Land Use Prof Blog

Court to Redevelopment Agencies: Drop Dead! (Or, It's TKO for TIF in CA)

Happy Holidays to all and best wishes for a great new year! I've been on blog hiatus (blogatus? blogcation?) but simply had to report this piece of news. Two days ago the California Supreme Court put a huge lump of coal in the Christmas stocking of California's very naughty redevelopment agencies, issuing an epochal (or perhaps apocalyptic) but not entirely surprising decision that puts an end to redevelopment in the state of California, probably the state where redevelopment has hitherto been most popular. As of 2008, there were 395 redevelopment agencies in California, holding $12.9 billion in assets in 759 redevelopment zones. Now, after the court's ruling, they are all history. The court upheld a state law abolishing all California redevelopment agencies, and struck down a compromise bill that would have permitted redevelopment agencies to stay in business if they shared some of their tax revenue with other local government agencies, mostly school districts. Forlorn city leaders are already predicting all sorts of doomsday scenarios for cash-strapped California cities. Critics of redevelopment such as the Institute for Justice, are, as you can imagine, more pleased with the result. They must take especial delight in knowing, as I explain below, that redevelopment agencies basically brought this plight on themselves. Critics will be less pleased to learn that redevelopment is almost certainly not really dead, and will likely be back in a form hardly less objectionable to its critics than the original. According to this great recap from California Planning & Development Report (an excellent resource, by the way), this lawsuit was never about the merits of redevelopment itself, but was just the beginning of a complex negotiation over who is going to control the prized redevelopment money.

Much more below...

Redevelopment in California

California redevelopment in a nutshell: a local government agency known as a "redevelopment agency," which is usally just the city council of a given city, declares a part of the city to be "blighted" and hence in need of redevelopment. The blight designation enables the agency to declare the area a redevelopment zone, which gives the agency two hugely significant powers: one, the power to condemn property in the zone by eminent domain; and two, the power to float tax-free bonds to finance the redevelopment, secured by the "incremental" property tax revenue that the redevelopment of the area is supposed to generate. This tax increment is earmarked to pay debt service on the bonds and otherwise to refurbish the redevelopment zone. Hence, "tax-increment financing" (TIF).

The "Blight that's Right"

As many of you know, redevelopment has had its critics. Eminent domain, and specifically the use of eminent domain to facilitate redevelopment, has probably faced the loudest and most successful criticism -- criticism that crystallized in the opposition to the U.S. Supreme Court's widely reviled decision in Kelo v. New London. From a basic fairness standpoint, critics have asked whether government should be able to take your property and give it to someone else (usually, a wealthy real estate developer) simply because government thinks it can make a better use of the property than you can. This is an especially powerful argument because government agencies have so frequently failed to make good use of the properties they have condemned.  Many high-profile redevelopment projects, including New London's, have been abyssmal failures even on their own terms -- failing to bring in the jobs and tax revenue they promise and often leading to further deterioration of the area. And even though landowners are compensated for the fair market value of condemned property, they are not compensated for the property's sentimental or "subjective" value. Then there is the impact of eminent domain on existing neighborhoods, many of which have been gashed or detroyed by redevelopment, and the fact that minorities and the poor have disproportionately faced displacement to make way for redevelopment projects.

The "blight" component of redevelopment law has also been criticized. The blight standards in California are vague and easily manipulated, and redevelopment agencies often seek "the blight that's right" -- an area that can plausibly be called "blighted" but is sufficiently economically healthy that it has reasonable prospects for revitalization and the increased tax revenue to pay off the bonds.

Follow the Money, People

These are all legitimate, perhaps compelling, criticisms of redevelopment in California. But don't be deceived: they had absolutely nothing to do with why the state sought to abolish redevelopment. Instead, the dispute was all about who controls the redevelopment money, and where that money goes. One of the more controversial aspects of TIF is that, because it earmarks the incremental tax revenue to be funnelled back into the TIF district, it thereby enables municipalities to make sure that property tax revenue does not go to other local governments that would ordinarily be entitled to a piece of that revenue, including counties and school districts. (Thus explaining why many county leaders are ecstatic about the court's ruling). For California cities, this is an especially important feature of TIF because of something called Proposition 13, which drastically limits the pool of property tax revenue available to local governments. As the court noted in the ruling, Proposition 13 led to an intensified zero-sum struggle between California municipalities for "their slices of a greatly shrunken pie." TIF gave cities a way of keeping this "shrunken pie" all to themselves, rather than having to share "slices" with other local governments. Needless to say, cities thus had a great incentive to use TIF specifically for this purpose, rather than to engage in actual redevelopment. And because the only limitation on the use of TIF is the "blight" finding which, as I said, is extraordinarily manipulable, cities went bonkers with TIF. Indeed, there have been instances in which cities have designated their entire downtown, even their entire city(!) as a redevelopment zone simply in order to protect their tax revenue against redistribution to other local governments.

