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 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.
Tuesday, April 8, 2014
Nancy McLaughlin (Utah) has posted Perpetual Conservation Easements in the 21st Century: What Have We Learned and Where Should We Go from Here?, 2013 Utah L. Rev. 687. Here's the abstract:
April 8, 2014 in Agriculture, Conservation Easements, Environmental Law, Environmentalism, Federal Government, Historic Preservation, Scholarship, Servitudes | Permalink | Comments (0) | TrackBack (0)
Wednesday, April 2, 2014
Potential tax deductions are one of the driving forces behind creation of conservation easements. The exact contours of the tax deduction (how much can you deduct and over how many years can you stretch your donation) has varied over the years. For the past several years, the deductions have been particularly generous.
Under standard law, individuals can deduct the value of the donated property up to 30 percent of their adjusted gross income, and any excess value can be carried forward for 5 years. But in 2006, Congress passed the enhanced landowner incentive. It allows deductions up 50 percent of donors’ adjusted gross income and over a 15-year carry-forward period. That incentive ended this past December. The consistent support of this tax deduction by Congress led many to people the enhanced version would be extended without struggle.
Perhaps not. The most recent tax-extension proposal from the Senate Finance Committee does not extend the enhanced tax deduction for conservation easements. Russ Shay at the Land Trust Alliance has hypothesized that the bill drafters may want to change the nature of the deduction, but are still likely to keep the enhanced deduction available to some extent. In particular, this might appear an attractive opportunity to remove deductions for conservation easements over golf courses, something both parties (and the IRS) have indicated their support for. Others suggest that a better approach would be to craft legislation making the enhanced deduction permanent so it does not require periodic extensions.
Thursday, January 23, 2014
Turning old railroad lines into parks and bike paths seems like a great idea. When it results in things like NYC's Highline Park who can complain, but not everyone is happy about these rail to trail projects. In fact, it is the subject of a case currently pending before the Supreme Court. (This is not a case under the Rails-to-Trails Act but implicated perhaps thousands of miles of trails that came from rails).
Marvin Brandt is upset about the bike trail built by the Forest Service on an abandoned railway through his land. Brandt argues that the when the railroad abandoned the government-issued right-of-way, the feds did not have the right to create a new right-of-way in the form of the trail.
The tricky issue here is determining what exactly a railroad right-of-way is. When I hear the term ROW, I envision an easement. But as we all know there are some things out there that sound like easements but aren’t actually easements. The government argues here that these railroad ROWs were not easements in the traditional sense. However, nor were they fee simple strips of land given to the railroad. Instead they are some third category of property law that no one can quite figure out how to define. A surface defeasible fee subject to a reverter perhaps? Let’s break it down.
If it’s an easement: The federal government gives the railroad an easement through public land. The common law rules of easements apply. This means that when the railroad abandons the track in the 1980s (or whenever it was), the easement is extinguished and full unencumbered fee simple title goes back to the underlying landowner. This particular parcel is no longer federal land because the Forest Service swapped it with the Brandt family. Traditional run of the mill easement law tells us that the Brandt family (owner of the servient estate) should have this land with no dominant easement holder left around to bug them (or ride bikes through their property). This is what Brandt’s attorney argues. Not argued, but hinted at by Justice Sotomayor is that the easement holder was really the US and it temporarily transferred its easement rights to the railroad. Now that the railroad is done, it can keep using the easement for similar (transportation) uses through the Forest Service bike trail.
If it was a patent (i.e., fee simple absolute): The federal government gave the railroad a strip of land and the railroad owned that strip (or spaghetti noodle as the court seemed to like envisioning it). This would mean that the railroad owns the land for any purpose and once it stops using the railroad tracks for trains, it could use them for something else or it could sell them to the underlying landowner (or lose ownership via adverse possession if it stands by and does nothing while the forest service or underlying landowner makes use of the land). No one actually argues that the railroad had an unrestricted fee simple though. Instead, it might be that they had a type of defeasible fee (starting to give you flashbacks of your 1L property class yet?). That’s right, the railroad had a fee interest subject to the possibility of reverter. That is, the federal government had a reversionary interest and would get the land back if the railroad stopped using it for railroad purposes.
