Monthly Archives: September 2013

Eminent Domain, or Compulsory Purchase, Makes It Into British Mystery TV

We don’t know how many of Our Readers are faithful watchers of the British TV/PBS show “Foyle’s War.” It’s a saga of Detective Chief Superintendent Foyle of the Hastings police department doing his thing in Hastings during Word War II. As the Brits say, a Good Show! Entertaining and engaging, and faithfully followed by your faithful servant. Now, there is a spin off, so presumably, there is more good stuff to come.

In the second series of “Foyle’s War,” Foyle retires from the police department and joins British intelligence. That one appears on the PBS program “Masterpiece Theater,” and we recommend it highly, particularly Episode VII, entitled “Sunflower” which is what this post is about. So what does that have to do with eminent domain, you ask. As it turns out, quite a bit.

Though not, strictly speaking, involving intelligence work, and though its main plot has to do with capturing a real nasty Nazi SS type wanted by the Yanks for killing American prisoners of war,*  Foyle runs across some hanky-panky in connection with the government’s wartime misuse of eminent domain, or compulsory purchase as the blokes put it. It seems that during the war a fellow’s land was taken for the war effort, “for the duration,” which is what we used to do over here as well. But a funny thing happened when the guns stopped shooting. The government failed to return the property, and when its former owner protested, offered to sell it back to him for twice the price it paid him only a couple of years earlier because — are you ready? —  that was the new value assigned to it by a compliant government “valuer” as they put it over there. Bad show!

The former owner is now pissed off and smells a rat, as indeed he should. It turns out that the Minister in charge of things is a wacko environmentalist who decides on his own that the world will be better off if the subject land is kept by the government and devoted to agriculture wherewith to help feed the British population which is still living with belts tightened as a result of wartime food shortages. So that’s the motivation.

Long story short, Foyle gets wind of all that skullduggery (including a transparently phony memory lapse on the part of the aforementioned “valuer”). Being a moral person who believes that the government should live up to its promises, Foyle informs the Minister that the jig is up and that it’s time to face the music (if you’ll forgive out mixed metaphors). Result: Minister resigns. Justice is done.

But wait a minute, you say. What’s this “justice” thing? Did the former owner of the subject property get it back? Or at least, was he paid damages for the government’s retention of its possession and use past the end of the duration of the war? No. At least not that you can discern any of that from the show.

Which goes to show that in the UK things are as bad or worse as in the good ol’ U.S. of A. — once property is taken by eminent domain over here, you don’t get it back even if the government took it under false pretenses. Check out a California Court of Appeal case captioned Capron v. State, 247 Cal.App.2d 212 (1966). Also see our discussion of that problem in Gideon Kanner, We Don’t Have to Show You Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (2007).

However , the good news is that over here, when the government retains taken property for a period of time exceeding the duration for which it took it, it has to pay additional just compensation.

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*      We have to give the Brits their due for that one. The Yanks are depicted as honest straight shooters seeking simple justice, whereas the British intelligence types (with one reluctant exception) are depicted as lying, cheating, treacherous bozos, doing their best and then some to protect a Nazi mass murderer from justice. But in the end he gets his, in a manner of speaking, as the Yanks drag him off to face justice — or at least what passes for justice in prosecutions of former Nazis.

 

California Choo-Choo (Cont’d.)

The Los Angeles Times reports that in a recent poll Californians indicate that they are no longer in favor of that “bullet train” that is supposed to be built to run between Los Angeles and San Francisco. The title of the story says it all.  Ralph Vartabedian, 52% Want Bullet Train Stopped, L.A. Times, Sep. 28, 2013 — click here.

“Fifty-one percent of respondents called the project a waste of money, and 63% said they would never or seldom use it. Given the choice, 58% of voters would rather fly or drive from Southern California to the Bay Area, and 39% would take a bullet train.”

Detroit Again. Auditor Says Its Pension Fund made Billions of Dollars in Unathorized Payments

There are times when words seem inadequate to report news items that are so grotesque that they are hard to believe even when they come from a most respectable source. Today’s New York Times reports in a  front-page, above-the-fold story that an audit has disclosed that “Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping to push it into bankruptcy, according to people who have reviewed the payments.” Mary Williams Walsh, Detroit Spent Billions Extra From Pensions, N.Y. Times, Sep. 26, 2013, at p. A1 — click here.

