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The Fifth Amendment and most state constitu-tions prohibit government from condemning pri- vate property except for a “public use.” Traditionally,that has forbidden most condemnations that trans-fer property from one private owner to another.In recent years, however, many state courtshave read “public use” more broadly to allow government to transfer property from one pri- vate owner to another simply because the latter isexpected to make a greater contribution to thelocal economy. The most notorious of these deci-sions was the 1981
 Poletown
decision, in whichthe Michigan Supreme Court allowed the City of Detroit to uproot some 4,200 people in order tomake way for a General Motors plant.But last summer the Michigan SupremeCourt overturned
 Poletown
, just after theConnecticut Supreme Court had relied on thatprecedent to uphold economic development tak-ings in the case of 
 Kelo v. City of New London
.Shortly thereafter, the U.S. Supreme Courtagreed to hear the appeal of the property owners.If the Court decides in favor of the homeowners,the resulting decision will constrain economicdevelopment condemnations nationwide.Federal and state courts should ban econom-ic development takings. Such takings are usually the product of collusion between large and pow-erful interests and government officials againstcomparatively powerless local residents. They generally produce far more costs than benefits,as the
 Poletown
case dramatically demonstrates.Finally, the economic development rationale ren-ders nearly all property rights insecure because itcan justify virtually any taking that benefits a pri- vate business interest.
 Robin Hood in Reverse
The Case against Economic Development Takings
by Ilya Somin
_____________________________________________________________________________________________________
 Ilya Somin is assistant professor of law at the George Mason University School of Law. He was the author of an ami-cus brief for the Institute for Justice and the Mackinac Center for Public Policy in
County of Wayne v. Hathcock
and is the author of an amicus brief for Jane Jacobs in
Kelo v. City of New London
.
Executive Summary 
No. 535February 22, 2005
Routing 
 
Introduction
Recent court decisions have rekindled thelongstanding debate over whether governmentcan condemn private property and transfer itto new private owners for the sole purpose of promoting “economic development.” Both theFifth Amendment to the federal Constitutionand nearly all state constitutions contain a “public use clause.”
1
By implication, suchclauses prohibit government from taking pri- vate property, even when compensation is paidto the owner, except for a “
 public 
use.” But forsome time the U.S. Supreme Court and many state courts have allowed that restriction onthe condemnation power to atrophy. In 1984,in the leading case of 
 Hawaii Housing Authority v. Midkiff 
, the Supreme Court held that condem-nations and private-to-private transfers areacceptable under the public use provision of the takings clause as long as they are “rational-ly related to a conceivable public purpose.”
2
 Asa result of 
 Midkiff 
and similar decisions in many state courts, local governments have been ableto undertake so-called “economic develop-ment takings”—transfers from one owner toanother, justified simply on the ground thatthe new owner is expected to make a greatercontribution to the local economy. The eco-nomic development rationale has allowed theuse of eminent domain in a much wider rangeof cases than the traditional view, which heldthat condemnation is permitted only for a “public use”—only if it leads to public worksprojects such as roads or bridges or, at the very least, paves the way for public utilities, such aspower lines used by all.Thus, a recent treatise written by two well-known scholars concludes that “nearly allcourts have settled on a broader understand-ing [of public use] that requires only that thetaking yield some public benefit or advan-tage.”
3
That statement was not entirely accu-rate even at the time it was written, as somestate supreme courts continue to follow a more restrictive approach to “public use.”
4
 Yet for a time it did reflect the dominant view.More recently, however, the public useissue has been reopened. In particular, lessthan a year ago, in
County of Wayne v. Hathcock
,
5
the Michigan Supreme Court over-ruled
 Poletown Neighborhood Council v. City of  Detroit 
,
6
the most notorious of the decisions justifying economic development takings.Shortly thereafter, the U.S. Supreme Courtdecided to review the Connecticut SupremeCourt’s decision in
 Kelo v. City of New London
,
7
a case upholding the constitutionality of eco-nomic development takings under the federalConstitution’s takings clause. Unlike
 Hathcock
,decided under Michigan’s state constitution,
 Kelo
raises the prospect that economic devel-opment takings might be banned or restrict-ed nationwide.For more than 20 years,
 Poletown
stood asboth the most infamous symbol of eminentdomain abuse and a precedent justifyingnearly unlimited power to condemn privateproperty.
8
 As one scholar of the subject put it,“To many observers of differing political view-points, the
 Poletown
case was a poster child forexcessive condemnation.”
9
 Poletown
held thatcondemnations transferring property fromone private party to another satisfied the“public use” requirement even if the only claimed public benefit was that of “bolster-[ing] the economy.”
