The High Speed Rail Will Go Where??!

The folks at the Sacramento office of Stoel Rives, a well known law firm, inform us on their web site that

“The California High-Speed Rail Authority (“Authority”) will announce at its December 2, 2010 meeting which segment of the 800-mile HSR will be the first to be built. At its November 4, 2010 meeting, the Authority’s Chief Executive Officer, Roelof van Ark, presented the Authority’s Board members with revised corridor selection criteria for full Board discussion and direction. The Federal Railroad Administration recently sent a letter to the Authority stating that the Stimulus money must all be allocated to the Central Valley. ” (Emphasis added).

“Thus, contrary to earlier projections, the two routes in the most populated regions—San Francisco to San Jose, and Los Angeles to Anaheim—are now out of the running. The route that will be the early winner of $4.3 billion in federal and state funds and constructed first will be either Merced to Fresno (60 miles in length), or Fresno to Bakersfield (113 miles in length).”

So if this information is correct, given its prognosticative nature, it would appear that the vaunted high-speed rail service will run through the boondocks populated by comparatively few people. To us, it’s the sort of thing that leaves one wondering — who do these folks think will ride the high-speed trains between Bakersfield and Fresno?? And how will it be possible to achieve the level of ridership that is sufficiently high to pay for this caper?

Oh well. Guess we have no choice but to leave such decisions to our betters. Stay tuned and see what happens.

In the meantime, have a great Thanksgiving, and reflect on the fact that in spite of these capers that keep us entertained and insolvent, we have much to be thankful for. Keep that in mind, and enjoy your turkey, the fellowship of your family and friends, and your freedom that makes it all possible.

Pay Attention! The Redevelopment Maven Speaks.

We just came across an item that sheds light on redevelopment. Professor George Lefcoe teaches at the University of Southern California, which befits a classy guy like him. Our high regard for his acumen notwithstanding, we do differ on the virtues of redevelopment. Last time we spoke he was steadfastly in favor of redevelopment and extolled the joys and virtues of it, at least in the context of the Santa Monica beachfront area — the sort of place where God would live if He could only afford it.

So imagine our surprise when we came across the following quotation of his on the USC Law School web site. Here goes:

George Lefcoe

Los Angeles Times

October 1, 2010

“George Lefcoe was quoted about a lack of transparency at California’s municipal redevelopment agencies. In many projects, even the most basic accountability is lacking, said Lefcoe. ‘What we really want to know as taxpayers is, what kind of public funds were involved — what did we give and what did we get?’ he said. ‘You cannot get those answers anywhere.’”

We couldn’t have said it better, even if our formulation would have been more trenchant and less polite. But any way you slice it, those redevelopment guys are blowing gobs of your money, but are reluctant to tell you how they do it, as was duly noted in a recent Los Angeles Times expose that we duly noted in this blog of November 12th.  See http://gideonstrumpet.info/?p=519

In the meantime, last time we looked, the bonded indebtedness of California Redevelopment Agencies has gone up from $5 billion in 1985 to $81 billion in 2006. And counting.

Supreme Confusion

It used to be said by old-time liberals, before the days of political correctness,  that constitutional rights of all must be respected because if you deny them to some, you’ll eventually wind up denying them to others. Few things demonstrate the soundness of that concern better than a recent lengthy, front-page article in the New York Times (Adam Liptak, Justices Long on Words but Short on Guidance, Nov. 18, 2010 at p.A1). In it, Liptak makes the point that recent Supreme Court opinions on important subjects have grown long, and they tend to hedge and equivocate to such an extent that lower court judges are unable to interpret them in a straightforward fashion and are frustrated by their “marked lack of clarity” as one federal judge quoted in the Times article put it.

