April 24, 2013
Talking Energy in Minnesota
It's been a whirlwind of conferences for me this month. Two weeks ago I was at GW. Last week, we had a conference at Buffalo. Now, I am sitting in sunny but snowy Minnesota attending the 2013 Consortium Annual Conference, entitled "Legal & Policy Pathways for Energy Innovation."
My co-author Amy Morris (of Aspen Environmental) and I presented one of our current works-in-progress (yes we have three). This one we are currently calling Mitigating the Impacts of the Renewable Energy Gold Rush. In this paper, we take a close look at the mitigation being done in association with the large-scale solar projects in the California Desert. One of the challenges has been just to untangle all of the agencies and laws at play. We have been particularly concerned with the mitigation projects and methods. Projects are approved (and indeed construction often begins) before mitigation projects are finalized or land identified. And of course, the use of exacted conservation easements is prevalent throughout... something that always makes me nervous.
Most of the mitigation projects are about endangered species protection and our paper focuses on that aspect. Thus, we were not too surprised when we were placed on a panel about endangred species and renewable energy (with Kalyani Robbins and Jeff Thaler). It was one of the more contentious academic (they've got nothing on the land trust folks) panel presentations I have been a part of. It was a lively discussion about whether it makes sense to protect endangered species if the protection will in any way hamper development of renewable energy projects. Most folks agreed that climate change is likely to have bigger impacts on endangred species and ecosystem health than renewable energy development is. This raises big questions about tradeoffs with renewable energy projects and even introduced proposals to amend the Endangered Species Act!
And things are only getting started. Conference organizer extraordinare Hari Osofsky tells us that the recordings and videos of the conference will be available. You should contact her to learn more.
The Legal & Policy Pathways for Energy Innovation conference will bring together leading scholars, practitioners, policymakers, and business people to address current energy law and policy challenges, particularly at the intersection of environmental law and policy. The panels will focus on four primary topics: (1) clean energy infrastructure; (2) environmental and energy governance; (3) climate, energy, and environmental justice; (4) sustainable regions and communities.
April 11, 2013
Talking Energy at GW
Greetings from George Washington Law School where the 2013 J.B. and Maurice C. Shapiro Conference is wrapping up. Entitled Laying the Foundation for a Sustainable Energy Future: Legal and Policy Challenges, there has been an impressive array of panelists from industry, governements, NGOs, and academia.
My co-athour Amy Morris (of Aspen Environmental Group) and I presented some of our work on the land use tradeoffs involved in renewable energy projects. We have been looking at these issues through the lens of solar projects in California, but the issues come up in many contexts. To give you some broad strokes of the project: In California, we see development of main types of projects--utility scale and distrbuted generation. The large utility-scale solar facilities in the California desert have been under heavy scrutiny and criticized for their potential impacts on environmental and cultural values. In an effort to avoid pristine desert ecosystems, agencies and environmental groups have been championed the use of distrubed lands. Such lands are not completely controversy-free either. As a threshold question, we have to figure out what lands should qualify as "distrurbed." In some cases, it may be that we are too quick to label something as disturbed. Generally though the big categories are brownfields, former landfills and mines, hardscapes (parking lots and rooftops), and marginal agricultural lands. I won't get into here, but trust me each of those categories has a host of issues surrounding its use.
I've been feeling a little out of my league as the land use lawyer in the midst of the energy experts but have learned a lot and have been impressed with GW's organization of the conference. I also really enjoy attending conferences in Washington DC where the audience is always filled with a great mix of people from agencies and nonprofits.
- Jessie Owley
August 22, 2012
Climate & Energy Law Symposium at USD
The University of San Diego School of Law will host the Fourth Annual Climate & Energy Law Symposium on Friday, Nov. 9, 2012. This year's title is Law in a Distributed Energy Future. Here is the symposium overview:
The University of San Diego School of Law's fourth annual Climate and Energy Law Symposium will examine emerging law and policy approaches to encourage and accommodate distributed energy solutions. Historically, electricity has been generated by large power plants located far from consumers and delivered via long transmission lines. While that model remains largely intact, a gradual shift is occurring toward more localized energy production.
The symposium will bring together legal and policy experts from across the country to address a variety of key issues including the latest developments in the rules that govern the electricity grid change to incorporate distributed generation, possibilities for generating energy at the neighborhood and community levels, the legal and policy innovations at the federal, state and local levels that are most needed to usher in a distributed energy future.
Keynote addresses will be given by Commissioner Carla Peterman of the California Energy Commission, and Ken Alex, senior policy advisor to California Governor Jerry Brown and director of the Office of Planning and Research. The program and registration info are at the website.
August 04, 2012
Anaheim Police Shooting and At-Large Elections: Is there a link?
