Monthly Archives: April 2011

From Those Wonderful Folks etc. – Take Two. The TVA ‘Fesses Up. Sort of.

If it’s not one thing, it’s another. No sooner did we get done with the Lady Liberty screw-up by the Postal Service, described in the imediately preceding post,  that we came across another example of your gummint at work — this one with much more serious implications.

If you are of our generation, you were inculcated in high school with the well-nigh religious belief that the Tennessee Valley Authority, a veritable jewel in the crown of the New Deal, was just plumb wonderful. Its hydroelectric dams brought the Tennessee Valley into the modern age and improved everything from agricultural practices to good sex (even if  in those days the latter subject was not mentioned at all). What the TVA really accomplished was at first, a large number of eminent domain takings, and eventually the production of dirt-cheap electricity generated by its dams. How cheap? Oh, about half the price charged by  private utilities. Naturally, this attracted a lot of industry to the area so that eventually the power-generating capacity of those hydroelectric dams was used up. The TVA stepped into that breach and proceeded to build a bunch of coal-fired power plants that delivered power at a mere 30% discount from private utilities and attracted still more industry.

Ah, but if you are going to operate coal-fired power plants you need lots of coal. So the TVA proceded to strip-mine it in prodigious quantities, causing pollution of streams in the area and contaminating the air with power plant exhausts. Moreover, when you burn large quantities of coal you wind up with large quantities of coal ash that has to be disposed of somehow.  TVA’s method of choice was to deposit that ash in special dumps that . . . But surely, you must have read about it in the paper. After the ash heap grew tall, it collapsed and inundatecd the nearby area with tons and tons of a toxic, semi-liquid goop that inundated private land and gave rise to litigation that is still going on.

That aspect of TVA operations was understandably not bragged about. But in recent years, as environmental concerns became more important, the inevitable happened. TVA’s operations collided with environmental laws. Making a long story short, today’s New York Times brings the news (Felicity Barringer, T.V.A. Agrees To Shutter 18 Generators That Use Coal, April 15, 2011, at p. A11). The settlement calls for the closing of 18 of TVA’s coal-burning plants over the next six years while spending $3 billion to $5 billion on pollution controls on any remaining coal-fired generating units.

And so, the TVA, an agency that was created during the Depression to bring electricity to rural America — says the Times — became one of the largest users of coal in the utility industry, causing 1200 premature deaths and hundreds of cases of bronchitis and nonfatal heart attacks, as well as 21,000 asthma attacks. 

So why is all that of interest in a blog on eminent domain? Because it was in an eminent domain valuation case that the U.S. Supreme Court ruled in favor of the TVA, noting in the process that it had to keep an eye on compensation because awarding it implicated a “conflict between the peoples interest in public projects and the principle of indemnity to the landowner” (United States ex rel. T.V.A. v. Powelson, 319 U.S. 266 (1943)).  Indemnity? In eminent domain? Don’t be silly. But as long as the court brought it up, why should those landowners be forced to forgo full indemnity for all their demonstrable economic losses, and why should the government be relieved of having to pay for all economic losses  caused by its takings? The court never got around to explaining any of that.

Now, it turns out that “the people’s interest in public projects” is not a freebie, that it carries a price, in this case a heavy price in human lives, health and environmental degradation. Nor is that all. Reading the name of Felicity Barringer, the author of the Times story that inspired this post, reminded us of another of her articles (Decades Later, Simmering Debate on a Road Heats Up, N.Y. Times, Feb.21, 2006, at p. A12), reporting that as of that date, almost a half century after the fact, the TVA had still not provided the compensation it promised when one of its dams flooded a local road.

Bottom line: the judicial attitude reflected in Powelson allowed the TVA to enjoy a “free lunch,” a right to inflict economic (and later physical) harm on large numbers of people who were denied full and fair compensation for their losses by government-minded judges.

For a more detailed discussion of the TVA economics see Jane Jacobs’  famous book, Cities and the Wealth of Nations, 116-117 (1984). Also see Amity Shlaes, The Forgotten Man, 181, 187-188 (2007).

From Those Wonderful Folks Whose Decision to Take Your Property Is Deemed “Well Nigh Conclusive” By the Supreme Court

As you know, the U.S. Post Office (a.k.a. The U.S. Postal Service), though deemed an independent agency, is very much a part of the U.S. Government, so it’s not very surprising that at times what they do falls under the rubric of good-enough-for-government-work.  And in that tradition, we learn from today’s New York Times (Kim Severson and Matthew Healey, This Lady Liberty Is a Las Vegas Teenager, April 15, 2011, at p. A1) that the post office folks set out to issue a stamp depicting the head of the Statute of Liberty, but — oops — what they actually depicted  is the head of replica that sits in front of the New York New York casino in Las Vegas.

And those are the folks whose decision to take your property is deemed well-nigh conclusive; see e.g., United States v. Carmack, 329 U.S. 230 (1946).

Further your affiant sayeth naught.

