Outside the Beltway

Outside the Beltway

Eminent Domain and ‘Fair Market Value’

James Joyner
2

Jim Henley argues, in defense of the position that ascertaining “fair market value” to a person forced to sell their property by the state,

[A]s a matter of justice the victim of a forced sale is entitled to an inconvenience premium. My house is “worth” a certain amount of money. But it’s not currently worth it to the Henley family to move for that price. If it were, we’d have the house on the market right now. The victims of eminent domain, abusive or otherwise, are people who have already made a decision, by default or direction, not to sell their property.

Quite so. I would argue, to, in light of Kelo, that the amount of said premium is variable based on the public purpose claimed. A lone holdout should not be allowed to hold society hostage when it needs to provide a public good like a road. On the other hand, a strip mall developer should certainly pay through the nose for the privilege of forcing someone off his land.

Of course, I think Kelo is immoral and plainly unconstitutional, but that’s a different post.

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2 responses to “Eminent Domain and ‘Fair Market Value’”

  1. donsurber Avatar
    donsurber

    Good point. Kelo is not a referendum on eminent domain. Fair market value is appropriate for land for a project designed for a greater public purpose than use as a family home, office building, farm, etc.

  2. yetanotherjohn Avatar
    yetanotherjohn

    They recently changed the power lines running through our neighborhood (we bought the property knowing it had the easement). We aren’t talking about the power into the neighborhood, but the really high voltage power lines meant to transport energy across a substantial distance.

    They had a request to move the position of one of the towers, so it would not be as visible from the road. The change would be technically possible, but would require the resulting line between the two towers to be longer. In a strong wind, the lines could be blown to overhang our and several other people’s property about 50′ above the ground. The power company wanted to purchase the ‘aerial rights’ on a strip of land running along the easement, about 20′ wide starting 40′ in the air and continuing to the sky. They would be able to trim the tops of trees that encroached into this space, but not to cut down the trees. I could not erect a tower on my property that would intrude into that space, but I could happily build one to 39′ and 11 31/32″. The lines themselves would only enter the space if the wind was blowing at a very high speed (I forget exactly but it was about 60 MPH or greater).

    The offer was $500 to agree to enter negotiations, a further $500 if all other property owners involved agreed to enter negotiations and they would then pay me the pro rata share of the assessed value of the land (minus the house) for the area they would over top. So if the property (minus the house) was worth $10,000 and the corridor 40′ in the air would overlap 10% of the land, then I would get $1,000 (numbers just used for example). The negotiations would be around accepting the survey of the land covered and the valuation of the land minus the house. If the negotiations fell through, then they would have the right to proceed with eminent domain proceedings to take the aerial easement.

    This seemed to me to be a reasonable approach for the utility to gain easement rights. You get something for just agreeing to negotiate. You get something further if all your affected neighbors also agree. They laid out what they considered to be a ‘fair price’ which essentially paid you in full for the affected land, but left you will almost all enjoyment. Given that they would have order two towers at considerable expense (each tower cost over $100K), they would only use the eminent domain proceedings if everyone had entered into negotiation and then weren’t being reasonable. I suspect that if I had tried to move another $10,000 value from the house to the land in negotiations, they would have agreed. It would only be if I tried to take a valuation position that could not stand up at all in an eminent domain proceedings that they would have gone to court (and paid in legal fees much more than my trying to slip an extra $10K into the value of the land).

    We got the first check, but not all neighbors agreed to enter negotiations. But the experience to me was an imminently reasonable one for how a utility or other such organization should try to acquire private rights.

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