Monthly Archives: January 2009

Was the Kelo Case Novel?

         Right after Kelo v. City of New London came down, holding that the power of eminent domain could be constitutionally used for “economic redevelopment” (i.e. the taking and transfer of unoffending private property from its rightful owners to would-be redevelopers for the construction of private, profit-making enterprises), the immediate reaction of redevelopment groupies was to assert that this judicial thunderbolt was just a plain old, nothing-to-it, routine holding — a mere application of preexisting precedent. For a brief review of that propaganda campaign and its deficiencies, see Gideon Kanner, The Public Use Clause: Constitutional Mandate or “Hortatory Fluff”? 33 Pepperdine L. Rev. 335, 343-349 (2006). Now, along comes Professor John J. Costonis, a noted police power hawk and a supporter of expanded use of eminent domain, and – surprise! — weights in on the side of Kelo’s novelty: 

          “[I]n Kelo, the majority and concurring opinions like the litigants themselves untethered the [eminent domain] power’s deployment from blight remediation or any other substantive planning concern, asking instead whether or not government’s assessment of its fiscal needs alone warrants denying a private property owner the autonomy over property that, in its current use is otherwise unproblematic.” John J. Costonis, New Orleans, Katrina and Kelo: American Cities in the Post-Kelo Era, 83 Tulane L. Rev. 395, 398 (2008).

         Well said, John – we couldn’t have said it better ourselves. So far, so good. Unfortunately, Professor Costonis also uses his article to criticize state legislation (notably in Florida and Louisiana) that bans the use of eminent domain for “economic redevelopment,” arguing that this bodes ill for post-Katrina redevelopment in New Orleans. 

         Which brings to mind the fact that the expansive power of eminent domain that Professor Costonis so admires is a legislative power, which is to say a democratic power that follows the wishes of the people, not the diktats of elites who, in disregard of the vital interests of the lower middle class that is usually displaced by urban redevelopment, would impose their notions of urban planning on an unwilling populace, and in the process feather the already cushy nests of the redevelopers. So the legislature of Connecticut likes an expansive use of eminent domain for candidly private uses masquerading as “public purpose,” whereas the legislatures of Florida and Louisiana don’t. The U.S. Supreme Court says that as far as the Constitution is concerned, this is just hunky-dory. Mind you, we don’t like that rule because it waters down constitutional protection of citizens and deprives the Public Use Clause of the Fifth Amendment of any independent meaning — in the post-Kelo world that meaning can vary from state to state, and produce precisely the sort of situation that Professor Costonis is so unhappy about.

          So what? As the Romans used to say, Sic friature crustum dulce – that’s how the cookie crumbles. Back in the bad old days when we went to court to complain about the unfairness of eminent domain law, we were met with condemnors’ riposte that the wisdom of legislation is no business of the courts, and that our clients’ travails were merely “the price of progress,“ so that if we didn’t like it, we should take our sad story to the legislature. So it looks like the folks in Florida and Louisiana (and a few other states) did just that. And their legislatures responded. So what’s the problem, John?

How Do You Say “Chutzpa” in German?

          Politicians’ temerity never ceases to amaze us, and here is another example to add to your collection. “German Chancellor Angela Merkel warned . . . that U.S. efforts to prop up its failing auto industry amount to a form of protectionism that threatened to distort the global economy . . .” Simon Hooper, Merkel Warns U.S. Over Auto Bailout, news, Jan. 30, 2009

         So where was Frau Merkel when German automobile manufacturers like BMW and Mercedes-Benz were collecting hefty subsidies in the form of land, tax abatements, and the cost of construction and worker training from American state governments, to induce the Germans to build automobile plants in those states? We don’t recall her lecturing her countrymen on the evils of protectionism then, do you?

Will the “Stimulus Package” Stimulate Jobs by Building Highways?


            As the Congress goes into the theatrical frenzy of appropriating gazillions of dollars for a stimulus package that is supposed to build highways, fix bridges and improve our infrastructure as it provides more jobs, we are reminded by Professor Ilya Somin that Congress passed another big package, $286.4 billion to be exact, in 2005, and apart from handing out a lot of pork it does not seem to have accomplished much good.  As Professor Somin puts it:

 “One reason why the 2005 bill may have failed is that much of the money was spent on various porkbarrel projects, such as the notorious “Bridge to Nowhere,” which is the only thing most people now remember from that bill. It’s certainly possible that the 2005 money was largely wasted because most of it went to politically connected interest groups and districts rather than genuinely valid infrastructure priorities. But if the 2005 bill indeed failed for that reason, why would we expect a different result this time around?” Ilya Somin, Whatever Happened to the Last Big Infrastructure Bill? Volokh Conspiracy, Jan. 17, 2008. 

