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What do the Charter Cities Institute likely mean when they refer to long term problems with the use of eminent domain?

by MakoYass 1 min read8th Dec 20195 comments

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Without using eminent domain, a large chunk of the possible future value goes to surrounding land-owners who may have done little or nothing to create that value. It does not seem economically possible to build a city that is cheap to live in without locking the price of land down in some way, at some point. It is not obvious how to do this well, but eminent domain seems to be a necessary component of it. If even fairly rural land starts out pre-speculated, there is no hope, there is a value/livability value that cities cannot ever rise above.

Apparently, the Charter Cities Institute for all their dreams, does not dream of transcending that limit any time soon. They seem to disagree with the use of eminent domain completely

From their FAQ

How do you minimize the risk of charter city developers using eminent domain to secure land?
The Charter Cities Institute will never become involved with a project that takes land from its rightful [weasel words?] owners. Generally, charter cities are decades long projects. As such, we encourage developers to take long term perspectives. While eminent domain might save money in the short run, it delegitimizes the charter city and sets up a host of problems later on.

Does anyone know what they're talking about? A search of their site didn't turn up anything.

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My guess is that they're giving a nod to Kelo v. New London. It was a big supreme court case at the time (2005), when the city of New London tried to use eminent domain to buy up a big chunk of land and then sell it to a private developer. I don't know the details of the case well, but my understanding is that it was a pretty typical case of "urban renewal": government uses eminent domain to buy out a neighborhood full of poor people, kick the poor folks out, and then sells the land over to a private developer to build "higher-class" real estate.

A lot of people are politically opposed to this (for obvious reasons), so presumably the Charter Cities Institute decided to avoid getting entangled in that kind of thing.

The only explanation I can think of, myself, is that they are concerned that using eminent domain would "hurt market confidence" and decrease property prices.

My answer to that would be: Good. Land is reliably overpriced anyway, the land market is not efficient. I'd then refresh my memory of Inadequate Equilibria's argument to that effect (though it may have been specific to houses) and see if it cited anyone.