Monthly Archives: February 2009

The Palmdale “Intercontinental” Airport — Is There Life After Death?

           We want to assure our readers that we aren’t making this up. We couldn’t if we tried. To borrow Hillary Clinton’s expression, there has got to be a “vast conspiracy” out there, bound and determined to provide us with material for our never-ending dispatches about what the City of Los Angeles once dubbed the Palmdale “Intercontinental” Airport, back around 1970 when the city blew some $100 million on the condemnation of 17,000 acres of high desert land for the aforementioned airport. But it never got off the ground. Last time we looked, after some eight airlines tried to make a go of it without success, the city of Los Angeles threw in the towel and surrendered its certification to the feds, thus seemingly putting an end to the Palmdale airport story. Or so we thought. 

         Actually, it turns out that Parkinson’s second law holds true in this case – it’s easier to get into things than out of them. It turns out that you can’t just mail the airport certificate to the feds and go home. No sir. Once you climb into bed with Uncle Sam you don’t just get to say bye-bye and split. According to an article in today’s Los Angeles Times (Dan Weikel and David Zahniser, Palmdale Airport Land Sought for Solar Farm, L.A. Times, Feb. 23, 2009, at p. B1) you have to get the nod from the FAA which first has “to assess the planned use of the property, whether the land is needed for aviation, where the [solar] project would be situated in relation to airport operations and the availability of other land for future airport operations. [¶] If the land is going to be leased, other criteria apply. FAA officials say non-aviation uses should not last more than five years, though exceptions can be made.” 

         The “project” that these folks are talking about is the proposed creation of a “solar farm” on some 4000 acres of land carved out of that 17,000-acre airport site, a use that the Los Angeles Department of Water & Power likes because it would help it generate ”green” power and meet the objectives of “Measure B,” a ballot proposition on the ballot submitted to city voters, favoring power generation without the use of fossil fuels. So as far as the DWP is concerned, what’s not to like? But if that solar farm is built on leased land, it would take a lot more than five years to amortize the cost, especially since (according to the solar farm’s opponents) the cost of solar “green” power would be higher than that of coal-generated power. 

         So far, the FAA spokesman ain’t talkin’ being as nothing has been formally submitted to the feds. Stay tuned on that one.

         Meanwhile, back at the ranch, at least one L.A. County Supervisor, would like to see the air service to Palmdale reestablished, since Palmdale is his constituency. Or at least that the city “should keep its promise to the people of the Antelope Valley or give the [subject] land back to the its rightful owners”  from whom it was taken over 30 years ago. Goodness, gracious — what a droll idea. See Gideon Kanner, We Don’t Have to Follow Any Stinkin’ Planning — Sorry About That, Justice Stevens, 39 Urban Lawyer 529 (2007), explaining how under California law once you take land by eminent domain you don’t have to give it back, not even if you don’t carry out your ostensible “public project” plans, or even if you lied about it to begin with.

         Oh, we almost forgot. It turns out that “any revenue generated by non-aviation use belongs to the airport or airport system.” Uh, oh. What now?

         And so it goes, and goes, and goes . . .

Update. of February 24, 2009, reports in an Associated Press story that the Los Angeles County Board of Supervisors has requested a review of the legality of building a solar power plant on the 17,000-acre site of the “Intercontinental” Airport. We can’t wait for the result.

Second update. The “Measure B” propositon has grown controvesial as election day approaches. As non-residents of Los Angeles, we are not sufficiently informed on the merits of that proposition to express an opinion, but we note in passing that the Los Angeles Times has come out editorially against it and it is being criticized as a power grab by DWP unions.

Third update. As of this morning (3/4/08) it appears that City proposition B (dealing with “green” power generation) has been defeated by the voters in yesterday’s Los Angeles municipal election. What that probably means is that the 4000-acre “solar farm” will not be built on part of the 17,000-acre tract of land that the city took 30 years ago for the Los Angeles “Intercontinental” Airport. How now, brown cow? Stay tuned — there is bound to be more on that one.

There They Go Again

          The Orange County (California) Register reports another would-be redevelopment fiasco. It seems that the city of Santa Ana has bought up, under threat of eminent domain, some 60 parcels of land at a cost of $22 million. Doug Irving, Santa Ana Has Spent Millions to Buy Land Near Downtown, Orange County Register, February 5, 2009. Though no eminent domain lawsuits were actually filed, the city made it clear to the owners of the affected parcels that if they did not cooperate their homes would be condemned. So they caved in.

