Category: Uncategorized

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 ax re. Dept. of Transp. v. Sothern 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

Enjoy Your Thanksgiving and be Grateful — That’s What Thanksgiving is All About

The Thanksgiving holiday is upon us, and it’s time to give thanks for all that we have, that the rest of the world is envious about. It’s not about fixing and eating turkey etc. It’s to take time out to reflect on how fortunate we are to live here, in the United States of America. To give thanks.

If you don’t embrace that view, name one country in the world where you would rather live. You can’t. And if you think you can, explain to us why you haven’t moved there to enjoy whatever it is about personal, economic and civic life you contend is better over there. Millions of people all over the world understand that, and millions of those who do, strive to leave their homes and come here to live among us. If nothing else, this should tell you a lot.

So enjoy your holiday, and don’t forget that turkey feast or whatever floats your boat gastronomically.

Is the Chavez Ravine Curse Being Lifted?

The Dodgers are into the 7th game of the world series, which is a big deal even if they don’t win it. So given the long interval between the Dodgers’ last series and today, maybe the Chavez Ravine Curse is finally being lifted. You don’t know about that curse? Sure you do if you are a reader of this blog.

A while back we wrote about it, explaining the municipal shenanigans that led to the City of Los Angeles acquiring that plot of land and conveying it to the Brooklyn Dodgers to induce them to move from Brooklyn to Los Angeles. The taking displaced a neighborhood of low-income Mexican families who made their homes there. Ostensibly, this was done to create new, low-cost housing. But that didn’t happen. The city took the land and underpaid its Mexican owners, going so far as to deny them interest on their meager awards, even though they were plainly entitled to it. Some of them tried to stand their ground but were forcibly removed by L.A. sheriff’s deputies. For our piece telling that story see “The Curse of Chavez Ravine,” http://gideonstrumpet.info/2011/04/

Now, more of that sordid background has come to light in the form of a collection of historical photographs made available by the LA Public Library that you — whether eminent domain junkies, or baseball aficionados — may want to see. If so, go to https://www.scpr.org/news/2017/10/31/77135/remembering-dodger-stadium-when-it-was-chavez-ravi/ It will tell you stuff about the history of Dodger Stadium and the fate of little people who get in the way of a grandiose municipal project that in the name of “public use” takes land from some private property in order to reconvey it to other, more favored folks for the latters’ private gain. To see those photos, copy and paste the above link into your browser.

That’s “public use”?

Postscript: We now know the answer to the question posed by the title of this post, and the answer is “No.” The curse of Chavez Ravine is not being lifted. Not yet anyway. Maybe next year. So stay tuned.

As Malls Circle the Drain, What About the Outstanding Municipal Revenue Bonds Used to Pay for Them?

“A report issued by Credit Suisse in June predicted that 20 to 25 percent of the more than 1000 existing enclosed malls in America will close in the next five years.”

Big article today in the NY Times on the decline and ongoing fall of malls. The fancy ones that cater to upscale customers are still doing OK, but not “regular” malls. See Steven Kurutz, An Ode to Shopping Malls, NY Times, July 27, 2017, at p. D1. The article’s hard copy is worth taking a look at, for its color photos of abandoned, empty malls.

The article is mostly a personal display of the author’s nostalgia — about the good ol’ days when he and his teen-age buddies took part-time jobs and chilled out at the mall. But that was then — this is now.

What makes this stuff of particular interest to this blog which is mostly concerned with eminent domain and land-use, is a subject that is pertinent to malls, but is not mentioned in this article (or others like it). Many of these malls were constructed as redevelopment projects, which means that in many of these cases somebody’s privately owned land was taken by eminent domain (with just compensation payable from the proceeds of tax-free, revenue, municipal bonds, the idea being that as the mall prospered and generated new property taxes, the increment of those taxes over and above pre-existing property taxes would go to the bondholders and eventually pay off the bonded debt).

But what happens when things go south, and there are no such incremental taxes, so the redevelopment agencies that issued those bonds default on them? Nothing we have read about the mall failures addresses that subject. However we did see the opinions in an Illinois case in which the cash flow from bonds secured by taxes paid on land that was taken for a public project ceased paying the bondholders when the subject land was taken. Too bad, said the Illinois Supreme Court to the bondholders — you invested in bonds and one of the risks you took was that the bond issuers would default. But your bonds were not taken, so you are not entitled to “just compensation.” Your bonds were secured by expectations of a future cash flow, so when that cash flow ended so did your security interest.

