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By Nicole Gelinas

After The Fall: Saving Capitalism From Wall Street--and Washington

City Journal

Nicole Gelinas
They’re Taking Away Your Property for What?
The Court’s eminent-domain ruling is useless as well as unjust.
Autumn 2005

Pundits both Left and Right condemned the Supreme Court’s Kelo v. City of New London ruling last June as an unjust, even un-American, abuse of state power. And surely it’s hard to defend a decision that lets government take well-kept property away from one private individual or business to give it to another who might make it more upscale. But what critics haven’t noticed is that the decision simply expands the Court’s approval of a practice that state and local governments have long used to bring about urban renewal or economic development. More important, they have also failed to notice that, over its long history, this practice has almost never worked. The Court’s decision fails not just on moral but also on utilitarian grounds.

The crux of Kelo’s injustice is its further enlargement of the power of eminent domain granted by the Fifth Amendment, which recognizes that “private property” can “be taken for public use.” “Public use” once meant the obvious: the state could seize private land to build a road, for example, or it could allow a railway or a utility company to build track or power lines across private farmland, since they’d be available to everybody. But 50 years ago the Court replaced the “public use” rationale for eminent domain with a more nebulous concept of “public purpose,” in order to allow cities to condemn slums to remove urban blight. In Kelo, the 5-4 majority went a step further, ruling that governments don’t need to show that property they condemn is even nominally blighted; the vague promise of higher tax revenues and the hope of private-sector jobs through planned development are no less public goods than a road or a water-treatment plant. And so the Court allowed New London, Connecticut, to condemn a middle-class waterfront neighborhood and to parcel it out to private developers who would make more lucrative use of the property, including building luxury condos.

Americans are serious about the sanctity of private property because they understand that it is not only inseparable from liberty but also the foundation of prosperity. If Soviet-style central planning actually worked, America’s vast urban renewal projects that used eminent domain to bulldoze slums would have produced flourishing communities rather than high-rise housing projects awash in social pathology. And the megaprojects of today—the stadiums, convention centers, Renaissance Centers, and so on, for which urban planners have condemned acres of private property—would actually have produced the economic development that their sponsors promised. Like so many who have believed those promises, Justice John Paul Stevens, in his majority opinion in Kelo, puts much stock in the fact that New London “has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” More than 50 years of experience say it won’t.

Urban planners like to dream big dreams, though in the U.S. until the mid–twentieth century they mostly remained dreams. From at least the 1920s, planning orthodoxy held that the slum neighborhoods whose conditions Jacob Riis had documented as the century began were too diseased to heal themselves—they had to be eradicated wholesale, and even run-down neighborhoods should be knocked down before they turned into slums. Urban “experts” and government-sponsored developers would then plan new residential districts in concert with political leaders, with government itself providing housing for many of the poor. Of course, officials would need the right to use eminent domain freely to plan new districts; as University of Pennsylvania law prof Wendell Pritchett puts it, the experts believed that “only major changes”—that is, erosions—“in property law could prevent urban decline.”

New York planners began making the dream a reality in a relatively modest way in the early 1940s, when they cleared 18 square blocks of Manhattan’s East Side above 14th Street so that MetLife could build Stuyvesant Town, a high-rise suburb-within-a-city for middle-class whites whose rich cultural capital made the architecturally sterile project succeed socially. The full scale of the planners’ ambitions soon emerged, however, as they pondered what to do with the unskilled minorities who were migrating north and destabilizing urban neighborhoods as the whites moved out. Their decision: raze those overcrowded neighborhoods to build “modern” housing complexes.

So in New York, as elsewhere, acres of shabby but functional neighborhoods—from the Lower East Side to Harlem in Manhattan, and all over Queens, Brooklyn, and the Bronx—disappeared under the bulldozer to make room for the boxes of high-rise housing projects that still sap vitality from Gotham today. As Robert Caro writes in The Power Broker: “The eastern edge of Manhattan Island . . . was completely altered between 1945 and 1958. Northward from the bulge of Corlears Hook looms a long line of apartment houses . . . hulking buildings, utilitarian, drab, unadorned, not block after block . . . but mile after mile.”