Now of course, it is not as simple as just reading over the grant to the railroad and figuring out what it said. Instead, we have several wrinkles. For example, there is an 1922 Act (postdating the grant to the railroad) explaining that when the railroad stops using the land for railroad purposes and it reverts to the feds, the feds should first use the land for roads and streets, then consider giving to municipalities, and if that doesn’t pan out give the land to neighboring landowners. There is a more recent statute adjusting that order of priority, but these statutes sure make it sound like the US had a reversionary interest. Of course, Justice Scalia pointed out that he doesn’t care very much about how a subsequent Congress interpreted the railroad’s property right. He is only interest in looking at the 1875 Act enabling grants of ROWs the railroad to try and figure out the property right.
There are some cases muddying the water including a 1942 case interpreting the 1875 Act, concluding that the railroad in question there had not gotten subsurface rights and instead had gotten something akin to an easement.
There is also the tricky part of the land conveyance to the Brandts. The Forest Service swapped some land with Brandt’s father back in 1976. While the land conveyance noted the railroad’s ROW, it did not mention any reversionary interest. Leading the Brandts (quite reasonably) to believe that the ROW was just a standard run of the mill easement. Can an underlying federal law be in trouble where the forest service neglected to mention it in a land conveyance? Perhaps Brandt’s property lawyer should have researched more and tried to determine what was really going on…
The oral argument in this case is fun for land geeks, especially those of us who teach or study property and/or federal lands. The Court seemed particularly interested in figuring out how much lands the feds own and how much has been converted to other uses -- and what the implications of allowing such reversions would be. Several justices pushed the parties to try and explain how many acres or how many landowners were at stake. No one dared to put forth an estimate. I actually laughed out loud when the justices were shocked that the federal government didn’t keep good track of its land holdings and dispersals. They are so cute sometimes.
Tuesday, July 9, 2013
This month's ABA Real Property "Professors' Corner" teleconference will focus on Koontz, the end-of-Term exactions that is one of the most significant Supreme Court property-rights cases in recent years. (Jessie Owley has discussed it here, and Tim Mulvaney and others have weighed in around the net). This Professor's Corner session should be a good one with several leading scholars participating. Here's the announcement:
Professors’ Corner: Wednesday, July 10, 2013: Koontz v. St. John’s River Water Management District: A Significant Victory for Property Rights?
Professors’ Corner is a monthly free teleconference sponsored by the ABA Real Property, Trust and Estate Law Section's Legal Education and Uniform Laws Group. Each month’s call features a panel of law professors who discuss recent cases or issues of interest to real estate practitioners and scholars. Members of the AALS Property Section are invited to participate in the call (as well as to join and become involved in the ABA Real Property, Trust and Estate Law Section).
Wednesday, July 10, 2013
12:30 p.m. Eastern time (11:30 a.m. Central, 9:30 a.m. Pacific). Call is ONE HOUR in length.
Call-in number: 866-646-6488
This program will feature a roundtable discussion breaking down the Supreme Court’s important June 25 decision in Koontz v. St. John’s River Water Management District. If “monetary exactions” have always seemed a little untamed to you, you’re not alone. The 5-4 decision in Koontz leaves a lot of room for analysis, and this month’s panel is prepared to guide you through it by parsing the decision and the dissent. Our distinguished panel will include Professor Jonathan H. Adler, who is the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at Case Western Reserve University School of Law; John D. Echeverria, Professor of Law at Vermont Law School; and David L. Callies, who is the Benjamin A. Kudo Professor of Law at the University of Hawai’i.
For those that haven’t already seen it, here’s a link to the opinion:
Please join us Wednesday for this great program!