The legislature did attempt to rein in this practice by requiring that a percentage of redevelopment money be funnelled to affordable housing, but an expose in the Los Angeles Times last year showed that cities routinely failed to fulfill this requirement. This was one of the precursors to the recent legislation killing off redevelopment agencies.

The other major precursor was, of course, the fiscal crisis that hit California in 2008. The state legislature obviously saw the treasure trove of redevelopment money as a way of dealing with its dire fiscal problems. Because redevelopment agencies are, like other local governments, state creatures, there was nothing to stop the legislature from simply taking redevelopment money to plug holes in its budget, and the state legislature made clear that's exactly what it intended to do.

Proposition 22: It Seemed Like a Good Idea at the Time

In response to the threats from the state, the League of California Cities qualified a measure for the ballot in November 2010 that would protect local redevelopment money from being forcibly redistributed by the state. The measure passed, but in an ironic twist, Prop 22 proved not to be redevelopment's savior, but its undoing.

In that same November 2010 election, a guy named Jerry Brown was elected governor. One of his first steps was to declare that if redevelopment agencies would not give up their money, then Brown would simply abolish the redevelopment agencies entirely. Although that would apparently go against the spirit of Prop 22, the measure did not explicitly say anything like: "Oh by the way, you can't abolish redevelopment to get our money either." The bill abolishing redevelopment agencies was passed, along with another, compromise bill that allowed redevelopment agencies to stay in existence if they gave up some of their money to other local governments.

The lawsuit that led to the recent decision challenged the constitutionality of both bills under Prop 22 -- the first because it would seem nonsensical for the Constitution to protect redevelopment money unless it implicitly protected redevelopment agencies from being abolished, and the second because it required forcible redistribution of redevelopment money in violation of the plain language of Prop 22. The outcome of the case was the nightmare scenario for redevelopment: the court held the first bill was consistent with Prop 22, and the second was not. As a result, redevelopment is dead!

What made Proposition 22 so stupid (I voted against it, for the record) was that despite all the real objections to redevelopment, there was no way in heckfire that the California governor or legislature would ever have done anything serious to curtail redevelopment as long as redevelopment moolah was flowing into the state's coffers. (and voters had already declined to enact a meaningful anti-Kelo measure at the ballot box, so the initiative was also off the table). Once cities severed the umbilical cord between redevelopment money and the state, redevelopment was no longer untouchable.

The King is Dead, Long Live the King! Wait, who's the king again? I'm the king. No, you're not. I'm the king!

The fact that the real debate here was over money, and not redevelopment, means that redevelopment is very likely not really dead. There is money to be made in redevelopment, especially by powerful lobbying interests like real estate developers and, of course, the cities. The state of California is in no position to be turning down an opportunity to make some money. In all likelihood, the legislature sees the court's ruling as a very big bargaining chip it can use to change the way redevelopment agencies do business so the state gets more money. It is noteworthy in this regard that the court's ruling was handed down a bit earlier than expected, giving the legislature time to mull its next move before the next legislative session begins at the start of the year.

It sure would be nice though, wouldn't it, if the state used this opportunity to seriously re-evaluate redevelopment on its merits? There is word that perhaps the state will tighten up the blight definition. How about actually enforcing the requirement that some redevelopment money go to affordable housing? How about some kind of audit into redevelopment's real costs and benefits? I suspect we won't get a real soul-searching evaluation of redevelopment, and redevelopment will be back in something like its original form.  But we academics exist in order to dream -- which is why we may be the next thing on the chopping block.  Happy Holidays!

Ken Stahl

 

ULI Report on What's Next in Urban Land Use

As we head into the New Year, The Urban Land Institute has also been looking ahead at the future of land use.  ULI recently issued its report What's Next? Real Estate in the New Economy.  From the press release:

A new economy is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change urban planning, design and development through 2020, according to a new report from the Urban Land Institute (ULI).

What’s Next? Real Estate in the New Economy outlines how every aspect of living, working and connecting will change in major ways, driven in large part by the values, preferences and work ethic of Generation Y, the largest generation in American history. . . .

