Analysis of "court Bars New York's Takeover of Land for Columbia Campus"

Written in the fifth amendment of the United States' constitution is, "nor shall private property be taken for public use, without just compensation." This action of making the sale of a certain property entitlement compulsory is called eminent domain. Over time, the vague nature of the terms "public use" and "just compensation" in this context have created many disputes. Among these is the case of Columbia University vs. two property owners in the Manhattanville, New York area. In 2003 Columbia made plans to embark on an expansion project to build a satellite campus in Manhattanville. The projected 17-acre site would replace old industrial buildings with academic buildings, restaurants and more. Columbia owns or controls 61 out of 67 buildings in the project area. The problem is that the owners of the remaining 6 buildings are holding out on making a bargain for the property entitlements. So Colombia took the property owners to court hoping to force an exchange via eminent domain claiming the proposed plan would be of public use and provide a greater benefit to society than is being offered presently. The court ruled 3-2 in favor of the property owners, defending their decision that Columbia's plan does not qualify as being for "public use."

This outcome was surprising considering prior precedents, set by the U.S. Supreme Court ruling in Kelo vs. New London, condoned the use of eminent domain to transfer land between private parties. Discrepancies over the use of eminent domain like in the Columbia vs. two property owners case and Kelo vs. New London case makes determining expected compensation for the sale of property entitlements difficult. Property owners fearing the mandatory sale of their property will not know how much they will be compensated and will therefore be misinformed in their investment decisions. If the use of eminent domain could at any time be used where seen fit by the court, landowners will be given the incentive to invest below optimal levels in fear of not being compensated fully. Property rights would be protected with a liability rule if courts decide to allow for the use of eminent domain in the sale of a property entitlement, therefore allotting land owners compensation as determined by the court. This is as opposed to property rights being protected with a property rule which would give incentive to the private parties involved in the sale to settle on an efficient terms of bargain. Since it is difficult for courts to forecast and calculate the gains the landowner would receive from the cooperative surplus had property rule been in place, court determined compensation would be non-optimal and hence lead to an inefficient outcome: landowners would misallocate available resources towards investment. Landowner's should be certain of being compensated for any investment they make on their property.

The term "public use" must be clearly specified so that landowners may be more informed of their