“The payments, which were not publicly disclosed, included bonuses to retirees, supplements to workers not yet retired, and cash to families of workers who died before becoming eligible to receive a pension, according to reports by an outside actuary and other people with knowledge of the matter.” Id. at A4

The outside actuary concluded that “the extra payments had cost the city nearly $2 billion over 23 years . . .” That’s “billions” with a “b.”

That’s pretty bad, isn’t it. But it isn’t all. It turns out that this was only one such pension fund. There was also another one. The outside actuary credited with this disclosure, was unable to get the data from a second pension plan (for police officers and firefighters) so that God only knows what may be going on there.

And if that weren’t enough there is fight going on between two or three auditors (hired by different people with dogs in this fight) as to the proper way of analyzing this mess and the bona fides of some of the auditors. But the firm hired by Detroit’s  “emergency manager” who was appointed before the bankruptcy filing, said “the two city plans appeared to have a $3.5 billion shortfall, much larger than previously disclosed” in annual valuation.

New Jersey Shore: Harvey Cedars Dune Taking Case Settles for $1

Northjersey.com/news reports that the Karan case has settled for $1 which the borough of Harvey Cedars will pay the owners for the taking of an easement on which to build a protective dune which the government intends to act as a barrier protecting shorefront homes from hurricanes — Karen Sudol and Stephanie Akin, $1 Settlement in Jersey Shore Dune Case Clears Way for Officials ton Take More Shoreline, Sep. 25, 2013.  Click here for the full story.

Originally, the trial court awarded $375,000 relying on prior law which held that only special, not general benefits could be offset against just compensation, and these benefits, ruled the trial court, were general because they benefitted all beachfront owners in the community, not just the Karans.

But on appeal, the New Jersey Supreme Court changed the law and held that from now on not just special benefits, but also general benefits may be offset against the just compensation payable to condemnees in partial takings. For our take on the New Jersey Supreme Court’s decision, click here.

The interesting wrinkle is that some shoreline homeowners have built their own protective dunes at their own expense. It now remains to be seen how the court’s ruling in the Karan case will affect to them, if at all, because, having built their own protective dunes, they won’t receive any benefit from the government-built dunes.

Not Just Detroit. Philadelphia Too.

Detroit has been getting all the publicity lately, what with its bankruptcy filing and the attention its decades-long misrule has been getting in connection therewith. But as we never tire reminding our readers, it isn’t just Detroit. It’s also a bunch of other Eastern cities, including Philadelphia which got a bit of a spotlight in today’s New York Times (Jon Hurdle, Philadelphia Raises Stakes With Plans to Reverse Blight, Sep. 23, 2013, at p. A14).

In a nutshell, Philadelphia has to cope with 40,000 abandoned homes, lots and commercial buildings (as opposed to Detroit’s 60,000). And life in modern, urban America being what it is, where there is serious urban blight, there’s a surfeit of crackpot notions about what to do about it. In this particular case, the peddled nostrums abound. Thus, some pooh-bah of the Philadelphia Association of Community Development Corporations — you mean there is more than one? — wants to create a “land bank” and encourage “buyers for the abandoned properties who are committed to making improvements, instead of speculators, to acquire tax-delinquent properties.” Rots of ruck with that one, folks. Who but a hard-boiled speculator would be likely to invest money in decrepit stuff like that in the hope of making a buck? It evidently hasn’t occurred to these folks that so many people have abandoned Philadelphia over a period of years, if not decades, because they don’t want to live there, and have no intention of investing their money in deteriorating slums, at market rate no less. But hey man, reality be damned. Supporters of this scheme “envision a variety of uses for the abandoned properties, including market rate and affordable housing, commercial development, and open space.” And how can we overlook “urban farms”? Those too.

So is that it? Not on your life. We seem to recall that — it seems like only yesterday — the Mayor of Philadelphia took note of Philadelphia’s decrepit condition,* and announced that, to quote a new York Times headline, Philadelphia Mayor Seeks to Expand City’s Revival (N.Y. Times,  Apr. 30, 2003, at p. A10) by pursuing redevelopment in its rotting areas.  That was 10 years ago.

And so it goes in the City of Brotherly Love.

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*     Andrew Jacobs, A City Revived but With Buildings Falling Right and Left,  N.Y. Times,  Aug. 20, 2000,  at p. A14. We never did figure out how a city can be “revived,” but with “buildings falling down right and left.”

Where the Hell was The Los Angeles Times When “Government Overreach at Its Worst” and All This Looting of the Public Treasury Was Going On? And What Are They Thinking Now?

Today’s Editorial in the L.A. Times (Beyond the CRAs, Sep. 22, 2013, at p. A25 is a gem. It tells us in hyperventilated prose just how bad California Community Redevelopment Agencies were. Ready? Here it comes.

