Eminent Domain

[Renegade]

Eminent domain is the power of government to take private property. Recognizing its potential for abuse, the Framers of the U.S. and N.J. constitutions expressly provided that eminent domain can only be exercised for a “public use,” which, traditionally, meant a road or public school. Over the years, however, courts have abdicated their constitutional duty to restrict eminent domain to genuine public uses. Now, local governments, like the City of Long Branch, regularly take their citizens’ homes and simply give them to influential developers that use the land for their own private profit. As is the case in Long Branch, private developers typically compensate the City for using eminent domain. Cities like Long Branch in effect “rent out” this fundamental government power to the highest bidder.

Long Branch Homeowners Take Fight Against Eminent Domain Abuse to Appeals Court

When the government can sieze property from a private party to give it to another privaate under the pretext of "the public good" clearly they have gone too far. Abuse such as this is why we clearly need property rights enshrined in our Charter.

[Riverwind]

When the government can sieze property from a private party to give it to another privaate under the pretext of "the public good" clearly they have gone too far. Abuse such as this is why we clearly need property rights enshrined in our Charter.

I would agree if such a clause applied only to land directly expropriated by gov't. My fear is such a clause would quickly be extended to require compensation for 'lost future profits' every time the gov't changes a law or regulation. This would hamstring the gov't and make it prohibitively expensive to change anything.

That said, I think would be possible to draft a property rights clause with language that clearly indicates that it should not be extended beyond the original intent of the authors.

[August1991]

This recent debate in the US seems to come from a landmark US Supreme Court decision in 2005.

Wikipedia has a good article on the case:

Kelo v. City of New London, 545 U.S. 469 (2005)[1], was a landmark case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another to further economic development.

Wikipedia

BTW, in Canada, we use the term "expropriation" for what Americans call "eminent domain".

My own feeling is that property should go to the use where it has highest value and the Court should encourage that.

Good thread and interesting question.

[kimmy]

Here in scenic Edmonton, I believe some houses were expropriated for a Light Rail Transit corridor along 114th street between 76th (?) and 61st (?) avenues, for the much-needed extension of the rail line south from the University. I'm not sure how or when this was accomplished; I'm not even 100% sure that homes had to be removed to make room for the rail line. However, I do believe that if the city expropriated homes for this purpose, it was the right thing to do... I approve of the idea that there is some mechanism that allows the public to obtain land when it's necessary for the greater good. The people forced to sell had better receive at least fair market value (or perhaps higher, due to the inconvenience of being forced to leave).

I guess in an abstract sort of way, one could argue that an expensive new housing development serves the greater good too... when the new development is complete, the resulting property taxes will presumably be much higher, giving the city more revenue, allowing the city to perhaps improve services or reduce taxes.

However, I'm not fond of the idea that somebody could be compelled to sell their home just because somebody else has the money to make them do so. The LRT extension, or similar projects, I see as being of such major importance to the community as to justify it. A marginal boost in revenue (and for a city of any significant size, even a large housing development is only going to yield a marginal boost, in a big picture sense) to me doesn't justify evicting people from their homes whether they're compensated or not.

If the city is acting in my name by using its legal means to evict the family down the street and the old lady and the barely-making-ends-meet young couple next door, then I want to know what *I* get out of it. And if the only answer they have is "well, the resulting revenue will knock a 85 cents off next year's property tax assessment!" then I don't find that particularly compelling.

-k

[Liam]

I think there ought to be a distinction made between a legitimate and direct public good (someone mentioned the taking of properties for the extension of a light rail system) and an indirect public benefit (the New Haven case). The New Haven case was appalling -- the city sought to evict homeowners in a down-at-heels neighborhood so that a private developer could build a shopping center (or something). The city argued that the increased tax revenue the developed land would generate was a public good allowing them to use the eminent domain process.

I remember after the New Haven decision several critics launched a campaign to take Justice Souter's home in New Hampshire arguing that they wanted to build a hotel on the land which would generate more income to the town than his existing residence.

[Charles Anthony]

If the city is acting in my name by using its legal means to evict the family down the street and the old lady and the barely-making-ends-meet young couple next door, then I want to know what *I* get out of it. And if the only answer they have is "well, the resulting revenue will knock a 85 cents off next year's property tax assessment!" then I don't find that particularly compelling.

