Monthly Archives: November 2012

So Did Passage of Proposition 30 in California Solve the Current Fiscal Problem? Don’t Be Ridiculous.

If you have been following California doings in last week’s election, you may think that Governor Jerry Brown’s victory at the polls, in getting Proposition 30 (the tax increase initiative) passed, has solved the looming deficit. Right? Wrong.

We offer the deathless line of California’s state Treasurer, responding to demands that all that money anticipated to come from Proposition 30 (estimated at $6 billion in anticipated revenue) be spent on new government goodies, who points out that “the money has already been spent” last year. Specifically, the money is already included in the budget the governor signed last year. Oops! Talk about spending money before you get it! You can read all about it in Chris Megerian’s front-page story, Prop. 30 Victory Is No Cure-All, L.A. Times, Nov. 12, 2012, at p. A1.

So it looks to us like nothing has been solved and the fiscal can has been kicked down the road for another year. In the meantime, California’s debt service is hovering at 9% of its general fund annually to cover the cost of that borrowing. And so it goes.

What troubles us is that competent, affluent people who are confronted with having their hard-earned wealth looted, are leaving California in droves for other states where living is easier, and where you can buy a really nice family house for less than a half-million dolars. And it’s not so much that these folks don’t want to pay taxes, as that they don’t want to see their taxes frittered away, particularly on yet another hare-brained  “soak-the-rich” scheme that hasn’t worked in the past and is unlikely to work this time. In any event, whatever their motivation, they are leaving California in droves, leaving behind a state largerly composed of the poor, a middle class largely composed of government employees, and wealthy Silicon Valley entrepreneurs and show business types — click here. For lots of additional dispatches on this subject, just go to Google and type in “people leaving California.” The new, additional taxes aren’t going to help that problem, and neither will the fact that the City of Los Angeles is now contemplating an increase in its own sales taxes, to be tacked on to the state sales tax boost. If anything, those new taxes will drive more people out.

Hetch Hetchy Is Safe. For Now.

It turns out that San Franciscans aren’t as crazy as we sometimes fear they are. In this week’s election they turned down a ballot proposition that would have authorized taking preliminary steps to drain the Hetch Hetchy reservoir (that supplies water to the Bay Area) and restore it to its wild state. Whew!

For our earlier post on this subject, click here.

What’s Going on At the Supreme Court?

We have wondered about the question posed by the above headline, without coming up with a clear (or for that matter, any) answer. On the one hand we believe that property rights are an important subject — “The Guardian of All Other Rights,” as Professor James Ely put it in the title to his book. But on the other hand, apart from a flurry of inconclusive, mostly procedural cases dealing largely with ripeness in takings cases, that ended with a whimper in the 1980s as far as property rights are concerned, when the court largely confirmed what we already knew. Thereafter, SCOTUS hasn’t had much to say on the subject, except for the wretched Kelo case that pissed off the country mightily (among others, it was repudiated by a state constitutional amendment in Virginia in this week’s election), and of which the less said, the better, and that silly Florida Restore the Beach case that was supposed to deal with “judicial takings,” except it turned out that any arguable taking in that controversy was legislative, not judicial.

But now there are two inverse taking cases pending on the merits before the Supreme Court. In the first one (Arkansas Fish & Wildlife Commission v. United States, argued recently) the question is whether the feds’ inundation of Arkansas state-owned forest land for five years, and the resulting destruction of millions of dollars’ worth of standing timber, is a compensable taking. The other one (Koontz) involves exactions; whether it was proper for a Florida Water District to demand a cash “contribution” by a land owner as a condition of granting of a development permit, in light of the Nollan and Dolan cases (which answered that question with a “no”)  when exactions of land rather than cash are involved. Stay tuned for that one. To get an good overview of these cases, check out Lawrence Hurley,  Supreme Court: Property Rights Take Center Stage in Disputes Over Wetlands, Flooding, E & E Publications, LLC, Nov. 6, 2012 — click here. It’s all there, including quotes from the usual suspects — folks who have been battling in these trenches for decades.