Among the report’s findings:

• Technology will reshape work places. Office tenants will decrease space per employee, and new office environments will need to promote interaction and dialogue. Offices will be transforming into meeting places more than work places, with an emphasis on conference rooms, break areas and open configurations. Developers will craft attractive environments to attract young, talented workers.
• Major companies will value space that enables innovation. They will continue to pay more for space in a global gateway served by a major international airport, or in 24-hour urban centers. Hard-to-reach suburban work places will be less in demand.
• The influx of Generation Y, now in their teens through early thirties, will change housing demand. They are comfortable with smaller homes and will happily trade living space for an easier commute and better lifestyle. They will drive up the number of single households and prompt a surge in demand for rentals, causing rents to escalate.
• For most people, finances will still be constrained, leading to more shared housing and multi-generational households. Immigration will support that trend, as many immigrants come from places where it is common for extended families to share housing. This may be the one group that continues to drive demand for large, suburban homes.
• The senior population will grow fastest, but financial constraints could limit demand for adult housing developments. Many will age in place or move in with relatives to conserve money. Developers may want to recast retirement communities into amenity-laden “age friendly” residences. Homes near hospitals and medical offices will be popular, especially if integrated into mixed-use neighborhoods with shops, restaurants and services.
• Energy and infrastructure take on greater importance. Businesses cannot afford to have their network connections down, and more will consider self-generated power or onsite generator capacity. Developers, owners and investors are realizing that the slightly higher costs of energy- and water-saving technologies can pay for themselves quickly, creating more marketable and valuable assets. Ignoring sustainability issues speeds property obsolescence.

You can download the full report here. 

Matt Festa

Wolf on the Supreme Court and the Environment

Michael Allan Wolf (Florida) has a new book out called The Supreme Court and the Environment: The Reluctant Protector (CQ Press, 2012).  Here's the Amazon blurb:

Silent Spring (1962) can arguable be cited as one of the most influential books of the modern era. This book, along with 1960's rampant activism reacting to high-profile ecological calamities, helped create the modern environmental movement. The Supreme Court and the Environment, written by Michael Wolf, discusses one of this movement's most important legacies, namely the body of federal statutory law amassed to fight pollution and conserve natural resources that began with the enactment of the National Environmental Policy Act of 1969. Instead of taking the more traditional route of listing court decisions, The Supreme Court and the Environment puts the actual cases in a subsidiary position, as part of a larger set of documents paired with incisive introductions that illustrate the fascinating and sometimes surprising give-and-take with Congress, federal administrative agencies, state and local governments, environmental organizations and private companies and industry trade groups that have helped define modern environmental policy.

And for a preview, Prof. Wolf has posted the introduction on SSRN.  The abstract:

This document contains the Introduction and Contents for The Supreme Court and the Environment: The Reluctant Protector (CQ Press/Sage 2012). When one views the body of modern environmental law — the decisions and the other key documents — the picture that emerges is not one of Supreme Court dominance. In this legal drama, the justices have most often played supporting roles. While we can find the occasional, memorable soliloquy in a Supreme Court majority, concurring, or dissenting opinion, the leading men and women are more likely found in Congress, administrative agencies, state and local legislatures, nongovernmental organizations, private industry, and state and lower federal courts.

What one learns from studying the Supreme Court’s environmental law output is that the justices for the most part seem more concerned about more general issues of deference to administrative agencies, the rules of statutory interpretation, the role of legislative history, the requisites for standing, and the nature of the Takings Clause than the narrow issues of entitlement to a clean environment, the notion of an environmental ethic that underlies written statutes and regulations, and concerns about ecological diversity and other environmental values. When we widen the lens, however, and focus on the other documents that make up essential parts of the story of the Supreme Court and the environment — complaints by litigants, briefs by parties and by friends of the court, oral argument transcripts, the occasional stirring dissent, lower court decisions, presidential signing statements and press conference transcripts, media reports and editorials, and legislative responses to high court decisions — we discover what is often missing in the body of Supreme Court decisions.

 Looks fascinating, and is a very original take that situates the cases themselves within a broader context of Supreme Court jurisprudence and goes beyond to the larger networks of actors that shape law.

Matt Festa

Arezki, Deininger, & Selod on What Drives the Global Land Rush

Rabah Arezki (IMF), Klaus Deininger (World Bank), and Harris Selod (World Bank) have posted What Drives the Global Land Rush?  The abstract:

This paper studies the determinants of foreign land acquisition for large-scale agriculture. To do so, gravity models are estimated using data on bilateral investment relationships, together with newly constructed indicators of agro-ecological suitability in areas with low population density as well as land rights security. Results confirm the central role of agro-ecological potential as a pull factor. In contrast to the literature on foreign investment in general, the quality of the business climate is insignificant whereas weak land governance and tenure security for current users make countries more attractive for investors. Implications for policy are discussed.

Matt Festa

 

Happy Holidays!

According to The New York Times there's a shortage of misteltoe this year (blame the drought in Texas), and not enough snow to ski, but I'm full of the holiday spirit just the same.  I hope all of you and yours have a safe, joyful, yummy, gratitude-filled celebration.  We look forward to blogging for you in the New Year!

