The government can, via eminent domain. This is how private railroads in the US were financed in the 1800s. The companies paid for land at pre-development prices via eminent domain, then built the railroad, then sold the much-improved land at higher prices. Basically, the land appreciation covered the capital costs, and fares only covered the operating costs. Japan and Hong Kong still use this strategy, and the new private railways in the US are attempting to do it as well. (Virgin Trains and Texas Central)
Sure the government could do it. But any city council that tried to do this would likely find themselves voted out.
Case in point: it was a tough push to get AB 2923 through the CA legislature. It allowed BART to build dense housing on their own parking lots. Thankfully common sense prevailed. The bill was approved and BART is now using their power to plan for more transit oriented development.
This makes it not just unnatural but an injustice.
The sleepy suburb gets the commercial revenue from having a major tech firm, and then most of the workers leave and the residentialists get to keep the revenue for their city services.
The service workers who had to drive until they qualified, they go home to more far-flung suburbs with financial problems and poor services. This is segregation by deliberate policy.
But it’s starting to fall apart. When there were still nearby orchards to pave to put up parking lots, the new homes were cheaper than they are today, and the rich suburb could still hire workers to provide the services. Now that there’s not enough room for both new single-family homes and parking lots, and they are refusing to allow sufficient multi-family housing, the housing supply is not keeping up with demand and the service workers are increasingly refusing to take the jobs. This is manifesting as chronic short-handedness in the schools, in the police and fire departments, in the transit agencies. By greedily holding onto commercial revenues, these suburbs are destroying their own ability to provide services.
The only thing that could drive up the land prices is that some landowners try to hold out to demand unreasonably high prices. So what you need is a kind of squeeze-out mechanism like "If 2/3 of the landowners are willing to sell their land for price X, then the remaining 1/3 must sell for the same price".
That is happening as well, land owners go to court to delay development, solely to wait for prices to increase. There are places were price to build out transit have skyrocketed because of this exact tactic being used.
