Wednesday, July 13, 2011
One the topic of taxing non-profits, here's an idea from LTVfan, one of our commentators:
I'm heartily in favor of taxing the land under nonprofit buildings; I'd favor exempting the buildings themselves from taxation. Valuing land well and accurately is relatively easy; valuing buildings, particularly special-purpose buildings like churches, is much more difficult and expensive.
Many downtown churches sit on large pieces of land, bought decades or centuries ago, perhaps with the foresight of land speculators in the lay leadership. Frequently, the land is underused, and currently no mechanism exists to nudge it into more use.
But I encourage you to consider the effects (and costs) of taxing ANY buildings, and submit that we'd be wiser to simply tax land value, and treat buildings and their contents as private property, not subject to taxation. Land value, unlike the value of buildings and personal property, is created by the community, and is thus a logical and just base for taxation.
You might explore Henry George's Single Tax, best laid out in his landmark book, "Progress and Poverty," available online at its dot org.
For those that haven't kept up with the career of Marion Barry, you'll be happy to hear that the erstwhile crack smoking mayor of D.C. is back on the city council. And not only is he back, he's proposing aggressively stupid legislation. Specifically, Barry plans to introduce a bill that would ban the construction of all new apartment buildings in his Ward (Here's a copy of the Bill's text). Why??? Barry thinks this plan will encourage home-ownership and the renovation of the area's dilapidated housing. "The American dream is to own a home. And black people have not gotten the American dream as much as they need to," he says. "Somebody can rent for 20 years, and has no equity in their unit at all."
It's hard to see how this bill helps the people of Ward 8 in any way. If anything D.C. in general, and Ward 8 in particular, needs denser & more affordable housing. Right now, DC's population is exploding. So any proposal to artificially limit the supply of available rentals seems likely to push (poor) long-term residents out of the neighborhood. It's also tough to comprehend how this land use measure would help the folks of Ward 8 acquire the downpayments and credit history that are the normal barriers to home ownership.
Perhaps the really interesting question here isn't about the policy but rather, why do people in D.C. keep voting for Barry?
Wednesday, April 27, 2011
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.
Tuesday, April 26, 2011
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.
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.
Tuesday, March 29, 2011
It's bad to close the barn door after the horse is gone. But it's just as bad to fill the barn back up with horses, then reassure everyone that it is now secure, because the barn door is only open wide enough for the horses to escape in single file. That's what the FDIC appears to be ready to do with regard to mortgage-backed securities.
According to the New York Times, the FDIC is about to adopt rules that would go a long way to correcting some systemically catastrophic faults in the securitization business. For that, they deserve praise (and I should point out, the FDIC under the admirable Sheila Bair has truly been a stand-up force throughout this mess). But going a long way is like closing the barn door most of the way -- it doesn't help much if the horses can still slip through.
Frequent readers here might remember that I've argued several times that the single most effective way to reform the MBS industry is to require loan originators to retain a certain percentage of the loans they make, and to choose those retained randomly. I've suggested 20% be retained in-house, randomly chosen. The MBS industry can thrive, providing liquidity for the residential market, but originators are bound to the risk of the loans they originate, which creates every incentive for them to lend wisely.
The proposed FDIC rules, thankfully, adopt that very principle -- but then gut it in the details.
Rather than a simple percentage rule with randomized selection for the retained loans, under the proposed rules,
- high quality loans are exempt from the risk retention pool, off-the-top;
- only 5% of the risk from mortgage-backed securities derived from lower quality of loans that make up the risk retention pool must be retained;
- the risk can be split among the loan originator, loan aggregators, and loan securitizers -- that effectively reduces the risk to any of them well below the 5% line;
- the lenders have considerable flexibility in choosing their method of exposure to the 5% risk -- either by retaining a 5% exposure in all securitizations, or retaining a representative sample of loans in-house equivalent to a 5% exposure -- but the proposed rules do not specify a mechanism by which the 5% are selected or determined to be 'representative.'
The proposed rules do not do enough, in my opinion, to make sure that the risk retained by originators is of sufficient quantity and quality to incentivize them to make only sensible loans. Under the system that crashed the U.S. economy in 2008, lenders could reap the benefit of originating all loans, since the cost of originating bad ones was externalized to the usually uninformed holders of MBSs. There are lots of potential ways of reforming the system, but none is as clean and efficient as requiring that a substantial portion (I still say 20%, as is required in Canada, which did not suffer an MBS crash) of risk is retained in-house, and that percentage is chosen randomly. That system requires relatively little oversight, and no wiggle room for escape.
