Monthly Archives: January 2015

Detroit May Be Out of Bankruptcy, But Is It Out of the Woods?

Detroit may have emerged from bankruptcy, but predictably, it now must face the factors that got it into trouble to begin with, and that haven’t just vanished by judicial decree. The intractable facts are many, but two stand out. First, the population of Detroit has largely left and fewer and fewer people are paying local taxes. Those Detroiters who are still around are largely poor and unable or unwilling to pay taxes, for which it is hard to blame them, being that Detroit provides exceedingly poor public services to its inhabitants. Second, Detroit remains a mess most of whose population has left, leaving few employment opportunities. It is odd for a state or country to go fully bankrupt because it is often about businesses facing bankruptcy where all the news surrounds. Bankruptcy in states isn’t that different, it essentially means that they are clearing all their debts but it also means a lot of issues for the residents who live there.

For our earlier insight into the problems that post-bankruptcy Detroit is facing, click on

But life must go on, so the Detroit City Mothers have now turned to the desperate strategy of trying to squeeze blood from a turnip, and are stepping up foreclosures of homes with delinquent tax bills. To give you an idea of the vastness of this task, this year alone 62,000 properties located in the city are subject to foreclosure — which means that their owners are at least three years behind on their tax payments. According to the New York Times, only half of these are occupied and nearly 13,000 are probably vacant lots. “Probably?” That’s what it says in the Times. Monica Davey, A Hearing on Housing in Detroit Draws a Reluctant Crowd, N.Y. Times, Jan. 29, 2015, p. A13 (New York edition).

The problem now faced by Detroit is, who is going to buy all these wrecks in foreclosure sales, and what is to be done with them afterwards? No answers to these questions appear to be forthcoming. In the meantime, interest is running on all those delinquent taxes at the current rate of 6% which is a big deal being as it was 18% until the Michigan legislature enacted legislation reducing the rate of interest for those folks who still live in the houses with delinquent taxes.

Being a pessimist by nature, we don’t see much of anything on the horizon that bids fair to turn things around. Remember, it isn’t just Detroit; it’s a whole bunch of older American cities, some of which (Camden, NJ, for example) are in worse shape than Detroit. But if you have an interest in the depressing subject of the decline of American cities, stay tuned. You may even want to take a look at our article on this subject, Detroit and the Decline of Urban America, 2013 Mich. State L. Rev. 1548. It will give you an idea of how things got to their present sad condition, and why revitalizing American cities is in the nature of “Mission Impossible.” Suffice it to say here that it wasn’t a case of Americans “falling in love with the automobile” — as some planners are fond of putting it — and on a whim moving to the suburbs. No, it wasn’t that. It was the lengthy interaction of government policies that for all practical purposes bribed your Mom and Dad to leave the city and move to the suburbs, to say nothing of the fact that city crime rates soared, city living grew dangerous, particularly in the 1970s, and urban schools became not only ineffective but also hazardous for the kids.

So we wish all those Detroiters luck. They will need it.

Follow-up: For another pessimistic look at Detroit’s future, this one having to do with local xenophobia that views newcomer-investors with disdain, see Aaron M. Renn, Is Detroit Open for Business? City Journal, Winter 2015, go to

Is It Now Atlantic City’s Turn to Go Down the Tubes?

It would so appear. We noted not too long ago that Atlantic City was on its way down with Online Pokies now much more popular. With casino/hotels closing and things nowhere like the rosy predictions of yore, when we were assured by our betters that its redevelopment — using the tired old condemn-and-bulldoze method — would turn things around and as the glittering casinos went up prosperity would rise with them. But it didn’t. See The rise of online gambling has resulted in a change in customer preferences. In fact, sources at suggest that online gambling now dominates the market. The online world is taking over the gambling world! It could be as easy as searching for eu casino (for example) on Google and playing online casino games that way. These online sites don’t look like they’re going anywhere anytime soon.

Websites like are becoming increasingly popular for users to play games like slots, and gambling sites are only growing in popularity.

Oh sure, for a while it glittered but as the proverb teaches, all that glitters isn’t gold. It appeared good as long as Atlantic city enjoyed Las Vegas-style gambling as a municipal monopoly. But it didn’t last.

With this being said, when it comes to gambling, it comes as no surprise to find that the option of people playing Online Casino games, such as Blackjack and Roulette continues to grow. Plus, not everyone is able to make it to a casino, so being able to play these sorts of games within the comfort of your own home is another factor. Additionally, winning money should be seen as a bonus.

The gambling biz eventually became a government-supported oligopoly, and then it had to face reality as other places on the East Coast also went into the gaming business and gambling-minded members of the hoi polloi discovered that it wasn’t necessary for them to travel to a far-off place like Atlantic City for a spot of blackjack. With there being options like how to bet on sports and being able to play casino games online, people don’t feel like they need to travel to places like Atlantic City to have fun and potentially win some money.

or whatever visions of getting rich quickly floated their boat because casinos started sprouting all over the place — Indonesian casinos in particular. Ayo daftar Sbobet judi online sekarang juga!