Jamie Baker Roskie

Levine Powers on State and Local Regulation of Fracking

Yes, more about "fracking", that is, oil and gas extraction through hydraulic fracturing.  Erica Levine Powers (SUNY-Albany-Geography and Planning) has published Home Rule Meets State Regulation: Reflections on High-Volume Hydraulic Fracturing for Natural Gas, ABA St. & Loc. L. News (Vol. 35, No. 2, p.1).  Here's the opening:

Hydraulic fracturing, or “fracking,” like all mining, is both a local matter impacting community development and environmental quality and a state matter impacting national energy security and regional economic development. Along with the discovery of new sources of natural gas—and methods for its recovery—have come increasing battles over local control and state interests. States have taken diverse positions on fracking, and, building on the experiences of other states, New York is the latest to wrestle with the issue. In the process, New York is defining the roles of local and state government by including an explicit role for local government in environmental review, by public input in the state review process, and through ongoing litigation that will define the rights of New York’s home-rule municipalities to regulate fracking.

Jim K.

Call for Papers: ABA J. of Affordable Housing and Community Development Law

As the new Editor-in-Chief of the ABA's Journal of Affordable Housing and Community Development Law, I am taking full advantage of my Land Use Prof Blog posting privileges to let you all know about our submission cycles for the Journal.  Here's the call:

The Journal of Affordable Housing & Community Development Law, the legal publication of the American Bar Association’s Forum on Affordable Housing and Community Development Law, is currently seeking submissions from students, professors, and practitioners. The Journal publishes full-length articles, book reviews, and shorter commentaries on a wide range of affordable housing and community and economic development issues.

The Journal has extended the deadlines for the Fall 2011 issue (Vol. 21:1) until January 9, 2012 and the Winter 2012 issue (Vol. 21:2) until March 5, 2012.  Double-spaced manuscripts should be e-mailed to Jim Kelly, Editor-in-Chief, at J.Kelly@nd.edu and Wendy Smith, Managing Editor, at wjsmith@staff.abanet.org.

N.B.  The writers' guidelines for the Journal can be found here.

Jim K.

Davidson on a Hamiltonian Vernacular as a Social Function of Property

Nestor M. Davidson (Fordham) has posted Sketches for a Hamiltonian Vernacular as a Social Function of Property, Fordham Law Review, Vol. 80 (2011).  The abstract:

This symposium article examines the intersection between Léon Duguit’s concept of the social function of property, predicated on an affirmative duty on owners to put their property to productive use for the sake of social solidarity, and a tradition in the property law of the United States that similarly reflected this kind of pro-development norm. The article associates the impulse to associate ownership with a productivity oriented social function with certain Hamiltonian themes at the founding and in the early nineteenth-century salus populi tradition, and argues that the imperative remains a background norm in the United States that contrasts with classical liberal absolutism and certain strains of civic republican property norms.

Absolutely fascinating-- an original insight that makes an important contribution to our understanding of early republic property theory and its implications for property law today.

Matt Festa

Munzer in defense of the Bundle Theory

Stephen R. Munzer (UCLA) has posted A Bundle Theorist Holds On to His Collection of Sticks, Econ Journal Watch, Vol. 8, No. 3, pp. 265-73, September 2011.  The abstract:

For nearly a century, most persons who have studied or written about property have conceived of it as a bundle of rights or, colloquially, as a bundle of sticks. In the mid 1990s, several philosophically minded academic lawyers questioned whether property should be thought of as a bundle at all. The impact of their work is reflected in Merrill and Smith (2007), a highly regarded and intellectually challenging casebook used in many U.S. law schools. Merrill and Smith emphasize that property is centrally a right to exclude and is generally held in rem, that is, is good against all the world. They find bundle theories of property defective for various reasons. This essay argues to the contrary. There are solid grounds for holding on to at least some bundle theories, which facilitate the careful analysis of the complexity of property. Moreover, Merrill and Smith’s criticisms are often misguided or ineffective. Lastly, their account gives an overly simple picture of property and views property law as a more unified subject than it actually is.

I haven't developed my own position on whether the bundle theory is the most accurate philosophical account of property, but I use the heck out of it in teaching.  I've found that having the class think of property as a bundle of rights that can be arranged in different ways, and then extrapolating that concept over topics such as estates, future interests, co-ownership, and servitudes really helps students wrap their heads around these otherwise esoteric subjects, and provides a good framework for understanding property.  I'm glad to see this short philosophical essay by Munzer to assure me that at least I'm not horribly behind the times in teaching about sticks.

