Though, thank the Good Lord, we haven’t had many cases of this type at home, an interesting issue arises when the military must destroy private property in wartime, under battle conditions. The U.S. Supreme Court held in United States v. Caltex, 344 U.S. 149 (1952) that when the U.S. Army blew up a privately owned refinery in the Phillipines in World War II, to keep it from falling into the hands of the advancing Japanese troops, that was not a compensable taking. Similarly, in Y.M.C.A. v. United States, 395 U.S. 85 (1969) damage to a YMCA building in the Panama Canal zone, in which American troops took temporary shelter during local riots, and from which they eventually had to withdraw under fire, was likewise not a compensable taking. That’s how it goes. War is hell.

But if the New York Times is to be believed, the locals in Afghanistan get paid for their farms, irrigation systems, land and crops that are destroyed by Allied troops fighting the Taliban. Carlotta Gall and Ruhulla Khapalwak, Winning Hearts While Flattening Vineyards Is Rather Tricky, N.Y. Times, March 12, 2011, at p. A4. The U.S. and Canadian troops fighting in Afghanistan find themselves sorely pressed at times for lack of roads by which to transport their equipment. So they enter the needed land, raze existing structures or vineyards, and build the needed roads.

But the Times also discloses that some of the compensation payable to the locals is not just for taking land for those roads, but also for destruction wreaked by the military on local farms and vineyards. “Fruit trees have been felled, vines uprooted, and fields and barns flattened.” Which, if we read Caltex and Y.M.C.A. correctly would not happen when Americans make similar claims.

Interesting.

Today’s New York Times brings us the story behind the cancellation of the prposed high-speed railroad between Tampa and Orlando, Florida. Michael Cooper, How Flaws Undid Obama’s Hope For High-Speed Rail in Florida, N.Y. Times, March 12, 2011, at p. A11.

The title says it all, and as you might suspect from it, there was a hefty element of politics behind the initial decision to pop some $2,400,000,000 to fund the construction of that rail line. But that, however true it may be, does not tell the whole story. It was a boondoggle. In the words of the Times:

“Tampa and  Orlando are only 84 miles apart, generally considered too close for high-speed rail to make sense. The train trip, with many stops along the way, would have shaved only about a half-hour off the drive. Since there are no commercial flights between the two cities, the new line would not have lured away fliers or freed up landing slots at the busy airport.”

For the N.Y. Times story go to http://www.nytimes.com/2011/03/12/us/12rail.html?_r=1&ref=politics

The editorial in today’s Los Angeles Times (Redevelopment Reality, March 11, 2011, at p. A18), finally takes a position on Governor Jerry Brown’s proposal to abolish redevelopment in California, and to redirect the incremental tax revenues it produces to the state instead of to the redevelopers’ pockets. Predictably, the Times’ nostrums — “reform, not extinction” — are a classic case of too little and too late. The fact is that for decades redevelopment, not just here in La-La Land but also elsewhere, has been a negative force, destroying badly needed low and moderately priced urban housing, and replacing it with malls and the familiar clusters of office buildings that are occupied by day by commuting suburbanites who wouldn’t be caught dead living in cities, and who, at the end of the day, head for the suburbs where they live, shop and pay taxes. That reality has been a factor implicated for a half a century in stimulating an out-migration from cities to the suburbs which have been thriving  even as the cities hollow out.

But morally speaking, all that pales by comparison with the monstrous idea that individuals’ property, their homes and businesses, can be just taken from them by government compulsion, while they are concededly undercompensated and the redevelopers to whom their land is given are subsidized. The whole shebang is largely based on a pernicious system that subsidizes redevelopers with increasingly scarce public funds, while undercompensating property owners whose land is wrested from them by using eminent domain, even as California courts have taken the position that to fully indemnify the displaced property owners for all their demonstrable economic losses would bring about an “embargo” on the creation of public projects. But you won’t find a peep about any of this in the Times editorial. The abuses the Times worries about are municipal “high finance” capers whereby money that should have been spent on redevelopment is diverted to improper municipal purposes. But it doesn’t worry about the citizens who are displaced by municipal bulldozers under conditions of undercompensation.

