Eminent domain for economic development is both attractive and appalling. States need the power to condemn because so much land in America is inefficiently fragmented. But public land assembly provokes hostility because vulnerable communities get bulldozed. Courts offer no help. The academic literature is a muddle. Is it possible to assemble land without harming the poor and powerless? Yes. This Article proposes the creation of Land Assembly Districts, or “LADs.” This new property form solves the age-old tensions in eminent domain and shows, more generally, how careful redesign of property rights can enhance both welfare and fairness. The economic and moral intuition underlying LADs is simple: when the only justification for assembly is over-fragmentation of land, neighbors should be able to decide collectively whether their land will be assembled. Our legal theory solution is equally simple: use property law to retrofit communities with a condominium-like structure tailored to land assembly. Let's try giving those burdened by condemnation a way to share in its benefits and to veto projects they decide are not worth their while.

This Article proposes a paradigm shift in takings law, namely “inclusionary eminent domain.” This new normative concept provides a framework that molds eminent domain takings and economic redevelopment into an inclusionary land assembly model equipped with multiple tools to help guide municipalities, private developers and communities construct or preserve affordable housing developments. The tools to achieve this include Community Benefit Agreements (“CBAs”), Land Assembly Districts (“LADs”), Community Development Corporations (“CDCs”), Land Banks (“LABs”), Community Land Trusts (“CLTs”) and Neighborhood Improvement Districts (“NIDs”). The origin of the concept derives from the zoning law context, where exclusionary zoning in the suburbs excluded affordable housing for the poor. Courts intervened, applying exclusionary zoning doctrines, which led to the enactment of inclusionary zoning programs to achieve a fair share of housing. Exclusionary eminent domain in urban areas, similarly, has displaced and decreased the stock of or denied access to affordable housing through the power of takings. Under an exclusionary eminent domain doctrine, courts would apply heightened review to condemnations in a locality that has less than its fair share of affordable housing. But in a post-Kelo era of takings, doctrinal solutions may not be enough. Analogous to inclusionary zoning, inclusionary eminent domain helps us rethink how to fix the exclusionary eminent domain phenomenon that displaces low-income residents. Indeed, this Article moves us beyond the doctrinal muddle and instead incorporates both the intellectual musings of takings and zoning law with an assessment of how innovative tools can be practically applied to construct and preserve affordable housing in eminent domain takings for economic redevelopment.

In this book, the authors argue for instigated property exchange--a concept applied in a land-assembly method commonly known in the literature as land readjustment.

The primary functional justifications for eminent domain involve bargaining problems, including the holdout problem, the bilateral monopoly problem and other transaction costs, as well as the existence of externalities. The holdout problem is particularly noteworthy, and this chapter analyzes three types of holdouts, depending on whether the failure in bargaining is the result of strategic behavior among owners, the presence of a large number of owners or a single owner who is unwilling to sell because of a highly idiosyncratic valuation. Although eminent domain solves any potential bargaining problems by transferring land directly from existing owners to the government, eminent domain has limitations as well. The primary limitations are the difficulty of valuing parcels, the potential for secondary rent seeking and the existence of administrative costs. Valuing parcels is especially problematic because, in the absence of perfect information, the government may underestimate the valuations of existing owners or overestimate the valuations of future owners. In either case, eminent domain may increase the likelihood of an undesirable transfer, i.e., a transfer in which the existing owners value the land more than the future owners, even if public officials are acting to maximize social welfare rather than advance their own, or other private, interests. Because of these limitations, scholars have proposed various alternatives for acquiring land, three of which I discuss below: (i) secret purchases; (ii) land assembly districts; and (iii) auction mechanisms. Comparing eminent domain with each of these alternatives is necessary to determine whether, or under what circumstances, it is desirable for the government to invoke eminent domain, a determination that ultimately depends on a number of important, yet relatively unexplored, empirical questions.