Thursday, June 22, 2006

Eminent Domain Hits Madison

Here in Madison, a big development is apparently on hold due to a new state law that prevents governments from condemning property with the goal of transferring it from one private party to another. Traditionally, "eminent domain" is used by municipalities to obtain "blighted" property to redevelop it into something with a public purpose. In this case, however, the City of Madison condemned land in order to turn it over to a developer, which is the same issue argued in last summer's Kelo v. City of New London U.S. Supreme Court case.

Despite the Supreme Court upholding the practice of eminent domain in the case of private party transfers, states are reacting by passing legislation outlawing the practice. Wisconsin has done so, which means developers might actually - gasp! - have to pay for the land they want, rather than running to their city government to condemn it for them.

On the same day this article explaining the Madison situation appeared, I just happened to read this excellent piece in "The Region," which is the official magazine of the Federal Reserve Bank of Minneapolis. The article details how the use of eminent domain can actually harm economic development more than it helps. It's long, but a quality read.