The proposed rules don't leave the barn door open as much as they might have, but closing it 2/3rds of the way doesn't help much if the horses can still get out.
There will be a comment period after the proposed rules are announced. I hope to submit some, and I'd like to hear yours.
Mark A. Edwards
[comments are held for approval, so there will be some delay in posting]
Friday, February 11, 2011
The White House released a proposal today that would dramatically alter the long-term future of the American housing financing market, in ways that are almost as important and fundamental as the creation of the FNMA (later Fannie Mae) in 1938.
Starting in 1938, the U.S. government created and became the most important -- and often only -- player in the secondary mortgage market. The FNMA bought loans and mortgages from banks, thereby allowing lenders to transfer the risk of default, but only if those loans met certain quality standards. The secondary mortgage market was a great success and was responsible for much of the post-war housing boom in America. The FNMA was semi-privatized in 1968, becoming Fannie Mae. It helped created the mortgage-backed securities market, but when faced with competition from other players in the secondary mortgage market who captured market share by purchasing and securitizing loans that didn't meet its quality standards, Fannie Mae lowered its standards. Because the appetite of investors for mortgage-backed securities was voracious, there was soon a race to the bottom through subprime lending. Because Fannie Mae still had special privileges with regard to taxation and borrowing from the federal government, many investors assumed or gambled that Fannie Mae would be rescued by the federal government in the event it began to crash. It did, and they were right.
The new plan's main objective is to release the United States from it's role as a de facto backstop for Fannie Mae, so that taxpayers aren't liable for reckless lending -- and presumably, so that reckless lending is less likely since liability for it will stay with lenders. It offers 3 paths to that goal, essentially gradations of the same objective -- either (1) limiting its backstop role to certain targeted borrowers (such as lower income borrowers purchasing affordable housing), who meet the previously enforced Fannie Mae quality standards; (2) limiting its role to those borrowers during a time of crisis; or (3) eliminating its backstop role entirely.
If implemented, any of these plans is likely to raise the cost of borrowing, since the risk of default must be priced into the private market system in ways that it may not have been previously. I intend to write more about the plan's implications as I have more time to study it, but it is safe to say that what is envisioned is a reduced participatory role for the government in home lending; what isn't yet clear to me is whether the regulatory role of the government will increase or decrease correspondingly.
An apparently ideologically-distasteful truth in this mess is that the FNMA worked very well from 1938 to 1968. But there is no stomach now for a government agency capturing an entire private market, even though it was able to impose quality standards that kept the market stable and functioning. Since there is no stomach to dominate the market, the question is whether any participation is appropriate. The plan's answer: perhaps, but only in the most limited sense. My concern is that in the absence of significant particpation, quality assurance can only be achieved either by extensive oversight, or by rules that cause lenders to impose quality on themselves.
Given that, I still like my half-baked idea: lenders can make loans on whatever terms they choose, but they can't sell them all on the secondary market. Instead some percentage -- let's say 20% -- must stay in-house in the portfolio of the originator. But here's the key: that 20% is chosen randomly, by some computer sitting in a government agency that knows only the loan number. It's lending Russian roulette. Lenders can decide there own risk tolerance, but they can't fully escape it. That should reduced the number of risky loans.
Meanwhile, the 80% of loans that enter the secondary market create capital for home lending.
Got another idea? Speak up -- let's get in on the conversation about the future of housing finance in the United States. If not us, who?
Mark A. Edwards
[comments are held for approval, so there will be some delay in posting]
Sunday, November 28, 2010
To get a sense of how badly the legal system has responded to the foreclosure crisis, consider this: we are three years into it, hundreds of thousands have lost their homes, states like Florida are running outrageous special foreclosure courts where retired judges aim to process 200 foreclosures per day -- and only now are actors in the system beginning to ask whether the parties seeking foreclosure and eviction actually have standing.
Standing is -- or should be -- question #2 in any legal proceeding (right after jurisdiction). But in Florida, here are the questions that are asked, according to the Wall Street Journal, no less:
"'Case No. 136,' the clerk intoned. 'Wells Fargo versus Edward Callahan.'
Judge Carlin asked whether the man was living in the house and was current on his mortgage. He answered no to both questions.