A major news item here in Orange County has been the rash of protests in the county's largest and most well-known city, Anaheim, sparked by a pair of police shootings of two suspected Latino gang members. Activists and the media have drawn a link between the shootings and Anaheim's system for electing city councilmembers. In Anaheim, as in most cities in California, all five members of the city council (technically four members plus the mayor, but the mayor is really just a fifth councilmember who gets to hold the gavel at meetings) are elected at-large, meaning the city as a whole is a single electoral district and candidates can reside anywhere in the city. It has been alleged by the ACLU that the at-large system dilutes Latino voting power because it diminishes the ability of geographically concentrated groups (which often include minority communities) to elect representatives from their own neighborhoods, and places a premium on the ability to gather a huge war-chest, which advantages candidates with support from the more affluent constituencies. In Anaheim, indeed, there is not a single Latino member of the city council despite Latinos representing more than 50% of the city's population, and four of the five councilmembers live in Anaheim's wealthy, largely white "Anaheim hills" area. Thus, the argument goes, it is because the city government is out of touch with the concerns of its major constituency that incidents like these police shootings are able to happen.
This story hits home to me because I wrote an article a few years ago that made a very similar argument, although it was more focused on land use: The at-large electoral system deployed in most California cities means that neighborhoods have little voice on land use matters, which tends to favor the interests of the pro-development "growth machine." I further argued that this system tended to dilute minority voices on land use issues (especially eminent domain, of blessed memory). In my article, however, I argued that neighborhood interests did not simply fade away but necessarily expressed themselves outside the political system, either in the form of the initiative process or in the form of urban riots. Indeed, the famous anti-tax initiative Proposition 13 has been referred to (although I could not definitively verify the original quote) as "the Watts riot of the middle class." In the paper, I called for the jettisonning of the at-large system and the implementation of district or ward systems, which is precisely what the activists in Anaheim are calling for.
It appears in Anaheim we may be seeing "the Proposition 13 of the disenfranchised." Stay tuned.
Hat tip to my colleague Ernesto Hernandez-Lopez for some of these links and for alerting me to some of the details of the story.
July 30, 2012
California flirts with new environmental review exemptions for infill projects
Anyone who has practiced or studied land use law in a state with a strong environmental review process knows how that environmental review process often comes to override the land use permitting process. In particular, urban projects have often suffered from an environmental review process that works better for reviewing greenfield projects, and also from more litigious groups of neighbors that use environmental review procedures either to oppose the project, or seek "mitigations" that benefit neighboring property owners. On the other hand, efforts to ease the environmental review burdens on infill projects often run into a roadblock of environmental groups that believe exemptions for infill projects will likely only lead to more exemptions and a gutting of the entire law itself (the "slippery slope" argument).
This fight has been ongoing in California, and other states, for decades. Several infill exemption provisions from the state's California Environmental Quality Act ("CEQA", pronounced "SEE-kwa") look good on paper, but are essentially unworkable if there are litigious parties involved. Such unworkable exemptions are in the state's landmark SB375 legislation that seeks to link land use and transportation: the list of requirements for applicability of the exemption apply to, well, about absolutely nowhere. Another unworkable exemption is CEQA Guidlines section 15332, which is seldom used where litigation is possible.
With the passage of SB 226 in 2011, however, the state is once again taking a hard look at exemptions for urban infill projects. Under a mandate of SB 226, the Governor's Office of Planning and Research, now headed by Ken Alex, a well-respected former senior assistant attorney general who ran the California Attorney General's environmental division, has drafted a proposed new CEQA Guideline for urban infill exemptions that was released on June 25, 2012 after epic public commenting. The proposed CEQA Guideline is now going through formal rulemaking processes at the state's Natural Resources Agency. A cheat sheet on the new proposed infill exemption is available here. If you want to keep up-to-date on the California infill exemption hearings, you can do so by adding your name at this link.
California's purpose for pursuing the infill exemption is now structured in terms of the climate change debate, but decades ago, the need for such legislation was structured in terms of "sprawl" or "smart growth." We all know that it is harder to build in urban areas than in greenfields, and there needs to be a way to level that playing field and encourage urban infill. Following this latest effort in California will be a chance to watch this debate unfold once more, and now in the framework of the climate change debate.
Stephen R. Miller
July 20, 2012
San Diego Climate & Energy Law Symposium
Lesley McAllister recently announced a symposium on Climate and Energy Law that might be of interest to our readers. Land use is so closley entwined with energy sprawl, electricity distribution, and facility siting, I am sure it will be discussed extensively in San Diego in November.
USD Climate & Energy Law Symposium, SAVE THE DATE - Nov. 9, 2012
The University of San Diego School of Law will host its Fourth Annual Climate & Energy Law Symposium on Friday, November 9. The 2012 symposium will bring together leading academics and practitioners to explore the theme of Law in a Distributed Energy Future with questions such as:
- How should the rules that govern the electricity grid change to incorporate distributed generation?