The Housing Doo-Doo Hits the Fan in California

The other day we noted a big article in the LA Times, reporting the calamitous and growing housing situation in California. ( http://www.latimes.com/projects/la-pol-ca-housing-supply/ ) Today we follow up with another journalistic heavyweight, to wit, the front page of the New York Times; Adam Nagourney and Conor Daugherty, Housing Costs Put California in Crisis Mode, NY Times, 7/8/17, at p. A1. To get the whole thing, go to https://www.nytimes.com/2017/07/17/us/california-housing-crisis.html?ref=todayspaper&_r=0

The bottom line is that California state law requires that cities follow the housing elements of their general plans which include the requirement that provisions be made for affordable housing. But this law is administered by cities and they have no intention of following it because their populations are the very embodiment of NIMBYism and they take a dim view of their local glorious leaders increasing the local housing stock. Period. One of the transparent gimmicks used by cities to stultify new housing is to approve commercial zoning with room for commercial construction that will employ, say, over 5000 new employees. But at the same time they approve residential zoning that will provide room for maybe 500 new dwellings. The result is right out of classic Econ 101: the demand for housing overwhelms supply, with prices zooming up accordingly. In the last five years, California housing prices have jumped by as much as 75%. And it is no longer posh coastal communities that we are talking about. This madness is spreading to inland communities.

And not much relief is coming from the courts which stand ever-ready to nit-pick housing project environmental reports to death, which — to put it mildly — isn’t helpful at all.

So stand by for the inevitable popping of our housing bubble. To borrow the line of Gretchen Morgenson of the New Yourk Times when a few years she predicted the bursting of the great housing bubble of 2008, by saying “it won’t be pretty.”

Words of Wisdom on the Murr Case

As we do from time to time here we go again, expressing our admiration for the commentary of our colleague and fellow blogger, Robert Thomas, on his blog www.inversecondemnation.com. Here we go:

” . . . Maybe the liberal majority [of the Supreme Court], viewing Murr as the last charge of Wyatt Earp and his Immortals, threw principle to the wind, created a metaphysical, social justice warrior test for property that undercuts a thousand years of common law principles, deprives juries of the opportunity to decide what is and what isn’t reasonable reliance on metes-and-bounds, and takes the power to define property away from both property owners and state and local legislators, and hands it to mostly unelected philosopher-kings in black robes.

“The Murr majority gives lower court judges a chance to play Justice Kennedy for a day and decide what counts as property (for today, but may not be tomorrow, who knows?), all based on what Your Honor believes is fair, or isn’t, or is or isn’t worthy of being compensated, or whether the government can really afford to pay. There will no doubt be a plethora of law review articles which will try and justify these vague . . . factors as based somewhere in our common law property traditions. The authors would have a mighty hard time convincing us, because under Justice Kennedy’s ad hoc-ism, you really don’t know whether you own property until you make a takings claim and some judge decides you deserve to not be compensated when it is impressed into public service.”

We agree, and in fact we have articulated the same sentiments in the past (about property owners not really knowing what they own until after years of costly litigation), but in truth there isn’t all that much that’s new about this view. It was years earlier that the California Supreme Court, speaking in HFH, Ltd. v. Superior Court (1976) admitted that in the end the judicial characterization of a complained of government regulation is a taking or merely the exercise of the regulatory police power is only an act of labeling the results in a particular controversy. Add to that the U.S. Supreme Court’s confession in the Penn Central Transportation Co. case that the intellectually mighty US Supreme Court has been “simply unable” to tell us what is a cause of action in regulatory inverse condemnation law or how to plead it and prove it, and what you have is an intellectual witches’ brew that mocks aggrieved property owners rather than provide them with a discernible path to relief for the violation of their constitutional rights.

Murr — SCOTUS Meets Dick Babcock’s Ghost

So the Murr v. Wisconsin opinion has finally come down, and as predicted by us, it’s an intellectual mess, as must be evident to anyone with some knowledge of eminent domain law, who has read it. We could spend a lot of time surveying the Murr disaster area, but others have begun doing it, so why duplicate their efforts? As we often do, we recommend today’s blog post of our colleague, Robert Thomas in his blog www.inversecondemnation.com for an overview of Murr. Also, check out Roberts’ post of June 26, 2017, for a more in-depth analysis. Here, we concentrate on only one aspect of it. Quoting one passage from Justice Kennedy’s opinion:

“Though a use restriction may decrease the market value of the property, the effect may be tempered if the regulated land adds value to the remaining property, such as by increasing privacy, expanding recreational space, or preserving surrounding natural beauty. A law that limits use of a landowner’s small lot in one part of the city by reason of the landowner’s nonadjacent holdings elsewhere may decrease the market value of the small lot in an unmitigated fashion. The absence of a special relationship between the holdings may counsel against consideration of all the holdings as a single parcel, making the restrictive law susceptible to a takings challenge. On the other hand, if the landowner’s other property is adjacent to the small lot, the market value of the properties may well increase if their combination enables the expansion of a structure, or if development restraints for one part of the parcel protect the unobstructed skyline views of another part. That, in turn, may counsel in favor of treatment as a single parcel and may reveal the weakness of a regulatory takings challenge to the law.” Slip Opinion at 12-13.

