Thursday, January 22, 2015
For those of you who have not already figured out exactly how land use planning officials are expected to proceed in the wake of the U.S. Supreme Court's 2011 decision in Koontz v. St. Johns River Water Management District, Lee Fennell (Chicago) and Eduardo Peñalver (Cornell) have posted Exactions Creep, __ Sup. Ct. Rev. ___ (forthcoming). Rather than deny that the Court has aggravated the uncertainty faced by local governments, Lee and Eduardo explore the nature of the confusion in the Court's exactions jurisprudence and call for a significant revision. Here's the abstract:
How can the Constitution protect landowners from government exploitation without disabling the machinery that protects landowners from each other? The Supreme Court left this central question unanswered — and indeed unasked — in Koontz v St. Johns River Water Management District. The Court’s exactions jurisprudence, set forth in Nollan v. California Coastal Commission, Dolan v. City of Tigard, and now Koontz, requires the government to satisfy demanding criteria for certain bargains — or proposed bargains — implicating the use of land. Yet because virtually every restriction, fee, or tax associated with the ownership or use of land can be cast as a bargain, the Court must find some way to hive off the domain of exactions from garden variety land use regulations. This it refused to do in Koontz, opting instead to reject boundary principles that it found normatively unstable. By beating back one form of exactions creep — the possibility that local governments will circumvent a too-narrowly drawn circle of heightened scrutiny — the Court left land use regulation vulnerable to the creeping expansion of heightened scrutiny under the auspices of its exactions jurisprudence. In this paper, we lay out this dilemma and suggest that it should lead the Court to rethink its exactions jurisprudence, and especially its grounding in the Takings Clause, rather than the Due Process Clause. The sort of skepticism about bargaining reflected in the Court’s exactions cases, we suggest, finds its most plausible roots in rule-of-law concerns implicated by land use dealmaking. With those concerns in mind, we consider alternatives that would attempt to reconcile the Court’s twin interests in reining in governmental power over property owners and in keeping the gears of ordinary land use regulation running in ways that protect the property interests of those owners.
January 22, 2015 in Affordable Housing, Conservation Easements, Constitutional Law, Development, Impact Fees, Local Government, Planning, Property, Property Rights, Property Theory, Scholarship, Subdivision Regulations, Takings, Zoning | Permalink | Comments (0)
Tuesday, November 11, 2014
Following up on my introductory post, I was fortunate to get to help facilitate the biannual summit of the Lower Platte River Corridor Alliance (LPRCA) last week. The Alliance is a unique organization composed of three Natural Resource Districts and six state agencies in Nebraska. It aims to work “with people to protect the long-term vitality of the Lower Platte River Corridor” (an area that includes “the Lower Platte River, the bluffs, and adjoining public and private lands located within the floodplain” for approximately 100 miles along the river from Columbus to Plattsmouth). The Lower Platte faces both supply and water quality issues. The river traverses unique rural landscapes and also bisects the expanding Omaha-Lincoln metropolitan areas. It provides water for important agricultural and mining uses in the region, and it is also supplies drinking water for over half of Nebraska’s population. (For more information, look here.)
For me, one of the most unique and important aspects of the Alliance is its focus on supporting locally drawn solutions and strategies to protect the river and the surrounding landscape, especially in the face of great demographic changes. My experience at the summit has me thinking more about my ongoing interest in the role of public participation in complex land use and resource management issues, like planning for the long-term sustainability of this important watershed.
Getting out of the office and elbow deep into some of the real-world debates about the future of the Corridor (where I not only work but also live) was invaluable to me. In many respects, I learned more in one day discussing shelter belts, crop insurance, trail development, Main Street facade improvements, property tax systems, and various potential models for valuing ecosystem services with such a diverse group of landowners, agricultural producers, conservationists, advocates, and government officials, than I probably could have from many days in a library. Somewhat unexpectedly, the primary takeaway for me was some renewed perspective about the role of legal solutions in what are often really ecosystem-level social problems. Although I spend most of my days analyzing and trying to craft legal solutions to real-world problems, back on the ground things looked a little different.
For example, Chuck Schroeder, Executive Director of the Rural Futures Institute (RFI), started the day with a keynote about the resiliency of rural communities within the Corridor and beyond. At one point, he told a story about a small town community working hard on some marketing and revitalization efforts that had struggled to address a blighted property located right at the entrance to the downtown area. The mayor, according to Chuck, complained to two undergraduate students interns (there for the summer as part of an RFI-funded teaching grant for service learning) about this eyesore house and how all their town’s marketing efforts might be undercut if a visitor’s first impression was this dilapidated house and junk-filled yard. Chuck said the mayor and town had tried “everything” to address the house to no avail, but my ever-legal lawyer mind immediately started ticking off other possible legal solutions to the problem: nuisance claims, aesthetic zoning regulations, condemnation, code enforcement, tax enforcement, etc. My issue-spotting lawyer brain was so occupied checking off possible legal procedures that I almost missed the punchline of Chuck’s story. Although the mayor and the town had not had success communicating with the home’s owner about the issue in the past, Chuck said the two student interns took it upon themselves to walk up to the landowner’s door and offer to help him sell the stacks of tires on his lawn and recover some cash for them…. The homeowner, pleased with the result and liking the student interns who helped put some money in his pocket, then proceeded to let the interns and some other community volunteers engage in additional clean up work around the house. Problem almost immediately solved.
It’s a simple story, but for me an important reminder. In my rush to legal analysis, my instinct was not to consider first what might motivate the landowner to fix the problem himself or what may be standing in the way of him doing so. Or how public engagement in the clean up process might be the most efficient and simple solution, while also likely creating a host of other intangible community benefits.
I was also struck at the summit by how many examples there were from stakeholders actively working on land use challenges within the Corridor of the law working more as an obstacle to progress than as an opportunity or useful tool. These people who do the daily work of trying to make the Corridor a better place seemed incredibly competent and intelligent, but in many cases, they described to me very specific instances where well intentioned laws were getting in the way of actually achieving the desired results (e.g, too much bureaucracy, cumbersome procedures, agency rules that didn't make sense). I heard complaints of the persistent problem of top-down policies and priorities being implemented in ways that are not fully matched up on the ground or that create unintended inefficiencies or obstacles.
This isn’t universally the case. For example, we visited a family farm along the river outside of Omaha where an innovative conservation easement has been created in coordination with the Nebraska Land Trust. The family, at least, said they felt very satisfied that the legal tool of the easement had satisfactorily addressed their concerns in the face of “houses coming over the hills.”
(Photo: Dave Sands, Executive Director of the Nebraska Land Trust, discusses his organization’s conservation easement work within the Corridor at the site of one of these easements.)
However, the theme that there are limits on the ability of the law to respond perfectly or exclusively to the complex land use challenges in the Corridor--including how we will value and protect a range of ecosystem services in the face of growing populations and a changing climate--lingers. Of course, these watershed issues are more complex than one junked property with too many tires in the lawn and more difficult to respond to than the threat of new development around a historic farm that an entire family agrees should be preserved. However, after this summit experience, I look forward to more thinking and engagement around the issues of (1) how law and policy can be better designed with real feedback from, and attention to, the on-the-ground realities of the people working in the trenches and (2) the proper mix of legal and non-legal responses to challenges like the longterm vitality a fragile ecosystem, and especially the role of public participation in designing and implementing these varied solutions.
- Jessica A. Shoemaker
Tuesday, November 4, 2014
Thank you for the chance to guest post here on the Land Use Prof Blog. As Jessie mentioned, my current research agenda is focused primarily on the intersection of property law and federal Indian law. I’m actively exploring how the unique property frameworks that have been applied in a top-down fashion to American Indian lands over the years have disproportionately limited the abilities of Indian landowners and tribal governments to make flexible and efficient uses of their own resources and how this, in turn, is negatively impacting the health and vibrancy of many indigenous communities today. I’m really looking forward to sharing more of my work on these American Indian land tenure issues and how this all relates to the broader land use theme of this blog over the next month.
