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August 21, 2005

Why Reaction Against Kelo Undermines Transit Projects

In Texas, they are about to approve a bill to ban eminent domain used for economic development purposes, an obvious response to the Kelo decision. One big target is the proposed Trans-Texas Corridor, where the bill will bar the state from acquiring adjoining land to the Corridor for money-making businesses like gas stations and convenience stores.

Now here's the problem. Transit projects use public money, yet increase adjoining property values, sometimes dramatically. Unfortunately, the public does not always collect the windfalls from this transit-induced property value rise. Instead, those who own property nearby get the windfall.

We often hear conservatives complaining about "takings"-- regulations that decrease property values where they demand compensation for landowners -- but you rarely hear them talking about the much more common "givings" where public spending increases the value of private property, without the property owners returning the windfall to the public.

The ability of government to acquire property near big transit facilities would actually be a way to fund transit without a lot of tax money, since most transit projects create more wealth than they cost. But an anti-Kelo style law kills that option and makes transit projects more expensive for taxpayers and a big windfall for private landowners.

Posted by Nathan at August 21, 2005 08:48 PM