Lowball Watch — Texas

Tradition has it that everything is bigger in Texas and that goes for lowballing condemnees too. The Associated Press reports what appears to be an epidemic of lowballing in Texas, in connection with the feds’ condemnation of land for a border fence. The story has been published in the Metropolitan News-Enterprise, a legal newspaper in Los Angeles, under the headline Landowners Say They Were Shortchanged in Deals for U.S.-Mexico Border Fence, October 16, 2012, at p. 5.

The public project consists of a congressionally authorized, 670-mile long metal fence along the border, intended to curb “illegal immigration” and the taking is for its construction.

The problem that is stirring things up is the great disparity in prices that the feds are paying. Many complaints are coming from owners of small parcels that are being taken, who are largely unrepresented, and who, without legal advice tend to accept the government’s offers in the naive belief that Uncle Sam wouldn’t cheat them. Hah! In fact, condemnees who are represented by counsel do much better than others.

“An Associated Press analysis of nearly 300 Texas land cases found that most of the settlement money went to a small group of owners, all of whom had attorneys. The legal help appeared to pay off: Of nearly $15 million that has been paid out, 85 percent has been awarded to just a third of the property holders.”

Of course, these people were largely owners of larger, more valuable land, and thus had a greater incentive and greater means to hire counsel. But that doesn’t change the fact that even those folks were targeted for lowball offers.

“One recent case involved 8 acres at the entrance to a sable palm grove managed by the Nature Conservancy. The government initially offered $114,000, but in August the matter was settld for nearly $1 million.”

Which according to our calculator comes to over eight times the original lowball offer. In another case,

“The fence forced a developer to scrap plans for an entertainment district along the Rio Grande in Brownsville. The government’s first offer was $233,300. After a three-year legal battle that almost went to a federal trial, both sides settled for $4.7 million.”

Which comes to twenty times — you read it right, twenty times — the original offer!

These lowball offers from which the feds retreat when challenged, are not just limited to cases in which the owners are affluent and well represented. The AP cites the case of one Oscar Ceballos who was offered the “ridiculous” amount of $1600, but who, even when represented by an unspecialized legal aid lawyer, was able to settle for $40,000, or twenty-five times the original offer.

So what’s the feds’ excuse? Get this. “Federal attorneys say the initial offers represented only a starting amount that would permit the seizures to begin and could be adjusted later.” In our opinion, that sounds like bullshit. If memory serves us, the Uniform Relocation Assitance Act requires that prospective condemnees are offered the highest approved government appraisal amount, not some sort of  a “starting” lowball bid. So in our opinion what the feds are doing, is taking unfair advantage of unsophisticated land owners of modest means and cheat them when they can.

We have written about this stuff earlier — see “[Un]equal Justice Under Law,” 40 Loyola of L.A. L. Rev. at pp. 1106-1107 (quoting Keith Harper, MAI, describing from an appraiser’s point of view how typical lowballing works in cases of mass condemnations). Do take a look at it, as well as at the infamous statement of a government land acquisition functionary, threatening landowners with prolonged delays and needless litigation unless they accepted “30 cents on the dollar;” quoted at id. pp. 1105-1106.

Thiese morally shoddy practices were common and were exposed in congressional hearings in the 1960s. The Uniform Relocation Assistance Act was supposed to put an end to such stuff. But as you can see from the AP story reported here, it hasn’t. For an insight into how it was done in the old days, see Curtis J. Berger and Patrick Rohan, The Nassau County Study: the An Empirical Look Into the Practices of Condemnation, 67 Columbia L. Rev. 437 (1967).

So what’s the feds’ excuse now? According to the Associated Press, they say that “the initial offer represented only a starting amount that would permit the seizure to begin with and could be adjusted later.” But as noted above, the Uniform Relocation Assistance Act requires fair offers — actually, the highest amount from an approved cindemnor’s appraisal — and forbids such shoddy haggling. Moreover, for all that appears from the AP article, the feds don’t “adjust” it later when the owners accept the lowball offer.

All of this is yet another reason why eminent domain is so widely despised.

Afterthought.  All this talk about a border fence stimulates a question. Why is it that when we build a border fence to keep out poor Mexicans who are only looking to better their lot in life, it seems OK and you don’t see lachrymose op-eds lamenting this activity and denouncing  our government for it, but when the Israelis do the same thing to keep out bloodthirsty terrorists out to cross the border to kill innocent men, women and children, the bien pensant, politically correct folks get their knickers in a twist?  Jes’ wonderin’.