An Empirical Study of Compensation Paid in Eminent Domain Settlements: New York City 1990 - 2002
42 Pages Posted: 14 Apr 2008 Last revised: 15 Jan 2011
Date Written: December 30, 2008
No large-scale empirical study on condemnation compensation has been done in the past thirty years. Yet several state legislatures, in response to the Kelo case, have changed laws to increase condemnation compensation, despite the lack of empirical grounds. To fill in the empirical gap, I use hedonic regression models and about 8''8000 sales to estimate the fair market value (FMV) of condemned properties whose owners reached compensation settlements with the condemnor, New York City, between 1990 and 2002. More than 50% of these condemnees were compensated with less than FMV; about 40% received more than FMV; and less than 10% got FMV. Owners of residential properties and non-residential properties alike often received extreme compensations that are less than 50%, or more than 150%, of FMV. Condemnor''s political interests and condemnees'' ignorance of estimated FMV are the most likely explanations. Compensation level does not correlate with any factor with available data.
Keywords: Compensation, eminent domain settlement, fair market value, hedonic regression model, New York City
JEL Classification: K11
Suggested Citation: Suggested Citation