Violence in Myanmar. Over What? Land Seizures, Of Course.

The latest dispatches from Myanmar inform us that local villagers, sick and tired of having their land confiscated, are striking back and letting the authorities know that have no intention of taking it anymore. When the police tried to disperse villagers protesting the land seizures, the local folks responded with violence, wounding 46 people (27 of them police officers) and killing one.

Land seizures by the police, have been going on in Myanmar for years, but something — no one has explained what — set things off this week. Something acted as the straw that broke the camel’s back. For the whole story, see Thomas Fuller, Clashes Over Land Seizures Batter the Police in Myanmar, N.Y. Times, Feb. 228, 2013, at p. A3 – click here.

Atlantic City in Trouble

Remember how introducing gambling to Atlantic City, New Jersey, was going to revitalize that down-at-the-heels community, using eminent domain when necessary? Sure you do. But it didn’t happen, did it? Sure, at first there as a flurry of new shoreline casinos, but that didn’t do much for the rest of the city. After an initial flurry, competion from Indian casinos and casinos in nearby states kicked in, and casino profits  declined around 25%. In 2003, a new casino, Revel, was proposed and the state government ponied up $261 million to help it along. Now, Revel is in bankruptcy. And so it goes.

For the whole story, see Kate Zernike, Casinos Ailing, New Jersey Tries New Ways to Bet, N.Y. Times, Feb. 28, 2013, at p. A21 — click here .

Methinks Justice Stevens Protesteth Too Much. Way Too Much.

It’s official. Justice Stevens  has done it again. While at first he hinted at the idea that the Kelo case was one of Supreme Court’s achievements that perhaps warranted a mulligan, he now concedes that as far as the American populace is concerned, it’s a lot worse than that. In his latest (second? third?) article on the Kelo case, he concedes that Kelo is viewed as the most widely despised case decided by the Supreme Court in modern times. Kelo, Popularity and Substantive Due Process, 63 Ala. L. Rev. 941 (2012).

So it seems proper to suppose that given Justice Stevens’ concession, he might have given his handiwork some thought in an effort to discern whether upon reflection, even by his lights, Kelo may have fallen short of judicial perfection by stretchng “the law” a bit too far. Right? Wrong! Instead of contemplating the possibility that he might have been, if not wrong, then at least not entirely right either, he doubles down on his Kelo effusions and purports to tell us in three easy steps why he is right and everybody else is wrong.

We could engage here in a lawyerly point by point debate, but we won’t; we have done that already. See 33 Pepperdine L. Rev. 201 and 38 Urban Lawyer 201. This blog deals with the law of eminent domain, all right, but it also deals with its other aspects, like the injustice of it (which is evidenly of no interest to Justice Stevens), its impact on society and, in this case, the common sense or more accurately, the lack thereof.

We hold to the quaint  proposition that law should rest on a foundation of common sense, and that even when it is right it should not be stretched to a reductio ad absurdum point — i.e., “public” is not “private.” Otherwise, when extreme reliance on precedent alone is what motivates judicial holdings, society finds itself in a state that Justice Holmes aptly characterized as “revolting,” and more important, governed by ”law” that not only commands no respect, but is despised by the vast majority of the people. That isn’t good, folks. It isn’t even bad. In a democratic society, that is a self-destructive form of playing with fire.

Some time ago, we came across the line that the hallmark of good law is that even the losing party should be able to explain why he lost  – he may not like the result, but he should be able to see why the judges ruled as they did. Try that with the Kelo majority opinion; go to some public gathering and try defending its holding and see what happens. Indeed, Justice Stevens tells us that he is frequently approached by friends and strangers alike, who take him to task for his Kelo ruling.

What you get from Justice Stevens’ latest article is not an explanation of why he ruled as he did, but a repeated asserion  that ”the devil made me do it,” the devil in this case being unyielding precedent. But if “the law” was as clear and firm as Justice Stevens would have his readers believe, why woud SCOTUS take the case and consider it on the merits in the first place, only to affirm it? Were his four dissentingcolleagues irrational? Not really. Whether you agree with their doctrinal bottom line or not, the dissents of Justices O’Connor and Thomas (and the votes of two more of their colleagues rejecting Justice Stevens’ position) were certainly not frivolous. Thus, by asserting that “public” means “private,” and “use” m eans “purpose,” and resorting to repetition as the sole basis for his ruling, Justice Stevens has acted out W. H. Auden’s poem that goes:

“Law, said the judge, as he looked down his nose, speaking clearly and quite severely. Law, as, I told you before; law, but let me explain it once more, law is the law.”

