Policy Research

Just Undercompensation: The Idiosyncratic Premium in Eminent Domain

Brian Angelo Lee

Summary

The Fifth Amendment defines eminent domain’s “just compensation” as fair market value. As many state governments believe this leads to undercompensation, they have enacted fixed percentage bonus programs as a solution. This article argues that determining fair market value can be subjective. Additionally, out of fairness, the subjective value that fair market value does not compensate should not be compensated. Fixed percentage bonus programs are not the best method to compensate sentimental value and lost autonomy. Since all people are equal, the sentimental value of property should be an equal dollar amount instead of percentage. A percentage bonus unjustly favors the wealthy.

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Policy Implications

In 2006, Michigan’s legislature amended its constitution to compensate individuals 125% of the property’s fair market value if it is taken for public use. In light of major infrastructure projects such as Detroit’s Gordie Howe Bridge, special consideration should be given to the fairness of eminent domain.