Matt Festa

John Norquist hearts (good) congestion

John Norquist, CEO of the Congress for the New Urbanism, has a thoughtful essay on the always-excellent Cities blog from The Atlantic called The Case for Congestion:

Yogi Berra once said, "nobody goes there anymore. It’s too crowded."

It’s certainly true that people complain about congestion. Yet it’s just as true that popular destinations tend to be crowded. Fifth Avenue in New York, Market Street in San Francisco, Chicago’s Michigan Avenue and Rodeo Drive in Beverly Hills are all congested, but people keep coming back to shop or hang out. 

Congestion, in the urban context, is often a symptom of success.

If people enjoy crowded places, it seems a bit strange that federal and state governments continue to wage a war against traffic congestion. Despite many hundreds of billions dollars spent increasing road capacity, they've not yet won; thank God. . . .

After all, congestion is a bit like cholesterol - if you don’t have any, you die. And like cholesterol, there’s a good kind and a bad kind. Congestion measurements should be divided between through-traffic and traffic that includes local origins or destinations, the latter being the "good kind." Travelers who bring commerce to a city add more value than someone just driving through, and any thorough assessment of congestion needs to be balanced with other factors such as retail sales, real estate value and pedestrian volume.

This is an important point, that not all "congestion" is the same.  And even with "bad" congestion, adding road capacity doesn't always help.

Matt Festa

Bad Acronym: The Real Problem With RLUIPA

Some argue that the Religious Land Use and Institutionalized Persons Act (RLUIPA) is an unconstitutional establishment of religion.  Others claim that it unduly restricts municipal land use authority.  Still others wonder what constitutional authority Congress had to enact such a law.  While these are important questions, this blog post argues that RLUIPA suffers from a far more serious defect that has so far been neglected in the legal scholarship: it has a really bad name.  I mean, seriously, how do you even pronounce RLUIPA?  Is is Ahrr-loopa?  Uhrrr-loopa?  Rah-loopa?  All of these are equally plausible and, frankly, equally awful.  For those of us who need to actually pronounce this acronym at least fifty times during a semester, it's a big problem.

So what to do?  Some statutes with unwieldy names are simply called by the names of their sponsors.  I like the Taft-Hartley Act myself (standing in for the acronymically challenged "Labor-Management Relations Act" or LMRA.  "Lmoora?"  OK, that's pretty bad too).  RLUIPA, unfortunately, had six sponsors, and I'm afraid the Hatch-Daschell-Kennedy-Canady-Nadler-Edwards Act would be a bit of a mouthful.  Other statutes are given cool nicknames -- the Comprehensive Environmental Response, Compensation and Liability Act is called "Superfund" (and let's be honest, even "CERCLA" isn't half as bad as RLUIPA.)  I'm not sure there's an obvious nickname for RLUIPA though -- unless it's "the Establishment Act." 

I invite your thoughts during this grading season about how to handle this pressing problem.  One solution, of course, is to just do nothing.  Maybe we should just embrace the fact that land use and environmental law are full of terrible acronyms.  After all, we're the people who brought you such gems as PUDs, TPPs, CUPs, MURPs, SIDs, MUDs, and SMSAs, among others.  On this list, RLUIPA is practically a beauty queen.  Please feel free to leave a note with your favorite horrible land use acronym.

Ken Stahl

Voicu, Been, Weselcouch, & Tschirart on HAMP vs. non-HAMP Loan Modifications

Ioan Voicu (US Gov't--Office of the Comptroller of the Currency), Vicki Been (NYU), Mary Weselcouch (NYU Furman Center), and Andrew Tschirart (US Gov't--OCC) have posted Performance of HAMP versus non-HAMP Loan Modifications--Evidence from New York City.  The abstract:

Policymakers have heralded mortgage modifications as a key to addressing the ongoing foreclosure crisis. However, there is a lack of research about whether modifications are successful at helping borrowers stay current on their loans over the long run and what kinds of modifications are most successful. Our empirical strategy employs logit models in a hazard framework to explain how loan, borrower, property, servicer and neighborhood characteristics, along with differences in the types of modifications, affect the likelihood of redefault. The dataset includes both HAMP modifications and proprietary modifications. Our results demonstrate that borrowers who receive HAMP modifications have been considerably more successful in staying current than those receiving non-HAMP modifications.

