Poletown, Michigan

Better later than never. More than two decades after Michigan’s Supreme Court upheld an egregious abuse of government’s power of eminent domain, that same court acknowledged the error of its ways.

The Fifth Amendment to the United States Constitution permits government to seize private property for a “public use,” such as a highway, railroad, or military facility, provided it give the owner “just compensation.” Many state constitutions have similar provisions. But in modern times it has become common for the government, usually at the state or local level, to seize property and transfer it to another private party rather than maintaining it for public use.

Neglecting their role as guardian of the Constitution and individual rights, courts across the country have rubber-stamped these illegal actions, claiming that private-to-private transfers satisfy the “public use” requirement as long as the new recipient’s use of the land provides a “public benefit.”

Which brings us back to Michigan. In 1980, in the teeth of a recession, Detroit was desperate for economic revitalization. General Motors took advantage. Having announced plans to shut down two plants in the city, GM offered to build a new complex if a suitable site could be found and given to GM on favorable terms. Detroit and GM eventually agreed that the best site was Poletown, a close-knit residential neighborhood consisting primarily of second-generation Polish-Americans and African-Americans.

To make room for GM, the city of Detroit told innocent Poletown residents to accept the city’s offer of modest compensation and get out. Many protested, insisting that no amount of money was “just compensation” for their cherished homes and neighborhood. But the Michigan Supreme Court didn’t care, upholding the seizure of hundreds of homes, a half-dozen churches, an array of schools, a hospital, and dozens of small businesses. In all, 4,200 persons were forced to relocate, and a thriving community was destroyed.

Sadly, this abuse of power yielded no net gain for Detroit. GM fell 3,500 short of its promise to create 6,500 new jobs. In the end, more people were displaced than employed and the sweetheart deal cost taxpayers more than $300 million in federal, state, and local subsidies for GM.

Hundreds of similar abuses of eminent domain have occurred during the last few decades, with municipalities playing reverse Robin Hood — taking from ordinary citizens and giving to powerful individual developers or corporations. In many cases, the alleged public benefit is a transparent cover for what amounts to legal bribery. Those who fill campaign coffers expect rewards, and eminent domain is used to produce rewards. Some new, unneeded sports stadiums result from such a process. A regulatory agency even sought to seize an elderly woman’s home and turn it over to tycoon Donald Trump to expand the parking lot and limousine waiting station at one of his casinos (fortunately a lower level court ruled against Mr. Trump).

Now, at last, a prominent court has said enough is enough. The case of Wayne County v. Hathcock bore obvious similarities to /Poletown/. A county in Michigan planned to seize 1300 acres of land, encompassing scores of homes, and transfer it to private developers and businesses to create an industrial park. Just as in /Poletown/, the county justified the seizure with wholly speculative, extravagant predictions about future economic benefits. A dozen brave homeowners refused to yield, and took the county to court. Citing /Poletown/ as precedent, the trial court and court of appeals upheld the proposed transfer.

Perhaps chastened by the way things turned out after /Poletown/, or enlightened by a body of commentary criticizing the use of eminent domain to enrich private businesses, the Michigan Supreme Court announced its intention to reconsider its /Poletown/ decision. Several public interest groups weighed in with friend-of-the-court briefs urging the Court to rectify its tragic error in the earlier case. On July 30, the Court handed down a momentous decision. In a holding endorsed by all seven Justices, the Court explicitly overruled /Poletown/ and said that henceforth eminent domain may not be used to transfer property to a private party except in very unusual circumstances.

In the single most important sentence in its lengthy opinion, the Court rejected the suggestion, central to /Poletown/, that “a vague economic benefit stemming from a private profit-maximizing enterprise is a ‘public use.'” Rather, land may be seized and transferred to a private party only if “public necessity of the extreme sort” so requires and “the property remains subject to public oversight after transfer to a private entity.”

This decision makes good sense as a matter of constitutional law and fundamental fairness. Under Michigan law, people’s homes can no longer be seized to achieve speculative benefits or to reward usually large corporate welfare kings. Courts nationwide should follow Michigan’s lead and reestablish their rightful role in our constitutional system.