The Institute for Justice, a non-profit libertarian law firm, has a video and a press release marking the tenth anniversary of the Supreme Court's decision in Kelo v. City of New London, allowing eminent domain seizure of private property for "public use" even if the "public use" was by a private developer. The Institute for Justice press release points out that ten years later, "the land taken through the Kelo ruling to complement the nearby Pfizer facility is home now to nothing more than weeds and feral cats."
Meanwhile, cities continue to struggle with how to award "just compensation" under the Fifth Amendment, especially when the value of land being seized is tied inextricably to the city's own zoning regulations and building permitting process. In today's New York Times, Michael Kimmelman tells the story of eminent domain being used in an attempt to create a park along the East River waterfront in Brooklyn:
Through eminent domain, the city offered $12 million for the [five-acre] rental truck lot. When the owner found a sympathetic judge, the price leapt into the stratosphere, to more than $90 million. The owner of CitiStorage, next door, Norman Brodsky, naturally assumed he had also hit the jackpot. Crain's reported recently that he now wants $500 million for his 11-acre site. If the city won't pony up, his site will cleave the prospective park in two.
Back here on planet Earth, the city will not, and should never, pay that kind of ransom. The good news is that the site is zoned for industrial use, meaning it's unlikely that Mr. Brodsky will find a private buyer who logically crunches the numbers and offers half the asking price. ...
Let's put aside how eminent domain proceedings ended up provoking a settlement that cost taxpayers more than $90 million for a truck rental lot on a decrepit industrial site. The bottom line is that the system is capricious, promotes extortion and often acts against the public interest. While private developers quietly accrue properties to assemble big projects, keeping their intentions secret and upfront costs down, government must act openly, as it should, the upshot often being that landlords can have City Hall over a barrel.
While the Times fears that the city is overpaying for the property it is seizing, the owners of the land may feel like they are being underpaid given what the waterfront land would be worth with residential development rights. At least with eminent domain the taking is clear and visible; with zoning and building restrictions, the value of the property is taken away without any compensation, let alone "just" compensation.
That's not to say that I am against all zoning or all building restrictions; it is just to point out that the government's "taking" can happen in various ways, of which eminent domain is just one.