10
While it was not thefirst decision upholding so-called “economicdevelopment” takings,
11
 Poletown
was by farthe most widely publicized and notorious. Itsnotoriety stemmed from the massive scaleand seeming callousness of Detroit’s use of eminent domain: destroying an entire neigh-borhood and condemning the homes of 4,200 people, as well as numerous businesses,churches, and schools, so the land could betransferred to General Motors for the con-struction of a new factory.
12
 Aside from themoral and humanitarian concerns at issue,
 Poletown
raised the fear that if “economicdevelopment” could justify such massive dis-location, it could be used to rationalizealmost any condemnation that benefited a private business in a way that might “bolsterthe economy.”
13
Thus, the Michigan court’s recent deci-sion to overturn
 Poletown
was an important
2
The
 Poletown
court justifieddestroyingan entireneighborhoodand condemningthe homes of 4,200 people, aswell as numerousbusinesses,churches, andschools, so theland could betransferredto GeneralMotors for theconstruction of anew factory.
 
milestone in the history of eminent domainlaw. Moreover,
 Hathcock
and
 Kelo
are closely connected. Decided by the ConnecticutSupreme Court just a few months before the
 Hathcock
opinion was issued,
 Kelo
relied heav-ily on
 Poletown
in justifying its conclusionthat economic development is a valid “publicuse.” The majority opinion in
 Kelo
described
 Poletown
as a “landmark case...[that]illustrates amply how the use of eminentdomain for a development project that bene-fits a private entity nevertheless can rise tothe level of a constitutionally valid publicbenefit.”
14
In addition to those two highly publicizedcases, several lower federal courts and thesupreme courts of Illinois and SouthCarolina have recently invalidated or severely restricted the economic development ration-ale for takings.
15
Eight state supreme courtsnow categorically forbid economic develop-ment takings,
16
and several others, at the very least, seek to restrict them.
17
But the battle isfar from over, even if the judicial tide is now starting to run against economic develop-ment takings.This study argues that courts should baneconomic development takings. A categoricalban is the best solution to the problems cre-ated by 
 Poletown
and other such decisions.Several of 
 Poletown
’s most serious flaws per-sist in takings decisions in other states—flawsfound in
 Kelo
itself. At the same time, it isessential to recognize that a ban of the kindthe
 Hathcock
court fashioned is not a panacea for all abuses of the power of eminentdomain on behalf of private interests.The first part of this study uses the
 Poletown
decision as an exemplar of the flawsof economic development takings generally.Such condemnations allow politically power-ful interest groups to “capture” the condem-nation process for the purpose of enrichingthemselves at the expense of the poor andpolitically weak. While economic develop-ment takings are not the only condemna-tions subject to this kind of abuse, they areespecially vulnerable to it because “economicdevelopment” can justify almost any con-demnation that transfers property to a com-mercial enterprise.Several other aspects of economic devel-opment takings also exacerbate the danger of abuse, including the failure to require thenew owners of condemned property to actu-ally provide the economic benefits that sup-posedly justify condemnation in the firstplace, and the refusal of courts to considerthe social and economic costs of condemna-tion as well as the claimed benefits.The
 Poletown
majority was not completely oblivious to such dangers, and it sought tomitigate them by requiring “heightenedscrutiny” in cases in which “the condemna-tion power is exercised in a way that benefitsspecific and identifiable private interests.”
18
Unfortunately, the
 Poletown
case itself and 23years of experience since then show that theheightened scrutiny test is not an adequatebulwark against the dangers of economicdevelopment takings, and may in some casesactually exacerbate those risks.The second part of this study shows thateven a categorical ban on economic develop-ment takings is not a comprehensive solu-tion to the underlying problem of eminentdomain abuse. Although
 Hathcock
held that“a generalized economic benefit” is not by itself enough to justify condemnation,
19
itdoes not forbid all condemnations thattransfer private property to other private par-ties. The same is true of similar decisions inother states.The
 Hathcock
court outlined three cate-gories of takings in which private-to-privatetransfers are still permissible: “public necessity of the extreme sort”; cases in which the con-demned property remains subject to “publicoversight” after transfer to a private entity; andsituations in which the condemned property “is selected because of ‘facts of independentpublic significance’” rather than because of the new owner’s uses.
20
Unfortunately, bothlogic and experience in other states show thatthese exceptions, particularly the second andthird, may be vulnerable to some of the samekinds of interest group exploitation as eco-nomic development takings. If not properly 
3
Even a categoricalban on economicdevelopmenttakings is not acomprehensivesolution to theunderlyingproblem of eminent domainabuse.
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