Hundreds of millions of dollars in “modern” housing investments proved no solution, however; the housing projects instead turned economic and social assets—whole swaths of the city—into economic and social liabilities. In fact, in New York and elsewhere, the construction of housing projects only exacerbated middle-class flight to the suburbs, as people fled the fringe neighborhoods that survived these new and efficient crime factories. Instead of being uplifted by their new housing, as the planners intended, the poor became increasingly dysfunctional and dependent on the government.

Projects like these were soon under way all over urban America, and Congress gave them its blessing, and its money, in 1949, when it funded a massive urban-renewal program for housing, Title I, which cities would carry out using local contractors. In 1954, Congress cemented the new orthodoxy—central planning of whole neighborhoods after leveling them through eminent domain to remove “blight”—by amending the law to require that municipalities submit comprehensive community development plans in order to get urban-renewal grants. Mayors had to destroy their cities in order to save them—so they did.

The Supreme Court first ratified using eminent domain for this purpose that same year, affirming the right of the Washington, D.C., government to condemn much of the city’s depressed southwest region, including a thriving, privately owned department store, and to transfer the land to a private construction company for redevelopment. The district government had argued that the area was too decayed ever to repair itself; it had to be razed, department store and all, and rebuilt all at once in order to succeed.

“The area must be planned as a whole [in order to overcome its blight],” the Court ruled in Berman v. Parker. “The concept of the public welfare is broad and inclusive. . . . If those who govern the District of Columbia decide that the nation’s capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.”

But as the cities began to lose middle-class residents and manufacturing jobs to the suburbs, and as the urban poor multiplied and became increasingly demoralized, such central-planning schemes proved no solution to what was starting to be seen as urban decline. Consider the fate of New Haven, Connecticut, the most willing victim of the urban-renewal era. Mayor Richard Lee, a Democrat who took office in 1953, had pledged to create “a slumless city, the first in the nation.” During his 16-year tenure, as Yale University’s “Model City” history project relates, Lee procured more urban-renewal funds per capita than any other American mayor—more than $1 billion in today’s dollars, and nearly four times as much as runner-up Newark. In 1958, the Saturday Evening Post hailed Lee for embarking upon “saving a dead city.”

New Haven officials used eminent domain to raze block after block of immigrant and working-class communities to build “Modernist” office complexes, industrial buildings, and housing projects, as well as a strip mall, a parking garage, and connections to highways. Going beyond earlier planners’ ambitions, limited merely to solving housing problems, the New Haven planners would revitalize an entire economy.

But bulldozers and central planning didn’t save New Haven. Between 1950 and 1980, the city’s population declined by 30 percent—and poverty increased. “In 1970, as urban renewal ended, the census ranked New Haven as the 38th-poorest city in America,” local journalist Paul Bass and Yale prof Douglas Rae wrote in a New York Times op-ed in July. “Ten years later, it was ranked seventh, with 23.2 percent of its population living below the poverty line. Today, more than a quarter of its families live in subsidized housing.” Rae thinks that without urban renewal, New Haven’s poverty rate would be lower today: “They destroyed a lot of economic and social vitality,” he told me. Even Mayor Lee saw that top-down planning had failed; by the end of his final term, he observed: “If New Haven is a model city, God help America’s cities.” Unfortunately, cities all over the country had replicated New Haven’s experience.

As planners recognized that they couldn’t solve the problem of housing (and uplifting) the poor, and certainly couldn’t remake entire cities, they scaled back, rather than relinquished, their ambitions. By the seventies and eighties, cities focused on using eminent domain to build sterile business districts and industrial centers to trap disappearing well-paying jobs in inner cities, or to build convention centers, stadiums, and subsidized hotels to lure free-spending out-of-towners. Eminent domain for urban renewal morphed into eminent domain for economic development—with similarly dismal results.