In the meantime, though, I’m also just this week participating in some real boots-to-the-ground land use planning work here in Nebraska that may also be of interest to this group (and that I would love comments and feedback on as we go). As Jessie also mentioned, in addition to my more traditional law professor responsibilities at Nebraska, I get to participate in some outreach-oriented work with an actively expanding university-wide effort here called the Rural Futures Institute ("RFI" or the “Institute”). This Institute, though new, has done some really interesting things in a short time (see, for example, recent grant awards and conference proceedings) and is working to be a local, state, regional, and even global leader “for increasing community capacity as well as the confidence of rural people to address their challenges and opportunities, resulting in resilient and sustainable rural futures.” You can read more about RFI’s official mission, vision, and core values here. In my own words, though, I see the Institute as charting new territory in really re-committing to the University’s original land grant purpose and working to create a two-way bridge between the resources of the University as a powerful teaching and research institution and the resources of rural communities, with their own invaluable local knowledge and expertise about both challenges in need of innovative solutions and opportunities that may be expanded and from which important learning can come. RFI focuses on being as community-driven as possible and defines community success broadly (i.e., not just economic indicators but also looking to other critical elements of community life, such as art, culture, health, education, and longterm security and sustainability).
My own view is that land use—and all the complex factors that influence how individual landowners make decisions about using their land and natural resources—is at the crux of a lot of the issues around how we create positive futures for rural landscapes and rural communities. This week I will be exploring that theme directly as I moderate a plenary panel at the Lower Platte River Summit, an event sponsored biannually by the Lower Platte River Corridor Alliance, on Thursday. The theme this year is “Urban Grown – Rural Resiliency.” I’m looking forward to talking to a variety of experts about balancing growth and sustainability along the Lower Platte, with its unique resource issues and mix of urban and rural places. The panel includes local landowners, a water quality and public health professor, a real estate developer, agricultural producers, and a National Park Service program director who helps communities develop recreational trails in places like the Lower Platte River Corridor. I'm also looking forward to the Summit's afternoon bus tour of real properties along the Corridor that raise interesting land use issues, including a farm with a unique set of conservation easements in place and a small town doing its best to bridge its historical traditions with modern development in light of some encroachment pressure from the Omaha metro.
I expect it will all be fantastic fodder for further work and thought, and I look forward to sharing some observations and reactions to the discussions around land use at the Summit this week. However, I also plan to tell you about one other project that I’ve been doing with RFI and that I’ll be using as a discussion tool and interactive exercise at the Summit: a land use simulation “game” we’ve developed called Plainsopoly. Plainsopoly is experienced truly as a game in which participants engage around a large game board image of a hypothetical landscape and roll dice to answer a series of real-world (but still hypothetical) land use visioning challenges. An interdisciplinary group of students and professors from across the University, including from law, natural resources, applied ecology, business, and agricultural economics, helped me develop this as a discussion tool last year, and we worked in conjunction with a group from Birmingham City University in the United Kingdom to adapt Professor Alister Scott's original idea for this kind of planning game (what they call RUFopoly for its focus on the Rural Urban Fringe (i.e., RUF) space in Europe). So far, I’ve only piloted Plainsopoly for the purpose it will be used again this Thursday: as a discussion facilitator at conference-type events. However, it has gotten very positive feedback for its potential to improve stakeholders’ engagement around land use issues, open civil dialogue, and speed participants’ learning around land use management challenges and opportunities. Like my colleagues in the UK, I'm interested in thinking further about whether this kind of tool may have future applications for conflict resolution, consensus building, or even real-world planning and policy development.
I’ll look forward to telling you more about the Summit and about this Plainsopoly exercise over the next week or so and then also to turning to the Indian land tenure issues later in the month.
- Jessica A. Shoemaker
Land Use in Canada - Where "Extensive and Restrictive Land Use Regulation is the Norm" by Deborah Curran
Greetings from Canada where most of the water flows north and there is no Canadian equivalent to the Fifth Amendment. Arguably the biggest difference in land use law between Canada and the U.S. is that we have no constitutionally protected property rights in Canada. Of suprise to many of you and, indeed, to many landowners in Canada, this approach to land use regulation allows provincial and local governments to restrict virtually all use of land without compensating the property rights holder for loss of land value as long as the regulation is in the public interest. As Justice Cromwell of the Supreme Court of Canada reasoned in Mariner Real Estate Ltd. v Nova Scotia (Attorney General), (1999) 177 D.L.R. (4th) 696, 178 N.S.R.(2d) 294 (NSCA) when he was a judge of the Nova Scotia Court of Appeal in a judgment that thoroughly canvassed this area of law (at paras. 41-42):
These U.S. and Australian constitutional cases concern constitutional limits on legislative power in relation to private property. As O'Connor, J. said in the Unites States Supreme Court case of Eastern Enterprises v Apfel 118 S. Ct. 2131 (U.S. Mass. 1998), the purpose of the U.S. constitutional provision (referred to as the "takings clause") is to prevent the government from "...forcing some people alone to bear public burdens which, in all fairness and justice, should be born by the public as a whole." Candian courts have no similar broad mandate to review and vary legislative judgments about the appropriate distribution of burdens and benefits flowing from environmental or other land use controls. In Canada, the courts' task is to determine whether the regulation in question entitles the respondents to compensation under the Expropriation Act, not to pass judgment on the way the Leiglature apportions the burdens flowing from land use regulation.
In this country, extensive and restrictive land use regulation is the norm. Such regulation has, almost without exception, been found not to consitute compensable expropriation.
However, the principle that a government or expropriating entity must pay compensation when expropriating an interest in property is alive and well in Canada. Its foundation rests in the royal perogative, powers bestowed on the Crown or government from the common law, and the common law principle that unless a statute explicitly provides, it is not to be construed as taking away property without just compensation (Attorney General v DeKeyser's Royal Hotel  A.C. 508 H.L.). As a common law principle for which the courts have set a high bar when testing whether regulatory behaviour equals regulatory or de facto expropriation. The claimant must prove that:
1. The legislation or government action must so restrict a landowner's enjoyment of property as to constitute confiscation an interest in property; and
2. That interest in property must be acquired by the Crown (government).
It is the second part of the test that is the hardest to meet. Courts have found that simply benefitting Crown land such as a park is not sufficient to prove acquisition by the Crown.
In many provinces this common law rule is codified in a modified form in provincial land use law. For example, sections 914 of the Local Government Act in British Columbia and 621 of the Alberta Municipal Government Act state that no compensation will be paid for changes in the value of land caused by specified decisions made under a land use bylaw or permitting function. It is only when regulation takes away virtually all incidents of private ownership that the regulation will be found to be improper. The precise wording in British Columbia under s.914 is:
(1) Compensation is not payable to any person for any reduction in the value of that person's interest in land, or for any loss or damages that result from
(a) the adoption of an official community plan or a bylaw under this Division [zoning and other development regulation] or the issue of a permit under Division 9 [development permit] of this part,
(2) Subsection (1) does not apply where the bylaw under this Division rstricts the use of land to a public use.
These regulatory or de facto expropriations are few and far between in Canada. Although we hear about successfully argued "takings" cases in the U.S. courts, in Canada a court has never found land use regulation by a local government to result in a regulatory expropriation for which compensation is owed. See Mariner Real Estate Ltd. v Nova Scotia (Attorney General) 1999 CanLII 7241 (NSCA) for an excellent discussion of this area of law, and Canadian Pacific Railway Co. v Vancouver (City)  1 SCR 227, 2006 SCC 5 for the most recent Supreme Court of Canada discussion in the municipal land use context. Courts have ruled that significantly curtailing development on land that is environmentally sensitive, freezing development, development moratoria, and requirements to plant a vegetated buffer adjacent to a watercourse to protect a drinking water source do not require compensation.
