Two points about eminent domain and "just compensation," both obvious enough that probably a hundred other people have made them since Kelo came down, but since I don't recall having seen them:
- The "fair market value" of the property is pretty much by definition less than the value of a piece of property to the current holder: Otherwise, they'd have already sold it. (That is, before the commencement of the development project—if someone had advance warning they might misrepresent their preference in hopes of reaping a holdout windfall, provided the premium they wanted were less than the costs of seizure to the prospective buyer.)
- The market value is itself a function of public knowledge of a potential ED seizure. If the city planning board has had its eyes on a plot of land for a couple years, and this is common knowledge, buyers are apt to be deterred. Why go through the cost and hassle of a transaction if the property is just going to get taken back at whatever price you paid for it? You can use the market value of other comparable properties in the vicinity, but their value might well be driven up by the same phenomenon (since the supply of nearby property attractive to buyers is diminished), or by the expectation of future growth as a result of whatever the development project is. The latter, of course, is less of a concern—if your house is being seized, I figure you're pretty well entitled to a premium.