Monthly Archives: April 2014

The Clippers and Eminent Domain — It Was Only a Matter of Time

We just knew it was coming sooner or later since there is an eminent domain angle to just about everything, including professional sports franchises. Some jerk named Harvey Wasserman has posted a piece on line urging that in light of Donald Sterling’s racial transgression, the Clippers be taken from him through the use of eminent domain. Click on http://www.truthdig.com/report/item/eminent_domain_the_real_solution_to_scumbag_sports_owners_20140429

Overlooking the little problem that denying a politically incorrect bad guy his First Amendment rights is not exactly what would appear to be the “public use” required by the Constitution as a condition to the exercise of the power of eminent domain, there is the little matter of determining the amount of compensation.

Wasserman allows as how the value of the Clipper franchise should be at least $575 million. So does Wasserman propose to pop that sum — actually more, keep reading — out of his own pocket? Don’t be ridiculous! He wants you and us — the public — to pay, using “other people’s money” as Margaret Thatcher used to say.

Also, wheeler-dealer Wasserman does not appear to be aware of the fact that by California statute, the just compensation payable in eminent domain is the highest price that the subject property would bring in a voluntary, private, arm’s length transaction, disregarding any negative impact on value caused by the contemplated eminent domain action or its imminence.

So don’t just stand there, people. Dig into your piggy banks so Harvey can enjoy watching the Clippers play on your — not his– nickel.

Follow up. CNN brings the dispatch that a clutch of show biz and computer types (including Oprah) are circling over Sterling and the Clippers. CNN even quotes a professor to the effect that the Clippers are worth as  much as $1 billion. We can’t wait to see how it all turns out. We also can’t wait to see who will represent Sterling and the Clippers (which, it say here in the newspaper, are not his personal property but are held by a family trust). When the Raiders’ bacon was in the eminent domain fire, they were represented by San Francisco’s heavy hitter Moses Lasky whose fees came to $2 million (paid by the city), with your faithful servant acting as a humble spear-carrier in the background (and whose fees, alas, were nothing like that, more’s the pity).

Second follow up. If you get the chance, do read the letters to the Editor in today’s N.Y. Times (5/1/14). It would appear that the Great Unwashed — at least what passes for the Great Unwashed in the pages of the N.Y. Times — is not crazy about the treatment meted out to Sterling. Interesting.

Our system forbids the taking away of miscreants’ constitutional rights — like freedom of speech and association and the freedom to own lawful property from even seriously naughty individuals like murderers, rapists, robbers and all those other folks who, after doing awful things are the object of constitutional protection when called to account.* So why is it suddenly de rigeur to inflict all that on Sterling who hasn’t actually done anything; only for being bigoted and stupid, and forgetting the World War II cautionary adage (that he surely is old enough to remember) that loose lips sink ships. So maybe he displayed blameworthy attributes for which he deserves blame but that is not something that justifies stripping him of his constitutional rights.

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* Of course we don’t know what’s in the Sterling/NBA contract. If he agreed to be treated this way, tough cookies. But I hope you won’t mind if we await judgment on that one. Remember, he paid some $12 million for the Clippers, and now stands to collect anywhere from $500+ million to $1 billion, taxable at long-term capital gains rates. Oh, if one could only be “punished” like that.

Lowball Watch — Virginia

Because of its first-person sincere-sounding tale of a citizen’s confrontation with a lowball offer, and its happy ending, we reproduce this story in its entirety.

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Jack Remembers: In eminent domain, if God can be miserly so can elected officials, Richmond News (On line), Apr.25, 2014.

By Jack Hackley

This is an election year and few people realize when they vote for mayor, aldermen, county commissioners and some state officials, they are actually giving these people the right to take their property at whatever price they so desire.

 
It is called “power of eminent domain.” It is the ultimate power we give our elected officials and it should not be abused.

 
Our farm is located on the edge of town bordering I-70.  We have been hit with eminent domain seven times, probably a state record. All have been a disaster, and the last one the worst.  The city of Oak Grove put in a new sewer plant and had to go through a high fertility field on our property with 2,000 ft. of sewer line and five manholes.  For this 20-foot easement and five manholes that we would have to farm around forever, we were offered $145.  The city had paid an appraiser $7,000 to come up with that figure.

 
The mayor at the time had publically stated that God had made all of his decisions pertaining to the city.  After being offered $145, he had almost convinced me that God was a miser.
When I complained to him and the aldermen, they informed me that the city manager was handling this acquisition.  When I went to the city manager, he informed me that since they had to take us to court it was now in the hands of the city attorney and his associates.