Wait a minute. What will compell you? Is it just a question of "85 cents" is not enough??? What if it was more? Would you be complicit in confiscating your neighbor's property for your own benefit?

[kimmy]

If the city is acting in my name by using its legal means to evict the family down the street and the old lady and the barely-making-ends-meet young couple next door, then I want to know what *I* get out of it. And if the only answer they have is "well, the resulting revenue will knock a 85 cents off next year's property tax assessment!" then I don't find that particularly compelling.

Wait a minute. What will compell you? Is it just a question of "85 cents" is not enough??? What if it was more? Would you be complicit in confiscating your neighbor's property for your own benefit?

As I mentioned earlier, what I'd find compelling is something that's of tangiable benefit to a significant portion of the community. The example of building the LRT corridor, for instance. If some old coot on the required route says "I've lived in this house for 40 years and I'm not moving," what do you do? Scrap the project? Something's got to give, and given the choice between the city's transportation needs and future growth, or someone's sentimental attachment to a piece of property, I have to choose the needs of the community at large.

-k

[Drea]

My own feeling is that property should go to the use where it has highest value and the Court should encourage that.

Do you own your own home August?

What if I want your property to build a highrise?

Your house may only fetch $300,000 but if I buy (force you to sell) your property I can build and sell 20 condos for $150,000 each!

I win! Because my idea for your land has it with the "highest value" and the court should encourage me to force you to sell your property to make way for the "highest value".

Still think all property should go to the use where it has the "highest value'? Or would you rather keep the home you worked hard for?

Land should only ever be expropriated for public use. A road, an overpass, a park, whatever. But not private use such as a condo complex or office building.

[Renegade]

I think there ought to be a distinction made between a legitimate and direct public good (someone mentioned the taking of properties for the extension of a light rail system) and an indirect public benefit (the New Haven case). The New Haven case was appalling -- the city sought to evict homeowners in a down-at-heels neighborhood so that a private developer could build a shopping center (or something). The city argued that the increased tax revenue the developed land would generate was a public good allowing them to use the eminent domain process.

I remember after the New Haven decision several critics launched a campaign to take Justice Souter's home in New Hampshire arguing that they wanted to build a hotel on the land which would generate more income to the town than his existing residence.

Liam, I agree with you. If no distinction is made, the power of government is virtually unchecked in its ability to confiscate assets for what it deems is the public good.

There really should be a clear definition on what property is eligible for expropriation, and what is acceptable "public good". For example is land the only property which can be expropriated? Should a government be able to expropriate your car if it deems that others can best use the car for car-pooling and thus is in the public good?

[Renegade]

As I mentioned earlier, what I'd find compelling is something that's of tangiable benefit to a significant portion of the community. The example of building the LRT corridor, for instance. If some old coot on the required route says "I've lived in this house for 40 years and I'm not moving," what do you do? Scrap the project? Something's got to give, and given the choice between the city's transportation needs and future growth, or someone's sentimental attachment to a piece of property, I have to choose the needs of the community at large.

-k

kimmy, your earlier statement does not restrict the tangible benfit to the community to simply infrastructure projects. I would read your earlier statement as indicating that if there was a monetary benefit to the community, such as putting up expensive houses where there were cheap houses, that would be an acceptable use, so long as the gain was sufficient.

Do you not see that when a government does this it is an egregious violation of property rights? The property rights are violated even when the property is confiscated for infrastructure projects, but in that case, I can't see any other solution.

[kimmy]

My own feeling is that property should go to the use where it has highest value and the Court should encourage that.

Do you own your own home August?

What if I want your property to build a highrise?

Your house may only fetch $300,000 but if I buy (force you to sell) your property I can build and sell 20 condos for $150,000 each!

I win! Because my idea for your land has it with the "highest value" and the court should encourage me to force you to sell your property to make way for the "highest value".

Still think all property should go to the use where it has the "highest value'? Or would you rather keep the home you worked hard for?

Land should only ever be expropriated for public use. A road, an overpass, a park, whatever. But not private use such as a condo complex or office building.

Well, in your example, it's quite possible that *everybody* wins (except August, perhaps.)

You've replaced one expensive house with more affordable housing for 20 families. The city is able to collect 10 times the property tax. The building undoubtably delivers better per-unit heating efficiency and lower per-unit costs of delivering utilities than August's single-family dwelling.

In your example, the higher market value does happen to coincide with what would generally be considered the greater social good.

