Archive for December, 2011

Lowball Watch — Missouri

Saturday, December 31st, 2011

An interesting decision comes to us from Chesterfield, Missouri. Local station KSDK reports the outcome of a local eminent ddomain case, as follows.

St. Louis County offered $238,000 for 15 acres of the owners’ land  that had been in the family for 100 years (that fact is significant in Missouri, and we will come back to it presently). The owners contended that fair market value was $1,300,000, and that is just what the jury awarded. In addition, the owners were awarded $150,000 in interest, and another $650,000 for what in Missouri is called “heritage value,” defined by local law as a 50% addition to the verdict in cases where the subject property has been owned by the same family for over 50 years — you could call it a sort of solatium payment that has to be made to people whose land has been in the family for a long time.

The bone of contention was the County’s unsuccessful argument that the subject property was in a flood plain, with wetlads and access issues. The jury evidently disagreed or discounted the couty’s argument.

The total award thus comes to almost nine times the county’s offer.

The story is Jeff Small, Chersterfield Family Gets $2 Million for Land Taken by Eminent Domain, KSDK.com, December 30, 2011 – click here http://www.ksdk.com/news/article/293842/3/Chesterfield-family-gets-2-million-for-land-taken-by-eminent-domain

Reflections on the Demise of Redevelopment in California

Friday, December 30th, 2011

If you stop and think about it, there isn’t all that much to say about the California Supreme Court’s endorsement of the Legislature’s abolition of redevelopment agencies in California, except maybe to ask rhetorically what took them so long?

Whatever the motivation behind urban redevelopment back in the olden days when it was promoted as slum clearance, in time it became an out-and-out racket. Don’t take our word for it. In the words of Zev Yaroslavsky, Los Angeles County Supervisor, and former member of the Los Angeles City Council, as reported by today’s Los Angeles Times:

The projects “had nothing to do with reversing blight, but everything to do with subsidizing private real estate ventures that otherwise made no economic sense,” Yaroslavsky said. Redevelopment over the years “evolved into a honey pot that was tapped to underwrite billions of dollars worth of commercial and other for-profit projects.” http://www.latimes.com/news/local/la-me-redevelopment-20111230,0,7617164.story

You can find a more detailed discusion of our views  in Gideon Kanner, “Fairness and Equity,” or Judicial Bait-and-Switch? It’s Time to Reform the Law of “Just” Compensation, 4 Albany Gov’t L. Rev. 38 (2011) — we commend to our readers’ attention the part at pp. 67-73, subtitled Has Redevelopment Been Worth It? We particularly urge our readers to peruse the part at pp. 69-71, which enumerates the factors that inspired urban populations to move to the suburbs . The fundamental, insoluble problem with post-WW II urban blight, and with the redevelopment undertaken in order to cure it, has been the fact that even as in the aftermath of the wretched Supreme Court opinion in Berman v. Parker, an army of bulldozers started rumbling through American cities, tearing down low and moderately-priced housing, displacing hundreds of thousands of innocent people annually under conditions of undercompensation, Americans were moving out of cities en masse. They left behind worse urban conditions than the ones that were used as the basis for redevelopment. If you need to be convinced take a look at the online pictures of today’s Detroit. Of course, redevelopment was not the sole cause of this migration; government policy encouraging and subsidizing suburban living was a bigger factor.  But however motivated, the results became obvious. In older American cities, entire blocks were reduced to uninhabited rubble and there is no arguing with that. Redevelopment didn’t make a dent in the problem. Take a look at Detroit, Cleveland, Buffalo, Gary, Camden, Bridgeport, Flint, Newark and even Philadelphia, Pittsburgh, Kansas City, St. Louis and Oklahoma City, and you’ll get an idea of the enormity of this problem. This process intensified as urban conditions grew worse and law enforcement (particularly in the 1970s) less effective. Urban freeways contributed by taking out large areas in cities, and replacing urban dwellings with rights-of-way,  interchanges and parking lots. Add to that urban riots that began in the 1960s, and the impact of forced student bussing, and what you have is a set of irresistible motives for the middle class — the urban backbone — to move out of cities to the suburbs.  Between 1950 and 1968, 2.38 million housing untits were destroyed by redevelopment. By the mid-1960s, some 111,000 families and 17,800 businesses were destroyed by eminent domain annually. As amply documented by Bureau of Census statistics, and  in recent writings of Joel Kotkin, this urban out-migration process continues until this day, with only a small trickle of empty nesters and trendy yuppies moving the other way. People find living in the suburbs more pleasant and economically more attractive (even today) so they vote with their feet to get away from blighted cities.

