The Costs of Condemnation: The Economic Impacts of Expanding the Public Use Requirement
Author: Paris Rebeil
Abstract: Since the United States Supreme Court incorporated economic development into the public use definition in the Takings Clause of the Fifth Amendment (Kelo, 2005), legal scholars have critiqued the expanding interpretation of the public use requirement. Broadening this requirement curtails American citizens’ property ownership rights and expands governments’ power of condemnation. Even though the Supreme Court has set a federal precedent, state courts still debate whether transferring properties from an owner to a private developer is a valid extension of the constitutional power or an augmented interpretation of the Fifth Amendment by local government agencies.
This project sets forth a framework to quantify and analyze the economic impact condemned commercial properties have on their surrounding communities. Economic impact is defined as the financial contribution that a commercial property generates in the form of revenues, property taxes, and employees. To quantify the economic benefits, I gathered, discounted, and averaged financial data for three commercial properties before and after condemnation. By comparing these results, I found that the first property generated more employees per square foot than the second properties and the second property produced more property taxes per square foot than the first properties. I was unable to conclude whether the first or second properties produced greater revenues per square foot. Similarly, analyzing two non-transferred properties enabled me to determine that some transferred properties produce more economic benefits than non-transferred properties. These inferences signify the need for a comprehensive economic analysis to determine a proper legal definition of the public use requirement.