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Taking from the Rich to Give to the Rich - Some Lessons from a Highly Unusual Eminent Domain Case:

This Weekly Standard article discusses an unusual attempt to use eminent domain take from the rich to give to the only slightly less rich:

Ever since the Supreme Court ruled in Kelo v. New London that forcing the sale of private property to promote economic development and broaden tax revenues passed constitutional muster, Americans have read about a steady parade of eminent domain horror stories, typically involving wealthy developers and cash-strapped city councils. But with Deepdale, eminent domain moved from heartbreak to absurdity, as the local mayor kicked around the idea of seizing a plush private golf course and making it "public."

Deepdale is located in the tony village of North Hills, New York, along a strip of Long Island's North Shore known as the Gold Coast. Founded in 1924 by William K. Vanderbilt II, its most famous members have included Presidents Eisenhower and Nixon, as well as New York City mayor Mike Bloomberg and a bevy of celebrities. The club boasts around 200 current members--by invitation only--and gauges the value of its 175-acre property at over $100 million.

Critics like to mock eminent domain abuse as "Robin Hood in reverse"--taking from the poor to benefit the rich. Not so in North Hills, where the fight for Deepdale pitted rich villagers against even richer golfers. Judged by its real estate prices and per capita income, North Hills, a village of about 4,500 residents, ranks among the wealthiest communities in America.

The story of how Deepdale fell into the crosshairs of eminent domain traces back several years, to the tenure of former North Hills mayor John Lentini, a Republican, who served for over a decade. Shortly before his death in 2002, Lentini gave an interview to New York Newsday and gushed over a survey that had listed North Hills as the eighth wealthiest community in the United States. "This is a great community, full of warm people, most of whom are professionals," Lentini said, calling his village "a success story unrivaled in New York State."

Then he divulged his curious strategy for making North Hills even more attractive. "We believe our acquisition of the Deepdale Country Club will be the crown jewel of our municipality and bring us to a new level of North Shore Gold Coast affluence, perhaps bringing us to number one."

As the article documents, the wealthy and politically influential Deepdale members eventually managed to block the condemnation of their club by persuading the New York state legislature to pass a law preventing it. Silly as this story seems, it does raise three important issues about eminent domain:

First, as the article notes, this is a rare case where a local government tried to condemn the property of wealthy and politically powerful owners. The outcome illustrates one of the major reasons why "economic development" takings usually victimize only the poor and politically weak, a point I have emphasized in much of my own work on the subject (e.g. here), and also Justice O'Connor's and Justice Thomas' dissents in Kelo v. City of New London.

Second, because this condemnation would have transferred the golf club to public ownership, it would have been constitutional even under the rule preferred by the Kelo dissenters and by most Kelo critics in academia. Yet, the "public" nature of the new arrangement would have been almost entirely theoretical. The local government planned to make the golf course available only people who were 1) residents of North Hills, and 2) willing to pay hefty membership dues. In effect, the new "public" golf club would have been very similar to a private one (albeit with different membership rules from those imposed by the Deepdale club). This raises the important issue of what to do in cases where "public" ownership of a condemned property is largely a sham for the advancement of narrow private interests, a question that has largely been ignored in federal Public Use jurisprudence, and also by most states. I would argue that at least some such takings should be invalidated because they are not true public uses. But it will often be difficult to draw a clear line between legitimate and illegitimate condemnations in this field.

Finally, it is worth noting the North Hills Mayor's absurd claim that the "acquisition of the Deepdale Country Club will be the crown jewel of our municipality and bring us to a new level of North Shore Gold Coast affluence." This despite the fact that, according to the article linked above, "There are [already] 20 courses within five miles of the village and 51, including 11 public tracks, within 15 miles." Unfortunately, such exaggerated claims of economic benefits from condemnation are all too typical. For reasons I have tried to document in various articles ( e.g. here), local governemnts have strong incentives to present inflated estimates of economic benefits that voters and courts cannot easily expose or challenge.

Jeremy T:
A quick point. If a local government makes an exaggerated claim of economic benefits from condemnation, doesn't it run the risk of making the land appear that much more valuable, and thus raise the price it will have to pay for the land beyond its "true" value?
9.7.2006 11:47pm
Ilya Somin:
A good question, but the answer, in general, is no. Legally speaking, the price paid for condemned land is determined by its "fair market value," which is usually calculated based on the sale price of similar properties in the area and on the basis of other "objective criteria." The government's public relations statements about the benefits of its proposed project rarely if ever factor into judicial calculations of fair market value.
9.8.2006 12:24am
wm13:
Doesn't this story also suggest that the ordinary democratic processes provide adequate protection against abuses of this nature, so that there is no need for unelected and insular judges to start policing the boundaries of "sham" public uses?
9.8.2006 9:20am
GD:
The Reading(Pennsylvania) Country Club was acquired through eminent domain recently (when a developer bought the course for a townhome development). It is now a true muni and a jewel in the rough.

http://tinyurl.com/z4rnj
9.8.2006 10:55am
ShelbyC:

Doesn't this story also suggest that the ordinary democratic processes provide adequate protection against abuses of this nature, so that there is no need for unelected and insular judges to start policing the boundaries of "sham" public uses?


Yeah, if you're rich.
9.8.2006 11:00am
Houston Lawyer:
Perhaps they should condemn the mayor's house and turn it into a public toilet. Where's a mafia hitman when you need one.
9.8.2006 11:24am
Goobermunch:
Houston Lawyer--

That would be quite the feat for the hitman, given the fact that the Mayor, as noted in the article, died in 2002.

--G
9.8.2006 12:45pm
Wild Pegasus (mail) (www):
I think this is what is meant when people say, "The first time as tragedy, the second time as farce."

- Josh
9.8.2006 1:59pm
Ilya Somin:
Doesn't this story also suggest that the ordinary democratic processes provide adequate protection against abuses of this nature, so that there is no need for unelected and insular judges to start policing the boundaries of "sham" public uses?

Only if you are rich and powerful, and have influential friends in the state legislature.
9.8.2006 3:38pm