April 29, 2011
The Institute for Justice Wins California Blight Case
The Institute for Justice helped the owner of a small boxing gym in National City, California file suit challenging the municipality's redevelopment plan. National City intended to declare 700 properties as "blighted," level the entire area, and then construct new condominiums. However, a trial court in San Diego found that National City lacked a legal basis for the blight declaration. Ilya Somin at the Volokh Conspiracy notes that the "National City case is a particularly egregious example of the widespread phenomenon under which local governments use of dubious blight designations to condemn property and transfer it to politically influential developers and other interest groups. The City declared a vast area to be “blighted” on the basis of extremely dubious evidence, and then refused to even make the evidence available for public scrutiny." Here's the IJ's press release. And here's their video on the case:
Many are trumpeting this case as a victory for post-Kelo state-level reforms. Before jumping on that bandwagon, I think it's important to note that the Kelo Court, for all the grief the its taken, probably would have come out the same way on this case. Stevens' opinion takes process seriously. If National City was as loosey-goosey with then blight designation as Somin and other indicate, then it doesn't get by Stevens (or Kennedy). Kelo isn't perfect, but it didn't wipe-out property rights.
Friday's Architecture Moment: The Farnsworth House
The Wall Street Journal has a breezy and informative piece on Mies van der Rohe's Farnsworth House:
See-through on all four sides and elevated more than five feet above a flood plain, the minimalist icon is part fishbowl, part tree house and part transparent time capsule. Sixty years after architect Ludwig Mies van der Rohe completed the famed glass getaway on the banks of the Fox River in Plano, Ill., the structure remains shockingly ahead of its time. . . . The 3,300-square-foot structure is relatively small by Mies's standards, and once inside, a guest is transfixed by the juxtaposition between the home's rigid lines and the exterior's wilds. Set in nature like a levitating houseboat, the exposed weekend retreat exudes both grace and vulnerability.
Byrne on the Stop the Beach Plurality
Peter Byrne (Georgetown) has posted Stop the Stop the Beach Plurality! (Ecology Law Quarterly) on SSRN. Here's the abstract:
The plurality opinion in Stop the Beach Renourishment v. Florida Department of Environmental Protection articulated a new doctrine of "judicial takings," and justified it with arguments drawing on text, history, precedent, and "common sense." This essay argues that the opinion falls makes a mockery of such forms of interpretation, represents raw pursuit of an ideological agenda, and indicates why the Regulatory Takings Doctrine more generally should be abandoned or limited.
Salsich on the Land Use Regulatory Process
Peter Salsich (St. Louis) has posted Keystone Bituminous Coal, First English, Nollan: A Framework for Accommodation? (Journal of Urban and Contemporary Law) on SSRN. Here's the abstract:
This article focuses on three Supreme Court cases that produced important developments for land use laws and redefined property rights: Keystone Bituminous Coal Association v. De Benedictis, First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, and Nollan v. California Coastal Commission. The article discusses these cases and the implications they have for both landowners and regulators. Keystone favors property regulators while First English and Nollan favor property owners, but the article emphasizes that when these cases are read together what emerges is a sense that both landowners and regulators have important common interests which the American property law system can accommodate. The article suggests alternative approaches for future developments in the land use regulatory process. Finally, the article concludes that the best response to this trilogy of cases is the effective use of an early review system, along with regulations carefully tailored to specific land use policies. This would enable municipalities to plan and regulate land in comprehensive, flexible, and innovative ways.
April 28, 2011
A Tribute to Keith Aoki
Hari Osofsky has posted a heartfelt tribute to Keith Aoki, who wrote extensively in intellecutal property and local government law.
Property Issues and the Royal Wedding
A childhood full of playing Dungeons & Dragons and trading Magic: The Gathering cards has left me far too interested in the Royal Wedding (it is, sadly, the closest I'll ever get to wearing chain mail or wielding a broad axe). Luckily, there's at least a little overlap between my scholarly interests and the pageantry of Will and Kate's nuptuials. As far as I can tell, the wedding raises at least three property issues:
1. The shortage of hotels has inspired many Londoners to rent out their homes and become temporary landlords. One expert estimates that London homeowners stand to take in an estimated $170 million in rents during this week. Prices range from $50 a night for a single room in a private home to more than $6,000 a week to rent an entire house in central London.