Of course, it's easy to come up with an example where the opposite happens. Suppose there's a building with 10 $150,000 units and somebody wants to bulldoze it and build a single home worth $3 million.

-k

[Charles Anthony]

As I mentioned earlier, what I'd find compelling is something that's of tangiable benefit to a significant portion of the community.

I was right. You are only after the money. More money in your pocket means good policy -- screw the loser who pays. Sounds great.

How about everybody in your city ganging up on you and robbing you blind and dividing up the spoils. I vote for it so long as I get some of the share.

If some old coot on the required route says "I've lived in this house for 40 years and I'm not moving," what do you do? Scrap the project?

Yes, I do.

Something's got to give,

Yes: the victim of theft has to give.

[kimmy]

kimmy, your earlier statement does not restrict the tangible benfit to the community to simply infrastructure projects. I would read your earlier statement as indicating that if there was a monetary benefit to the community, such as putting up expensive houses where there were cheap houses, that would be an acceptable use, so long as the gain was sufficient.

My earlier statement poses the argument that I'm sure August will make later (more elegantly, no doubt) which is that the market can be a very efficient arbiter of what is the best use of an asset.

Since I'm already fooling around with imaginary real-estate as if it were Sim City (Kim City?) let's make another imaginary street in Kim City. Say you've got a block that's got some crappy slum apartments near downtown. Over the past decade or so, changing traffic patterns and demographics and economic growth and so-on have turned this into a prime location. Except it still has slum apartments on it. Real estate developers are willing to buy the property at a price that's far higher than the value of the slum apartments.

What will they do with that land-- parkade? shopping plaza? business offices? newer houses? Does it even matter? The fact that they believe there's profit to be made reflects, in effect, that society appears to have a need for the service or product they intend to provide at that location.

Of course I recognize that there are social values that the market doesn't put a price on, which is why I can't support expropriation of property whenever the market says it would be convenient to do so.

The other thing is, it's not really even necessary. The property taxes on those slum apartments would rise to a point that the owner can't make a profit providing crap housing on that property, and sell the land or convert it to more profitable use anyway.

Do you not see that when a government does this it is an egregious violation of property rights? The property rights are violated even when the property is confiscated for infrastructure projects, but in that case, I can't see any other solution.

I tend to agree, actually. Peoples' right to their homes is one of those social values that market forces don't take into account. I generally wouldn't want the city to go around strong-arming people for the sake of profit. And, it's probably not even necessary. If valuable land is being used for purposes that just aren't valuable, the property taxes should rectify the situation.

-k

[kimmy]

As I mentioned earlier, what I'd find compelling is something that's of tangiable benefit to a significant portion of the community.

I was right. You are only after the money. More money in your pocket means good policy -- screw the loser who pays. Sounds great.

How about everybody in your city ganging up on you and robbing you blind and dividing up the spoils. I vote for it so long as I get some of the share.

How'd we get from "tangiable benefit to a significant portion of the community" to "you're only after the money"??

I don't see any talk of robbery... I'm sure that whoever is having their property expropriated is being very well-compensated for their inconvenience.

If some old coot on the required route says "I've lived in this house for 40 years and I'm not moving," what do you do? Scrap the project?

Yes, I do.

If you'd scrap a necessary project like the LRT extension because somebody didn't want to move, then I'm glad you're not the mayor of my town.

Something's got to give,

Yes: the victim of theft has to give.

Don't worry, grandma is going to be well compensated for her sorrow, but make no mistake: if it's a choice between the needs of the city or grandma's attachment to her home, grandma has got to come second.

-k

[Renegade]

My earlier statement poses the argument that I'm sure August will make later (more elegantly, no doubt) which is that the market can be a very efficient arbiter of what is the best use of an asset.

Since I'm already fooling around with imaginary real-estate as if it were Sim City (Kim City?) let's make another imaginary street in Kim City. Say you've got a block that's got some crappy slum apartments near downtown. Over the past decade or so, changing traffic patterns and demographics and economic growth and so-on have turned this into a prime location. Except it still has slum apartments on it. Real estate developers are willing to buy the property at a price that's far higher than the value of the slum apartments.

What will they do with that land-- parkade? shopping plaza? business offices? newer houses? Does it even matter? The fact that they believe there's profit to be made reflects, in effect, that society appears to have a need for the service or product they intend to provide at that location.

