Gideons Trumpet

A dispatch from Forbes (The Stagnant City: How Urban Politics Are Stalling Growth and Pushing Rents Up, Forbes.com, March 5, 2012 – click here ) reports a recent study by George Mason University Professor David Schleicher,  indicating that urban zoning policies are disfavoring small developers and preventing construction of sufficient apartments where they are wanted, causimng rents to rise. For a Forbes interview with Prof. Schleicher, click on the link above.

From the Bloomber News Service (With Gas Tacx on Empty U.S. Must Find New Way to Tax Roads, February 26, 2012), click here — we quote:

“. . . [T]he Highway Trust Fund, which gets the bulk of its revenue from a federal excise tax on gasoline of 18.4 cents per gallon, is nearly bankrupt. Because the tax isn’t adjusted for inflation, and has been pegged at the same rate since 1993, it has covered less and less of U.S. transportation spending. The Congressional Budget Office says the trust fund could be insolvent as soon as October.”

Interest rates are of interest to eminent domain lawyers because the constitution requires that when payment of  just compensation for the taking of property is delayed, interest “at a proper rate” has to be paid as well, to provide compensation for the delay in payment (and in theory to discourage condemnors from delaying payment). Why “in theory”? Because out here in la-la land our law is shamelessly biased against property owners and in favor of condemnors. Whereas in all other cases the interest rate is 10%, in eminent domain it runs around 1 to 2%. And that isn’t all. In those situations where a deposit turns out to be higher than the ultimate award, and the owner has to pay some of it back to the condemnor, then the interest rate is 10%. Our courts see nothing wrong with that, and never mind the constitutional mandate about denying people equal protection of the laws.  No, we are not making this up.  See Inglewood Redevelopment Agency v.  Aklilu, 153 Cal.App.4th 1095, 1120-1121 (2007).

And speaking of interest rates, in the cacophony of politicized voices that dominate today’s press, there are a few voices of reason, and one of them is Gretchen Morgenson, a business reporter at the New York Times. She first caught our eye back in 2004, when she accurately predicted the coming “Housing Bust” — see Gretchen Morgenson, Housing Bust: It Won’t Be Pretty, N.Y.Times, Jul. 25, 2004, at Sec. 3, p. 1. Since then she has continued to be an astute critic of the foibles and misdeeds of the financial system.

Ms. Morgenson does it again in her column in today’s N.Y. Times (click here), on prevailing interest rates and the Fed’s effort to keep them down for the banks at the expense of ordinary people. The Fed lets banks have money at almost 0% supposedly to encourage them to make loans and thus stimulate the economy, but they don’t make loans necessary to a healthy business climate. Instead they prefer to take 0% money from the Fed and invest it in government bonds that pay 3 to 4%, thus collecting risk-free interest on Uncle Sam’s money. This acts out the old joke that a bank is an institution that will lend money to anyone who can prove to it that he doesn’t need it. The Fed thus wages economic war on the middle class, and shamelessly victimizes savers of limited means who for lack of realistic alternatives are forced to resort to savings accounts and CDs for their modest savings, where they receive peanuts by way of interest. Around here, those financial institutions that advertise for deposits, offer less than one percent. Which means that if you take inflation and taxes into account, you suffer a net loss when you put your money in a bank.

What Ms. Morgenson brings to our attention is that the Fed isn’t playing straight with the American people. Its spokeswoman (who has refused an invitation to an interview) justifies this outrageous situation by citing obsolete statistics from before the recession in an effort to justify what is going on. We are not into conspiracy theories — we prefer the bon mot of former California Court of Appeal Justice Don Gates who is said to have observed that he is wary of accusations of bad faith when the conduct in question is explainable by simple stupidity. Except that here stupidity does not explain things. The Fed folks certainly aren’t stupid. So why do they say stupid things like that and expect them to be believed? Our hunch is that whatever their true motivation, they think that we, the public, are so stupid that we can be fed whatever convenient nonsense pops into their minds by way of justification of the unjustifiable. “The Fed has been following this plan for more than three years now,” concludes Ms. Morgenson. “Yes, we are seeing some improvements here and there. But the transfer of wealth from savers’ pockets has been immense. And with the price of gasoline and other goods going up, the vise is tightening.”

In the meantime, the Fed is for all practical purposes facilitating the theft of your money for the benefit of banks, and is acting out the role of a reverse Robin Hood (Hood Robin?) who takes from the middle class and gives to the very rich.

We came across a fascinating news item last evening. It was one of those “crawlers” at the bottom of the screen as a news program was running, so we cannot cite the source, but even so it’s worth passing on.

