Monday, February 5, 2007

Turning eminent domain targets into shareholders? ...

   Eminent domain continues to be the land use issue that most often galvanizes public opinion.  In lieu of forbidding government from using its power for the purpose of economic development, how else could the law be made “fairer” to landowners whose property is taken?  Professors Amnon Lahavi and Amir N. Licht have recently published a proposal that addresses one of the most commonly cited justifications for such eminent domain –- the “holdout” who stymies the “assembly” of a large private development project.      

   Under the proposal of Lahavi and Licht, a landowner whose property is taken for economic development would be given the option of accepting shares in a specially created development corporation that would assemble the development project. 

   While this proposal would likely give affected landowners more money than they might get in a typical fair market value determination –- a goal of many proposed adjustments to eminent domain law –- it seems to do less to address the absolute “rights” issue that seems to bother so many Americans viscerally.

Rockefellercenter    Here’s one historical anecdote on the supposed “assembly” problem for development projects.  As explained in Daniel Okrent’s immensely entertaining "Great Fortune: The Epic of Rockefeller Center," the Rockefellers were faced with stubborn holdouts (in the Great Depression!) to their big plan for midtown Manhattan.  Their solution?  They simply built around the holdouts.  The result?  The most acclaimed urban business development in American history.

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