         But — surprise, surprise! — though years have gone by, nothing has been built there by the city, which is hardly surprising since, according to the Register article, the city never adopted any formal plans for this contemplated redevelopment. As the Register article puts it,

“But no such plan was ever sent to the City Council for an official vote. ‘There was never a plan that was adopted,’ said Cynthia Nelson, the deputy city manager in charge of redevelopment. “There was a strategy. I’d call it a strategy.’

         The upshot of it all, after 10 years and $22 miilion of the taxpayers’ money down the tubes, has been:

“Drive along Santa Ana Boulevard, and you’ll see what’s become of the city’s ambitions. Abandoned houses, where city officials envisioned new apartments. Chain-link fences, where they thought for sure there’d be townhomes.”

“This was going to be one of Santa Ana’s showcase neighborhoods, a gateway to downtown. Instead, it has become a grim guidepost for the thousands of commuters who pass through it every day. In the words of Councilwoman Michele Martinez: ‘Welcome to Santa Ana. Welcome to a slum.'”

         And so, it would appear that instead clearing slums, here is a redevelopment project that creates ’em.

          Maybe Santa Ana can enter into one of those “sister cities” deals with New London, Connecticut. Maybe the two of them can still make it to a casting call for a sequel to Dumb and Dumber.

Insight Into the Housing Crash

         If you haven’t done so already, do see the program on CNBC entitled “House of Cards.” Even if you think you know what happened to bring about the “subprime mortgage” meltdown, you should see it.

         It will be shown on CNBC tonight at 6:00 and 8:00 PM, eastern time. If you miss it, don’t worry — it’s also available on a DVD.

What’s More Environmentally Desirable? Cities or Suburbs?

“Do you really want to be good to the environment? Stay away from it. Move to high-rise apartments surrounded by plenty of concrete. Americans who settle in leafy, low-density suburbs will leave a significantly deeper carbon footprint, it turns out, than Americans who live cheek by jowl in urban towers.


“Also, when environmentalists resist new construction in their dense but environmentally friendly cities, they inadvertently ensure that it will take place somewhere else–somewhere with higher carbon emissions. Much local environmentalism, in short, is bad for the environment.”

Edward L. Glaeser,  Help the Environment – Stay in the City, DC  February 11, 2009.

Update.The Pew Research Center just finished a study about where Americans would like to live and what sort of life-style they would like to have. The first thing they found is that even in dark times, Americans are still looking over the next horizon. Nearly half of those surveyed said they would rather live in a different type of community from the one they are living in at present.
            “Second, Americans still want to move outward. City dwellers are least happy with where they live, and cities one of the least popular places to live.” See  David Brooks, I Dream of Denver, N.Y. Times, Feb. 17, 2009, at p. A29.

Second update. David Brooks’ column produced three — count ’em, three — letters to the editor, all from evident or self-identified urban living fans, including the Chief Executive of the American Planning Association. See Letters to the Editor: From Sea to Sea, the City Still Rules, N.Y. Times, Feb. 20, 2009, at p. A22. All of them challeneged Brooks’ conclusions, but none of them took note of the Bureau of Census data indicating that American cities continue to lose population — the people are voting with their feet, and their wallets.

Did You Say “Holdout”? A New Book on the Kelo Controversy Tells All.

           With rhythmic regularity of the tides, redevelopment groupies assure us that recourse to eminent domain in redevelopment projects is necessary because without it there will be those awful “holdouts” whose refusal to sell their properties to redevelopers at below-market prices will spoil the whole thing by forcing changes in redevelopment  plans and having to build around them. Indeed, we wish we had a buck for each time that “holdout” argument has been made in connection with the Kelo case. Nonetheless we should all reflect on the fact that there was a holdout in the Kelo case, and it wasn’t Suzette Kelo. For some strange reason the city of New London had no problems with it and the press hasn’t made much of it. Remarkable, isn’t it? 

          We were reminded of all this by the new book by Jeff Benedict, entitled Little Pink House: One Woman’s Historic Battle Against Eminent Domain (2009), which tells the whole story of Kelo v. New London. Our perception is that up until now virtually all discussion of the Kelo case and the misuse of eminent domain that it symbolizes, has been centered on law. Rightly so, because the vast majority of English-speaking people took offense at the court transmogrifying the phrase “public use” into private economic benefit on the intellectually and economically flimsy theory that some of the redevelopers’ prosperity would trickle down to the community. But there is more to life than law. The Kelo-related puzzle – if that is what it is – is how come the Italian Dramatic Club of New London got to be the onliest structure left alone when the Fort Trumbull area was taken by eminent domain and razed to the ground? 