Detroit, for instance, spent some $200 million to destroy the “blighted” Poletown neighborhood in 1981 so that General Motors could build a factory there. But this investment never paid off. Poletown’s destruction was supposed to create 6,000 jobs but created less than half that. And that’s not the worst of it. “If we assume that the 600 eliminated businesses employed a modest average of slightly more than four workers, their total lost work force turns out to be greater than the 2,500 jobs created at the GM plant,” wrote famed urbanist Jane Jacobs in her amicus brief supporting the Kelo homeowners. “Even if we consider its impact in purely economic terms, it is likely that the Poletown condemnation caused more harm to the people of Detroit than good.” Moreover, Detroit’s condemnation of Poletown certainly didn’t stop the decline of the auto industry—or of Detroit.

In New York, politicians’ efforts to trap corporate jobs through government planning resulted in a similar centrally planned boondoggle: downtown Brooklyn’s Metrotech. For decades, New York pols had fretted that the city was losing its white-collar jobs to New Jersey, Connecticut, and other lower-cost regions, even as skyrocketing crime and taxes sent middle-class residents fleeing from the outer boroughs.

The solution? Nearly two decades ago, Gotham decided to build a walled camp in the middle of a lower-class area of Brooklyn to lock white-collar jobs in. This project would accomplish two goals, pols thought. In addition to keeping jobs in New York, Metrotech would spark further development in a slummy neighborhood that never had grown on its own, despite its proximity to lower Manhattan. City and state officials used eminent domain to displace 250 owners and tenants so that developer Bruce Ratner could build the suburban-style office campus.

Metrotech tenants have received about $270 million in state and city subsidies (of which more than $200 million went to JPMorgan Chase). But Metrotech hasn’t “kept” the nation’s financial-services jobs in New York: Gotham’s share of U.S. securities-industry jobs has fallen from one in three to one in five since 1980. Metrotech, despite its Class A office space and its quiet campus lush with greenery, can’t even attract enough private-sector tenants to remain fully occupied; its tenants include an array of government agencies.

Nor has Metrotech, completely cut off from the surrounding streetscape, encouraged the growth of an unsubsidized business community in its neighborhood. Metrotech is what it was when it opened: a suburban-style office campus carved out of inner-city downtown Brooklyn. The two worlds don’t meet. The government’s newest solution for “underdeveloped” Brooklyn is another top-down project by eminent domain planned by the same developer nearby. It seems that the distortion of the free market via eminent domain for economic development just begets more of the same.

True, Ratner’s new proposal for remaking Brooklyn, the massive Atlantic Yards development project, glitters with modern urban-planning language, but it is a perfect illustration—only one out of many recent eminent-domain projects like it—of how little today’s central planners have learned from half a century of failure. Ratner’s sweeping master plan for the Prospect Heights neighborhood envisions a basketball arena over some uncovered railyards he’ll buy at a below-market price from New York’s Metropolitan Transportation Authority, and he’s petitioning the state and city to condemn the adjoining blocks so that he can build nearly 6,000 high-rise apartments there. Ratner’s supporters, including Mayor Michael Bloomberg, dismiss the entire Brooklyn neighborhood as “the railyards” to denote a region in economic distress.

But the properties Ratner wants the government to condemn, like the houses in Kelo, are hardly distressed. They include two historic warehouses converted into fancy condos and sold at high prices just two years ago, a neighborhood bar that dates to pre-Prohibition days, and a flourishing arts-supply factory that employs two dozen legal immigrants and has recently opened a modest art gallery as well. The owners and tenants on the soon-to-be-condemned properties pay their sales, income, and property taxes. They create jobs. And they do all this without government subsidy. Ratner’s plans, by contrast, require huge investments of state- and city-taxpayer money.

The taxpayers sure won’t get much in return. They will pour about $200 million in public subsidies into the stadium portion of Ratner’s project up front. In return, the city and state could receive an annual net surplus from that part of the project of about $7.8 million over 30 years. (And that’s if everything goes perfectly according to plan, and if the city and state don’t have to pony up more millions up front to pay for unspecified infrastructure improvements, as is hinted at in early project documents; as Steven Malanga has reported in these pages, nearly a dozen economists have studied stadium projects across the country for decades and have found that they almost always fail to deliver their promised benefits.) But if New York simply deposited that $200 million in a savings account and left Prospect Heights alone, it could receive about $8 million a year in interest—and at no risk, as it could withdraw the $200 million at any time. For Ratner, of course, the arena provides a signal advantage; since politicians never fail to fall in love with the idea of urban stadiums, they are willing to condemn the land that Ratner needs to make his project viable and to allow him to build his apartment buildings higher and denser, and thus more profitable, than current zoning permits.