Thus, Justice Stevens’ point is that that Kelo is only an application of same ol’, same ol’ SCOTUS holdings in Berman and Midkiff. But it ain’t so. Berman justified the use of eminent domain and the transfer of the taken land to private parties, in order to clear slums on an area-wide basis, which the private market could not do, and which were not involved in Kelo. In spite of Justice Stevens’ effort to ring Berman’s bell by trying to make something of New London’s declining condition, the Kelo condemnation was NOT based on laws authorizing redevelopment of “blighted” urban land, but rather a candid municipal effort to improve its cash flow — which was rather strange because the Fitch bond rating service gave New London’s general obligation bonds a solid, investment grade AA- rating  (which, by the way, is higher than California’s). Thus New London’s counsel brazenly asserted in oral argument that by his lights, should a municipality decide to take and raze an unoffening Motel 6 in order to replace it with a privately-owned five-star luxury hotel, that would be a “public use.” Justice Stevens evidently agrees, but there is nothing in either Berman or Midkiff that can be tortured into reaching such a bizarre conclusion.

Justice Stevens’ next precedent that supposedly forced him to rule as he did, was Hawaii Housing Authority v. Midkiff which was said to justify the use of eminent domain to correct a malfuctioning housing market, and eliminate a legislatively posited (but economically nonexistent) local land “oligopoly.” But as astutely pointed out by Judge Cecil Poole while Midkiff was in the Court of Appeals, that was not merely wrong — it was impossible because the means prescribed by the legislation in question were antithetical to the results sought to be achieved by it. Replacing limited duration leaseholds with freehold estate titles was certain to raise, not lower, housing prices, and that is exacly what it did.  The law in question was thus irrational. The proof of the pudding came shortly after the Midkiff decision, when home prices on Oahu doubled within a few years, and instead of improving the lot of Honolulu home seekers, made it worse, as foreign (mostly Japanese)  investors and speculators prospered beyond the dreams of avarice. See 31 U. Haw. Law Rev. at 429-433, notes 30-34.

More important, Midkiff’s rationale was to correct a “malfunctioning” market for the benefit of lessees who could not buy homes, not to displace unoffending lower middle-class homeowners in order to build a spiffy, upscale neighborhood for the benefit of well-paid professional employees of the nearby Pfizer pharmaceutical company.

Nowhere in his writings does Justice Stevens defend the precedents he relies on in doctrinal terms. Instead, he  repeats, in the vein of  W.H. Auden’s judge, that “the law is the law” and that he was only following its precedential orders. But that is not the  point, certainly not at the Supreme Court level. The question is whether the application of “the law” to the facts before the court makes sense. And in Kelo it did not. Most people understand this. Justice Stevens evidently does not.

Avast, Ye Scurvy Sea Dogs!

The inimitable Alex Kozinski, Chief Judge of the U.S. Court of Appeals for the 9th Circuit, noted and widely admired for his occasionally colorful opinions, has done it again. We invite your attention to his opinion in Institute of Cetacean Research et al. v. Sea Shepherd Conservation Society, Case No. 12-35266, Opinion filed Feb. 25, 2013. To read it click here   http://cdn.ca9.uscourts.gov/datastore/opinions/2013/02/25/1235266.pdf 

Bottom line: The court took a dim view of Sea Shepherd Conservation Society’s vigilante tactics employed in harassing Japanese ships conducting research on whales, enjoined its unlawful activities, and ordered that upon remand the case be reassigned to another trial judge. We won’t go through the whole megillah, but judge Kozinski’s opening passage must not be lost to posterity, so here it is:

“You don’t need a peg leg or an eye patch. When you ram ships; hurl glass containers of acid; drag metal-reinforced ropes in the water to damage propellers and rudders; launch smoke bombs and flares with hooks; and point high-powered lasers at other ships, you are, without a doubt, a pirate, no matter how high-minded you believe your purpose to be.”

 

 

“Never Today!” — Alice In Wonderland Goes to Washington

As our readers know, we often take admiring looks at our colleague’s blog www.inversecondemnation.com because Robert Thomas who runs that blog covers developments in the courts to an extent we don’t. We just took such a peek, and wow! Don’t miss his latest posts having to do with court decisions that, given the nature of this field, are replete with almost indescribable procedural twists and turns that suggest to an unbiased mind that some of what goes on in this field of law cannot come down from on high as decision-making rendered in good faith. Catch this conclusion at the end of the Thomas’ description of the Jerry Maguire case (Fed. Cir. No. 12-5073, Feb. 20, 13):

“Thus, the end result (assuming there’s not a cert petition) of this odyssey is that Maguire has been through six courts, two trials and two appeals, and years of litigation, only to be told ‘you’re too early.’ ” Maguire v. U.S.,

The same sort of thing happened in the wretched Hage case that wended its way through the cours for decades, only to end years after the unfortunate Wayne Hage’s death, with a holding that he sued too early. And in the Tahoe-Sierra Preservation Council  case the owners (who had been forbidden to build anything on their land) were shuttled between the federal trial and appelate courts for 20 years so that some fifty of them died while this went on, only to be told by the Supreme Court in the end that all that was unnecessary because there was no real factual dipute and the case presented only  an issue of law.