          Jeff Benedict tells that story, along with a detailed depiction of the political, behind-the-scenes activities that preceded the condemnation. Benedict makes clear that the decision to leave the Italian Dramatic Club alone while destroying all structures around it, was a case of favoritism arising out of local politics. So much for the “holdout” theory. So far, no one has even tried to explain how leaving the Italian Dramatic Club (in reality more of a political club to which women were not admitted, except in the capacity of servants) untouched while razing all other structures in the Fort Trumbull area was justified. Evidently, it all depends on how well connected politically is the holdout. As the ancient Italians, the Romans, used to say: Quod licet Jovi, non licet bovi – or, if you prefer the modern English version, some animals are more equal than others. So do read Little Pink House. It’s a good read for anyone with an interest in modern uses and abuses of eminent domain. It tells the whole Kelo story.

Follow up. For a detailed review of Benedict’s book, see the post of Prof. Ilya Somin on the Volokh Conspiracy – Telling the Kelo Story: Jeff Benedict’s “Little Pink House,” posted February 21, 2009.

Eminent Domain Program Announced

          CLE International will presnt a program on Eminent Domain on April 23-24, 2009, at the Millenium Biltmore Hotel in Los Angeles. The program will cover a variety of legal and appraisal topics.  For detailed information, contact CLE International, 1620 Gaylord Street, Denver, CO 80206, telephone (800) 321-6320.

How Do You Say “Chutzpa” in Japanese?

          Today’s Wall Street Journal reports (John Murphy, Nissan to Slash Payroll, Pare Japanese Output, Feb. 9, 2009, at p. B1) that as part of its retrenchment brought about by the declining automobile market, our good friends at Nissan are expected to seek assistance inter alia from the U.S. Government. How is that for chutzpa?

         That’s the same Nissan that was the beneficiary of a state government handout for a new plant in Mississippi, to the tune of a 2.5 square mile plant site that was condemned by the state for Nissan, plus  $400 million in cash, plus $17 million for a vehicle preparation building, plus $80 million for a job training program, plus $60 million for new roads serving the new Nissan plant. See our post entitled Arigato, Gaijin San, November 2, 2008.

        But evidently, our Japanese friends don’t think that’s enough and — if the Wall Street Journal is to be believed — they’ll be asking for more, so they can better compete with American domestic car producers and do what they can to drive them out of business. Chutzpa indeed.


IOLTA – The Vanishing Free Lunch

           The February 2009 issue of the California State Bar Journal reports that in the declining economy, revenues of the state IOLTA fund have tanked, plunging from a high of $22.4 million in 1990 to a current $11.5 million, with a projected low of $3.0 million  by the end of 2009. What’s IOLTA, you ask? It’s a gimmick ginned up by the organized bar, intended to fund do-gooder litigation on behalf of the poor without having to pay for it. Neat, eh? Actually, not so neat. As we need not explain, money does not grow on trees – it has to come from somebody’s pocket. And if you are a lawyer, whose pocket can you pick most conveniently? Your clients’ of course. That way, you get the credit for organized do-gooderism, while your clients . . . Wait a minute! If you just do it that way, those clients would complain, wouldn’t they? So how do you solve that little problem?

          Enter the government with a legal scheme that makes three-card Monte look like a game of bridge, and makes it all possible, while giving the appearance of generating something from nothing, so the plucked clients can’t complain.

         In the olden days, if you put your money in a bank checking account, you got no interest on it. But more recently the law authorized the creation of what is called NOW accounts – we are not sure what that acronym stands for, except that it sure isn’t the National Organization of Women. But we digress. 

         Anyway, a NOW account is a checking account that pays interest. The gimmick is that under the regulations that govern such accounts, Joe Sixpack can open one but businesses can’t. And lawyers are in business, so their checking trust accounts in which they keep their clients’ money can’t earn interest as a matter of law. But mirable dictu, under IOLTA regulations they can, except that this interest goes to a bar-operated charitable outfit that uses it for do-gooder litigation. Bingo!

          Mind you, neither we nor any moral person we know of can properly complain when people – whether lawyers or their clients – decide to dip into their own pockets and voluntarily contribute a few shekels to so worthy a charitable activity.  But that is not what’s afoot here. For one thing, this activity is dependent on the lawyers dipping into their clients’ not their own money.

