Using eminent domain to blight neighborhoods

by Stephen Smith

The Weekly Standard has a comprehensive and compelling piece of investigative reporting on Columbia University’s attempt to acquire 17 acres in the heart of the Manhattanville section, north of its Morningside campus. The tale is a classic example of eminent domain abuse – the university worked hand-in-glove with the government to designate the area as blighted and eligible for eminent domain action, and the university’s lawyers pushed the limits of rational argument so far and yet look like they’ll probably come out on top.

But perhaps more importantly in this process of acquiring the necessary Manhattanville land on which to build its gleaming new Campus upon a Hill (and under which to build a mammoth garage complex) is not the explicit use of eminent domain, but rather the threat of the land being taken by force. Whereas Columbia’s initial land acquisitions before the expansion plans were made public were probably not made under duress, as time went on, Columbia’s plans became known, and, as a holdout landlord’s leasing agent put it: “At some point along the line, with all of these concerns, the knowledge that Columbia University can or will invoke eminent domain has caused [ground floor retail renters] to seek out alternative space arrangements.” This is a phenomenon that affects all negotiations with the government and big institutions like Columbia – and, post–Kelo, even private buyers – and which makes it very difficult to be sure that the owner didn’t sell for less than they’d have liked (or, indeed, might not have wanted to sell at any price).

As it is, the land that Columbia has already acquired – 70% of what it wants – is largely vacant and most definitely more “blighted” than the land it wants to buy, however the relevant (and irrelevant) acronymed planning agencies made sure not to recognize any of their own studies that come to that obvious conclusion. So while the school is gathering all the land it wants, the buildings are vacant and the neighborhood is deteriorating. And even once it gets what it wants, the university’s own plans admit that they have not decided what they will build on some of the land, meaning even more years of blight.

Unfortunately, the practice of taking land via eminent domain or otherwise restricting use has a long and illustrious history of not working out too well in the end. In the 1926 landmark Supreme Court Case Village of Euclid vs. Ambler Realty Co. that validated zoning codes as constitutional, the justices dismissed as “mere speculation” the plaintiff’s argument that the restrictions aimed at keeping out industrial development would lower the property’s value. Obviously this mere speculation turned out to be right, because the property didn’t find a buyer until some two decades later, when the city relented, and the land has been used for industrial purposes ever since.

In the most recent land use decision handed down by the Supreme Court, Kelo vs. City of New London in 2005, the justices’ decision has also shown itself to be clearly detrimental with respect to the specific property in question. Not two years after the would-be developer succeeded in wresting the holdouts’ property from them, the proposed development has fallen flat on its face, and there are no plans to develop the vacant properties.

In my own hometown of Bryn Mawr, a suburb of Philadelphia, the eponymous “non-profit” hospital fought a protracted battle to acquire a good chunk of prime surrounding property (which would be even more valuable under the hospital’s desired zoning designation), and while it never used eminent domain, the specter of it led people to sell their properties where they otherwise wouldn’t have. Unsurprisingly, the Bryn Mawr Hospital’s plans for developing the newly-acquired property seem to have stalled. Of the lots, one had a few houses that were turned into a parking lot that was supposed to replace a different parking lot which was to be developed, but that development never materialized, so now instead of a full parking lot and a house, there’s a full parking lot and an empty parking lot. The other lot was a block of row homes, some of the few affordable property left in the area, and they were razed to the ground and now an unused grassy field stands in their wake.

But despite the constant disappointments in eminent domain and zoning outcomes, the courts and local governments don’t seem to have learned the most fundamental rule of economics: private actors are better at determining the most efficient use of productive inputs than public ones like land use and eminent domain boards.

This post was written by Stephen Smith, who writes for his own blog called Rationalitate.