Public Sector Land Banking: A Decision Model for Local Governments |
| |
| Authors: | Don T. Johnson Lary B. Cowart |
| |
| Affiliation: | Associate Professor of Finance in the Department of Marketing and Finance in the College of Business and Technology, Western Illinois University, Macomb, IL 61455.;Associate Professor of Real Estate in the Department of Finance in the School of Business and Economics, Morehead State University, Morehead, KY 40351-1689. |
| |
| Abstract: | Local governments frequently face land banking decisions concerning real properties that they may acquire now in open market transactions or later via their power of eminent domain. After construction of a practical local government land banking example, a theoretically correct cash flow and cost-benefit analysis is presented. Then a buy-now or buy-later decision model is developed explaining when to exercise the free American Call Option provided to governments through their power of eminent domain. |
| |
| Keywords: | |
|
|
