Bill fosters a blight on property rights

This article originally appeared in the Detroit News on June 15, 2001 at

By Donald Kochan / Special to The Detroit News

A bill that would expand the government's power of "eminent domain" -- the power to condemn private property for public use -- far beyond what is allowed under Michigan's Constitution is working its way through the Legislature.

If passed in its current form, the so-called Michigan Blighting Program, sponsored by Rep. Andrew Richner, R-Grosse Pointe Park, would allow local governments to use "the public interest" as an excuse to bestow favors upon private developers.

It would become easier for municipalities to designate a building or lot as "blighting property" -- defined in the bill as having some negative financial impact on adjoining property or on a neighborhood because it is dangerous, vacant, or out of use. While elimination of true "blight" is in the public interest, the bill has a more troubling component: an overly broad conception of blight that municipalities could use to serve special interests.

The bill would allow Michigan municipalities to condemn property not just for public use, as stipulated in the state Constitution, but for the private use of developers. A municipality could deem a property "blighting" with little fear of being overturned in the courts, since the bill specifically provides that judicial review of the designation would be highly deferential. The municipality could then condemn the property, pay "just compensation" and take title away from the property owner.

The bill then specifically authorizes the municipality to turn around and give that title to a private developer if a deal is struck that is "reasonable and valuable." The bill declares that such transfers "constitute the performance of ... essential public purposes and functions," regardless of the uses planned by the private developer.

The legislation allows municipalities to use "blight" as a cover to avoid legal scrutiny for taking property. Although property owners can challenge in court the designation of "blight" by the municipality, their chances of halting the transfer of property to a private developer would be slim, especially after the property is condemned and they no longer hold title.

The Michigan Constitution clearly limits the government's power of eminent domain to condemnation or "taking" of private property for "public use" only. Unfortunately, the Legislature's latest attempt to create broad authority to transfer condemned property to private developers is not without precedent.

In fact, in Poletown Neighborhood Council v. City of Detroit, the Michigan Supreme Court in 1981 upheld as a "public use" the city of Detroit's exercise of eminent domain to acquire a large tract of land to convey to General Motors Corp. for an assembly plant site. The city argued that the condemnation served the economic revitalization interests recognized by the Michigan Legislature in the Economic Development Corporations Act and therefore the condemnation served a "public interest" or a "public purpose," looser phrases now recognized by the courts as synonymous with the constitutional phrase "public use."

The Michigan Supreme Court has later held that the Legislature can deem the condemnation of a property for purposes of redevelopment as serving a "public purpose" and that there is almost no room for courts to question such transfers.

Such a system sets up dangerous incentives. Suppose Company X wants to build a new factory, but there are some old homes in its way. The homeowners refuse to sell, might sell but not in the current real estate market or otherwise demand a price higher than Company A wants to pay. The right to property, after all, includes the right to refuse to sell.

So Company X finds a cheaper way. It uses its political clout to convince the city to designate these properties as unfit or unsafe and therefore "blighting." The city condemns the properties, forces the owners out and grants Company X title, which it can do in exchange for a "reasonable and valuable" return to the municipality, to be determined by city officials.

Two things are certain:
   -- This transaction would cost Company X far less than it would have had to pay to acquire the property on the open market.
   -- Company X would not need to worry about competing developers, because the legislation makes no requirement that the municipality transfer the condemned property to the highest bidder.

There is an incentive for the municipality to abuse condemnation powers in such situations. City officials could curry favor with Company X, and the municipality is likely to bring in significantly more tax revenue than from the previous owners. At the end of the process, the coercive power of eminent domain has been used to kick one private owner out for the mutual benefit of the developer and the municipality.

Private property rights are bound to suffer when the Legislature makes it easier for government to take property and convey it to private special interests -- and declares such transfers essential to public purposes. Blighting the property rights of Michigan citizens is no way to deal with urban blight.

Donald J. Kochan is an adjunct scholar with the Mackinac Center for Public Policy in Midland, Mich., and an associate with the Washington, D.C.based law firm Crowell & Moring LLP. Write letters to The Detroit News, 615 W. Lafayette, Detroit, Mich. 48226, or fax to (313) 222-6417 or send e-mail to