June 26, 2010
The Governator Promotes Denser Development...
California's Governor continues his push toward more compact land use development according to this recent Sacramento Bee column. Here's a key excerpt:
Gov. Arnold Schwarzenegger has denounced the November ballot measure and vowed to defeat it at the polls. His administration's new report contends that California must cope with its ever-rising population by shifting to denser, transit-oriented development patterns and says that doing so will dramatically lower the cost of living in the state, citing both AB 32 and Senate Bill 375, another new law aimed at implementing higher-density development patterns.
"Vision California is an unprecedented effort to explore the role of land use and transportation investments in meeting the environmental, fiscal and public health challenges facing California over the coming decades," the document declares, adding, "By clearly expressing the consequences of different scenarios, Vision California can inform the policy and programmatic decisions that will drive California's infrastructure investments."
The idea of living more densely is one way to reduce, among other things, the need for extensive (and expensive) government services like road maintenance and energy costs related to running police, fire, and other vehicle fleets. For a state like California that's on the cusp of budget disaster (if not past it), reducing expenditures is mission:critical.
This should be an interesting ballot battle in Sunny CA later this year...
--Chad Emerson, Faulkner U.
June 25, 2010
Salkin on Cooperative Federalism and Climate Change
Patricia Salkin (Albany) has posted Cooperative Federalism and Climate Change: New Meaning to 'Think Globally--Act Locally,' Environmental Law Reporter, Vol. 40, 2010. The abstract:
Gonzales-Pagan on Takings, the Public Trust, and Reclamation of Submerged Lands
Omar Gonzalez-Pagan (J.D. Candidate, Pennsylvania) has posted The Lucas Exemption: How Takings Can Prevent the Erosion of the Public Trust Due to the Reclamation of Submerged Lands, Real Estate Law Journal, Vol. 38, Winter 2009. The abstract:
June 24, 2010
NY Court of Appeals decides Columbia U. Eminent Domain case
The New York Court of Appeals today handed down its decision in Kaur v. New York State Urban Development Corp., the challenge to the government's use of eminent domain in conjunction with a Columbia University development project. To almost no one's surprise, the NY high court reversed the Appellate Division'sruling that the taking was unconstitutional. Especially since the Goldstien case (i.e., Atlantic Yards) came out last fall, solidifying the New York approach of Kelo-style deference to governmental assertions of economic development as consonant with the Public Use Clause.
June 24, 2010 in Caselaw, Constitutional Law, Economic Development, Eminent Domain, Judicial Review, New York, Property Rights, Redevelopment, State Government, Takings | Permalink | Comments (0) | TrackBack
Kermit Lind on Cleveland Housing Code Enforcement
From Kermit Lind of Cleveland State:
The Court issued the following statement on its web site:
“In these two cases, the Court imposed fines on the Defendants for extended and extensive violations of the City’s codes. The Court analyzed in depth the aggravating and mitigating factors and found no basis, at this time, for mitigation of the fines. Defendants are related, out-of-state, for-profit corporations in the business of buying and selling real estate. The Court discussed at length the impact that neglected properties have on the city and the harm caused by investors who neglect properties and shift the costs of nuisance abatement to the City’s taxpayers. Among
the factors the Court found aggravating were Defendants’ ongoing failures to correct violations and their “offer” to the City of a sum insufficient to cover even the outstanding demolition costs and unpaid taxes on the properties. The Court imposed total fines of $11,948,000 on Interstate Investment Group and $1,059,000 on Paramount Land Holdings, LLC.”
The Court’s decision sends a message to those presuming that compliance with local building and housing ordinances that protect the public health, safety and welfare is not required of those who own housing for business purposes. In Cleveland, banks and bulk purchasers of bank real estate owned (REO) properties have claimed in legal proceedings that municipal laws do not apply to them when it conflicts with their business interests in holding title to real property.
The Court also scolded City Prosecutors for weak prosecution in the sentencing phase of these cases. It calculated the small costs to chronically lawless investor-owners of violating in rejecting the prosecution’s proposed sentences. Judge Pianka’s judgment also stated the Court’s now familiar policy of sentencing for compliance over punishment. That policy mitigates fines where the guilty homeowners abate or pay the costs of abating nuisance conditions.
