Tuesday, December 19, 2006

Dana on Reframing the Eminent Domain Debate

David A. Dana (Northwestern University Law School) has posted Reframing the Debate over Eminent Domain Reform on SSRN.  Here's the abstract:

As a purely theoretical matter, we can predict that a flat ban on all exercises of eminent domain will result in some less development in urban areas (poor or not poor) and some more development in exurban or rural areas. We can also predict that a ban on only economic development condemnations (which allows so-called blight or blight removal condemnations to continue as before) will result in some more development in poor urban areas (but not necessarily in urban areas as a whole) and in exurban or rural ones, and less development in suburban areas (at least non-poor suburbs). We can say almost nothing about how much less or how much more. Moreover, even these minimal predictions must be qualified because restrictions on eminent domain may lead localities in fragmented land markets to rely more heavily on alternative means to reduce the costs of land assembly for developers, such as cash and infrastructure subsidies or zoning exceptions, particularly in markets where the status quo ante was imperfect competition among the localities for new development.

The qualitative claims about the nature of the development that will be encouraged or discouraged as a result of eminent domain "reforms" lack both theoretical and empirical support. Stated simply, there is no defensible way to categorize as good or bad, economically viable or non-viable, efficient or inefficient, socially beneficial or socially harmful, the development in urban areas that will be lost as a result of a flat ban on eminent domain or (in poor urban areas at least) that will be gained as a result of a ban on economic development condemnations coupled with continued allowance of blight condemnations. One reason this is so is that the two legal tests for the kinds of "public use" that are sufficient for the exercise of eminent domain - the economic development as public use test and blight removal as public use test - do not necessarily select for "good" new development according to any intelligible criteria of goodness.

In sum, we are left with a rather unsatisfying situation: a lack of any assurance as to whether there will be any net benefits, in terms of more "good" development and less "bad" development, as a result of either of the two eminent domain reform alternatives currently on the political agenda, namely, a flat ban (the Florida approach) or a ban on only economic development condemnations coupled with continued allowance of blight condemnations (the approach in most reforming states). Given this unsatisfying situation, and assuming we do care about poorer urban areas, we need to ask, we should ask: is there a different kind of eminent domain reform for which we would have more, at least some more, assurance that it will produce more good development and less bad development in those areas? The debate over eminent domain reform needs to be re-framed.

Ben Barros

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