Remember Wukan? Of course you do. We wrote about it. Click here. Wukan is the village in China that rebelled in reaction to the local government officials selling off its land to raise money. It was a confrontation that resulted in at least one death and the imprisonment of protesters. But in the end they prevailed. The government backed down. Now we learn that as a result of it all the people of Wukan will be allowed to hold elections to choose their local government.

There are two morals to this story. First, as Justice Potter Stewart put it, liberty and property are interrelated and neither could have meaning without the other, and second, that it was the concern about their property rights that inspired the Wukan residents to assert themselves and obtain a small measure of liberty and democracy, not the other way around.

We wish them luck.

Follow up. To get the news dispatch describing these events, see Wukan Villagers in China Elect Protest Leaders to Replace Ousted Officials, Bloomberg.com, March 3, 2012 — click here. For a more detailed analysis of this event see Michael Wines, Protest’s Success May Not Change China, N.Y. Times, March 3, 2012 – click here.

In addition to reporting the news in greater detail, the N.Y. Times article also suggests that these events in Wukan may only be a one-off event staged by China’s communist regime as a public relations ploy.

Today’s New York Times reports that of the 20 cities it surveyed, all but six experience home prices that are below the baseline date of 2009. Of these six (where prices are higher than they were in 2009), three are in California: Los Angeles, San Francisco, and San Diego. The other three are Minneapolis, Denver (just barely), and Washington. In other words there are as many cities experiencing above-2009 home prices in California as in the rest of the country put together.

Floyd Norris, Home Prices Declined to New Lows in 2011, N.Y. Times, March 3, 2012, at p. B3.

We are saddened to report that the Florida law firm of Brigham Moore is closing after 34 years of dominating the practice of eminent domain law. However, there are still plenty of law firms, like this bradford law firm, which are still up and running. At its peak, the firm, then known as Brigham, Moore, Gaylord, Schuster, Sachs & Ulmer, with offices in Miami, Fort Lauderdale, Sarasota, Tampa and Orlando was the powerhouse in its field. We still have a sweatshirt with their firm name emblazoned on it. Its senior partner, Toby Prince Brigham, started practicing eminent domain law with his father, T.F.P. Brigham, who won the landmark case of Dade County v. Brigham, 47 So.2d 602 (Fla. 1950), holding that in Florida, the constitutional government duty to pay just compensation for property takings, included the duty to pay the owner’s attorneys’ and appraisers’ fees, which made Florida unique in that regard. And so, while it lasted, the Brigham law firm could properly boast of being a three-generation eminent domain defense firm — T.F.P., Toby, and Toby’s children, Amy and Andrew.

Andrew Brigham, a great trial lawyer, who for some years has been headquartered in Jacksonville, will continue practicing eminent domain law and carry on the family name, as the Brigham Property Rights Law Firm. Amy Brigham Boulris, a fine appellate lawyer, will be joining the Gunster law firm in Miami. Bill Moore, the second name partner of Brigham Moore, will continue practicing in the Sarasota-Tampa area with two former Brigham Moore attorneys, as Moore, Bowman & Rix.

We have a special bond with the Brigham firm. Your faithful servant occasionally practiced with those guys in the 1970s and 1980s (see e.g. Context Dev. Co. v. Dade County, 374 So.2d 1143 (Fla.App. 1979), and Florida Audubon Soc. v. Ratner, 497 So.2d 672 (Fla.App. 1986) (yes, we represented that Ratner). We remember with particular fondness the condemnation of the Portland, Oregon, Paramount theater, a case in which Toby and your faithful servant, along with the late, inimitable Diane Spies — a local land-use attorney par excellence — went head-to-head with the local redevelopment agency types, a rather obnoxious bunch who got its ass kicked big time when a multi-million dollar verdict for our clients came down. And though we never had to darken a courthouse door, we were also a part of the legal team that, along with the one and only Bert Burgoyne, represented the Sisters of Mercy in the notorious Detroit Poletown case which settled, thus depriving Toby of an oppportunity to display his courtroom virtuosity. Fun was had.

We vivdly remember the Context case, in which a lawyer for the County got carried away and proceeded to argue to the court that growing citrus fruit in Florida was a nuisance, so the County simply had to issue a cease and desist order preventing our client from planting a citrus grove. Their Lordships were not amused. And who can forget the federal sequel, Context Dev. Co. v. Alexander (S.D.Fla. 1980) No. 80-1708-Civ-JE, in which the feds argued that plowing bone-dry land for the above-mentioned grove was “dredging and filling in waters of the United States)” – no, we are not making that up.