The cases where courts have awarded compensation for loss of an interest in property centre around federal or provincial regulation that essentially prohibits an otherwise existing lawful activity or prevents access to a property right. Several cases in British Columbia award compensation for mineral rights that the provincial government rendered inaccessible upon creating a provincial park [R v Tener [1985 1 SCR 533; Casamiro Resource Corp. v British Columbia (Attorney General), 1991 CanLII 211 (BCCA)]. The classic case is Manitoba Fisheries v The Queen  1 SCR 101 where the court found a de facto expropriation by the federal government when it enacted legislation that created a monopoly in favour of a Crown corporation dealing with a freshwater fishery that removed all economic viability, including the goodwill, of one business.
Before I seal your view of Canada as the quiet socialist neighbour to the north ("What? No constitutionally protected property rights?") I must add that in practice land use regulation by local governments works much the same in Canada as in most parts of the U.S. Zoning typically awards development potential or development rights, and once an application is submitted to a local government that zoning and other regulations vest. Few local governments attempt to curb growth in any comprehensive way. There is little coordination at a regional scale about where new development will occur, and most cities are challenged with revitalization of a formerly industrialized water front or downtown core that has to compete with the big box periphery. Proposals for a slight increase in residential density in existing neighbourhoods result in an eight hour public hearing, and there is, of course, no accounting for municipal bad taste in what was kind of development council believes is in the public interest. Although we have somehow resisted building freeways through most of our urban centres and do have a few somewhat successful provincial growth management or agricultural land protection law in place (more on that this month), the local politics of land use law often favours individual property rights.
If we conducted a poll I would be willing to wager that most Canadians and, in particular, municipal elected officials believe that compensation is owed if development "rights" are taken away by regulation. Most intersting is the fact that the Canadian law of regulatory expropriation has remained unchanged since land use regulation came into vogue yet it is popularly trumped by the law of eminent domain from the U.S. Perhaps telecommunications law has more impact on land use than land use regulation itself.
Thursday, October 9, 2014
This is (hopefully) the last in a series of three posts, again cross-posted from Concurring Opinions. In the first, I asked why more land use professors are not libertarians, considering the strong leftist critique of local government. In the second, I suggested that one reason for the leftist commitment to local government (and specifically to local government land use control, albeit often in the guise of “regionalism”) is that the relevant libertarian alternatives – namely, the marketplace and the common law of nuisance – are far worse. Nevertheless, I conceded that this answer was unsatisfactory, considering that many leftists – myself included – betray a Tocquevillian optimism about local government that is difficult to square with the position that local governments are merely the least bad of all the alternatives. So I am left here, in this third post, with the hardest question: How can left-leaning local government scholars have any optimism about local government in light of the abusive local government practices we have witnessed (and documented)?
State Structuring of Local Governments
Alright, here goes… While there is no denying the manifold abuses of which local governments are guilty (see my initial post), the blame for these abuses really falls upon state governments, not local governments. The reason local governments act in the parochial fashion they do is because states have empowered and constrained local governments in such a way that effectively forces local governments to be parochial. In a variety of ways, states have facilitated and encouraged the proliferation of small local governments within metropolitan regions, each of which is thus coerced into a zero-sum competition with the others for scarce revenues. States have, at the same time, dumped all kinds of unfunded and underfunded mandates on local governments, which they must meet with whatever revenue they raise locally. Yet, there is one saving grace for local governments: states have given them an awesome power — the land use power. Is it any surprise that local governments use the biggest power states have given them to solve the biggest problem states have saddled them with –an ongoing obligation to provide costly services with limited funds? The local government abuses I mentioned in my initial post, including the “fiscalization” of land use, exclusion of undesirable land uses (and users), strategic annexation and incorporation efforts, and sprawl are thus not things local governments do because they are inherently corrupt; they do so because the state has structured local government law so as to make these abuses inevitable.
That’s not even the interesting part. This is: Why have the states created a system in which local governments have such perverse incentives? According to Jerry Frug, states created the modern system of local government law because they were threatened by cities. Cities’ openness and spirit of participation stood in contrast to the bureaucratizing tendencies of the state. States created a system of local government law designed specifically to emasculate and frustrate cities’ ambitions. In other words, local government represents a vital aspect of human experience that has been actively suppressed by the state. Frug and many others have argued ever since that in order to recover the essence of the local, we need to recalibrate local power and change cities’ incentive structures.
Local Governments and Participatory Democracy
Frug wrote in the tradition of the New Left, with its emphasis on participatory democracy, and in the aftermath of a period in which cities had been devastated by riots, white flight, urban renewal, disinvestment, and outright hostility from state and national political figures. During the late 1960s, there had been a moment when cities appeared to be on the brink of realizing their potential as fora for public participation – a heady time of citizens’ councils and “maximum feasible participation” – but this potential was quickly squashed by nervous elites.
Frug’s argument echoes theorists of participatory democracy such as Hannah Arendt. Arendt writes that, despite the bureaucratization of modern life, there periodically erupt spontaneous displays of citizen activism that demonstrate a latent human desire for political participation. These moments, of which she includes the Paris Commune of 1871, the Hungarian Revolution of 1956, and others, are quickly snuffed out when powerful interests feel threatened. Nevertheless, Arendt sees participatory democracy as lying at the core of the human condition, and the quest to recover the lost tradition of spontaneous citizen activism as a noble calling, which she refers to as “pearl diving.” This “pearl diving,” this quest to recover the vital potentiality of the local, is I think what motivates many leftist local government scholars, and fuels our optimism.
A False Utopia?
Before we all choke on the sentimentality of the last paragraph, I should note that the nostalgia for the pre-Progressive era city is somewhat discomfiting. The Gilded Age city was no enlightened democracy; even before the political machines turned cities into cesspools of corruption, as legal historian Robin Einhorn writes, cities were highly privatized, “segmented” entities that almost exclusively served the will of propertied interests. Going back further in history, certainly very few of us would like to live in the “free” cities of the middle ages, which were basically totalitarian communes, or the Athenian polis, which was rooted in the exploitation of slave and female labor.
Moreover, it is hard for cities to fulfill their potential as fora for participation when they are so embroiled in the quotidian business of governing at the local level. While states have the freedom to delegate hard decisions and devote their energies to ideological struggles, cities have to deal with the pragmatic daily chore of picking up the garbage, literally and figuratively. On a nearly daily basis, cities must address intractable issues such as homelessness, affordable housing, climate change, education, health care, security, immigration, and more, issues that, in an era of globalization, are only likely to intensify the pressure on cities as states and national governments recede in influence. Managing all these issues will require shortcuts, and city governments will be forced to make unpopular decisions that are sure to anger significant segments of the community; these issues cannot possibly be addressed if we see urban politics as merely, or even principally, a forum for democratic deliberation.
But everything I have just said also explains why we leftists insist on putting all our eggs in the local government basket. Like it or not, cities are, and for the foreseeable future will be, the primary means of dealing with the messy everyday problems we confront. In some cases, as with the provision of clean water (see my earlier post on cities in the developing world) they have succeeded spectacularly. In others, such as the provision of affordable housing, they have failed miserably. But even where they have failed, as in the case of affordable housing, we can often point the finger at the way states have empowered local governments, rather than some inherent flaw in local government. In any event, as I mentioned in my previous post, we have few viable alternatives to local government. For reasons both practical and utopian, it figures to think that cities represent our best hope for the future, and to rest our efforts on improving urban governance rather than displacing it.
Wednesday, August 20, 2014
Posting from New Orleans (No. 3) -- Forging Successful Non-Profit Partnerships Following Crisis and Disaster: O.C. Haley Boulevard's Story
This blog post follows-up a pair of August 5th and August 12th New Orleans posts. Although I’m home in Atlanta getting ready to begin the new school year, I’m continuing an observance of Katrina’s 9th anniversary by ‘walking’ O.C. Haley Boulevard and looking at one of the city’s emerging post-storm neighborhood revitalization stories.
At the outset of this post, it is important to note that there are many more neighborhood stories that deserved to be told, ranging from stretches of St. Claude, Carrollton, and Claiborne Avenues to Freret and lower Magazine Streets. There are also many neighborhood corridors still struggling to come back all over the city, but particularly neighborhoods lying generally east and a little north of the French Quarter, including the vast area of New Orleans East as well as the Upper Ninth Ward and the Lower Ninth Ward.