“CRAs pumped public money into private development plans to build car dealerships, entertainment complexes, and other projects that demonstrated little public value beyond the increased property tax revenues — which didn’t even help pay for schools or police but stayed with the [redevelopment] agencies for the next project and the one after that.

“Throw in the occasional forced sale to an agency under eminent domain powers, and CRAs became government overreach at its worst. Taking into account increasingly goofy definitions of blight, it’s fair to say that some redevelopment projects caused more blight than erased.”

So we ask: Where the hell was the L.A. Times indignant editorial page when all that was going on?

Oh sure, we recall one Times front-page expose of the North Hollywood redevelopment project that, after blowing some $117 million produced nothing and had to begin all over again. Adjacent areas that were not the “beneficiaries” of that redevelopment project were no worse off that the affected North Hollywood area. Oh but what they accomplished was to engender such fury on the part of local residents that the CRA had to move its local office to a more secure building for fear of violence. Your tax dollars at work.

So what does the Times propose now? Pretty much the same ol’ thing, only under a different name: Instead of Community Redevelopment Agencies, the new outfits would be called Sustainable Community Investment Authorities — “which would foster a new kind of redevelopment based on cooperation, rather than competition, among governments trying to share tax dollars to spark economic development.” In other words, a cartel of local agencies working together.

There is more that we could say, but it isn’t necessary, except to note that this wonderful new proposal is silent as to how these wonderful new agencies would acquire the land necessary their wonders to perform. Eminent domain anyone? It would so appear, unless the Times knows of some other miraculous way that those new, new, tax-increment-generating properties would transfer themselves into government ownership and then into redeveloper ownership, so their newly-generated incremental tax revenue streams could flow to — ta, da! — the state, rather than “to old style diversion” into local redevelopment agencies. But either way, these funds would eventually have to find its way into redevelopers’ pockets or those new projects would not be built. How else would anybody have an incentive to get involved in this caper if not to make a buck? After all, to paraphrase the immortal line of Willie Sutton, you go where the bucks are.

 

Detroit’s Financial Autopsy

If you are seriously interested in municipal finance, particularly in the mechanics of how Detroit slid into bankruptcy, check out the Detroit Free Press’ investigation entitled How Detroit Went Broke, Sep. 15, 2013. It runs to 23 pages, and is full of charts and graphs tracking Detroit’s downward slide with regard to tax revenues, population, deficits etc. — all accompanied by text tracing Detroit’s Mayors from Albert Cobo to the current Dave Bing.

For all its length, it’s well worth a perusal, even if it disregards the causes of some important factors, like why did Detroit’s population split in such large numbers? Why didn’t the city make any serious effort to counteract the rampant criminal activity that was overtaking it? What was the impact of the Detroit riots? Of the catastrophic collapse in safety and quality of Detroit’s schools?

But whatever may be missing in this analysis, it’s a fountainhead of information, at least for readers who are interested in municipal finances and governance. Click here.

Calling All Inverse Condemnation Junkies!

The prolific Professor Ilya Somin has charged into the breach again and has authored another article; this one on the recent SCOTUS Arkansas Fish & Game and Koontz cases. To check out the abstract, click here. The citation to it is 2013 Cato Supreme Ct. L. Rev. 215.

We agree with Prof. Somin’s conclusion that goes:

“Although both cases represent incremental progress, there is still a long way to go before property rights cease to get second-class treatment from the Court.”

In other words, these victories are better than the proverbial poke in the eye. But that’s all.

Our conclusion is that while we appreciate his sentiments,  Professor Somin is an optimist. In our opinion, when it comes to eminent domain, particularly nonphysical takings,  SCOTUS has vaccilated between indecisiveness, ignorance of the subject, obfuscation and hostility to private property rights, interspersed with an occasional ruling in favor of the owners. Bear in mind that a “ruling in favor of the owners” is not necessarily a victory. Keep in mind that between the court’s return to this topic in the wretched Penn Central case in 1978* and now (that’s a period of 35 years), there has been only one case — count ’em, one — in which the court actually affirmed a financial just compensation judgment in favor of a property owner.  That was the Del Monte Dunes case. All other cases in which owners nominally won, were of the go-back-to-the-lower-court(s)-and-try-again sort. For a prominent example, check out what happened in First English Evangelical Lutheran Church v. County of Los Angeles after the lower court’s dismissal was reversed by SCOTUS and the case was was remanded. Which is meaningless to property owners with a limited life span and limited resources available to be spent on litigation, but it tells us that the court’s ostensible rulings in favor of owners may be something less than wholehearted.