With the new Cuyahoga County Land Reutilization Corporation now in operation as an advanced capacity land bank, some banks and other absentee commercial owners of residential properties, including Fannie Mae, are looking to it for help in disposing of unmarketable houses.
The Court’s web site is http://www.clevelandhousingcourt.org/hc_rd_m.html.
Jamie Baker Roskie
June 23, 2010
Florida says Homeownership is Overrated (WSJ)
Richard Florida, one of the leading public intellectuals on the future of cities and the originator of the "Creative Class" concept, had an interesting article in the Wall Street Journal last week: Homeownership is Overrated: Today's economy requires a more mobile workforce. After acknowledging the important role that homeownership has played in cultural conceptions of the "American Dream" for the last several generations, Florida critiques the norm:
Owning a home may actually be a drawback given the economic flexibility required to power long-lasting recovery. My colleagues and I tracked homeownership levels across U.S. cities and regions to see how they correlate to other measurable demographic and economic factors. As we expected, the rates of homeownership are greatest where housing prices are lowest. But cities with high levels of homeownership—in the range of 75%, like Detroit, St. Louis and Pittsburgh—had on average considerably lower levels of economic activity and much lower wages and incomes. Far too many people in economically distressed communities are trapped in homes they can't sell, unable to move on to new centers of opportunity.
Now I think there are two different questions here that Florida doesn't distinguish: (1) whether homeownership is good for individual homeowners; and (2) whether it is good for society at large. But Florida makes some excellent points. He goes on to make a policy prescription that I think is long overdue, particularly from the left:
First and foremost, the Obama administration should end its ongoing measures to prop up the housing market. The massive federal subsidies for homeownership, which totaled some $230 billion in 2009 according to the Congressional Budget Office, should be phased out, and the tax deduction for mortgage interest eliminated.
The next critical step is to encourage the transition to more and better rental housing. Multifamily housing is one of the few profitable bright spots in a ravaged housing industry. There are thousands upon thousands of unsold condos and foreclosed homes that can and should become rentals.
Florida concludes with a much-needed questioning of the cultural assumption that property ownership is the sine qua non of the "American Dream":
A "home of one's own" has been the emblem of prosperity and stability for a very long time. The idea is rich with psychological and cultural significance, but we have come to an economic juncture where we must re-examine even our most cherished beliefs. We can begin by updating our definition of the American Dream.
Chimpanzee Gangs Kill for Land
Now here at the Land Use Prof Blog, we have assembled a team of bloggers with different areas of specialty, but all of whom I think share the idea that land use is a fundamentally interdisciplinary subject: it involves many fields within law, and many disciplines and professions across the human landscape, and transcends national systems as well. But until today, I never thought that land use involved inter-species issues. But I was wrong. Check out Chimpanzee Gangs Kill for Land.
Chimp-on-chimp attacks in the wild are very common, especially among small packs of males on patrol. Now research suggests the motive for these crimes is to gain territory. . . .
"The take-home is clear and simple," said researcher John Mitani of the University of Michigan. "Chimpanzees kill each other. They kill their neighbors. Up until now, we have not known why. Our observations indicate that they do so to expand their territories at the expense of their victims."
So maybe the impulse to control the use of land transcends humanity. Do the chimpanzees signal our "primal" innate desire to own land and regulate it? Who knows; read it for fun.
NYT on the Housing Market Slowdown
Before the recession, people simply looked for a house to buy. Later they got squeamish just thinking about buying. Now they are on a quest for perfection at the perfect price. . . .
It is a reversal of roles from the boom, when competing buyers were sometimes reduced to writing heartfelt letters saying how much they loved the house and how they promised to eternally worship the memory of the previous owners. These days, it is the buyers who are coldly seeking the absolute best deal while the sellers are left in emotional turmoil.
“We see buyers who must have learned their moves from the World Wrestling Federation,” said Glenn Kelman, chief executive of the online broker Redfin. “They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.”
Everyone expected the housing market to suffer at least a temporary hangover after the government’s $8,000 tax credit expired, but not necessarily this much. Preliminary data from around the country indicates that the housing market began swooning last month immediately after the credit was no longer available. In some places, sales dropped more than 20 percent from May 2009, when the worst of the financial crisis had subsided.
