Monthly Archives: March 2014

Lowball Watch — Louisiana

We are informed that in an eminent domain case in Terrebone Parish, Louisiana, the Parish originally deposited $236,492.90, to which it added another $48,7899.18. The case then went to trial where after four days of trial (March 17-20, 2014), the jury awarded additional compensation, bringing the total up to $959,448.23, plus interest as well as attorneys and expert fees to be calculated later.

The case is Terrebone Parish Consolidated Government v. CMM Properties, LLC, No. 165775, 

Bubble, Bubble, . . .

Here is a headline and subheadline from yesterday’s Los Angeles Times (Andrew Khouri, Mar. 12, 2014, at p. B1:

Some ZIPs Regain Bubble-Era Pricing.

Most are in the San Gabriel Valley or the Westside. Many other areas remain well below pre-crash highs.

Which requires no comment, except to hark back to our observation of a few days ago that said:

“Not that it wasn’t foreseen . Back in 1979, when Agins v. Tiburon was before the California Supreme Court, Justice William Clark nailed it in his dissent when he noted that an adverse consequence of the Court’s ruling that denied recovery for regulatory takings and, indeed, denied that there can be such a thing as a regulatory taking, would be regulatory extremism that in the long run would cleave California into two states: one for the affluent folks who could afford fancy digs, and another one for the hoi polloi. That was back in 1979. And so it came to pass.”

How Did 50 Successful Cases Become One Case of “A Stubborn Wyoming Family”?

 

“Monday’s ruling [in Brandt v. United States] was a victory for a stubborn Wyoming family that was the lone holdout when the federal government tried to claim ownership of a twenty-eight-mile stretch of railroad right-of-way in southeastern Wyoming.” Emphasis added.

So says the generally respected SCOTUS Blog which in this case evidently went off the intellectual tracks because the controversy in issue (whether the feds could convert abandoned railroad rights of ways into public biking and hiking trails without paying just compensation) was no idiosyncratic theory advanced by a “lone holdout.” On the contrary, it was a rule both well settled and in this case unaffected by statutory alteration(s). So the SCOTUS Blog’s formulation of the issue is  misleading. In the past decade or so the U.S. Court of Federal Claims and the Federal Circuit have decided some fifty such cases in which they rejected the feds’ arguments, and held that upon abandonment of railroad service over these old easements, they terminated and the land underlying them became the unencumbered property of the servient owner, any ownership interest of the formerly dominant owner having ended when the railroad use was discontinued. To get a partial list of these cases, click on http://www.inversecondemnation.com/inversecondemnation/2012/02/guest-post-dojs-rails-to-trails-strategy-fails.html

The feds then tried to argue that these easements weren’t true easements, and that under them Uncle Sam (who had conveyed them to the railroads in the 19th century under the 1875 Railroad Right of Way Act) retained a reversionary interest. Unfortunately for the Feds, there was nothing in the deeds used by Uncle Sam to convey those easements to the railroads, or in the law authorizing their transfer, to support such a theory. To make matters worse, in earlier litigation Uncle Sam took a contrary position in the U.S. Supreme Court, and won, thus establishing a precedent directly contrary to the Feds’ present position. Oops!

Long story short, in the Brandt case, SCOTUS reversed a maverick 10th circuit opinion that had ruled in favor of the Feds, and held that the general rule applied here the same as in all other easement abandonment cases: when easement use is discontinued, the subject property becomes unencumbered by it, and the unencumbered land underlying it goes to the servient owner who now owns it free and clear. A classic example of that occurs when a railroad discontinues train service over a right of way and tears up its tracks. After that, if Uncle Sam wants the land underlying the discontinued easement, he has to pay for it under the “Just Compensation” Clause of the Fifth Amendment. Nothing new or startling about that — that is what has been taught in elementary first-year property courses in the first year of law school.

As Justice Holmes put it: the public is only entitled to that for which it pays. That’s what the constitutional protection of private property against government takings is all about. As the Texas Supreme Court once put it, you can’t confiscate private land just because it’s pretty. So the Brandts were not a holdout  “stubborn  Wyoming family,” but rather good-guy Americans who stood up for their — and their fellow citizens’ — constitutional rights, and vindicated them in the highest court of the land, preserving the integrity of settled law in the process. So what they deserve is a loud “atta boy” for their principled, determined civic mindedness, not snotty derision as “lone holdouts.”

This post was edited on 3/14/14.

