Monthly Archives: December 2013

ALI-CLE Eminent Domain Program Coming Up

The annual CLE program on Eminent Domain and Land Valuation Litigation is coming up on January 23-25, 2013, at the Hotel Monteleone in New Orleans, Louisiana. As usual, the program will cover recent developments in the law of eminent domain, as well as presentations on practice topics, valuation and litigation strategies. The two-and-a-half day program will be presented by 39 highly experienced speakers with both a condemnor and a property owner orientation, which should give the attendees a good perspective on this field of law and practice.

To get a brochure listing the topics covered in this program, and to register, contact www.ali-cle.org/CV023, or get in  touch the old fashioned way at Registrar, ALI-CLE, 4025 Chestnut Street, Philadelphia PA 19104-3099, telephone (800) CLE NEWS.

This should be a good show, as the British put it, so y’all come. If nothing else, it will be in New Orleans, so the food should be good.

NIMBY Elves

We have trouble believing this is for real, but take it for what it’s worth. The PBS News reports that in Iceland, local NIMBYs are opposing the construction of a highway so as not to disturb the homes of elves. See for yourself:

http://www.pbs.org/newshour/rundown/2013/12/in-iceland-elves-arent-just-santas-little-helpers.html”

 

A small earthen mound is decorated as an “elf house” near Strandakirkja in southern Iceland. An Icelandic group called the Hrauvinir claims that ancient elves of Iceland would be disturbed by the construction of a proposed highway. Photo by Christian Bickel/Wikipedia

As far as we have been able to ascertain, no elf has been heard from directly. But give ’em time. Chances are that somewhere there is a federal judge ready to entertain a lawsuit on behalf of elves. After all, if trees can have standing (according to the late justice Douglas), then why not elves. After all, it should be easier for a lawyer to communicate with an elf concerning  client intent, than with a tree.

Lowball Watch — Mississippi

This is quite a story, and it comes to us from Gulfport, Mississippi. Mary Perez, Jury Awards Dedeaux Utility $8.1 Million Plus Interest,  The Sun Herald, Dec., 23, 2013.  This was the third trial, which gives you a hint of what is going on here. In 2004, the city took Dedeaux Utility Co., a local utility, and the jury awarded $3.6 million. The city appealed, and the Mississippi Supreme Court reversed and remanded  for another trial, in which the [second] jury awarded $5.1 million. The city didn’t take the hint and appealed again, getting another reversal from the appellate court, and yet another (third) trial, in which the jury awarded $8,063,981, plus interest.

The Sun Herald story fails to disclose what the city’s offer or evidence was, but it does tell us that the city now owes the Dedeaux Utility Company another $3.6, plus about $3 million in interest. Do you think the city will appeal again?

What is interesting to us is how much money the city and the Mississippi courts have spent to far on this caper, which might give us a clue as to how big this lowball was and whether this game is worth the candle. Maybe we will find out. Stay tuned just in case.

Urban Trolley Cars — Love ‘Em or Hate ‘Em?

The Washington Post informs us that the District of Columbia is initiating new trolley car service. See Michael Laris, District’s Streetcar Line Finally Has Its First Car, Dec. 14, 2013.

This isn’t what you might call news to us old timers. Washington had extensive trolley service through the 1950s, but the local trolley line company and its holdings were acquired by the District by eminent domain, including the vast car barns located at the southern tip of the Southwest part of the District of Columbia, right by the Potomac, and next to Fort McNair.  As it happens, your faithful servant lived there in the early 1960s, catty-corner across the street from the site of those car barns which by then had been razed as part of the Southwest redevelopment project. That’s the redevelopment that gave rise to Berman v. Parker, the granddaddy of American urban renewal cases. It wasn’t the first one, but it was the most prominent one because in it, SCOTUS, in a unanimous opinion by “Wild Bill” Douglas held that in the name of “slum clearance” it was OK for the local government to take by eminent domain unoffending, unblighted, private property — specifically, a well maintained small neighborhood department store — raze it to the ground, and reconvey the now vacant land to private redevelopers who would then build privately owned, and privately occupied apartments, co-ops, and a small shopping center.

The fig leaf affixed to this plainly private, profit-making caper, to make it seem to meet the constitutional “public use” limitation on the use of eminent domain, was the provision in the local law that at least one-third of the new dwellings built on the site — which then became known as “the new Southwest” — would be low-cost housing renting for $17 per month, per room. Alas, that turned out to be bullshit. After SCOTUS approved this taking in Berman, the redevelopment law was amended to eliminate that provision. What was actually built was an area of upscale dwellings that were so expensive that in a few years they inspired the Wall Street Journal to report a rent strike by affluent tenants who made the new Southwest their home. See Amy Levine, Urban Renewal and the Story of Berman v. Parker, 42 Urban Lawyer 423 (Spring 2010) — a good read, that.

There is no question that the old Southwest was indeed a slum, and that it was ready for redevelopment. But in a familiar instance of government confusion between ends and means, how it was done was another story. Though the primary beneficiaries of that slum clearance were supposed to be the wretchedly poor local black folks who constituted the vast majority of the area’s population, and whose plight figured prominently in Douglas’ lachrymose opinion approving their displacement, in fact they were not compensated or were undercompensated and bulldozed into other parts of the District  of Columbia, where they had to settle for worse but more expensive housing.