2. Royal watchers are gossiping about whether Kate and Will have signed a prenuptial agreement. Family Law Solicitor Louise Liu speculates that even though William is worth $45 million, it's unlikely he's been encouraged to get a prenup with Kate. According to Liu, while prenups are routine in the U.S., they are persuasive but not legally binding in England.
3. What titles will the Queen bestow on William and Kate? All titles are gifts from the monarch, so it is the Queen's perogative to choose which one to grant to her grandson and his new wife. As the Telegraph explains, "Tradition dictates that royal men receive a title on their wedding - and often more than one." Leading contenders include the Duke of Cambridge, the Duke of Sussex, and the Duke of Clarence. A couple of Duchies produce serious income. Prince Charles' Duchy of Cornwall estate, which stretches over 135,000 acres in the south-west of England, has an estimated value of $1 billion (647 million pounds) and produces $25 million a year in profits. One final note on titles; according to tradition Kate would not become HRH Princess Catherine of Wales because she is not a Princess in her own right. Instead, she becomes HRH Princess William of Wales.
If you're looking for me tomorrow, I'll be the guy having tea and crumpets, glued to the TV.
Alexander on Regional Governance and Sustainable Communities
Lisa Alexander (Wisconsin) has posted The Promise and Perils of ‘New Regionalist’ Approaches to Sustainable Communities (Fordham Urban Law Journal) on SSRN. Here's the abstract:
This Article argues that "new regionalism" is a form of "new governance." New regionalist approaches include collaborative efforts between cities and outlying suburbs to resolve metropolitan challenges such as affordable housing creation, transportation and sprawl. Such practices focus on regions as key sites for the resolution of public problems that transcend traditional local government and state boundaries. New regionalist praxis responds to local government law's failure to advance equity and sustainability throughout metropolitan regions. New regionalism promotes voluntary agreements and interlocal collaborations, rather than formal government or mandated regulation to resolve regional problems. New regionalism, then, is a form of new governance. The term new governance describes problem-solving processes that shift away from traditional government and regulation, towards voluntary, public/private collaborations including multiple stakeholders. New governance supporters assert that such approaches can enhance the participation of traditionally marginalized groups in reform and lead to more equitable outcomes. This Article examines the institutional design of the Obama Administration's Sustainable Communities Regional Planning Grant Program (the "Grant Program"), as well as its initial implementation in the Madison, Wisconsin/Dane County area, as a test of these claims. This Article identifies the Grant Program's promise and perils in advancing meaningful stakeholder participation and distributive justice. The Article concludes by making recommendations to improve the Grant Program and by outlining the implications of these observations for new regionalist and new governance practice.
April 27, 2011
A Defense of Public Lands in the West
What follows is Eric Biber's great response to this post:
So there's at least three normative arguments I would make off the top of my head:
(1) Coordination of low-intensity uses. Our property system does a great job of allowing high-intensity single uses -- the paradigm is intensive agriculture or industrial use. But what if the "best" use of the land is multiple different uses that are all low-intensity conducted by a range of different users? In such a situation, common ownership or state ownership may make more sense. The best analogy I can think of here is how many Native American tribes used land ownership (see Changes in the Land). The coordination and transaction costs may not be feasible for individual landowners to conduct, instead of a communal or state ownership system. And many of the lands in the West are best suited for this kind of use.
(2) Related to (1) is environmental protection. There is arguably a great deal more potential to manage exploitative uses in a way that results in more environmental protection on communal/state land than on private land -- both because of law (think of the Takings Clause) and because of politics (people may think they have less of an entitlement on public lands compared to private lands). That allows us to better balance different uses and allow for "buffer" zones around key reserve areas (something that conservation biologists regularly call for). The legal argument here I think is pretty strong (only mining claims have property protection on public lands), the political argument seems weaker since exploitative users have been pretty successful in protecting their interests -- but not entirely! And of course, the question is always relative to how they do on private land, where they may be subject to much less regulation.
(3) The normative desirability of open access. For many people -- particularly people who have lived near public lands -- there is a strong benefit to having land that you can go to and use without asking anyone's permission. This is not just limited to hiking and ORVing and other recreational uses (which is what many of us urban folks are most familiar with today); think also about all the "mythology" about the miner with the burro and pickaxe who goes to prospect, or the cowboy who gets to go out and graze his cows, or (in the context of the oceans) the rugged fisherman who gets to make a living on the sea. Of course, many of these are today myths, relied upon by strong political/economic interests in ways that I think are problematic. But nonetheless, I think they do reflect a strong underlying preference that we have to be able to make our own way in the world without anyone telling us what to do -- and public lands help allow for that. Whether that is particular to a frontier culture like the US or is more generalizable I don't know.