There are two things that are conspicuous by their absence in the Times editorial. First, it never even mentions the abuse of eminent domain by redevelopment agencies’ takings of private land for the benefit of other, more favored individuals. That has always been a sore point, but it doesn’t rate a word in the Times editorial.

Second, there is the matter of what happens to the incremental tax revenues. The Times overlooks that there is no such things as a free lunch and to get a redevelopment project going, a redevelopment agency has to raise money to pay for the land it acquires. It does so by selling bonds. So those incremental tax revenues are not just a freebie — they have to be spent servicing and eventually paying off the accumulating mountain of redevelopment bonds. The latest data we have at our disposal at the momemt (State Controller’s Community Redevelopment Agencies Annual Report, 2006-2007, at p. xix), indicates that the true indebtedness of California redevelopment agencies (i.e. the amount necessary to repay redevelopment indebtedness) stands at — are you ready? — $82,429,304,000.

None of these considerations are reflected in the Times’ cheerleading for redevelopment. But as the country is increasingly learning the hard way, people increasingly resent eminent domain abuses, and are bitter about kicking ordinary citizens out of their homes and businesses to enrich municipally favored redevelopers. 

Bottom line: Taking private property without fully indemnifying its owners for all their demonstrable economic losses is profoundly immoral, and public  indebtedness has to be  controlled and repaid.

Edited March 11, 2012

Remember the Campus Cruade for Christ case? Sure you do. That was a taking by eminent domain of land for an underground water transportation tunnel that was laid out across Campus Crusade’s land. The way the Southern California Metropolitan Water District laid out the tunnel, it crossed the San Andreas Fault right on the Campus Crusade land. So there was a danger that in a major earthquake — the San Andreas Fault is potentially capable of giving us the Mother of All Earthquakes — the tunnel would rupture. The MWD engineers thought of that, so they designed the underground tunnel so as to bring it close to the surface at that point (smack, dab in the middle of the Campus Crusade land) so it could be more conveniently repaired. But that meant that in case of such a tunnel rupture Campus Crusade’s land would be inundated with gazillions of cubic feet of water gushing out of the ruptured tunnel. That potential, argued Campus Crusade, would negatively affect the remainder of the subject land, and diminish its fair market value.  So Campus Crusade’s trial counsel, the late, lamented Justin McCarthy of Riverside, California, presented  a substantial claim for severance damages. There were other issues as well, such as the condemnor’s and the trial judge’s insistence that even though the California legislature had eliminated burden of proof in eminent domain cases, Campus Crusade still had such a burden. We suggest you read the California Supreme Court’s opinion, Metropolitan Water District v. Campus Crusade for Christ, 41 Cal.4th 954, 161 P.3d 1175 (2007) which inter alia provides a good discussion of which issues in an eminent domain action are decided by the jury, and which are properly resolved by the  judge.

To make a long story short, the trial judge sort of took over the case, usurped the jury’s function, and made a number of purportedly evidentiary rulings that actually decided various factual issues that should have gone to the jury. He included a ruling that Campus Crusade was not entitled to severance damages, and eventually awarded $478,278.45. When Campus Crusade appealed, a settlement conference was ordered by the appellate court, at which MWD offered (if memory serves us) some $3 million. Campus Crusade rejected that offer.

On appeal, both the California Court of Appeal and the California Supreme Court reversed the trial court’s ruling, and remanded the case for a new trial. But that trial never took place. We recently learned that the case has settled for — are you ready? — $15,500,000, or some 32 times that trial judge’s award, or five times the offer the condemnor made at the settlement conference. And keep in mind that this was not one of those cases where the condemnor fought the good fight and lost. No, this was a voluntary settlement.

And so it goes in the Golden State. For a collection of other cases like that — involving huge differences between condemnors’ offers and the eventual awards or settlements — see 40 Loyola of L.A. Law Review at pp. 1146-1148.

