Private Property Panic

The final bill’s other key provisions weren’t directly related to the Kelo decision. One says that if a property owner challenges a condemnation in favor of a private development and wins, the government must pay the owner’s attorney’s fees. If a property owner wins a challenge involving a public-use project, the court can make the government pay part of the property owner’s fees, in some situations.

The other provision says that if a business is taken under eminent domain, “just compensation” should include not just the market price for its land and buildings but also its “going concern” value; that is, the economic benefit of doing business at its present location. However, this will only apply if the business is destroyed or if there is a “complete taking,” Johnson says.

Coyle says that courts and other state legislatures have tended to shy away from the going-concern issue, “fearing that it’s a bottomless pit, with too many huge potential damage awards.”

In Bed With Developers?

Cities, developers, and other defenders of eminent domain’s use for “public purposes” argue that making restrictions too tight leads to unpleasant consequences. Among them: discouraging urban revival, starving the tax bases of older cities, and encouraging suburban sprawl.

Ryan Companies’ Collins spells out how the sprawl factor could work in practice if new eminent domain laws weaken government power. “Developers will explore projects involving multiple parcels only until they come upon one reluctant seller,” he predicts. “We have only so much time. If we hit a brick wall that seems immovable, we’ll move on. We’ll leave behind areas of core cities that are mostly abandoned but not completely. The consequence will be more development in the exurban fringe.”

Savin doubts it’s that cut-and-dried. “Money clearly is a way to make transactions occur,” he says. “My guess is . . . shrewd developers still will find a way to get transactions done. They’re inventive, persistent, and smart.”