So as the 20th century wore on, the bulldozer model of  urban redevelopment became not only an ineffective but also a hopelessly misguided process that often did more harm than good. Jane Jacobs who harshly criticized it in her book THE DEATH AND LIFE OF AMERICAN CITIES, is now widely acknowledged to have been right.

Also, Lord Acton got it right – power corrupts. So with the enormous and de facto unreviewable power casually conferred by the courts on redevelopment agencies, it didn’t take long for the process to become corrupted — instead of clearing slums, it became a device for wresting wanted urban land with development potential from its rightful owners, and reconveying it to municipally favored redevelopers under cover of the assertion that some of the fruits of their financial success would trickle down to the community, and thus the process could be judicially stuffed into the rubric of “public purpose” that according to Justice Stevens’ Kelo opinion was a “more accurate” meaning, no less, of the ”public use” specified in the Constitution. For a wonderful, albeit unintended, illustration of this point read Professor George Lefcoe’s article, Finding the Blight That’s Right for California Redevelopment Law, 52 Hastings L. J. 991, in which he, a gung-ho supporter of redevelopment, candidly confessed that by the term “blight that’s right” (an expression first coined by Bernard Frieden and Lynn Sagalyn in their book DOWNTOWN, INC. – HOW AMERICA REBUILDS CITIES) redevelopers mean, not blighted urban land — they won’t touch it with a ten-foot pole. What they want is an area that is sufficiently downscale to pass muster before condemnor-minded judges as “blighted,” yet sufficiently upscale to be of interest to would be redevelopers whose projects, after all, depend on the presence of people who are able to patronize their newly built shopping malls, car dealerships and office buildings. The urban poor don’t qualify, so land in areas populated by them is of no interest, and genuine slums go without redevelopment. The headline of a New York Times story tells it all: Andrew Jacobs, A City Revived but With Buildings Falling Right and Left, N.Y. Times, Aug. 20, 2000, at p. A14, reporting that in Philadelphia, in spite of redevelopment activity downtown, old rotten buildings have been literally falling down in less favored parts of the city.

So redevelopment has been, if not a failure, then at least a process that exacted an intolerable price from American urban society. So as we conteplate the demise of redevelopment in California, the phrase “good riddance” comes to mind. From now on (assuming the new robber barons who have feasted on the misery of people displaced by their subsidized grandiose schemes, fail to get the California legislature to reverse itself) urban redevelopers won’t be able to ride on the backs of powerless urban populations; they will have to pay the true cost of doing business and of rebuilding cities. And Costco will have to pay the true cost of its big-box stores.  Oh, the horror of it!

Follow up: As you no doubt surmise, the outpouring of “serves-’em-right” and “the-end-of-the-world-is-upon-us” writings has begun. For a good collection (with links) check out inversecondemnation.com. Good stuff, that. Our favorite is a piece by former California Deputy Attorney General and our erstwhile intellectual adversary Richard Frank on legalplanet.wordpress.com (link included in the inversecondemnation.com post) who concludes his post with this gem of a line: “Political pundits and land use experts will debate the legacy of California redevelopment agencies, a conversation that will be both robust and useful. But it seems indisputable that the redevelopment community’s actions over the past six years have set a new standard for political tone-deafness and ineptitude.” Well said, Rick. But then, even overlooking the wisdom of Lord Acton, it is said that pride goes before the fall. But Frank forgot to mention that the track record of redevelopment agencies has also consistently set a new low for civic (and ordinary, garden variety) morality. At least the fictional Robin Hood had the flimsy excuse that he robbed the rich for the benefit of local villeins, though in reality he did nothing of the sort. But redevelopment agencies have consistently robbed the poor (and the taxpayers) for the benefit of the very rich to whom they reconveyed the land taken by them, at a discount or free of charge, calling it “land writedown.” So even if you are a lefty redistributionist type who rails against the government stuffing the pockerts of the rich, your civic and moral values should cause you to upchuck over that one.

 

 

 

A Case of Eminent Domain, or Intercorporate Back-Scratching in Louisiana?

Thursday, December 29th, 2011

The New York Times of today, runs a great story of environmental litigation, cum eminent domain with a soupcon of what looks suspiciously like intercorporate intrigue. See Campbell Robertson, Bitter Twist In Louisiana Family’s Long Drilling Fight, N.Y. Times, December 29, 2011.  Here is the short version.

Farmer A leases land to oil company B which then sets out to operate oil wells and pipelines on the subject property. All goes well for years — or so it seems — until one day the farmer learns that the oil company has contaminated the subject property so severely that he demands cleanup or lease termination. Litigation ensues, that has been pending for so long that 13 members of the lessor’s family (who are heirs to the title) have died awaiting the result.

