Kelo Follow Up

Well looks like the entire town of New London, Conn. is going to get screwed by Pfizer.

“Look what they did,” Mr. Cristofaro said on Thursday. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.”

That sentiment has been echoing around New London since Monday, when Pfizer, the giant drug company, announced it would leave the city just eight years after its arrival led to a debate about urban redevelopment that rumbled through the United States Supreme Court, and reset the boundaries for governments to seize private land for commercial use.

Pfizer said it would pull 1,400 jobs out of New London within two years and move most of them a few miles away to a campus it owns in Groton, Conn., as a cost-cutting measure. It would leave behind the city’s biggest office complex and an adjacent swath of barren land that was cleared of dozens of homes to make room for a hotel, stores and condominiums that were never built.

[…]

After Pfizer completed its $67 billion acquisition of Wyeth, another drug giant, in October, Ms. Power said, “We had a lot of real estate that we had to make strategic decisions about.” She said Pfizer would try to sell or lease its buildings in New London and would “continue to pay our taxes to the city as scheduled.”

The complex is currently assessed at $220 million, said Robert M. Pero, a city councilman who is scheduled to become mayor next month. The company pays tax on 20 percent of that value and the state pays an additional 40 percent, Mr. Pero said. That arrangement is scheduled to end in 2011, around the time Pfizer, which is currently the city’s biggest taxpayer, expects to complete its withdrawal.

“Basically, our economy lost a thousand jobs, but we still have a building,” Mr. Pero said. Then again, he added, “I don’t know who’s going to be looking for a building like that in this economy.”

Basically you suck Mr. Pero. Good job wrecking your town’s economy. Not only has your economy lost thousands of jobs you’ve gone out and wrecked considerale amounts of private property…for nothing. On top of this you’ve spent millions of dollars that could have been spent elsehwere.

Mr. Pero said that he was offended that Pfizer did not notify city officials about the decision before Monday or give them a chance to argue against it or even fully understand it.

Oh the irony. Hmmm how did Ms. Kelo feel?

FILED UNDER: Bureaucracy, Economics and Business, Government, Law and the Courts, US Politics
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Steve Plunk says:

    Don’t blame Pfizer. The responsibility for this mess rests squarely on the shoulders of the city council and the courts. The council overstepped the function of government and eminent domain, the courts failed to rein them in.

    We saw something similar in my town. Gave special treatment to a business only to see the economy change and the business plans change. The key is to never give preferential treatment and to never abuse the power of government.

  2. PD Shaw says:

    Frankly, this problem goes beyond eminent domain. In my home state, there have been large give-aways to companies like Motorola that turned into white elephents.

    But Kelo made a difference. Many states passed laws against it. And I attended a conference this year put on by land-grabbers. Eminent domain has gotten a bad name they wailed. Morale was low. They are afraid that government is afraid to use it and the juries are going to enact a higher price when they do.

  3. sam says:

    I know how she feels:

    Ms. Kelo, a nurse who works in New London and Norwich, Conn., said she was still bitter about the loss of her house, which she sold for $1 to Avner Gregory, a preservationist. Mr. Gregory dismantled the house and moved it across town. It now stands as a bright-pink symbol of the divisive dispute that drew so much attention to New London.

    “In all honesty, I’m not happy about what happened to me,” Ms. Kelo said. But, she added, “With 43 states changing their laws, in that sense I feel we did some good for people across the country.”

    BTW, years ago I worked on a massive multi-volume work on anti-trust. A certain drug company, whose name escapes, had a lot of litigation attached to it for price-fixing. I remarked on this to the author. “Wait,” he said, “until we get to the chapters on Pfizer.”

  4. anjin-san says:

    Well looks like the entire town of New London, Conn. is going to get screwed by Pfizer.

    What kind of a commie are you Steve? Our corporations need the freedom to act as they see fit to pursue profits…

  5. JVB says:

    Lesson learned by greedy, incompetent city council members and courts for future reference? Not a chance. There is no accounting for stupid, greedy council members who actually think they’re obliged to ruin communities and lives with the tripe they pass. And no shortage of judges who can be purchased to go along with them.

  6. Brett says:

    They were that desperate for any potential jobs? You’d think they’d get something in writing in case Pfizer decided to back out, requiring them to pay back what they’d been given in terms of tax exemptions and the like.

  7. PD Shaw says:

    Good point, Brett. Even if one were to defend what New London did, they did it in a stupid manner.

  8. Steve Plunk says:

    Brett and PD,

    Isn’t that the truth. Town officials everywhere are so naive when it comes to these deals. My city in Oregon has two incomplete “public/private partnership” deals. The taxpayers are left out in the cold while the professional staff that brokered the deals moves on. It’s like contracting with minors, they don’t have the where with all to do it right.

  9. Triumph says:

    This is typical of Obama’s America. He does his socialist things and the real Americans get either screwed or hit in a terror attack.

    Thanks, Barack. I’m moving to Switzerland.

