Wednesday, January 11, 2006

Garnett on the Political Economy of Eminent Domain

Nicole Stelle Garnett was part of the same panel discussed in my last post, and gave a fascinating talk on compensation and eminent domain practices based on a paper that she has just posted on SSRN.  The title of the paper is What a Strange Place to Put a Church:  The Political Economy of "Just Compensation".  Here's the abstract:

The Supreme Court’s “public use” decision, Kelo v. New London (US 2005), has prompted dozens of proposals to reform eminent domain practices legislatively. Most of these proposals would restrict the use of eminent domain to transfer of property from one private individual to another. Noted legal scholars have proposed, however, compensation-based reforms as a wiser alternative to this prohibitory model. These suggestions flow naturally from the widely accepted belief that the constitutionally mandated fair-market-value compensation may undercompensate owners. This Article argues that the undercompensation problem likely has been overstated because scholars mistakenly have focused on the compensation required by the Constitution, rather than on the actual mechanics of the eminent domain process. Specifically, the Article examines three ways that “Takers” (i.e., non-judicial actors in the eminent domain process) may minimize undercompensation. First, Takers may simply avoid taking high-subjective-value properties. (By way of illustration, I examine evidence that expressway planners dodged Chicago’s urban Catholic churches.) Second, Takers may (and frequently are required to) pay more compensation in the form of “relocation assistance.” Third, during mandatory pre-condemnation negotiations, Takers and property owners may voluntarily settle on above-market compensation. (This part of the Article includes an empirical case study of the compensation paid by St. Joseph County, Indiana to purchase – under threat of eminent domain – several dozen residential properties for a facility to manufacture luxury H2 sport utility vehicles.)

The Article concludes by asking a natural question: If undercompensation is less of a problem than commonly assumed, is eminent domain reform really needed? The final Part argues that there are two problems, unique to takings raising “public use” questions that more money cannot solve: First, high compensation levels may undermine critical political resistance to questionable projects; second, private takings may generate high non-instrumental, dignitary harms that will persist even as compensation increases. These problems weigh in favor of some version of the prohibitory model of eminent domain reform currently dominating legislative debates.

The entire paper is terrific, but the discussion of Chicago's churches and the St. Joseph's County H2 plant are must reading for people interested in takings issues.

Ben Barros

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Tracked on Jan 11, 2006 4:12:00 PM


"evidence that expressway planners dodged Chicago’s urban Catholic churches."

When I lived in Chicago in the late 60s, the locals all said that Illinois licence plate No. 1 belonged to the Archbishop of Chicago and the Governor of Illinois got No. 2. I don't think that the expressway planners were worried about compensation. I think they just recognized a higher power:-)

Posted by: Robert Schwartz | Jan 12, 2006 11:19:51 AM

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