            We sure hope that this time it will be different and that the stimulus works, even though our faith in government ability to screw things up is boundless. We are also troubled by the thought that the tens of thousands of people being laid off on a daily basis are unlikely to possess the kind of skills that may be usefully employed in highway and bridge construction. So this stimulus package may be good for construction workers, but unlikely to do much good to the hordes of computer geeks, clerical workers and low and middle management types who have lost their jobs. Also, the bad news includes the fact that much of our job-providing industry has been shipped overseas.

Taps for the Los Angles “Intercontinental” Airport — This Time for Real

         Dan Weikel of the Los Angeles Times reports (Commercial Operations to Close at Palmdale Regional Airport, Jan. 27, 2009) that the City of Los Angeles is throwing in the towel on what it created in the early 1970s as the Los Angles Intercontinental Airport, and for which it condemned some 17,000 acres of high desert land near Palmdale (60 miles north of Los Angeles). The city is surrendering its federal certification to operate that airport. Since 1971 eight airlines have tried to operate out of that airport but without success. United Airlines was the most recent one, and it gave up a couple of months ago.

         In the early 1970s the city blew $100 million acquiring all that land, much of it by eminent domain, for that airport, and the Lord only knows how much more money was spent trying to make a go of it. And remember, those were circa 1970 dollars which means that the $100 million figure has to be multiplied by three or four to get the equivalent in today’s dollars. Your tax money at work.

         For our earlier posts providing details of that fiasco, see The Palmdale Airport Saga Goes On, Dec. 17, 2008, and Update on Palmdale Airport, Nov. 13, 2008.

A Honkin’ Big Deer Barbeque in Montana?

Closing out 2008, on December 31, the Montana Supreme Court filed a humongous opinion in Kafka v. Montana Department of Fish, Wildlife and Parks, No. 2008 MONT 460, upholding as against a taking challenge a state statute that forbids owners and operators of game ranches to charge fees for allowing others to hunt game on their land, thereby putting out of business a number of Montana game ranches. Hopefully, this does not put people who were looking for a montana ranch for sale off. The majority opinion rehearses the familliar judicial shibboleths underlying the majority rule that holds business losses to be noncompensable in eminent domain in spite of the fact that they are compensable in all other legal contexts. If you are of a scholarly bent, you should know that Professor D. Michael Risinger of Seton Hall University School of Law wrote an aricle in 1985, entitled Direct Damages: The Lost Key to Constitutional Just Compensation When Business Premises are Condemned, 15 Seton Hall Law Review 483, in which he not only demonstrated the lack of a respectable doctrinal basis for the rule of noncompensability of business losses, but he also reviewed all pertinent commentaries and treatises written in the 20th century, and demonstrated that, save only for one student note, no legal scholar or treatise writer has endorsed the rule of noncompensability of business goodwill in eminent domain.

The piece de resistance of the Kafka, decision is the 60+ page dissent by Justice Nelson, joined in by Justices Rice and Swandal, that demolishes the majority arguments. A good read, that. For our own views on that subject, see Gideon Kanner, When Is “Property” Not “Property Itself”: A Critical Examination of the Bases of Denial of Compensation for Loss of Goodwill in Eminent Domain, 6 Cal. Western Law Review 57 (1969). An oldie but a goodie, if we do say so ourselves.

So what happens now to those poor Montana screwees? They can petition the U.S. Supreme Court for certiorari — a chancy proposition at best. So what’s left? We suggest one hell of a deer barbeque. There is nothing in that Montana statute prohibiting that. The game ranchers are only forbidden to charge others for hunting game on their land. It does not prohibit eating the critters, nor charging members of the public for deer barbeque.

We could say that the Kafka majority opinion is Kafkaesque, but we won’t. The rule in question does not rise to that level, either doctrinally or — certainly — morally.

