Monthly Archives: January 2009

Funny Coincidence Department


          One of the most outrageous applications of the power of eminent domain took place a few years ago in Syracuse, New York, where a local redevelopment agency set out to condemn, not leasehold interests, but rather specific provisions in leases of major tenants occupying space in an existing shopping mall that had been built as part of an earlier redevelopment project. This was done in order to facilitate another redeveloper’s plans for an expansion of that mall. The protesting tenants included JC Penney and Lord & Taylor. They argued that the changes sought to be imposed unilaterally on their leases by the use of eminent domain were contrary to the parties’ intent when those leases were entered into, and had they known that such changes would occur, they never would have entered into those leases in the first place. That sounds like a reasonable argument. But, hey man, this was New York whose courts neither see, nor hear, nor speak evil when it comes to redevelopment takings, and routinely reject owners’ submissions in terse opinions. And so it was in this case. See In re Kaufman’s Carousel v. Syracuse Industrial Development Agency, 70 N.Y.S.2d 212 (App. Div. 2002). 


            We now learn from the New York Times that there were aspects to this deal that are — shall we say? – fascinating. According to the Times (Charlie Savage, A Donor’s Gift Soon Followed Clinton’s Help, N.Y. Times, Jan. 4, 2009, at p. 1) New York Senator Hilary Clinton “helped secure millions of dollars in federal assistance for the [Syracuse] mall project” now known as Destination USA, for which she took repeated public credit. That legislation makes the bonds used to finance the Syracuse redevelopment project, tax free, being as they are said to be “green bonds” – i.e., they finance “environmentally friendly projects,” like recycled materials, and solar power panels — stuff that a lender would not ordinarily approve. So here it is, folks. A humongous shopping mall gets a bundle under the “green” banner as “environmentally friendly.” Goes to show how little we know – we always thought that large shopping malls consume vacant land and attract a lot of shoppers, thus requiring a large infrastructure, and generating traffic that contributes to traffic congestion, air pollution and global warming – things that would seem to be something less than environmentally desirable.



            But that’s the least of it. What makes this story noteworthy (presumably that’s how it wound up on the front page of the New York Times) is that after those bonds were approved by Congress, and after Senator Clinton repeatedly took credit for pushing them through, the redeveloper behind Destination USA, donated $100,000 to the William J. Clinton Foundation that finances Bill Clinton’s presidential library and donates funds to other projects favored by him. So what, you say — a fellow should be free to support a fellow Democrat if he pleases. True enough, except that the gentleman in question isn’t a Democrat; according to the Times, he is “a major Republican campaign fund-raiser,” a “Bush Ranger” who in 2004 alone gathered more than $200,000 for the Bush-Cheney ticket, as well as additional funds for the Republican National Committee and several Republican presidential candidates. Nonetheless, he says he thought that Bill Clinton was “a great president.”



         The bottom line — in the words of the Times:


“[This] contribution is the only known situation  so far in which an American donor gave a large sum to Mr. Clinton’s foundation while benefiting from his wife’s official actions.”

Another Attempt to Undercompensate Goes Down in Flames

          The Detroit Free Press ( reports that the Michigan Department of Transportation settled its condemnation action seeking to take a 51-acre right of way for the M-5 freeway segment known as the Haggerty Connector in Novi, Michigan. The state DOT took the land in 1996 and deposited its idea of just compensation in the amount of $2.8 million. But after a valuation trial the verdict came to $14.9 million. The Michigan Supreme Court reversed, and ordered a new trial. 

          But there won’t be any retrial. DOT has now settled the case for $16 million, payable in addition to the $2.8 million deposit.

          It kinda makes a fellow wonder. What were the DOT people thinking when they made a deposit that was only some 15% of what the land turned out to be worth. Reasonable minds can differ as to what is reasonable compensation. But when the eventual voluntary settlement turns out to be almost seven times the original offer, that raises the question as to whether the initial purchase effort was sincere. Remember that this was not a case of DOT suffering an adverse verdict after trying the case and fighting the good fight against what it thought was the owner’s ecessive demand — the $18.8 million payment was agreed to by DOT.

TVA Follow-Up

           Back in November we blogged about undercompensation of condemnees, in the context of United State ex rel TVA v. Powelson, where the U.S. Supreme Court expressed its unjustified concern that indemnifying property owners whose land was being taken by eminent domain for a TVA hydroelectric dam would create tension with the people’s interest in public improvements (see Hydroelectric Dams – Build them Up or Tear them Down?, 11/16/08). We noted that this judicial concern was unfounded because as it turned out, the TVA made a bundle on its dams, and so did its industrail customers who got to enjoy electric power at a cost that was 30-50% below prevailing rates. We also noted that after exhausting its hydroelectric dam geerating capacity, the TVA went on to build large coal-burning electric power generating plants, which in turn required massive strip mining of coal, that produced the familiar environmental problems.

          Now it turns out that we left something out. When you operate coal-fired power generation plants, you also produce ash, and TVA did that too — in prodigious quantities. See Shaila Dewan, At Plant in Coal Ash Spill, Toxic Deposits by the Ton, N.Y. Times, Dec. 30, 2008, at p. A13. From this story we learn that one year’s worth of ash produced by one of those plants produces 45,000 pounds of arsenic, 49,000 pounds of lead, 1.4 million pounds of barium, 91,000 pounds of chromium, and 140,000 pounds of manganese. And, of course, these plants have been operating for many years.

          All that toxic glop descended on the surrounding area when a few days ago the earthen dike containing the ash heap of a TVA power plant, gave way, and 5.4 million cubic yards of the stuff flowed out, covering some 300 acres, in an area 40 miles west of Knoxville.  As yet, the TVA has no estimate of the cost of the needed cleanup or how long it will take to accomplish it. Our reading of the news dispatches reporting this calamity fails to indicate that anyone on the goverrnment side is rushing in to compensate the affected landowners. We are not holding our breath on that one, and it seems like a fair bet that the affected owners will have to lawyer up and sue the government to collect. It also seems likely that when it comes to assessing damages, we may again hear the judicial lament that indemnifying the affected property owners will create tension between indemnifying them and the “people’s interest” in public projects. It seems to us that the “people’s interest” in public projects does not include the “right” to cover hundreds of acres of other people’s land with a toxic glop.

          The Los Angeles Times (Richard Fausett, After Tennessee Ash Spill, Cleanup and Worry, Jan. 1, 2009, available at ) reports that “a tide of litigation” has already begun. Stay tuned.