This is an unfortunate state of affairs, but it isn’t news. Those of us who have had the misfortune of working in the field of eminent domain and inverse condemnation, know all about this process. As the late Professor Arvo Van Alstyne, California’s leading expert on government liability, put it over 40 years ago: takings jurisprudence is “…a mass of obtuse decisional law that is only occasionally relieved by judicial common sense, pragmatism and candor.” The late California Court of Appeal Justice Roy Gustafson noted at the time, the law of eminent domain is a “hopeless mess.” Etc., etc. The late Professor Paul Bator, devoted an entire article to the depressing subject of the Supreme Court’s general lack of clarity, aptly entitled What Is Wrong With the Supreme Court? (51 U. Pitt. L. Rev. 673 (1990). Professor Bator’s still valid point was that the court was disregarding its true “customers” — litigants, their lawyers and the lower courts — who need rules to live by and doctrinal guidance in order to resolve disputes efficiently, but instead get  vague multiple-factor tests that make litigation costly and its outcomes uncertain. So in creating the chaos that the Supreme Court has been creating in the law that governs other areas, it has only been following the same old beaten path of takings law.

Liptak notes that the Justices are unwilling to make clear, definitive decisions because they fear that they may have to live with them and have to apply them in future cases where they may lead to results that are not judicially favored. But in reality, it is these long, vague opinions that are the culprit because they provide more opportunities for judicial error and ambiguity, and increase the lack of clarity that then inspires more confusion in later cases.

And of course, a major problem that contributes to this situation is the Justices’ excessive reliance on the efforts of inexperienced and ideologically besotted clerks, whose recommendation whether to grant or deny certiorari, and their production of  these lengthy, confusing court opinions, that go on for pages on end,  is often the culprit. Prime example: Justice Brennan’s reference in his clerk-drafted opinion in Penn Central Transportation Co. v. City of New York, to “investment backed expectations” whose frustration may (or may not) give rise to inverse condemnation liability.

Lowball Watch – Arkansas

We just came across the news item that an Arkansas jury rejected the State Highway Commission’s evidence in an eminent domain case of a taking of 19.26 acres out of the owners’ 72.89 tract of land for a new highway connecting Arkansas and Missouri. It took the jury only one hour to award the owners $4,670,000 million as against the Commission’s contention that the award should be $1,132,100.

High Speed Rail (Cont’d.)

 According to its proponents, the highly touted high-speed rail system will be a cornucopia of all that is socially and economically good — from saving ag land to improving the economy.  But since high speed rail is associated with the plans of the Obama administration and its so far dubious efforts to revive the economy, it is no surprise that the incoming new governors and federal legislators are cool on the idea. No surprises there.

But we learn from today’s New York Times (Michael Cooper,  Plans for Rail Projects Around the Country Are Threatened by Midterm  Results, N.Y. Times, Nov. 18, 2010, at p. A14) that “more than half of the $10.4 billion the administration has awarded for rail so far has not gone toward real bullet trains, but to build slower, conventional train lines that it hopes will form the foundation of a nationwide high-speed rail network.” Surprise, surprise!

As is so often the case, the best comment was delivered inadvertently.  It seems that  Transportation Secretary LaHood recently attended a conference in New York, where he touted the virtues of high speed rail. So far, so good. But, in the words of the New York Times,

 ”At the rail conference, Mr. LaHood. . . spoke of spending $500 billion over the next 25 years to connect 80 per cent of the country with rail. Then, although the conference was in a hotel across the street from Pennsylvania Station, where Amtrack trains leave all day for Washington, Mr. LaHood left for the airport.”

Count Potemkin Is Alive and Well, and Living In Cleveland

artistic boardup.jpg

Take a close look at the windows of this house. See the flowers? Well, they aren’t flowers. They are wooden boards with flowers painted on them, that have been set into broken windows of a vacant house to fool passersby into believing that the house is sound and occupied when in fact it is an empty eyesore.  What is amazing is that installation of these deceptive boards was ordered by a Cleveland housing court judge whose idea it was to use this method to keep vacant, dilapidated houses from looking like what they are.

This sort of thing goes back to a few decades ago when the authorities in New York similarly disguised decrepit vacant structures in the South Bronx, so the out-of-towners driving on the Cross-Bronx Expressway wouldn’t realize that they were in an abandoned, wrecked urban “war zone.”

