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[Nicole Garnett (guest-blogging), February 13, 2007 at 3:03pm] Trackbacks
Takers May Minimize Undercompensation by Not Taking High-Value Properties

In yesterday's post, I suggested that a failure to consider the role of non-judicial actors ("Takers") in the eminent domain process may have led legal scholars to overstate the undercompensation problem. A number of the comments following the post assume, incorrectly, that I think that fair-market-value compensation will fully indemnify owners. I agree that a fair-market-value award will often result in undercompensation. What my article argues instead is that scholars mistakenly focus exclusively on the constitutionally mandated measure of damages in an eminent domain action and disregard extra-judicial means of minimizing the undercompensation risk.

Academic discussions tend to assume that there are two ways to minimize the risk of undercompensation. The first is substantive limits on the use of eminent domain. The second is above-market compensation. As I will discuss in my posts tomorrow and Thursday, many owners probably do receive more than the fair market value of their property — because they are entitled to substantial relocation assistance, because they settle on above-market prices during mandatory pre-condemnation negotiations with Takers, or both.

The literature overlooks third way that Takers might minimize uncompensated losses — simply avoid taking properties with high subjective value. The complete lack of attention to this dynamic is unsurprising, but unfortunate. It is unsurprising because the government usually owes a property owner nothing until it takes her property — which is why most of the "takings" literature concentrates on discerning when a taking has occurred, rather than how much is owed once it has. It is unfortunate because the government's plans frequently are flexible: it can pursue policy objectives by various means, and, in the eminent domain context, with different parcels of property.

My article uses a historical case study — the preservation of Catholic churches along Chicago expressways — to explore how Takers can exercise this flexibility to minimize subjective losses. Over two dozen Catholic churches line these expressways. Driving through the city, it is easy to forget that these churches once served as the spiritual and social hearts of neighborhoods now buried under fourteen lanes of concrete. When the expressways were built in the mid-1950s, over two million Catholics lived in the Archdiocese of Chicago, more than half of them in densely populated urban neighborhoods like the ones dissected by these freeways. Yet, while expressways displaced thousands of parishioners, only five Catholic churches were destroyed. Planners assiduously avoided the Archdiocese's four hundred other churches.

At one point, the Department of Public Works announced plans to reroute the Kennedy Expressway through St. Stanislaus Kostka Church and school. This proposal enraged Chicago's Polish Catholics — the Archdiocese's most important ethnic minority. If, as historians argue, the national parish was "the most important Polish-American institution," then St. Stanislaus Kostka was the most important national parish in the most Polish of all American cities. The parish website claims that St. Stanislaus was, at the time, "the largest parish in the United States, if not the world, with 8,000 families, totaling 40,000 people" and that it remains "the mother Catholic Church of Polish parishes." The Polish community quickly organized to oppose the demolition. Cardinal Stritch personally approached the Governor of Illinois, and the expressway was rerouted. The freeway bend around St. Stanislaus is evident on Google earth or any navigation system. (Address for curious readers: 1351 W. Evergreen Ave., Chicago, IL.) According to historian Steven Avella, expressway routes were altered at least three other times to preserve the geographic integrity of parish boundaries.

The fact that highway planners in mid-twentieth century Chicago avoided demolishing Catholic churches is hardly surprising. Neil Komesar has described a "two-force" political model, in which democratic actors are prone to both majoritarian and minoritarian biases, leading to both the "fear of the few" and the "fear of the many." In Chicago, the individuals who rallied to save expressway churches were, in a sense, both the few and the many. Catholics made up a majority of the City's voters, and certainly Democratic voters. The city's powerful Irish Catholic mayor, Richard J. Daley, undoubtedly preferred, when possible, to avoid disrupting the spiritual lives of thousands of co-religionists (who also happened to vote Democratic). Indeed, Mayor Daley was the chair of a Transportation Advisory Group which, in the mid-1960s, issued guidelines indicating that "parish boundaries" should be considered when determining freeway routes.

Majoritarian clout is not the sine qua non of successful political advocacy, however. Another important lesson of the Chicago expressway churches may be that high subjective values may correlate with successful efforts to prevent takings. Subjective attachment provides an incentive to oppose takings and increases the intensity of the opposition. While the episodic nature of physical takings may disadvantage property owners in the political process, public-choice theory also teaches that political actors are particularly responsive to cohesive, well-organized and narrowly-focused coalitions like those that characterized parish-preservation efforts. Just as the subjective value that Catholics attached to parishes undoubtedly increased the intensity of the focus of church-preservation efforts, so also did the affected communities' cohesiveness reduce impediments to organization.