Bad news for the housing and construction industries, and a possible signal of a double-dip recession. I think that last part about the $8000 tax credit is telling. Once again, the market for housing was artificially propped up by a policy decision to promote home ownership.
Livable Communities Act
Courtesy of the Houston Tomorrow newsletter, here is a report on the proposed Livable Communities Act. Senate Bill Connects Transportation, Land Use Planning: Livable Communities Act. Quoting the D.C. Streetsblog:
The Livable Communities Act would provide about $4 billion in competitive grants to coordinate housing, transportation, and economic development policy with an eye toward promoting sustainable development. About $400 million would be slated for planning with the remainder funding implementation. The bill would also create a new office within the Department of Housing and Urban Development to guide and administer the programs. If passed, it would strengthen the Obama administration’s multi-agency Sustainable Communities Initiative.
Sounds great in its intent, though short on specifics, as most proposed legislation is. Senator Dodd opines:
Senator Dodd described the bill at the hearing, stressing that “integrated transportation and land use planning can help address a host of challenges: high foreclosure rates, climate change and oil dependency, deteriorating infrastructure, traffic congestion, and the loss of farmland. “
I have a couple of questions, though. First, to the extent that this bill can be construed to represent the Obama administration's commitment to rethinking urban development and land use, and promoting transit oriented development and sustainable communities, how does it square with the other administration policies that seem determined to continue promoting single-family home ownership in suburban sprawl?
Second, I'm not persuaded by this last exchange on performance measures:
Senator Warner supports the bill, but would like to see the Livable Communities Act have performance measures in place. He asked, “Is it just squishy livability? Is there a way that we can define this with metrics?”
He was assured by responses saying that many of its results can be measured, such as “the volume of reduced greenhouse gases, acres of preserved open space and rises in property values,” the article reports.
I'm skeptical of "performance measures" and "metrics" generally. More substantively, I think that the point of legislation such as this--agree or disagree with it on the merits--should be to promote qualitatively different community development (which is a quintessentially local issue) and not to be wrapped up in larger transnational issues like global warming. Really, should the "metric" for whether a "Livable Communites" grant is successful be its infinitesimal contribution to reducing the Globe's carbon footprint? There are better ways to fight climate change. I for one would rather promote "squishy livability" than to try to shoehorn some "metric" for carbon reduction into the analysis of whether we should subsidize certain forms of development. If the legislation promotes good development, then that is the primary outcome that should be measured.
"No New Houses, For You!"
One of the iconic characters created by the much-missed Seinfeld series was the Soup Nazi and his signature "No Soup for You!" rants at George and Elaine.
Well, the housing market just suffered its own version of that rant today as new home sales tanked over 30%. This is a really bad number. Bad enough to provoke talk about a double dip recession all over the web.
All of this new housing carnage has a slight silver lining though as it leads me back to the premise that, these days--more than ever--municipalities have the leverage over developers to amend their land use regulations into more sustainable approaches. In the past, developers might have threatened to go build in the next town down the road if anything but the most minimal moves toward sustainable development regs were put in place.
Now where is that developer (if they're even still in business) going to threaten to go? The answer is nowhere because they cannot get the capital to build in the first place.
If cities are serious about reforming their land use codes to embrace sustainable regulations, now is the time to do so as the influence of sprawl-friendly developers is lower than ever.
--Chad Emerson, Faulkner U.
Institute for Justice on Kelo at Five Years
The Institute for Justice has published a white paper commenting on the fifth anniversary of the Kelo decision: Five Years After Kelo: The Sweeping Backlash Against One of the Supreme Court’s Most-Despised Decisions. The IJ, you may remember, was lead counsel for the homeowner plaintiffs in the case. The paper, of course, expresses IJ's continued opposition to the SCOTUS ruling, but nonetheless seems to strike a cautiously optimistic note regarding eminent domain in the wake of the Kelo backlash. From the intro:
Less than one week after the decision was handed down, the Institute for Justice launched a national campaign called “Hands Off My Home.” IJ was determined to focus the outrage over Kelo and turn it into meaningful reform. In the five years since the decision, there has been an unprecedented backlash against the Kelo ruling in terms of public opinion, citizen activism, legislative changes, state court decisions, and lessons learned from the New London case . . .