July 9, 2013 in Caselaw, Conferences, Conservation Easements, Constitutional Law, Environmental Law, Federal Government, Property Rights, Scholarship, Supreme Court, Sustainability, Takings, Wetlands | Permalink | Comments (0) | TrackBack (0)
Tuesday, June 11, 2013
Michael C. Blumm (Lewis & Clark) and Andrew B. Erickson (Lewis & Clark) have posted Wild Lands Policy in the Twenty-First Century: What a Long, Strange Trip It's Been. The abstract:
The protection of federally owned wild lands, including but not limited to designated wilderness areas, has long been a cardinal element of the American character. For a variety of reasons, designating wild lands for protection under the Wilderness Act has proved difficult, increasingly so in recent years. Thus, attention has focused on undesignated wild lands, that is, unroaded areas managed by the principal federal land managers, the U.S. Forest Service and the Bureau of Land Management (BLM). These areas can benefit from a kind of de facto protected status if they are Forest Service areas that have been inventoried for wilderness suitability and not released to multiple use or are wilderness study areas managed by BLM. In the last two decades, considerable controversy has surrounded roadless areas in both national forests and BLM lands because protecting their wild land characteristics may foreclose development, such as oil and gas leasing or timber harvesting. Recently, the courts have settled longstanding litigation by upholding roadless rule protection in the national forests. But BLM wild land protection has remained more unsettled, as Congress recently rejected a Wild Lands Policy adopted by the Obama Administration. Despite this political setback, current policy is to survey and consider wild lands in all BLM land plans and project approvals. This promised consideration, however, leaves the fate of such lands in the hands of local BLM officials and to the political vicissitudes of future administrations.
This article traces the evolution of federal wild lands policy from its beginnings in the 1920s to the enactment of the Wilderness Act in 1964 and the Federal Land Management and Policy Act in 1976 to the longstanding dispute over the Forest Service's roadless rule to the present controversy over BLM wild lands policy. We maintain that, pending congressional decisions on wilderness status, the best way to protect wild lands in the 21st century is through administrative rule, as in the case of national forest lands. Such protection, however, will require at least acquiescence from Congress, which has not been evident in the case of BLM lands in recent years.
Monday, June 10, 2013
This Essay, based on a presentation at Duke Law School’s 2009 symposium, Next Generation Conservation: The Government's Role in Emerging Ecosystem Service Markets, briefly examines the emerging policy front of ecosystem services and federal public lands and proposes a set of key policy questions, research needs, and options for building on what policy work has been done to date. Part I outlines the basic context for thinking about the role federal public lands might play in the management of ecosystem services and why it is worth considering using the ecosystem services concept in public land policy. Part II proposes several key research paths that must be addressed before federal lands can be effectively managed for ecosystem service flows. Part III bears down on the different roles federal lands might play in promoting or participating in markets for ecosystem services.
Monday, May 27, 2013
The U.S. tradition of Memorial Day has a long and complex relationship with land, history, and memory. This post has some thoughts on the subject from last year.
Today was Memorial Day in the US. There are lots of land use issues that we can associate with Memorial Day, which, stripped to its essence, is designed as a day to remember the military members who died in service to the nation. There is the obvious land use issue of cemeteries, and the related legal and cultural norms governing how we memorialize the dead (check out any of the interesting blogposts or scholarship by Al Brophy and Tanya Marsh on cemeteries). It gets even more relevant when we start talking about government-owned national or veterans' cemeteries, and the attendant controversies about First Amendment and other issues. [The photo is from last year's Memorial Day ceremony at Houston National Cemetery, which my daughter attended to honor fallen Marine Lance Corporal Matthew Sauer Medlicott.] Of course, there are always land use and local government issues involved with things like parades and public ceremonies, and in many communities there are specific rules that govern the "summer season" informally commenced on Memorial Day weekend.
Check out the whole post for some info about a couple of little-known and interesting events from the early history of Memorial Day and land use, including what may be the first Memorial Day celebration, by African-Americans in Charleston on the former planters' racecourse, and a U.S. Supreme Court case about eminent domain for historic preservation on Gettysburg National Battlefied.
We hope you had a safe and happy Memorial Day.
Thursday, March 7, 2013
We are pleased to share with you our latest fact brief: Sandy's Effects on Housing in New York City (PDF) Our report is the first independent, comprehensive analysis of the Superstorm's impact on housing in New York City.
The study revealed some surprising insights into the impacts of the Superstorm Sandy. It found that low-income renters were disproportionately impacted by the storm's surge; over half of the victims were renters, 61 percent of whom make less than $60,000 per year, instead of middle-class homeowners. It also exposed the age of the housing stock affected by the surge; 82% of the properties hit by Sandy were built before 1980, before the latest flood maps and building standards were established.
The report also summarizes newly available information about the characteristics of properties in the area in New York City flooded by Sandy's storm surge, as well as demographic characteristics of households that have registered to receive assistance from FEMA. The study was released in partnership with Enterprise Community Partners, who provided a similar analysis on Long Island and New Jersey.
