Author Archives: Gideon

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 Ct, App., 1st District/Division One, March 5, 2018 The opinion is unpublished, which means that you can’t cite it in California courts as an authority.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).

__________________________________________________-
* 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.

__________________________________________-
* 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.

Ed McKirdy — R.I.P.

It took us a few days to recover from the shock, but reality must be faced. Our friend and colleague Edward McKirdy has passed away. He was a gentleman and a super lawyer whose presence enhanced any gathering.

We could at this point go on and launch into a string of complimentary adjectives, but it somehow seems unnecessary. If you knew Ed you must know what a gentleman, a scholar and a mensch he was, and what a privilege it was to work with him. And of course there was Ed the man. If nothing else, it was a unique pleasure to dine with him, and just to sit with him and Laura, his charming, one-of-a-kind wife and engage in the lost art of intelligent and witty conversation over a good meal.

Our profession is poorer for his passing, and we will never see the likes of him, his talents and his wit again.

The Fish that Ate Manhattan

Los Angeles Daily Journal

Jan. 3, 2018

THE LITTLE FISH THAT’S KILLING MANHATTAN
Gideon Kanner
Professor of Law Emeritus, Loyola Law School

Being old isn’t all bad. If you’re lucky, you remember things and you gain perspective. Case in point, the abysmal traffic conditions in Manhattan recently reported by the New York Times which reports that Midtown Manhattan traffic has reached a near-gridlock condition. Winnie Hu, “App-Hailed Cars Clog Streets. Should Riders Pay for the Jam?” Dec. 27, 2017 (front page, no less).

Current average car speed in midtown Manhattan is 4.6 mph, down from 6.5 mph only five years ago. (Walking speed is 3 mph — which means that a jogger can beat Midtown traffic.) The Times attributes these conditions to the presence of Lyft, Uber and Juno ride-hailing app vehicles looking for fares. Adding insult to injury, “more than a third of ride-sharing cars and yellow taxis that clog the streets are empty at any given time during weekdays in Manhattan’s main business district.”

Today, there are 103,000 for-hire vehicles plying New York streets, as opposed to only 47,000 as recently as 2013. Uber alone puts 65,000 cars on Manhattan streets. The upshot is that you can easily get a ride when you want one, says the Times, but once you get in the car, you’re stuck.

But another way of looking at this problem is that Manhattan streets are unequal to the task of accommodating modern traffic. So the question virtually asks itself: Weren’t New York traffic engineers smart enough to see what was coming and what to do about it? Yes, they were, but these days, planning and building are two different things once environmental concerns are brought to bear on the problem at hand.

The story of the old decrepit Manhattan West Side highway that was torn down back in the 1970s, but never replaced is instructive. Why? Oh, they tried, and therein lies a tale. What stopped the would-be highway rebuilders was a lawsuit brought by environmentalists who persuaded a local federal judge, Thomas F. Griesa, to bar the construction of a new replacement West Side Highway on environmental grounds.

By an odd coincidence, the same issue of the Times that tells us about the impending Manhattan gridlock also carries an obituary of Judge Griesa, and brings it all back to mind. Griesa found that the plans for the proposed replacement highway violated environmental laws, and barred its construction. The plan was that the new West Side Highway would permit much of the local traffic to bypass the congested mid-Manhattan streets, and keep it moving. It would run from the southern tip of Manhattan to 42nd Street, using a tunnel for a part of its route. It was projected to cost some $2 billion (in 1970s dollars, or $5.7 billion adjusted for inflation).

So was the proposed new highway environmentally bad by increasing air pollution, as claimed by the environmentalists? No. Judge Griesa, according to the Times, rejected that argument, and based his highway-killing judgment on the proposed highway’s adverse impact on fish. Fish? In Manhattan? Yes, fish. Specifically, the Hudson Striped Bass which was not even endangered. It was, according to the judge, “one of the nation’s most popular and commercially lucrative fish,” and it still is. So the new highway was not built, even as Manhattan traffic grew worse and is now approaching gridlock conditions.

As far as I know, the Hudson River has been cleaned up to some extent, but that was largely due to removing industrial waste accumulated on the river bottom in the industrial area way upstream, near Poughkeepsie. It had nothing to do with automobile traffic in Manhattan. Swimming in the Hudson remains hazardous in places. And so I fail to see how improving the river water quality for fish does much of anything for embattled New Yorkers stuck in traffic, waiting for the red light to change so they can move forward another few feet. To say nothing of wasted energy and air pollution caused by all those idling cars (recall that, ironically, air pollution was what the environmentalists claimed to be defending New Yorkers from).

Which brings us to the moral of this story — actually two morals. First, judicial rulings have consequences, even when there is a time lag between their promulgation, and a visible manifestation of their effects. Some judicial rulings can be terrific, but others are unsound, or even disastrous, like the misbegotten judicial notion of bussing kids from good schools to decrepit, dangerous inner city ones, a feat that helped empty the cities of their middle class populations and in some cases transformed them into urban wastelands, as middle-class families fled to the suburbs.
Second, a legal question: How come, in eminent domain cases, the same judges who wield a heavy hand in environmental review litigation — such as killing entire public projects on environmental grounds — hold that condemnors’ findings of public use are “well-nigh conclusive” and disclaim any power to deal on the merits with land owners’ defenses alleging that condemnors’ findings of necessity for the proposed public works, their efficacy, safety, location, layout, etc. are defective?

In the notorious Chevalier case, the California Supreme Court went so far as to hold that in eminent domain cases, state compliance vel non with statutory criteria of public necessity was altogether nonjusticiable, not even where the condemnors’ determination was obtained by fraud, bad faith and abuse of discretion. The California Legislature repealed that rule in 1976 but the court never retreated from it, and even now review of these matters is available only in cases of a condemnors’ “gross abuse of discretion” or bribery. New York federal courts did the same over there, when in the Rosenthal & Rosenthal case they upheld a condemnation, refusing to inquire into allegations that a redevelopment project’s boundaries were corruptly drawn to benefit the mayor’s friends.

Conclusion: Ideas do have consequences, and as this saga illustrates, in time seemingly unconnected court rulings can have a profound impact on people’s lives. The parties who fought it out before Judge Griesa almost a half-century ago could have no idea that their wrangling over the comfort levels of an abundant fish would come at the expense of people’s life quality affecting their daily lives.

Lowball Watch — Virginia

The Martinville Bulletin, 12-29-17, reports that the Virginia DOT deposited $6.28 million for the taking of a truckstop, but settled for $7.2 million, an increase of close to $1 million. Laurence Hammond, VDOT to pay $7.2 million for truck stop closed by Batentout Highway project, for an increasr of $920,000.

http://www.martinsvillebulletin.com/news/region_and_state/vdot-to-pay-million-for-truck-stop-closed-by-botetourt/article_69d43010-3fcf-5034-882a-8de569ae0695.html