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Wednesday, December 22. 2010

A creative solution to eminent domain conflicts

It's money. At The American. One quote:



In the eminent domain context, the problem is that landowners are not being paid enough. The standard of “just compensation” is usually interpreted as the market value of the property as determined by dueling appraisers. This standard can be unfair, as Loyola Law School Professor Gideon Kanner has long argued. It skimps on costs of relocation and upset, and excludes consideration of damage to businesses, which can considerably outweigh the value of the real estate. Tenants, especially businesses, are often seriously short-changed.


Pay them the real value. Makes sense to me.

Posted by The Barrister in Hot News & Misc. Short Subjects, Our Essays, The Culture, "Culture," Pop Culture and Recreation at 14:04 | Comments (13) | Trackbacks (0)

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How about not grabbing property that isn't needed for the government's legitimate functions? We seem to have all of the military bases, police stations, and roadways that we need.

Let everyone else stay where they are.
#1 John on 2010-12-22 15:18 (Reply)
How about not grabbing property at all.

Yep.. Just that simple..

Last I checked government owned far too much land, which IMAO is ANY land beyond the footprint of government buildings and military installations.
#2 Rob on 2010-12-22 16:18 (Reply)
Governments do need to expand facilities sometimes -- roads, new schools or expansion of existing schools, new facilities as a community expands. Eminent domain does have its legitimate purposes. It should be the last option and it should require "strict scrutiny" as the standard for invoking it.
The Columbia case is offensive because the agency that's after the property is a private-sector university. It's not a government agency at all. If Columbia can't negotiate a deal with the property owners, Columbia should come up with a new facility plan.
#3 Geoff Brown on 2010-12-22 16:31 (Reply)
Land for highways is my pet &^%#*e. Texas seems to buy more land than the immediate need but with a plan in mind. Simpleton states like my Kentucky wait until all the local shills have front run the market and then just buy enough to meet the minimum goals while escrewing (I hope a new werd) the land owners as much as possible with regard to future land values and needs. I presume it is werser in the North East.

And yes I flunked Sandbox tooo...
#4 dorf on 2010-12-22 19:52 (Reply)
Just a thought: How about "just compensation" being the higher of the market value post construction or the current market value? If it's a highway being built, the higher market value will most likely be the current value (legitimate use of eminent domain). If it's a deal like Kelo, the market value will be higher post "land grab" and that should be the compensation. As said above, strict scrutiny is needed.
#5 Dennis on 2010-12-22 20:52 (Reply)
There is no "real value."

Prices don't reflect the value of the property to the owner. It's worth more than the market price to him, or he wouldn't have bought it.

It's worth less than the market price to the seller.

That disagreement is why any voluntary transaction occurs.

What you have to do to make the guy whole is offer him whatever it takes to get him to sell.

Unfortunately the dynamics of that situation don't work.

Second best is restrict takings to very narrow situations, like actual bridges needing to be built, and so forth. Then it falls under bad luck for the land owner, rather than somebody else wanting the property with corrupt state backing.
#6 rhhardin (Link) on 2010-12-22 21:10 (Reply)
There's a case currently in my neighborhood where a new business wants to come in and has a option for 95% of the land they need, but not the prime spot in the corner of two busy streets; a spot that use to be a Jiffylube. The Jiffylube owner thinking he had them all tied up raised his price 400%. When the mayor heard about it he told the business, no problem. "I'm sure we need to widen the turn lane there and after we condemn that site we'll get it for a fair price and sell you what you need." Done deal. Oh and the new guys will pay a heck of lot more in sales taxes than a vacant lube shop does.
#7 Colorado on 2010-12-22 22:19 (Reply)
Comment 7 completely astonishes me. Is he citing this example of government extortion with approval? I hope not, otherwise I hope the next time he owns something valuable, because it is scarce, that some government gives him what the JiffyLube owner got. Any thought at all for the years the JiffyLube owner carried that land, paying taxes, waiting and hoping for an opportunity?

