The Commonwealth owns all the land in the Australian Capital Territory. Here, all anyone owns is a lease, generally granted on a 99-year term.

So when the ACT government says it wants to compulsorily acquire Calvary Public Hospital at Bruce, it does have the power to do so.

The ACT government had offered to buy the hospital for $77 million in a deal that collapsed in February 2010.

That figure could set a floor on what the hospital operator will accept as compensation now the ACT government has announced plans to acquire the facility.

The Lands Acquisition Act 1994 gives the territory's executive government the power to take control of land in the ACT for a public purpose.

The law says that a person who is forced to give up their interest in land is entitled to be paid compensation that "will justly compensate the person for the acquisition".

That just compensation must give regard to the market value of the land on the day it is acquired, legal costs and other factors.

"The market value of an interest in land at a particular time is the amount that would have been paid for the interest if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer," the law says.

The laws have been used in the past to secure land for power poles and other public utilities. The laws were also used to reclaim land for the Dickson bus interchange as part of the light rail project along Northbourne Avenue.

In January 1996, the ACT executive used the laws to acquire a 9.8 hectare site in Belconnen for the future development of Dunlop.

However, the process to acquire the Calvary public hospital is likely to be much more complicated than taking back a rural lease or part of a development site in an urban renewal project.

Legislation for the ACT government to take over the Calvary hospital will be introduced to the Legislative Assembly on Thursday, which has the support of all 16 government members. It is expected to pass before the end of May.

The Commonwealth government granted the lease in Bruce to Calvary's operators in 1971. The Commonwealth also paid for the construction of the hospital buildings, which opened in 1979.

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All land in the ACT is managed on a leasehold system. Leases are generally granted for 99 years and contain conditions on what the land can be used for. The system allowed for clear planning as Canberra was established, enabling the government to release land for specific purposes, like clubs, schools, houses and hospitals.

Chief Minister Andrew Barr and Health Minister Rachel Stephen-Smith did not provide any detail on the negotiation process with Calvary and said they would not provide running commentary while discussions are underway.

However, it is likely any negotiation will need to consider the unimproved value of the land the public hospital is built on and the value of the hospital buildings and related equipment. The issue of compensation to Calvary for buildings it did not build and services it did not pay to run is likely to be contentious.

Land acquisition laws allow the government to take control of the land - the government says it intends to run the hospital by July 3 - before the question of compensation is resolved.

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