Actually, the originator of such deception was Russian Count Grigory Potemkin (or Potyomkin if you want to pronounce it the Russian way). He was a minister of Katherine the Great, Empress of Russia, and he had phony but prosperous-looking villages erected on the shores of the Don River, so that when Her Majesty’s barge floated by, she and her retinue would be deceived into thinking that the area was prosperous, when in fact it was not. It’s  a good story but it may have been a Russian “urban legend.” Some historians dispute it. Since we lay no claim to detailed knowledge of Russian history, we leave it to the real mavens of such stuff to pass judgment on the historical origins of this caper. Our point, however, is that after decades of urban redevelopment in Cleveland this is what you get by way of accomplishment. On this caper Cleveland spent $20,000, but that sum will cover only 22 properties. And so it goes in American redevelopmentland.

To read the Plain Dealer article, check out Sandra Livingston, Program Uses Decorative Boards to Try to Blend Vacant Homes into Cleveland Neighborhoods, the Plain Dealer, August 25, 2010. For the full story go to http://blog.cleveland.com/metro/2010/08/program_uses_decorative_boards.html

  

California Redevelopment. Your Tax Money at Work. Maybe.

They’re at it again. Today’s Los Angeles Times (Jessica Garrison and Jeff Gottlieb, Bad City Finances Often Go Unflagged, Nov. 12, 2010, p. A1, at A16) reports that “Many cities that have been troubled by public corruption or mismanagement during the last decade – including San Diego, Compton and South Gate – got clean audits, even in cases in which public officials were sent to prison.”

We find this dispatch concerning the conduct of redevelopment agencies, embedded in the L.A. Times story to be of particular interest: 

 “There has been a widespread failure by auditors to make sure that cities are properly spending hundreds of millions of dollars in redevelopment money. Each year, about 100 of the state’s 391 municipal redevelopment agencies fail to file annual reports as required by law. Auditors are supposed to flag that failure as a major audit violation that can be followed up by the attorney general’s office, but auditors catch the problem in fewer than 20% of cases, according to a recent report from the state Senate Office of Oversight and Outcomes.”

Another Redevelopment Project Hits the Dirt

A while ago, there was much stir among eminent domain bloggers about the Minnesota case in which that state’s intermediate appellate court overturned the City of Eagan attempt to condemn private property for redevelopment (765 N.W.2d 403). Being a congenital pessimist, we never carried on about it, and predictably it turned out to be a short-lived victory for the good guys — the Minnesota Supreme Court reversed and held that when the redevelopment plan required that it could not proceed without an enforceable contract with a redeveloper, that did not mean that the redevelopment authority actually had to have such a contract.

To learn how the court reached that conclusion, see the Minnesota Supreme Court decision Eagan Economic Development Authority v. U-Haul Company of Minnesota, 787 N.W.2d 523 (2010). We suggest a stiff drink beforehand because this opinion is a masterpiece of length, complexity and obfuscation. Don’t take our word for it. Read it yourself.

But we wish to leave you with the following piece de resistance  buried in the opinion:

“. . . much of the planned redevelopment never occurred. Several different developers submitted development proposals and the [Eagan Development Authority] pursued those proposals, but the projects did not materialize because the developers withdrew their proposals.”

Of course, that did not keep the court from letting the condemnation proceed.

So as we never tire of noting: Your tax money at work.”

Florida Voters Zap “Ballot Planning”

Overshadowed by all the big political news of last week’s election, is the fact that Florida voters rejected a proposal that would have required voter approval for all state and local land-use planning changes. The “No” vote was 67%.

See Polyana da Costa, Voters Resoundingly Reject Land Use Amendment, Daily Business Review, November 2, 2010.  For the full story go to                         http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1202474332203&hbxlogin=1

Gifts of Public Funds? Oh, Give us a Break, Rick

Evidently one of our blogging colleagues, Mr. Rick E. Rayl, who runs the Nossaman blog on eminent domain in California (see the blogroll on the right margin of this page), must have spare time on his hands because he has been worrying  — oy, how he worries — about settlement of eminent domain cases, that are above the value figures in the condemnor’s appraisal. He worries about his friends’ concerns that this may be in the nature of illegal gifts of public funds, forbidden by the state constitution in California and elsewhere. See his blogs When (If Ever) Does a Payment Become an Illegal Gift of Public Funds, Oct. 19, 2010, and FollowUp on Pombo Decision, Nov. 2, 2010.