The other bond between Toby Brigham and your faithful servant is that a few years back the William & Mary College School of Law established an annual national prize for outstanding contributions to the field of property rights, and named it after the two us — a development that for once left your faithful servant speechless, so we will say no more about that, except perhaps suggest that you come down to Williamsburg, Virginia, this fall and take in the program and the celebration of this year’s award of the Brigham-Kanner prize to Professor Jim Krier of the University of Michigan. Y’all come.

Ferw lawyers are so blessed as to leave their imprint on the law of the land, and thereby better the condtion of the American people. Toby Prince Brigham is surely one of them. Many law firms would love to be as beloved as Brigham Moore but are still struggling to get clients. Luckily there are law marketing firms similar to SERP. SERP Legal is considered one of the top law firm marketing agencies in the USA. Hopefully, with marketing firms like SERP, newer law firms may be able to reach potential clients.

Clarification. Some eagle-eyed readers have suggested that the way we described these events it sounded like Toby Brigham is retiring. He isn’t. We expect he will do his thing as he has always done it, which is to say, very well indeed. Except he will be doing it as a solo practitioner. Also, we should mention that the end of the firm was entirely amicable.

Putting aside the loony-tunes crowd that governs us from Sacramento, and that is evidently bound and determined to banrupt California, there is another factor at work in the decline of la-la land, that we commented on in the past,  that has reared its head: the cost of rental housing. In the past we had occasion to comment on the still sky-high prices of California homes, particularly in areas where people want to live. Now, here comes a dispatch from the Economics Roundtable, a nonprofit economics group, to the effect that Los Angeles area rentals are also way up there, causing serious problems to a large segment of the population. Marla Dickerson, The Rent Is Too  Darn High for Many Angelenos, L.A. Times, March 3, 2012 – click here. In the meantime, incomes are declining.

According to this report, “More than 60% of Angelenos who rent their dwellings are considered ‘rent burdened,’ meaning they pay more than 30% of their income in rent.”[O]ne-third of of local renters are ‘severely’ rent burdened, meaning that they pay more than half of their income in rent. That figure was 24% in 2000.” The average “asking rents” averaged $1,382 in the third quarter of 2011. . .”

So is it any wonder that Californians are splitting in large numbers and heading out to other states?

CLE International will present its 14th annual Eminent Domain Institute on California law on April 26-27, 2012, at the Sheraton Garden Grove Hotel in Anaheim. The program will cover a variety of topics, presented by experienced practitioners on both sides, ranging from legal developments to a variety of specific legal and appraisal topics, as well as practice pointers. To obtain the program brochure and to register, contact CLE International, 1620 Gaylord St., Denver CO 80206, or www.cle.com/anaheim.

Evidently based on an Associated Press story (click here) reporting House of Representatives’ passage of legislation limiting the sweep of SCOTUS’ controversial Kelo decision of 2005, the blogosphere is full of news stories about it, that begin like this:

“The House sought Tuesday to undercut a 2005  Supreme Court ruling that gives state and local governments eminent domain  authority to seize private property for economic development projects.’

“Undercut” the Supreme Court ruling? A court ruling that “gives” state and local authorities authority to seize private property for economic development? No, folks. That’s a mischaracterization of the Kelo holding that misleads the lay reader.

What SCOTUS held was that it is the legislature, not the courts, that has the primary say-so as to what constitutes “public use” within the meaning of the Fifth Amendment’s Taking Clause, so that (a) what the legislature decides in that regard is “well-nigh conclusive,” and (b) legislatures are perfectly free to limit the scope of a state’s eminent domain power and to change the right-to-take law any way they see fit, as long as they don’t violate the “public use” clause of the Fifth Amendment. So in this case the Congress did not “undercut” the court. On the contrary, it exercised its primary prerogative of defining what is “public use.” That is a decision that the courts are required to follow, not the other way around. For a good example, see Eden Memorial Park Ass’n. v. Superior Court, 189 Cal. App. 2d 421 (1961), where the courts denied the California Department of Public Works the right to take by eminent domain a right of way through a cemetery. Why? Because the state legislature had passed a law denying condemnors the right to take cemetery land for rights of way, and the courts were bound by it.

We have no way of knowing whether the AP story is the result of its author’s unfamiliarity with the law of eminent domain, or whether it is motivated by more sinister thoughts. But either way, it is black letter law that when it comes to deciding what sort of property may (or may not) be taken by eminent domain, doing so is a legislative function. So when the legislature exercides that function it isn’t “undercutting” anything; it is governing.