Disclosure: Your faithful servant was one of the lawyers representing Campus Crusade for Christ on appeal that followed the trial, but not at the trial court level before or after the appeal.

Fox News reports that in Winston-Salem, N.C., the city is about to take by eminent domain the automotive shop of Harvey Davis who has been operating at the same location since 1975. The taking of Mr. Davis’ shop, a former train depot, is for, appropriately enough, a railroad depot. The city hopes to use it to get its hands on some federal money (that’s your taxes) for the trendy use of high speed rail.

The city has offered $680,000, but the article gives no indication of Mr. Davis’ view of the matter of compensation.

This seems like an ordinary eminent domain cum human interest story, except that a careful reading of it discloses that this is the fifth time — yes, you read it correctly — that Mr. Harvey’s property has been acquired by the city.

As you may have heard, out here in California, our new and fashionably recycled governor, Jerry Brown, faces a huge deficit in state finances. So to help plug this multi-billion dollar hole he has called for putting an end to redevelopment and for redirecting some $5 billion in local property tax dollars now being skimmed by redevelopment agencies (with much of it wasted according to a recent Los Angeles Times expose), to legitimate state and local uses. Predictably, this has caused screams of anguish from California municipalitires and redevelopment agencies who have been enjoying a free-spending life, wasting kings’ ransoms on all sorts of dubious projects that, if you disregard the mumbo-jumbo of eminent domain law about “public purpose,” often fail to accomplish much good. At least that’s what the Los Angeles Times told us in a recent series of reports that we blogged about earlier.

Now, the State Controller, John Chiang, has chimed in by issuing a report to the effect that “City redevelopment agencies improperly shortchanged schools by more that $40 million last year while allocating millions of dollars in public money for such things as a luxury golf course and a lobbyist,. . . ” Jessica Garrison, Controller Reports Redevelopment Agency Failings, March 8, 2011. Surprize, surprize! 

Apart from disclosing that 18 cities had been using their redevelopment funds for “questionable” expenditures, “The city of San Jose charged one-fourth of the salaries of the mayor, 12 council members and 40 council staff members to the redevelopment agency. When Chiang’s office asked why, it could not get an explanation, the report said.”

But since this blog is primarily about eminent domain we have saved the best for last: The L.A. Times reports that Chiang’s office found that “cities can call virtually any area ‘blighted’ and turn it into a redevelopment area. The reports notes that Coronado, in San Diego County, includes all privately owned property in its ‘blighted’ area — including miltimillion-dollar ocean-front homes. In Palm Desert, officials allocated $16.7 million to clean up ‘blight’ at a luxury public golf course that has been listed as a ‘Best Place to Play’ by Golf Digest magazine.” Surprize, surprize!

What we find amazing is that the Times reports all this as an expose, with an air of astonishment, as if it never heard of such stuff even though it has been going on right under its nose for decades.

For the entire Los Angeles Times article go to: http://www.latimes.com/news/local/la-me-redevelopment-20110308,0,7682705.story

For coverage of these events by the Sacramento Bee, go to http://www.sacbee.com/2011/03/08/3457163/controller-issues-sharp-critique.html

The City of New York took by eminent domain a parcel of land owned by ExxonMobil, for a water pollution control plant, and made an advance payment of $809,540. Two years later, in March 2000, responding to ExxonMobil’s motion to exchange appraisal reports, it turned out that the city’s appraiser valued the land at $2,600,000, but he opined that the cleanup cost would exceed that figure, so he suggested a token payment of $1000. Eventually, the trial court (there are no juries in New York), awarded $8,505,457, plus interest at 6%, but ordered the award held in escrow, pending the resolution of another action having to do with the property’s contaminated status.

There was a great deal more to this complex controversy, so we recommend that readers with a professional interest in these matters read the entire opinion. It may be found as In re City of New York, 913 N.Y.S.2d 512 (Sup.Ct. 2010).

Bottom line: in addition to the $8,505,793.57 (plus interest at 6%),  the trial court awarded $3,091,793.57 as attorneys fees, plus $284,610.90 in expert fees, and $97,772.08 in “disbursements.”