          In Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998) the Supreme Court so held – interest generated by the principal belongs to whoever owns the principal, and that applies to IOLTA accounts.  Now what? Is that the end of the story? One would think that it is, that the interest, having been generated by the clients’ money, belongs to them. But if that’s what you think, you just don’t understand human creativity when it comes to getting one’s mitts on other people’s money. 

         In a later case confusingly named Washington Legal Foundation v. Legal Foundation of Washington, 538 U.S. 216 (2003), the Supreme Court dropped the other shoe and held that private property or not, where small individual amounts are involved, it is legal to have the banks pay the interest on lawyers’ trust accounts as if they were NOW accounts, but instead of paying it to its rightful owners, pay it to the bar’s organized charitable foundations for their do-gooder operations. Since the cost of calculating and processing the interest on small or very short-term deposits on an individual basis is so small, held the court, the cost of handling can exceed their total. Therefore their rightful owners (the clients) do not lose anything even though its diversion to the bar’s charitable organizations is indeed a taking. But this is a taking, said the court, that is for a public use, so it’s OK, and payment of just compensation is not required because the clients are owed no net payments and have not suffered any net loss because if sought to be paid to them, the interest would be consumed by the cost of the transaction.

           All that sounds straightforward, but since there is no such thing as a free lunch, something must be wrong with it. Yes? Yes, indeed. If IOLTA accounts produce a net cash flow in the millions to the bar’s do-gooder organizations – as they do – then obviously they would likewise produce such a cash flow to the clients whose money, after all, is the principal on which the interest is earned. And if the banks’ calculation and payment of the interest is OK when the money goes to the charitable organizations, why wouldn’t it be OK if it went to the clients or to charities of the clients’ choice? Are the individual amounts small? Maybe. But we see class-actions all the time in which the courts require payment of similarly small amounts to large numbers of wronged parties. It seems to us that using modern computer techniques that net cash flow can just as well be calculated and diverted in accordance with the clients’ not their lawyers’ wishes. So if the clients want to spend that money – their money — on funding a charitable activity of their choice, that would be fine. But in our book, making them contribute money for causes they may be individually opposed to, isn’t. 

         Finally, adding insult to injury, the IOLTA rule does not apply to large clients’ deposits. So if General Conglomerates, Inc. sends its lawyers a gazillion dollars to cover expenses in pending litigation, the lawyers are free to put it in a savings trust account, with the entire earned interest being credited to the client. But if Joe Sixpack advances his lawyer a couple of grand for expenses, the (admittedly small) interest on that goes to the bar’s charitable organizations, while the bar leaders preen in public about what great philanthropists they are.  What’s wrong with this picture? 

         Be all that as it may, it now appears that in the declining economy a dramatic shrinkage of IOLTA funds is afoot, and we will see in short order if leaders of the bar who gave us this system will dip into their own pockets to keep so worthy an activity of their creation  going on their own, not their clients’ nickel. Any bets? 

         Stay tuned.

Those Flinty-Eyed Guardians of the Public Fisc Are At It Again

          Buy some experienced condemnation lawyers a couple of drinks and chances are that, as the conversation progresses, they’ll give you an earful about cases they handled in which the owners of the taken property were shortchanged by condemning agencies claiming to act in defense of the public fisc. But the courts go along with the gag, and responding to condemnors’ doomsday cries deem all sorts of condemnation-inflicted losses — some direct and some incidental — to be noncompensable. Oh sure, the courts talk a good game about justice and fairness, and about seeing to it that the condemnees are put in the same position “pecuniarily” — love thet word — they would have been in had their property not been taken, but it’s all talk. When it gets down to business one quickly learns not to rely on  these lofty but empty phrases. The California Supreme Court once explained in a moment of candor that these are “panoramic” expressions of judicial idealism that, in fact, do not represent reality, and that anyone so naive as to rely on them only displays a fundamental misunderstanding of eminent domain law. 

