Susette Kelo's little, pink house in New London, Conn. — like the houses of all her neighbors — is now a pile of rubble, overgrown with weeds. But Pfizer, the company that called for the demolition in order to build a new research and development plant, announced Monday it is packing up and leaving town in order to cut costs after its merger with fellow drug-giant Wyeth.
New London now has a wasteland where a neighborhood once stood, and no jobs or business to show for it. It's another travesty of central planning.
In the late 1990s, New London's politicians were desperate to fix up their aging and ailing town. The city revved up a private, non-profit entity called the New London Development Corporation, which went to work drawing up a plan of a new New London.
The central planners decided that their white knight would be Pfizer, already operating a plant across the river in Groton, but looking to build a massive research and development facility. So, the politicians picked a 24-acre lot and sold it Pfizer for $10, adding on special tax breaks. Also, state and local governments promised $26 million to clean up contamination on the lot and a nearby junkyard.
But Pfizer executive David Burnett thought New London needed to do some more cleaning. “Pfizer wants a nice place to operate,” the Hartford Courant quoted Burnett in 2001. “We don't want to be surrounded by tenements.” The old Victorian houses in the Fort Trumbull neighborhood next door did not match Pfizer's vision – a high-rise hotel or luxury condominiums would be more fitting.
So, the development corporation, empowered with eminent domain by the city government, cleared out the Fort Trumbull neighborhood, condemning the homes of anyone who wouldn't sell at its appraised value. Kelo, and other residents who didn't want to move, sued to block the condemnation. They lost, but they fought all the way to the U.S. Supreme Court.
There, the four liberal justices joined with moderate Anthony Kennedy to rule in favor of the developers — the takings were perfectly legal.
The Court cited the redevelopment plan's “comprehensive character” and the politicians' “thorough deliberation.” Justice John Paul Stevens wrote, “The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue.”
The New York Times, long a fan of eminent domain among other big-government tools (after all, the paper had recently scooped up its Times Square property through eminent domain), applauded the ruling as “a setback to the 'property rights' movement,” (note the scare quotes) and explained: “New London's development plan may hurt a few small property owners, who will, in any case, be fully compensated. But many more residents are likely to benefit if the city can shore up its tax base and attract badly needed jobs.”
Phrased that way by a liberal editorial page, and approved by the liberal arm of the Supreme Court, the takings in New London begin to sound like a great progressive victory: government, triumphing over the exploitive notion of “property rights,” helps the many at the expense of a few.
But, New London was really another example of political cronyism and politicians using the might of government in order to benefit well-connected big business at the expense of those poorer and less influential.
Consider that the head of the New London Development Corporation was Claire Gaudiani, who was married to David Burnett, the Pfizer executive who wanted “a nice place to operate.” Pfizer vice president George Milne also sat on the development corporation's board. In the courtroom, former development consultant Jimmy Hicks called Pfizer the “10,000-pound gorilla” in the planning process, and said “the entire municipal development plan — it was related back to Pfizer.”
So Pfizer got its loot – free land, special tax breaks, and government-funded clean-up of the neighborhood (including clearing out the unsightly neighbors) – and the area prepared for economic “rejuvenation,” as Justice Stevens put it.
It didn't work out that way.
The Fort Trumbull neighborhood Pfizer had bulldozed today consists only of “weeds, glass, bricks, pieces of pipe and shingle splinters,” according to the Associated Press. Nobody has built the high-rise hotel or the luxury condos the city's planners had envisioned. The credit crunch and housing collapse took the air of out of that grand plan.
And Pfizer's sparkling R&D facility that was supposed to anchor the city's “rejuvenation?” It's being shuttered as a cost-saving measure following Pfizer's merger with Wyeth. Some of the 1,400 jobs there will move across the river to Groton. Some will be terminated.
The best-laid plans of central planners, it seems, have once again gone awry-unless you look at it from Pfizer's perspective.
The Hartford Courant reports Pfizer may sell the building and the land, which it got for nearly nothing. Or it may lease it out. So, the drug giant still gets the profits from the government's taking. But for New London? No more R&D jobs. No development of Fort Trumbull. Just some rubble where families once lived.
Timothy P. Carney is The Washington Examiner's Lobbying Editor, His K Street column appears on Wednesdays.