Ratner knows the criticism of the failed centrally planned projects of the past, of course: that big, single-use, housing developments, no matter for low-, middle-, or high-income residents, don’t create lively streetscapes with urban vitality. “Look what we have built,” Jane Jacobs wrote of the 1950s version of the “model city” in her seminal 1961 classic, The Death and Life of Great American Cities. “[L]ow-income projects that become worse centers of delinquency. Middle-income housing projects which are truly marvels of dullness and regimentation, sealed against any buoyancy or vitality of city life . . . . Commercial centers that are lackluster imitations of standardized suburban chain-store shopping.”

Today’s sophisticated megaproject developers like Ratner and his supporters speak the language of Jane Jacobs. Ratner and co. talk of building a “mixed-use urban complex” of residential, commercial, and retail “space,” as opposed to the failed purely residential and purely commercial districts planned by past renewers. And they’ve brought in one of the trendiest celebrity architects, the overrated Frank Gehry, who enthuses about building a neighborhood from scratch.

But even with a fashionable architect, one cannot decree a healthy mixed-use urban complex that will serve as the anchor of a new neighborhood and make it so. Just look at New York’s sterile Roosevelt Island. Is the risk at Prospect Heights really worth the economic and social cost of bulldozing an existing “mixed-use urban complex”—that is, an actual neighborhood—that doesn’t require taxpayer subsidies?

Remember, nobody set out to create the urban-renewal failures of past decades—and such projects didn’t fail because politicians are inherently dumber than businessmen; many smart developers have built failed urban-renewal projects. They failed because neighborhoods, and economies, are built not by government and developer fiat but through individual initiative in pursuit of profit. Jacobs wrote more than 40 years ago that neighborhoods built all at once by one developer, even those designed for affluent residents, “offer no economic possibilities to city diversity. The practical penalties of dullness . . . stamp the neighborhood early. . . . The neighborhood shows a strange inability to update itself . . . by a new generation. It is dead. Actually, it was dead from birth.”

“They say they’re not doing what they did 30 years ago,” John Norquist, the former mayor of Milwaukee, remarks of today’s urban planners. “But they’re taking out the urban fabric of neighborhoods. Sometimes you get it right, but it’s not likely. If the person isn’t brilliant, you end up withCeauçescu’s Bucharest. It’s much better to go with multiple-owner development over a long period of time.”

Just consider the difference between Boston’s North End and its West End, says Norquist. Modest immigrant communities before the 1950s, both appeared slums to planners. Boston used urban-renewal funds and eminent domain to develop the West End as a self-contained modern high-rise apartment district, but it left alone parts of the North End. Despite the Central Artery highway that bisects it, the North End is now a vibrant mixed-income community of old and new construction, where people want to live, work, and visit. The West End, while benefiting from the heated real-estate market, is stagnant and boring by comparison. “The West End has some value, but nowhere near the value of the North End,” Norquist concludes. Similarly, in New York, the old slums of Hell’s Kitchen and the Upper West Side, relatively untouched by urban renewal, now house an economically diverse collection of small firms, restaurants, and apartment dwellers, while on the Lower East Side, the dead weight of the central planners’ housing projects serves as a thick boundary to natural residential and commercial growth in nearby neighborhoods that were once America’s worst tenement slums and now bustle with hip and trendy vitality.

Like these former slum areas, Ratner’s Prospect Heights prize used to be distressed—longtime neighborhood residents remember the days of drugs and hookers all too well. But wedged in between three prosperous areas of Brooklyn, including Park Slope, it has benefited from natural growth over the past decade, like Hell’s Kitchen and the Upper West Side before it. (That’s part of the reason Ratner wants it—he isn’t asking the government to use eminent domain to help him put luxury apartment towers among the projects of East New York to bring “economic development” to that stagnant, centrally planned community.) Without government intervention, prosperous people have chosen to move in, and one Prospect Heights property owner, Henry Weinstein, had tentative plans to develop his land to its full potential, including, possibly, more luxury condos. In order to win the bid for the state-owned railyards, Ratner also had to stymie rival developer Gary Barnett’s competing bid to build apartment towers over the railyards’ footprint, which did not require eminent domain and massive stadium subsidies. So taxpayers will end up subsidizing economic growth that would have happened naturally, and far more rationally, anyway.

