Not Just Compensation

Abstract:     
This Article develops a "contributory negligence" rule for takings compensation under which property owners will not be awarded compensation where they overdevelop their property. I propose that a contributory negligence standard be implemented by soliciting homeowner self-assessments that would serve as the basis of both the magnitude of the award of takings compensation and of the decision as to whether property development has been contributorily negligent.

By analogy with economic models of tort law, I show that compensation policy must create bilateral incentives that, on the one hand, deter government decisionmaking on the basis of fiscal illusion, and, on the other hand, discourage property owner behavior on the basis of moral hazard. To be coherent, this compensation policy must have a clear manner of determining the baseline value of property, and it must avoid strategic timing that creates "condemnation blight."

Number of Pages in PDF File: 45

JEL Classification: K10, K11

working papers series