As the son of an architect, I’m always ready to begin discussion of any neighborhood transformation by flashing slides of the ‘bricks and mortar’ improvements. Those are also the improvements that we as lawyers are most directly involved in supporting: the land acquisitions, the tax credit financings, the bridge loans, the condo documents, the parking easements. But to get any neighborhood to the point where it can provide the social and economic buttressing to support significant private market transactions, there’s often a foundation of community activism and advocacy. O.C. Haley Boulevard is no exception.
Very rarely is any one individual or organization the sole ‘mover’ behind a neighborhood’s re-emergence. Long before the levees and flood walls breached, non-profit, business owner, and neighborhood advocacy groups were working to lay the groundwork for O.C. Haley Boulevard’s resurgence. Carol Bebelle, co-founder of the Ashé Cultural Arts Center, moved the Center onto the Boulevard in 1998 in order to sustain and nurture the stories and traditions of New Orleans’ African American community. The Cultural Arts Center’s historic building, an adaptive use of a former department store, became a foothold for the Boulevard’s resurgence, supporting non-profit office space, exhibit and meeting space, and 29 apartments.
About the same time, O.C. Haley Boulevard Merchants and Business Association gathered local businesses to spearhead creation of a strategic plan for the Boulevard’s revitalization.
A couple of years later, in 2000, Café Reconcile opened across the street as an adaptive use of another large historic commercial building, housing a full-service restaurant dedicated to providing culinary training and life skills development to young men and women from the surrounding neighborhoods.
Along the way, the Boulevard attracted key regional community development partners, and led them to call the Boulevard ‘home.’ These partners included Hope Federal Credit Union (http://www.hopecu.org/) and Good Work Network (http://www.goodworknetwork.org/), both of which concentrate their resources on serving low and moderate income families and developing opportunities for minority and women-owned businesses.
In short, the Boulevard’s momentum had already been triggered when Katrina’s storm surge filled-up 80 percent of city, leaving the Boulevard and only a handful of other major corridors navigable by car as opposed to boat. (A relatively current map of the businesses that have grown-up on the Boulevard in the last fifteen years is found on the Merchants and Business Association’s website, http://ochaleyblvd.org/?page_id=5).
Lawyers – often community development lawyers – figure critically in these first stages of a neighborhood’s redevelopment, well before building projects begin ‘going vertical.’ Lawyers are counseling neighborhood groups and businesses on drafting their articles of incorporation and their bylaws or preparing their Form 1029 to seek IRS 501(c)(3) status. They are helping review applications seeking funding from foundations for planning and predevelopment award monies. They may be advising their clients to seek funds for a market study to help give current and future businesses a sense of where and how they might invest their capital and other resources. Or, they may be advocating at city hall for stricter enforcement of health and safety code violations affecting vacant or abandoned properties. Law students interested in pursuing urban and community development work should gain an appreciation in law school of these critical supporting and counseling roles that lawyers play for community groups.
Earlier this month, I visited with Kathy Laborde, President and CEO of the non-profit Gulf Coast Housing Partnership (GCHP). Laborde, who has worked on the Boulevard for almost two decades, described the factors that convinced her and the neighborhood’s stakeholders that they could turn around the Boulevard’s fortunes. GCHP has been a main driver of redevelopment on and around the corridor since Katrina. In sharing her thoughts and recollections concerning the Boulevard’s rebirth, Laborde described not only the last nine years’ key redevelopment projects, but at the same time she highlighted additional pieces of the urban redevelopment ‘puzzle’ that successful urban and community development lawyers need to appreciate to serve their clients well.
(Photo: Gulf Coast Housing Partnership offices (gray building) at 1610 O.C. Haley Blvd.)
Location is an essential consideration for any urban redevelopment project. Against the essential backdrop of an engaged group of neighborhood stakeholders, Laborde outlined the following factors as critical:
- The O.C. Haley corridor’s historic status as the one of the chief commercial centers for the city’s African American community;
- The corridor’s proximity to New Orleans’ Central Business District (separated only by the elevated U.S. 90, The Pontchartrain Expressway);
- The corridor’s proximity to St. Charles Avenue, one of nation’s great historic streets, which runs just 3 blocks to the corridor’s southeast; and
- The presence of historic commercial buildings fronting O.C. Haley Boulevard and stakeholders’ initial investment in rehabilitation of those structures.
These four areas of strength formed a sort of superstructure for the corridor’s redevelopment; however, by themselves, these four factors were not sufficient to draw significant investment to the corridor. The challenge for GCHP and the corridor’s stakeholders was how to connect O.C. Haley’s assets to the city’s surrounding areas of strength and investment while maintaining the corridor’s character. It was at this juncture, nine years ago, Hurricane Katrina unleashed its destructive forces.
Katrina fundamentally altered the way those inside and outside New Orleans viewed the city. To those living in New Orleans, the telltale watermark stains left by the epic flooding clearly distinguished O.C. Haley Boulevard as ‘high ground’ that did not flood. To those outside New Orleans, particularly local and national foundations and philanthropies, O.C. Haley Boulevard bordered one of the city’s toughest neighborhoods with one of its deepest pockets of poverty. Outsiders also appreciated that the Boulevard was surrounded by areas of significant strength, including the city’s wealthier Uptown neighborhoods, the Central Business District, St. Charles Avenue, and the former C.J. Peete (Magnolia) development which was a 1930s-era public housing development then-slated to receive millions of dollars in HUD funds for complete redevelopment into the new mixed-income Harmony Oaks community.
Outside funders immediately saw the Boulevard in a new way. It stood out not only as a neighborhood where the private foundations and philanthropic funders saw they could achieve programmatic goals of creating more equitable, inclusive, and prosperous inner-city neighborhoods, but also these private funders were buoyed by the fact that high levels of investment were occurring all around the Boulevard. Further, just as foundations and philanthropies were looking to leverage their investments, so too was the New Orleans Redevelopment Authority (NORA), which was responsible for making decisions about deployment of a tranche of federal disaster block grant monies for commercial corridor investments. It was a ‘no brainer’ for NORA to join the catalytic investments of the Greater New Orleans Foundation, Kellogg, Rockefeller, Ford, Surdna, and the J.P. Morgan Chase Foundations.
Make no mistake – even with this level of interest, the Boulevard was hardly awash in cash. In a post-Lehman Brothers world, banks had a low temperature for risk, and in post-Katrina New Orleans where the levee and flood control system rebuilding was not yet complete, caution was the rule for commercial lenders. But what the philanthropic and government funding accomplished was to make the development ‘math’ work for deals dependent on tax credits and tax exempt bonds. A non-profit developer could run a development pro forma that now yielded at least a sliver of a development fee. The challenge for those developers and their clients was to complete successful residential and commercial development projects that would help New Orleanians and visitors alike see O.C. Haley Boulevard as a safe place to live and work. As Laborde explains, this was the “show me stage” of the corridor’s redevelopment. Beginning in 2007, this is exactly what the Boulevard’s stakeholders began to do.
Over the last seven years, GCHP and the Boulevard’s other stakeholders have completed a steady stream of housing, restaurant, office and retail projects. The first pivotal project was GCHP’s completion of The Muses, a 263-unit mixed-income apartment community, which opened in 2009. This project brought hundreds of new residents to the Boulevard and helped bridge the three-block real estate market 'canyon' between St. Charles Avenue and the Boulevard.
The tipping point project may have been GCHP’s redevelopment of almost an entire city block between Martin Luther King, Jr., Boulevard, Thalia Street, O.C. Haley, and Rampart Street. GCHP convinced the New Orleans Redevelopment Authority to move its 45 employees from its downtown rented office space to become the anchor tenant of an office building with ground floor commercial space. This office and retail building were funded with New Markets Tax Credits, NORA’s investment of $2 Million in disaster Community Development Block Grant (dCDBG) funds, and private financing. The office building, in turn, helped secure financing for an adjacent 75-unit affordable senior housing development.
Another important project was Café Reconcile’s expansion and rehabilitation of its existing restaurant and training space.
Café Reconcile’s $6.5 Million expansion was funded by private donations, NORA dCDBG funds, and state and federal tax credits.