Lots of interesting maps and data in this report, which should be of interest to anyone researching law, land, housing, and disaster planning
March 7, 2013 in Affordable Housing, Beaches, Coastal Regulation, Community Economic Development, Environmentalism, Federal Government, Housing, Local Government, New York, Property, Redevelopment, Scholarship, Water | Permalink | Comments (0) | TrackBack (0)
Monday, February 25, 2013
I am just finished streaming the press conference for the release of the Bipartisan Policy Center's Housing Commision Report. Led by its Co-Chairs, Sens. George Mitchell, Mel Martinez and Kit Bond, as well as former HUD Secretary Henry Cisneros, the Commission is offering a far-reaching set of recommendations regarding the housing finance system, public subsidy for affordable housing development and preservation (particularly in rural areas) and promotion of housing counseling as a vital resource. Even if the Executive Summary is too long for you, I would encourage you to check out a two-page article available on Politico authored by the four co-chairs.
Wednesday, February 20, 2013
Christopher Serkin (Brooklyn) has posted Affirmative Constitutional Commitments: The State's Obligations to Property Owners, Brigham-Kanner Property Rights Conference Journal, Forthcoming. The abstract:
This Essay, prepared for the 2012 Brigham-Kanner Property Rights Conference, argues that social obligation theories in property generate previously unrecognized obligations on the State. Leading property scholars, like Hanoch Dagan, Greg Alexander, and Eduardo Peñalver, have argued that the institution of property contains affirmative duties to the community as well as negative rights. This Essay argues that those affirmative duties are two-way streets, and that moral bases for social obligations also generate reciprocal obligations on the State to protect property owners. The social obligation theories rely upon a dynamic not static vision of property rights. The community’s needs change, the conditions of ownership change, and the appropriate allocation of benefits and burdens within a society changes over time. Therefore, a legal obligation that is justified and permissible at the time it is enacted because it is consistent with moral obligations may become impermissible over time, even if the content of the legal obligation does not change. At the extreme, the State’s failure to respond to certain kinds of changes in the world can lead to a regulatory taking.
An interesting and important take on some of the implications of progressive property theory. Especially interesting is Serkin's appreciation for the changing social notions of property over time, and how that challenges static notions of property rights and obligations.
Wednesday, February 13, 2013
The University of Missouri School of Law is hosting a Symposium on February 22, 2013, called Promoting Sustainable Energy through Tax Policy. Sponsored by the Journal of Environmental and Sustainability Law and the Missouri Tax Law Society, the event will be introduced by Mizzou profs Michelle Arnopol Cecil and our own guest blogger Troy Rule, and features panels with Alexandra Klass (Minnesota), Steve Gaw (The Wind Coalition), Felix Mormann (Miami), Roberta Mann (Oregon), Robert Peroni (Texas), with a keynote by David Weisbach (Chicago). Here's the info and link:
Renewable energy and sustainable development are valuable means of combatting climate change and of reducing the nation’s reliance on foreign energy sources. Recognizing the importance of sustainable energy, state and federal policymakers have employed aggressive tax incentive programs to stimulate unprecedented growth in wind energy, solar energy, biomass, green building, and related industries in recent years. Unfortunately, shortfalls in many state budgets and growing concerns about the national debt are now creating pressure for governments to extinguish these tax programs — a move that could bring progress in the nation’s fledgling sustainable energy sector to a grinding halt.
This year’s Journal of Environmental and Sustainability Law symposium is being sponsored jointly with the University of Missouri Tax Law Society. The symposium explores questions about the long-term role of tax policy as a tool for promoting renewable energy and sustainability in the United States.
Cost and Registration
The symposium is free and open to the public.
Registration is suggested by Friday, February 15.
