Author Archives: Gideon

Urban Decline — Chicago

The decline of American cities is an old, sad story, with Detroit usually taking center stage because of the severity of its problems and its abandonment by over half its population. We wrote about it in Detroit and the Decline of Urban America, 2013 Michigan State Law Review 1547, and you may want to take a look at it. But you rarely see a broad discussion of this phenomenon that combines the role of land-use law and policy as well as municipal misgovernance, local politics, law enforcement and race relations. Now, along comes Joseph Epstein, our favorite essayist, and takes on this subject from soup to nuts.

Epstein manages to tell the story — the whole story of urban decline — in a single essay that is both informative and occasionally amusing. The only factor in this sad story of urban decline that he does not get into — and who can blame him for that? — is the role played by the post World War II government policy of encouraging and financing an out-migration from cities to suburbs. That was covered by Jane Jacobs in her famous book, The Death and Life of American Cities.

So we recommend that if you have an interest in land-use law and politics, and their combined effect on American cities you read it. Here is the link:

http://www.weeklystandard.com/chicago-then-and-now/article/2011701

California Choo-Choo – (Cont’d.)

In a few words. Here is the daily on-line news summary for today, from the LA Times:

“$$$$$: The California bullet train project has taken a sharp jump in price. The state rail authority announced Friday that the cost of connecting Los Angeles to San Francisco would total $77.3 billion, an increase of $13 billion from estimates two years ago. The rail authority also said the earliest that trains could operate on a partial system between San Jose and the farming town of Wasco would be 2029, five years later
than the previous projection. Los Angeles Times ”

Frankly, we never heard of Wasco. Maybe it’s because it’s located 2o or 30 miles northwest of Bakersfield. But on the plus side, it says in Wikipedia that Wasco produces over half the roses in California.

New Takings Case — Once More Into the Breach

Here we go again, folks. The Magnificent Nine have granted certiorari in another taking case. What’s more, the question presented is whether or not the court should reconsider the wretched procedural mess it dumped on an unsuspecting legal world in Williamson County etc. v. Hamilton Bank back in the 1980s. There, for no evident reason and without any doctrinal support — without benefit of briefing by the parties — it held out of the blue that plaintiffs in uncompensated taking cases, unlike any other class of litigants, are not allowed to sue to vindicate their federal constitutional rights in federal courts, but must instead file their action first in state court. Until they thus exhaust their available state remedies, their federal cause of action (under 42 USC Sec. 1983) is not ripe.

If that were all, Williamson County would have been a bad, decision pointlessly creating a duplicative waste of time and resources for courts and parties alike. But there was more. Acting supposedly on the basis of Williamson County, lower federal courts began ruling that if a plaintiff complies with this crazy rule (as he has to), the decision of the state court denying compensation becomes res judicata (or an act of issue preclusion) so that the result is that according to these courts, a taking case becomes barred by res judicata or issue preclusion at the very moment it became ripe for federal litigation. Crazy? We’d say so.

Even worse, if that is possible, are cases where the aggrieved property owner sues in state court like he is supposed to under Williamson County but the defendant city removes the case to federal court, claims the right to be there because the issue is one of federal law, and then moves to dismiss the lawsuit on the ground that the owner was supposed to be in state, not the federal court. No, we are not making this up; we wrote at length about that anomaly. See Michael M. Berger and Gideon Kanner, Shell Game! You Can’t Get There From Here: Supreme Court Ripeness Jurisprudence in Takings Cases at Long Last Reaches the Self-Parody Stage, 36 Urban Lawyer 671 (2004).

The case in which certiorari was granted is Knick v. Township of Scott. Cert was just granted so with a little bit of luck — whether good or bad luck remains to be seen — we’ll get an opinion by the end of the court’s term, or in plain English by the end of June.

So stand by. For now, round and round she goes, and where she stops nobody knows.

Follow up. A sharp-eyed reader takes issue with us and tells us that there is no way the opinion in this case can be filed by the end of this term, so we will have to wait until at least sometime next fall. He is probably right, and if he is, this is good. Opinions issued at the end of the Supreme Court’s term are notorious for having been produced during the “end-of-the-term crush” when clerks regularly pull all-nighters in an effort to finish all the opinions in cases that were argued during the term. The result is that many of those opinions are actually produced by harried, inexperienced youngsters desperately trying to finish their task by the end of June. This is not an atmosphere that is conducive to clear thinking and careful editing. So maybe if the opinion is written next term it will be produced under better circumstances, by people who are not pumped up on coffee and God-knows-what-else, pounding their word processors in a midnight effort to get their job done by midnight of June 31st.