But the question of how the taking benefits the owner’s remaining land that is not taken, goes to the measure of compensation, not to liability for the taking. It is basic appraisal lore that only after the value of the taken part of the subject property is determined, and benefits (usually special ones, but sometimes general ones too) to the remainder are determined, that they are deducted from the severance damages (or in some places, from the entire just compensation). That’s how the owner’s net just compensation is determined. Justice Kennedy thus confuses liability with the measure of compensation, and puts the cart before the horse. In other words, first you determine that a taking occurred and then you value the economic harm done to the owner, from which you deduct benefits. But by Kennedy’s lights you first value the harm done, and then — in an amazing feat of circular reasoning — you use that harm to decide whether a taking occurred. Justice Kennedy also forces the owner to try valuation twice — once in what is usually a bench trial for the purpose of determining liability and if successful, once again, this time before a jury, to fix compensation for the taking. With all due respect, this is wasteful of both the parties’ and of judicial time and resources, it violates the judicial economy principle, and accomplishes nothing except maybe placing an unwarranted and illegitimate obstacle in the path of the aggrieved land owners seeking relief from an unconstitutional taking of their land.

We could go on, but in a tour de force of self-restraint, we won’t. Suffice it to say that the Murr majority opinion provides the aggrieved party with a suggested “remedy” that is akin to advising a car driver with a flat tire to change it with a screwdriver, and then to do it again.

All of which brings to mind a bit of history. After the “taking issue” burst upon the legal scene in the 1970s, I had a talk about it with the late Richard Babcock, then the dean of the nation’s land-use bar. Dick was opposed to the damages remedy for regulatory takings, and being from Illinois, a fabled, far-away place where at that time judges actually provided non-monetary remedies, notably what Dick called the “builder’s remedy” whereby a court would invalidate an overreaching land regulation and order the regulators to issue a building permit. The photo below depicts Babcock (left) and your faithful servant, engaged in scholarly discourse concerning the proper remedy for regulatory takings.

His punch line to me was: “You may win a right to ‘just compensation’ for regulatory takings, but even if you do, judges will never allow an actual payment of money to land owners.” Though I thought at the time that he was being unduly cynical by thus questioning the good faith of judges, he turned out to be right on that one — the “taking issue” has been coming up before the US Supreme Court time and again during the past thirtysomething years, but with two exceptions the court never affirmed an actual money judgment against a land-use regulatory agency. Owners’ victories have consisted of invitations to go back and try the whole shebang all over again. Those exceptions were City of Monterey v. Del Monte Dunes, a case of such transparently bad-faith city conduct, that it caused some harsh remarks from the bench to the city’s lawyer during oral argument (by Justice Kennedy, inter alia, come to think about it). The other was the bizarre “California raisins” case where the feds’ trucks pulled up in front of Mr. Horne’s ranch and demanded that he fill them up with some $400,000 worth of raisins without any compensation. The 9th Circuit — who else? — thought this was hunky dory, but the Supreme Court reversed and ordered the feds to cancel the fine they imposed on poor Mr. Horne and to pay him the value of the raisins which had already been determined. No, we are not making this up — see Horne v. USDA.

In one of his law review article, the late Justice Scalia noted that Roman Emperor Nero would issue decrees, but then had them posted on poles so high that no one could read them. The law of takings is sort of like that. The court has established as a matter of principle that when private property is taken by the government, just compensation is payable whether the taking is physical or regulatory. But then it surrounded this basic holding with a thicket of conceptual and procedural obstacles, that make it nearly impossible for aggrieved parties — except perhaps wealthy folks with multi-million-dollar litigation budgets and decades of time to devote to byzantine litigation — to secure enforcement of their constitutional rights under the Fifth Amendment’s “Just Compensation” clause. Indeed in the notorious Penn Central case the court confessed that it has been “simply unable” to articulate any rule whereby to determine when compensation is required, and that it was deciding these cases ad hoc, one by one.

Bottom line: to invoke the insights of another old-time takings law maven, Fred Bosselman: the courts are denying land owners due process of law — they do so by providing too much process, not too little.