“Success in community development,” Laborde stresses, “is about getting people to follow.” And they are doing so on the Boulevard. More projects are just weeks and months from completion, including the adaptive use of an historic school as a grocery store and offices, the renovation of two large retail buildings into the Southern Food and Beverage Museum (SoFAB), including The Museum of the American Cocktail, as well as the first home of the New Orleans Jazz Orchestra (NOJO), including its 360-seat performance venue. The projects soon coming on-line include:
The school’s $17 million renovation is financed by New Markets Tax Credits, historic tax credits, $1 Million from the City’s dCDBG-funded Fresh Food Retailer Initiative, $900k from the New Orleans Redevelopment Authority, and $300k from the Foundation for Louisiana.
The NOJO Market and SoFAB redevelopment projects critically anchor two separate O.C. Haley Boulevard blocks where the Boulevard meets Martin Luther King, Jr., Boulevard. NOJO’s development is financed by State of Louisiana historic tax credits, State of Louisiana theater, musical, and theatrical production tax credits, $10 Million from Goldman Sachs’ Urban Investment Fund, an $800k loan from NORA’s commercial revitalization gap loan fund, and a bridge loan from Prudential Insurance Company. NOJO will open in the spring of 2015. A ribbon cutting for the SoFAB redevelopment is set for September 29, 2014.
Next week we will wrap-up our discussion of O.C. Haley and Katrina’s 9th anniversary with a discussion of what urban redevelopment professionals are looking for in the attorneys they hire.
John Travis Marshall, Georgia State University College of Law
August 20, 2014 in Affordable Housing, Architecture, Community Economic Development, Development, Downtown, Federal Government, Financial Crisis, Historic Preservation, Housing, HUD, Redevelopment, Teaching | Permalink | Comments (0)
Monday, August 11, 2014
Posting from New Orleans (No. 2) -- Reviving Inner-City Neighborhoods: the Challenges of Teaching and Doing Urban Revitalization Work
This is the second in a series of posts from New Orleans. The first appeared last Monday, August 4th. As I promised in that first piece, today we’re just beginning to take a walk down one of New Orleans’ historic commercial corridors, Oretha Castle Haley Boulevard (O.C. Haley Blvd.), which is named after a leading local civil rights activist. Today’s post looks at the fortuitous intersection between post-Katrina federally-funded long-term recovery programs and the extensive pre-storm efforts of O.C. Haley Boulevard activists and stakeholders to reclaim this historic corridor.
Photo (2014): O.C. Haley Boulevard looking northwest toward the Central Business District (CBD)
In the decades leading up to the 1960s, O.C. Haley Boulevard (formerly known as Dryades Street) was one of the principal shopping destinations for black families and also a pre-Civil Rights Era hub for the City’s best black musicians. During the 50 years since the mid-1960s, O.C. Haley withered a little more each passing year. First, the corridor lost in increasing numbers its shoppers; then its businesses began to close; and then families in surrounding blocks began to move away. Finally, in the years leading up to Hurricane Katrina, the Boulevard started losing its architecturally distinguished commercial structures – one by one.
Earlier this spring, in his CityLab article, The Overwhelming Persistence of Neighborhood Poverty, Richard Florida tacitly suggests that O.C. Haley’s fate has been the fate of our oldest urban neighborhoods all across the country. Florida’s article, citing a May 2014 study by Joseph Cortright and Dillon Mahmoudi, disclosed a number of fascinating tidbits about cities, but the statistic that really jumped out is this one: since 1970 “for every single gentrified [urban] neighborhood, 12 once-stable neighborhoods have slipped into concentrated disadvantage.”
That statistic about declining inner city neighborhoods stopped me in my tracks. As long as I can remember, I’ve been fascinated by two things: old inner city neighborhoods (my dad is a preservation architect) and the Red Sox (born and raised in Boston). This is to say that I'm easily captivated by box score style statistics, such as the one Florida cites. I'm also no stranger to extended periods of adversity for the teams I love. But I clearly did not have an accurate idea of the extent to which so many inner city neighborhoods had faced such long odds for so long a period of time.
The statistic Florida cites concerning the decline of inner city neighborhoods got me to thinking about what I taught my land use students last semester. If our land use, local government, real estate finance, and community and economic development clinic students aim to work in cities, Richard Florida is telling us that they have their work cut out for them. The data suggests there are many hundreds of O.C. Haley-like Boulevards across the country.
Of course the problem of distressed inner city communities is not new. As we all know, lawyers have for years played critical roles in representing community groups, developers, banks, philanthropic funders, and local government clients on every side of urban revitalization deals. But Florida’s article reminded me how large the challenge of neighborhood revitalization looms for cities. There’s a lot of ground to cover in a basic land use class, but I found myself asking what my students and I learned this past semester that would help them do this work better or smarter. The short answer is that we squeezed in as much time as we could to study the redevelopment ‘tool box’ a city and its neighborhood organizations can use to stabilize and revitalize neighborhoods: land trusts, land banks, eminent domain, code lien enforcement, tax credits, etc. But thinking about Florida’s article reminded me that this approach is missing a key element. After all, most of these stabilization and revitalization tools were available to young lawyers and planners and community groups for the better part of the 45-year period that Florida observes the rapid evaporation of inner-city neighborhood vitality.
In thinking about the statistics Florida discusses and about the long decline of O.C. Haley Boulevard, it struck me that the conversation that I didn’t have this spring with the land use students is about the nature of urban revitalization work. It is often a slog. Some describe the work as being as slow and painfully incremental as ‘trench warfare.’ I prefer how some describe it as caring for a patient recovering from a debilitating life-threatening injury. That is, urban revitalization work concerns much more than strategic deployment of those redevelopment “tools.” It goes far beyond helping your client close on tax credit financing for a major catalytic redevelopment project. Rather, it also depends on the patient persistence of a diverse team of ‘caregivers’ over a long period of time. Some of those ‘caregivers’ are internal to the community. They are the local merchants associations and neighborhood advocacy groups. They are also the local community development corporations, code enforcement staff, city councilpersons, assistant city attorneys, philanthropic foundation program officers, and the law school clinics with neighborhood organization clients. Neighborhood revitalization ordinarily requires keeping at least part of these diverse teams together for years – often more than a decade. In other words, it is worth discussing with our students that while they need to know the law and understand the nuances of the ‘tools’, the work of revitalizing a neighborhood is not usually just a transactional matter, but it is much more an organic process.
Kathy Laborde, is President and CEO of Gulf Coast Housing Partnership, one of Louisiana’s leading developers of commercial and residential projects serving low and moderate income communities. Beginning in the late 1990s as a community development banker, Laborde has worked with representatives of the O.C. Haley Boulevard neighborhood on redevelopment projects. Prior to Hurricane Katrina she also moved her development firm’s offices onto the Boulevard. Like the neighborhood merchants association and local community groups, Laborde knew O.C. Haley Boulevard had enormous potential to rebound – even as most New Orleanians ignored the corridor and consciously avoided it for fear of encountering the crime for which the Boulevard had become known. Together with a strong and cohesive band of neighborhood advocates, she has long been a steadfast proponent of revitalizing the Boulevard. In a meeting in her office earlier this month, I asked her why, in the late 1990s, she and neighborhood leaders believed that they could turn around the Boulevard’s fortunes.
In the next blog post, we look at snapshots of the Boulevard's challenging 15 year journey through and beyond Hurricane Katrina to an active neighborhood renaissance that continues to catch the attention of both the city's visitors and long-time residents.
John Travis Marshall, Georgia State University College of Law
Monday, August 4, 2014
This August marks the ninth anniversary of Hurricane Katrina’s devastating collision with the Gulf Coast. New Orleans, of course, did not suffer the direct hit that submerged and leveled the Mississippi Gulf Coast, but the hurricane’s historic tidal surge overwhelmed a poorly maintained and engineered Orleans Parish flood protection system. Lake Pontchartrain’s brackish muddy waters poured through gaping holes in flood walls and levees and submerged 80 percent of the city.
