Foxconn project underscores the threat to property rights

July 16, 2018 | By LARRY SALZMAN
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Originally published by The Hill, July 16, 2018.

When President Trump visited rural Wisconsin to see the first phase of construction of a Foxconn electronics manufacturing plant, he called it “an unbelievable plant, like we’ve never seen before.” It is hoped the project will bring thousands of jobs to the area at a cost of $4.5 billion in subsidies and tax breaks. The state says that, assuming all goes well, it will break even on the deal—in about 30 years.

What is more shocking, and less well advertised, is the plan of state and local officials in Wisconsin to use eminent domain to force some homeowners off their property to make way for the plant. This kind of cronyism, through which taxpayer money is used to advance private business interests in what is euphemistically called a “public-private partnership,” has become disturbingly common.

Eminent domain is the government’s power to take land, homes, businesses or other property for public use, when the government pays the owner “just compensation.”Eminent domain got a well-deserved bad name in 2005 in the wake of a U.S. Supreme Court case, Kelo v. New London. The court ruled that the Connecticut city of New London did not violate the Constitution when it took homes and small businesses using eminent domain for the benefit of a private development, promising the development would generate jobs and more tax revenue.

Unlike eminent domain for public use—such as building a school or a road—New London scooped up family homes and businesses to develop a location for the Pfizer pharmaceutical company, along with condos and a hotel. Kicking out homeowners to make way for another private owner sparked national outrage.

One of the good things to come out of that tragic case was legislative reform in several states, including Wisconsin. In 2006, Wisconsin passed a law that made it harder for the government to use eminent domain for so-called economic development projects. Among other things, Wisconsin’s law says eminent domain can’t be used to take one person’s private property for the benefit of another private entity unless the property is first determined to be “blighted.”

The reform was intended to slow down the kind of abuse of eminent domain represented by the Kelo case. Yet, as the Foxconn project demonstrates, eminent domain for private gain is making a comeback.

The government has said it wants to acquire about 1,000 acres of land for this plant. But there are a number of homes that stand in the way, and the owners don’t want to leave.

For example, the Mahoney family in Racine County owns a well-maintained family home on the edge of the project. Even though the plant could be built around them, the government says they must leave. State and local officials think they have found a loophole around Wisconsin’s reform and have threatened the Mahoney family with eminent domain if they don’t sell.

Since the government can’t condemn a home that isn’t blighted—which the Mahoneys’ home is surely not—local officials are rezoning the land on which their home sits as a “business park.” The local government now claims that any residential home no longer conforms with the prevailing zoning. That opportunistic shift makes it possible to redefine virtually any old home, no matter how well maintained, as “blighted.”

The plight of these rural Wisconsinites was foretold in a powerful dissenting opinion in the Kelo case penned by Justice Sandra Day O’Connor. As a result of the ruling, she wrote, “[T]he specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz Carlton, any home with a shopping mall, or any farm with a factory.”

The right to keep the property one has earned is among our most important civil rights. There’s a good chance a court could block the government from taking the homes of the Mahoneys and their neighbors, if they are able to fight. But everyone should wonder: if the government can upend the Mahoneys lives for the benefit of Foxconn, whose home is next?

Larry Salzman is a senior attorney at Pacific Legal Foundation, which litigates constitutional cases involving property rights nationwide.