Matt Festa

Hirokawa & Rosenbloom on Town, Gown, and Place-Based Sustainability

Our friends Keith Hirokawa (Albany) and erstwhile guest-blogger Jonathan Rosenbloom (Drake) have posted Town, Gown and Place-Based Sustainability: Collaborating in the Shared Space.  The abstract:

The locational and spatial circumstances of town and gown present opportunities to advance sustainability. This essay examines these areas of opportunity by proposing collaborative frameworks between town and gown. In what we describe as “place-based collaborations,” we identify three areas for productive collaboration by two mutually compatible institutions. Part I of this essay introduces the impacts of the sustainable curriculum and other projects that implement the educational mission of the institution, including the more progressive notion that pedagogical strategies for engaged learning, combined with the introduction of sustainability in the curriculum, may serve as drivers for nested sustainable practices. Part II considers the special relationship that towns may foster in their nested universities by recognizing shared space. Part III illustrates interaction and collaboration possibilities that build on the intellectual capital occurring in educational institutions.

Matt Festa

Slate on the Death of High Speed Rail

Will Oremus writes in Slate on a Requiem for a Train: High Speed Rail is Dead in America; Should we Mourn it?  From the article:

Well, you can stop imagining it now. High-speed rail isn’t happening in America. Not anytime soon. Probably not ever. The questions now are (1) what killed it, and (2) should we mourn its passing? . . .

Though Republicans’ outright rejection of high-speed rail is short-sighted, so were many of the plans themselves. Rather than focus on the few corridors that need high-speed rail lines the most, the Obama administration doled out half a billion here and half a billion there, a strategy better-suited to currying political support than to addressing real infrastructure problems. Spread across 10 corridors, each between 100 and 600 miles long, Obama’s rail system would have been, at best, a disjointed patchwork. The nation’s most gridlocked corridor, along the East Coast between Washington, D.C. and Boston, was left out of the plans entirely. Worse, much of the money was allocated to projects that weren’t high-speed rail at all.

Lots of mistakes were made in the roll-out of the HSR plan, but one of the main problems was that it was fantasized in a lot of places where it isn't really necessary, and ignored in the places where it could be great. 

Matt Festa

Senik on Direct Dysfunctionality (initiative & recall)

Last month I posted a rant on Election Day and State Constitutions based on the referendum for new Texas constitutional amendments; Ken Stahl posted a thoughtful response with a qualified defense of direct democracy in ballot-box zoning, which set forth some thoughts that he more fully elaborates in his excellent article The Artifice of Local Growth Politics: At-Large Elections, Ballot-Box Zoning, and Judicial Review. 

My complaints--prompted by my frustration with a slate of ten poorly-articulated and confusing process amendments for which the State Legislature required a nominal thumbs-up from the people-- were more focused on (1) statewide (more than with local) lawmaking through referenda; and (2) the over-constitutionalization of public policy in fundamental state law.  Troy Senik has written an article for City Journal that articulates some of the points of this (hardly original) critique: Direct Dysfunctionality: California celebrates 100 years of the initiative, referendum, and recall. 

Golden State voters can approve or reject public-policy changes at the ballot box through the use of the initiative and referendum. They can also remove unpopular elected officials with the less frequently employed recall, made famous when it chased out Governor Gray Davis in 2003. While nearly half of U.S. states have an initiative process of some kind, nowhere is it as central to the political process as in California, where, in 2010 alone, 14 issues appeared on the ballot. As a result, voters constitute a de facto fourth branch of government. . . .

These measures were introduced in the salad days of the early Progressive movement, when California Governor Hiram Johnson (who would eventually serve as Theodore Roosevelt’s running mate on the Bull Moose presidential ticket of 1912) pressed for their implementation as a firewall against political domination by special interests—particularly those of the well-heeled railroads. . . .

But statewide direct constitution-making has its problems:

Expediting policy shifts, however, is a relatively modest benefit in exchange for the dramatic cost of the initiative process: inducing widespread public-sector sclerosis. Rather than simply providing an outlet for popular grievances, direct democracy actually annexes huge swaths of policymaking from the legislature. When voters mandate a policy directive from the ballot box, the legislature has no way to override the decision, even by supermajority. As a result, any issue that voters weigh in on directly becomes their exclusive purview in perpetuity—amendable or repealable only by another popular vote. This also has the ironic effect of slowing down the democratic process that the initiative system is supposed to make more responsive, ensuring that policy shifts can only come on election days spread years apart. And many of the ballot measures take the form of constitutional amendments, a trend that has given California the unenviable distinction of having the third-longest constitution in the world, after India and (believe it or not) Alabama. Because altering the state’s foundational political charter only requires a simple majority, California ends up inhabiting a bizarro world where it’s relatively easy to amend the constitution but can be nearly impossible to alter basic public policy.

So as with any political process tool, it's a mixed bag with some good things that can be contorted into bad results; my tentative thesis is that direct democracy is less effective the broader the polity (i.e. state vs. local) that engages in it.  I know, James Madison and others had something to say about this too. 

Soon I'll blog about an interesting local-government direct democracy land use requirement that is a little different from the ones that Ken has written about. 

