This is wildly inaccurate. The tax basis in this example is about 1% of $400,000 plus fifteen years of incremental adjustments, ad volerum, and parcel taxes. That total is nowhere near the 600K figure you imagine it is.
Now the city of San Francisco can condemn your house, pay you 120,000 (20% of tax base) and turn around and sell this land to another developer or even a real estate agent who will then sell it to someone that is going to pay 2.5 million in property tax rates.
Nonsense. You don't seem to have even the slightest grasp on how Prop 13, or eminant domain regulations operate in the state of California.
If you do have the knowledge then correct it. As far as ED regs ... tell us about how it works there. I'm speculating.