If You Wonder Why There is a Severe Housing Shortage In California . . .

. . . you have to read this opinion of the Clifornia Court of Appeal in which some poor guy tried to build two houses on his 10,000 sq. ft. lot. If nothing else, you just have to read the Byzantine chronology for yourself to believe what went on in this case. Suffice it to say that the permit-seeking process began in the 1990s, and has gone on for 20 years! And the holding of this decision, filed today, is that the case is still not ripe. The case is Mahon v. County of San Mateo, Cal. Ct, App., 1st District/Division One, March 5, 2018 The opinion is unpublished, which means that you can’t cite it in California courts as an authority.

So if you are a land use/taking junkie, have at it:

http://www.courts.ca.gov/opinions/nonpub/A149633.PDF

California Choo-Choo — Cont’d.

Big article in today’s Los Angeles Times. Ralph Vartabedian, Bullet Train Costs Rise Again, March 5, 2018, at p. B1. “New business plan will show the project taking more money and time.” Surprise, surprise.

Estimates of those increases in costs are not provided but we are told that they’re a’comin later this year. We can’t wait. Otherwise, though we have read this article a couple of times, we can’t actually say what it says, except that the new manager of the bullet rain project allows as how those cost increases “are likely to cause a furor.” Also, he says that this project “is the most transformative [he] ha[s] ever seen.” Whatever that means.

Lowball Watch — Ohio

The Chronicle-Telegraph of Lorain County, Ohio, reports that a local judge, after a three day bench trial, rejected the Ohio Turnpike Commission’s offer and deposit of $11,865, and awarded the condemnees $1,093,181 for the taking of 0.338 of an acre out of their 123-acre larger parcel. See Scott Mahoney, Chronicle-Telegraph, March 2, 2018.

The report does not provide any details as to what was the specific issue dividing the parties, so we surmise that it had to do with severance damages.

For the story go to
http://www.chroniclet.com/Local-News/2018/03/02/Property-owners-wins-1M-lawsuit-against-Ohio-Turnpike.html

Follow up: We learn from a post of News5 Cleveland that the taking of that 0.338-acre parcel eliminated access between two parts of the subject property. https://www.news5cleveland.com/news/local-news/oh-lorain/lorain-county-family-awarded-more-than-1-million-after-ohio-turnpike-seized-their-land

Lowball Watch — California

This one’s a doozy. We are informed that a federal jury in California has just brought in a whopping verdict for the taking of 1000 acres of iron ore bearing land with a mining permit. The subject land is out in the Mojave Desert near Twenty Nine Palms. The feds’ evidence of value was $5.6 million. The owners’ evidence was $38.6 million, and the jury verdict was $30,283,750, delivered after only three hours of deliberation. The case is United States v. 1005.58 Acres, etc., Case No. 5-16-cv-1014 VAP (SPx), Central District of California.

The smiling owners’ counsel is Ed Burg of Manatt, Phelps and Phillips.

Whatever Happened to Taking “Underwater” Mortgages?

A funny thing about the press and media. Sometimes they pick up an idea and go on about it, assuring us that it is important and bids fair to influence public events in a profound way. But then poof! After a period of pontificating about it, the news item sort of vanishes from the printed page never to be heard about again.

For example, whatever happened to the bright idea of taking mortgages on “underwater” homes by eminent domain, restructuring the debt secured by those mortgages, and then selling the subject homes for a new, lower price that would still put a buck in the pockets of the city hall promoters of this goofy idea. But in spite of a flurry of articles by out-of-it professors and their press followers, it didn’t happen. The problem with this wacky scheme was that a condemnor acquiring property by eminent domain has to pay fair market value, which would leave no room for making a profit — someone would have to subsidize such a scheme and no one was willing to do so.

So, to the best of our knowledge, it didn’t happen.

California Choo-Choo Meets Condemnation Blight

On top of its other problems, the infamous California “bullet train” project has run into another, familiar problem which comes in two varieties. First, once word gets out what land is to be taken for a project, its inhabitants become short-term occupants, and this motivates them to neglect maintenance, and start moving out ahead of being evicted, making conditions worse. In some cases the government encourages this process hoping to pick up the subject land at bargain prices. The second variant of this problem is what happens after land in the path of a project is acquired but the project construction is delayed. This gives rise to what one observer called “linear ghettos” — long strips of land projected as the coming right-of-way become effectively abandoned, with structures located there becoming fair game for squatters, vandals and scavengers. The result then becomes what’s called “condemnation blight.” Back in the 1960s, particularly in the Midwest cities would give this destructive process a helping hand by withholding or delaying trash pickup or even in some cases, police protection.

