Category: High-Speed Railroad

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.

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.

California Choo-Choo (Cont’d.)

We haven’t had much to say about our aborning “Bullet Train” and the plans therefor because there hasn’t been much news in that department lately. But the Los Angeles Times of October 21, 2016, at p. B1, Bullet Train’s Capacity Could be Downsized, informs us that we are about to get less bang for our buck. Quoting:

The California bullet train authority has told its design engineers that the future [railroad] system would have shorter trains and smaller station platforms reducing the capacity of individual trains by roughly 50% and potentially the capacity of the entire Los Angeles-to-San Francisco route.

This dispatch says nothing about the — to us — obvious consequence that smaller trains means smaller passenger capacity and therefore lower revenues. Yes?

To borrow Kurt Vonnegut’s favorite line, “and so it goes.”

California Choo-Choo (Cont’d.)

We haven’t had much to say lately about the California “bullet train” that is planned to run between Los Angeles, and San Francisco in the sweet bye and bye because there hasn’t been much news. Now there is. Today’s Los Angeles Times has an item that is worth noting. Ralph Vartabedian, Bullet Train May Miss Deadline, Jan.28, 2016, p. B 1. Not much for us to say, except to quote the first paragraph of the LA Times story:

“California bullet train could take longer than to build than previously estimated and its ultimate cost is difficult to predict, the head of the high-speed rail authority told state legislators Wednesday.”

Surprise, surprise!

 

California Choo-Choo vs. The Dreaded Sprawl

This is a good one folks. Another conflict over the California high-speed railroad seems to be developing. Proponents of the railroad argue that future development in the Central Valley will occur near railroad stations, and thus will inhibit sprawl and slow consumption of farm land. Opponents, on the other hand, argue that the railroad will stimulate development, but not necessarily near stations, and therefore will encourage sprawl and consumption of farmland. They point to the experience in France (which has an extensive network of operating high-speed trains) where this has happened.

We don’t take either position, since we lack the gift of prophecy, and your faithful  servant is a follower of Yogi Berra who famously said that prediction is very difficult, especially about the future.

In the meantime, a development of 2,432 homes is going up just north of Bakersfield, with projected home prices starting at $250,000, which in Southern California borders on giveaway.

To get the whole story read Ralph Vartabedian, Railing Against Urban Sprawl, L.A. Times, Feb. 24, 2015, at p. A1 (above the fold).

California Choo-Choo (Cont’d.)

Today’s California newspapers report breathlessly that — ta,da! — work is starting on the delayed bullet train. Ralph Vartabeian, Work Starting on the Bullet Train, L.A. Times, Jan. 5, 2015, p. 1A (above the fold). But before you get all in an uproar and rush out to buy some California Choo-Choo bonds, be advised that nothing has been done yet, and the foo-foo of which Mr. Vartabedian writes will be more in the nature of a ground-breaking ceremony, rather that the start of actual construction. Mr. Vartabedian who impresses us as a knowledgeable dude, adds this:

          “But the milestone marked by Tuesday’s ground-breaking ceremony also will serve as a reminder of the enormous financial, technical and political risks still faced by the Los Angeles-to-San Francisco project.

Rail officials haven’t yet lined up the funds needed to complete the initial system over the next 14 years. Construction is starting two years later than  the state had promised. Acquisition of private property is going slower than expected. And they have yet to finalize legal agreements with two of the nation’s  most powerful private freight railroads that are concerned about how a bullet train network will affect their operations.

To say nothing of the fact that Congress is in the process of being taken over by Republicans who — it says here — are likely to be considerably more inhibited in giving away the federal taxpayers’ money to California to help fund Democratic Gov. Jerry Brown’s California Choo-Choo.

California Choo-Choo (Cont’d.)

We hear that the California High Speed Rail Authority has finally gotten around to adopting resolutions of public necessity to begin acquiring some three dozen parcels of property for high-speed railroad rights-of-way.  Click on http://www.fresnobee.com/2014/12/12/4283181/state-oks-condemnation-for-37.html?sp=/99/406/   So you’d think that everything regarding the right of way and projected rolling stock is all copacetic. Not quite.

It turns out that there is an intramural donnybrook going on as to what kind of rolling stock is to be used and where. One faction wants the high-speed electric trains to run on their own, dedicated special rights of way, while the other wants them to share rights of way (at least in some stretches) with regular, diesel-powered trains. But “the cost of installing an electrical system, buying new electric cars and operating a mixed system of electric and diesel trains is unknown.”

You can read all about this in today’s L.A. Times, in an article by Ralph Vartabedian, Bullet Train to L.A. Poses Issues, Dec. 14, 2014, at p. AA 1.

Our favorite item to come out of this latest kerfuffle is the dispatch that came out in a legislative committee hearing, that “bullet train doors would be 25 inches [that’s over two feet] higher than existing train doors on California’s cars in the Bay Area, where blended service is being planned.” So the high-speed cars could not use the same platforms as the existing trains.

So when will all that wonderful stuff come to pass? Oh, about 2028, or about a 15 years from now, reports the Times. The train is supposed to be operating then between Burbank and Modesto, even though nobody we know contemplates much travel between those two metropolises. And what will it all cost then? We fear that not even God is able to predict that, but being the cynical sort we tend to be when it comes to government projects, there is a distinct possibility that by then California will be broke, so it all may be academic.

 

California Choo-Choo (Cont’d.)

“. . . [T]he state has yet to start full-blown, sustained construction of permanent structures — including bridges, tracks and train stations — at least partly because it lacks most of Central Valley land needed for an initial 29-mile segment that will pass through Fresno. The state has acquired 71 of 526 parcels needed for the segment, about 13% of the total, according to figures provided by the California High-Speed Rail Authority.” Ralph Vartabedian, Lack of Land Slows Work on California Bullet Train Project, Los Angeles Times. Aug. 13, 2014.

This passage pretty much speaks for itself, but it and the rest of the article may be misleading to lay readers unacquainted with the law and practices of eminent domain. It quotes the former chief executive of the project that “acquiring land for transportation typically involves property owners trying to squeeze the state for the highest possible value.” That is nonsense.

The idea that individual farmers in the Central Valley can “squeeze” the state is absurd on its face. Indeed, the history of eminent domain is a history of undercompensation  of landowners. That is why owners who refuse the state’s offers and litigate value — whether before judges or juries — usually make out better than the ones who accept the state’s offers.

As for that nonsense about farmers “squeezing” the state for the taken land’s highest value, the “highest price” is what California law sets as the measure of just compensation that has to be paid when land is taken by eminent domain. Don’t take our word for it. Check out the California Code of Civil Procedure that provides explicitly in section1263.320 (a) that just compensation is the highest  price that the subject property would fetch in a voluntary, private sale transaction between a willing but unpressured seller and a willing but unpressured buyer, both fully aware of the subject property’s good and bad features, including its highest and best use.

Why does the law say that? Because in a voluntary transaction the seller can take his sweet time in marketing the property until he finds a buyer willing to pay top dollar. An eminent domain action deprives him of that ability, so the law provides him with the “highest” price that he could have obtained in a voluntary transaction.

Moreover, the state has the power of taking the property before compensation is finally determined, so owners cannot “squeeze” the condemnor.