In a decision that could change the economic development plans of urban areas throughout the country, the Michigan Supreme Court ruled recently that a government could not take private property by eminent domain and turn it over to another private entity for development.
The ruling reversed the court's landmark 1981 Poletown Neighborhood Council v. Detroit decision, which upheld government's right to affect such transfers. At the time, the Poletown case received national attention, as it was viewed as paving the way for a whole new avenue of government land takings. Previously, using the power of eminent domain was considered appropriate only for projects involving a clear public interest, such as roads, schools or public power facilities.
The Poletown decision came after a long and bitter battle pitting preservationists, businesses and property-rights advocates against the city of Detroit, which wanted the 500-acre tract of land so that General Motors Corp. could build a new automobile plant. In all, hundreds of homes and dozens of businesses were bulldozed to make way for the factory. In the wake of the decision, other state courts used it as precedent in finding that eminent domain was appropriate for private projects in their states.
The vehicle for the unanimous vote to reverse Poletown was Wayne County v. Hathcock, brought by Edward Hathcock, whose 12-employee millwork and cabinetry shop lay in the path of a proposed 1,300-acre office and industrial complex adjacent to the Wayne County municipal airport. Hathcock complained that the $360,000 the county offered him for his building wasn't sufficient and that the county had no legal right to take his building by eminent domain absent a sales agreement.
The Michigan ruling is just the latest in a long-running series of legal skirmishes over government's right to take private property for commercial redevelopment. The power of eminent domain was clearly being abused in some of the cases, says John Mogk, a land use law professor at Wayne State University. But he sees the Hathcock decision as an overreaction to that misuse of eminent domain. "It's human nature and government nature to push the envelope and some have been doing that," Mogk says, "but it's the responsibility of the court to clarify and set the standard for when eminent domain is legal and appropriate."
Under Michigan law, he points out, taking property through eminent domain can be justified in two ways: if the taking satisfies a public purpose (such as a road or municipal facility), or if it fulfills a "predominant public interest." That, in Mogk's opinion, includes projects that clearly boost the economic and job prospects of an otherwise struggling city or region.
It is the latter test that was tossed aside in the Hathcock ruling, Mogk argues. In failing to offer some guidance on the question of what reasonably constitutes a "predominant public interest," he thinks the Michigan Supreme Court missed a chance to help rationally rebalance property rights and the public interest. Instead, the new ruling will, he fears, be used in other state courts, this time to stop projects that would clearly benefit cities and inner-ring suburbs struggling to stay afloat.