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   More to the Story about Poletown....... 
by Larry Lawver

The following are my personal insights about the Michigan Supreme Court's July 2004 decision overturning their infamous "Poletown" ruling of 1981, a travesty which had set the precedent for a wave of eminent domain abuses across the country.  The Detroit Free Press article about it is, in my opinion, incomplete if not somewhat misleading.  I was a Detroit area resident as the original mess was unfolding, and there is more to the story than the liberal Detroit Free Press would tell.  In particular, this is the SECOND time the courts have repudiated the eminent domain abuse at the Detroit-Hamtramck Assembly Plant, later known as Poletown. 

Everyone who lived anywhere around Detroit before 1980 knows the story of Dodge Main.  The Dodge brothers started building it in 1910, and it eventually grew to a sprawling, three story, five million square foot body-on-chassis assembly plant.  For six decades, Dodge Main produced affluence for a thriving community of businesses, neighborhoods, and the City of Hamtramck (not a misspelling!) in Wayne County.  Hamtramck became a successful destination for thousands of immigrants from Poland, and their children became my friends while I lived there. 

The City of Detroit annexed most of the rest of Wayne County, and Hamtramck became an encircled enclave, powered by the economic output of Dodge Main.  In the seventh decade, Chrysler's incompetence and changing technology combined to kill the plant.  Lee Iacocca and Jimmy Carter abandoned it in 1980. 

After about 1977, it was clear that efficient auto assembly plants now required two key elements:  Transportation access (rail, water, highway) and about a square mile of flat space.  New automobile assembly plants were springing up around the planet where space was near transportation.  Dodge Main had two excess floors, great transportation, and no space to expand in an urban enclave.  Detroit area governments decided to do whatever it took to redevelop the area.  Lee Iacocca and Jimmy Carter gave them Dodge Main. 

The neighborhoods around Dodge Main were devastated when it closed, but not dead.  Hundreds of businesses that were started to serve Dodge Main had already acquired contracts with the other auto plants, and continued to employ local residents.  The area was severely damaged, though, and the property owners would have taken any reasonable offer to salvage what was left in their asset. 

In the shadow of the Jimmy Carter Depression, Detroit area governments were in panic.  Then, General Motors decided to build a new assembly plant, billed as the last automobile assembly plant that would ever be built in the United States.  (Wrong.) 

Detroit, Wayne County, and Michigan conspired to make the ultimate giveaway to GM:  We will come if you will build it! 

To clear the space GM needed around the old Dodge Main site, Wayne County had to clear out nearly 2000 homes, businesses, churches, etc.  In a rushed process, Wayne County made lowball offers, then used eminent domain to take the property needed to fulfill GM's requirements as quickly as possible.  Businesses, homes, and churches were disrupted and began to sue. 

Throughout the Eighties, courts slammed the government with damage rewards that valued the siezed properties at values the government was unwilling to pay.  In the end, former Poletown property owners received hundreds of millions of dollars in excess of what the government thought it had to pay under eminent domain. 

If GM had offered the property owners a reasonable price for their blighted land, they would have sold overwhelmingly.  Instead, government stole the property and paid dearly on the back end. 

While I could cite thousands of things that were wrong with General Motors in those days, I want to note that GM didn't ask for what happened, and in fact delivered their requirements for the site in a "this is why it can't be done" format.  When it became clear that the local governments were going to do it, GM had to get on board for fiduciary reasons:  The once impossible site was going to be the 
best place on earth for an assembly plant, and if they turned it down, another auto company (including possibly Chrysler!) would have jumped on it. 

GM did not choose to redevelop Dodge Main on its own because it was cheaper to develop a greenfield site somewhere else.  Dodge Main could have been redeveloped privately for any number of uses.  A good example at the time was the very similar Packard plant on the other side of Detroit.  Packard hadn't built a car for about thirty years, but the building survived and housed dozens of companies. 

Dodge Main would have been redeveloped, but not as an automotive assembly plant.  The flaw in eminent domain is that government, not the market, picks the best and highest use of a property.  In this case, the market decided that this was not a good place for an assembly plant any more.  Chrysler itself, owning the valuable property at the center, gave it away and built a greenfield plant in 
central Pennsylvania instead!

The local governments were rather quickly spanked by the court awards to the owners of the stolen properties.  Thirty years later, the basic concept has finally been repudiated.  Thousands of people were damaged, including two groups that don't physically exist because of the force of government:  The redevelopers of Dodge Main, and the neighbors and owners of the site, somewhere in this country, where GM would have built a $750M assembly plant for sound economic reasons.
 
 

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Larry Lawver is an industrial automation consultant and entrepreneur in central Florida

See this recap (with relevant resource links) by Reason editor Jacob Sullum
and this one by Orange County Register columnist Steven Greenhut

 
About the impact of Kelo (Kelo et al v. City of New London, 04-108) on the states:

Reason: How is this going to affect lower court decisions in other eminent domain cases, such as the Michigan Supreme Court's reversal of the Poletown decision last year? 

Scott Bullock: What's important to point out is that even the majority admitted that state courts are free to interpret their own provisions in a manner that's more protective of property rights. Thankfully, every state Constitution has prohibitions against private takings and a requirement that takings be for public use. And, only six states have held that economic development condemnations are Constitutional. Nine have held that they are not. And most states have not addressed it. 

-- excerpt from: 
http://www.reason.com/interviews/bullock.shtml

"So the FIRST thing to do is to get your state to strengthen its anti-taking laws and put real TEETH in them." -- Rick Gaber