Of course, you might still conclude that we have too much public lands, that half of what we have would be more enough to accomplish these goals. But I do believe that the fact that no one else would really want the land anyway strongly indicates that we probably don't. One of the reasons that the states don't want them is because they would lose lots of money on them, just like the feds do. As for whether you'd get private buyers for many of the lands, I'm skeptical. Or at least, you would get a buyer, but the value would be very low -- I don't think the revenue from the sale plus any additional benefit from improved management (which I would question, see points (1) and (2)) would offset the loss of open access.
Who Owns the West, Ctd
There's a really nice discussion going on in the comments about the role of the fedeal government as a landowner in the West. Eric Biber, who has written widely about conservation biology and public lands, splashes cold water on my idea that federally owned land in the West should be auctioned off:
... many important constituencies in the West don't want the lands privatized or turned over to state ownership. Those interests like the free access to the land (for recreation), the subsidies for exploitation (for mining or timber), or because if the states owned the land, they would lose money from it (as opposed to the feds who lose money right now) and they don't want the burden. There's a strong cultural element in the West that values having public land that is "open" for people to do what they want (hike, ORV, pan for gold, hunt) without anyone telling them what to do or to get permission (although this is changing with greater environmental regulations). . . . . Personally, I think privatizing these lands would be a terrible mistake (including for the reasons that Paula indicates -- that the government is more likely to squander the money from selling the lands than squander the lands themselves).
There's a lot of great stuff in both Eric's writing and in the other comments. However, I think the commentators do a better job with the descriptive arguement -- explaining why the public lands haven't been sold -- rather than attacking my position on a normative level.
It may very well be true that the federal government has a role to play in the preservation of some truly wild and open spaces. However, the Bureau of Land Management (BLM) alone controls 250 million acres - that's one-eigth of the county's land. Should all of that be in a wilderness "lockbox?" Moreover, agencies like the BLM are involved in lots of other activities besides preservation. The BLM, for example, sells minerals from federal lands to the public, it sells timber, it sells grazing rights, and enters into oil leases. And it seems to go about these things in a very "pro-business" way; The Grazing Service has traditionally been heavily influenced by ranchers, who have succeeded in keeping grazing fees so low that the BLM spends far more managing their grazing programs than they collect in fees (pdf). If we don't trust the federal government to conduct an auction to sell this land, why do we trust them with complicated management tasks that seem better suited to the private sector?
Borden and Vattamala on Series LLCs in Real Estate Transactions
Bradley Borden (Brooklyn) and Mathews Vattamala (Student-Brooklyn) have posted Series LLCs in Real Estate Transactions (Real Property, Probate, and Trust Law Journal) on SSRN. Here's the abstract:
Series limited liability companies are a fairly new form of business entity. Some observers worry that series limited liability companies are untested and business and property owners should wait to use them. Meanwhile, tax and business law practitioners are moving forward, recommending that their clients take advantage of the opportunities series limited liability companies present. This article reviews the growing popularity of series limited liability companies and the statutory framework of the Delaware series limited liability company statute. It suggests that any hesitancy to use series limited liability companies is unfounded and that they will continue to grow in popularity. The article then discusses the tax classification of series, concluding that recently proposed Treasury regulations provide property and business owners considerable latitude in choosing the tax classification of series. Finally, the article illustrates how property owners may use series limited liability companies to minimize the complexities of ownership and transactional structures.
Hills and Schleicher on Zoning & the Supply of Land for Housing
Rick Hills (NYU) and David Schleicher (George Mason) have posted Balancing the 'Zoning Budget' (Case Western Law Review) on SSRN. Here's the abstract:
The politics of urban land use frustrate even the best intentions. A number of cities have made strong political commitments to increasing their local housing supply in the face of a crisis of affordability and availability in urban housing. However, their decisions to engage in “up-zoning,” or increases in the areas in which new housing can be built, are often offset by even more “down-zoning” or laws that decrease the ability of residents in a designated area to build new housing as-of-right. The result is that housing availability does not increase by anywhere near the promises of elected officials.
In this essay, we argue that the difficulty cities face in increasing local housing supply is a result of the seriatim nature of local land use decisions. Because each down-zoning decision has only a small effect on the housing supply, citywide forces spend little political capital fighting them, leaving the field to neighborhood groups who care deeply. Further, because down-zoning decisions are made in advance of any proposed new development, the most active interest group in favor of new housing – developers – takes a pass on lobbying. The result is an uneven playing field in favor of down-zoning.