To register, please contact:
Journal of Environmental and Sustainability Law
University of Missouri School of Law
12E Hulston Hall
Columbia, MO 65211
February 13, 2013 in Clean Energy, Climate, Conferences, Environmental Law, Environmentalism, Federal Government, Local Government, Oil & Gas, Politics, Scholarship, State Government, Wind Energy | Permalink | Comments (0) | TrackBack (0)
Tuesday, January 1, 2013
Robin Kundis Craig (Utah) has posted Treating Offshore Submerged Lands as Public Lands: An Historical Perspective, forthcoming in Public Land & Resources Review (2013). The abstract:
When President Harry Truman proclaimed federal control over the United States’s continental shelf in 1945, he did so primarily to secure the energy resources — oil and gas — embedded in those submerged lands. Nevertheless, the mineral wealth of the continental shelf spurred two critical legal battles over their control and disposition: First, whether the federal government had any interest in the first three miles of continental shelf; and second, if so, whether the federal government had authority to regulate the continental shelf under traditional federal public land laws, such as the Minerals Leasing Act. Congress’s reactions to federal courts’ resolutions of these questions, embodied in 1953 in the Submerged Lands Act and the Outer Continental Shelf Lands Act, continue to provide the foundations for state and federal management of the nation’s continental shelf and its energy resources.
Nevertheless, the Outer Continental Shelf’s status as federal public lands remains ambiguous. This
Article takes an historical approach to assessing that issue, reviewing the traditional definition of federal “public lands” and the historical context of the public lands issues that arose for the Outer Continental Shelf. It concludes that the Outer Continental Shelf, from a natural resources perspective, qualifies as the newest of the federal public lands, but it also acknowledges that — unlike for many other public lands — federal statutes repeatedly and consistently exclude the states from gaining ownership of those submerged lands.
Saturday, November 17, 2012
Yesterday, Case Western Reserve University School of Law hosted a symposium called The Law and Policy of Hydraulic Fracturing: Addressing the Issues of the Natural Gas Boom. As Steve noted on Property Prof, Professor Thomas Merrill (Columbia) was slated to give the keynote. Case Western's Jonathan Adler was part of the event, and he posted an extensive commentary on Merrill's remarks over on the Volokh Conspiracy. Looks like it was a fascinating talk with lots of observations on how to deal with the potential environmental impacts of fracking, and a perhaps counterintuitive suggestion on the possible upside of the gas boom with respect to climate change. But here, I'll focus on some of Merrill's observations on why fracking developed in the U.S., because it may have a lot to do with property law and land use regulation. As Adler describes:
Why did fracking arise in the United States? Contrary to some analysts, Professor Merrill does not believe it is attributable to federally funded research and development. . . .
Professor Merrill also doubts industry structure has much to do with fracking’s rise either. . . .
A more likely factor is the way U.S. law treats subsurface rights. The U.S. is something of an outlier in that subsurface minerals are the property of the landowner, and not the government. This results in decentralized ownership and control over subsurface rights facilitates experimentation and innovation in figuring out how to exploit and manage subsurface resources.
Further decentralization, and experimentation, results from the federalist regulatory structure. Different states have different regulatory approaches than others, creating opportunities for further innovation and the opportunity for jurisdictions to learn from one another. The existence of a few jurisdictions that will allow a new technology to be tried provides a laboratory from which others may learn, whereas under a more centralized regulatory structure such innovation is unlikely to get off the ground.
The existence of a relatively open infrastructure network – a pipeline system that is subject to common-carrier rules – also plays a role in facilitating entry into the market. These factors have a common theme: decentralization. Taken together, Merrill suggests, they are the most likely source of fracking’s rise in the United States.
Looks like another fascinating event, with participation from a number of land use, environmental, and energy scholars on the subsequent panels. I look forward to the symposium isse in the Case Western Law Review.
November 17, 2012 in Clean Energy, Climate, Comparative Land Use, Conferences, Environmental Law, Environmentalism, Federal Government, Lectures, Oil & Gas, Property, Property Rights, Scholarship, Water | Permalink | Comments (2) | TrackBack (0)
Friday, October 19, 2012
Marcia Johnson (Texas Southern) has posted Will the Current Economic Crisis Fuel a Return to Racial Policies that Deny Homeownership Opportunity and Wealth to African Americans?, published in The Modern American, Volume 6, Issue 1, Spring 2010. From the introduction:
Perhaps the greatest threat to the continued realization of the American dream is the latest economic crisis rooted in the sub-prime mortgage collapse.12 Some blame the CRA of 1977 for creating a market that they claim provided housing loans to noncreditworthy borrowers – particularly African American families – in the low and moderate income range.13 However, this charge is without direct factual support as the post-CRA period saw a decline in homeownership for African Americans but a mild increase for White homeowners.14 Illegal and fraudulent practices in property appraisals and income reporting directed program benefi ts away from those the program was meant to aid. . . .