The disaster’s immediate aftermath has been described in thousands of blogs, maps, documentaries, songs, books, articles, and deeply disturbing pictures that are seared into the collective American consciousness. The shockingly poor government agency response at every level has earned “Katrina” a place not only in the American political lexicon, but also in international discourse, alongside “Waterloo”, “Watergate”, and “9.11.” For the past nine years, however, an equally compelling but far less “photogenic” story of long-term recovery has unfolded – glacially at first, then haltingly, and over the past four years at a steadier pace. The flood waters inundated the city in just hours, but the long-term recovery has proceeded as a kind of community development ‘trench warfare’, advancing one street and one block at a time.
Nine years later there are still neighborhoods that show only a faint pulse of life amid boarded houses, car-eating potholes, and jungle-like yards. These are particularly the lower income neighborhoods with pre-storm populations that were predominantly African American. These include neighborhoods such as the Upper Ninth Ward and the Lower Ninth Ward. At the same time, the redevelopment slog that has characterized the long-term recovery has been the catalyst for instances of remarkable investment in, and revitalization of, moribund neighborhood commercial corridors.
Many of the law teachers and development practitioners reading this entry have one or more former students or protégés who have sought out opportunities over the past twenty years in New Orleans or Gulfport, Cedar Rapids or Grand Forks, Tuscaloosa or Galveston, or most recently New York City, New Jersey and Detroit to work with federal, state, and local government agencies and, perhaps even more important, with non-profit and philanthropic organizations who often spearhead long-term recovery and revitalization efforts. The next couple of New Orleans dispatches are intended to serve less as a land use travel log than as a discussion of what
happens during a community's long-term recovery as well as the key skills and proficiencies that our students must have in order to contribute to rebuilding cities. It is no coincidence that non-profit and local government executives point to legal capacity and sophistication as critical and also troublesome components of New Orleans’ long-term recovery. The refrain not infrequently heard is that ‘we lost thousands of dollars’ or ‘weeks of time’ because a developer did not challenge an informal government interpretation of a federal regulation that turned out to be incomplete or based solely on anecdotal experience from a disaster in another jurisdiction. There is no substitute for learning how to read and carefully analyze agreements, local code provisions, or federal regulations.
Over the next few weeks, there will be at least two more dispatches from New Orleans. The first dispatch will be from the Oretha Castle Haley Boulevard (“O.C. Haley”), which begins just a football field’s length from the edge of the New Orleans' Central Business District (CBD) and travels southwest towards the Central City neighborhood, which prior to Katrina reported some of the city’s highest poverty and crime rates. You can follow along by entering the intersection of Martin Luther King, Jr., Boulevard and O.C. Haley Boulevard into your favorite mapping application.
Thursday, June 26, 2014
No one is more surprised than I with how much time I spend reading about tax law these days, but I wanted to alert folks to another case regarding the valuation of historic conservation easements. This time, we are talking about Maison Blanche - a fancy former department store now an even fancier Ritz Carlton on Canal Street in New Orleans.
In 1997, the Whitehouse Hotel Ltd. (owner of the property) donated an historic preservation conservation easement to protect the facade to the Preservation Resource Center. Whitehouse's appraiser estimated the value of the conservation easement at $7.445 million (not $7,445 million as the 5th Circuit opinion mistates). The IRS cried foul and valued the conservation easement at $1.15 million and also dinged Whitehouse for an extra 40% for underpaying by more than 400%.
Unsurprisingly, litigation ensued. Whitehouse v. CIR, 2014 WL 2609866 (5th Cir. 2014), decided on June 11th is the second time the case has made it up to the 5th Circuit. The disputes have generally been battles of appraisals and valuation methods. I am not going to express any opinion about the appraisal methods but thought I'd point out a few things.
What does the conservation easement allow?
There was a big dispute here as to whether the conservation easement actually had any value. One of the appraisers suggested that because the conservation easement would not actually prevent Ritz Carlton from building what it want to build, the value should be zero. The highest and best use of the property is unchanged by the conservation easement. This conclusion turned in part on the language of the conservation easement and whether it actually prohibited the potential building of 60 additional rooms on part of the hotel complex. The Tax Court agreed with the appraiser that the conservation easement did not have such a prohibition. Whitehouse I, 131 T.C. 112 (Tax Ct. 2010). The Fifth Circuit disagreed. Whitehouse II, 615 F.3d 321 (5th Cir. 2010). On remand to the same judge, the Tax Court reviewed Louisiana servitude law and again stated its belief that the conservation easement did not restrict the additional building and should not have value BUT the Tax Court acknowledged that it was bound by the 5th Circuit's precedent and estimated the conservation easement value based on that assumption (coming up with as the 5th Circuit said "merely $1,867,716"). Whitehouse III, 139 T.C. 304 (Tax Ct. 2012).
Undoubtedly feeling that it got a raw deal from an unbiased judge, Whitehouse appealed but the 5th Circuit upheld the Tax Court stating that even though the Tax Court went out of its way to voice its disagreement with the 5th Circuit that was allowed as long as it actually followed the 5th Circuit.
Can you rely on tax professionals' assessments of your conservation easements?
Well, at first blush the answer to this question looks like "no" because the appraiser was so wrong. But the key question to consider for this case is whether Whitehouse's reliance on its appraiser and other professional should protect it from the penalty for gross underpayment (the 400% thing I mention above). There is a reasonable cause exception that allows taxpayers to get out from under this rather steep penalty. This issue is important for people interested in conservation easements because we see over and over again how far apart the private appraisals can be from those the IRS calculates. How much should we penalize landowners for their underpayments made in reliance on qualified professionals? The Tax Court imposed a 40% gross underpayment penalty, holding that Whitehouse had not done enough to demonstrate that it had reasonable cause to believe the appraisal. The court may have been particularly persuaded by the fact that the appraisal of the conservation easement exceeded the price actually paid for the property. The 5th Circuit reversed on this issue because Whitehouse had consulted with more than one appraiser and consulted other tax professionals. The 5th Circuit found this to be adequate.
I am really torn on this one. We want landowners to be able to rely on qualified appraisers and to impose a 40% tax penalty could be particularly painful to small landowners. But there have been repeated examples of bad appraisals around and it seems like there has got to be some type of smell test. Where a conservation easement is valued so much higher than the purchase price of the property, I hesitate too. Of course, I understand that the purchase price doesn't really tell you the value of the property and the value of what an entity like Ritz Carlton can get out of a property, but at the end of the day as a taxpayer, I don't even like the fact that the landowners here got a $1.8 million dollar charitable tax credit to build a big fancy hotel and condo complex that will make them oodles of dollars. Arguing that they lost $1.8 million because they couldn't make it as absolutely big as they might have just leaves a bad taste in my mouth.
June 26, 2014 in Architecture, Caselaw, Conservation Easements, Development, Economic Development, Federal Government, Historic Preservation, Land Trust, Real Estate Transactions | Permalink | Comments (1)
Monday, June 23, 2014
As long-time readers know, I have an obsession with interest in conservation easements. In particular, I have been intrigued with a category I call "exacted conservation easements," which I view as any conservation easements that have been created in exchange for some type of land-use permit or development benefit.
Many conservation easements are donated to land trusts and government entities. Those landowners are then able to seek deductions for charitable contributions on their federal tax returns based on the fair market value of the conservation easement. Of course, calculating the fair market value of a conservation easement may not be a simple task, but we can leave that discussion for another day. Today, I want to talk about the potential for tax deductions on exacted conservation easements.
Exacted conservation easements exist because a landowner is seeking the right to develop or change her land in a way currently restricted by law. For example, where a landowner wants to convert endangered species habitat into a residential development, the landowner often agrees to burden other land with conservation easements in exchange for an incidental take permit. Now, in what I hope is an uncontroversial statement, I often assert that such conservation easements should not garner landowners any charitable tax benefits. Unfortunately, I heard many stories of landowners seeking and obtaining tax deductions for such properties.