There’s another danger here. In the free market, a poorly designed project will fail and be replaced by a well-designed project—or just won’t find private financing to get built. With government central planning, ill designed projects last forever—and they retard natural growth around them. Take Mayor Bloomberg’s recently scuttled plan to subsidize a football stadium on Manhattan’s West Side. Like Ratner in Prospect Heights, Bloomberg pitched the deal as a necessary stimulant for a long-dormant neighborhood. In truth, developers have been moving midtown Manhattan steadily westward for two decades, beginning with the Worldwide Plaza office and condo tower on Eighth Avenue in the early 1980s and now extending westward and southward with new apartment towers along Ninth, Tenth, and Eleventh Avenues throughout the West 40s and 50s. A stadium would only serve as a wall against the continuance of that natural growth. We can see the effects of 1950s-style urban renewal—the housing projects still stand. It’s harder to see missed opportunities.

But pols and planners insist that they can’t simply watch decayed neighborhoods (real and perceived) fester while they wait for the possibility that economic growth, and tax revenues, will develop on their own. That’s why the National League of Cities and the U.S. Conference of Mayors filed briefs supporting New London in Kelo. After the case was decided, D.C. mayor Anthony Williams, the head of the NLC, breathed a sigh of relief: “Local officials [need] the continued use of eminent domain to bolster depressed neighborhoods,” he said. Eminent domain “has been indispensable for revitalizing local economies, creating much-needed jobs and generating revenue that enables cities to provide essential resources. . . . [W]e need all the help we can get to redevelop our neighborhood and provide jobs for our citizens.”

One of the most oft-cited examples in support of this argument is the revitalization of Times Square. Without government’s power to condemn the blighted blocks at Manhattan’s heart, the story goes, New York would never have been able to bring tourists back to the Crossroads of the World.

This is nonsense, as William J. Stern, who headed New York State’s Urban Development Corporation when it cooked up the 42nd Street Development Plan, has written in these pages (“The Unexpected Lessons of Times Square’s Comeback,” Autumn 1999). Times Square reemerged in the 1990s as a corporate and tourist mecca thanks to the skillful and aggressive policing that began in the mid-1980s and became pervasive under Mayor Rudy Giuliani, and thanks also to tax benefits for selected developers, in a city where overall tax cuts seemed politically too hard to accomplish.

Sure, the state government chose developers to build new office towers to anchor the new Times Square. But nothing happened. As government-sponsored developers dithered for years and didn’t build, private activity filled the vacuum. In the early nineties, Stern recounts, Viacom, Bertelsmann, and Morgan Stanley moved in on their own. The boom was on—because Times Square was safe again.

The state’s $300 million worth of eminent-domain condemnations, mostly along 42nd Street, did have one important effect: they drove Times Square’s critical mass of sex shops, and the lowlifes they attracted, out of the heart of the square. But Stern argues that government could have achieved the same effect through effective, and aggressive, zoning. “You don’t have a sex shop in Times Square for the same reason you don’t have a pig farm,” Stern told me. “The sleaze business poisons other businesses.” Tourists don’t want to visit streets teeming with pimps, prostitutes, and perverts.

It’s not just Times Square that has prospered from more than a decade of outstanding police work and falling crime in New York. Harlem, too, has revitalized; newly safe streets there have unlocked millions of dollars of value along the rows of brownstones that were spared the housing-project wrecking ball 50 years ago. In light of the resurgence of so many once-blighted neighborhoods after crime was cut down, it’s hard not to wonder if unsubsidized residential and commercial investment from Brooklyn Heights and lower Manhattan might not eventually have spilled into an unbulldozed downtown Brooklyn as the city repaired itself, too—without a subsidized Metrotech.

Eminently Silly in D.C.