The doctrine of ripeness is supposed to assure efficiency in adjudication; it supposedly spares the courts and parties unnecessary litigation. But it ain’t so. Some of this stuff is transparently devised to serve as an obstacle course designed to frustrate, not facilitate, a prompt and fair resolution of disputes that involve uncompensated takings of property. If you examine what passes for takings law, you’ll notice that there seem to be as many (or more) cases going on about the timeliness of the plaintiff-property-owner’s filing of his lawsuit as there are cases dealing with the merits of the controversy. 

A while back, Justice Scalia observed in a law review article that to have a rule of law we must first have a law of rules that are discernible. But instead, to stick with Justice Scalia’s metaphor, our law in this field emulates the practice of Roman Emperor Nero who first promulgated decrees and then ordered that they be posted around the city on poles so high that nobody could read them.  Here, what we get too often is stuff, in which no one, including the courts, can tell up front when the aggrieved party should sue and what he must do before filing suit. There are even cases in which the courts have held simultaneously that the owner sued too early and also that he sued too late in the same case.

So instead of Justice Scalia’s sensible observation about the need for discernible law, what we have is a frequent reenactment of the line from “Alice in Wonderland” where the Queen of Hearts says to Alice: “You could have had jam on your toast yesterday, and you can have it tomorrow, but never today.”

Sorry  folks,  but whatever this may be, it isn’t law. At least not law that deserves the trespect of the citizenry. Courts in general and the U.S. Court of Federal Claims in particular, are instituted to provide a reasonably fair-minded and impartial resolution of disputes  between people and the government, not this sort of doctrinal and moral mish-mash. We read a while back that there is an inscription in the Justice Department in Washington that says: “The United States wins when justice is done to its citizens.” Not any more; not in this wretched field.

 

And now, for a Bit of Good News From the Atlantic Yards Project

It turns out that at least for now, the fallout from Barclays Center on its immediate surroundings is not as bad as feared, or as good as hoped for — depending on your point of view. Thousands of people descend on the area at game or concert time, but when it’s over they leave. Promptly. Click here.

Afterthought. Wait a minute! If folks just come, watch the game and scurry home without hanging around and spending their money, than whatever happened to the neighborhood revitalization that the project was supposed to bring?

Detroit (Cont’d.)

No comment necessary. The following quote from today’s New York Times says it all: “. . . Detroit, [is] a city plagued by pockets of empty lots, shuttered homes and a continuing foreclosure problem in the face of unemployment and a plunging population.” Monica Davey, Review Moves Detroit Nearer Emergency Oversight, Feb. 20, 2013, at p. A14.  Click here.

Bubble, Bubble — Toil and Trouble (Cont’d.)

A short time ago, on January 30, 2013, to be exact, we posted a short item bringing our readers the dispatch that market values of homes are zooming upwards, in some areas at double-digit rates – raising the question of whether another real estate “bubble” is in the offing. We now have a partial explanation of what is going on, at least in California.

It turns out that the big money boys on Wall Street are sitting on piles of cash and are looking for investment opportunities. Their latest strategy is to spend some of that money buying up homes at depressed prices and renting them out for now, in the expectation that in time their market value will go up, whereupon they will be able to sell them at a profit, and in the meantime they will be collecting rents. According to the Los Angeles Times. this phenomenon has reached the point where ordinary prospective home buyers are being squeezed out of the seemingly depressed home market because the aforementioned big boys are buying up those homes for cash, free and clear, leaving only slim pickings for ordinary, would-be home buyers. So while ordinary Joe Homebuyer has to arrange for a loan, get credit approval, and do the usual song and dance with lenders, loan brokers, real estate agents etc., the home in question is long gone from the for-sale lists. As an example of what is going on, the L.A. Times cites the case of a qualified, employed would be home buyer who so far has made 200 offers on Inland Empire (San Bernardino County — “the epicenter of the Southern California housing crash”) homes, all unsuccessful. Why? Because they all got sntched by the aforementioned financial “big boys” snapping up everything in sight. Alejandro Lazo, Inland Empire Housing is More Affordable But Still Out of Reach, L.A. Times, February 16, 2013. Go to http:www.latimes.com/business/la-fi-inland-empire-recovery-20130217,0,5814396.story

“The Inland Empire has gone from bust to boom with a vigor few could have predicted, mirroring Western regions such as Phoenix and Las Vegas. Surging demand has tightened inventory, driving up mediam home prices in San Bernardino County by 18.3% and in Riverside County by 25.2% from the last year according to reaol estate fi8rm DataQuick.