Matt Festa

Renuart on the Ibañez Time Bomb

Elizabeth Renuart (Albany) has posted Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb? It's the first piece that I've come across to explore the title law ramifications of the Mass. Supreme Judicial Court's Ibañez decision that I alluded to in a post earlier this year.  Hat tip to my colleague, Judy Fox, for sharing it with me. Here's the abstract:

The economic crisis gripping the United States began when large numbers of homeowners defaulted on poorly underwritten subprime mortgage loans. Demand from Wall Street seduced mortgage lenders, brokers, and other players to churn out mortgage loans in extraordinary numbers. Securitization, the process of utilizing mortgage loans to back investment instruments, not only fanned the fire; the parties to these deals often handled and transferred the legally important documents that secure the resulting investments — the loan notes and mortgages — in a careless manner. 
The consequences of this behavior are now becoming evident. All over the country, courts are scrutinizing whether the parties initiating foreclosures against homeowners legally possess the authority to repossess those homes. When the authority is absent, foreclosure sales may be reversed. The concern about authority to foreclose is most acute in the majority of states where foreclosures occur with little or no judicial oversight before the sale, such as Massachusetts. Due to the decision in U.S. Bank N.A. v. Ibanez, in which the Supreme Judicial Court voided two foreclosure sales where the foreclosing parties did not hold the mortgage, Massachusetts is the focal jurisdiction where an important conflict is unfolding. 
This article explores the extent to which the Ibanez ruling may have traction in other nonjudicial foreclosure states and the likelihood that clear title to foreclosed properties is jeopardized by shoddy handling of notes and mortgages. I focused on Arizona, California, Georgia, and Nevada because they permit nonjudicial foreclosures and they are experiencing high seriously delinquent foreclosure rates. After comparing the law in these states to that of Massachusetts, I conclude that Ibanez should be persuasive authority in the four nonjudicial foreclosure states highlighted herein. However, property title trouble resulting from defective foreclosures may be more limited in Arizona and Nevada. The article also provides a roadmap for others to assess the extent to which title to properties purchased at foreclosure sales or from lenders’ REO inventories might be defective in other states. Finally, the article addresses the potential consequences of reversing foreclosure sales and responds to the securitization industry’s worry about homeowners getting free houses. 

Jim K.

Reiss on Glaeser on the City

David Reiss (Brooklyn) has posted a review of Harvard economist and urban theorist Edward Glaeser's new book. Book Review: Edward L. Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (The Penguin Press 2011), forthcoming in Environment and Planning (2012).  The abstract:

It is always a bit unnerving to read someone else’s love letters, but even more so, when you have the same object of desire. Edward Glaeser’s TRIUMPH OF THE CITY is a love letter to cities and to New York City in particular. Glaeser provides a theoertical framework of the city, arguing that “Cities are the absence of physical space between people and companies. They are proximity, density, closeness.”

Glaeser prescribes three simple rules to protect the vitality of the urban environment: First, cities should replace the current lengthy and uncertain permitting process with a simple system of fees. Second, historic preservation should be limited and well defined. Finally, individual neighborhoods should have some clearly delineated power to protect their special character.

While Glaeser does not fully justify his set of rules, he does provide a thought-provoking discussion of the consequences of not following them. If you were to take nothing else from TRIUMPH OF THE CITY, you should attend to its cri de coeur: “the real city is made of flesh, not concrete.” But, notwithstanding its limitations, the book offers much, much more than that. It challenges broadly held beliefs and presents a theory of the city that helps to evaluate urban policy proposals with a clear eye.

Matt Festa

Upcoming Oral Argument in PPL Montana, Inc. v. Montana

On Wednesday, the U.S. Supreme Court will hear one of the only cases that touches on property rights scheduled for this Term, PPL Montana, Inc., v. Montana.  Professor Thomas Merrill has posted an excellent preview of the case on SCOTUS blog:

On December 7, the Court will hear argument in PPL Montana, LLC v. Montana. The case is one for history buffs. The question is whether the state of Montana holds title to portions of three riverbeds in the state. The parties agree that the relevant legal test is historical: were the river segments in question part of a waterway that was “navigable in fact” when Montana became a state in 1889? Prominent among the many bits of historical evidence cited are the journals of Meriwether Lewis and William Clark, who explored the rivers in 1805 on their famous expedition.

That's enough to get me excited (seriously).  Go read the rest of Prof. Merrill's informative analysis.  (h/t to our friends at Property Prof Blog for the link).