- What possibilities exist for generating energy at the neighborhood and community levels?
- What legal and policy innovations at the federal, state and local levels are most needed to usher in a distributed energy future?
Confirmed speakers include: Carla Peterman, Commissioner, California Energy Commission (Keynote) Scott J. Anders, Director, Energy Policy Initiatives Center, University of San Diego School of Law Sara C. Bronin, Associate Professor of Law & Program Director, Center for Energy & Environmental Law, University of Connecticut School of Law Timothy Duane, Associate Professor of Law, Vermont Law School Joel B. Eisen, Professor of Law, University of Richmond School of Law Michael B. Gerrard, Andrew Sabin Professor of Professional Practice, Columbia Law School Lesley K. McAllister, Stanley Legro Professor in Environmental Law, University of San Diego School of Law J.B. Ruhl, Matthews & Hawkins Professor of Property, Vanderbilt Law School Katherine Trisolini, Associate Professor of Law, Loyola Law School Hannah Wiseman, Assistant Professor, Florida State University College of Law
June 23, 2012
New report on west coast sea-level rise
The sea level off most of California is expected to rise about one meter over the next century, an amount slightly higher than projected for global sea levels, and will likely increase damage to the state's coast from storm surges and high waves, says a new report from the National Research Council. Sea levels off Washington, Oregon, and northern California will likely rise less, about 60 centimeters over the same period of time. However, an earthquake magnitude 8 or larger in this region could cause sea level to rise suddenly by an additional meter or more.
Global sea level rose during the 20th century, and projections suggest it will rise at a higher rate during the 21st century. A warming climate causes sea level to rise primarily by warming the oceans -- which causes the water to expand -- and melting land ice, which transfers water to the ocean. However, sea-level rise is uneven and varies from place to place. Along the U.S. west coast it depends on the global mean sea-level rise and regional factors, such as ocean and atmospheric circulation patterns, melting of modern and ancient ice sheets, and tectonic plate movements.
. . .
The committee that wrote the report projected that global sea level will rise 8 to 23 centimeters by 2030, relative to the 2000 level, 18 to 48 centimeters by 2050, and 50 to 140 centimeters by 2100. The 2100 estimate is substantially higher than the United Nation's Intergovernmental Panel on Climate Change's projection made in 2007 of 18 to 59 centimeters with a possible additional 17 centimeters if rapid changes in ice flow are included.
For the California coast south of Cape Mendocino, the committee projected that sea level will rise 4 to 30 centimeters by 2030, 12 to 61 centimeters by 2050, and 42 to 167 centimeters by 2100. For the Washington, Oregon, and California coast north of Cape Mendocino, sea level is projected to change between falling 4 centimeters to rising 23 centimeters by 2030, falling 3 centimeters to rising 48 centimeters by 2050, and rising between 10 to 143 centimeters by 2100. The committee noted that as the projection period lengthens, uncertainties, and thus ranges, increase.
The committee's projections for the California coast south of Cape Mendocino are slightly higher than its global projections because much of the coastline is subsiding. The lower sea levels projected for northern California, Washington, and Oregon coasts are because the land is rising largely due to plate tectonics. In this region, the ocean plate is descending below the continental plate at the Cascadia Subduction Zone, pushing up the coast.
Extreme events could raise sea level much faster than the rates projected by the committee. For example, an earthquake magnitude 8 or greater north of Cape Mendocino, which occurs in this area every several hundred to 1,000 years with the most recent in 1700, could cause parts of the coast to subside immediately and the relative sea level to rise suddenly by a meter or more.
"As the average sea level rises, the number and duration of extreme storm surges and high waves are expected to escalate, and this increases the risk of flooding, coastal erosion, and wetland loss," said Robert Dalrymple, committee chair and Willard and Lillian Hackerman Professor of Civil Engineering at Johns Hopkins University.
Most of the damage along the west coast is caused by storms, particularly the confluence of large waves, storm surges, and high tides during El Niño events. Significant development along the coast -- such as airports, naval air stations, freeways, sports stadiums, and housing developments -- has been built only a few feet above the highest tides. For example, the San Francisco International Airport could flood with as little as 40 centimeters of sea-level rise, a value that could be reached in several decades. The committee also ran a simulation that suggested sea-level rise could cause the incidence of extreme water heights in the San Francisco Bay area to increase from about 9 hours per decade, to hundreds of hours per decade by 2050, and to several thousand hours per decade by 2100.
You can view a video produced by the Council below.
