What is still open is what, exactly, constitutes fair compensation? If I have a $100,000 home (on the lower side for non-slums in my area) and the government offers me $125,000 for my home, is that fair compensation? Let’s assume you still come out way ahead on the deal (moving costs, commissions, etc.). On the surface, yeah, you made out with more than the property was worth. But once it’s re-zoned for commercial use, and in conjunction with all of your neighbors’ properties, let’s say your lot is worth $500,000, and this is what Wal-Mart is going to pay for your lot to the city. Does that $125,000 suddenly sound like a fair payment?
Note: please don’t argue the points above here in GQ; that’s used to illustrate the fact that we still don’t know what constitutes fair payment in the courts. Yeah, you can site precedent, but that’s not what the case was about!
A couple of years ago the Mexican Federal Government wanted to expand the Mexico City airport (and give it a much needed facelift). The government was going to pay a very fair amount to the peasant farmers that occupied the expansion area, and move them to new, wet, fertile lands. Rather than going through the court system, they raised arms and used violence to not leave their lands. The government capitulated, and to my knowledge no one involved is in prison (armed revolt!). So Mexico City is still served by a non-expanding, outdated, piece of crap airport because the federal government was unable to use eminent domain (there were political reasons for their wimpiness that I won’t go into), and this will negatively impact the economy of the region and the nation.
The above is the kind of crap you see when there’s no effective eminent domain (whatever the reason).
I’m curious as to whether there’s any precedent for compensation to neighbors of new developments siezed under eminent domain. If I’m in a $300,000 house (nice place in my area), and a Wal-Mart moves in next door, then my property values are going to plunge. Wal-Marts bring traffic, poor people, litter, noise, dirt, pollution, prostitution, gambling, and drugs with them. Now in order to get away from all of this crap, I’m going to have to sell my house for $150,000, because no one will pay market value to live so close to a Wal-Mart. This low-ball price will scare the neighbors, too, and so now everyone has lost a fortune on their houses, and the beautiful $300,000 neighborhood has become a lower class neighborhood. Now if the municipality had sold out to Nieman Marcus or Marshall Fields, the above scenarious wouldn’t be as likely to happen. And yes, I know I went a little overboard with some of what Wal-Mart brings with it – remember its for illustrative purposes only.