The Effect of Eminent Domain on Private and Mixed Development on Property Values

The objective of this study is to assess the impact of eminent domain (ED) for private and mixed development on property values in Rochester, New York, within 107 months of policy announcements and construction initiations. This study includes data on 19,707 screened house sales. By using both parametric and semiparametric models, this study concludes that the Midtown Plaza (MP) redevelopment project purely for private development generates positive policy externalities on property values across the city. However, homeowners lost property value if they lived within a one mile radius of the MP center after the policy announcement. The average citywide housing prices dropped by 8.2% after the MP demolition began, and yet, homeowners living within a one mile radius of the MP neighborhood enjoyed an 8.7% property value gain after the start of the MP demolition. There is no significant credible policy impact from the Brooks Landing (BL) project. This project for mixed development aims for both public and private revitalization. Citywide housing prices dropped by 6.8% after the start of the BL site demolition and homeowners suffered a 1.4% property value loss for each mile closer to the BL site under demolition. The semiparametric model takes spatial heterogeneities and nonlinearities into consideration; thus, due to the spatial dependence problem within the dataset, it is superior to the parametric model in this study.