June 03, 2012
Lefcoe on California Redevelopment Decision
George Lefcoe (USC) has posted CRA v. Matosantos: The Demise of Redevelopment in California and a Proposal for a Fresh Start. The abstract:
This paper describes how redevelopment in California came to an end with the California Supreme Court’s decision in California Redevelopment Association v. Matosantos and how redevelopment could be resuscitated. The first part of the paper highlights the precipitating events leading up to the case: California’s unique property tax history, the successes and drawbacks of redevelopment, how redevelopment is financed, and the text and politics of Proposition 22, the state constitutional predicate for the Court’s opinion. The second section describes the arguments and outcome of the case in which the Court upheld a statute dissolving redevelopment agencies (RDAs) and simultaneously struck down a companion bill — a “pay-to-stay” law — that would have enabled cities and counties to preserve their RDAs by pledging local funds to the state. A concluding section proposes that California legislators consider a new redevelopment enabling law, modeled along the lines of Texas’s tax increment reinvestment zones (TIRZs). Such a statute would conform to the guidelines for constitutionality from the concluding paragraph of the Court’s opinion in Matosantos, and it would be fiscally responsible because it limits the use of tax increment financing.
May 29, 2012
New Lawsuit Challenges San Francisco Billboard Settlement
Most land use profs are familiar with Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1981), a U.S. Supreme Court case that helped to clarify the extent to which billboards could be regulated under the First Amendment. In the years following Metromedia, several cities have adopted billboard restrictions based on the case's holding, which generally allows for greater restrictions on offsite and commercial signage. Still, despite decades of case law on the subject, billboard regulation remains a relatively risky and controversial endeavor. A new lawsuit against the City of San Francisco is the latest example of cities' ongoing difficulty in restricting billboards.
In 2002, San Francisco voters passed Proposition G--a ballot measure later codified as City Planning Code Section 611 that severely restricts offsite commercial billboards within city limits. Earlier this month, the citizen group "San Francisco Beautiful" filed a complaint alleging that a settlement agreement between an outdoor advertising company and the City of San Francisco violated the provisions of Proposition G. According to local newpaper articles posted here and here, the settlement required Metro Fuel LLC, a billboard company, to remove several large billboards and pay $1.75 million in fines. However, the settlement also effectively forgave more than $5 million in other fines and allowed Metro Fuel to replace its decommissioned billboards with an even greater number of smaller signs.
In a new complaint filed in a California Superior Court, San Francisco Beautiful is alleging that the City's settlement violated Proposition G by allowing an overall increase in billboards. Assuming that Metro Fuel's aggregate square footage of signage is reduced under the settlement, should it matter that the company's actual number of signs is allowed to increase? This may be a worthwhile case for land use profs to follow in the coming months, particularly since most of us will be covering Metromedia in our courses again next year.
The biking bug
Coming this July, New York City will launch a bike share program with 10,000 bikes at 600 stations across lower Manhattan (below 59th Street) and the hipster enclaves of west Brooklyn.
David Byrne, former-Talking Heads front man turned biking proselytizer (maybe you've read his Bicycle Diaries about biking in cities around the world), has a great piece about biking in the Big Apple in last Sunday's New York Times. In the article, he focuses on the practical aspects of the bicycle program for daily activities, like getting some groceries or going across town to a meeting.
Byrne notes that some 200 cities around the world have bike-share programs. I've never used a bike-share program, but not for want of trying. When we were in London last summer, my wife and I were trying to find a rack in that city's bike-share program with two bikes for the both of us, and in London's Soho, we had no such luck. The good news is that the program was obviously immensely popular in London, and I have no doubt it will be in New York. (In particular, I predict Ess-a-Bagel on 1st Avenue will see an even longer line as its bagels become just a short bike-ride away for that many more people).
As a matter of policy, however, I wonder whether the best use of bikes is really the freedom it offers for complete trips, or whether biking's long-term value for large cities isn't the ability for people to use bikes to access other forms of public transportation, such as trains. For several years in San Francisco, I rode my bike, rain or shine, from Potrero Hill to the 24th Street BART station, and then took the train in to work. There were a lot of others doing the same. That requires a different biking infrastructure than bike share programs. Instead of the rental bike stands, it requires secure places to park bikes at train stations and safe pathways through more distant parts of the city. The value, of course, is making public transportation options, such as trains, more readily available to more people. Imagine such a program in the far reaches of Brooklyn or Queens linking to the city's established subway system.
Biking programs can take a long time to develop. For instance, San Francisco's bike plan went through litigation and was required to conduct an extensive environmental impact report under the California Environmental Quality Act. As such, thinking through the variety of ways that bikes can assist getting around a city, should be conducted and evaluated up front. Bike shares and bike-to-transit, I'd suggest, are both important parts of the project.
For those cities contemplating such bike-friendly options, I have two free ideas I'm offering to you. First, a bike commuter greenbelt. This is not new, by any means, but this year I've discovered the joys of bike commuting along Boise's Greenbelt, and it is such a remarkable daily experience down by the cool river. For any city that has the option of making this a reality, just do it. Second, parking squids. That's right, parking squids. Parking squids are being deployed by Seattle as a means of creating bike parking within existing parking spaces. The parking squids each park eight bikes and fit within a traditional car parking space. The squids provide utility and whimsy in the same fixture. Could there be anything better in ending a work commute than locking a bike up to a squid before heading to office?
