Condemning Fair Market Value: An Appraisal of Eminent Domain's Just Compensation

Abstract

Part II of this Comment discusses the origins and development of eminent domain in the United States and Texas as well as briefly exploring the judicial developments in the interpretation of public use in the United States and Texas. As discussed below, case law has articulated the breadth of the public use definition to include utility and development plans that are for public purposes. This breadth and delegation of authority encompasses a wider range of property that may be taken than originally conceived without any sort of balancing growth in protection for landowners. Part II also discusses the origins, modern development and process of compensating landowners for their condemned property. Part III analyzes the fair market value calculation of just compensation and its failure to adequately compensate landowners. It then suggests methods that Texas could employ to establish an improved balance between the power of the state to condemn land and the financial well-being of targeted property owners. This comment recommends legislation to include relocation costs to a comparable dwelling as part of a displaced homeowners "adequate compensation" to put them in the same pecuniary position they were in before the condemnation proceedings. This comment also suggests Texas tax legislation to roll the effective date of a residence property tax exemption designed to freeze elderly or disabled landowner's property taxes to the landowner's new residence after eminent domain displacement. This would not only provide calculable, subjective compensation not available by fair market value but also maintain stable economic circumstances for a particularly susceptible group of citizens. This Comment then also recommends harkening back to the early American Mill Acts, which granted private entities the ability to use another's land for a public purpose but required the landowners to be compensated an additional fifty percent of their damages. This extra (or debatably equal) compensation is a way to restrain private eminent domain authorities since they do not have public oversight of their actions and work as a tax on the coercive ability to take the land of another. Re- quiring private entities to pay more for land they take will reduce the number of private entity takings, while still allowing for productive development. Additionally, providing more than fair market value to condemnees would more accurately compensate for the true costs of a forced relocation and thus reduce the incentives of the property owner to litigate or otherwise oppose the taking. All three recommendations focus on the just compensation needed to place landowners in the same pecuniary position they would have been prior to condemnation and serve as a meaningful safeguard to rebalance the equity of eminent domain to its origins.