 
I was never able to determine what the city paid a fleet of lawyers from Lee’s Summit to go before a Lexington judge to defend the $145 offer.

 
Everyone I communicated with in the exercise of eminent domain across our property, the only fair one was the judge who told the lawyers and the city administrator to go back to Oak Grove and negotiate in good faith.
We had to hire a lawyer and finally received $12,000 instead of $145.

 
So remember when you vote, ask yourself this question: “If this office holder takes my property, will he give me a fair price?”

Jack can be reached at PO Box 40, Oak Grove, MO 64075, or jack@aol.com.  Visit www.jackremembers.com

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Postscript: With all due respect, Mr. Hackley’s statement that government officials can give land owners whatever price they desire for land being taken, is incorrect. As Mr. Hackley demonstrates, you can fight city hall and win. All it takes is a competent lawyer who knows his business, who in this case saw to it that Mr. Hackley was awarded over ten times the amount of money the county offered for his land.

Disruption of our Favorite Blog “www.inversecondemnation.com” Is Temporary.

We received the following dispatch from our fellow eminent domain blogger and friend, concerning the disruption in the availability of his blog:

“According to Robert Thomas, his Inversecondemnation blog (www.inversecondemnation.com) has been thrown off-line for the past few days, due to a “distributed denial of service” attack on the blog’s host, Typepad. This attack has affected thousands of blogs, making it impossible to view them or post new items. Robert writes that Typepad reports that the FBI is on the case, and for now, there is no ETA on a fix (but they’re working on it. See http://techcrunch.com/2014/04/21/say-media-owned-blogging-platform-typepad-enters-day-5-of-on-and-off-ddos-attacks/).

“Robert asks that his readers please be patient, and promises that he’ll return to Inversecondemnation.com’s regularly scheduled programming soon (or so they tell him).”

If You Spend It Here, You Can’t Spend it There — Quote Without Comment

 

“Of the many factors holding back young home buyers — rising prices, tougher lending standards, a still-shaky job market — none looms larger than the recent explosion of college debt.

“The amount owed on student loans has tripled in a decade, to nearly $1.1 trillion, according to the Federal Reserve Bank of New York. People in their 20s and 30s — often the best-educated and highest-earning among them — owe most of that tab. That is keeping a crucial segment of home buyers on the sidelines, deferring one of the traditional markers of adult success.”  http://www.latimes.com/business/realestate/la-fi-0420-student-debt-house-2-20140420,0,7975649.story#ixzz2zRESk5nS

Middle Class Leaving Cities — Quote Without Comment

“[I]ndependent-minded, urban middle classes are quintessential swing voters. They can create political trouble for an unsympathetic mayor—and that’s why leaders in Chicago, New York, and elsewhere aren’t going to lift a finger to try to halt their flight. Indeed, in Chicago, even the black middle class is bailing. The city’s leadership appears unconcerned.”

“To the extent that the middle class abandons Chicago and New York, the Democratic Party’s stranglehold in such places will only tighten. In this light, the dramatic changes in Chicago since 1970 shouldn’t be seen as merely an accident of fate, but rather as a political result directly tied to the interests of the Democrats running America’s third-largest city. Urban liberal politicians may see value in continuing to beat the “tale of two cities” drum. Just don’t expect any of these big-city mayors to reach out to the middle class any time soon.”

Aaron M. Renn, Chicago’s Vanishing Middle Class, City Journal, April 16, 2014.  http://www.city-journal.org/2014/eon0416ar.html

Nobel Prize Worthy Discovery: If You Raise Prices, the Demand Falls

The New York Times reports that young adults are leaving better suburbs and moving to cities. Why would they do a thing like that? Because on account of the soaring home prices, they can’t afford to start a household of their own in the desirable suburban areas where they grew up, so they move to cities where they can afford to join the gentrification trend, and if necessary, share an apartment with one or two roomies, saving a bundle in the process. For example, Rye, NY, a posh suburban community, “had a 63 percent decrease in 25- to 34-year-old residents and a 16 percent decrease in 35- to 44-year-olds.” Joseph Berger, Suburbs Try to Prevent an Exodus as Young Adults Move to Cities and Stay, N.Y. Times, April 16, 2014.

According to a housing maven quoted by the Times: “The greatest population losses, . . . were in ‘the least diverse communities with the most expensive housing, which happen also to be those that have almost no affordable multifamily housing.” Amazing. Don’t that beat all?

This is an important news story, but it leaves us wondering what took the Times so long to take note of it and why the tone of its coverage in one of discovery of surprising news. We were taught in Econ 101 that if you raise prices, you reduce demand. Yes? Any question about that?