Stephen R. Miller
May 15, 2012
Boudreaux on The Housing Bias
Paul Boudreaux (Stetson)--the original Founding Editor of the Land Use Prof Blog-- has published a book that addresses one of the most critical issues in American land use in the 21st century: The Housing Bias--Rethinking Land Use Laws for a Diverse New America (Palgrave MacMillan, 2011). Here's the SSRN abstract:
As more than 300 million Americans squeeze into our country, and as single-person households now outnumber families of parents and children, it's time to rethink our land use laws that favor the single-family house. Our zoning laws were created in an age that assumed that nearly everyone outside of central cities preferred to live a house separated from neighbors; this assumption is no longer valid and no longer sustainable for a crowded nation. The Housing Bias explores the legal discrimination against apartment buildings and other forms of low-cost residences and how these laws make housing more expensive for modest-income Americans – a key factor in the development of subprime loans and other risky practices that eventually sparked our current economic crisis. Why do our laws prohibit the construction of low-cost housing? It is largely because existing homeowners prefer to exclude them – an astonishing example of law’s granting a legal privilege to wealthier citizens, a privilege that our nation can no longer afford.
This provocative book explores real-world 21st-century controversies of the housing bias. It visits the recent effort of Virginia suburbs to enforce “overcrowding” laws against mostly Latino families who migrated to the area to build new subdivisions, and then moves to New York, where eminent domain is used through a dubious interpretation of law to seize condominiums of middle-class families to build a new pro basketball arena. The book reports on the story of how laws requiring large house lots prevented the construction of a mobile-home community in a growing rural county in southern Michigan, and then examines the failed effort to legalize the widespread phenomenon of small “granny flats” in the backyards of the middle-class homes in the packed city of Los Angeles.
The Housing Bias concludes by exploring how we could update our laws to accommodate the housing needs of a diverse new America, in which half of all households now consist of only one or two persons. The prescriptions range from the complex, such as using state laws to override the power of local homeowners to zone out low-cost housing in certain zones, to the simple, such as facilitating the construction of apartments above suburban malls. It is useful for libraries and for college courses on society or law or for any intelligent reader. Written in an entertaining and jargon-free style, The Housing Bias is essential reading for understanding the flaws and the future of the American community.
One of the great things about land use is that it is fundamentally about places and their stories, and in this book Paul uses these examples to make a larger point about a critical issue of law and policy. The Housing Bias is definitely worth reading and thinking about.
April 18, 2012
Forefront: New Online Planning Magazine (and more on Redevelopment)
Next American City, a planning website with a primarily "New Urbanist" bent, recently launched a new online magazine called "Forefront," which will publish long-form articles on planning issues. The first edition of Forefront features an interesting piece by Josh Stephens, editor of California Planning & Development Report, on the end of redevelopment in California. For those interested, this very blog also devoted some attention to the demise of redevelopment in posts here, here, here and here.
April 11, 2012
Southern California's New Regional Plan
My last post discussed some of the backlash against Southern California's new regional plan, which emphasizes high-density transit-oriented development. California Planning & Development Report now provides some of the details of the plan, including:
- a total cost of $524 billion over 20 years
- $6.7 billion in funding for biking and walking
- $246 billion on public transportation
- 80 plus percent of all jobs and housing within a half mile of rail stations or bus stops by 2035
- 68% of all new development would be apartment or condos.
April 09, 2012
California's War on Suburbia?
In this Wall Street Journal opinion piece, transportation planner Wendell Cox claims that state and regional planners are driving people out of the state of California with their plans for high-density, transit-oriented development, which he calls a "war" on the single-family home. According to Cox, requiring a change from a primarily single-family suburban to a multi-family urban settlement pattern will make "the state's famously unaffordable housing .. even more unaffordable."
I am at a loss to understand how multi-family housing is going to be more expensive than single-family housing. Cox's claim rests on economic data drawn from William Fischel and others showing that land use regulations in California, such as urban growth boundaries, development moratoria, and so on, generally drive up the cost of housing. This is true, but only because most of these regulations either restrict the overall supply of housing (development moratoria) or force developers to internalize the costs of new growth (exactions). Urban growth boundaries, by contrast, will not necessarily increase housing prices as long as growth is permitted at sufficient densities within the UGB to offset the loss of housing outside the UGB. Yet, Cox places the blame squarely on increasing density!
Furthermore, it is ironic that Cox sees salvation in reverting to the single-family lifestyle, when of course all of the cost-increasing restrictions he now decries, such as moratoria and exactions, have been called into service in order to subsidize single-family homeowners and exclude affordable, multi-family housing.
