High court OKs personal property seizures

Ilya Somin isomin at fas.harvard.edu
Thu Jun 23 19:19:36 PDT 2005


We don't know what the terms will be in the Kelo case, as New London does
not even yet know who the property will go to (this is one of many shady
aspects of this transaction), or even exactly what it will be used for.

But, in general, states that permit economic development takings do in
fact transfer it with few or no legally binding strings attached. AT the
very least, there is virtually NEVER a legal requirement to actually
provide redevelopment. By contrast, private firms hired to collect garbage
or manage prisons, or whatever, are contractually bound to actually do
these things, and usually to at least a minimal level of quality. It is
quite common for governments to sue contractors that renege on such
obligations. By contrast, the City of Detroit could not sue General Motors
after GM failed to even come close to providing the 6000 jobs it promised
to create as a result of the Poletown condemnation.

I agree with Sandy that tax abatements for specific businesses are - at
least in most cases - bad policy, but not unconstitutional. But, as I
argue in my last post, the constitutional rules that apply to tax and
spending policies are different from those that apply to takings. If taxes
are the same as takings, then would Sandy (following Richard Epstein, who
is the best known advocate of the taxes=takings theory)  argue that the
IRS is obliged to provide "just compensation" to taxpayers?

Ilya Somin


On Thu, 23 Jun 2005, Sanford Levinson wrote:

> Ilya may, of course, be right.  But I would be more than a bit surprised
> if New London gives the property "no strings attached" to Pfizer (or
> anyone else).  After all, I assume that Pfizer would not be free to
> "flip" the property by selling it and pocketing the profits, while the
> new buyer, say, builds a huge multi-plex devoted to showing "adult
> movies."  It is, presumably, true that Pfizer has ZERO legal obligations
> actually to revivify New London.  Rather, the city council is making a
> bet that helping Pfizer move in will lead to such a happy outcome.
> Incidentally, does Ilya think that bribing private companies by offering
> "tax abatements" is also unconstitutional insofar as it is a functional
> transfer from A to B inasmuch as it (necessarily) raises A's taxes by
> providing the de facto subsidies to B.  (I happen to think that such
> abatements are terrible public policy, but that, of course, is not
> equivalent to saying they're unconstitutional.)
>
> sandy
>
> -----Original Message-----
> From: Ilya Somin [mailto:isomin at fas.harvard.edu]
> Sent: Thursday, June 23, 2005 9:46 PM
> To: Sanford Levinson
> Cc: Scott Gerber; daviwag at regent.edu; Strang, Lee;
> conlawprof at lists.ucla.edu
> Subject: RE: High court OKs personal property seizures
>
> There is a clear distinction between economic development takings that
> tranfer property to private parties and privatization of public
> services.
> What follows is taken from a recent post of mine on Scotusblog.com:
>
> 	There is an important incentive problem present in takings that
> does not
> 	arise with other types of "privatization" of public services.
> When
> 	property is condemned for transfer to a private party, there are
> usually
> 	very few if any limits on what the new owner can do with it. In
> Kelo and
> 	other economic development takings cases, the new owner has ZERO
> legal
> 	obligation to actually provide the economic benefits that
> allegedly
> 	justified the taking in the first place.
>
> 	By contrast, when public services are "privatized" by
> contracting out, the
> 	contractors (as the term implies) are usually required to sign a
> binding
> 	contract that creates a legal obligation to provide the public
> service in
> 	question. For this reason, private-to-private condemnations that
> 	supposedly serve public purposes are much more vulnerable to
> abuse than
> 	are most kinds of privatization. Free market advocates are right
> to view
> 	them with heightened suspicion.
>
> If New London were to build the facility itself and rent it out, the new
> owners would presumably have to sign a contract that requires them to
> pay rent and meet other conditions. They would therefore not be able to
> simply do whatever they want. Obviously, one can imagine takings that
> place the property under nominal state ownership but in reality allow
> private parties to work their will with it. Some state courts strike
> down these types of condemnations, and I think federal courts should
> too, though I recognize that such cases are sometimes hard to
> distinguish from "true"
> public uses. Be that as it may, the fact that courts have been too lax
> in policing one type of taking is no  reason to commit the same error in
> others.
>
> Ilya Somin
>
>
>
> On Thu, 23 Jun 2005, Sanford Levinson wrote:
>
> > I don't understand the high dudgeon about this altogether predictable
> > case (at least if Midkiff and Berman aren't to be overruled).  Why
> > isn't it eminently reasonable to think that New London has a right to
> > try to pull itself out of the economic doldrums by luring Pfizer and
> > other high-tax-paying entities.  I take it that New London could build
>
> > the facility itself and then immediately rent it out to private
> businesses.
> > If so, then I am not bothered by their placing construction in the
> > hands of the businesses.  What this case really represents is the
> > attempt by private property buffs to take advantage of what they
> > perceive as a friendly court to cut back on these earlier cases and
> > reinstate the jurisprudence of an earlier era (though Stevens takes
> > pains to point out how the precedents he is relying on are over a
> century old).
> >
> > I also confess that I find it somewhat hilarious that conservatives
> > object to using eminent domain to help out private businesses when
> > they are just the people leading the fight to "privatize" much of
> > government, which, as a practical matter, means the shovelling of
> > large amounts of dollars to non-governmental institutions who are
> > allowed to operate without significant supervision.  Consider the high
>
> > dudgeon from political conservatives if the Court were to rule, for
> > example, that the implementation of "public welfare" programs had to
> > be done by state agencies instead of private "faith-based"
> organizations, etc.
> >
> > I also see similarities, incidentally, between this opinion of Stevens
>
> > and the opinion a few weeks ago in Raich:  I.e., the emphasis in both
> > was on the complex nature of the overall regulatory (or developmental)
>
> > scheme.  Stevens's opinion leaves properly open the question of a
> > single-shot transfer from A to B that is not embedded within a broader
>
> > program that clearly could be thought to benefit the public, as does
> > the New London development.  Anyone who truly believes in judicial
> > restraint should applaud today's decision.
> >
> > sandy
> >
> > -----Original Message-----
> > From: conlawprof-bounces at lists.ucla.edu
> > [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Scott Gerber
> > Sent: Thursday, June 23, 2005 4:58 PM
> > To: daviwag at regent.edu
> > Cc: 'Strang, Lee'; conlawprof at lists.ucla.edu
> > Subject: High court OKs personal property seizures
> >
> > I don't know how others feel, but in my humble opinion the Court's
> > opinion in this case ranks among the worst during the Rehnquist Court
> > era.
> >
> > Scott
> >
> > --------------------------------------
> >
> > Scott Gerber
> > Law College
> > Ohio Northern University
> > Ada, OH 45810
> > 419-772-2219
> > http://www.law.onu.edu/faculty/gerber/
> > _______________________________________________
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