September 3, 2011

Kelo Update: Tax Abatements, a Rubbish Heap, and Continued Establishment Press Neglect

KeloHouseMonumentIn June 2005, in its Kelo vs. New London decision, the Supreme Court ruled that the City of New London, Connecticut could condemn and take over private property, including that on which Susette Kelo’s pink house sat, for a “public purpose” (a redevelopment plan worked up by the city’s New London Development Corporation), instead of limiting the Constitution’s Fifth Amendment application to “public use,” as the Founders intended.

The Supreme Court justices who supported the ruling largely justified it on the basis that “The City has carefully formulated an economic development plan that it (the city) believes will provide appreciable benefits to the community, including–but by no means limited to–new jobs and increased tax revenue.” Carefully formulated or not, nothing even remotely positive happened after the ruling until very recently, and nothing even remotely resembling decent national media coverage of post-ruling events has ever occurred.

Until August, in the five years after the final post-ruling showdown, during which Connecticut’s governor essentially had to intervene to keep the city from calling in the bulldozers while the final holdouts were still on their properties in June 2006, nothing has happened. Developers have withdrawn, and Fort Trumbull anchor company Pfizer has left town (a smaller company moved into the facility in a special deal involving — of course — city incentives).

Finally, the city appears to have gotten a developer interested in building condos. Well, sort of, as readers will see. I noted in April, the city was again prepared to offer tax abatements.

On Monday, August 15, as Kathleen Edgecomb at the New London Day reported, the abatement deal was approved, out of which the developers received quite generous tax breaks, even though the city hasn’t seen the details of what the developers wants to do (bolds are mine throughout):

Fort Trumbull housing will get tax breaks in New London
City Council votes for 10 years’ worth; project still pending

The City Council has granted about 10 years of tax breaks to the developers who want to build 80 to 104 units of housing on 6.5 acres in Fort Trumbull.

River Bank Construction will receive the tax breaks on its proposed Village on the Thames, a complex of two-story, wood-frame units connected by garages to be built on four parcels in Fort Trumbull.

The tax breaks were granted under the City and Town Development Act. In 2009, voters narrowly approved the city’s participation in the state program, which provides distressed municipalities with broad powers to try to attract new development, including tax breaks, the issuance of notes and bonds, delegating powers to development agencies and earmarking capital reserve funds.

The River Bank proposal was discussed at a City Council committee meeting earlier this month and passed 5-0. On Monday the full council unanimously approved the resolution without comment.

Under the agreement, during the construction phase of the project, River Bank will pay $1,000 a year in real estate taxes for each unit approved by the Planning & Zoning Commission, up to a maximum of $100,000 a year. The planning commission has yet to approve any plans.

Once the units are occupied, River Bank will be exempt from paying 95 percent of the taxes on rental properties for the first five years. The sixth year, the exemption goes down to 50 percent, and it drops to 25 percent the seventh year.

If any of the units are sold, the exemption will be 70 percent of the taxes for the first year, 60 percent for the second year, 50 percent for the third year, 40 percent for the fourth year and 30 percent for the fifth year.

The housing units at Fort Trumbull were originally going to be condominiums, but because of the economy and the soft housing market, River Bank has said the units will be rentals and sold to individuals when the economy improves.

Michael Joplin, president of the New London Development Corp., which is overseeing the project for the city, said the units will be built to condominium specifications and will be recorded on the land records as condominiums.

So condos that aren’t condos will be recorded as condos. Nice.

The way the Obama administration has messed up the economy in general and deeply depressed the housing market in particular, it’s a pretty safe bet that it will probably be quite a while before said properties, if/when they’re built, go condo at the desired price of $300,000 to $375,000.

A group of city residents tried to overturn Council’s vote, but as the Day noted in a September 1 editorial, that effort appears to have failed because Council’s action was a “resolution” and not a “law.”

Until the plans get approved and construction begins, the city’s enterprising politicians have found a “you can’t make this up” idea for the area, as an unbylined Day item reported on Tuesday August 30 (HT Gideon’s Trumpet via Ricochet via Instapundit; a brief raw footage video is also at the link):

New London officials are allowing city residents to bring tree branches and other vegetation to Fort Trumbull where the city has designated a lot for storm debris.

Gideon, in calling this “The Final Indignity,” said it well:

Connecticut taxpayers have thus been soaked tens of millions of dollars, not just for nothing, but for making things worse — for transforming (what was) a nice local neighborhood into a dump.

Much of the public probably believes that meaningful development occurred after the Kelo ruling. It didn’t happen. As the Castle Coalition has documented in a section of its web site devoted to “Redevelopment Wrecks” containing twenty examples of government eminent-domain debacles, this is not at all an unusual result of supposedly “carefully formulated” plans. The Coalition wryly observes that the city has finally found a “public use” for the area.

It would be nice if the establishment press gave even cursory coverage to the post-ruling failures. It has never happened. It would also be nice if the New London Day would end its near total ban of the word “Kelo,” which has become a virtual four-letter word since the post-ruling final settlement.

As I wrote back in April in a statement which remains even more true given the tax giveaways and the storm debris set-aside:

This outcome makes a complete mockery of the Supreme Court majority’s belief that a “carefully formulated … economic development plan” was ever in place. The press’s five-year lack of coverage makes a mockery of its claim to be interested in meaningful story follow-up.

It’s hard not to conclude that the press is extraordinarily reluctant to expose authoritarian moves that make a government — virtually any government not run by conservatives or Republicans — look bad.

Cross-posted at NewsBusters.org.

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2 Comments

  1. Who owns the establishment press and what are there business interests?

    Comment by Greg — September 4, 2011 @ 11:14 am

  2. #1, what’s more important is what the agendas of the journalists managing the operations are.

    But, while on the topic, the Associated Press is a not-for-profit “cooperative” of its subscribing newspapers, radio stations, TV stations, and Internet outlets. There are no shareholders. It is run by “journalists” from top to bottom. It shows.

    Comment by TBlumer — September 4, 2011 @ 11:37 am

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