The median, the point at which half the homes sold for more and half for less, hit $226,000 in Riverside and $177,500 in San Bernardino in January.

That’s  great for the real estate industry and helps the localm economy. It also boosts home equity , or, at least decreases negative equity for the thousands of Inland Empire residents still mired in underwater mortgages.

But it’s bad for many buyers. Now that housing is finally affordable, it’d unavailable.”

But that raises an interesting problem in eminent domain valuation. Just compensation is usually fair market value which is usually determied by looking a comparable sales. But what happens if the FMV experiences a short-term “bump”? Can that be used as a comparable figure. As far as we know there isn’t much California case law on point. As we recall there is some decisional law on that point in New York some of whose courts allow a deviation from strict applications of fair market value on the date of valuation, where the price deviation is the result of abrupt, temporary changes in the market. We will leave to our expert readership to come up with the answer to the question of how such properties shouold be valued. Good luck.

But more important, what does this portend for home prices? Is California creeping back up into bubble territory? Who knows?

 

Where’d All that Redevelopment Money Go?

The banner justification for redevelopment is that the new construction will generate additional taxes, and they will benefit the city. That was actually the whole justification for the taking in the wretched Kelo case. Right? Well, maybe not so right. We know that redevelopment deals often include provisions whereby the redevelopers get to enjoy “tax abatement” — they don’t have to pay property taxes on their redeveloped projects, or they don’t have to pay the full amount of those taxes, either  temporarily or in perpetuity. Which is exactly what happened in Kelo — the municipal goodies included a 12-year tax abatement for Pfizer, the giant pharmaceutical company that was supposed to benefit from the project. The same was true of the notorious Poletown case in Detroit where General Motors (then the largest company in America) got a multi-million dollar tax abatement. As we know, that didn’t help — GM went bankrupt anyway.

But since redevelopment bonds (whose sale produces the funds used to finance the project) have to be serviced and eventually paid off, that means that the net cash flow from redevelopment projects is . . . We like the way California’s Court of Appeal Justice Macklin Fleming put it in one of his opinions: the project promoters, said he, promise to bake a bigger economic pie, with bigger slices going to all, but in reality what they often produce is pie in the sky.

Thus, we now learn from none other than that great supporter of redevelopment takings, the New York Times, that the new Barclays Center in Brooklyn, built on the newly condemned land of the Atlantic Yards redevelopment project with a “taxable” assessed value of $329.1 million, won’t have to pay any property taxes like the rest of you peasants. Isn’t that nice?

In receiving such royal treatment Barclays will be joining such luminaries as Madison Square Garden, Yankee Stadium and CitiField who also don’t pay property taxes on their playgrounds. See Jim Dwyer, Vital City Revenue, Lost in Fine Print, N.Y. Times, February 13, 2013, at p. A23. Quoth Mr. Dwyer:

“A classic in the field is Madison Square Garden, which received a tax exemption on its property in 1982, as long as the Knicks and the Rangers agreed to play there for 10 years. Everyone in government apparently thought that meant a 10 year tax abatement. There were great worries that the sport teams would move away with the trauma of the Dodgers leaving Brooklyn in 1957 having ossified into an abandonment neurosis, acted out in compulsive, humongous handouts of public money to sports  teams.

But in 2002, 20 years from when the “10-year” tax exemption was granted, Joyce Purnick, a columnist for The New York Times, read the fine print and discovered that it expires on the 12th of Never.

That is, Madison Square Garden pays no property tax today either, 31 years later. And by the way, for many seasons, the Knicks gave no sign of playing actual basketball.

Moment of bewilderment. All the people involved in the deal, which was made when Edward I. Koch was Mayor, said they thought the exemption was for only 10 years, but ohmygosh!”

Stay tuned, folks. There is more to come on this subject.

Most Expensive Cities in the World Are Not in the U.S.

According to CNN, the most expensive cities in the world are

1. Tokyo, Japan
2. Osaka, Japan
3. Sydney, Australia
4. Oslo, Norway
4. Melbourne, Australia
6. Singapore
7. Zurich, Switzerland
8. Paris, France
9. Caracas, Venezuela
10. Geneva, Switzerland

Note that not a single city in the U.S. makes the “most expensive” list. Two American cities tie for 27th: Los Angeles and New York.