No News From New London

         In our post of November 22, 2008 (Once More With Feeling) we took note of the news item reported a day ealier by The Day, the New London newspaper, that the City of New London had issued a Request for Qualifications, inviting developers to come forward in connection with the Fort Trumbull redevelopment project — the site of the wretched Kelo case. The Day mentioned a January 5, 2009, deadline for responses.

          It just dawned on us that January 5th has come and gone with no news dispatches that this deadline has been met. Or not met.

         So stay tuned. One of these days we may see progress by the city. But we suggest that you not hold your breath.

FOLLOW-UP. The New London newspaper, The Day, reports that in response to its Request for Qualifications, New London has received two — count ’em, two — responses from developers interested in taking a shot at the Fort Trumbull redevelopment project. These developers have not yet been identified.

          John Brooks, the executive director of New London Development Corporation does not appear to be exuding optimism — he is quoted by The Day as saying “The response is a little disappointing. The economy is in tough shape. It’s a risk to take on a project now.” It sure is, John, except that starting a new development venture involves the risk of failure any time, not just now.  That is why people who want to profit from such ventures should risk their own money, not public funds.

         The article may be found in Kathleen Edgecomb, Two Developers Express Interest in Fort Trumbull, The Day, Jan. 30, 2009.

After the Ball Is Over

          Our Latin isn’t good enough to translate the age-old phrase Habemus Papam, from the papal to the presidential context, but we sure do have one – a new President, that is. Poor guy. There he was, big as life, deploying his evident intelligence and rhetorical talents to kick poor ol’ John McCain’s butt, when — Boom! — the financial world came apart, and is continuing to do so, with the Dow Jones dropping by threehundred-something points, even as the new kid was being sworn in. We wonder if there wasn’t a moment during which Barack Obama flirted with the idea of calling McCain and asking him to take the presidency off his hands, before the presidential gold coach turned into a plain ol’ pumpkin. 

          Once the cheering stops and the inaugural balls are over it’s time to face reality, dismal as it may appear to be. This is true to some extent in all presidential successions, but this time it’s  different. The problem is that, as it becomes more and more apparent, the last few decades in America have involved a great, big party with no adult supervision. Money was flowing like borscht, the livin’ was high, and the trendy suburban mansion had many rooms, to say nothing of a whopping mortgage. No one seemed overly concerned with the idea that if you borrow money, sooner or later you have to pay it back. Well, folks, it’s now “later,” and it’s time for some grownups to step in, tell the partying kids to cut it out, to clean up the empty beer cans, and to get ready to go to work next morning — assuming they still have a job to go to. 

          So what does all that have to do with eminent domain? Good question. For openers, we still don’t know what President Obama’s views are regarding eminent domain. Is he a Kelo fan? A critic? Or does he even think about it in the press of other presidential business that threatens to engulf his administration? This is important stuff because as sure as God made little green apples, one component of the government’s effort to stimulate the economy will be an increased level of construction of public works, and that requires land acquisition, usually by eminent domain. The House Appropriations Committee estimates expenditures on the order of $825 billion to be spent largely on roads, highways, harbors and airports, as well as school buildings and sewage treatment plants.

           During the election campaign, we tried to ascertain candidate Obama’s view on the subject of eminent domain abuse, with a singular lack of success. The available information – if that is what it was – only showed the familiar, vague, maybe-this-and-maybe-that, something-for-everybody response one has come to expect from politicians. See our post, Where Does Obama Stand on the Misuse of Eminent Domain?, July 20, 2008.

            What now? Stay tuned.

UPDATE. It didn’t take long to get a glimpse of what’s in store for us. The Los Angeles Times reports (Evan Halper and Richard Simon, Economic Stimulus Package Has a Potential Windfall for California Government, L.A. Times, Jan. 23, 2009) that when the feds pony up the $11 billion they plan to give California for “healthcare and education,” that money will actually disappear into the Sacramento black hole a.k.a. the dreaded $40 billion state budget deficit, covering only about a quarter of it. So much for healthcare, education and fiscal responsibility in state governance.