In a recent tax court opinion, we see an example from Colorado. In Seventeen Seventy Sherman Street, LLC [SSSS] v. CIR, T.C. Memo 2014-124, the Tax Court examined the deductibility of historic facade and interior conservation easements. SSSS wanted to develop an historic site (the Mosque of the El Jebel Shrine of the Ancient Arabic Order of Nobles of the Mystic Shrine) in Denver into condos. Because the property is a designated landmark, the architect proposed building in the parking lot and preserving the shrine "as leverage to induce the city of Denver to modify the zoning restrictions governing the use and development of the [property,]" which at that time was not zoned for residential development (T.C. Memo at 5-6). SSSS then entered into negotiations with the city's Community Planning and Development Agency regarding changes to the Planned Unit Development (PUD) for the area, the conservation easements, height variance, etc. The Agency asserted that it would not recommend any changes to the PUD or granting of the height variances without the conservation easements.
Hopefully, you see quickly why I label these exacted conservation easements (or I sometimes call them "coerced conservation easements") and why they differ from the vision most folks have of conservation easements protecting the family homestead and helping farmers keep the property in the family. Here, we have a developer with no emotional connection to the property simply making a deal to obtain the development rights that the developer sets as its goal. This doesn't mean that the developer doesn't value the historic, scenic, and cultural benefits of this property. Indeed, a developer may purchase an important or beautiful site exactly because it believes those features are important, BUT we may not have the same ideas of freedom of contract or donative intent involved. We might want to view such conservation easements differently, more critically.
So what kind of tax break should SSSS be able to get here? My initial take on these has always just been zero. The conservation easements were exchanged for a varaince and favorable development measures; they are not donations. But as the Tax Court points out, we may be able to find some instances where some of an exacted conservation easement was done in exchange for a permit or some other benefit, but the value of the restriction actually exceeds the value of the permit. Frankly, while I agree generally with that sentiment, I have trouble picturing where that might occur. How do we calculate that? Without the conservation easements here, we know there would have been no permit. So can we really say that the value of the conservation easements exceeds the value of the permit? If so, are there ways to confine the conservation easement to bring it in line with the value of the permit? They have to be perpetual, so we could only change other characteristics. Suddenly I feel like we are immersed in some Dolan-like analysis of value and proportionality.
The conservation easements in this case were first valued at over $7 million. On its tax forms, SSSS did not indicate that it had received anything of value in exchange for the conveyance of the conservation easements (to Historic Denver). The IRS responded that SSSS had failed to meet some filing and appraisal requirements and asserted that the conservation easements should only be valued at a little over $2 million but claimed that the interior CEs were not deductible at all, leaving the potentially deductible amount at $400,000. Here, the Tax Court did not need to determine the value of the conservation easements or the value of the development benefits SSSS received in exchange for them because SSSS failed to identify that it received consideration for the CEs as required by the Tax Code. The court continued to explain that the exchange sure looked like a quid pro quo one with SSSS agreeing to the CEs (whatever their value) in exchange for the Planning Agency's support (whatever its value).
I am glad to see the IRS taking a careful look at these conservation easements. Generally, I think we should be wary of any conservation easements emerging from development schemes.
Wednesday, December 11, 2013
Nowadays I usually get inspired to post on this blog by things that appear in my Facebook feed. Due to my long association with UGA Law many of my friends are in Georgia, and Georgia-related news gets lots of play. Recently a few land use savvy friends have posted this article from Slate, "Why Cul-de-Sacs Are Bad for Your Health."
My first thought - "Isn't this something the New Urbanists have been telling us for, oh, 20 years or so?" Andres Duany has certainly been on the topic for a long time - his book Suburban Nation came out in 2001.
But, this article supports the truth many of us have known for awhile - that living in the suburbs and commuting by car has a negative impact on one's health. This is being confirmed by a recent study at Georgia Tech. The article makes for interesting reading, regardless of where you live.
Jamie Baker Roskie
Friday, November 15, 2013
I no longer follow Georgia news closely, but recently my Facebook feed lit up with multiple article postings and opinions about the Atlanta Braves' plan to build a new stadium in suburban Cobb County, abandoning Turner Field, which they've occupied for only 16 years. Sentiment amongst my friends is running about 20 to 1 against the move. It even merited national attention from a Huffington Post blogger. He brings up the not-unfamiliar criticism that Cobb County has no business spending $450 million on a new stadium when they're furloughing teachers:
Now it seems that Cobb County is one of the 100th wealthiest counties in America, and the 12th most educated. So $450 million must be chump change -- it's not like they're Philadelphia, slashing public school teachers in the face of massive budget cuts. Oh, wait... actually they are sort of like that: "Cobb County's school board approved a 2013-14 budget Thursday night that will result in five furlough days for all employees, the loss of 182 teachers through attrition and a slimmer central administration staff."
The cuts are the result of reduced state aid and lower property tax revenues -- although apparently the lower property tax revenues that are low enough to mean fewer teachers aren't so low that they can't BUILD A NEW BASEBALL STADIUM! For a team that already has what you and I might, sanely, consider a pretty new baseball stadium.
I'm friends with several local government lawyers, and my friend, law school classmate, and former member of the Georgia legislature Rob Teilhet rightly pointed out that building the stadium has no direct relationship to school funding. But, as Land Use Prof chief blogger Matt Festa noted in a blog post he wrote in 2009 on stadium controversies generally, claims are often made that the overall economic development caused by the stadium will benefit the community generally. This project is no exception.
Jamie Baker Roskie
Friday, November 1, 2013
Marie Boyd (South Carolina) has posted Zoning for Apartments: A Study of the Role of Law in the Control of Apartment Houses in New Haven, Connecticut 1912-1932, 33 Pace L. Rev. 600 (2013). In it, she reviews building records and Sanborn maps to give her reader a complete picture of the restrictions placed on apartment development before and after New Haven's first zoning ordinance in 1926. Here's the abstract:
This article seeks to contribute to the legal and policy debates over zoning by providing a more detailed examination of the impact of apartments on both pre-zoning land use patterns and the zoning process during the formative initial stages of zoning in the United States than has been provided in the literature to date. Specifically, this Article analyzes the impact of apartments on both pre-zoning land use patterns and the zoning process in New Haven, Connecticut. It focuses on the period beginning with the selection of New Haven’s first Zoning Commission in 1922, and concluding with the passage of New Haven’s first zoning ordinance in 1926. Through this detailed historical account of the realities of zoning, this Article demonstrates how — due to delays in the enactment of zoning — New Haven’s first zoning ordinance, rather than shaping the future growth of the regulated area, was instead shaped by existing land use patterns and political considerations.
Wednesday, October 30, 2013
So it's been quite awhile since my last post, but I felt compelled to share the end of the story about putting a Wal-Mart in downtown Athens, Georgia. If you're a longtime reader of the blog you may remember that an Atlanta based developer proposed a mixed-use development, anchored by a Wal-Mart, in the center of Athens. (See my previous post here.) Although Wal-Mart never expressed official interest in the project, many local residents were highly opposed to the idea.
Yesterday the local paper featured a story saying that the developer has now abandoned the project entirely, due to market conditions. The development featured student apartments as its residential component, and downtown Athens is already overbuilt in that category. However, the site, while topographically challenging, is prime real estate. I'm sure as market conditions improve something will eventually be built there.
Jamie Baker Roskie
Tuesday, July 23, 2013
I am not sure how many of you are readers of High Country News, but it is of course the go to source for news about the West (especially if you are interested in land use, conservation, or rural peoples). I get it in hard copy because even though you can get it electronically, it is hard to beat seeing their large format magazine with awesome images. An article by Ray Ring from the June 10th issue caught my eye and I thought might be interesting to some of you.
In Paradise at a Price, Ring examines how conservation goals collide with affordable housing. He uses Jackson, Wyoming to tell his tale but it is a story we have seen in many towns. Jackson has some special challenges because of its high percentage of publicly owned land, but we see similar patterns in several resort communities. The story is a simple one. Beautiful areas attract people. Beautiful areas with recreation opportunities in particular end up with communties dominated by fancy vacation homes and amenities for tourists. Real estate prices are high. But all those tourists and Californians with second homes still need goods and services. The problem is that employees of the stores, the ski resorts, the hotels, and the grocery stores can't afford to live in Jackson. This means we need afforable housing projects. Unfortunately, in areas like Jackson the affordable housing projects compete not only with other private residential development but also with conservation efforts.