Our thanks to Robert Thomas, our fellow blogger at www.inversecondemnation.com for tipping us off to this article.

Animal Crackers

If your professional activities bring you in contact with what the politically correct folks are pleased to call “animal rights,” you know that there is no limit to the ingenuity and wackiness that can be aired in court concerning animals and their “rights.” There is even a case captioned Arizona Grey Squirrel v. Somebodyorother which, truth to tell, we stopped reading after the caption because it demonstrated to us that when courts take up the causes of squirrels as plaintiffs, (a) things can really go loony-tunes in court, and (b) federal judges have no sense of humor, because if it had been your faithful servant presiding over that one, we’d have ordered that the named plaintiff appear in court personally and testify. After all, if according to Justice William O. Douglas, trees can have standing, why not squirrels? If nothing else, it should be easier for counsel to communicate with a squirrel to ascertain his client’s intent, than communicating with a tree — a famously frustrating effort immortalized in the hit song that goes “I talk to the trees, but they don’t listen to me. . .” Tricky business that, because for all we know a redwood tree may be pining to become an outdoor picnic table. Who knows for sure?

Anyway, you just can’t escape that stuff. In the Del Monte Dunes case, a regulatory inverse condemnation case  in which we were involved, and in which SCOTUS affirmed a seven-figure judgment against the city of Monterey, California, for its regulatory taking of the plaintiffs’ land (after subjecting them to lengthy regulatory harassment consisting of five development applications and 19 plot plans, all required by the city and all turned down seriatim). The city refused permission to build anything on any part of the subject property. Perfectly normal in California, asserted the bland-faced lawyer for the city — an assertion that, to put it mildly, produced an incensed responses from the Justices.

But how does that involve critters, you ask. One factor proffered by the city as cause for its behavior was its tender regard for endangered species. Even though a certain blue butterfly had never been seen on the subject property, thought the city, it might want to live on it should it come across it and take it into its little head  to do so.

And how can we overlook the California Moerman case (17 Cal.App.4th 452) in which the state trucked over a herd of Tule Elk, turned them loose next to Moerman’s land (where they — big critters that they are — proceeded to walk right through Moerman’s fences and wreak havoc on his crops). California courts — who else? — held that this was no taking of the crops or anything else.* And who can forget Christy v. Hodel, 857 F.2d 1424, holding that a sheepherder could not use lerthal force to protect his flock from marauding grizzly bears that evidently viewed his livestock as food. The court left it unclear how one would go about diossuading a grizzly from munching on one’s sheep without the use of force. Then there is a New York case (State v. Sour Mt. Realty, Inc., 714 N.Y.S.2d 78) in which the hapless property owner built a snake-proof fence to keep timber rattlesnakes, off his land, only to be ordered by a New York court to tear it down because it might inconvenience the aforementioned snakes that enjoyed protected status.

But it turns out that this is no big deal compared to some of the stuff that is going on. At least the above cases involved endangered species. But now we are seeing similar stuff involving animals that are not endangered — like deer, for instance. It turns out that Bambi may look cute, but is a lethal menace in thousands of car collisions, and engages in widespread destruction of ornamental and agricultural flora. In that connection, we recommend that you read an article by Jim Sterba, America Gone Wild, Wall St. Jour., November 2, 2012. Click here. You will learn from it that there is a kind of low-level war going on out there, compleat with casualties. Some folks demand that they and their homes be protected from predatory wild creatures like cougars and coyotes, that are intruding into humn habitats, and are fond of muching on dogs, cats, sheep, and even people (cougars and bears have evidently been losing their fear of man, and — in Mark Steyn’s immortal phrasing — increasingly see human beings as “a tasty Jello pudding on legs.”)

It all goes over the edge when one group of animal lovers demands protection from four-legged predators, while others demand that the predators be protected from people, and if that causes harm to crops, lifestock, pets and even humans, too bad. Ths is serious stuff because there have been cases in which wildlife protectors were killed and consumed by the very animals they insisted on protecting by being nice to them — see Mark Steyn, AFTER AMERICA (Regnery Publishing 2011) at pp. 259-262.