Postscript. For those of our readers who haven’t had the benefit — if that is what it is — of a first-year law school property course, and need some authority for what we say here, here’s the highest authority of all: Property for Dummies. And we quote:

“An easement agreement may say the easement lasts only as long as it’s used for a specific purpose, such as for a railroad. If the easement agreement specifies a purpose for the easement, the easement ends when that purpose can no longer be served, even if the easement agreement doesn’t say so.” Emphasis added.

So for that we had to go to the United States Supreme Court? Sheesh!

 

Lowball Watch — New York

A New York trial court (what those folks call the Supreme Court) in Kings County was faced with a case of taking in which the city deposited $3,700,000, which it dropped in trial to $3,675,000. On February 28th, the trial court awarded $5,134,000, plus $425,539 in interest. PJK Realty v. N.Y. State Urban Dev. Corp., Kings County Docket No. 1688/2012. The court also awarded $464,884.87 as the owner’s attorneys fees.

The court ruled by opinion (2014 N.Y. Slip.Op. 01332) which discusses New York law governing attorneys fees in eminent domain in some detail.

The New City NIMBYs

This is another one of those municipal policies that you contemplate in disbelief. Still, it’s one of those you know nobody could make up. Besides, it’s in the New York Times, so it’s gotta be true. Right? See Timothy Williams, Cities Helping Residents Resist the New Gentry, N.Y. Times, March 4, 2014, at p.A1 (above the fold).

For the past several years our planners  — who else? — have been touting the idea that cities are making a comeback. This is a proposition that is hotly disputed because at best, the folks returning to cities are not what you might call a healthy urban population. They largely consist of a trickle of elderly boomers who have raised their families and now don’t fancy rattling around their large, empty suburban homes even though they are now worth a fortune. But fortune, shmortune, living in places like that, out in the better suburbs means that it takes a seven-mile trip in a car to get to the nearest store to buy a quart of milk or a loaf of bread. Which may be OK when you are raising kids and are schlepping them around anyway, but not when you are getting long in the tooth and don’t fancy running around like you used to. So what we have seen of late is a trickle of these superannuated boomers moving to cities, where they can buy a jazzy condo and enjoy the good urban life. Also, some yuppies find “hip” city neighborhoods attractive.  Out in the suburbs, you can’t stroll down the street for a block or two and find a trendy watering hole, frequented by good looking professional chicks who. . . Well, you get the idea, don’t you?

Ah, but ideas have consequences. When all those affluent young and old folks set their sights on fashionable, hip city neighborhoods, that tends to raise the demand and cause an increase in condo prices and rents, along with a ripple effect — everything, from housing, taxes and goods and services tends to go up. So what? say the affluent yuppies and and boomers. They can afford it, so they don’t much care about the plight of ordinary lower middle class people who form the indigenous population  of the gentrifying city neighborhoods, and who feel an economic squeeze as prices of everything rise. Upshot: those indigenous folks are beginning to scream at the prospect of being displaced from their home turf. After all, they say, they resisted the last half-century’s exodus to the suburbs, endured the cities’ downward slide, and kept the old city neighborhoods going, more or less. So don’t they deserve a break by way of being able to stay put in their old neighborhoods even as the cost of living is moving up? So they complain about the rising cost of living that is squeezing them out.

And where there are cries of “NIMBY!” there you’ll find local politicians posturing as defenders of the downtrodden, protecting — or purporting to protect — the old down-at-the-heels neighborhoods from the dreaded process of “gentrification.” Quoth the New York Times:

“In doing so, cities are turning urban redevelopment policy on its head and shunning millions in property tax revenues that could be used to restore municipal services that were trimmed during the recession because of budget cuts, including rehiring police officers.”

Ah, but as we are fond of saying, there is no such thing as a free lunch. The incoming yuppie/boomer cohort is not interested in taking permanent city roots. The yuppies grow up, marry and move to the suburbs where life is safer and raising children is also a lot easier. As for the old boomers. . . . Well, in time they die off. So there is less long-term personal investment and less incentive to stay for the long run. So, according to the Times, cities are saying “let’s invest in the stayers.” That sounds good, but the result is that if implemented as a tax policy, incoming yuppies would get a windfall in the form of lower taxes, which they don’t need. So what the municipal mavens are coming up with is a scheme whereby the city’s old-timers would get a special property tax break, and property taxes would become a blend of old value-based property taxes and an adjustment taking the taxpayers’ income into account. In the meantime, while this is being debated, assessed value are zooming up — in Philadelphia, the relevant ones have quintupled, zooming up to $250,000 from $45,000 in the past year.