So that is how the District of Columbia got rid of street cars.

But the District was only a part of the story. Other cities got rid of their trolleys too, and thereby hangs a story.

The prevailing conventional wisdom has it that deliberate destruction of the intraurban trolley car transportation systems was a conscious, deliberately pursued policy. Legend has it that a consortium of automobile, rubber and oil companies organized a company that bought up urban trolley lines, let them decline, so they could then be eliminated and replaced with buses that (a) were made by the car companies, (b) rode on rubber tires, and (c) burned petroleum products to get around.  See Cecilia Rasmusen, Did Auto, Oil Conspiracy Put the Brakes on Trolleys? Los Angeles Times, Mar. 23, 2003, at p. B6, and a polemical video entitled Taken for a Ride, Produced by Jim Klein and Martha Olsen, New Day Films, Hohokus, NJ.

If you are thinking that this sounds a bit like a story by a bunch of conspiracists, check out United States  v.  National City Lines, 186 F.2d 562 (7th Cir. 1951). So there may be something to that conspiracy theory. For a contrary view, check out Stephen Smith, The Great American Streetcar Myth, Market Urbanism. see http://marketurbanism.com/2010/09/23/the-great-american-streetcar-myth/ arguing that irrespective of the asserted conspiracy, street cars in American cities were on the decline, and car use was on the rise before these events, quoting New York Mayor Fiorello LaGuardia as saying in 1935 that trolleys were “as dead as sailing ships,” and noting that FDR’s Works Progress Administration (WPA) “was tearing up streetcar tracks in Manhattan years before the National City Lines began doing the same in less transit-worthy places.”

So take your pick of theories.

Be all that as it may, the fact is that American cities built trolley car lines, then paid good money to destroy them, and now are spending more good money bringing them back. We are sure there is a lesson buried in here somewhere, and we hope you will discern it. The really sad part of all this is not just the waste of money involved in this on-again, off-again, and then on-again again,  but also — perhaps more so — that these days America appears incapable of building trolley cars, and is buying them from the Czech republic.

But it turns out that whatever the cause for their removal, maybe those trolleys weren’t such a bad idea after all. See Joe Wessels, Panel Pushes Streetcar Project, Cincinnati Post, Oct. 17, 2007, reporting that Cincinnati officials are pushing for the creation of a $102 million streetcar system, and reporting the creation of successful new trolley car lines in Portland, Oregon, Tampa, Florida, and Kenosha, Wisconsin. The same is true of San Diego where the “Tijuana Trolley” running from downtown south to the Mexican border has become a local institution.

 

Returning Condemned Land to Its Former Owner? Not In California.

An AP story in the San Francisco Examiner of December 15, 2013, quotes one Don Grebe, a real estate poo-bah for the California high-speed rail authority as saying that “if the project were scrapped at some point and the property was no longer needed, state law gives the original owner the first option to buy it back.” We didn’t know that. Actually, what we know is the opposite.

The California Law Revision Commission studied and revised the California law of eminent domain back in the 1970s, and decided  not to recommend such a provision in the law. See Nathaniel Sterling, Return Right for Former Owners of Land Taken by Eminent Domain, 4 Pac. L. Jour. 65 (1973) recommending against enacting into law the right of repurchase of property taken by eminent domain but not devoted to the use for which it was ostensibly taken. At the time Sterling was on the staff of the Law Revision Commission. The  Commission agreed not to revise the law in this fashion.

For a broader discussion of the law governing the status of property taken by eminent domain but not put to the specified public use, see Gideon Kanner, We Don’t Have to Follow Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (2007).  For the Examiner story go to http://www.sfexaminer.com/sanfrancisco/board-approves-eminent-domain-move-for-high-speed-rail-project/Content?oid=2650532

Lowball Watch? — Pennsylvania.

A tip of our hat to our fellow blogger Robert Thomas of inversecondemnation.com for alerting us to this story.

In Pennsylvania, the feds took the 275-acre United Airlines Flight 93 crash site of 9/11 infamy for a monument, and paid $610,000. The owner contended that the subject property was worth “close to $23.3 million.” The federal judge presiding over this taking litigation referred the valuation case to a three-person commission which returned a verdict of $1,535,000. That, according to our calculator is 2.5 times the feds’ deposit/offer. Nonetheless the feds proclaim themselves to be happy with the commissioners’ award — which to us suggests that the feds’ original $610,000 offer/deposit may have been in something less than good faith, and that is what suggests to us that this controversy qualifies for our “Lowball Watch” department, even though the owner got a lot less than what he demanded (“closer to $23.3 million”). Go figure. Still, two-and-a-half times the condemnor’s offer ain’t hay.

