The California State Legislative Analyst’s Office has released a report recommending that the California High-Speed Rail Authority be stripped of its powers, and the high-speed rail construction project be turned over to the California Department of Transportation (known around here as CalTrans), being as the latter has much experience building large-scale transportation projects whereas the former cannot boast of any such experience and is operating with a skeleton staff.

The Legislative Analyst also recommends that the current legislative funding for the high-speed train project be cut from $185 million to $7 million in the 2011-2012 state budget (these figures do not include the much larger federal funding), and that the initial leg be built where people live, not in the boondocks in the Central Valley. For the full text of the Times article, including the anguished screams of protest emanating from the high-speed rail folks see Dan Weikel, Changes Urged for Rail Project, L.A. Times, May 11, 2011, at p. AA1. A good read, that. Go to http://www.latimes.com/news/local/la-me-0511-high-speed-rail-20110511,0,710485.story

Follow up. Today’s Los Angeles Times editorial, puts the blast good and proper on the way the high-speed rail boondoggle has been handled thus far. We quote:

“The train’s biggest problems can be laid at the feet of the High Speed Rail Authority, which is overseeing its construction. Inexperienced board members appointed by the governor and Legislature on the basis of political patronage rather than expertise have made a host of poor decisions. Not the least boneheaded of these is the board’s plan to take a circuitous route from Los Angeles to Bakersfield by veering through Palmdale and Lancaster. Compared with the more direct route along Interstate 5 through the Grapevine, this would add 30 miles to the trip plus $1 billion in construction costs, and make it all but impossible for the train to meet its promised travel time of 2 hours and 40 minutes from L.A. to San Francisco. The legislative analyst calls for slashing the authority’s
proposed budget for next year by $185 million and eventually eliminating it,
transferring the bullet train’s oversight to another agency. We heartily agree.”

California’s High-Speed Train Wreck, L. A. Times, May 16, 2011. For the full text go to http://www.latimes.com/news/opinion/opinionla/la-ed-bullettrain-20110516,0,5409734.story

First, let’s review the bidding. A while back, California’s new governor, Jerry Brown, has announced that he wants to abolish redevelopment agencies in California so that the circa $1.7 billion in public money diverted  by them from municipal taxing agencies can  be used for public purposes instead of funding redevelopers’ private businesses, and being diverted to repayment of redevelopment agency tax-free bonds. This, says the guv, is necessary to help balance California’s state budget and keep the ongoing deficit from eating up what is left of the once Golden State. With that deficit hovering someplace around $20 billion this year, this is serious stuff, given that California has the highest unemployment rate in the nation and new businesses aren’t exactly marching from thither to hither to enjoy California’s business climate which is rated as the worst in the nation.

But guess what? It turned out that when push came to shove in the California legislature, it was — surprize! — the Republicans, not the Democrats, who voted to oppose Brown’s proposal and thus kept redevelopment agencies in business as usual in spite of the fiscal calamity descending on California. How come?

Conventional wisdom of politics has it that it is the Democrats, the left-liberal party, that disfavors private property rights and wants to see wealth redistributed from the fat cats to “the peepul.” In theory, you can count on the Democrats favoring erosion of private property rights and cheering on government use of eminent domain for redevelopment. It appears at times that these folks get their jollies from the contemplation of a process whereby “the peepul” get to confiscate the ill-gotten gains of the rich. So you might think that the Democrats would stand up in defense of the “little people,” the lower middle-class and poor folks who are the usual victims of redevelopment, and keep them from being evicted and undercompensated in order to make lebensraum for the likes of car manufacturers like General Motors, Chrysler and Nissan, as well as major merchandisers like Costco, Target and Best Buy, etc. But that is not what is happening. See 4 Albany Gov’t. L. Rev. at 64-65, fn. 109,  for a lengthy list of fat cats with their snouts in the public trough, supping lavishly on public funds diverted from the public treasury to feather their already cushy nests.

The Republicans, on the other hand, are supposed to be the guardians of private property rights resisting the leftist notions of confiscation and wealth redistribution as favored government policies.

But as it turns out in this case, neither of these conventional-wisdom scenarios is unfolding in California. On the contrary, the Democrats favor Brown’s proposal to abolish redevelopment, while the legislative Republicans, in a rare display of near-unanimity, are fighting tooth and nail to keep the redevelopment process going and redevelopment agencies alive. That entitles one to ask: what the hell is going on here?

We don’t have a clear answer to that one, but today’s Los Angeles Times sheds an oblique light on the process. See Shane Goldmacher, Wife’s Consulting May Pose Conflict for State Senator, L.A. Times, May 10, 2011, at p. AA1,  http://www.latimes.com/news/local/la-me-redevelopment-huff-20110510,0,3897790.story What this story tells us is that the leader of the Republican block that is doing its utmost to preserve redevelopment in California, happens to be married to a lady who, as the Times puts it, “is a paid consultant for a large developer eager to keep the [redevelopment] program intact.” For this her business, says the Times, has collected a cool $100,000, and in a praiseworthy display of gratitude, her company and its executives have given some $30,000+ to her husband’s campaign.

Conflict of iterest you say? Nah, says a company spokesman — “even though there’s the perception of conflict, he does what’s right.” So says the Times.

So there you have it folks. We were thinking of saying something snide but that quote is well-nigh impossible to top. At least for us.