As for us, we said it all in 1979 — that’s right, 34 years ago — in the ABA Journal, where we said:

“The U.S. Supreme Court increasingly grows institutionally incompetent to discharge its central function of definitive construction of the Constitution. Controversies that divide the country for years emerge from the marble temple in Washington in a form that can be charitably described as bewildering: cases such as Bakke, for example, resolve nothing and only assure decades of litigation certain to consume kings’ ransoms in resources, with no assurance that in the end we will have any reliable. guide.  Gideon Kanner, Competence, Competence, Who’s Got the Competence, 65 ABA Jour. 160 (Feb. 1979).

We emphasize for the record that we wrote this in 1979. Now, the year is 2013, and the Court has once again remanded a reverse discrimination case to the lower courts for some more judicial diddling around with the proper contours of a “test” for determining whether what’s involved is permissible “affirmative action” or impermissible reverse  discrimination. Rots of ruck on that trip, guys. Give us a call in another 34 years when you decide.

In inverse condemnation, it’s even worse because in the Penn Central case — the “polestar” case —  SCOTUS confessed in writing that it has been “simply unable” to say what is a coherent statement of a cause of action in inverse condemnation, and only gave us three fuzzy “factors” with which to play around in this latter day search for the Snark. So rots of ruck to us.

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*      If you really want to know what’s wrong with the Penn Central opinions, read our article Making Laws and Sausages: A Quarter-Century Retrospective on Penn Central Transportation Co. v. City of New York, 13 Wm. & Mary Const. L. Jour. 653 (2005). It’s long, but if we do say so ourselves, it’s a detailed autopsy of the Penn Central mess. At least read the Conclusion from which you will learn inter alia that after all the high level sturm und drang, it was the City of New York, not Penn Central, that wound up paying for the restoration and maintenance of the Grand Central Terminal, so this whole litigational to-do that wasted a King’s ransom in private and judicial resources, and only confused the law, was unnecessary. Actually, the city could have had a better deal had it settled with Penn Central on terms the parties had agreed to after trial, but which were not implemented when the city decided to appeal instead.

Those Urban Boomers: Are They Coming or Going?

As a reader of this blog, you probably know that there has been a fight going on between factions of land-use mavens concerning migratory boomers. The “new urbanists” (led by Richard Florida) have it that boomers are giving up their posh suburban digs and moving in large numbers into cities. On the other hand the realists (led by Joel Kotkin) are looking at U.S. Census Bureau figures and take the contrary position. So who is right?

As far as we are concerned, we have no dog in that fight, and wouldn’t get mixed up in it for love or money. Still, having been involved peripherally in land-use stuff, having been an observer of urban sprawl and how it came about, and having been corrupted in our youth by getting a degree in engineering, we have respect for objectively determinable, scientifically supportable truth — we want to know which of these dudes is right. Our own position is that people should be able to live where and how they choose, and where they can afford to live. Our personal experience has been that unless you have the liquid assets of a real fat-cat (in which case city living can be pretty neat) for ordinary people suburban living beats the hell out of the alternative in terms of quality of life, economics, safety, quality of schools for your kids, etc.

Now, there has been a fascinating development that suggests that someone may have been cooking the statistics. Two major newspapers, The Wall Street Journal and The Washington Post have come down recently on the side of the new urbanists and have reported that the boomers — some 1,000,000 of them — have been heading from suburbia to “hip” city neighborhoods. Now, the New Geography magazine has taken a closer look at things, and disagrees. Its findings are that:

“Within the five mile radius of downtown, there was a net loss of nearly 1,000,000 baby boomers, or 2 percent of the 2000 population (ages 35 to 55). There was also  a loss of 800,000 in the suburbs, or 17 percent of the 2000 population. The continuing dispersion of the nation is indicated by the fact that there was a gain of nearly 450,000  in this cohort outside the major metropolitan areas. Overall, there was a net loss od 1.3 million, principally due to deaths.”

Wendell Cox,  Urban Core Boomer Population Drop 1 Million 2000-2010, New Geography, Sep. 11, 2013. Click here

To us, the fascinating thing is not so much these disparate figures, but rather the fact that Cox contacted these two newspapers to verify these figures, whereupon the Wall Street Journal corrected its story, while the Washington Post has not. In Cox’s words it is “hanging tough.”

So whom do you believe? The Journal or the Post?