12/22/2006

George Liebmann - There is another way to settle ‘eminent domain’ debate: National Examiner, 12/15/06

Commentary

By George Liebmann

The recent election has seen states adopt constitutional amendments reversing the recent Kelo decision allowing New London, Conn., to condemn private homes for purposes of development.

That decision was applauded by city officials, and was decried by many conservatives, including some seeking to ban all redistributive government activity.

A dialogue of the deaf, similar to that in the abortion and “gay rights” controversies, is under way: A judicial decision ignites extravagant political responses; arguments are cast as absolutes, and underlying problems are not rationally discussed.

Certainly, cities have not benefitted from “the federal bulldozer.” The condemnation of owner-occupied homes so that land can be handed over to developers is wrong. But it is a fact that inner cities do not spontaneously regenerate.

Because of the splintering of lots and the complication of titles, private land assembly is a difficult process; developers are held to ransom by “hold-outs”; and the line of least resistance is to develop on greenfields elsewhere.

Improving single properties is difficult; vandalism renders it infeasible. Although there is re-gentrification in historic neighborhoods and around harbors, decay is the rule, renewal the exception. Those urging that rights of property and “law and order” are all that is necessary to renewal overlook formidable transaction costs.

Several foreign countries have found a method of renewal that utilizes private developers and that minimizes, though it does not completely eliminate, governmental coercion. The technique is known as “land readjustment” and supplies the basis of re-development in the war-damaged cities of Japan, Korea and Taiwan, and in Kiel, Germany, and Rotterdam, Netherlands.

Under it, a percentage of owners in a city block petition a city council or court for creation of a readjustment district. Unlike the situation with government takings, any owner-occupier can exclude his property. If creation of the district is found reasonable, the properties within it are appraised.

Any owner not wishing to remain in the scheme has the right to be bought out at an appraised value, as in eminent domain. The remaining owners frame a redevelopment plan, give shares in it to a developer, and on completion, receive either their improved property and/or shares in a corporate owner.

The method relieves both developers and municipalities of land acquisition costs, and gives owners, in inner cities typically landlords, absentee investors, or municipalities, an incentive to cooperate.

Although a number of American academics have sought to foster the technique, it has never caught fire here, although there is no reason save unfamiliarity, why it should not. Similar devices have been used to consolidate land parcels in cemeteries and failed recreational developments.

Provided that compensation of dissenters is immediate, there are no constitutional obstacles. When the defenders and foes of Kelo are through screaming at each other and celebrating their victories and mourning their election defeats, they might usefully turn their attention to this moderate and hopeful device.


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