Of course I recognize that there are social values that the market doesn't put a price on, which is why I can't support expropriation of property whenever the market says it would be convenient to do so.

The other thing is, it's not really even necessary. The property taxes on those slum apartments would rise to a point that the owner can't make a profit providing crap housing on that property, and sell the land or convert it to more profitable use anyway.

You are exactly correct. There are other mechanisms for enabling best use of the property. If there is a better use of the property, the market will value its price accordingly, and give the existing residents a financial incentive to dispose of the property toward the better use.

All this to say that expropriation in this case is not a societal necessity. Just let the market work its magic!!!

[Charles Anthony]

How about everybody in your city ganging up on you and robbing you blind and dividing up the spoils. I vote for it so long as I get some of the share.

How'd we get from "tangiable benefit to a significant portion of the community" to "you're only after the money"??

-- by your own admission. You define things to legalize theft of somebody else's property. My example of everybody ganging up on you matches your "tangible benefit" yadda yadda.

So.... what do you think of my example???

I don't see any talk of robbery...

I do.

I'm sure that whoever is having their property expropriated is being very well-compensated for their inconvenience.

You are sure??? Congratulations. I blindly trust all of the bureaucrats too.

This should be in the Are You A Thief? thread.

[August1991]

My own feeling is that property should go to the use where it has highest value and the Court should encourage that.

Do you own your own home August?

What if I want your property to build a highrise?

Your house may only fetch $300,000 but if I buy (force you to sell) your property I can build and sell 20 condos for $150,000 each!

I win! Because my idea for your land has it with the "highest value" and the court should encourage me to force you to sell your property to make way for the "highest value".

Still think all property should go to the use where it has the "highest value'? Or would you rather keep the home you worked hard for?

If the developer can sell the condos for $3 million, then maybe I should negotiate a higher selling price than $300,000 for my house. If I sell it for $500,000 then I'll be happy and my property will go to the use of highest value - building condos. OTOH, if I value my house more than $3 million, then the developer might have a problem since I'll refuse all offers.

A problem arises when I refuse the developer's offers as a negotiating tactic. This is known as the hold-up problem and I'm not certain that expropriation is always the best answer to it.

I can understand why the State itself might employ expropriation (to use Kimmy's LRT example) but not because an LRT is in the "public interest". When a private seller negotiates with the State, the seller knows the State has deep pockets. The deep pockets change the negotiating dynamic and the hold-up problem might become severe.

In any case, the State is always free to tax and expropriation is a form of tax.

What will they do with that land-- parkade? shopping plaza? business offices? newer houses? Does it even matter? The fact that they believe there's profit to be made reflects, in effect, that society appears to have a need for the service or product they intend to provide at that location.

That's a good point. Some municipalities have zoning by-laws which complicate this question.

[kimmy]

How about everybody in your city ganging up on you and robbing you blind and dividing up the spoils. I vote for it so long as I get some of the share.

How'd we get from "tangiable benefit to a significant portion of the community" to "you're only after the money"??

-- by your own admission. You define things to legalize theft of somebody else's property. My example of everybody ganging up on you matches your "tangible benefit" yadda yadda.

I'd have thought that it would be clear from what I've already said what I meant.

So.... what do you think of my example???

Pretty foolish, actually. If you expropriate my property (or somebody who actually has property to expropriate) and "divide up the spoils" among everybody in the community, you don't actually have anything to divide up. Whatever "spoils" you'd be dividing up have already been more than spent in compensating me for the loss of my property.

Moral: don't expropriate somebody's property unless the land is needed for something really good.

I don't see any talk of robbery...

I do.

I'm sure that whoever is having their property expropriated is being very well-compensated for their inconvenience.

You are sure??? Congratulations. I blindly trust all of the bureaucrats too.

You're aware that there are laws? This is city hall we're talking about, not the CIA. They can't make people "disappear".

BC's act, for instance, not only specifies fair market value, but also compensation for expenses, disturbance, and loss of business resulting from relocation.

( http://www.qp.gov.bc.ca/statreg/stat/E/961...1.htm#section31 )

The act indicates that the land valuation is to be done by an independant appraiser, not by bureaucrats. There are legal remedies available if the party feels they haven't been adequately compensated.

So to be honest you're coming across as a paranoid nutjob here.