Drawing on examples of “extra-congressional procedure” like federal base closing commissions and the Reciprocal Trade Act of 1933, we argue that local governments can solve this problem by changing the procedure by which they consider zoning decisions. Specifically, they should pass laws that require the city to create a local “zoning budget” each year. All deviations downward from planned growth in housing supply expressed in the budget should have to be offset by corresponding increases elsewhere in buildable as-of-right land. This would reduce the degree to which universal logrolling coalitions can form among anti-development neighborhood groups and would create incentives for pro-development forces to lobby against down-zonings in which they currently have little interest. The result should be housing policy that more closely tracks local preferences on housing development.
April 26, 2011
From the Department of Disastrous Timing . . . Housing Counseling Funds Eliminated
Funding for HUD's housing counseling program has been eliminated. Not to worry: not many people need housing counseling these days.
The counseling program cost $88M, or approximately 1.25 C-130J long-range military transport planes.
Also from the same Department: Law Professor's laptop goes belly up during finals week; dog's leg is paralyzed, wife's back goes out. I apologize for the lack of posts lately, but it''s been a wild two weeks.
Mark A. Edwards
[comments are held for approval, so there will be some delay in posting]
Buying a Home: There's an App for That
The Wall Street Journal Reports that if you're in the market to buy a new home there's a "slew of new smartphone apps aim to make the job easier and save you time." Again, why do we still need realtors?
Blumm and Guthrie on Internationalizing the Public Trust Doctrine
Michael Blumm (Lewis & Clark) and R.D. Guthrie (Lewis & Clark) have posted Internationalizing the Public Trust Doctrine: Natural Law and Constitutional and Statutory Approaches to Fulifilling the Saxion Vision (U.C. Davis Law Review). Here's the abstract:
The public trust doctrine, an ancient doctrine emanating from Roman law and inherited from England by the American states, has been extended in recent years beyond its traditional role in protecting public uses of navigable waters to include new resources like groundwater and for new purposes like preserving ecological function. But those state-law developments, coming slowly and haphazardly, have failed to fulfill the vision that Professor Joseph Sax sketched in his landmark article of forty years ago. However, in the last two decades, several countries in South Asia, Africa, and the Western Hemisphere have discovered that the public trust doctrine is fundamental to their jurisprudence, due to natural law or to constitutional or statutory interpretation. In these dozen countries, the doctrine is likely to supply environmental protection for all natural resources, not just public access to navigable waters. This international public trust case law also incorporates principles of precaution, sustainable development, and intergenerational equity; accords plaintiffs liberalized public standing; and reflects a judicial willingness to oversee complex remedies. These developments make the non-U.S. public trust case law a much better reflection than U.S. case law of Professor Sax’s vision of the doctrine.
Bu on Security Rights in Property in China
Yuanshi Bu (Freiburg) has posted Security Rights in Property in Chinese Law - An Unattainable Goal to Construct a Coherent Legal Regime? (European Private Law Review). Here's the abstract:
Chinese property law was codified in March 2007. Being an important component, existing provisions governing security rights in property have been consolidated in the newly passed Property Act. The aim of this article is to analyze several highly controversial questions in detail such as creation and perfection, accessoriness and foreclosure of security rights, security rights in bankruptcy proceedings, priority rules, mortgages in movables and immovables, floating charge, restrictions on disposal rights of the security grantor as well as bona fide acquisition of security rights. The analysis reveals challenges brought about by incomplete mixed borrowings of foreign laws that China is now faced with in constructing an internally coherent and nationally uniform property law regime.
April 25, 2011
In Time for Easter: The Tragedy of the Bunnies
In my property class, we spend a couple of hours wrestling with the "Tragedy of the Commons." In a typical year, I have my students read an excerpt from Hardin's seminal article, we go over the explanation in the Dukeminier textbook, and I pepper them with examples. Although these standard approaches all work OK, I've found that the best way to demonstrate the concept is with a simple video game designed for high-schoolers.
The game, called the Tragedy of the Bunnies, vividly illustrates how "The Tragedy" plays out and why private property rights can help. The concept is simple; You're a bunny merchant and you make your living by selling bunnies to children. Your goal is to sell an many bunnies as possible in two rounds. In both rounds, you score points by selling the bunnies, which you do by clicking on them.