Update on the Misadventures of New York’s Mayor, the New York Yankees, and the Fate of the Celebrated Not-So-Free Lunch

          A while back we blogged about the New York Times story reporting the eye-popping deal between the New York Yankees baseball team and the City of New York (The Free Lunch – Literally, Nov. 30, 2008). After giving the Yankees over $300 million for the construction of their new stadium, the city folks demanded a luxury box and a free lunch (literally – free food to be available to the city’s occupants of the box and their guests). The Yankees resisted the city’s demand but gave in when it was suggested that the city would withhold approval of municipal, tax-free bonds to be used to pay for the stadium, which according to the New York Times, would enable the Yankees to pay tens of millions of dollars less in interest since interest payments to holders of such bonds are exempt from city, state, and federal taxes, and therefore they pay interest that is lower than interest paid  by taxable bonds. 

          Now, the New York Times reports (David M. Halbfinger, Yankee Stadium Subsidy Becomes Mayoral Campaign Issue, N.Y. Times, Jan. 14, 2008, at p. A23) that the city folks have evidently concluded that such a conspicuous display of municipal high living may not be a good idea, given the rapidly deteriorating economic situation. So a new deal – no pun intended – was struck.  The city “announced that it would give the luxury box back to the Yankees in exchange for $100,000 a year.” The Yankees expect to recover at least $550,000  for the city by reselling the box on the open market, but the $100,000 was a ‘sign of good faith’ in case the luxury-suite market collapsed.

         Oh, we almost forgot. The New York Times has responded to all this with a scathing editorial (Whatever Yankees Want, N.Y. Times, Jan. 15, 2009, at p. A26), noting that “the total $362 million price tag to the city has almost doubled since the project was announced in 2006. And according to the Independent Budget Office, the price dwarfs the $318 million the city will provide for the Mets’ new stadium across town.”

          Precisely what the Founding Fathers must have had in mind when they inserted that “public use” clause into the Constitution. 

          Ain’t law just grand?            

As the Sun Sets on the Pitiful Remnants of What Was Once the British Empire . . .

         For a bit of comic relief — at least we’d like to think that that’s what it is — of Januray 14, 2009, reports that the enviromentalist organization Greenpeace has surreptitiously bought a plot of land, representing themselves as buying it to create a “donkey sanctuary.”  The British have a reputation for being eccentric, but a donkey sanctuary? That must set some sort of record even in old blighty.

        But why would those greenies do a silly thing like that? Well, according to CNN, they don’t actually intend to involve real donkeys in this caper, which came as a great relief to us. Rather, they mean to divide the land into itty bitty pieces and convey them to “supporters around the world” in order to stop the construction of a new runway at Heathrow Airport — the land in question is evidently located where the airport folks plan to put the new runway. Through this sophomoric caper the greenies intend to slow down the proposed construction, their motivation being that airplanes burn fuel and discharge carbon dioxide into the atmosphere, and thus contribute to global warming. We find nothing in that CNN story about anybody over there worrying about the fact that when an airport is congested, incoming planes have to circle for a while, burning fuel and discharging carbon dioxide as they do that.

          Anyway,  haven’t these blokes heard of compulsory purchase? Evidently they have, but they believe that their caper will “slow down the planning process.”

          “Donkey sanctuary,” indeed.

FOLLOW UP. Undeterred by the aroused greenies, the British government has approved that runway. (Sarah Lyall, Third Runway Approved for Heathrow, Angering Critics, N.Y. Times, Jan. 16, 2008, at p. A11). But that’s not the end of the story. The, of January 16, 2009, reports that protesters of all sorts are threatening “direct action” intended to shut down Hathrow Airport. “A number of groups are planning a ‘flash mob’ when a group of people suddenly assembles in a public place, perform an unusual action and then quickly disperse. The activists will arrive at Terminal 5 [of Heathrow] at midday and disperse among the crowd. At a signal they will all unveil red T-shirts with anti-airport expansion logos.” We plumb can’t wait to see what that “unusual action” will turn out to be.

         Stay tuned.


Second Chance for Illinois Redevelopment Bond Holders?

         On November 1, 2007, we blogged (He Who Lives by the Sword, Dies) about the Illinois case of City of Chicago v. Prologis (Ill.App. 2008) 890 N.E.2d 639, in which the Illinois Appellate Court held that holders of redevelopment bonds are not entitled to compensation when land within the redevelopment for which those bonds were issued is condemned by another condemning entity — in this case it was a taking of redeveloped land in the Village of Bensenville for expansion of the Chicago airport, and the taking stopped the flow of property tax revenues used to service those bonds.

          We have now been informed that the Illinois Supreme Court has granted review in this case. Stay tuned.