This paper is written to examine the potential effect of the market collapse on our nation’s homeownership policies. Part I reviews America’s historical housing and homeownership policies. Part II considers the expansion of homeownership opportunities to historically non-participating communities, particularly the African American community. Part III reviews the culprits of the economic crash of 2008 and explains why sub-prime borrowers often get blamed. Part IV examines solutions to maintain America’s pro-homeownership policy, and Part V concludes that America’s homeownership policy should continue to be vigorously pursued with a goal of including African Americans who have long been excluded by government policies and sanctions from building wealth and thereby stabilizing their communities.
Tuesday, October 16, 2012
Keith Hirokawa (Albany) has posted From Euclid to the Development of Federal Environmental Law: The U.S. District Court for the Northern District of Ohio and the Regulation of Physical Space, forthcoming in Justice and Legal Change on the Shores of Lake Erie: A History of the U.S. District Court for the Northern District of Ohio, Paul Finkelman and Roberta Alexander, eds., (2012, Ohio University Press). The abstract:
In 1969, the Cuyahoga River burned. Although it was not the first time that the River was in need of assistance, it was the 1969 fire that helped to compel a radical transformation in the way that we interact with the environment. The U.S. District Court for the Northern District of Ohio was not called upon to adjudicate the liabilities resulting from this pivotal event. But in the years preceding the Cuyahoga fire, the district court was asked to navigate conflicting jurisprudential approaches to the use of land, air, and water. This chapter explores a handful of these cases in order to illustrate the nation's struggle over suspicious conceptions of economic advantage and fairness, flexible distinctions of private and public property, and evolving ideas of nature and health. The chapter begins with the 1924 decision in Ambler Realty Corporation v. Village of Euclid, which remains the most famous challenge to the constitutionality of zoning regulations. It then turns to the 1930 decision in Swetland v. Curtiss Airports Corporation, where the district court addressed the inevitable limitations in property rights above land following the advancement of powered human flight. Finally, it considers an opinion released on the eve of the Cuyahoga River fire, when the court was asked to choose between saving a town and protecting railroad operations in Biechelle v. Norfolk Western Railway Company. Although the district court's decisions in these controversies do not bear the indelible character that we often attribute to law, the federal district courts for the Northern District of Ohio contributed to a legal framework in which the fire could occur and, perhaps more significantly, in which the fire could be perceived as an important event.
It's true that Northern Ohio has been at the forefront of the development of modern land use law! Land use and legal history are more connected than might be apparent. The entire volume looks worth reading.
Wednesday, August 29, 2012
The case arose when the American Civil Liberties Union of Maryland sued HUD, saying that it demolished old public housing high-rises where mostly African-Americans lived — only to move the residents to equally segregated housing and poor conditions in other parts of the city.
Attorneys for the residents said Friday that the government in effect “perpetually locked” African-American families in neighborhoods of concentrated poverty, violating federal civil right laws. The settlement, which would cover all claims in the case, was filed in conjunction with Baltimore City and the Housing Authority of Baltimore City.
As the Legal Defense Fund, which worked with the ACLU on the case, notes in its press release, the court had ruled in 2005 “that the U.S. Department of Housing and Urban Development (“HUD”) violated the Fair Housing Act by unfairly concentrating African-American public housing residents in the most impoverished, segregated areas of Baltimore City. Judge Garbis held that HUD must take a regional approach to promoting fair housing opportunities throughout the Baltimore Region.”
The settlement requires HUD to allocated money towards expansion of the Baltimore Housing Mobility Program, which has been in place since a partial settlement in the 1990s. The program has enabled over 1,800 families to move to neighborhoods in other parts of the city and to surrounding suburbs. Under the settlement, the program will, among other things, fund vouchers and counseling over the next seven years for up to 2,600 additional families.
The case is particularly interesting given its regional approach to questions of housing and segregation. Housing vouchers can be used throughout the region, enabling participants to voluntarily move to suburban areas with greater employment and educational opportunity. The program provides extensive housing counseling and mobility assistance to aid families interested in moving to lower-poverty neighborhoods. For more details, see this 2009 report discussing the progress of the program at that time.