This went on until the U.S. District Court in Detroit put a stop to it Foster v. City of Detroit, 254 F.Supp. 655 (1965), aff’d. 405 F.2d 138 (1968), with other courts following suit. In California, the leading case on this subject is Klopping v. City of Whittier 8 Cal.3d 39 (1972). Check it out.

Now, along comes the Los Angeles Times with a report that what in the past was a problem associated with urban redevelopment is now occurring across the state along the strip of land designated as the “bullet train” right of way.
Quoth the Times:

The problem that vacant properties create when the government takes private land is not new, but the massive scope of the bullet train project has birthed a problem unprecedented in recent California history: The current construction program is creating a corridor 100 feet or more wide through the Central Valley. Many of the land takes are stuck in protracted litigation, creating a patchwork of property ownership and leaving lots vacant for a long time.

Ralph Vartabedian, Vacant Lots, Empty Homes and Dying Orchards on Bullet Train Route Attract Squatters, Vandals, and Thieves, L.A. Times, Feb. 4, 2018.

Note however that this article’s assertion that delays are caused by “protracted litigation” is inaccurate. In eminent domain law possession of the subject property can, and often is taken immediately, while the determination of compensation is tried later.

Finally, if your interest in condemnation blight runs deeper than the news, we suggest our law journal article on that subject — Condemnation Blight: Just How Just Is Just Compensation? 48 Notre Dame Law Review* 765 (1973). An oldie but goodie that one. That article received the Shattuck Prize from the American Institute of Real Estate Appraisers (now the Appraisal institute).

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* The Notre Dame Law Review was then called the Notre Dame Lawyer.

California Choo-Choo — (Cont’d.)

We haven’t had much to say about the supposedly abuilding high speed train line between San Francisco and Los Angeles, or at least its initial 119 mile segment running from Madera to Fresno (aka the middle of nowhere), because there hasn’t been much news on that subject. But news came with a bang on the front page of today’s Los Angeles Times (Cost of State’s Train Surges, Jan.17, 208, p. A1) bringing the dispatch that the financial condition of the train project is parlous. The now conceded increase in the cost of that segment jumped from an estimated $2.8 billion to — are you ready? — $10 billion. This, we are told, is the worst-case scenario that was “long forewarned” but the warning was rejected by the railroad project’s management. Now it is coming to pass.

So much for the news which, as it turns out, is no news at all. Overruns of this kind, that belatedly try to raise the excuse of “higher cost of land acquisition” are old hat. Our own files contain an old article in a conservationist magazine called Cry California. The Spring 1966 issue contains an article by Joseph C. Houghteling, then member of the California Highway Commission, entitled Confessions of a Highway Commissioner at p. 29. In it the author reveals that “Actual costs were an average of 32 percent above estimates, most of the increment coming from additional right-of-way costs.” (at p. 30). That was a half century ago, and evidently not much has changed since then.

If you want an insight into how this happens, take a look at 40 Loyola L.A. L. Rev. at 1108, footnote 162, for an extensive collection of studies indicating that underpaying property owners for land taken from them is common in California as well as in other states. In a nutshell, appraisers of thousands of parcels constituting a major right-of-way are under pressure to come in with low opinions of value to impress their condemnor-clients and because unsophisticated and unrepresented property owners believe that “you can’t fight city hall” and accept those lowball offers in disproportionate numbers. For an explanation of this process by a prominent appraiser, see Ibid, at pp. 1106-1107, footnote 158. In other words, lowballing by condemnors is common and property owners who refuse condemnors’ pre-condemnation offers and try their cases, whether before judges or juries, usually recover compensation quite a bit higher than those offers, often higher by millions of dollars. For some outstanding examples of the stunningly higher awards granted by courts, or even agreed to by condemnors once the weaknesses of their own appraisals are exposed, see Ibid, at pp. 1146-1148.*

So if the California high speed railroad builders are experiencing unanticipated costs of right-of-way acquisition, they are only treading an old beaten path of their own making. California law requires explicitly that condemnees be paid the highest price that their property would bring in a voluntary market transaction. So it should not come as a surprise that when instead condemnors try to lowball condemnees, the compensation they have to pay is higher than their hopes.

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* Our favorite case of that sort is People ex rel. Dept. of Transp. v. Southern Calif. Edison Co (2000), where California DOT deposited $245,000 as its good faith estimate of “just compensation” for a partial taking of a major electrical transmission line, but at trial (a) the jury awarded some $49.5 million, and (b) on appeal the California Supreme Court affirmed and ordered the State not to brief the issues of valuation because the court would not consider them.