To read the whole story — thin on the parties’ valuation approaches though it is — go to http://triblive.com/news/adminpage/5225204-74/site-commission-million#axzz2n5cho3O7

Lowball Watch — Oklahoma

This one’s a doozy. The Associated press (Dec. 3, 2013) reports that  the school board of Jenks, Oklahoma,  offered $395,000 for 12.7 acres of the Taylor’s land, but the commissioners awarded $1.4 million. When the matter was then tried to a jury, it awarded $3.1 million. However, at this point, the trial judge decided that she shouldn’t have permitted jury consideration of the value of billboards on the subject property, so she granted a new trial.  The owner appealed, and the Oklahoma Court of Civil Appeals reversed the new trial order and reinstated the jury verdict.

So the bottom line of this one is that on the board’s original offer of $395,000, the owners were eventually awarded $3.1 million. They were also awarded interest on the difference between the commissioners’ award (which the board paid) and the ultimate award.

 

Federal Court: Detroit Can Proceed with Bankruptcy, and Municipall Pensions May be Reduced If Necessary

One of the notions flitting about with regard to municipal bankruptcies, has been the idea that where state law provides that municipal pension obligations cannot be discharged in bankruptcy, that’s that. We have always doubted the soundness of that idea because bankruptcy is uniquely a federal proceedings, so how can the states limit or even forbid its application to some creditors but not to others?  Article I, Section 8 grants Congress, not the states, the power to establish “. . .uniform laws on the subject of Bankruptcies throughout the United States.” So how can each state decide for itself what bankruptcy protection to offer, to whom and for what? And Article VI, Clause 2, of the U.S. constitution states

“This Constitution and the laws of the United states enacted in pursuance thereof . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitutions or Laws of any State to the contrary notwithstanding.”

So that would seem to be that. Right? But Detroit creditors, notably the unions whose [unfunded] pensions are the Big Dog in this fight, have been arguing that inasmuch as state law protects pensions in bankruptcy, federal courts can’t mess with them.

But the federal bankruptcy court in Detroit has just ruled that the City of Detroit may proceed with its bankruptcy in federal court, and that “Detroit’s obligation to pay pensions was not untouchable.”

The folks on the short end of this ruling vow to appeal, but your faithful servant, being a man of limited intellectual resources, can’t understand what the fuss is about, given that rather plain language of the Constitution. So stay tuned and see how it all turns out.

For a detailed, much more detailed, coverage of this development see the front-page story in today’s N.Y. Times (Detroit Ruling Lifts A Shield on Pensions, Dec. 4, 2013, A1). Click here http://www.nytimes.com/2013/12/04/us/pension-ruling-in-detroit-echoes-west-to-california.html?hp&_r=0

What we can’t understand, is that if the money isn’t there, and if it can’t be raised by taxes, Detroit’s population having gone bye-bye, and its property tax base having been largely reduced to rubble, whence can the money come from no matter what the union lawyers say? Like King Canute lacking the power to order the tides not to advance on English beaches, the authors of Michigan state laws (and the directives of courts  of whatever kind) cannot order money to appear magically in the city’s coffers when it isn’t there.

So we’ll just have to stick around and see how it all turns out.

 

 

Bubble, Bubble . . . (Cont’d.)

The Los Angeles Times of November 30, 2013 (Andrea Chang and Andrew Khoury, Tech Effect, at p. A1) reports that “bubble” type housing costs and rentals in the “Silicon Beach” area of Los Angeles (the area west of the 405 Freeway (that’s the San Diego Freeway to us old timers), running south from Santa Monica to Marina del Rey, are spinning out of control again. The median price of a home in that area peaked at $925,000 in 2007 when the “bubble” was at its bubbliest, but plunged to $694,000 in 2010. However, now the median price is up again at $952,000, which is more than the 2007 bubble peak. And keep in mind that “median price” means that half the homes in the area are selling for more than that.

The reason for this price surge is that young, well-paid techies who are attracted to the area by the coming of tech giants like Google, Facebook, and Microsoft, as well as little-known startups, favor that area as home, and being a demographic not noted for its prudence and common sense, are blowing money on housing like drunken sailors, evidently hoping to get into big bucks as their firms prosper and are bought out. We seem to recall a similar phenomenon a while back that didn’t end well. But what do we know?

Being of the pessimistic persuasion, we offer our insight and wisdom (if that’s what they are) from around 2004, when we cautioned against an

“extremist [land-use] regulatory culture that has become instrumental in bringing about . . . a market bubble for the haves and a draconian housing shortage for the have-nots.  While the use of extrapolation to predict the future is risky business, enough dark clouds are appearing on the economic horizon to justify serious concerns on that score, particularly given the huge private debt being incurred by Americans in all walks of life, which is heavily contributed to by inflated home prices.” Gideon Kanner, Making Laws ad Sausages: A Quarter-Century Retrospective on Penn Central Transportation Co. v. City of New York, 13 William & Mary Bill Rts. Jour. 679, footnote 466 and associated text (2005).

In the meantime, as the young, exuberant techies are enjoying life in their modest million-dollar digs, lots of other middle-class Californians are packing their bags, cashing out on their again/still overpriced homes, and continuing to split out of the Golden State. So to borrow the line of Gretchen Morgenson, our favorite N.Y. Times financial reporter, when the doo-doo hits the fan, as it has in 2008 and as it inevitably will again at this rate , “it won’t be pretty.”