Out of Control Policy Blog

Economic development reconsidered

Planners, council members and mayors often see cities as an extension of their living rooms. Don't like something? Move it and bring in something else.

But now the federal courts may make it tougher for them to do that. Two cases take another look at the use of tax incentives and eminent domain:

On Sept. 28, the U. S. Supreme Court agreed to hear the case of Kelo v. City of New London. The court will consider the Constitution's Fifth Amendment limits on the power of eminent domain, the legal process used by governments to acquire private property for various purposes after paying the property owner. The "public use" clause of the amendment states "...nor shall private property be taken for public use without just compensation."

The City of New London, Conn. exercised its eminent domain power to condemn several residential properties in order to allow a mixture of office, recreational facilities and hotels to be built.

At issue in the case is whether the eminent domain power can be used as a means of increasing the tax base to improve the local economy.
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The second case, Cuno v. DaimlerChrysler, was decided in September by the U. S. Court of Appeals for the 6th Circuit. That case held that Ohio's use of certain tax credits designed to lure DaimlerChrysler to the Toledo area was a violation of the Constitution's "dormant" commerce clause.

The whole story is here.

Ted Balaker is Producer


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