Bubble, Bubble, . . .

A quote from today’s L.A. Times says it all:

“Southern California home prices are surging as the spring buying season heats up, with the median price in March hitting $400,000 for the first time in six years.

“But a deeper look at the market reveals a recovery divided between the rich and everyone else.

“The market for high-dollar homes is hopping, with sales on the rise and buyers launching bidding wars. But sales of low- to medium-priced homes have plummeted during the same period — with many potential buyers priced out….” Tim Logan and Andrew Khoury, Home Prices Surge, Sales Plunge, L.A. Times, April 16, 2014, front page, above the fold.

http://www.latimes.com/business/realestate/la-fi-home-prices-20140416,0,4794538.story#ixzz2z43sCMIL

So y’all think that a home market where half the homes sell for over $400,000 isn’t going to end badly? What do you suppose will happen when interest rates go up?

We again  remind our readers, as we do regularly, that back in 1979, in his dissent in Agins v. Tiburon, California Supreme Court Justice Willam P. Clark, warned that California’s extreme regulatory climate would lead to a cleavage of the population, and its division into the well housed rich and others.

So, Shall We Move from the Suburbs to the Cities Like Those Wonderful Modern Planners Want Us To?

For the past few years we have been getting the new “progressive” planners’ “party line” that suburbs are icky and passé, and that enlightened folk are abandoning them and moving back to cities. Alas, much of that appears to be BS. Commentators who track Bureau of census figures, tell us otherwise. As we note in this blog from time to time, that vaunted “return to the cities” is largely a trickle consisting of young, well paid singles, and well-heeled middle aged boomers, both of whom tend to favor hip city neighborhoods, but neither of whom have to contend with the burdens and problems of raising and educating children in today’s shabby American cities.

Now drops the other shoe. Today’s New York Times (front page, below the fold) brings the news that — in the words of the headline — In Many Cities, Rent Is Rising Out of Reach of Middle Class, April 15, 2014, at p. A1. Whereas historically, city residential tenants would pay no more than 30% of their gross income for housing, now it’s more than that, ranging from 47% in — where else? —  Los Angeles, down to 35.8% in Hattiesburg, Mississippi. A Zillow study “found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income.” Now that may be cool if you are a well-paid techie living in San Francisco and being transported to your Silicon Valley office gratis in a luxury bus owned and operated by your employer, but it’s not so good for lesser folk.

Bottom line, “[f]or many middle- and lower-income people, high rents choke spending on other goods and services, impeding the economic recovery.” Developers are building new city apartments, but as long as their product is being snapped up by the affluent yuppie/boomer market, “there is little incentive to build anything other than expensive units.” But to our thinking, not many people can afford $2000+ per month for a studio or a dinky one bedroom place (CNN.Money says the median rent in LA — which means that half the dwelling rent for more than that — is $2100)? And be careful about what you read in the papers. CNN.Money.com also says that you can buy a home in the San Fernando Valley for $200,000. Our response: Stuff and nonsense. Should you by some miracle find a Valley home at that price, you wouldn’t want to live in it. Trust us.

And so, as the sun sets in the West, be careful, be very careful before you buy the “new” planners’ pitch that cities are where it’s at. It isn’t. At least not yet; not by a long shot. Current data show that in most cases buying a house is a better economic deal than renting. And if you want to save on rents by moving to more remote parts of the city and certainly to the better suburbs, you may discover that commuting to your city job is a pain in the neck, and that transportation costs erode or negate your rent savings. Bummer.

So in our view, there is no solution in sight as long as developers are prevented from building small, modest and inexpensive suburban “starter homes” and garden apartments, like they used to do in the days of yore. Also, as long as a house is looked upon by buyers as a tax-advantaged investment rather than a dwelling, things are not going to get much better. And talk all you want about the fashionably hip foo-foo city scene, its existence is not going to attract middle-class families with children (who are indispensable to a healthy city), but who insist on reasonably safe and effective schools.

So how do the “new urbanist” planner mavens expect young suburbanities to form a city household of their own and settle there permanently when they reach adulthood? They can’t. So they do the only thing they can, which is move to a hip city neighborhood where affordable living space can be, especially if they share an apartment with a roommate or two.  In other words, as we noted years ago, the prevailing suburban regulatory climate and its consequent upward pressure on home prices, is creating an economic climate in which — unless they win the lottery, or outlive their parents and inherit the family home — young people simply won’te able to live anywhere near their parents’ homes where they were raised.

