The Limitations of Majoritarian Land Assembly

In Land Assembly Districts, Professors Michael Heller and Rick Hills attempt to solve a seemingly intractable problem: how is it possible to overcome the strategic holdouts that sometimes prevent socially desirable assemblies while ensuring that these assemblies are, in fact, desirable? Private assembly relies on consensual exchange and is thus generally welfare-enhancing. But private assembly may lead to holdouts and underassembly. Eminent domain avoids the holdout problem. But eminent domain may lead to “inefficient overassembly” or “wasteful underassembly.”1 Heller and Hills seek to combine the welfare advantage of private assembly with the assembly advantage of eminent domain by retrofitting neighborhoods with a novel property rights arrangement, a Land Assembly District (“LAD”). A LAD is a district of property owners that has “the power, by a majority vote, to approve or disapprove the sale of the[ir] neighborhood to a developer or municipality seeking to consolidate the land into a single parcel.”2 Voting rights within the LAD are allocated in proportion to each owner’s share of land within the district. With majority approval, the developer or municipality (“the assembler”) obtains title to the entire district, and owners receive their proportional percentage of the bargained-for sale price. Any owner may “opt out,” but the LAD is entitled to condemn an opt-out’s parcel in exchange for just compensation (that is, the fair market value of the land). Without majority approval, owners retain their property, and neither the assembler nor the LAD is permitted to use eminent domain.3 The authors claim that, by permitting owners and assemblers to bargain over the sale price and by allowing owners to approve assemblies without