So far, there have been no major cases (at least none known to us) in which courts have entered the fray in the absence of endangered species. But at this rate, they are bound to come along. Stay tuned.

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* In an earlier California case involving flooding by a government  project, the court said by way of analogy that the “common enemy” rule that governs protection of one’s land from flooding, was like a case of a cougar roaming the mountains — a case of “every man for himself.” But that, added the court, does not mean that one can capture the wild beast and turn it loose in a city park. Sounds right to us, but evidently, California courts have different rules for Tule Elk than for cougars, and see  nothing wrong with capturing the former and turning them loose on someone’s agricultural land.

Virginia Passes Constitutional Amendment Limiting Eminent Domain

Dispatches from Virginia indicate that the proposed state constitutional amendment, limiting eminent domain takings to cases of genuinely public uses, providing for compensation for lost profits when land housing a business is taken, and providing for compensation for loss of access, passed easily in yesterday’s election by a whopping 76% margin. Jillian Nolin, Results: Amendment to Limit Eminent Domain Passes, Virginia Pilot, Nov. 7, 2012.  Click here.

Follow up. Today, the internet is overflowing with dispatches and comments on these Virginia events. And unsurprisingly, government types have crawled out of the woodwork, lamenting that the cost imposed by the new requirement that condemnees be compensated for losses actually suffered but deemed noncompensable under prior law, will impede the creation of public works in Virginia. This is nonsene for two reasons. First, the cost of public works is what it it is, and cheating condemnees out of the full measure of the just compensation for economic losses actually suffered by them does not reduce that cost — it only shifts some of it to the condemnees. Second, the lamentations asbout the imminent impairment of construction of public works are largely BS. We offer this lesson from California. Back in the 1950s, the California Supreme Court decided People v. Symons, an eminent domain case in which it denied compensation for impairment of access in a partial taking, and in the process lamented that if eminent domain compensation were to be liberalized, “an embargo” on public works would have to be declared. But in 1976, the California Legislature repealed the Symons rule (and liberalized other restrictive compensibility rules — like making loss of business goodwill compensable). So did the fiscal heavens fall? Did an “embargo” on public works have to be declared? Don’t be silly. Of course not.

California is in financial trouble today, not because it is overly generous to condemneess, but because it has been spending money like the proverbial drunken sailor on all sorts of wasteful, hare-brained schemes many of which never got off the ground after wasting tens or even hundreds of millions of dollars. Like $170,000,000 for an airport in the high desert, that had to be shut down because in spite of a hefty subsidy it could not attract sufficient users, or a $210,000,000 Los Angeles “learning center” that was built on a former oil field and could not be used fors intended purpose because of methane seeping from the ground. Etc.

And by the way, when government acquires an entire landholding by eminent domain and pays only “fair market value,” it does not actually pay anything for it (except for transactional costs). It only exchanges one asset (money) for another asset (land) at the latter’s judicially established fair market value. So its balance sheet remained unchanged and often, when the taken land is devoted to higher uses after its taking, the taking actually results in a profit to the government and certainly to the redevelopers or other land reusers when the project is successful. And if it isn’t, it shouldn’t have been pursued in the first place.

Thus, to take an obvious historical example, the TVA made a huge fortune for itself and for the buyers of the electrical powers generated by its hydroelectric dams, when it condemned land for them. And speaking of the TVA, it never paid for some the land it took.

Follow up.  On election day, this constitutional amendment was approved by the electorate by a whopping 76% majority.

 

When It Comes to Eminent Domain, Don’t Trust the Washington Post

Surprise, surprise! The liberal Washington Post — one of the only two major newspapers that came out editorially to praise the Supreme Court’s wretched Kelo case in 2005 — is at it again. The Kelo case, as you may recall, approved the destruction of a well-maintained, unoffending lower middle-class neighborhood, ostensibly for the purpose of replacing it with upscale shops and condos (and a five-star hotel) to serve well paid employees at the Pfizer pharmaceutical corporation’s research center in New London, Connecticut, and in the process increase the tax revenues flowing to the city. But the municipal plans proved to be humbug. After wasting over $100 million in public funds, nothing was built on the site, and it is now a trash-strewn dump.

