Kelo has had two profound effects on land-use policymaker incentives. First, the Court has given the green light on economic development takings, so long as there is a development plan with a democratic process governing the decisionmaking (these are not real constraints because they amount to reporting requirements that are easy to meet--or, more appropriately, very difficult to show not being met). So the decision encourages local policymakers to do more central planning. This has serious knowledge and incentive problems that bring about inappropriate and abusive use of eminent domain.

A few examples of post-Kelo boldness:

1. In Hercules, CA, the city council on May 23, 2006, unanimously voted to seize property acquired by Wal-Mart, in order to prevent the retail giant from opening a store in town.

2. In Yolo County, CA, the government has claimed eminent domain on a 17,300 acre ranch whose current rightful owners plan to develop small segments while conserving the rest. The city has no plans for the large tract, but wants to preserve it and retain the water and mineral rights.

3. In Riviera Beach, FL, the mayor bent the state's open meetings law to rush a deal with the city's master developer, in which the city promises to use eminent domain on properties whose owners refuse to sell. The rush was to sign the contract before Florida's governor could sign legislation restricting eminent domain for economic development. Riviera Beach signed their deal a day before the governor signed the legislation.

4. In Los Angeles, the city has condemned dozens of business properties around the famous intersection of Hollywood and Vine streets to allow a private developer to build a luxury "W" hotel, condos, retail and restaurants. The city’s redevelopment agency said developing the area is impossible without eminent domain.

5. In New Jersey, a state whose high court has yet to rule on economic development takings, the Department of Transportation has seized 17 acres of working farmland from Harvestone Farms, a 154-acre patchwork of fields in a traditional NJ farming region. The state needs the farm land to offset loss of wetlands because of road construction over 50 miles away in Sussex County.

6. In March 2006, Long Beach, California began condemnation procedures on the Filipino Baptist Fellowship to allow developers to construct condominiums. The building was labeled blighted so the property could be taken by eminent domain.

7. In Sand Springs, OK, the predominantly black Centenial Baptist Church is on property that private developers have earmarked for big box. At the government's price, the church cannot afford to relocate. What's curious is the use of eminent domain to acquire the church property when there is plenty of land on which to develop and nearby chain stores that do generate tax revenue are not being targeted.

8. Daytona Beach, FL, was given permission by the Florida circuit court to acquire three beach front properties to make way for a retail complex. The city attorney stated that the Kelo decision was a factor in the case because it allows for cities to take private land.

9. One week after Kelo, Oakland officials evicted a tire shop and adjacent auto repair shop, whose owners had been resisting eminent domain, to pave the way for a new housing high rise. “The city thinks I cause ‘economic blight’ because I don't produce enough tax revenue,”' the tire shop owner said. “We thought we’d win, but the Supreme Court took away my last chance.” The auto shop owner added, “the cost of buying or leasing a new site is prohibitive. The money the city offered me does not cover it.”

10. In Memphis, city planners see a river front development plan ripe for eminent domain. The head of the redevelopment agency remarked, “[Kelo] definitely gives the city more tools in its tool box for dealing with the legal issues surrounding that piece of property.”

Kelo's second order effect is the spotlight and backlash, which will be the topic of my post tomorrow.

Comments?