April 06, 2012
Food Trucks, Land Use, and the Free Rider Problem
The food truck wars continue. In this piece on Slate, Matt Yglesias talks about several cities' and states' efforts to ban or regulate food trucks in a way that prevents them from competing with existing restaurants. He cites what he considers a particularly egregious example: a San Francisco ordinance that permits any existing business to comment on an application for a new vending license and directs the city to "consider" whether the new vendor will operate within 300 feet of an existing vendor in deciding whether to grant the license. Yglesias concludes: "a basic rule of thumb seems to suggest itself: The fact that business owners would prefer not to face competition is not a valid regulatory purpose."
This proposition would surely come as a surprise to most land use folks, who generally accept as a matter of course that land use regulations are, at their core, anti-competitive. From large-lot single-family residential zoning that inflates the cost of housing for the benefit of existing homeowners to anti-big-box store laws that are designed to protect quaint mom-and-pop businesses, zoning represents pure economic protectionism. Indeed, the San Francisco ordinance Yglesias mentions is pretty familiar: many zoning laws give neighbors the right to file a protest to a proposed land use change in their neighborhood, which can result in requiring the city to enact the zoning change by a supermajority vote or possibly even block the zoning change (I address the legality of these neighborhood zoning provisions in my article Neighborhood Empowerment and the Future of the City.)
Zoning laws are generally allowed to be anti-competitive because they are thought to be means of combatting free-rider problems. Economists like William Fischel and Bruce Hamilton have argued, for example, that a preponderance of expensive homes on large lots tends to correlate with higher-quality schools. But in the absence of large-lot zoning, people would have strategic incentives to build smaller, less expensive homes in the area just to have access to the better schools. Of course, if too many folks did the same, the very thing that attracted people to the area (the good schools) will be lost as the area becomes congested with smaller homes and more schoolchildren.
Food trucks, it would seem, present an even stronger free-rider problem. Foot traffic is drawn to an area because of the existing shops, restaurants, etc, and the foot traffic in turn generates a demand for more shops, restaurants, etc. Rents and property values go up, as do property taxes, and many high-traffic areas use special assessments or business improvement districts to provide collective sanitation or security services for the area (again overcoming a free-rider problem, as I explain in my Neighborhood Empowerment piece). When a food truck swoops into a high-traffic area, it pays no rent, no property taxes, and no assessments for that privilege, and its lower operating costs enable it to siphon some of that foot-traffic away from existing fixed eateries, thus free-riding on the efforts of those eateries to bring in the foot traffic in the first place. Think of it this way: if the food trucks are sufficiently successful to bankrupt the existing fixed eateries, leaving lots of vacant storefronts in their wake, people will stop coming to the area altogether, and the food trucks will move elsewhere. In other words, the food trucks depend on the existence of fixed eateries to fuel their business. But while fixed eateries pay taxes and fees for the ability to do business in a particular place, food trucks do not. So it should not be a surprise that existing businesses are unhappy.
The solution that suggests itself to me is fairly obvious: since business improvement districts are mechanisms for overcoming free-rider problems, than food trucks should be forced to pay assessments to the business improvement district or special assessment district in those areas where they operate. Legally and conceptually, though, this is difficult to accomplish because special assessments are, as a matter of hornbook law, supposed to be keyed to the benefits that accrue to real property. Because food trucks are not real property, it is difficult to apply the special assessment to them. But wouldn't it be possible for municipalities to use their home rule powers to impose some sort of free-rider fee on food trucks? I would hope that cities and states will consider this alternative rather than simply banning food trucks altogether.
For more on food trucks, see my colleague Ernesto Hernandez-Lopez's piece, LA’s Taco Truck War: How Law Cooks Food Culture Contests.
April 05, 2012
What's Buried Under Dodger Stadium?
A front-page story in today's LA Times throws some cold water on the celebratory mood surrounding the recent sale of the Los Angeles Dodgers and the upcoming 50th anniversary of Dodger Stadium in Chavez Ravine. The story recounts how the city of Los Angeles acquired the land to build the stadium by uprooting (through the use of eminent domain) more than 1,000 mostly Mexican-American families who lived in the area. The story concludes with a chilling quote from one of the uprooted: "There's an old Mexican custom that where you're born, the umbilical cord is buried. Mine's buried under third base....And I hate home runs, 'cause every time they step on third base, my stomach hurts." The story of Chavez Ravine has been well told before, including by my friend Matt Parlow in his article Unintended Consequences: Eminent Domain and Affordable Housing, 46 Santa Clara L. Rev. 841, 843–46 (2006).
February 21, 2012
East L.A. Cityhood Proposal Defeated
An interesting local government story from the L.A. Times: East Los Angeles, an unincorporated and predominantly Latino neighborhood of 126,000 in Los Angeles county has had its latest petition to incorporate as a municipality denied by the Local Agency Formation Commission (LAFCO.)