Ah you say, but the owners got paid. Maybe they did but the Washington Post doesn’t like that either. One of the historical flaws of eminent domain law has been that the “just compensation” promised in the 5th Amendment is neither just nor compensation — as Judge Richard Posner put it in one of his recent opinions, “[defined as fair market value], just compensation is less than full compensation.” (602 F.3d at 834).  Courts have conceded that reality repeatedly.

The most egregious aspect of that legal reality is the rule under which nothing is paid for businesses that are damaged or even completely destroyed by the taking.

But Virginians decided to do something about this injustice and in tomorrow’s election there is going to be an initiative on the Virginia state ballot, to amend the state Constitution to provide compensation for business losses — now deemed “noncompensable” in eminent domain cases (but not in others) even when they are substantial and cause bankruptcy of the business located on the taken land. Second, the Virginia amendment will also make substantial impairment of access compensable — an element of compensation that is paid in eminent domain cases in other states.

But even though these economic losses are inflicted in many eminent domain takings, they have not been compensable under the Virginia Constitution. So this initiative sounds like an opportunity for the citizens of Virginia to rectify an old, festering injustice: people’s property is taken for public use but their “just” compensation is at best incomplete. It is limited to “fair market value” of only the land and buildings. They are paid not a penny for other losses proximately caused by the forcible displacement of owners from their homes and businesses.

But of course, reality and elementary economics teach that the fact that these “incidental” economic losses are ignored in eminent domain cases, does not make them go away. The cost of the public project is the same whether the owners are fully compensated for all their demonstrable economic losses, or not. The only question is who pays? In other words, if a thief steals your car, he does not thereby lower the cost of transportation — he only shifts it from himself to his victim. And so it is here. Those uncompensated losses don’t disappear when the government inflicts them but does not pay for them. They are only shifted from the government where they belong as quid pro quo for the benefit it receives from the taking, to the victimized land owner who is left uncompensated or undercompensated.

The Washington Post also asserts that no other state pays condemnees for business losses. Not true. Alaska, and Louisiana do as a matter of state constitutional law, and a number of states (including Georgia, Louisiana, Michigan and California) provide for such compensation by statute.

And adding insult to injury, many eminent domain cases are used for redevelopment, which means that property is frequently taken from one business and given — yes, given, either free or at a large discount called “land writedown” — to another business that is more favored by the government. That part is not just wrong; it stinks to high heaven. If you want to read up on that, dig up the front-page, Wall Street Journal story, Dean Starkman, Take and Give: Condemnation Is Used To Hand One Business Property of Another, Dec.2, 1998, which describes that moral disaster area.

Bottom line: Courts have repeatedly conceded that as interpreted by them, the “just compensation” called for in the Constitution is neither just nor compensation; it is only “fair market value” of the taken dirt and bricks, and is so artfully defined that when awarded by courts it is less than it would be in a private, voluntary transaction. The U.S. Supreme Court conceded that much in the Kimball Laundry case. If you want to read up on what goes on out there, check out Gideon Kanner, “Fairness and Equity,” or Judicial Bait-and-Switch?, 4 Albany Gov’t. L. Rev. 38 (2011). It demonstrates how American government, marching under the banner of “fairness and equity,” can and does engage in outright kleptocracy.

So Virginians, who led the fight for American independence, are again in a leadership position, seeking to eliminate a gross injustice from American law. Good for them. We hope they win big.

Wow! Even the New York Times Slams the False Promises of the Atlantic Yards Redevelopment Project

The way things have gone in recent years (make that decades), the New York Times has never seen an eminent domain case it didn’t like. They even approved editorially of the Kelo disaster which promised all sorts of goodies in the form of new shops, condos and a five-star hotel, but only  wasted a fortune in public funds, and produced absolutely nothing. It only destroyed an unoffending lower middle class neighborhood and transformed it into a vacant, trash-strewn dump  — yes, an officially designated dump. So imagine our surprise to come across an NYT article slamming the impact — or more accurately non-impact — of the Atlantic Yards revedelopment project.

