EMINENT DOMAIN IS NOT IN THE PUBLIC’S INTEREST
Advocates for using the government's power of eminent domain to takeover an investor-owned water utility often justify their idea as being in the public interest. Their public reasons are often to "gain local control", "reduce water rates," and even "return control of water to the public." These emotional messages are often used to justify the first steps on a very slippery slope. "Let's just look into buying the water company," "study it," and "evaluate having the community own the water company" are all terms used to justify spending valuable tax dollars.
These are all emotional themes intended to gain public support, and they just don't hold up under scrutiny. The facts can be found by researching publicly available information on eminent domain cases.
Using eminent domain to condemn a private utility will take much longer than proponents state, and the process will be a significant distraction from the issues most important to the public. While the initial funding requests to "just look into it" will appear modest, the costs will escalate rapidly. A few thousand dollars for the first study will result in a request for further study, and added funding. Before long, millions of valuable tax dollars will be spent, and the ultimate cost to the public will still not be known.
The process will divide the community, creating an unfriendly image that will discourage businesses and individuals who are looking for a place to locate.
An eminent domain takeover of a water or wastewater utility is very different from an eminent domain acquisition of land for a road project.
Valuation methods and legal factors involved in a utility condemnation are extremely complicated in contrast to establishing a valuation for a piece of land. The amount of time involved and the ultimate cost for properly valuing a utility are very substantial, as is the cost for legal representation.
Eminent domain advocates, as well as consultants and advisors to governments, are likely to substantially underestimate the cost to acquire a utility using eminent domain.
The cases illustrated below underscore the extreme disparity between what the public was told would be the cost, and what the actual cost was. It is important to also note that the costs shown do not include legal and expert consultant expenses.
Big Bear Lake, CA
Government’s Price: $10.3 million
Actual Price: $35 million
X Higher: 3.40
Government’s Price: $5.3 million
Actual Price: $13.4 million
X Higher: 2.53
Government’s Price: $6.5 million
Actual Price: $20.3 million
X Higher: 3.12
Government’s Price: $67.8 million
Actual Price: $203.0 million
X Higher: 3