In an example of the frivolity of the abuse of eminent domain to transfer private property from one profit-maker to another, Washington mayor Anthony Williams has proposed to condemn the Skyland Shopping Center, a perfectly decent mall that serves a working-class, mostly black neighborhood in southeast Washington, in order to allow a politically favored developer to build . . . another perfectly decent mall. Luckily, Skyland also is an example of how this frivolity can be stopped effectively.

Williams’s plan would displace several high-quality anchor tenants as well as black-owned small businesses to pave the way for a big-box store, preferably a Target. Why? Despite the fact that the existing mall is profitable and safe, and hasn’t had a lease vacancy in years, supporters of redevelopment don’t believe that the current mall is upscale enough to serve an up-and-coming neighborhood.

This government intervention, like so many, is almost certainly just plain unnecessary. If southeast D.C. is indeed gentrifying, and if enough middle-class residents in the area replace, or evolve from, working-class residents, Target or one of its competitors will be champing at the bit soon enough to open up a store to serve them.

But that hasn’t happened yet—probably because the neighborhood isn’t quite gentrified enough yet to support such growth. So Williams wants to jump ahead of the market, doing with an extraordinary government power exactly what private money would have accomplished on its own.

But Skyland does, at least, demonstrate why Congress must pass a proposed bill that would prohibit the awarding of federal grants to local projects that are predicated on the use of eminent domain for economic development. D.C. has applied for a $19 million community-development loan guarantee from HUD to remake Skyland—and at press time, it looks as though the federal government views the application skeptically, at best.

If courts won’t rein in runaway governments, cutting those governments’ funding looks to be an effective substitute.

If megaprojects built through eminent domain fail over and over, why do state and city governments continue to take private property away from rightful owners for taxpayer-subsidized stadiums, convention centers, and office parks that, in the best-case scenarios, will only suck economic activity away from other sectors, not generate new economic activity? The truth is, eminent domain is a gold mine for the political racket—the pols and interest groups who benefit when private assets are forced into the public sphere for political redistribution.

Politicians line up behind megaprojects like Ratner’s Prospect Heights scheme because they can boast that their sponsorship will create jobs and economic growth, whereas no politician can take credit for gradual and organic free-market economic development. The big, politically connected, unionized construction companies love such projects, too, because subsidized construction mandates unionized contractors, and the politically active construction unions love them no less. The Wall Street firms that underwrite the bonds for the public subsidy are also big supporters, as are the industry associations whose members stand to gain, even while other taxpaying businesses stand to lose.

Such highly politicized enterprises require finely honed political skills, and Ratner honed his as a commissioner in former New York City mayor Ed Koch’s administration. For backup, he has hired a former assistant to the project district’s state assemblyman to work on “community relations.” Ratner himself gave a revealing glimpse into how the system often works, in former New York mayoral candidate Mark Green’s book on campaign finance reform. “When you do business with the city, you get solicited by everyone from U.S. Senators down to members of the City Council,” he told Green. “You knew your competitors were doing it, and so when someone would call, it was hard to say no. For businesses that do a lot of business with the city, it was expected. . . . I didn’t want to be a person on the outs, nor could my business afford to be a person on the outs given how much business we do with government.” So when Ratner announced in 1997 that he would contribute no longer, he recounts, “[P]eople said I was crazy: ‘You’re going to get yourself killed.’ ”

In fact, Ratner had only found an even smarter way to play the political game. His new Prospect Heights project comes complete with a 51-page “Community Benefits Agreement,” which could serve as a textbook for politicized economic development. In it, he offers sweeteners to “community” activists, among them at least 2,000 units of below-market “affordable” housing and a generous percentage of jobs for minority contractors and employees.

The sweeteners attracted some powerful, if unsavory, political support. Unsurprisingly, Al Sharpton climbed on board, leading a march around Brooklyn in support of Ratner’s master plan and winning political credit, because he can claim that he helped push Ratner to lavish those benefits on minority contractors and employees.

