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The Civic Price of Courting Corporations

A Commentary By Froma Harrop

Thursday, November 19, 2009

Amtrak riders passing through New London, Conn., can catch an odd sight in an otherwise picturesque New England setting: a fancy corporate center standing next to a street grid emptied of nearly all its buildings. This used to be the Fort Trumbull neighborhood, a working class enclave that would have been largely forgotten had it not been central to a controversial 2005 U.S. Supreme Court ruling on eminent domain -- the government's right to take private property for public use.

New London had wanted to replace the area's weathered cottages and auto-body shops with a cityscape more amenable to the corporate types at the new Pfizer research park. The city bought some of the properties and seized those whose owners refused to sell.

The old neighborhood is now gone, and soon Pfizer will be too. The multinational drug company just announced plans to close its New London facility. It expects to complete the withdrawal by 2011, just when its tax deal with the city runs out. So much for those pretty architectural drawings of high-end condos, restaurants, offices and marina.

How many American cities and towns have turned themselves inside out to attract and keep the big corporation? And how many later learned that their heroic efforts to please went largely unreciprocated? What municipal leaders often see as their economic salvation the corporation regards as but one piece on a global chessboard.

New London extended Pfizer a handsome deal whereby the company would pay taxes on only 20 percent of its property's assessed value for 10 years. (Other local taxpayers made up the difference.) The company received a $5 million grant for engineering work.

Fort Trumbull had long lived with the smells from a nearby sewage treatment plant, but the city fixed that for Pfizer. The neighbors' ability to share the sweeter air was short-lived, due to the $75 million plan to turn their area into a waterfront district for fancier folk.

The Fifth Amendment of the Constitution lets government seize private property for public purposes -- such as roads or military bases -- as long as owners are fairly compensated. But the definition of public use had been expanded to include giving condemned property to other private owners in the name of economic development. In its famous 1981 Poletown decision, the Michigan Supreme Court permitted Detroit to condemn an old neighborhood for a General Motors factory.

The Fort Trumbull property owners and their supporters asked the Supreme Court to stop that practice. Some of the holdouts had not cared for the city's offer. Then there were old-timers, such as 86-year-old Wilhelmina Dery, who wanted to die in the house where she was born. No price was right for her. To the distress of many, the justices decided against the property owners. And what a bittersweet victory that's become for the city.

Some in New London have comforted themselves with the thought that even if Pfizer empties its building, the company still has to pay tax on the property. They should know that when Pfizer closed a campus in Ann Arbor, Mich., two years ago, it promptly asked the city to cut its tax assessment in half. It eventually sold the complex to the University of Michigan, which as an educational institution pays no real-estate taxes.

New London remains blessed by fine old architecture, a waterfront setting and a choice location between New York and Boston. It will reinvent itself. In the meantime, it must live with this huge irony: Two years hence, the auto-body shops banished from Fort Trumbull would have been employing more people in New London than the pharmaceuticals giant they were sacrificed for.

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