But on the political-ideological side of things we do have a thought: With conservative Republicans like that, who needs radical Democrats?

In what the Los Angeles Times characterizes as “a surprising and controversial move” the California bullet train planners have decided to revive consideration of an earlier, discarded route that would take the high speed rail line along Interstate Route 5, across the Grapevine (a mountain range that separates the San Fernando Valley and Los Angeles from the Central Valley). That route is nearly 30 miles shorter, would reduce tunneling and save $1 billion. So why wasn’t it chosen in the first place? See Rich Connell and Dan Weikel, High-Speed Rail Planners Revive Grapevine Route, L.A. Times, May 6, 2011.

The problem is that the potential new (actually old) route would swap opposition by one set of NIMBYs for another. Both routes will involve interference with existing land uses, notably residential ones. Both routes will be studied now, which is to say the old, rejected I-5 route will be reconsidered.

Stay tuned.

For the Los Angeles Times story go to http://www.latimes.com/news/local/la-me-high-speed-grapevine-20110506,0,7371109.story

The basic facts were that the feds offered the owner $1,875,000, but then in a classic old-fashioned lowball move, put on a witness at trial who opined to only $186,000 (less than 10% of the offer). The commissioners awarded $6,100,000 and the court eventually awarded $3,800,000 .

The classic “lowball” of this type (that was common in older California condemnation cases and is still seen from time to time) was to make a high deposit and take possession, thus forcing the owner to move out and use the deposit to acquire replacement property. Then, after the money was spent, the condemnor’s appraiser would show up at trial and testify to a much lower figure. The evident purpose of that sort of stuff was to put pressure on the condemnees by threatening them with the possibility of a negative judgment against them, and force them to settle on terms advantageous to the condemnor. This practice is warned against in the California Continuing Education of the Bar (CEB) book on condemnation. It is sometimes referred to as “sandbagging.”

In this case, to make matters worse, the feds also cheated on discovery for which they were sanctioned $50,000.

But the court refused to award the owners attorneys fees under the Equal Access to Justice Act  (28 U.S.C. Sec. 2412 (d)(2)(H)) which allows them when the owner’s evidence is closer to the award than the condemnor’s evidence. The owners’ problem was that they at one time took the position at a couple of early hearings that the subject property was worth around $30 million because of its mineral deposits. But they abandoned that position at trial and asked that the Commissioners’ award stand instead. So they argued that if you disregard that $30 million part which they had disavowed, and use the Commissioners’ $6.1 million award, they qualified under the EAJA. The court disagreed.

The case is United States v. Harrell, ___ F.3d ___ (10th Cir. 2011), Filed April 29, 2011, No. 10-2153.

Follow up. Two of our fellow bloggers, Robert Thomas of Hawaii (www.inversecondemnation.com) and Rick Rayl of California (http://www.californiaeminentdomainreport.com/) have commented on this case and we recommend that you read their stuff which provides other perspectives on the problem. All we wish to comment on here is the court’s assertion that inasmuch as EAJA, the statute allowing recovery of attorneys fees by condemnees who prevail against the government in these cases and recover a judgment that is closer to their evidence than to the condemnor’s offer, is one in derogation of sovereign immunity, and as such must be strictly construed. Maybe. We also seem to recall a rule of statutory construction holding that where the legislature reforms the law in order to remedy hardship that preexisting common law imposes on litigants, the new statute must be liberally, not strictly, construed. See e.g., Garrett v. Superior Court, 11 Cal.3d 245, 519 P.2d 588 (Cal. 1974).

So we wish that the Harrell court had provided us with an analysis of this conundrum, instead of limiting itself to an ipse dixit.

NorthJersey.com reports an interesting settlement of an eminent domain case in North New Jersey. A township offered $310,000 to the Veterans of Foreign Wars for its building. The case settled for $375,000 after the township filed an eminent domain action. That’s a 20% bump and as such no big deal as compared with some of our other Lowball Watch items. But the joker here is that the township issued bonds in the amount of $475,000 for this acquisition, and a local church had offered $649,000 for this property. All we know in this case is what we read in the newspaper, and the newspaper story is strange. Why would the VFW settle for $375,000 when it had an $649,000 offer and the county implicitly conceded that it might have to pay as much as $475,000?

For the story go to NorthJersey.com, Jason Braff, Township Closing In on VFW Property, May 3, 2011.

We recommend a recent article by Stve Greenhut, California’s Secret Government, appearing in the  Spring 2011 (Vol. 21, No. 2)  issue of CITY JOURNAL.  A good read, that. Go to http://www.city-journal.org/2011/21_2_california-redevelopment-agencies.html

Our favorite quote that says it all:

“In theory, RDAs spearhead blight removal. In fact, they divert billions of dollars from traditional services, such as schools, parks, and firefighting; use eminent domain to seize property for favored developers; and run up California’s debt to pay those developers to construct projects of dubious public value, such as stadiums and big-box stores. Most Californians have long been unaware that these agencies exist. As the activist group Municipal Officials for Redevelopment Reform puts it, RDAs constitute an “unknown government” that “consumes 12 percent of all property taxes statewide,” is “supported by a powerful Sacramento lobby,” and is “backed by an army of lawyers, consultants, bond brokers and land developers.”

Well said.