So here is the Times dispatch (Patrick McGeehan, Christie Uses Executive Order to Appoint an Emergency Manager in Atlantic City, Jan. 23, 2015, at p. A20); It brings the news that “Moving to take greater control over Atlantic City, which is struggling financially as its casino industry shrinks, Gov. Chris Christie on Thursday appointed a corporate finance lawyer to be the city’s emergency manager.”

And to make things really interesting, “along with the lawyer, Kevin Lavin, Mr. Christie brought in Kevyn Orr — the lawyer who led Detroit through the bankruptcy it emerged from last month — as a consultant.”

That, it seems to us, does not bode well for Atlantic City’s future. When in addition to a municipal finance maven you also retain a municipal bankruptcy maven, things are not looking good, and you won’t catch us rushing out to buy a fistful of Atlantic City municipal bonds, their tax-free interest status notwithstanding. Furthermore, with more and more gambling enthusiasts turning to mobile casino options, the landscape of the gambling world appears to be shifting dramatically.

So stay tuned. We are convinced that we haven’t heard the last of this and that more misadventures of redevelopment projects are in store for us.

Our own observation is mostly moral: if indeed gambling is considered a vice by the New Jersey Legislature, as evidenced by the state’s enactments of statutes that criminalize it, then how come gambling becomes a municipal virtue when it is sponsored by the state and conducted for private profit on land forcibly taken from faultless individuals who are under-compensated in the process?

Follow up. If the fate of Atlantic City is of interest to you, also read Stephen Eide, Debts No Honest Man Can Pay, City Journal, Feb. 12, 2015; go to for a detailed description of Atlantic City’s financial predicament.

The Horne California Raisin Case Is Back In the Supreme Court

Not much we can add to this headline. You no doubt remember the recent Horne case, in which the Supreme Court vacated the opinion of the 9th Circuit and sent the case back with directions to consider the Hornes’ claim of taking of a chunk of their raisin crop or else pay a fine north of $400,000. The 9th Circuit still couldn’t find a taking in this scenario, and hung tough — it more or less defied the Supreme Court and once again held that this physical seizure of the Hornes’ raisin crop was not a taking within the meaning of the Fifth Amendment.

The Hornes petitioned the Supreme Court for certiorari, which the court just granted. So it’s off to the races again.

Oral arguments should take place sometime later in the year and it is likely that a [second] SCOTUS decision will come down later in the year, probably by the end of June. Last time, the subtext of the court’s [first] opinion revealed — at least to us — that the court was not pleased with the government’s conduct whereby its physical seizure of tons of privately owned raisins and the resale of them in order to keep raisin prices up, without paying their owner a nickel. That weird legislative scheme was concocted in the depths of the Great Depression of the 1930s, as a means of keeping raisin prices up, and thereby keep raisin farmers from going broke. But it makes no sense today, and it was ridiculed during the last oral argument by none other than Justice Kagan, usually reliably lined up with the court’s liberal justices.

So stay tuned, folks. This one should be fun.

Follow up. Actually, this post should be called a “non-follow-up” if there is such a word. We understand that the same-sex marriage cases are of greater interest to more people than takings law, and understandably they take the lion’s share of SCOTUSblog publicity. But, hey, man. When a lower court pretty much defies the Supreme Court and sticks to the result achieved in its earlier, vacated decision, that might be of interest to SCOTUSblog readers. Yes? But evidently that’s not how our betters think. Other than a bare mention of the fact that cert was granted in the Horne case, we have not been able to find any SCOTUSblog reference to Horne, except a statement of the Issues Presented.

About All that Stuff Going on in France . . .

We thought it might be proper to share with our readers David Brooks’ insightful observation in the NY Times about freedom of expression in France as opposed to the good ol’ U.S. of A.:

“The journalists at Charlie Hebdo are now rightly being celebrated as martyrs on behalf of freedom of expression, but let’s face it: If they had tried to publish their satirical newspaper on any American university campus over the last two decades it wouldn’t have lasted 30 seconds. Student and faculty groups would have accused them of hate speech. The administration would have cut financing and shut them down.

*    *    *

“Americans may laud Charlie Hebdo for being brave enough to publish cartoons ridiculing the Prophet Muhammad, but, if Ayaan Hirsi Ali is invited to campus, [and wants to offer a sober critique of Islam]  there are often calls to deny her a podium.”

Guess What? Redevelopment Doesn’t Deliver on Its Promises.


“Florida Gulf Coast University economists Carrie Kerekes and Dean Stansel used data collected from states to quantify the empirical effect of eminent domain on local economies. If taking private property for public use is economically beneficial, tax revenue would correlate positively with increased eminent domain takings.

“Kerekes and Stansel found “virtually no evidence” of eminent domain’s economic benefit.