There is another paragraph in the conclusion that I find very interesting. Back when Pfizer moved out of its New London facility, I suggested on the New York Times "Room for Debate" Blog that the failure of the New London plan, and the Kelo backlash generally, might work to discourage planners and local governments from pursuing economic development takings (I called the Pfizer/New London debacle "Exhibit A" in the case against eminent domain for comprehensive redevelopment). Ilya Somin, who was involved in the case, and has done the definitive research on the problems and loopholes of the post-Kelo state "reform" legislation, agreed that the backlash was significant but thought I might have been too optimistic about the deterrent effect of the backlash. I agreed that I was in fact expressing an optimistic viewpoint--if I had had to bet money, I probably would have gone with Somin's more realistic prediction. And I still have absolutely no empirical data at hand regarding the rate of economic development takings since Kelo. But the IJ's report seems to indicate that there has been at least a slowdown in litigation on the issue:
The results of the Kelo backlash have been striking. The Institute for Justice used to get continual requests for assistance in fighting eminent domain for private gain. Now, we receive far fewer. Of those, many are defeated by activism in the court of public opinion before they ever reach a court of law. Eminent domain abuse used to be a nationwide epidemic with more than 10,000 instances reported in just one five-year period alone, an epidemic that affected property owners in most states. Now, it is largely a problem confined to certain reform-resistant states, like New York, that refuse to change their laws or listen to their own citizens. The Institute is focusing its efforts in litigation and advocacy in those states.
It was exactly that "court of public opinion" effect that I had in mind. Now of course, a slowdown in litigation requests to IJ doesn't necessarily mean there is less eminent domain out there. And there are two obvious counterarguments: (1) there are fewer requests to IJ because Kelo essentially declared economic development takings to be legal and constitutional, so there may be fewer disputes over such takings when they happen; (2) in the recession, planners and local governments are less eager for purely economic reasons to do New London-style redevelopment projects. And just because there might be less interest-group litigation doesn't mean that the issue has faded as a serious legal and policy matter.
Still, it's an interesting take on the political and policy effects of the Kelo backlash five years after the opinion. Thanks to Brian Erskine for the pointer.
UPDATE: Ilya Somin has his thoughts on Kelo's fifth here.
June 23, 2010 in Caselaw, Economic Development, Eminent Domain, Financial Crisis, Judicial Review, Local Government, Property Rights, Property Theory, Redevelopment, Scholarship, Takings | Permalink | Comments (3) | TrackBack
Scarberry's Reply to Levitin on Bankruptcy Modification of Home Mortgages
Mark S. Scarberry (Pepperdine) has posted a Reply to Adam Levitin's Response to Scarberry's Symposium Article (which was itself a "Critique"Levitin's work)--ok, I think I have that straight. At any rate, it's a very interesting and important debate. Scarberry's Reply is Mortgage Wars Episode V - The Empiricist Strikes Back (or Out): A Reply to Professor Levitin’s Response, and is published at Pepperdine Law Review, Vol. 37, p. 1277, 2010. The abstract:
Professor Adam Levitin has responded to my recent symposium article critiquing proposed congressional legislation that would allow modification (including strip down) of home mortgages in Chapter 13 bankruptcy. A portion of my Critique criticized his empirical studies concerning the likely effect of the proposed legislation on mortgage interest rates and availability, and also criticized the arguments he has made in support of the proposed legislation. The Critique did note, however, that the insight involved in conceiving of such empirical studies was impressive.
Surprisingly, Professor Levitin’s Response fails to deal with the substantial case authority discussed in my Critique. He treats the Critique’s case authority on a critical question as if it consisted only of one relatively recent Ninth Circuit case and supposed dicta from an “old” Second Circuit case. But the Critique in fact relies on about twenty cases that deal with the question; the only supposedly contrary case authority he discusses in his Response turns out to be one of the cases cited in my Critique and not to be contrary at all. The case authority shows that the main defense put forward in his Response - that the mortgage modifications that would be permitted under the proposed legislation are similar to those permitted before the Supreme Court’s 1993 Nobelman decision and similar to those currently permitted where the collateral is not the debtor’s principal residence - is simply untenable.
