Working Paper No. 05-04:
Date Posted: 2005
Abstract (below) | Full text (most recent) on SSRN
County of Wayne v. Hathcock is an important step forward in public use takings law. The Michigan Supreme Court was right to overturn its notorious 1981 Poletown decision and forbid condemnations that transfer property to private parties solely on the grounds that the new owners will contribute to 'economic development.' Poletown was the best known and most widely criticized decision justifying a nearly unlimited condemnation power.
As the Poletown case dramatically demonstrates, the economic development rationale is a virtual blank check for eminent domain abuse for the benefit of private parties.Poletown upheld a condemnation as a result of which 4200 people were uprooted so that General Motors could build a new factory in Detroit. Although GM and the City of Detroit promised that the new plant would create over 6000 jobs for the community, in reality the new plant employed less than half that many workers. By destroying hundreds of homes and numerous businesses, churches, and other institutions, the Poletown condemnations very likely inflicted more economic harm than they created benefits.
Economic development takings are highly vulnerable to such abuse for three interrelated reasons: the economic development rationale can justify almost any condemnation that benefits a private business; economic development takings rarely receive adequate scrutiny through the political process because of their nontransparent nature; and the absence of binding legal obligations on the new owners to actually produce the promised economic benefits severely exacerbates the danger of interest group manipulation.
Although the Hathcock case will help curb eminent domain abuse, it is not a panacea. Hathcock still permits condemnations that transfer property to private parties in three sets of circumstances: 'public necessity of the extreme sort,' situations where the public retains some 'control' over the condemned property, and cases where condemnation is justified by 'facts of independent public significance' rather than by the new owners' planned use for the property. All three of these scenarios, particularly the last two, are vulnerable to manipulation and abuse. Hathcock's third category is particularly problematic. It is intended to protect 'blight' condemnations, which historically have often been used to benefit politically influential developers at the expense of the poor and ethnic minorities.