And don't forget that we had our own pre-preview here at the Land Use Prof Blog, back on the day after the Court granted cert. From guest-blogger Tim Mulvaney's take on SCOTUS cert grant for PPL Montana v. Montana:

In finding that all three rivers at issue met this “navigability for title” test when Montana entered statehood in 1889, the Montana Supreme Court cited to a litany of historical evidence, including the centuries-old journals of Lewis and Clark.  As today’s brief AP story notes, PPL Montana disagreed, pointing “to accounts of the [Lewis and Clark] expedition’s arduous portages of canoes and supplies around waterfalls to argue that the contested stretches of water were not navigable.”  The Montana Supreme Court’s opinion also drew PPL Montana’s ire by considering what the company alleges are flawed contemporary studies, as well as recent recreational uses of certain stretches of the rivers, to support the finding that the rivers are held in total by the state in trust for present and future generations.

One of the foremost experts in natural resources and water law, Professor Rick Frank, notes on Legal Planet that the U.S. Supreme Court has not addressed navigability in the context of state public trust claims for several decades.  How the Supreme Court interprets its time-honored test and identifies what evidence is relevant in its application could have major ramifications for thousands of miles of inland lakes and waterways nationwide.

Should be very interesting.  Stay tuned.

Matt Festa

Morgan Stanley says US moving toward "Rentership Society"

I came across a link to this Bloomberg report in reading for my previous post on the Leinberger-Kotkin debate.  The article is a few months old, but I still think it's highly relevant: U.S. Moves Toward Home 'Rentership Society,' Morgan Stanley Says, discussing a report on housing.

The U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country’s move toward a “rentership society,”Morgan Stanley said in a report today. . . .

The homeownership rate reached an all-time high of 69.2 percent in 2004 as relaxed lending standards fueled home sales and President George W. Bush promoted an “ownership society.” Mortgage delinquencies, foreclosures and tighter credit for housing loans are reducing property buying, [Morgan Stanley analysi Oliver] Chang said.

“Taken together they are forcibly moving the country away from being an ownership society,” Chang, based in San Francisco, said in an e-mail. “This change is only beginning, and is moving the country towards becoming a rentership society.”

A real estate professional demurs, but look at the reason why:

Most Americans still aspire to own their houses and don’t want to be renters forever, said Rick Davidson, president and chief executive officer of Century 21 Real Estate LLC in Parsippany, New Jersey.

“It isn’t about the financial aspects, but about building a family and having a part of the American dream,” Davidson, whose company is a unit of Realogy Corp., said today during an interview at Bloomberg’s offices in New York. “What really drives purchases at the end of the day is emotional and has to do with lifestyle.”

We're still conditioned to think of homeownership as the sine qua non of the American Dream--but it's not necessarily in our financial or economic interest; it's emotional and about lifestyle.  But is there an adequate range of opportunities presented for Americans to choose (emotionally?) between different forms of lifestyle?  I believe that at their base, issues of housing, community, and urban form are primarily cultural.

Matt Festa

Kotkin: report of suburbs' death was an exaggeration

Last week we posted on Christopher Leinberger's recent New York Times piece on The Death of the Fringe Suburb.  Joel Kotkin at Forbes counters with Is Suburbia Doomed? Not so Fast.  Some excerpts:

Perhaps no theology more grips the nation’s mainstream media — and the planning community — more than the notion of inevitable suburban decline. The Obama administration’s housing secretary, Shaun Donavan, recently claimed, “We’ve reached the limits of suburban development: People are beginning to vote with their feet and come back to the central cities.”

Yet repeating a mantra incessantly does not make it true. Indeed, any analysis of the 2010 U.S. Census would make perfectly clear that rather than heading for density, Americans are voting with their feet in the opposite direction: toward the outer sections of the metropolis and to smaller, less dense cities. During the 2000s, the Census shows, just 8.6% of the population growth in metropolitan areas with more than 1 million people took place in the core cities; the rest took place in the suburbs. That 8.6% represents a decline from the 1990s, when the figure was 15.4%.

Nor are Americans abandoning their basic attraction for single-family dwellings or automobile commuting. Over the past decade, single-family houses grew far more than either multifamily or attached homes, accounting for nearly 80% of all the new households in the 51 largest cities. And — contrary to the image of suburban desolation — detached housing retains a significantly lower vacancy rate than the multi-unit sector, which has also suffered a higher growth in vacancies even the crash. . . .

It turns out that while urban land owners, planners and pundits love density, people for the most part continue to prefer space, if they can afford it. No amount of spinmeistering can change that basic fact, at least according to trends of past decade.

But what about the future? Some more reasoned new urbanists, like Leinberger, hope that the market will change the dynamic and spur the long-awaited shift into dense, more urban cores.

Kotkin provides further statistics derived from his Census analysis.  This debate is central to the future of housing policy and urban planning in America.

Matt Festa