It is also surprising that the entire weight of his defense of the empirical studies rests (A) on a very likely mistaken view of the law - that the law permits Chapter 13 debtors to use a novel, flawed approach in modifying secured claims under current law - and (B) on two remarkably bold and implausible assertions regarding how the market data he collected supposedly should have reflected the risk that debtors might use that novel, flawed approach, even though his data was collected before anyone had suggested that debtors might even try to do so. In addition, one of Professor Levitin’s assertions, if accepted, would fatally undermine
the design of a key part of his empirical studies.
The article notes in conclusion that law professors and others who have taken divergent positions on the wisdom of the congressional proposals might yet be able to agree on a common-sense middle ground; there is no need to consider those who disagree with us as having been seduced by the Dark Side.
The citation for my Critique is Mark S. Scarberry, A Critique of Congressional Proposals to Permit Modification of Home Mortgages in Chapter 13 Bankruptcy, 37 Pepp. L. Rev. 635 (2010). The Critique is available at http://ssrn.com/abstract=1520794. The citation for Professor Levitin’s Response to the Critique is Adam J. Levitin, Back to the Future with Chapter 13: A Response to Professor Scarberry, 37 Pepp. L. Rev. 1261 (2010). His Response is available at http://ssrn.com/abstract=1534912. The citation for this Reply is Mark S. Scarberry, Mortgage Wars Episode V - The Empiricist Strikes Back (or Out): A Reply to Professor Levitin’s Response, 37 Pepp. L. Rev. 1277 (2010).
I appreciate Prof. Scarberry including the citations to the other articles in the debate in his abstract--saves me a lot of work! More importantly, this dialogue addresses one of the key issues in the mortgage crisis.
June 22, 2010
Speaking of Powerpoint presentations...
...many of the presentations from the 2010 New Partners for Smart Growth conference have now been posted on-line.
A wide variety of them include information that land use types who focus on sustainability issues would likely find interesting.
--Chad Emerson, Faulkner U.
June 21, 2010
NYT on the Costs of Seizing Fannie & Freddie
Over the weekend this story by Binyamin Applebaum was featured on the front page of the New York Times: Cost of Seizing Fannie and Freddie Surges for Taxpayers.
CASA GRANDE, Ariz. — Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords. . . .
For all the focus on the historic federal rescue of the banking industry, it is the government’s decision to seize Fannie Mae and Freddie Mac in September 2008 that is likely to cost taxpayers the most money. So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.
The article has some good vignettes of how the Fannie-Freddie "rescue" process is playing out in communities like the featured one in Arizona, where private contractors are paid to maintain, renovate, and try to resell the foreclosed homes. The article also gives a short but interesting background on Fannie and Freddie.
Fannie and Freddie increased American home ownership over the last half-century by persuading investors to provide money for mortgage loans. The sales pitch amounted to a money-back guarantee: If borrowers defaulted, the companies promised to repay the investors. . . .
“Our business is the American dream of home ownership,” Fannie Mae declared in its mission statement, and in 2001 the company set a target of helping to create six million new homeowners by 2014. Here in Arizona, during a housing boom fueled by cheap land, cheap money and population growth, Fannie Mae executives trumpeted that the company would invest $15 billion to help families buy homes.
As it turns out, Fannie and Freddie increasingly were channeling money into loans that borrowers could not afford. As defaults mounted, the companies quickly ran low on money to honor their guarantees. The federal government, fearing that investors would stop providing money for new loans, placed the companies in conservatorship and took a 79.9 percent ownership stake, adding its own guarantee that investors would be repaid.
The huge and continually rising cost of that decision has spurred national debate about federal subsidies for mortgage lending. . . .
I think the interesting question for the future is whether we are willing or able to reassess the idea of homeownership as the American Dream, and the extent to which we (over)promote homeownership as a public policy.