Unlike many states, which simply permit any unincorporated area to incorporate if it can gather enough signatures for an incorporation petition, California actually requires all proposed municipal boundary changes to be approved by LAFCO, and one of the major factors LAFCO considers is the fiscal viability of the proposed municipality. In this case, the LAFCO concluded that East L.A. lacks sufficient taxable resources to generate sufficient tax revenue to finance the municipal services (fire, police, etc.) that the new city would require.
East L.A.'s situation is interesting for many reasons. For one thing, it highlights what Michelle Anderson has referred to as the problem of municipal "underbounding." Take a look at the map of the Los Angeles basin below:
It's hard to read, but you can see that I have circled East LA in the center of the map. The white portion of the map to the west and north of East LA are all encompassed within the city of Los Angeles. The multi-colored territories to the East and South are other incorporated cities. You can see that aside from a few small "islands" of unincorporated territory, most of the urbanized part of LA county lies within some incorporated municipality. So what happened?
As detailed in Gary Miller's excellent book Cities by Contract, during the 1940s and 50s the two largest cities in LA county, Los Angeles and Long Beach, began aggressively annexing neighboring unincorporated land. Many unincorporated areas were apprehensive because they sensed that annexation was driven by a desire to acquire tax-rich territory so as to redistribute tax revenue from the annexed territory to the annexing municipality. These unincorporated areas could prevent annexation only by incorporating as municipalities themselves, but if they did so, they would then become responsible for financing their own municipal services, a potentially crippling burden. LA county was also worried about the annexations because, as LA and Long Beach grew and swallowed unincorporated areas, they took power away from the county. So the county and the unincorporated areas came up with an ingenious idea called "the Lakewood plan." Under the Lakewood plan, any incorporated municipality could "contract" with the county for the provision of services so as to take advantage of the county's economies of scale in the provision of services while allowing municipalities to retain the powers they really wanted: taxing, zoning, and school control. With the Lakewood plan in place, there was no disincentive for unincorporated areas to incorporate, and they did so with abandon. Today there are 88 incorporated municipalities in LA county.
So why did East LA not incorporate? Frankly, no one wanted to annex poor areas like East LA, so East LA had no reason to incorporate. And, even under the Lakewood plan, incorporated municipalities would still be required to finance their schools out of their own tax base, which is a very significant expenditure for a poor area. The result is that East LA remained unincorporated. So why incorporate now? And why are they being prevented from doing so?
The second question is somewhat easier to answer. After the rash of Lakewood plan incorporations, someone in California state government decided this system of willy-nilly incorporation was crazy, and the LAFCO was formed in order to create a more orderly process of dealing with municipal boundary changes.
Now the harder question: why would east LA want to incorporate in light of the crushing financial burden that would impose? Remember, by remaining unincorporated, East LA receives services from LA county that are highly subsidized by residents of incorporated cities, who are still required to pay property taxes to the county in addition to the fees they pay for the contracted services. Why forego this subsidy and have to pay your own way? Incorporating would give East LA control of its own zoning, schools, and tax base, but with such a minimal tax base they would apparently be better off (and LAFCO certainly thought so) getting their subsidy from the county.
According to the website for the East LA cityhood movement, the goal is the basic one of bringing local government closer to the people. LA county government is the largest local government in the United States, with a population of 10 million, but has only a five-person board of supervisors. If my remedial math serves, that means each supervisor governs roughly 2 million people.
The East LA incorporation drive runs counter to the received wisdom that municipal boundary change follows a kind of "public choice" logic in which the motivation of annexing cities is to loot the tax revenue of unincorporated areas and unincorporated areas are driven by the selfish desire to hoard their stash from being redistributed to the urban masses. Here, it seems, the desire to incorporate stems from a yearning for self-government by a group of people who perceive themselves as a distinct community within the larger city.
Richard Briffault writes that there are two competing conceptions of local government in our political system: the polis and the firm. Local governments are sometimes seen as little democratic republics, and other times as participants in a marketplace. East LA's incorporation petition seems to rest on the former conception of local government -- a city is a forum for enlightened self-government. The reason East LA's petition has been stymied, however, is because LAFCO adheres to the latter conception -- local governments are business organizations. It is telling in this regard that the principal reason LAFCO gives for disapproving the incorporation is that East LA lacks a sufficient number of big-box stores to support an independent city.
January 05, 2012
City Journal's take on the California Redevlopment decision
I've been enjoying the outstanding posts on last week's landmark California Supreme Court ruling by Ken Stahl (here and here) and guest-blogger Stephen Miller (here and here) (I smell a great panel or symposium topic in the making). Just now I came a cross an early analysis by Stephen Greenhut at City Journal, the always-interesting center-right urban affairs journal. Greenhut has a strongly positive take on the decision in Crony Capitalism Rebuked California’s supreme court strikes a blow for property rights and fiscal sanity:
On December 29, the California Supreme Court handed down what the state’s urban redevelopment agencies (RDAs) and their supporters called a “worst of all worlds” ruling—first upholding a law that eliminates the agencies, then striking down a second law that would have allowed them to buy their way back into power. This was great news for critics who had spent years calling attention to the ways modern urban-renewal projects distorted city land-use decisions, abused eminent-domain policies, and diverted about 12 percent of the state budget from traditional public services to subsidies for developers, who would build tax-producing shopping centers and other projects sought by city bureaucrats. As of now, the agencies are history, though the redevelopment industry is working to craft new legislation that would resurrect them in some limited form.