Before you get carried away by this dispatch, we must note that this item comes to us not as a Times editorial, nor even as an op-ed piece on the editorial pages, but from an architectural review of the new Barclays Center arena built on the Atlantic Yards project site. It appears, in the Arts section of yesterday’s newspaper. See Michael Kimmelman, An Arena as Tough as Brooklyn, N.Y. Times, Nov. 1, 2012, at p. C1 – click here .

You will find what we have in mind at the end of the article after all the obligatory whoop-tee-do about the hip appearance of the stadium. After all, who wouldn’t just love a building adorned with slabs of rusty metal? The punch line that is of interest to us may be found near the very end of this article (at p. C5), where, after briefly lamenting the departure of Frank Gehry, the far-out architect who was originally in charge of the design, but was later let go, goes as follows:

“It’s probably too late to reconstruct the first apartment towers. But it’s not too late to hold Mr. Ratner [the redeveloper] , the city and the state to their word about creating jobs and building the promised number and type of subsidized apartments for low- and moderate-income Brooklyn families. Then the remainder of the project, which promises next to nothing for the public realm, ought to be sent back to the  drawing board, so that, should it go forward, it could still include density (density is good) but also much smarter streets, different scales of development and diverse public services.” Emphasis added.

So this wonderful redevelopment project that was endorsed by federal and state courts as a “public use,” turns out to be one that “promises next to nothing for the public realm.” Some public use! But, hey man, this is par for the course — these projects have an unfprtunate tendency to promise much but deliver little; sometimes nothing at all, except for a prodigious waste of your tax dollars.

Let ’em drink Perrier!

California in general (Northern California in particular) is a reliable source of social and civic lunacy masquerading as governance. And now, folks, they’re doing it again. Today’s Los Angeles Times reports that the latest meshuggas from the North Woods is what purports to be a serious proposal to breach the O’Shaughnessy Dam, and drain the Hetch Hetchy Reservoir which supplies clean water to San Francisco, Palo Alto, Mountain View and Stanford University, as well as 20% to 40% of clean, sustainable electric power  to the area. Even though California is flat broke and on the verge of insolvency (particularly if a ballot proposition increasing taxes fails in next week’s election, as is reasonably likely), that does not deter the wacked out neo-luddite Bay area enviros who nonchalantly assert that the Lord will provide the funds — which is to say the state and federal folks will pony up the necessary $3 to $10 billions which they don’t have. In case you don’t believe us, you can get the story in today’s Los Angeles Times, in an article entitled San Francisco Faces Environmental Identity Crisis, November 1, 2012 – click here.

This time, as best we can determine, this calamity is not being proposed for the sake of facilitating the fornicatory activities of migrating fish (which is the usual rationale for such proposals), but only because the Hetch Hetchy Valley in its pre-dammed condition was a beautiful place — which it it surely was. But it was inundated and converted into a reservoir some 80 years ago, and it is at best questionable whether it would be the same if the reservoir is drained.

Still, there is hope. According to the L.A. Times, Bay Area folks in high places are allowing as how draining Hetch Hetchy “makes no sense” (Senator Diane Feinstein), is a “stupid,” “insane” idea (San Francisco Mayor Edwin Lee), and “the height of folly” (Jim Wunderman, president of Bay Area Councils — whatever that is).

So stay tuned. November 6th is upon us, so you won’t have to wait too long to find out just how crazy San Franciscans can be. We hope that sanity will prevail, but then again, they may actually do it. Wouldn’t it be a typically California thing if the state voters turn down Governor Jerry Brown’s proposed tax increase, while the good citizens of San Francisco vote to blow the aforementioned $3 to $10 billion on depriving themselves of clean drinking water and clean, renewable electrical power.

Oh well — they can always drink Perrier.

Follow up. We are pleased to report that on election day San Franciscans rejected this ballot proposition, so Hetch Hetchy is safe, at least for the moment.