But, more crucially, Ratner’s chief “community” cheerleader is Bertha Lewis, head of the New York chapter of Acorn, the nation’s biggest left-wing activist group. Acorn has perfected the art of turning community activism to its own profit, as evidenced above all in its manipulation of the federal Community Reinvestment Act, which requires banks to show that they’ve lent sufficiently in poor neighborhoods if they want government approval of prospective mergers. Since complaints from “community” organizations are a sign of possible noncompliance with the act, banks had ample incentive during the era of industry consolidation through mergers to keep such organizations happy by paying them fees to market their loans in poor communities. Acorn has mastered this game, receiving $760 million from the Bank of New York to distribute as loans to low-income homebuyers, and receiving hundreds of thousands of dollars in “donations” from J. P. Morgan and Chase when the two banks sought to merge in 2000.

Ratner’s ransom payment to Acorn isn’t so direct, but it’s the same principle; he must provide “community benefits,” brokered by Acorn, in order to get “community” approval for his plan. Acorn’s Lewis, as “enforcing member” (the literal term the agreement uses) of the plan’s affordable-housing component, will have a huge say in deciding who will get the project’s subsidized apartments—a rich patronage plum indeed. Lewis thus has a big voice in shaping the long-term voting pattern of Ratner’s brand-new community. In return, Acorn will take “reasonable steps to publicly support the project by . . . appearing with the developer before the public parties, community organizations and the media as part of a coordinated effort to realize and advance the project.”

This is no trivial matter, since Lewis is not only a “community” leader but also co-head of the powerful Working Families Party, the political face of Gotham’s public-sector unions. Some 30 members of New York’s 51-member city council won election with Lewis’s endorsement; it would be hard for Ratner to find more a powerful political ally, even if he made the head of the Democratic Party his “enforcer.”

Ratner’s benefits are attracting newcomers to New York’s political follies, such as James Caldwell, a small-change Brooklyn activist who now heads a new coalition called Brooklyn United for Innovative Local Development (Build). Caldwell started Build just two months after Ratner announced his Prospect Heights project—but despite its total lack of a track record, Build will help execute the Community Benefits Agreement. Earlier this year Caldwell told a public meeting: “If this thing doesn’t come out in favor of Ratner, it would be a conspiracy against blacks.” Build’s small-business director, Michael West, added: “When you reject the Ratner project . . . you’re saying you don’t care about the 55 percent unemployment rate in the black community.”

Build has filed documents with the IRS that show that Caldwell and his partners in the group expect to get nearly all of their funding, which they estimate at $5 million over the next two years, from . . . Bruce Ratner. Of that money, Caldwell expects to draw a $125,000 salary for himself and six-figure salaries for two partners. (For his part, Ratner claims that his company will indeed pay for some of the community programs Build plans to execute under the benefits agreement, but that he has not agreed to a specific amount.) As Jane Jacobs wrote in her Kelo brief: “Economic takings serve as a virtual license for exploitation of the eminent-domain power on behalf of powerful interest groups”—including pols, developers, and “community” beneficiaries.

Kelo has generated a backlash. Even Justice Stevens said in an August speech that he would oppose the use of eminent domain if he were a state or local legislator. “My own view is that the free play of market forces is more likely to produce acceptable results in the long run than the best-intentioned plans of public officials,” he said.

In response, more than half of the states, and hundreds of cities and towns, have introduced legislation to rein in eminent domain. The governors of Alabama and Texas have already signed such legislation. Even in seizure-prone New York, bills are pending: New York City councilwoman Letitia James (of the Working Families Party, yes, but also of the Prospect Heights neighborhood that Ratner would bulldoze) has introduced a bill to outlaw using city funds for Kelo-style eminent domain, and state assemblyman Richard Brodsky has introduced a bill to require closer review of condemnations and to increase the mandated payments to displaced property owners and renters. Congress has several bills pending; one in the House would prohibit federal assistance to a state for economic development if that state did not expressly outlaw Kelo-type economic development.

Though these efforts have attracted supporters across the political spectrum, from the NAACP and the AARP on the left to the Claremont, Rutherford, and Goldwater Institutes on the right, such unanimity doesn’t guarantee success. The political class is likely to view those who care about property rights and sound economic principles in the same way it increasingly views individual property owners and the free market: as stubborn, or stupid, obstacles in the way of “economic development”—and in the way, of course, of political profit.

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