But then, oil company C which has been operating quietly across the street for 60 years, steps up and proposes to condemn the subject property in order to, er, protect it. So what’s the problem? The problem is that the condemnor company C just happens to be a subsidiary of oil company B. Got it? Company C offers around a million bucks which the farmer thinks is grossly inadequate (the current lease payments are over $100,000 per year). So oil company C files an eminent domain action around Thanksgiving.

As far as we can tell, no hard evidence of collusion between the two oil company has been produced, but the litigation is still very young, so it remains to be seen how things unravel in the glare of litigation. But even at this stage, interesting issues of public use and necessity seem to be hovering around this controversy.  The owner is quoted by the Times as contending that the two companies are in collusion, which, if true, would raise interesting issues, such as whether improper motives of the condemnor can be a defense to the condemnation, or whether one should look only to the use to which the condemnor means to put the taken property, irrespective of its subjectiove motives. Then there is Justice Kennedy’s admonition in his concurring opinion in Kelo v. New London, that pretextual condemnations are a no-no. So if the Louisiana courts find that this is a collusive action, it would pretty much follow that it is a pretext to rescue company B from having to face the consequences of contaminating the subject property. We will look forward to learning how it all turns out.

We now have a real interest in this case because the N.Y. Times concludes this story by quoting your faithful servant. Can’t be all bad.

Ding, Dong, The Witch Is Dead! California Supreme Court Approves Legislative Abolition of Redevelopment Agencies.

Thursday, December 29th, 2011

We haven’t seen the opinion yet, being that it was filed a couple hours ago, but this morning the California Supreme Court upheld last year’s legislative enactment abolishing redevelopment agencies in California. It held that the legislature, as the government body that created redevelopment agencies, also had the power to abolish them.

The decision also has a special wrinkle to it. The California legislature had also adopted a statute that would permit redevelopment agencies to stay alive, provided they shared a large part of their revenues with the state. That part of the law was stricken down. In 2010 California redevelopment agencies successfully promoted a statewide proposition that would prohibit transfer of redevelopment funds to the state for other uses. Therefore, such a fund transfer would be unconstitutional under the state constitution, and was therefore invalid.

We find it of particular interest that the State’s argument included the point that over time redevelopment agencies got to abuse the redevelopment laws to take tax money that by rights should have gone to schools and local services and devote it to other purposes. Hah! So where were these hypocrites all these years while these abuses were going on and copious amounts of public money were wasted on “redevelopment projects” many of which failed and never got off the ground, while the people whose land was taken for them went undercompensated? The author of the majority opinion is Justice Katherine Werdegar, with a one-justice dissent by Chef Justice Tani Cantil-Sakauye.

We expect we will have more to say after reading the opinion, so stay tuned.

Follow up. To see the opinion go to http://www.courtinfo.ca.gov/opinions/documents/S194861.PDF. This is a whopper of an opinion that runs to 83 pages with a 27-page dissent.

Also, a noteworthy feature of this opinion is that it cites a number of law review articles, mostly in support of the court’s recitation of pertinent history of California government organization and financing.

Check out today’s Los Angeles Times which covers the aftermath of the court’s ruling – Maura Dolan, Jessica Garrison and Anthony York,  California High Court Puts Redevelopment Agencies Out of Business, December 29, 2011. Click http://www.latimes.com/news/local/la-me-redevelopment-20111230,0,7617164.story.

The bottom line: Over the years, California Redevelopment Agencies grew so powerful, so rich and so arrogant that they lost their ability to perceive reality and to make sensible judgments. When they arrogantly took the position that their funds were sacrosanct even in times of great state financial distress, when every other government entity had to tighten its belt, they asked for it by de facto challenging Governor Jerry Brown to do anything about it. He did. The legislature agreed. End of story.

 

Lowball Watch – Missouri

Wednesday, December 28th, 2011

The Missourian newspaper reports the results in a case of taking of 2.6 acres for a highway widening in Franklin County, Missouri. Commissioners awarded $262,500 and the State deposited that amount into court. But after trial, the jury awarded an additional $937,500, for a total of $1,200,000. The owner’s appraiser testified to $945,000, and the owner himself testified to $1,745,000.

The bone of contention was the owner’s position that for fire and safety reasons, the remainder needed two driveways to be successfully developed, but the taking did away with one, and the State would not consider a redesign.

The DOT lawyer is quoted as saying that an appeal by the State is unlikely.