So stay tuned.

 

Be Careful What You Wish For

As we Californians have known for decades, San Francisco and its surrounding areas are the capital, or at least the West Coast capital of exclusivity — NIMBY City incarnate. Of course, urban policies, like other ideas have consequences, and one consequence of NIMBYism is that it tends to reduce housing supply while demand goes on. And in the case of highly desirable places, like the Bay Area, that means that housing prices go up, up, up. See Nick Bilton, Housing Market With Nowhere to Go (but Up), N.Y. Times, March 3, 2014, at p. B6. Go to http://bits.blogs.nytimes.com/2014/03/02/the-housing-market-with-nowhere-to-go-but-up/?ref=business

Not that it wasn’t foreseen . Back in 1979, when Agins v. Tiburon was before the California Supreme Court, Justice William Clark nailed it in his dissent when he noted that an adverse consequence of the Court’s ruling that denied recovery for regulatory takings and, indeed, denied that there can be such a thing as a regulatory taking, would be regulatory extremism that in the long run would cleave California into two states: one for the affluent folks who could afford fancy digs, and another one for the hoi polloi. That was back in 1979. And so it came to pass.

Today’s New York Times brings us a dispatch on what happened in good ol’ Baghdad by the Bay, when these urban/housing trends met an influx of denizens of Silicon Valley moving into the city. Those folks are by and large left-of-center, and talk a good game that tends to bring a warm feeling to the hearts of political liberals who are forever shedding tears over the housing plight of the poor folks. But when it comes to their own lifestyles, you are more likely to find them living the good life of the 19th century robber barons.

Thus, “Google alone, . . . minted 1,000 millionaires when it went public. Ditto Facebook. And Twitter? Some estimate 1,600. Tech worker bees are doing just fine, too, with average base salary now north of $100,000.” With over 5,000 start-ups in the city, “the influx of  well paid workers has pushed rents and home prices through the roof.”

In other words, San Francisco is a neat place to live in and to visit — if only for the views, the climate and the restaurants. So what’s not to like as a place to live, especially if you are generously compensated, have no children and don’t have to worry about the quality of local schools.? The upshot has been an upsurge of NIMBYism on a scale that is hard to imagine. Take a look at the SCOTUS opinion in the San Remo Hotel case, and you’ll get the idea. One of the city’s Supervisors concedes that “Our approach to housing in San Francisco is very dysfunctional. The system is intentionally designed to make is as difficult as possible to build new housing.” Really? Would those kindhearted folks whose hears bleed over the plight of badly housed poor minorities?

For a more recent, detailed description of what goes on in California, do read Liam Dillon, California Lawmakers Have Tried for 50 Years to Fix the State’s Housing Crisis. Here’s Why They Have Failed, L.A. Times, June 20, 2017. It demonstrates in painful detail that California legislature keeps on passing laws that ostensibly promote new housing, but go nowhere because cities and counties, where the actual construction permitting is supposed to happen, simply ignore those laws.

We could go on, but we suggest you read that N.Y. Times piece for yourselves. It’s short. But whether you do or not, do raise a glass and toast the memory of good ol’ Bill Clark who foresaw it all, and called it the way he saw it.

 

It’s that Ol’ Debbil Supply & Demand

We have noted from time to time recently that home prices in California — at least in the desirable parts of the state —  have been rocketing upward in spite of the nominally prevailing recession. How can that be, being that California is in the throes of a waning recession, but a recession nonetheless? Here is a headline from today’s L.A. Times which explains it all:

Supply of new homes for sale remains extremely low. Despite explosive housing price gains last year, builders and their financiers are hesitant to make big bets on the housing rebound.

*      *     *      *

“Despite explosive price gains last year, builders and their Wall Street financiers remain hesitant to make big bets on the rebound.

“The slow construction is among many hurdles facing buyers seeking affordable homes. Cash-rich investors — many of them buying homes to rent out, rather than resell — have eaten into supply, especially at the lower end of the market. Meanwhile, many homeowners still aren’t selling because they lost too much equity during the housing crash.

“That may seem like an ideal opening for builders to put up new developments. But Southern California’s supply of new homes had dwindled to about 2,200 at the end of last year, compared with a peak of about 19,000 in 2006, when the housing market started to collapse, according to the Real Estate Research Council of Southern California at Cal Poly Pomona.”
http://www.latimes.com/business/realestate/la-fi-new-home-shortage-20140302,0,6820450.story#ixzz2up9BH04U