This article was not about conservation easements, but its description of conservation easements in Jackson illuminated two somewhat conflicting concerns with conservation easements. I'll give you the facts and then explain my concerns.
- More than 97% of Teton County's land is public (owned by federal, state, or local government)
- This leaves only 78,000 acres of private land for development
- Much of this private land is covered by vacation homes for the wealthy
- 1964 local planning laws established overlay districts, protecting wildlife habitat and scenic views. This restricts development on 48,000 acres (leaving only 30,000 unrestricted acres).
- Conservation easements prevent development on 22,000 acres. Most (but not all) of the conservation easements are within the overlay districts
- 20,000 acres are too steep to build on (I think this may leave 10,000 unrestricted developable acres but I am not exactly sure what category these 20,000 acres fall into)
- Restrictions throughout the county limit things like building height (usually nothing over 2 stores) and include specific rules limiting construction near things like spawning areas and swan nests
Okay, so now my concerns. Note, there are many concerns here about affordable housing which are obviously just from looking at the facts above and are well explained in Ring's article, so let me just look to the conservation easement issue.
- Conservation easements are part of the problem on the affordable housing front. The restrictions on development puts up obstacles for people trying to build needed housing. Depending on your goals, you may be okay with that outcome but most of these conservation easements are ways for wealthy people to protect their views and open space (often with receiving attractive tax breaks). I know protecting these beautiful areas is important, but when we let private individuals make all the decisions about what to protect ... it makes me nervous.
- Conservation easements may not get you a lot of bang for your buck. The article states that most of the conservation easements in the community are in areas already protected by overlay districts. This makes me really curious about what type of compensation or development permit the landowners got in exchange for the conservation easements. What are they worth if land use was restricted without them. Admittedly, the conservation easements may have additional restrictions and will remain even if the County changes the contours and rules for the overlay districts. I don't have information about these individual conservation easements, and I am sure the Jackson Hole Land Trust would be pissed at perturbed by my claims but I have seen several examples from conservation easements I have dealt with directly where the landowner receives a large benefit for agreeing not to do something she never intended to do.
Just some food for thought
Wednesday, July 17, 2013
This past weekend I was in Southern California for a family wedding, and we had the chance to go over to the Getty Museum. It is a spectacular place for many reasons including land use and architecture. Right now, and through July 21, the Getty is featuring an incredibly interesting exhibit called Overdrive: LA Constructs the Future, 1940-1990. It tells the story of how LA was the archetype for American land use and development in the postwar era through the end of the 20th Century.
Tuesday, July 16, 2013
Darren A. Plum (Flordia State) and Tetsuo Kobayashi (Florida State-Geography) have posted Green Building Geography Across the United States: Does Governmental Incentives or Economic Growth Stimulate Construction? The abstract:
As green building activity continues to rise across the country, some state governments decided to create incentives that would motivate developers to voluntarily pursue third party certification for their real estate projects in order to assist in meeting sustainability and environmental goals. Despite the growing number of studies in green buildings, the geography of green buildings and sustainable construction only includes a few studies, which emphasize the lack of green building research from the spatial perspective and their relevance to public policies. This study analyses spatial distributions of certified green buildings in relation to governmental incentives deemed necessary to further environmentally friendly public policies that embrace sustainable construction practices while applying a regression analysis over time to determine the impact of such a course of action in relation to economic growth. This study focuses on each of the six states that applied tax incentives. The regression analysis between the number of certified green buildings and Gross Domestic Product in each state shows positive correlation between the two indicating an economic growth is a significant factor to explain the growth in green buildings.
Sunday, March 24, 2013
For those of you who just cannot get enough of Richard Florida, the Daily Beast this week features an exchange between Joel Kotkin and Richard Florida on whether Florida's evolution as a proponent of cities being geared toward the "creative class" constitutes a full-scale retreat from his emphasis on this group as a generator of local and regional economic growth. Florida's installment references a related piece on the importance of urban design that promotes personal interaction that he published in the Wall Street Journal back in July.
HT, Chris O'Byrne.
Tuesday, January 22, 2013
For those of you interested in conservation easements (particularly historic façade easements), you may have been following the Scheidelman saga.The next installment is now out.
In Scheidelman v. Comissioner, T.C. Memo. 2010-151 [Scheidelman I], the landowner sought a deduction for a façade easement burdening her Brooklyn brownstone. The Tax Court disqualified an appraisal because it viewed the method of calculating the easement’s value inadequate. Appraisals must include the method of valuation used as well as the specific basis for the valuation. The appraiser applied a percentage to the fair market value of the property before conveyance of the conservation easement. The Tax Court found that the appraiser had insufficiently explained the method (i.e., the percentage approach) and basis of the valuation (i.e., the specific data used).
The landowner appealed to the Second Circuit. The Second Circuit [Scheidelman II, 682 F.3d 189 (2d Cir. 2012)] reversed the Tax Court, saying that the shortcomings of the approach should not disqualify the appraisal.
On remand [Scheidelman III, T.C. Memo. 2013-18 ], the Tax Court accepted the Second Circuit's assessment that the appraisal was “qualified” but still thought it was crappy was not credible. You can check out the case if you want to delve into the nitty gritty of appraisal methods. The most problematic issue appeared to be the fact that the appraisal just picked a number between 10 and 12% of the fair market value of the home when trying to determine the value of the conservation easement. The appraiser's reasoned that those are the numbers that courts and the IRS seem to like instead of actually looking at the property and making an assessment.
I am enamored of this case though because in the end the Tax Court said no tax deduction is warranted. The evidence demonstrates that façade easements actually increase the value of homes in this area. Additionally, the landowner herself admitted that she was seeking a tax deduction for something she would have done anyway. Here is my favorite quote from the landowner:
"Well, I was primarily interested in preserving my house itself in light of the dramatic development that was occurring in and around Fort Greene during those years and still is. I was also intrigued by the tax benefit of preserving the facade which I had intended to do anyway. …I also wanted to benefit tax wise. I didn't know how much I would benefit, but I wanted to benefit from what I was already intended to be committed to doing."
I have been disturbed fascinated by conservation easement tax deductions that pay owners not to do things they never planned on doing. In understand that there can be some value to the conservation easements becuase perhaps future landowners would have other desires, but it is hard for me to reconcile that worth with the high value of tax deductions current landowners receive. I am glad to see the IRS and Tax Court calling these landowners out. Maybe if a landowner seeks to claim a tax decuction for a conservation easement and we see that the conservation easement increased the value of their land, they should have to pay that difference to the treasury.
Friday, January 4, 2013
Living in Pennsylvania (as I now do) I feel compelled to see the new Matt Damon movie "Promised Land," which opened in local theaters yesterday. The movie is about fracking, and the trailers look very intriguing. (I saw the trailer while seeing Tom Cruise's new movie "Jack Reacher" which, while most notable for multiple visceral fight sceens and car chases, also has a land use angle - SPOILER ALERT the villians are developers trying to get an advantage in a development project in downtown Pittsburgh.)
Today I was searching for a review of Promised Land and I stumbled across this article on NPR.org, which had an interesting critique of a scene where local citizens vote on whether fracking would happen in their town.
The film remains in the realm of fiction as the town debates an upcoming vote on whether drilling and fracking should be allowed. In the real world, there's almost never a vote.
"In Pennsylvania, where this film was made, municipalities have very little authority over what happens," says Kate Sinding, senior attorney and deputy director of the Natural Resources Defense Council. "They certainly don't get an up-and-down vote."
Still, I think this movie is a "don't miss" for land use afficianados, and I plan to see it soon.
Jamie Baker Roskie
January 4, 2013 in Clean Energy, Community Economic Development, Development, Economic Development, Environmental Justice, Environmental Law, Environmentalism, Local Government, Oil & Gas | Permalink | Comments (0) | TrackBack (0)