Mr. Rayl is a serious gent, so we don’t think he is putting us on, but just in case, this topic may be worth a few words.

Every study of this subject, starting with congressional hearings in the 1960s (that led to enactment of the Uniform Relocation Assstance Act), to the famous Nassau County (New York) study published in the Columbia Law Review, as well as studies and press exposes in California, Georgia, Minnesota, and Utah, have shown time and again that on the whole, condemors’ offers are too low, and on occasion below the condemnor’s own appraisal reports. Condemnees who reject condemnors’ offers and go to trial overwhelmingly recover more than the offer or the condemnors’ evidence — whether the case is tried before a judge or a jury.

The proof of the pudding lies in the fact that property owners’ lawyers in eminent domain cases usually work on contigent fees, the important feature being that the contingency is calculated NOT on the entire recovery, as is the practice in tort cases, but only on the overage — on the increased amount that the owner eventually recovers over and above the condemnor’s offer or evidence. So it follows that either (a) condemnors’ offers and evidence tend to be on the low side and can usually be refuted in court, or (b) condemnees’ lawyers are silver-tongued magicians who can reduce jurors’ and judges’ mind to putty with their soul-stirring rhetoric without evidentiary support. Well folks, having been one of those condemnees’ lawyers for some 40 years we can assure you that alternative (b) just ain’t so, even if we wish fervently that it were.

If condemnors’ offers were generous, condemnees’ lawyers couldn’t make a living trying eminent domain cases and would have to chase ambulances. But they don’t. All eminent domain lawyers known to us — and we know a lot of them — are doing right well and appear to be prosperous.

The fact is that on the whole, condemnors’ offers and deposits run on the low side, sometimes in humongous amounts — the local champion being the 2000 case of CalTrans v. Southern California Edison Co., where the state deposited $250,000 into court, but the verdict was $49,500,000. That’s right, forty-nine-and-a-half million, with the Court of Appeal affirming, and the California Supreme Court expressly declining to review the valuation aspect of the case. If you want to see some more cases like that, check out 40 Loyola L.A. Law Rev. at pp. 1146-1148.

But if Mr. Rayl wants to worry about gifts of public funds, we dig it. Here is something for him to sink his teeth into. What about those scandalous “land write-downs” whereby a redevelopment agency acquires private property at fair market value that may run into millions, and then turns around and gives it (or sells it for $1 — same thing) to a redeveloper so he can make a profit that is supposed to generate the “public benefit” that is the rationale of redevelopment takings? How about that? Is that a gift of public funds? Is it such a gift where the redeveloper gets the money but the redevelopment project goes bust with nothing to show for it? Shouldn’t the tapayers get their money back? Like in the Kelo case where the plan called for giving the redeveloper possession and use of a 91-acre waterfront parcel, for $1 per year. Nice deal if you can get it, isn’t it?

That seems to us to be one hell of a lot more of a gift of public funds than a settlement of a condemnation case in which the condemnor realistically assesses the prospects of litigational victory vs. defeat, and concludes that prudence dictates the conclusion that the public may be better off settling for more than its lowball appraisal, thereby saving itself the cost of an increased award (with interest), the costs of litigation and the risk of having to pay the condemnees’ statutory attorneys’ fees and other litigation expenses, as in that Pombo case that we wrote about on October 31, 2010 (Lowball Watch – California) http://gideonstrumpet.info/?p=512  Or how about refraining from blowing Kings’ ransoms on “public projects” that never get off the ground, like that “Intercontinetal” $100 million municipal airport in Palmdale, that after decades of trying had to be shut down because no airline could operate from it?

So in the end we agree with Mr. Rayl: public money should not be squandered on filling the pockets of private parties. Perhaps we can start with shutting down most redevelopment projects that are a prime offender.