A Simple Solution for Eminent Domain
The Supreme Court’s puzzlingly odious decision on eminent domain allows governments to condemn private property in the name of the public good, and then turn that property over to private developers who can use the land to generate more tax revenue.
While it’s not likely, on its face, the decision means that the government can seize your home and put a Starbucks on it.The concept of eminent domain was tricky enough when it was limited to public use projects. But extending it to private development is even more dubious.
So here’s a simple solution that might make eminent domain more palatable in all instances: double the market value for any property condemned in the name of eminent domain.
Currently, owners of property taken by eminent domain are paid market value. This is paltry remuneration for a home or business owner who is usually given 90 days to evacuate. For starters, who’s to say what market value is these days. Here in Southern California, houses in prime neighborhoods are known to inspire bidding wars that push their selling price as much as $100,000 over asking.
For another, many property owners do not want to move at all. The costs of breaking up neighborhoods, finding new places to live or do business, and moving at a time that may not be convenient cannot be measured in dollars.
Also, there is tax creep. In California and many other states in the country, property tax is based on the sales price of a home. A house that was purchased in 1980 for $200,000 may now be worth more than $1 million, but the taxes are probably still only around $4,000 a year. But even if the owner is paid $1 million to get out of the way for a football stadium, he will have to spend that $1 million to get a house of equal value. And the taxes on that house will be more than $10,000 a year.
Doubling the market value of condemned property solves these problems. If a project is so important to the government that it has to force people from their homes and businesses, it should be profitable enough to afford twice the payouts. If there isn’t that kind of money in the development budget, it’s not worth doing. This would be an excellent deterrent to using eminent domain willy-nilly.
Property owners are satisfied as well, since the additional dollars makes up for the inconvenience of having to move on short notice and pay more in taxes. If the feds offered me “market value” for my house or business, I’d be angry about it. But if they offered double market value, I’d have no regrets.
While it’s not likely, on its face, the decision means that the government can seize your home and put a Starbucks on it.The concept of eminent domain was tricky enough when it was limited to public use projects. But extending it to private development is even more dubious.
So here’s a simple solution that might make eminent domain more palatable in all instances: double the market value for any property condemned in the name of eminent domain.
Currently, owners of property taken by eminent domain are paid market value. This is paltry remuneration for a home or business owner who is usually given 90 days to evacuate. For starters, who’s to say what market value is these days. Here in Southern California, houses in prime neighborhoods are known to inspire bidding wars that push their selling price as much as $100,000 over asking.
For another, many property owners do not want to move at all. The costs of breaking up neighborhoods, finding new places to live or do business, and moving at a time that may not be convenient cannot be measured in dollars.
Also, there is tax creep. In California and many other states in the country, property tax is based on the sales price of a home. A house that was purchased in 1980 for $200,000 may now be worth more than $1 million, but the taxes are probably still only around $4,000 a year. But even if the owner is paid $1 million to get out of the way for a football stadium, he will have to spend that $1 million to get a house of equal value. And the taxes on that house will be more than $10,000 a year.
Doubling the market value of condemned property solves these problems. If a project is so important to the government that it has to force people from their homes and businesses, it should be profitable enough to afford twice the payouts. If there isn’t that kind of money in the development budget, it’s not worth doing. This would be an excellent deterrent to using eminent domain willy-nilly.
Property owners are satisfied as well, since the additional dollars makes up for the inconvenience of having to move on short notice and pay more in taxes. If the feds offered me “market value” for my house or business, I’d be angry about it. But if they offered double market value, I’d have no regrets.
posted by John Rosenthal @ 9:39 AM
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