In principle, the Coase theorem makes sense...when property rights are well-defined, two parties should be able to negotiate a mutually beneficial, economically efficient solution to a land use dispute. But in practice, bargaining over land use can be messy. Consider the case of 14 acres of privately owned vegetated land in an industrial area southeast of L.A. The owner wants to build a warehouse. Darryl Hannah (Splash) and other do-gooders don't want him to. Seems like a perfect set-up for Coasian bargaining, right?
Tree-sitting protesters, including some celebrities, vowed to peacefully resist eviction from a 14-acre (5 1/2-hectare) urban garden on which the landowner wants to build a warehouse.
The inner-city site is "a place of safety and respite from the harshness of the concrete jungle ... we just have to save it," actress Darryl Hannah said Thursday from the branches of an old walnut tree where she perched for the day despite her vertigo.
Below her, supporters had created a tent city in the midst of the flowers, bananas, edible cactus, sunflowers and other produce that is farmed by about 350 mainly poor, Hispanic families.
Hannah said she had created an "emergency episode" of her weekly podcast and urged people to support the garden, a green swath in an industrial area southeast of downtown.
So where are the courts when we need them?
A civil court judge signed off on the eviction order Wednesday but there appeared to be no immediate effort to remove them.
"There's no action today," said Steve Whitmore, a spokesman for the Los Angeles County Sheriff's Department, which must enforce the court order.
"We're in the process of developing the best approach to this evacuation," Whitmore said. "The community is important to us. We are sensitive to these issues."
OK, now for the bargaining. Turns out, the city, the land-owner and environmental groups have been fighting/negotiating for a while. But striking a bargain requires both parties to be willing and ABLE to pay for the settlement.
The land originally was owned by developer Ralph Horowitz but the city seized it in the 1980s, forcing him to sell it in order to build a trash-to-energy incinerator. When the project fizzled, the land was turned over to a food bank and people began gardening there after the 1992 Los Angeles riot.
Horowitz sued to get the site back and the city settled in 2003 by selling it to him for $5 million, leading to court battles. Eventually, he agreed to sell 10 of the 14 acres to The Trust for Public Land for $16.35 million but the group fell $10 million short and the option expired Monday.
Where does that leave us? Back where we started. Ralph owns the land and has the right to develop it. The courts have agreed. The delays have taken so long that any bargain price is now in the $20M range. That's one valuable warehouse. Ladies and gentlemen...Coase in practice.