  10. mpw says:

    The people that were displaced should get their lots back for free and build new homes to live in.
    mpw

  11. Franklin says:

    How can you *not* blame Pfizer, Plunk? Oh, sure, you could say they were just doing what was in their best interest. Mega-corporations are never to blame, I’m sure. Only the government, right?

    But the city council was *also* doing what was in their best interest. They were attracting jobs to the area and therefore making themselves more re-electable.

    The real problems here are the concept of eminent domain and the stupidity and immorality of preferential tax breaks to corporations. The fact is, we’re living in a plutocracy. Ruled by corporations or government, it makes little difference.

  12. Steve Plunk says:

    Franklin keep in mind Pfizer has no eminent domain power or the power to grant itself tax breaks. The city council entered into this arrangement as naive amateurs. Even the city professional staff failed to get contractual guarantees that would have protected to taxpayers. Our elected leaders serve us and should protect us but too often succumb to the glamor of big money corporations.

    Pfizer, on the other hand, understood it should get the best deal possible from the city and use all legal means to secure the project. Should we fault Pfizer for working within the rules? Should we fault Pfizer for trying to do what’s best for it’s stockholders? When conditions changed Pfizer had a fiduciary responsibility to it’s owners, not the city of New Haven.

    Those council representatives tried to run with the big boys and failed their constituents. They abused the trust given them through the abuse of eminent domain. They failed to secure contracts that would have protected them from the current situation. The blame rests solely on their shoulders.

  13. MarkedMan says:

    Steve Plunk said:

    “The key is to never give preferential treatment and to never abuse the power of government.”

    I agree with his statement, but would have to add: Voters should pay attention and remember longer. From my highly subjective experience, sweetheart deals generally don’t pay off, even if they are just subsidies in the form of tax relief. But politicians love them because they get their name in the paper and get a lot of grateful people who campaign for them. In the end, the voters reward them for exactly this kind of behavior, and more so, punish them if they lose the deal to another community.

  14. Our Paul says:

    I for one do not know why Steve Verdon got his knickers all knotted up about Pfizer and their negotiations with New London. He is a proponent that health insurance companies should be unregulated and allowed to make as much money as possible, why not the same for drug companies?

    Surely he must know that the buidness of buidness is to make money. The more money a buidness makes, the more successful it becomes. And as we know, the largess is spread around, to the stockholders, to the money managers, and of course to the top executive corps. Those are the only folks that count, the community their buidness is located in is of no value, their workers just pieces of the economic puzzle.

    To fully understand the buidness of making money, one has but look what happened to Simon Mattress Co (take it from me, well worth a read). Alternatively the story of Stanley Tools is well worth curling up with by the fireside. (Sorry, our hosts spam filter is such that only 3 links are allowed before you are relegated to never-never land — try “Stanley Tools + Bermuda” in your browser).

    Correspondent Franklin (November 14, 2009 | 09:45 pm) had this to say:

    The fact is, we’re living in a plutocracy. Ruled by corporations or government, it makes little difference.

    I think only a fool or a very committed “free marketer” would argue that since the days of the “Great Bumbler” wealth has precipitously shifted to a small upper class. By definition, a plutocracy.

    Yet I am not sure Franklin comprehends the function of government. Government is us chickens, we the people. Either we manage it, or assuredly the corporations will manage it for their benefit. He ought to spend a few minutes with a recent global BBC poll, to wit:

    And there is very strong support around the world for governments to distribute wealth more evenly. That is backed by majorities in 22 of the 27 countries.

    If there is one issue where a global consensus seems to emerge from the survey it is this: there are majorities almost everywhere wanting government to be more active in regulating business.

    Correspondent Steve Plunk (November 15, 2009 | 12:47 pm) ignoring the population of New London or the way the city was scarred, has no trouble identifying where the fault lies, to wit:

    Should we fault Pfizer for working within the rules? Should we fault Pfizer for trying to do what’s best for it’s stockholders? When conditions changed Pfizer had a fiduciary responsibility to it’s owners, not the city of New Haven.

    Those council representatives … failed to secure contracts that would have protected them from the current situation. The blame rests solely on their shoulders.

    Unfortunately brother Plunk, there were no rules in place to constrain Pfeizer’s negotiations with New London, the company could do what they wished. And guess what, they did! Some folks would ascribe Pfeizer’s behavior to good corporate governance, others to corporate greed, I prefer to view this episode as an example of psychopathy, to wit:

    Psychopathy is a personality disorder whose hallmark is a lack of empathy… “What is missing, in other words, are the very qualities that allow a human being to live in social harmony.”

    If we elevate corporations above the community, if we allow them to look upon their work force as pieces in the money making puzzle, if they can pollute at will, and ravage our natural resources as they see fit, we have lost all…

  15. Steve Verdon says:

    I for one do not know why Steve Verdon got his knickers all knotted up about Pfizer and their negotiations with New London.

    Going to take a wild guess here…cause you are an idiot?