Follow up. Today’s L.A. Times (April 17, 2014) notes that the median home price in the San Francisco Bay area has topped a half-million dollars. As we noted, in the desirable parts of cities, rents are soaring out of young people’s reach. So these folks who were raised with the modest comforts of the middle class, may have to climb down the socio-economic ladder, which — we have a sneaky hunch — is just what the “progressive” new urbanists want.

 

 

The 2014 Brigham-Kanner Prize Goes to Mike Berger

2014 Brigham-Kanner Prize

Why is this man smiling? Because he is Michael M. Berger, a California appellate lawyer par excellence (former president of the California Academy of Appellate Lawyers), and he has good reason to smile. The William & Mary College School of Law in Williamsburg, Virginia,  has just announced that its annual Brigham-Kanner Prize for 2014 will go to Mike, a private practitioner from California. He will thus be the first law practitioner — as opposed to a gaggle of prominent law professors — to be the recipient of the B-K Prize which is awarded annually to an individual who has made an outstanding contribution to the subject of private property rights and their role in society. Berger tops all those professors in that he has an outstanding track record both as an advocate who has won more taking cases in the U.S. Supreme Court, and in the California state courts than any other practitioner we can think of, and whose track record as a legal commentator in the law journals beats the professoriate.

We will have more to say about this subject before long. In the meantime, if you want more details go to www.inversecondemnation.com whose impresario and our fellow blogger, Robert Thomas, has done his usual fine job announcing the award and commenting on Mike Berger’s many professional virtues. Go for it.

Full disclosure: Mike Berger has been your faithful servant’s friend for over 40 years, as well as a co-worker, co-author, and even — once — an adversary in an appellate case. As the local legend goes, we gave him his first job and he gave us our last one.

The Taking Implications of the Federal Circuit’s Decision on the Automobile Makers’ Bankruptcy — What About Those Screwed GM Bondholders?

In case you didn’t catch it, the U.S. Court of Appeals for the Federal Circuit upheld the U.S. Claims Court decision that we commented on a while back (http://gideonstrumpet.info/?p=4727). The ruling was that the automobile industry’s bankruptcy proceedings of a few years ago do not collaterally estop car dealers whose franchises were terminated by the auto makers at the government’s behest from filing an inverse condemnation case in the U.S Court of Federal Claims, claiming a taking of those franchises.   A&D Auto Sales, Inc. v. United States, Nos. 13-5019, 13-1520 (Apr. 7, 2014).  Those dealers will now have to amend their pleadings but their right of action has been upheld. If nothing else, only the U.S. Court of Federal Claims has the jurisdiction to award just compensation for takings against Uncle Sam, so anything along those lines that may have been decided in the bankruptcy court proceedings is not binding.

As usual, our colleague Robert Thomas has the Federal Circuit opinion up on his blog today http://www.inversecondemnation.com/#.dpuf , so if you are minded to go through that opinion he has a link to it, and your faithful servant, being a lazy dude, is not inclined to duplicate Mr. Roberts’ effort which, as usual, is pretty good and is highly recommended by us.

But as far as we are concerned, that decision not only opens the door to claims by solvent car dealers whose franchises were terminated by that bankruptcy, but also those of the folks whose GM bonds were nullified to facilitate that bankruptcy. The bottom line of that aspect of the case is that the UAW made out like a bandit, but the GM bondholders had their bonds de facto confiscated in order to facilitate the public purpose of perpetuating the operations of the American car industry. If it’s a constitutional “public use” to take privately owned land in order to carry water for the likes of General Motors and Chrysler (see the Poletown and Vavro cases respectively), then surely it’s also a taking, albeit an inverse one, to take individual citizens’ GM bonds — which, last we heard, are private property — in order to serve the public purpose of keeping the automobile industry going at their expense. Yes?

We are aware that the principal of the  insurance giant AIG is pursuing a taking action in the Federal Claims Court for an alleged taking of its assets in that bankruptcy. We wrote about that a while back Which may be legally OK, except that in that case AIG was saved by Uncle Sam, so it’s rank ingratitude for it to claim  compensation for a transaction that saved the bacon of the complaining party. Maybe that can be taken care of by the familiar eminent domain doctrine of offsetting benefits against the complaining party’s just compensation. We shall see.

So why shouldn’t the [former] bondholders not be the beneficiaries of the same legal reasoning? Alas, we don’t know of any such action being pursued on their behalf, and the limitations clock is ticking. Still, hope springs eternal, and we hope that someone will bring such an action on behalf of the abused GM bondholders to vindicate the Fifth Amendment and the Eighth Commandment.