Detroit Bulldozed Poletown for a Car Plant and Michigan Took 23 Years to Repent

It takes a court twenty-three years to admit a mistake. That is not a bad turnaround for an institution that measures time in terms, but it is a long wait if your house was one of the mistakes. The story of Poletown is the story of a government that decided a neighborhood was in the way of progress, and of a court that said that was fine, and of the same court, in a later century, saying that it was not.

Let me tell it in order, because the order is the argument. A government can be wrong for a very long time while everybody involved is very sure it is right.

Poletown before the bulldozers

The neighborhood sat on the line between Detroit and the small city of Hamtramck, and it took its name from the Polish immigrants who settled it. By 1980 it was a dense, working-class district of houses, shops, parishes and small businesses, with long-time residents, many of them elderly, and a way of life organized around the church bell and the corner store. It was not wealthy. It was not abandoned. People lived there because they had chosen to, and many had been there for decades.

At that moment, the auto industry was in trouble and Detroit was in worse trouble. General Motors, according to the public accounts of the time, was looking at where to put a new assembly plant, and the city, under Mayor Coleman Young, was desperate not to lose it. The promise was jobs. The city said the plant would employ a very large number of workers, a figure commonly given as about six thousand. The price was land. GM wanted a large site, and the city offered to assemble it by condemnation, using the quick-take procedure that lets a city take title before the dispute over price is resolved.

The scale of the taking is the thing to understand. The site came to about 465 acres, a bit under three-quarters of a square mile. Public accounts of the case describe on the order of thirteen to fifteen hundred homes, several churches, a hospital and well over a hundred small businesses, and several thousand residents, in the range of four thousand. I am giving you a range because accounts vary on the exact figures, and the exact figures are not what matters. What matters is that a whole neighborhood, with its churches and shops, was designated for demolition so that a private corporation could build a factory.

Poletown Neighborhood Council v. City of Detroit

The residents and a neighborhood council sued. The case reached the Michigan Supreme Court, and in 1981 the court ruled for the city in Poletown Neighborhood Council v. City of Detroit. The majority opinion held that the taking served a public purpose, because the plant would alleviate unemployment and revive the economic base of the city, and that the fact that a private company would benefit did not defeat that purpose. In plain English, the court said the primary purpose was public, and the private gain was only incidental.

Think about that sentence the way a lawyer would. Every transfer of land from one owner to another in an economic development scheme has a public rationale, such as jobs or taxes, and a private beneficiary, the firm that gets the land. The test the court used was whether the public benefit predominated. And who decided whether it predominated? Mostly, the same government that wanted the land. A test that asks the condemning authority to certify its own purpose is a test with a very short exam.

One justice would not sign it. Justice James Ryan dissented, and his opinion is the one that history picked up. He argued that the power of eminent domain was being turned from a tool for public uses into a tool to hand one private party's property to another, and that the boundary of "public use" had been erased. He warned that if the promise of jobs and tax revenue was enough, then any business that wanted somebody else's land could present itself as a public benefactor. That dissent sat in the reports for more than two decades like a letter nobody had opened.

What happened after

The neighborhood was demolished. The plant was built. The residents, the churches and the businesses that had been there were gone. Money was paid. Some of the people who left were glad of the price. Others, plainly, were not, and those people are the reason this story is told.

The employment record is where the promise meets the ledger. The plant that rose on the site did employ many people, and it was a real factory with real paychecks. But the roughly six thousand jobs promised were never matched by the headcount, which reports put at about half that when the plant opened in 1985, and the broader fortunes of the auto industry and of Detroit went on to do what they were going to do anyway. I am careful here, because employment at a large plant moves with the market, and nobody can say what would have happened in a different world. The fair statement is narrower. The taking was justified by a forecast. Forecasts are the cheapest thing government buys.

The argument in four numbered steps

Let me argue it the way I would argue any policy.

1. The Fifth Amendment says "public use." The text: "nor shall private property be taken for public use, without just compensation." Two conditions. A government that takes a house and gives it to a corporation has to be able to say the taking was for public use. The word "use" means something. A railroad open to all, a road, a courthouse: the public uses it. A private factory is used by its owner.
2. If "public benefit" is the test, the first clause does no work. Nearly every private enterprise benefits the public somehow. The grocer feeds people, the factory employs them, the developer pays taxes. If any such benefit satisfies the clause, then the clause restrains nothing, and the only protection left is the price.
3. The party who gains from the taking should not be the judge of its purpose. The city, the developer and the court all had a stake in the answer being yes. The people with the largest stake in the answer being no were the ones with the least power. The Founders designed our system to guard against exactly this kind of lopsided deal.
4. The price cannot fix it. Just compensation is fair market value. It is not what a home is worth to the people in it, and it cannot buy back the church their parents were married in.

That fourth point is the one the economists skip. When the government pays "fair market value" for a taking, it is paying what a willing seller would take. By definition, a person who is forced to sell is not a willing seller. The difference between the two is the part of the value that the owner loses and the public never counts.

The strongest case for Poletown

I owe it a fair hearing. The defenders of the 1981 decision had a point. Detroit in 1980 was a city shedding people and industry, and an assembly plant was a real prize, with thousands of jobs that would feed families. A court should hesitate before second-guessing a legislature's judgment about public needs. The land was assembled in a way no private buyer could have managed, because holdouts could have blocked it. Courts had approved redevelopment takings before, including in Berman v. Parker (1954), and the Michigan court was applying a standard that the Supreme Court had said the states could use.

