Eminent
Domain Outrage in Connecticut
A struggling town made a big bet on a big company — and got
left holding the bag.
By William Fulton / January 2010 / Governing
Magazine
There has been no more notorious economic development effort
in America in recent years
than the campaign by New London, Connecticut, to persuade the pharmaceutical giant Pfizer
to relocate in and revitalize the city's blighted Fort Trumbull
neighborhood. The New London-Pfizer deal gave rise to an infamous
eminent-domain case, turned the whole question of eminent domain into a
national political issue, and gave aggressive urban redevelopment efforts all
over the country a black eye.
Now, however, the worst has happened in New London. Less than a decade after spending
$300 million to build a big R&D plant along the Thames River,
Pfizer is pulling out. And New London is forced not only to ask itself what it
got for its money but also to ponder what options a city has when it lays all
its bets on one company, and the company is gone after less than a decade.
Downsizing in the wake of a merger with Wyeth
Pharmaceuticals, Pfizer is closing the New London
facility and consolidating its research and development across the river, in Groton. New London will
be left with an empty Pfizer building and the mostly vacant Fort Trumbull
neighborhood nearby, which was never redeveloped as the city had hoped.
New London and the state of Connecticut spent, by one
reporter's count, $160 million on the Pfizer deal. And the full cost isn't in
yet. The state and the city will continue to pay 80 percent of Pfizer's
property taxes for two more years.
From Pfizer's point of view, the retrenchment to Groton makes sense. The
facility there is only seven miles away by car. From the region's point of
view, Pfizer's move is about as soft a blow as one can imagine. Some people
will be laid off, but most will simply travel to work on the east side of the Thames River
rather than the west side. Pfizer has been operating in Groton for more than 60 years. But from the
standpoint of New London's
local government and fiscal condition, it's an enormous blow.
Bringing Pfizer in — even at considerable cost — did make
some sense in the beginning. A faded 19th-century city surrounded by seaside
affluence, New London
had reason to hope that spending money and political effort to direct
investment to older parts of the city might revive them. Certainly nothing else
had solved the problem.
So New London
delivered an old carpet factory to Pfizer. At least partially at Pfizer's
request, the city condemned most of the adjacent working-class neighborhood
around Fort Trumbull in hopes of attracting
ancillary development. Suzanne Kelo, a resident of
the neighborhood whose house was condemned as part of the project, sued on the
grounds that taking a citizen's property in this manner for private
development, rather than public use, was an improper exercise of governmental
authority. The city defended its actions all the way to the Supreme Court, and
ultimately prevailed, but the decision was so unpopular among New London residents that local leaders were
reluctant to use their newly won power.
What did New London
buy with all this money, hassle and bad publicity? Is it possible that the whole
exercise somehow laid a foundation for long-term prosperity? That's a hard case
to make.
Unlike other locales that attract and later lose a plant, New London did not get a
skilled new labor force or a chain of suppliers. Those were already present because
Pfizer had been across the river in Groton
for decades. Nor did New London ever get the
"urban village" that it was expecting to create around Fort Trumbull,
which could have attracted other investment. Pfizer wanted the urban village,
but it doesn't exist, partly because of the city's caution in the wake of the Kelo controversy.
Just about the only thing New London has left for its money
and effort is the Pfizer building itself — which is still owned, at least for
the moment, by Pfizer. "Basically, our economy lost a thousand jobs, but
we still have a building," Councilman Robert Pero
told one newspaper reporter. Then he added, "I don't know who's going to
be looking for a building like that in this economy."
It's always a tough call in economic development whether to
invest in existing economic infrastructure or go after the home run with the
big company that can turn your town around. New London went for the home run. That was
understandable; the city had been on the skids for decades and Pfizer represented
a quick victory. In the end, however, the New
London story reaffirms what may be the most important
lesson in economic development: The measure of success is not in the company
you attract but what you've got when the company leaves.
Continued at …. http://www.governing.com/column/eminent-domain-outrage-connecticut