“The search for empirical evidence regarding government takings and tax revenue did turn up something surprising: There appears to be ‘a negative relationship between eminent domain and revenue growth.'” The author, Jesse Hathaway is a research fellow with The Heartland Institute.

$5 Million Taking Verdict in Connecticut

The Weston Forum reports that a jury in Stamford Connecticut has awarded $5,000,000 to a property owner who was prevented by the town from developing and selling his property, and eventually lost it by foreclosure. See Patricia Gay, Jury Awards $5 Million to Stones Trail Against the Town of Weston. Click on

The jury found that the owner was denied equal protection, due process of law, and that “the Town of Weston imposed an inverse condemnation on Stone Trail’s property.” The facts reported in this article suggest that this jury verdict was amply justified; among other things, it tells us that the town’s First Selectman said in a meeting that the town was going to “shut down” the owner and keep him from developing his property. However, we are puzzled because the article also says that the case isn’t quite over because the judge is yet to rule “on the final inverse condemnation counts.”

Martin Anderson, R.I.P.

Martin Anderson, Senior Fellow Emeritus at the Hoover Institution, died at the age of 78. If you don’t recognize the name, he was the author of an early critique of urban renewal, which appeared as the book “The Federal Bulldozer: A Critical Analysis of Urban Renewal, 1949-1962” (MIT Press, 1964).

Urban renewal (later re-christened “urban redevelopment,” and later still into “economic redevelopment” of Kelo v. New London infamy) proved to be a destructive force that over the years contributed to the decline of American cities, and in spite of the expenditure of kings’ ransoms in public funds, failed to revitalize American cities, even as it filled the pockets of urban redevelopers favored by city hall insiders, and holders of tax-free municipal bonds. Worse, it transmogrified legal doctrine concerning the “Public Use” clause of the 5th Amendment to the U.S. Constitution into an Orwellian mish-mash in which, in the hands of American judges, “public use” came to mean anything that city hall insiders wanted it to mean, i.e. that the latters’ decision to use eminent domain to displace urban populations to make room for redevelopment was “well-nigh conclusive” as long as it was merely “rationally related to the conceivable.”

Kudos to Martin Anderson for discerning the coming urban catastrophe ahead of most people.

California Choo-Choo (Cont’d.)

Today’s California newspapers report breathlessly that — ta,da! — work is starting on the delayed bullet train. Ralph Vartabeian, Work Starting on the Bullet Train, L.A. Times, Jan. 5, 2015, p. 1A (above the fold). But before you get all in an uproar and rush out to buy some California Choo-Choo bonds, be advised that nothing has been done yet, and the foo-foo of which Mr. Vartabedian writes will be more in the nature of a ground-breaking ceremony, rather that the start of actual construction. Mr. Vartabedian who impresses us as a knowledgeable dude, adds this:

          “But the milestone marked by Tuesday’s ground-breaking ceremony also will serve as a reminder of the enormous financial, technical and political risks still faced by the Los Angeles-to-San Francisco project.

Rail officials haven’t yet lined up the funds needed to complete the initial system over the next 14 years. Construction is starting two years later than  the state had promised. Acquisition of private property is going slower than expected. And they have yet to finalize legal agreements with two of the nation’s  most powerful private freight railroads that are concerned about how a bullet train network will affect their operations.

To say nothing of the fact that Congress is in the process of being taken over by Republicans who — it says here — are likely to be considerably more inhibited in giving away the federal taxpayers’ money to California to help fund Democratic Gov. Jerry Brown’s California Choo-Choo.

New York Condemnation Lawyer Passes Away — R.I.P. Mario Cuomo

Today’s dispatches bring the news that New York’s former governor, Mario Cuomo,  has passed away at 82. To the press and possibly to you ol’ Mario may have been a big time politician whose name, at one time, was bruited about as a presidential prospect. But to us, he was a customer who read our publication.

We never actually met the man but we knew of him as a condemnation lawyer in Queens. How? He was a subscriber to our monthly publication “Just Compensation” that began publishing in 1957 and continued in print for over a half-century.

Mr. Cuomo practiced law in Queens and, if the New York Times is to be believed, did right well by his clients. He defeated the taking of a 67-acre junkyard, thereby frustrating the desired of Robert Moses — quite a feat in itself — and succeeded in reducing the take of a 67-home tract of land for a school, down to 55 homes. Not bad.

Eventually, he went into public life and cancelled his subscription to “Just Compensation.” The rest as they say, is history.

If you want to read the whole story in his obituary, check it out in Adam Nagourney, Governor, Governor’s Father And an Eloquent Liberal Beacon, N.Y. Times, Jan. 2, 2015, at p. A1.

Follow up.  For another insight into Cuomo’s fight for the Queens property owners, see Sam Roberts, An Outsider’s Borough Shaped a Politician Who Helped Shape It, N.Y. Times, Jan. 3, 2015, at p. A13. See