Efficient Urban Renewal Without Takings: Two Solutions to the Land Assembly Problem

When urban renewal projects require that smaller parcels be assembled into a single large one, owners who hold out for higher prices may either prevent or significantly delay socially efficient redevelopment. Local governments seeking private redevelopment currently have only the choice between either hoping that private bargaining will lead to efficient land assembly or taking the properties of these owners under eminent domain. We describe two mechanisms that solve the holdout problem and lead to efficiency in land assembly without resorting to governmental takings.