The catch is that between rounds the bunnies get frisky and their population multiplies. If you sell them all in the first round then you'll have lots of money, but no bunnies to breed and sell in the second round. As this is the tragedy of the commons, you're also competing against two other bunny merchants controlled by the computer.
One final wrinkle; you can play the game in two versions. In the "public" version of the game, the bunnies are a common resource and they all get wiped in a matter of seconds. In the "private" version of the game, the bunnies are private property. You can exclude other competitors from taking your bunnies and conserve them for the second round.
I usually invite a student down to the front of the class to play both versions. They can then explain to the class why they overused the bunnies in the first game ("Because everyone else was grabbing bunnies, I had to as well!") and how private property then saved the day. I think it works pretty darn well. Although the game is simple (and clearly designed to promote private property) but it's a good springboard to discussing when and why the Tragedy plays out. Click on "Play the game" to see for yourself.
Boyack on Regulating Fannie Mae and Freddie Mac
Andrea Boyack (George Washington) has posted Laudable Goals and Unintended Consequences: The Role and Control of Fannie Mae and Freddie Mac (American Law Review). Here's the abstract:
The United States is struggling to emerge from an era of loose mortgage underwriting standards – lapses in credit analysis that led to origination and securitization of toxic loans. The fallout has been crippling, costing borrowers their homes, investors their money, and the government its taxes.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) passed last summer was the first comprehensive effort to address the problems in the system that led – in sequence – to the subprime crisis, the housing crisis, and the financial crisis. The Dodd-Frank Act, which contains over 2,300 pages of legislation, is very broad as well as very detailed – even though hundreds of rulemakings have yet to completely define its parameters. But this extensive legislation deliberately did not deal with the biggest elephant (or perhaps elephants) in the room: Fannie Mae and Freddie Mac. These government sponsored enterprises (GSEs), behemoths of the secondary mortgage market, are currently in conservatorship and have (so far) cost taxpayers over $130 billion. Yet our current residential mortgage market is utterly dependent upon them for credit and liquidity. With political pressures to stop taxpayer bailouts and the reality of a frozen mortgage market should Fannie Mae and Freddie Mac cease to exist, when it comes to the GSEs, the administration feels damned if they do and damned if they don’t.
For decades, the U.S. mortgage finance system was the envy of the world – the only industrialized nation to have a significant segment of housing costs covered by private capital through a securitization investment system. The United States is the only country to routinely offer homebuyers 30-year fixed-rate pre-payable mortgage loans. Better capital accessibility has made more homeownership opportunities more available to more Americans. The GSEs have performed a vital role in financing the production of rental housing as well. Our real estate capital markets set the gold standard worldwide for what is possible in freeing trapped asset values and increasing the wealth of borrowers and investors alike.
Over the past decade, this system undoubtedly became unhinged – and it is critical to reform its failings. But a complete wind-down of the government sponsored enterprises that are the linchpin of our housing finance system goes too far. Subtracting Fannie Mae and Freddie Mac from the finance equation may very well be market suicide, and the repercussions for borrowers, communities and investors would be dire indeed. Furthermore, this extreme step is unnecessary: the system’s failures can be adequately (and better) addressed within the GSE framework.
Undoubtedly there is still ample dirty “bathwater” to throw out as we reform the mortgage finance market system. But it would be an excruciating mistake to bow to political pressures and throw out the “baby” too. Current and future mortgage borrowers will only be adequately “protected” if they are empowered through access to capital, appropriately constrained by valid underwriting criteria. A well functioning market – rather than political scapegoating – is the best way to emerge from the recession and protect future buyers and investors alike.
This article first discusses the history and purposes of the GSEs and what went wrong with the system that led to the 2008 conservatorship and bailout. With reference to the Obama Administration’s February 2011 Report to Congress, “Reforming America’s Housing Finance Market,” Part II analyzes proposals to reform and wind down the GSEs in light of their likely legal and market impact. Part III offers some general suggestions on better approaches to crafting America’s future mortgage market and advocates for solutions more precisely tailored to remedy apparent systemic problems while achieving the identified policy goals.
Watson on the Doctrine of Discovery
Blake Watson (Dayton) has posted The Impact of the American Doctrine of Discovery on Native Land Rights in Australia, Canada, and New Zealand (Seattle U. Law Review). Here's the abstract:
This article describes the impact of the American doctrine of discovery, as set forth in Johnson v. McIntosh, 21 U.S. 543 (1823), on native land rights in Australia, Canada, and New Zealand.