Eminent Domain: It's necessary but not the only way....

A brief summary of eminent domain's major drawback and a simple solution.

The Supreme Court's recent ruling has many up in arms. Regardless of the ruling, eminent domain has its supporters and detractors, but no one can dispute its necessity. The problem arises in its application and in the determinants of just compensation. Property owners are promised 'fair market value' for their property, and in most cases, they are also compensated for relocation expenses.

What property owners aren't given is compensation on the 'subjective value' or on the 'assembly value' of their property. Subjective value can be construed as part of market value, despite the fact that market value is defined as 'what a willing seller gives to a willing buyer' and well, that doesn't take into consideration the arm twisting that goes on in eminent domain cases. The real tragedy comes with assembly value. Quite simply, an assemblage is vastly more valuable than a bunch of individual parcels. This is where most of eminent domain's inequity occurs.

Property owners have no option to participate in the value increases that redevelopment offers. A simple solution, one that could remove a significant amount of backlash, would be to allow property owners to assemble their parcels under a corporate umbrella and participate in the redevelopment through a public-private partnership. Securitization offers liquidity to those in need of it, while those with a higher risk tolerance may choose to participate in the uptick in value promised from redevelopment.

There are no panacea's, but I believe, simple, common-sense alternatives such as that proposed, can reduce much of the fear, distrust, and inequity in today's eminent domain and redevelopment issues.

Thanks for reading... David