NCPA - National Center for Policy Analysis

SUBSIDY FIASCO: MILLIONS SPENT, HOMES DESTROYED FOR NOTHING

February 4, 2010

Pharmaceutical maker Pfizer is pulling out of New London, Connecticut, where local officials have spent more than $70 million to raze a neighborhood of middle-income homes and small businesses.  The company moved to New London nine years ago after receiving more than $160 million in tax incentives and grants.  Pfizer promised more jobs and higher tax revenues if city officials would turn over to it the Fort Trumbull property, but the 90 acres stand empty.  Throwing salt into the wound is the further announcement Pfizer plans to close its New London research headquarters, moving nearly 1,500 jobs out of town, says Steve Stanek, a research fellow with the Heartland Institute. 

 According to Scott Bullock, an attorney with the Institute for Justice, which represented Suzette Kelo and other property owners in the case known as Kelo v New London, "Pfizer pulling out is the final nail in the coffin of this whole sad story." 

  • Pfizer had persuaded New London officials to use eminent domain to seize the Fort Trumbull neighborhood, adjacent to the company's research facility.
  • The company had plans for a new hotel, upscale condos, and offices on the property.
  • Kelo led a group of property owners in fighting the city's use of eminent domain. In 2005 the Supreme Court ruled 5-4 against the property owners.
  • And now that Pfizer is moving out of New London, the property is going to be abandoned. 

The Kelo case garnered national attention because of its potentially wide-ranging implications.  As then-Justice Sandra Day O'Connor wrote in her dissenting opinion, "The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.  As for the victims, the government now has license to transfer property from those with fewer resources to those with more.  The founders cannot have intended this perverse result." 

The ruling upset so many people that most states have since revised their eminent domain laws to make property seizures more difficult, says Stanek. 

Source: Steve Stanek, "Subsidy Fiasco: Millions Spent, Homes Destroyed for Nothing," Heartland Institute, February 2010.

 

Browse more articles on Government Issues