          But outside the field of eminent domain, it’s a whole other strory. For a current example of just how generous Uncle Sam can be when his minions aren’t in court, trying to evade the promise of the constitutionally promised “just compensation” payable to people whose property is being taken, take a look at good old TARP, the Troubled Assets Relief Program, better characterized as the Great 2008 Raid on the Treasury. Today’s Los Angeles Times reports (Associated Press, In Wall St. Bailout, U.S. Overpaid by $78 Billion, L.A. Times, Feb. 9, 2009, hidden on p. A19) that a “congressional watchdog committe” has revealed that Uncle Sam overpaid the “troubled” — love that word — recipients of his largesse by $78 billion. For example, reports the Times, “Ailing insurance giant American International Group Inc. deemed by the Treasury to be too big to be allowed to fail, received $40 billion for assets valued at $14.8 billion.” * * * ” Overall, the panel and analysts it retained to conduct the valuation study found that the Treasury Department used taxpayer money to pay $62.5 billion more than the value of assets in 10 transactions it examined.”

          So next time you hear condemnor’s lawyers going on about how the gummint just plumb can’t affort to pay your clients for all their demonstrable economic losses when it takes their property, remind them about this caper.

Messing With the L.A. Times

          There is a letter to the editor in today’s Los Angeles Times (Shrinking the Times, Feb. 3, 009, p. A14) whose author, Larry Gross, identified as Executive Director of the Coalition for Economic Survival, proposes that “taking over The Times for the benefit of the people at large” – who else? — would be a case of “good use for eminent domain,” being as the Times, beset of late with all sorts of tsuris, like shrinking readership  and declining revenues, has resorted to laying off high-quality reporters and consolidating the various sections of the newspaper into one. Interestingly, for some strange reason, in spite of his display of civic high dudgeon, Mr. Gross does not volunteer to pay the constitutionally required just compensation for such a taking. 

           Thus, this seems like an appropriate occasion to tell our readers (and warn Mr. Gross, if he happens to read this blog) that history has not been kind to folks trying to mess with the Times by using eminent domain. Back in the early 1930s the city of Los Angeles found out the hard way that taking on the Times can be a painful experience. The city decided to build a new City Hall – so far, so good – but for some boneheaded reason it decided to build it on land then occupied by the Los Angeles Times offices and printing plant. The bone of contention turned out to be the issue of whether the Times’ fixtures, including its huge printing presses, and other equipment, were compensable. The city argued that all this stuff was personal property and as such movable and therefore noncompensable in the condemnation action. Bad move. To make a long story short, the California Supreme Court disagreed and held (in City of Los Angeles v. Klinker, 25 P.2d 826 (Cal. 1933)) that the contested equipment that was physically and constructively attached to the Times building constituted fixtures that were compensable along with the building. The city then gazed into its purse and concluded that it lacked the funds to complete this transaction. So it purported to abandon the condemnation expecting to pay only the Times’ litigation expenses as required by statute. Wrong move again.  It turned out that in the meantime, the Times had bought a new site for its replacement building (across the street from the old one), as well as a new set of those huge printing presses to replace the old ones that were permanently installed in the old building. So the Times argued that allowing the city to abandon its condemnation of the old Times building would leave the Times high and dry, with two printing plants, one of which would be useless. So the Times argued that the city was estopped from abandoning this condemnation, and the California Supreme Court agreed. Times-Mirror Corp. v. Superior Court, 44 P.2d 547 (Cal. 1935).

      Now the city had a problem: it couldn’t abandon the condemnation because the court wouldn’t let it, and it couldn’t proceed with it because it didn’t have the money to pay the judgment. The problem was solved when the city prevailed on the State of California to take the property off its hands. The State did and eventually built a new state building on it. The city found another parcel a block away and built the Los Angeles City Hall on it, which still stands there. 

          That was the end of the legal story, but more was to come.  In 1971, the Sylmar Earthquake damaged the “new” state building beyond repair and after manfully hanging in there for a few years, its occupants (including the California Supreme Court and the Court of Appeal) moved out, and the building was demolished, leaving behind a vacant city block that is still there, still unbuilt-on in spite of several efforts to redevelop it. Why? Officially, nobody knows. Ah, but we think we know – it’s the curse of the Los Angeles Times, that’s what it is. 

          So if Larry Gross and his merry men – and women, no sexism, please – want to take a stab at condemning the Los Angeles Times, they better be careful. History teaches that trying to do so can be a problem. So, Mr. Gross, if you think that unlike the Times’ current owner, Sam Zell, you can make money from running the Times, and happen to have the wherewithal to pay Sam the fair market value of the Times facilities as well as the value of its business goodwill (see Cal. Code Civ. Proc. § 1263.510(a)), have at it. It should make for a good show. Or a good laugh, as the case may be.