Endgame In New London, or, Another Successful Five-Year Plan

Last decade's business model and this week's evictions

To understand why the last two homeowners in the Fort Trumbull neighborhood of New London, CT are now in the process of being evicted from their homes, consider this: More than half the property in New London generates no tax revenue for the city because it's owned by several colleges (including Connecticut College, the Coast Guard Academy, and Mitchell College), by churches, hospitals, or by the city itself. The Fort Trumbull redevelopment project—in which the city took over 115 lots, forcibly removing 15 homeowners whose fight to remain in their homes has been immortalized in the U.S. Supreme Court decision Kelo v. New London—was designed to address this very problem, and the prospect of increasing the city's property tax revenues was a central factor in the high court's decision to allow the transportation by force of American citizens. As Justice John Paul Stevens wrote in his decision:

The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including—but by no means limited to—new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts.

This week the New London city council voted 5-2 to begin evicting the last of the Fort Trumbull property owners, Susette Kelo and Michael Cristofaro. Barring an unlikely intervention by the state of Connecticut, the Fort Trumbull neighborhood will have been vaporized within 60 to 90 days.

And the only project the New London Development Corporation is currently working on is a National Coast Guard Museum—a public building that will pay no taxes to the city.

All but one of the remaining projects associated with the Fort Trumbull development—the condominiums, the retail shops and restaurants, the hotel half of whose rooms Pfizer, Inc. promised in 1999 to keep permanently filled—are out where the woodbine twineth, vaporware with no visible means of support.

If you want another example (beyond the intrusion on individual rights) of why eminent domain abuse needs to be stopped, New London is in the process of providing it. The city is in the final stages of removing private property owners in the name of a development plan that is nearly ten years old, drafted in an era of post-cold-war base closings, soaring profits for pharmaceutical companies, and a depressed real estate market. That is to say, at a time when the local, state, and national economies were entirely different from what they are today. Pfizer, a private company, has already moved on from its entanglement in the Fort Trumbull mess. The city of New London can't. They broke Fort Trumbull, and now they've bought it.

Activists have made much of the fact that the Kelo case centered on an eminent domain taking for private, rather than public, benefit; and there have been some interesting counterarguments questioning whether there is a legal difference between the two. In the July issue of Reason, the 9th Circuit Court's Judge Alex Kozinski argues that there is not: "What's the difference between taking property for public roads or anything else?" Kozinski asks. "Do only public automobiles travel on public roads? I don't understand why it's a problem. If the government thinks the city will benefit by having a road there instead of having your house so that people can drive their private cars on it, then it has to make that decision. Who owns the road really doesn't matter. What matters is that it makes it easier for other people to get from point A to point B using their private vehicles for private purposes. You could say 'but it's my house and my private purpose is more important than your private purpose.' But we live in a society."

Whatever the legal merits of that argument, there's a strong economic argument against it. "If we throw these people out, there's no financial gain to the city," says Charles Frink, one of the two New London city council members who voted against the evictions this week. "So it's not only immoral, it's irrational."

A 2001 economic impact analysis of the Pfizer/Fort Trumbull project is a hilariously precise and airy projection of how the development would save the city. We're told, for example, that

Upon completion, these developments will directly create 4,174 new jobs in the city, of which 4,172 will be private sector, non- farm jobs. The largest employer will be Pfizer, which will add 2,040 new jobs by 2004. The other large employers will be the office complex, projected to add 1,166 new jobs; the biotech labs, projected at 942 workers; and the hotel, projected to employ 120 workers.

History had other plans. Pfizer, which built a new waterfront research facility in the late nineties as part of the original project, does not disclose how many of those 2,040 jobs were created by 2004 (nor does the New London Development Corporation reveal what those two presumably public-sector farm jobs will be). But the company is not as well positioned to shed its bounty on New London as it was in 1998. Now the world's largest pharmaceutical firm, Pfizer is operating in a business environment that could not be more different than the one it enjoyed in the late nineties, losing money, losing patents, and battling a hostile market.

As a result, the company's enthusiasm for the Fort Trumbull development has cooled, and the controversy surrounding the project has prompted Pfizer to distance itself from the NLDC and disavow any role in shaping the project. This is a considerable mood change from March of 1999, when the company's then-director of research George Milne wrote in a letter to then-NLDC president Claire Gaudiani:

The Fort Trumbull area is integral to our corporate facility and to the plan for the revitalization of New London to a world class standard. The Amended Reuse Plan will provide a waterfront hotel with about 200 rooms, a conference center and physical fitness area, extended-stay residential units and 80 units of housing. We will use the proposed hotel and conference facility as an extension of our facility committing to 100 of those rooms on a daily basis for visiting international staff and other professionals. In addition we require conference space and are exploring a "virtual" Pfizer University to keep our researchers up to date on the most recent breakthroughs in biotechnology. The extended stay housing will provide for researchers who often stay for periods of up to 3-6 months. Year round quality housing is also crucial to recruiting top scientists.

The point here is not to play gotcha with Pfizer but to demonstrate that economic circumstances can change radically in a relatively brief period of time, and while private companies are capable of adapting, governments (and in particular "private-public partnerships") are not. Governments can react, however, as the NLDC is also finding out. The brutality with which the Fort Trumbull residents were removed has shocked the nation, and Connecticut Gov. Jodi M. Rell, a wavering supporter of the homeowners, has a strong disincentive to sink more money—beyond the $15 million that's already going to the Coast Guard museum—into the town of 25,000.

The political fallout in New London itself has been even greater, leading to the council election of Frink and Bill Cornish under the newly formed One New London party. (Frink is a pretty fascinating figure himself: a playwright and composer who made his first foray into politics last year, going door-to-door at the age of 77), and to a continuing boil at city council meetings. "These council members always say they've received hundreds of messages of support that they never disclose," says Cristofaro, one of the two holdout homeowners. "I can tell you, I've gone to every city council meeting for the last year, and there are always at least 15 people who speak against this project, and nobody who speaks in favor of it."

After all this strife, will the Fort Trumbull redevelopment project go bust? Not likely. Government projects have a life of their own, and nobody's going to let waterfront property stand empty for long (at least, not in this market). But then, that's the whole point: Left to their own devices, and spared from this exercise in Ceausescu-style central planning, the Fort Trumbull property owners (several of whose lots, including Kelo's, have never even been included in any of the plans floated for the area) would have been improving the area for the last ten years, instead of fighting for their lives. Property values have increased in New London, as they have almost everywhere in the country. How to capitalize on that? Cristofaro has an idea.

"So far the only thing they've even started to work on is this Coast Guard Museum," he says. "I'm sure I could convert my house into the Eminent Domain Museum and I'd get more visitors."