Follow up. The New York times (Anthony Ramirez, Liberty Statue Holds Its Own Against Las Vegas Facsimiles, April 16, 2011, at p. A14) brings us a follow-up story that (a) includes pictures of the two statutes, leaving your faithful servant wondering how anyone could possibly confuse one with the other, and (b) brings the dispatch that folks in Las Vegas, “the city with a short attention span,” don’t care which statute is displayed on U.S. postal stamps, quoting a visting maven from Ithaca to the effect that the difference between the genuine article and the styrofoam Vegas replica is inconsequential. O tempora, o mores.

Whither Fair Market Values in California?

As Yogi Berra famously put it, prediction is very hard, especially about the future. And so it is. But if you are in the eminent domain business, having some ideas about real estate pricing trends is esential. Of course, such prediction is the business of appraisers and investors, not lawyers. Still, lawyers are not forbidden to form and express their opinions on this subject, so here goes.

Two news items have caught our eye, that seem worth mentioning. First is the headline in the Los Angeles Times of April 11, 2011, p. B2: Housing Market Stays Unremarkable in March. It brings the unremarkable dispatch that home prices in Southern California have declined (as compared to March 2010) by 1.6%. No big deal in itself, but being as we are told that the recession is ending, one would have expected a rise or at least stability in prices. Which may be the market’s message that homes – after their dizzying rise in prices during the last decade or two – simply have not justified what people have been paying for them. Oh sure, “worth” is what the market says it is. But that is not the whole story. Whatever “the market” may say, buyers still have to have an income that is adequate to make the mortgage payments, pay taxes and maintain the ol’ homestead.  And in Southern California, folks, things are still loony tunes in the housing department.

Around here, a decent but by no means luxurious townhouse goes for around $400,000 to a half-million. We recently checked out some homes being offered for sale in Burbank – mostly a solid middle to lower-middle class community – and discovered that in spite of all the talk about shrinking home prices, they were being offered for sale at high $600,000s to low $700,000s. And those were no McMansions. They were small (two bedroom, plus an add-on third bedroom), old (1940s vintage), crackerboxes. If you want something better, something that is consistent with upper middle-class living, you better start thinking in terms of seven figures or at least very high six-figures. Local Sunday real estate advertising tabloids are still full of seven-figure homes being offered for sale, and even in Burbank, if you head for the more upscale hills, that’s what you will have to pay.

Oh sure, there are economic low-end places in Southern California, like the inland Empire, Riverside, Palmdale, etc. where during the “bubble” homes were sold en masse to folks who had no business going into debt on that scale, that are now being foreclosed on, and in many cases are sitting empty in droves. But those are not what we are talking about.

The other item, in the same issue of the Times, tells us that The Rich Buy Into the Idea of Leasing Homes, front page (B1) of the business section. “High-end rentals are up as buyers wait for prices to stabilize,” and are increasingly waiting things out in $10,000 per month houses. 

If you put these two items together it seems plain that what is sometimes called “the smart  money” does not believe that home prices are heading back up, but rather will continue to drift or slide downward, which come to think about it, may not be a bad thing since our housing market is still overpriced. People — whether rich or not so rich — are willing to invest what to them is serious money in housing if they believe that prices will move up. In the recent past they came to believe that buying an upscale home was a great leveraged, tax-advantaged investment. And so it was. But the music has stopped – the days when home buyers got to contemplate their growing equities with satisfaction, “felt rich,” and spent accordingly are gone. A house has become a home, not an investment.  So it shouldn’t be surprising that affluent folks with many options available to them now refrain from buying homes likely to consume rather than ehance their net worth.

So is that idea of the future what is driving the Southern California housing market? Maybe. Then again, maybe not. We tend to be pessimistic, and consider a house to be a place to live, not a way of making money. Which in the past has been a contrarian view, so don’t rely on it. We have always been amazed at the prices people are willing to pay for housing, considering their incomes. But what do we know?

Follow up. The L.A. Times of April 15, 2011, at p. B2, reports (State Home Sales Still in Slump) that

“So-called distressed properties made up well over half of the state’s market. Of the previously owned abodes sold in March, 39.3% were foreclosures, down from 40,1% in February and 40.3% in March.

“Short sales, in which the sales price fell short of the amount owed on the property, made up an estimated 17.6% of the resale market. That was down from an estimated 18.8% the previous month, but the same as in March 2010.”

Which means that 56.9% of all California home sales were distressed properties.

Atlantic Yards Report on the Fordham Conference – Part 2

In ( www.gideonstrumpet.info/?p=1043 ), we recently took note of the latest issue of  Norman Oder’s report (the Atlantic Yards Report)  covering the recent conference on eminent domain in New York, which took place at Fordham University. He has now dropped the other shoe and has posted Part 2 of his report on that conference. It’s his usual good work, and we recommend that you read it if you are interested in eminent domain in New York. Which is sort of like being interested in the processsing of [intellectual and moral] garbage. No reflection on Mr. Oder’s work — he only tells it like it is. We have characterized New York law of eminent domain as the sub-basement, if not the sewer, of the law.