What would you say if the land assembler was a private business? I'm a land assembler. I know just exactly what you'd say. You'd be all lovey-dovey for the JiffyLube dude and all on my back for extortion. And quite right. Why is it different for the government?

What goes around, comes around.
#8 Fred Z on 2010-12-22 22:56 (Reply)
The real value is whatever amount it takes to make the owner voluntarily say yes -- even if he is an unreasonable stick-in-the-mud who holds out for ten times what some realtor says the property is worth.

The only fair rule is not to have eminent domain at all, with possible exceptions for pipes and tunnels if they're far enough underground to let the owner keep using the property as before.
#9 John David Galt on 2010-12-23 15:08 (Reply)
Is he citing this example of government extortion with approval?

I wrote #7 giving no opinion because while the political facts lead to one, the economic facts don't. For the developer and the city, you play the economic system you're given. Jiffylube thought the economics of scarcity, a unique lot, gave them the upper hand, the offsetting government power canceled that out. The use of eminent domain this way may be questionable, but it is a fact of life in the economics of this situation and probably allowable.

This site consists of a large motel site and the smaller Jiffylube site in the prime corner. It is most economically viable as one unit. So any extra the Jiffylube gets in the negotiation really comes out of the value of the motel part, not out of thin air. As a whole it is worth X to the new buyers based on what use they can put it to and how much in mortgage payments they can afford from that use. So Jiffylube isn't just extorting free money from rich developers, they are taking money from the other property, neighboring businesses influenced by the new development and the city for loss of fees, licenses and taxes. The city feels they are protecting those people not directly involved in the negotiation. By giving Jiffylube an unlimited price for its land many people are affected, so where and how should society find equity. Like you said, how you decide that will decide the next situation because what goes around.....
#10 Colorado on 2010-12-23 19:05 (Reply)
Land should be taken via eminent domain only for public use. The actual value of the land should be used but the public should not end up with all ownership rights. The original owner should retain a reversion right. When or if the land is no longer used for a public purpose the land should revert to the original owner (unless the owner waives the reversion whereupon it would be vested in the state). This reversion right should be unassailable or taxable by any entity and should not support litigation of any kind by the government or third parties.

This would take the fun out of the government taking private land to give to other private land owners.
#11 Maddog on 2010-12-23 20:06 (Reply)
I'm not smart enough (or smart enough fast enough) to comment on the reversion idea, but it is interesting. The problem in most of these cases is the "actual value" part. The small site had a minimal value (it has been on the market for years) on its own, but now has more value as part of the adjoining site. And even more value if the cost of litigation is factored in. So, which value is the "actual value". If this deal falls through, it will revert to its minimal value. Courts and appraisers get fairly arbitrary when trying to decide these things. Jiffylube says the actual value is up to them because they own it. The city quietly says that condemnation is probably a bluff to make Jiffylube negotiate more reasonably.

I've found in a debate the two sides break down like this. One side sticks with the general principle (usually the pro side) and the other says the devil is in the details (usually the con side). One side says we can't sacrifice our principles but the other side says but it is going to cause this problem and that problem and probably something else. That is what we have here. The condemnation power is obviously abused but if the solution were simple we'd be there already. I just offer the Jiffylube case as an example.
#11.1 Colorado on 2010-12-24 10:57 (Reply)
Here is a twist on eminent domain and fair payment for land. Thugo Chavez has been expropriating agricultural land in Venezuela without compensation for years. That the expropriated land becomes unproductive is of no importance to Thugo.

Thugo recently announced expropriation of some 40 farms in the South of Lake Maracaibo region. For once, he has been getting some resistance. Roads have been blocked. He has had to call cadenas to stop news about the protests. Cadena= where Thugo takes over the airwaves.

Chucho Melan, a 93 year old farmer who developed his land from jungle over a half century ago, has informed Chavez that he will leave IF he gets a fair price for his land. As Chavez has been expropriating for years without compensation, that would be a small victory.
#12 Gringo on 2010-12-24 01:39 (Reply)

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