Wednesday, March 29, 2006


"Businesses in a San Ramon redevelopment district are marked with a 'bull's-eye,' a new citizens' group contends -- not only because they are situated in a redevelopment area, but also because the city wants to re-establish eminent domain there.

A city plan to bring eminent domain back to part of north San Ramon has put a 'cloud' over the businesses and reduced their values, said Martinez attorney Scott Jenny, representing Citizens and Businesses of San Ramon Against Eminent Domain.

'Buyers are unwilling to invest in property where the city has placed the bull's-eye of eminent domain aimed straight at it,' Jenny wrote in a letter to the council. 'This cloud of condemnation will artificially decrease the value of the properties and businesses in the redevelopment area.

'Of course, if the property is eventually taken, the city's appraisers will use this decrease in the value of the properties and businesses against the property owners and businesses themselves, paying less for the property taken,' he wrote.

Jenny sent the letter as the City Council on Tuesday night considered amending the city's redevelopment plan to re-establish eminent domain.

The council unanimously approved a resolution that will enable it to formally adopt an ordinance re-establishing eminent domain."

I certainly believe the assertion that buyers are unwilling to invest in property when local government has approved the use of eminent domain "as a last resort" is likely to be true. It may well also be the case that local government may be able to take advantage of this through lower property valuations. I've noted on this blog before that government often seems to use the power of eminent domain as a threat in order to encourage property owners to sell cheaply rather than fight the taking.

I want to ask a bigger question here. If we accept the assertion that the threat of eminent domain reduces the incentive for buyers to invest in the short run, then aren't the same incentives present in the long run as well? With Court opinions such as Kelo, if people begin to think that private property can be taken for virtually any reason, not just for specific public uses, then aren't the mechanisms by which economic prosperity flourishes in our system of political economy significantly impaired?

[Scott Marshall, "Businesses, residents unite to fight eminent domain," Contra Costa Times Wed., Mar. 29, 2006]

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