If you think we are being too harsh in thus expressing our opinion, reflect on the fact that in New York, there is no trial on the right to take. No witnesses are sworn, no one is cross-examined, and no evidence (as that term is understood in American law) is presented. There is no discovery. The condemning agency makes a unilateral decision to take, and if you don’t like it, you can ask for review of it by the Appellate Division of the Supreme Court (which is their name for the intermediate appellate court — what everybody else calls the state Supreme Court they call the Court of Appeals). And of course, since the Appellate Division is is an appellate court, there are no witnesses, no evidence, no discovery, no nothin’. In the usual course of things the appellate judges just rubber-stamp whatever the condemnor says, and away we go. You do get a trial on valuation, but no jury.

 This part of the Oder report covers the presentations of academics who attended this conference.  Go to http://atlanticyardsreport.blogspot.com/2011/04/ay-eminent-domain-decision-among-worst.html

Kelo Coming to the Screen.

The Day, the New London, Connecticut newspaper reports (Kristin Dorsey, Eminent Domain Story Heads for TV, The Day, April 6, 2011) that Jeff Benedict’s book about Susette Kelo and her famous fight against the city’s taking of her “little pink house,” which is also the title of Benedict’s book, is being made into a TV movie.

We can’t wait.

For the The Day article, go to http://www.theday.com/article/20110407/ENT09/304079386/1018

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Just Compensation

A Monthly Report on Eminent Domain and Inverse Condemnation Published Since 1957

Professor Gideon Kanner, Editor 

Just Compensation is a monthly reporting service on eminent domain, inverse condemnation, and relocation assistance law. It reports in abstract form the reported appellate decisions in these fields by all state and federal courts. It also prints news of professional seminars, new books and professional jounal articles of interest. Though Just Compensation is of value to all readers interested in the field of condemnation law, it is of special value to appraisers, lawyers and judges, as well as to highway, pipe line, public utility, cable transmission and railroad right of way personnel. It is of special use to municipal attorneys, state highway department lawyers, and city planners who have to deal with inverse condemnation problems. Because much of the eminent domain litigation involves issues of law that control valuation methodology, Just Compensation is also useful to assesors, property tax, and other real estate professionals of all sorts. Unlike legal texts and treatises that provide a supplement once a year, Just Compensation keeps its readers informed continuously and enables professionals to use the latest trends and developments in the law on a monthly basis. Each monthly issue is 10 to 12 pages long, and contains abstracts of 20 to 30 reported cases, so that Just Compensation is also a handy and efficient legal research tool. 

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Mark Your Calendar for the ALI-ABA Land Use Institute

The ALI-ABA annual Land Use Institute will take place this year on August 17-19, 2011, in Boston, at the Massachusetts CLE Conference Center. As usual, this program will cover a variety of land-use regulation topics, including recent developments in Eminent Domain and Inverse Condemnation. For further information check with ALI-ABA, 4025 Chestnut St., Philadelphia, PA 19104, telephone (215) 243-1600, or go to www.ali-aba.org

This is a highly regarded annual program that is presented and attended by a number of  land-use experts representing both the government and the private sector perspectives. Apart from its educational value it is also a good opportunity to network.

The Oder Report — A Good Read

Norrman Oder is a journalist who has been following the disastrous Atlantic Yards redevelopment project in Brooklyn in detail. We recommend that you read his latest post about the recent Fordham University law school conference on the intellectual and moral mess that passes for eminent domain in New York. Of particular interest is Oder’s treatment of the views of Justice Catterson of the New York Appellate Division, virtually the only jurist in that benighted jurisdiction to stand up and forthrightly tell it like it is, instead of rubber-stamping whatever condemnors in New York decide to do.

To read Oder’s post go to http://atlanticyardsreport.blogspot.com/ Read it.

Eminent Domain CLE Program Coming

The Eminent Domain Institute of CLE International will sponsor a program on Eminent Domain on May 12-13, 2011 at the Hilton San Diego Bayfront Hotel in San Diego. The program will cover a variety of topics ranging from developments in the law to trial techniques, appraisal problems and mediation.

For a copy of the brochure (containing the specific topics and identifyimng the speakers) contact CLE International, 1620 Gaylord St., Denver, CO 80206, telephone (800) 873-7130.

Will the Atlantic Yards Project Approved by New York’s Courts Be Built As Promised?

The New York Post brings the news that the most recent SEC filing by the [re]developers of the notorious Atlantic Yards project in Brooklyn, indicates that it may not be built, save only the Nets’ stadium. See Rich Calder, NBA Deal Is ‘Net’ Loss for B’klyn, N.Y. Post, April 4, 2011.  According to the Post, there is enough hedging in that SEC report to make it clear that the touted project may never be built. So stay tuned on that one. For the entire Post story go to http://www.nypost.com/p/news/local/brooklyn/nba_deal_is_net_loss_for_klyn_0jQTL97MrYcvmOMqct4TOK 

For a discussion of the law that permits the taking by eminent domain of  private property for asserted public uses that never materialize, see our article, Gideon Kanner, We Don’t Have to Follow Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (2007).