-k

[Charles Anthony]

There are legal remedies available if the party feels they haven't been adequately compensated.

That gives me consolation. I am now convinced.

[Riverwind]

the developer can sell the condos for $3 million, then maybe I should negotiate a higher selling price than $300,000 for my house.

You are assuming the 'market' value of a property is the same as the 'value' to the person living in it. Most conflicts regarding expropriation occur because the compensation offered does not replace the value the owner derived from the property. For example, a run down house is still a house that provides shelter in a location convenient to the owner. Offering the owner 'fair market value' is not really fair if the amount is too small to allow the owner to purchase another property within the same municipality.

In your example, assume the 'fair market value' was $300K but you need at least $500 to buy another property. The developer refuses to give you 500K and believes that you are making unreasonable demands. The developer then asks the city politicians to expropriate the property for $300K using the 'greater economic value' argument.

That is really the problem that has shown up in the states: gov'ts are being brought into what should be a simple negotiation between private parties. This distorts the market and leads to unfair outcomes that would not occur if the gov't did not use its powers of expropriation. That is why I think that expropriation should never be used for anything other than a public project such as schools, roads, rails, etc.

[Charles Anthony]

Most conflicts regarding expropriation occur because the compensation offered does not replace the value the owner derived from the property.

Are you kidding??? There is a solution to that:

There are legal remedies available if the party feels they haven't been adequately compensated.

Problem solved!

[Michael Hardner]

You know - if we banned development altogether, then we wouldn't even have to worry about this !

Food for thought...

[Riverwind]

There are legal remedies available if the party feels they haven't been adequately compensated.

Problem solved!

I don't think Americans have the same protections that people in BC have.

[August1991]

I largely agree with you Riverwind but I'll add these points.

You are assuming the 'market' value of a property is the same as the 'value' to the person living in it. Most conflicts regarding expropriation occur because the compensation offered does not replace the value the owner derived from the property.

In general, an owner values a property more than the market value because otherwise the owner would sell it. The question is: how much more does the owner value the property? I disagree that most conflicts arise because the owner values the property highly. In the Supreme Court case, it is easy to imagine that the owners were merely holding out for a better deal from Pfizer. The next question is: so what? If the owners want to play that game with Pfizer, let them. Pfizer is always free to go elsewhere.

Walt Disney quietly bought land in Florida before starting to build Walt Disney World. His experience with Disneyland in California taught him that neighbours would benefit from his success. Walt didn't go to the local council and seek ajacent property through "eminent domain". He accepted the situation in Anaheim and proceeded differently in Orlando.

That is really the problem that has shown up in the states: gov'ts are being brought into what should be a simple negotiation between private parties. This distorts the market and leads to unfair outcomes that would not occur if the gov't did not use its powers of expropriation. That is why I think that expropriation should never be used for anything other than a public project such as schools, roads, rails, etc.

I agree the market should be left alone in general. Fairness really isn't the issue. If local councils do the bidding for private buyers, there's no end to the complex negotiations this will invite. I would expect that the Supreme Court will revise this decision in the future because it leads to wasteful political games and litigation.

Nevertheless, there are instances where expropriation might make sense. I recall a five star private hotel in Moscow with a dilapidated small apartment building directly in front of the main entrance. Expropriation (or bribes) were the only solution.

But public works are not carte blanche for expropriation. When a homeowner refuses to accept anything less than $2 million for their small, ordinary bungalow, let the local council refuse the offer and build the garbage dump across the street. IOW, people can often privately negotiate these deals.

[Michael Hardner]

I don't think Americans have the same protections that people in BC have.

This idea (precept ? thought pattern?) has been used in Ontario recently to justify Toronto's failed 'Times Square' concept (precept ? thought pattern? ) that was to have been built near the Eaton Centre.

The city evicted a bunch of small businesses for the purpose of selling the land to a big movie chain and other businesses that have since pulled out - leaving a large and embarassing hole in the wall.

The idea of expropriation was really brought to the fore by a famous NYC planner named Robert Moses. If you read Robert Caro's famous biography of Moses, The Power Broker, there's a description of how RM snuck the right for the state of NY to expropriate land into a bill that became law.

A few days later, some wealthy socialites were relaxing outside their Long Island mansions, when they noticed some surveyors working on their properties. They sent their butler to inquire as to what they were doing, and he returned to say "sir, they say they're surveying the new expressway"...