All of that is true, and none of it answers the dissent. Judicial deference is a virtue when the question is policy. It is a vice when the question is whether the government has stepped outside the limit the Constitution drew around it. A court that defers on what the clause means has no further business calling itself the guardian of the clause. And the hard cases are exactly where the guardian is supposed to earn its pay. Easy cases do not need a constitution.

County of Wayne v. Hathcock (2004)

Now the repentance. In the early 2000s Wayne County planned a large business and technology park near Detroit Metropolitan Airport, a project sometimes called the Pinnacle Project, and wanted to use condemnation to acquire land from property owners who did not want to sell. The owners fought. The case went up to the Michigan Supreme Court, and in 2004, in County of Wayne v. Hathcock, the court overruled Poletown.

The court's reasoning went back to the older law of the state. It said that the Poletown decision was a radical departure from long-standing understandings of what "public use" meant, and it read Michigan's constitutional text and history to allow private-to-private transfers only in narrow circumstances. The justices identified situations in which condemnation for a private entity might still be allowed, including cases where the property is a public necessity of the kind that private enterprise cannot provide, such as roads, and cases where the property remains subject to public oversight, and cases where the selection of the particular property is based on public concerns, such as facts of independent public significance, instead of the private interests of the entity that gets it. I am paraphrasing a long opinion, and you should read the opinion itself, but the effect was clear: a promise of jobs and tax revenue was no longer enough.

So the same court that said yes in 1981 said no in 2004. Twenty-three years. That is more than eight thousand days of the old rule in force (23 times 365 is 8,395) and one opinion to end it. Government rarely moves faster than a glacier, but at least a glacier does not hold hearings about it. And a court that overruled a precedent after this long was admitting something important: that precedent is not scripture, and that a decision can be wrong for a generation and still wrong.

Kelo and the aftermath

Poletown did not stay in Michigan. When the U.S. Supreme Court heard Kelo v. City of New London in 2005, the year after Hathcock, the case concerned a taking in Connecticut for an economic development plan, and Poletown was part of the background that the justices on both sides discussed. The majority upheld the taking 5 to 4. The dissents warned that the logic of the decision would let the well-connected use the government to take from the less well-connected. For the full account, see When the City Wants Your Home for a Developer, the Steps to Fight Back, which turns the lessons into steps an owner can take.

The public reaction to Kelo was loud and bipartisan. State after state tightened its eminent domain laws. Michigan went further. In 2006 voters approved an amendment to the state constitution, and the legislature's language, which is in Article X of the state constitution, limits takings for private development. It says in effect that a taking for the purpose of transferring property to a private entity for economic development or an increase in tax revenue is not a public use. The amendment placed the rule that Hathcock had restored into the constitution itself, where a future court cannot simply wave it away. It also strengthened the compensation owners receive in some cases. Read the exact text of Michigan's constitution for the wording, because the details matter, and check it against what I have said.

That is the right order of repair. First the court corrected itself. Then the people wrote the correction into the constitution. That is how self-government is supposed to work when a court makes a mistake, and it is more reliable than hoping that judges will always be right.

The Founders would recognize the problem

The men who wrote the Fifth Amendment had lived under a king and under colonial governors who took what they liked. They had read Locke, who held that men enter society to preserve their property, and Blackstone, who wrote that the law of England held the right of property so sacred that it would not authorize the least violation of it, even for the general good of the whole community, without full compensation. Blackstone's wording is in the Commentaries, and you can find it. James Madison, in the Bill of Rights, put the principle into the supreme law of the country.

The pattern here is not a modern invention. It is the oldest pattern in politics: someone with power wants something that belongs to someone without it, and tells a story about the public good. The story is often sincere. That is what makes it dangerous. The remedy has always been to write down the limits and to give the weak a place to complain.

If you want the Founding account of the right at stake, Madison Wrote That Government Exists to Protect Property of Every Sort reads Madison's essay. For a modern case where the Supreme Court told a county it could not keep the whole value of a home for a small debt, see A 94-Year-Old Lost Her Condo Over a Tax Debt and the Court Said Enough. For the doctrine that opened the federal courthouse to owners, see Knick v. Scott Township Reopened the Federal Courthouse to Landowners.

What Poletown teaches

Three lessons stand out, and I would offer them to any city planner.

First, a promise is not a public use. A forecast of jobs is a hope, not a fact, and a hope should not be allowed to outweigh a title.

Second, the people with the most to lose get the least notice. The residents of a neighborhood do not have lobbyists. The developer does. Any process that is run by the people who will profit is a process that needs an outside check.

Third, courts can fix their own mistakes, but it takes a long time and many people pay for it. Twenty-three years is long. The better rule is the one in the text. If it is written down, and if it is read plainly, there is less room for a clever theory to eat a neighborhood.

And a note for the optimists, because I am one. The correction happened. The court turned around. The people voted. The system, slow and clumsy as it is, worked. That is not a reason to relax. It is a reason to believe that the work is worth doing.

The case in brief

1. In 1981 the Michigan Supreme Court, in Poletown Neighborhood Council v. City of Detroit, let Detroit condemn a neighborhood of homes, churches and businesses so General Motors could build a plant.
2. The Fifth Amendment allows takings only for public use and with just compensation, and a test that treats any economic benefit as a public use leaves the first condition with no work to do.
3. Justice James Ryan's dissent warned that the decision erased the limit, and in County of Wayne v. Hathcock in 2004 the court overruled Poletown after twenty-three years.
4. Kelo in 2005 carried the argument to the nation, and in 2006 Michigan wrote a limit on private-development takings into its constitution.
5. The lesson is that a forecast is not a public use, and the people with the most to lose need an outside check.

What you can do: Read Article X of your own state's constitution on eminent domain, and then read the one statute that defines "blight" or "public use" in your state's code.