We need to know more about pre-condemnation planning, but the story of Chicago's expressway churches provides an opportunity to reflect whether, and when, political actors can be expected to refrain from the use of eminent domain. Assuming that many Takers will reasonably prefer the path of least resistance, the planning process itself might minimize the risk of undercompensation. It will zero it out, however. Indeed, the political process may have the troubling effect of shifting the problem to disorganized, politically powerless owners. Judicial review and/or above-market compensation is needed to protect them.

guest1234:
yawn. since when is cutting and pasting from one's own law review articles an acceptable blogging strategy?
2.13.2007 4:17pm
Gideon Kanner (mail):
What in the world are you people talking about? What's new or important about a large, well motivated, politically potent group being able to stop a project on its home turf? Have you forgotten the San Francisco "Freeway revolt"? New Yorkers' defeat of Westway through lower Manhattan? South Pasadena's 30-year standoff with CalTrans, keeping the last link of te 710 Freeway from going through that city? The Encino NIMBYs' defeat of the redesign of the badly needed US 101/I-405 freeway interchange? The deletion of the Beverly Hills Freeway? Etc., etc.
Those events and others like them are interesting data points that tell us things about local politics, not about the general problems of eminent domain use and abuse, whether for public or private purposes, and certainly have nothing to do with the prevailing problem of undercompensation.
2.13.2007 6:14pm
byomtov (mail):
since when is cutting and pasting from one's own law review articles an acceptable blogging strategy?

When one wants to disseminate the articles' ideas to a broader audience and possibly receive useful comments?
2.13.2007 6:37pm
Dick Schweitzer (mail):
The shift in your terminology is welcome, but should be noted as such.

Today you say:

"What my article argues instead is that scholars mistakenly focus exclusively on the
constitutionally mandated measure of damages in an eminent domain action and disregard extra-judicial means of minimizing the undercompensation risk."

Yesterday you wrote:

"....constitutionally mandated measure of compensation...," both emphases added

which you specified is Fair Market Value. To which I commented that is not correct, the Constitution specifies "just" compensation. And I went on using the terminology (as you now do) and spoke to just compensation for damages from injuries caused by intentional actions.

s24rrs@aol.com
2.13.2007 9:40pm
Gideon Kanner (mail):
Dick Schweitzer makes a good point. FMV is not compensation, just or otherwise. "Compensation" means that a party has suffered damage or some detriment for which he or she now has to be recompensed. Value or FMV, on the other hand, is what a piece of property is worth in exchange, and may or may not have anything to do with the economic harm suffered by owners who are forcibly displaced from their homes or businesses (in the latter case they usually get nothing -- zero, zip, bobkes, nada). FMV may or may not be compensation. It depends on the facts into which courts do not inquire unless doing so works to the condemnors' advantage.
As Frankfurter explained, courts picked FMV as the measure of compensation because they thought that was a convenient way of doing it. It may be convenient but it isn't compensation and it certainly isn't just in many cases. As for the Uniform Relocation Act, see my earlier comments. It simply does not provide full compensation and in some states it does not apply at all to takings that are not funded with federal money. If memory serves, at least one state has held that condemnees lack standing to complain about its non-enforcement because only the feds can do that. The URA certainly does not put the owners in the same economic or "pecuniary" condition, as the court put it, that they would have been in had there been no condemnation of their property -- which is supposed to be the compensability theory according to SCOTUS. In fact it's window dressing. SCOTUS has confessed that eminent domain law is "harsh" and courts do not "reckon" all the factors that a buyer and seller would consider in a voluntary sale transaction. The California Supreme Court went further and confessed that when benign words like, "fairness and justice," are used in eminent domain opinions, they are merely "panoramic" expressions that reflect the courts' idealism -- Ha! -- but, said the court, anybody taking them seriously only displays his "fundamental misunderstanding" of eminent domain law. Those who do understand it thus presumably know that the courts are into bait-and-switch -- they say one thing that sounds good, but do something else.
Except, of course, when departing from FMV benefits the condemnor. Then "fairness and justice" require that the property be valued at less than what it would have sold for in the open market.
Welcome to my world, folks.
2.14.2007 1:01am
markm (mail):
About 15 years ago, my house and 20 acres of land were on one of the proposed routes for a freeway expansion near Manton, Michigan. When I looked at the possibilities if the state acquired the land, the relocation allowances looked pretty generous - *if* they took all of the land while we were still living on it. The trouble is, the proposed route went diagonally across the land northwest to southeast. The house was in the northeast corner. Depending on the exact alignment, we might have been left with a small parcel of land and the house, it's value greatly diminished by the noise of the freeway, and with the freeway blocking us from town and the main roads - and we wouldn't have been compensated for any of these losses. Alternatively, we could have been left with a few swampy acres in the southwest corner, inaccessible, and not developable even if we could get an easement to reach it - and the state wouldn't have paid for that, either.

Roadbuilding would often be impossible without eminent domain, but under the present policies, the compensation is often anything but fair.
2.14.2007 10:55am
Dick Schweitzer (mail):
To butress Mr Kanner:

There are, in jurisprudential remedies:

Restitution

Compensatory damages

Punitive damages

He cites one form of "synthetic" restitution attempted in takings. We have problems today in that the remedies of Equity (vis a vis Law) have been either perverted or abjured.
2.14.2007 11:43am
markm (mail):
The second problem is that at the time I was starting a job 60 miles away and looking for a new house. It would have been very difficult to sell the place with all these questions about the road alignment hanging over it. I was fortunately able to buy a new house while renting the old one out, but I think I would have taken quite a loss if I had been in the usual position of having to sell the old place to get out of the mortgage on it and get a down payment for the new one. As things finally worked out, after two or three years of collecting data on the various routes, they decided on a quite different route, and it was then possible to sell it at a good price.
2.14.2007 11:50am
bellisaurius (mail):
Wow. I grew up about three blocks from there. I always wondered why the highway around ashland ave has that funny curve to it.
2.15.2007 10:45pm