Rich, White Property Owners Disproportionately Hurt by Eminent Domain Abuse
Jacob Sullum | June 20, 2007, 12:43pm
Just kidding. A new report from the Institute for Justice finds that residents of areas targeted for private economic development projects that rely on eminent domain are poorer, less educated, and less likely to be white than people in surrounding communities. In 184 areas where the use of eminent domain was approved, the median income was about $19,000, 34 percent of adults had less than a high school diploma, and 58 percent of residents were members of minority groups. The corresponding numbers for nearby neighborhoods were $23,000, 24 percent, and 45 percent, respectively.
Such differences are not only not surprising; they are pretty much inevitable if the criterion for condemning a property is whether it can be put to a "higher use"—i.e., one that generates more tax revenue or creates more jobs. As Justice Sandra Day O'Connor noted in her dissent from the Supreme Court's endorsement of such takings in Kelo v. New London, "extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities." Not to mention the fact that it's easier for developers to force sales when the owners have little political influence and few resources to put up a fight.
Update: Thanks to jh's sharp eye, I've fixed the order of the numbers in the last sentence of the first paragraph.
jh | June 20, 2007, 3:52pm | #
In response to this: "The proposed solution is to eliminate eminent domain. Make the highway department negotiate with the homeowners and offer prices that they will voluntarily accept, rather than saying 'This is the price we're gonna pay you, and you have to take it, even if you value the property at more than what we do.'"
J sub D said: "Nice theory. Let me take a stab at this. There is always, ALWAYS, going to be someone who will not sell at any price, offtimes an old curmudgeon. There are alot of people who will hold on to their property in hopes of getting a better price. The government builds things, constitutionally even. Your propsal would make that extremely expensive if not effectively impossible. The propsal that the government build less makes sense, your proposal would cause the government to build not at all. I find that untenable."
The result of the policy I'm talking about would be similar to what happens when a group of investors proposes buying out the stock of an underperforming company -- the value of the stock shoots up, and other people tend to jump in and start bidding on the company. But, despite this, takeovers happen all the time, and the owners of the company taken over benefit from the transaction. And, despite this requirement to use voluntary transactons to purchase properties, huge multi-property buyouts for big-box stores, factories, etc. happen all the time.
Now imagine if we had a law in place where the government could acquire the stock of a company at whatever price they thought was "fair", and transfer it to another company with better political connections. The shareholders of the company being taken over would get hosed.
As for the whacko holdout problem you note -- have you seen the pictures of the massive regrading project in Seattle around the turn of the century (I believe it was for the Denny Way area)? They had a few of those holdouts, with their properties precariously perched on top of hills of dirt, surrounded by the valley of the project excavations made on the property of the vast majority of homeowners who had sold. Eventually the holdouts caved, and Denny Way got built.
And if we shrink the size of government because it becomes harder and more expensive to build public works projects, making private roadbuilding etc. more competitive, I'll shed few tears.
