• Philadelphia, Pennsylvania, July 4, 1776 – Fifty-six men pledged their lives, fortunes and sacred honor in a Declaration of Independence that told the King of England that the inalienable right to life, liberty and the pursuit of happiness – related to the right inalienable right to property and to seek one’s fortune shall not be infringed upon by the state.

• New York City, December 15, 1791 – The first ten constitutional amendments known as The Bill of Rights, are ratified. The Fifth Amendment states, “No person shall be . . . deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use without just compensation.

• Poletown, Michigan, 1981 – The Michigan Supreme Court authorizes the city of Detroit to use “Eminent Domain” on behalf of General Motors to tear down private homes, schools, churches and hospitals in the name of economic development.

• Norwood, Ohio, June 15, 2004 – Private homes have been declared “blighted/deteriorated” (a wonderful term often associated with Tax Increment Financing) so that a new mall can be developed forcing five home and business owners to move.

• Long Branch, New Jersey, Spring, 2004 – The town is attempting to use similar powers to forcibly take some private homes on the waterfront to build more attractive and expensive condos.

• Detroit, Michigan, July 30, 2004 – The Michigan Surpreme Court, in a unanimous ruling in “County of Wayne v. Hathcock,” reverses its Poletown decision from over two decades ago.

Lesson Plan Notes

The national landscape is littered with these types of decisions. In fact, Arizona, Mississippi, Colorado and others have been or are attempting to use Eminent Domain in the name of economic development.

The most recent case is in New London, Connecticut where an attempt is being made to remove established homeowners for the sake of more lucrative waterfront development. The Connecticut Supreme Court in a 4-3 ruling upheld the city’s right to seize these homes using Eminent Domain. Now, North Carolinians may soon be facing similar situations.

On the ballot this November is Amendment One. If passed, this constitutional amendment will allow cities and counties to sell bonds without so much as a whimper from the taxpayers in that community. The money raised would then be used to develop infrastructure for private development that politicians hope will increase the tax base of that city or county. The difference, or “increment”, between the previous tax value and the current tax value would, in theory, pay for the bonds. That in a nutshell is Tax-Increment Financing (TIFs).

The most serious problem with TIFs goes beyond the development side and ties in not-quite-so-nicely with Eminent Domain. Authorizing local governments to be in the business of economic development means that the pursuit of higher property values for any given segment of the community will be in their primary interest.

Although the Michigan Supreme Court has reversed its Poletown decision, it may be that the remaining hope for private property rights truly rests with the U.S. Supreme Court. As of this writing they are considering taking up the New London case on appeal.

One can only hope that the voters of NC will vote down TIFs this Fall with a resounding “NO” on Amendment One, just as they did in 1982 and 1993. In the meantime we should also hope that the U.S. Supreme Court realizes the true erosion of property rights that governmental complexities have now wrought with tools like TIFs.

Back – to the future

• November 2, 2004 – North Carolina voters, for the third time in 22 years, defeat a constitutional amendment allowing for Tax Increment Financing.

OR

• November 2, 2004 – North Carolina voters pass Amendment One, finally allowing Tax Increment Financing.

• A farm near you – March, 2005 – The city council moved today to condemn farmland for expanding city projects. The Council, exercising its new muscle under the recently passed Amendment One, allowed the long time home of a local family to be included in a new Medical Taxing District. Using the power of Eminent Domain, the council hopes to move forward on this project allowing developers to build a new biotechnology firm.