Lehavi on The Dynamic Law of Property: Theorizing the Role of Legal Standards
Amnon Lehavi (Interdisciplinary Center Herzliyah - Radzyner School of Law) has posted The Dynamic Law of Property: Theorizing the Role of Legal Standards. The abstract:
Property law is engaged in a constant conflict between stability and dynamism. As a field of law which delineates rights and duties to resources that apply in rem to large numbers of heterogonous parties, it is committed to ensuring stability and predictability. At the same time, even the most careful design of property norms cannot predict in advance all scenarios and legal contingencies, and must also address changes over time in values, socioeconomic environments, technological knowledge, etc. as affecting such norms. One potential strategy to accommodate dynamism in law is by crafting norms as open-ended “standards” rather than as clear-cut “rules.” Contemporary scholarship has been dealing extensively with the rules/standards tradeoff by addressing both public promulgation of laws and various forms of private ordering, especially in contract law.
Property has, however, been generally left out of the rules versus standards literature, addressing only discrete issues such as the boundaries of a hard-edged right to exclude. This Article offers a first-of-its-kind systematic analysis of the ways in which legal standards operate in property. It identifies the unique manner in which the chief justifications for standards - i.e., inherent “incompleteness” of rights and enhancement of “value-based” jurisprudence - play out in constructing property law.
Cutting across conventional public/private distinctions by referring to various standards such as “custom,” “reasonableness,” “abuse of rights,” or “public use,” the Article argues that legal standards in property hinge prominently on the institutional mechanisms through which such norms are crafted and filled with content over time, and identifies the conditions under which property standards may outperform clear-cut rules.
Singer on the Anti-Apartheid Principle in American Property Law
Joseph William Singer (Harvard) has posted The Anti-Apartheid Principle in American Property Law, forthcoming in the Alabama Civil Rights and Civil Liberties Law Review. The abstract:
Recently, many federal courts have been interpreting civil rights laws to allow racially discriminatory treatment of customers in retail stores and racial and religious harassment of tenants and home owners by their neighbors. These courts are misinterpreting federal law and ignoring the will of Congress embodied in the Civil Rights Act of 1991 which clarified that market participants have the right to enjoy property and contract rights on equal terms. More important, these courts are wrongly assuming a background norm of negative liberty; they presume that we are free to engage in racial discrimination in market transactions unless statutes clearly and unambiguously limit our freedom. But this is a mistake.
Since the 1960s, the background norm has become a presumption that market participants are not allowed to treat people unequally because of race, religion, sex, or disability. Both federal and state statutes embody this norm and many statutes contain it explicitly. Even the Civil Rights Act of 1866 was amended in 1991 to provide that private persons are entitled to equal contract terms. We aspire to be a free and democratic society that treats each person with equal concern and respect. We now understand that this commitment not only entails the repudiation of feudalism and slavery but the abolition of apartheid, whether imposed by law or enacted by private persons exercising their property rights. Liberty does not mean the absence of restraint on action; it means the creation of a legal infrastructure of a free and democratic society.
Equal access to the marketplace without regard to race is now as fundamental a norm as is the abolition of feudal tenures. For this reason, the common law should be interpreted to include a background assumption that prohibits racial discrimination in housing or public accommodations. Unless statutes affirmatively grant stores the right to treat their customers differently on account of race, courts should presume that they have no such right. Unless statutes affirmatively grant individuals the right to harass their neighbors on account of race or religion, courts should presume that housing rights include the right to be free from such discriminatory harassment. Rand Paul was wrong to suggest that liberty demands freedom to reject customers because of their race; the very opposite is true. American property law now contains a fundamental anti-apartheid principle that ensures access to the marketplace without regard to racial discrimination and the federal courts should start acting on that foundational commitment.
June 20, 2010
Agutu on Title Registration and Land Law in Kenya
Omolo Joseph Agutu (LL.M. Student, National University of Singapore) has posted Linking Title Registration in Kenya to Vision 2030: The Need for Review of Land Law. The abstract:
This paper argues for the proper recognition of land as one of the main pillars for the realisation of Vision 2030. This is does by looking at the significance of land to development from three different perspectives which touch on various sectors of the economy in Kenya ranging from development of infrastructure to anchoring the tourism sector on a sustainable basis to promotion of agricultural production to use of title to land to access credit. This paper argues that the foregoing aspects of development rely heavily on the title registration in Kenya and calls for reforms.