Build it, and Cash Will Come: A Look at Eminent Domain

Our governments, whether state, local, or federal, have the ability provided by law to acquire private property. The name of this action is called eminent domain. These two words can usually sends shockwaves through any neighborhood, no matter the socioeconomic profile. Simply put, developers endorse it if convenient; private property owners loathe it for obvious reasons; and for public officials, it can be a means to an end that may be politically motivated. Sometimes, eminent domain is put to good use, especially in dilapidated areas with few, if any owners.

Usually, governments are required to compensate private owners who have been subject to eminent domain by providing them a fair market value of whatever has been acquired, be it a house, or backyard. A prerequisite to acquisition is that the government must make a strong case that the property is blighted-which essentially means that it does not meet standards or enacted codes.

Eminent domain is certainly a scary statute to wrap your mind around. Your first immediate thought may be “How is the government able to take something that I own?” Well, the intent (as I interpret it) is that the sacrifice of the few is worth the benefit of the many. It’s exercised to provide a benefit for the public, otherwise known as a public good. Good examples of public goods are parks and roads.

There is a lot of concern about this as it stands. First, how are you sure that your government will give you an appropriate market value. I could bring in 100 real estate appraisers to examine a property. The results of each appraisal can vary tremendously.

Secondly, it’s been a major tool to knock down barriers in the urban planning universe. Most of the things we take for granted each day have been a result of eminent domain. For New Yorkers, how do you think the Brooklyn-Queens Expressway came to be? You don’t think there was a predetermined strip of land that existed for the construction of the highway, do you? Few New Yorkers today know of Rober Moses, the Master Builder who built New York City as we know it today. New York City was congested before the rise of Moses. I urge you to read how his aggressive methods in reshaped the city.

Thirdly, the intent and interpretation of eminent domain has been stretched, and many would argue that such stretching goes beyond original intent. Remember, eminent domain was used to provide a public good that everyone can use. Increasingly, local governments have exercised their clauses in search of increasing tax revenue and its respective base. In other words, the local city would render your property blighted, acquire your home, knock it down, and then contract with a developer that would build relatively more expensive properties. The question is: does tax revenue constitute as a public good. Apparently so, according to the Supreme Court (Kelo vs New London).

Here lies the problem. It relatively easy to project the use of a highway, or how many people would benefit from a park. But governments are notoriously inaccurate at choosing “winners” and “losers” in any industry. That’s economics 101. There is no sure bet that a government can 1) successfully assess the value of a property, and 2) accurately project the tax base based on such acquisitions. This is problematic. It begs the question of why the local governments decided to raze existing properties.

Many communities face battles against eminent domain, but they’re voices are barely heard. Few people know of the tactics used by Columbia University to acquire large properties in West Harlem, or now dubiously called Manhattanville. Eminent domain was used to displace residents and businesses in a roughly 5 block radius. Brooklynites are excited about the Nets coming to Brooklyn. I wonder if they were equally excited about how the Atlantic Yards were acquired to lay the foundation for the Barclays Center.

Do you see where I’m going? Many of us are enthused about a new building, facility, or structure that will probably improve our standard of living. But, at times, we fail to consider the expense of enjoying these benefits. Do you consider who had to move or those who may have been ultimately inconvenienced? Or do we live for the moment and say “This is great for me”…. until the process used to give you this benefit adversely affects you?

Should eminent domain still exist?