January 5, 2012 in California, Caselaw, Constitutional Law, Development, Economic Development, Eminent Domain, Judicial Review, Local Government, Politics, Property Rights, Real Estate Transactions, Redevelopment, State Government | Permalink | Comments (1) | TrackBack
January 03, 2012
The Future of Redevelopment in California
I want to be the second to welcome (Matt was first) our new guest-blogger, Stephen Miller. I appreciate Stephen's recent post on the future of redevelopment in California, following my initial post on the subject. I would like to pick up where Stephen left off, highlighting some areas where we agree and disagree.
I take Stephen's main point to be that given the fiscal environment in California (bad), cities desperately need redevelopment, specifically TIF, in order to finance just about any significant development. I agree with that premise, and I'll even add to it. The state of California is notorious for sticking cities with unfunded mandates, the most recent and significant of which is the landmark climate change legislation, SB 375. This legislation requires cities to take steps to address climate change, but doesn't give them any money to do this. And, of course, after Proposition 13, cities don't have any money lying around for this purpose either. Redevelopment seems nicely tailored for SB 375 (as the excellent CP&DR argues) because (a) TIF is one of the few sources of money cities do (or did) have and (b) eminent domain is thought to be an effective tool for "infill development" that can combat sprawl, reduce vehicle miles travelled and, thus, abate climate change. The second point is debatable and I've seen evidence both ways, so I'll leave it for now and focus on the first, which is really the gist of Stephen's post.
In my view, the fact that TIF is one of the few sources of revenue California cities have to address unfunded mandates and/or undertake significant development projects is an indictment of California's present system of municipal finance, not a justification for TIF. It is true that TIF allows cities to assume debt to finance redevelopment, but any type of bonded indebtedness would do the same. What makes TIF different are the following: (1) it is the only type of debt California cities can incur without voter authorization; (2) it directs the incremental tax revenue to the redevelopment district, thus depriving other local governments of their share; and (3) it needs only a flimsy "blight" justification to be used. I elaborated on these latter two points in my previous post. This combination of factors, coupled with Prop 13, practically assures that TIF will be abused. Surely this cannot be the best way to finance needed development in California.
Redevelopment agencies have gotten away with this because TIF rests on two fictions, both of which should be seriously questioned. The first is that a city should not have to share the incremental tax revenue with other jurisdictions because that revenue is all attributable to the redevelopment itself having increasing local property values. This fiction has obviously been proven false by the recent real estate downturn. If redevelopment projects account for all the incremental increase in property values in a given area, can we also blame those projects when property values collapse? The reality is that while improvements are certainly capitalized to some degree in local property values, other factors also affect changes in property value. Thus, when we authorize local governments to use TIF, we are really making a policy decision that local governments should be able to funnel money away from schools, highways, affordable housing, etc and toward redevelopment, that redevelopment is a bigger priority than these other things. California is contemplating a lot of hard choices right now, including releasing scores of inmates from prisons, deeper cuts to public schools, and laying off cops and firefighters. TIF should not be immune from that discussion.
Ths second fiction is this "blight" idea. The focus on blight is a throwback to the era of urban renewal, when it was thought, at least initially, that redevelopment was such a radical tool that it could only be used when a neighborhood was so economically depressed that it could not be saved by conventional means. Blight quickly evolved into rationalization that was used to justify the condemnation of viable but poor areas ("stable, low-rent neighborhoods" in Herbert Gans's formulation,) to turn them into something deemed more desirable (convention centers, stadiums, highways, etc.) Although the failures of urban renewal caused it to be repackaged as "redevelopment," little has really changed. Blight is still a vague, manipulable, and arguably culturally biased standard. States like it, and courts like it, because it gives the appearance that redevelopment actually has some limitations (This may explain some of the outrage over the Kelo decision, which refused to place any substantive limitations on the use of eminent domain). But blight isn't a real limitation.
Even if blight were a meaningful limitation on TIF, it's not the right limitation. If TIF's best use is either to finance development that could not be financed by other means or to implement unfunded mandates like SB 375, then those should be the criteria for its use, not blight. Of course, with any standard there is the danger of it being manipulated. I can just imagine Robert Moses justifying Lincoln Center as "infill development." Hopefully the legislature will think through these issues when it considers whether to revive redevelopment.
December 31, 2011
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!