For the story, go to Bill Miller, Jr., Man Awarded $1.2 Million in Condemnation, The Missourian, December 27, 2011 – click here.

California High Speed Rail (Cont’d.)

Tuesday, December 27th, 2011

Is there no end to it? Evidently not. Today’s Los Angeles Times reveals that the deal between California and the feds who are partially financing the California high-speed rail line — whose first link is supposed to run between Bakersfield and Fresno, down the largely empty middle of the Central Valley, and coincidentally, the middle of nowhere — provides that just in case the high-speed rail project does not pan out, the tracks built for it would be used by Amtrack. Sounds  prudent in the abstract, but there are two hitches to it. First, Amtrack wants no part of it. It has not done any studies, including cost-benefit studies of the impact of such an operation on its existing service. Second, the high-speed tracks have been designed to bypass svereal small towns, which is where the central valley population that would presumably use the conjectured Amtrack service line lives. So it’s difficult to see how Amtrack could serve those folks.

Altogether, it’s a jim-dandy contigency plan, except that it can’t accomplish its intended purpose.

For the L.A. Times story, see Dan Weikel and Ralph Vartabedian, Plan to Use Amtrack as Fallback for High-Speed Rail Criticized, L.A. Times, December 27, 2011 – click here.

Lowball Watch – Indiana

Friday, December 23rd, 2011

On December 14th, the Indiana Court of Appeals affirmed the judgment in favor a landowner whose 73-acre property had been taken for expansion of the Clark County Regional Airport. The airport deposited $200,000 in 2009, but the jury verdict came to $865,000.

The bone of contention was highest and best use. Though used for agriculture, the land was zoned for light industrial, and the owner’s appraiser thought that this was its highest and best use. The County’s appraiser opined that since the land was in a flood zone it could only be used for agriculture.

By our calculator, the increase was $685,000 over the County’s deposit, and was almost three-ands-a-half times the County’s deposit.

The story is Ben Zion-Hershberg, Southern Indiana Airport Loses Appeal in Land Taking, Louisville Courier-Journal, December 23, 2011click here.

Eminent Domain in Armenia

Thursday, December 22nd, 2011

Alas, it’s the same the whole world over. Word comes from Armenia about an all too familiar controversy over land. According to hetq online, protesters charge that, using eminent domain, the government is seizing privately owned land in the village of Kajarants, and reconveying to local mining companies. Tigran Khzmalyan, Karajan Eminent Domain Architects Are “Bloodsuckers,” 20 December, 2011. Click here.

Unfortunately, the story does not provide any details of the controversy, and contains no information as to the compensation (if any) that is being provided to the protesting land owners. However, an earlier article (click here) reporting the resignation of the local mayor in protest, refers in passing to a “land swap.”

China — End of the Wukan Rebellion Over Land Seizures

Thursday, December 22nd, 2011

The  Wukan rebellion over government land seizures in the village of Wukan, that we have been keeping track of in this blog (click here), has come to an end. The New York Times reports (Edward Wong, Leaders End Protest in China Village, N.Y. Times, December 22, 2011 (click here) that facing the inevitable (in the form of massing Chinese troops), leaders of the Wukan protests have announced their end, and took down their banners.

“The land dispute that ignited the protests remains unresolved.”

For a fuller report on the Wukan protests, see Michael Wines, Revolt Begins Like Others, But Its End Is Less Certain, N.Y. Times, December 17, 2011, at p. A6.

Remember the Coming Detroit Trolleys? Well, You Can Forget About Them

Monday, December 19th, 2011

The Wall Street Journal brings the dispatch that Detroit has changed its mind, and is abandoning its plans to build a $600 million light rail in the  city. Sic transit gloria transit. See Mattew Dolan, No Trains for the Motor City, Wall St. Jour., December 16, 2011 — click here.

Instead, Detroit now plans to use buses to transport people to their jobs in the suburbs. Which brings to mind an interesting prophecy. Back in 1944, Detroit Mayor Edward J. Jeffries was testifying before the Congressional Committee on Roads, and in response to a question, said: “I am not sure whether bringing people [into the heart of the city] more expeditiously and quicker [by freeways] than they have ever been able to get in before will not be the ruination of Detroit.” “By this Jeffries meant that the proposed highways which were designed to make the center more accessible to the periphery, would also make the periphery more accessible to the center. As a result more people would move farther away until there is nothing left [in Detroit] but industry — a development that would bankrupt the city (and devastate its central business district).” Robert M. Fogelson, DOWNTOWN: ITS RISE AND FALL, 1880-1950, At 117.


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