'Your house will be sold in 45 days,'' said the judge. 'That's all for today.'
Case time: 15 seconds."
Public interest lawyers like Prentiss Cox here in Minnesota have been fighting a lonely battle for a long time, trying to get courts to demand that parties attempting to foreclose demonstrate standing. A handful of judges, like Judge Arthur Schack in New York, have occasionally demanded this absolutely basic threshold issue be resolved first. But they are tiny grains of sand in the foreclosure machine.
But maybe -- maybe -- people who take the rule of law seriously are finally beginning to be heard.
The New York Times reports today that the U.S. Trustee is beginning to demand that foreclosers demonstrate standing in bankruptcy cases. That news isn't amazing; what's amazing is that it is news.
I spend a lot of my time researching property rights restitution issues. I've often argued that restitution is among the most complex and important issues in the world of property rights today. Complex, because once someone has been wrongfully dispossessed of property, restoring it to them becomes almost impossibly difficult over time; important, because few things create as much lasting bitterness as the wrongful dispossession of property (see, e.g., crisis, Israeli-Palestinian).
One day, we may well look back at the foreclosure crisis and ask, to paraphrase David Byrne, 'my god, what have we done?'
Mark A. Edwards
[comments are held for approval, so there will be some delay in posting]
Monday, November 15, 2010
At its core, the mortgage-backed securities crisis is the product of an inadequately regulated mortgage-industry system. This inadequacy resulted in a massive transfer of wealth from you and me to lenders and investment banks, and an economic crisis that continues the plague the country.
So I've been playing a thought-game: what's the smallest amount of regulatory reform that would completely prevent this disaster from recurring?
I've got a nominee.
Before I explain it, I need explain how we got to the point where we need it. To that end, here's the mortgage-backed securities crisis, in 10 easy-to-understand steps!
(follow the bump)
Tuesday, September 14, 2010
John A. Lovett (Loyola New Orleans) has posted Progressive Property in Action: The Land Reform (Scotland) Act 2003 on SSRN. Here's the abstract:
This article responds to a material deficit at the heart of American property law scholarship. For years, property scholars have debated whether the right to exclude deserves to be the centerpiece of our property regime in the United States. This article seeks to transform that debate by introducing to an American audience a remarkable piece of property legislation recently enacted in Scotland. Part I of the Land Reform (Scotland) Act 2003 creates a right of responsible, non-motorized access across almost all land and in-land water in Scotland, private as well as publicly owned, for purposes of recreation, education and passage. This legislation thus reverses the traditionally robust, ex ante presumption in favor of a landowner’s right to exclude and replaces it with an equally robust, ex ante presumption in favor of the public’s right of responsible access. By introducing this new property right in Scotland and creating an entire property regime to contextualize the right, a regime that is much bolder, in fact, than has been established in England and Wales under the better known Countryside and Rights of Way Act 2000, Scotland has provided property scholars with a case study in property law institutional design that is unique in modern legal systems. This article will demonstrate how the LRSA reveals that it is possible for a property regime to promote the ends of human flourishing without necessarily sacrificing all of the efficiency gains and coordination benefits that flow from the common law’s traditional preference for rules of exclusion.
[Comments are held for approval, so there will be some delay in posting]
Thursday, August 5, 2010
Thanks to a post by Kathleen Bergin at the Faculty Lounge, I see that NCCUSL has approved the Uniform Partition of Heirs Property Act. I haven't had a chance to read it yet, but it might make sense to incorporate the UPHPA into your coverage of concurrent interests. Of course, we'll have to see whether states adopt it over the next couple of years.
[Comments are held for approval, so there will be some delay in posting]
Saturday, August 5, 2006
I'm intrigued and heartened by Congress' recent legislation ensuring the right to display the American flag, even if condominum covenants or lease terms bar the display. Nice story from my childhood hometown newspaper, The [Chester County] Daily Local News here.
The full text of H.R. 42 is available here. Here are some key provisions:
SEC. 3. RIGHT TO DISPLAY THE FLAG OF THE UNITED STATES.
A condominium association, cooperative association, or residential real estate management association may not adopt or enforce any policy, or enter into any agreement, that would restrict or prevent a member of the association from displaying the flag of the United States on residential property within the association with respect to which such member has a separate ownership interest or a right to exclusive possession or use.
SEC. 4. LIMITATIONS.
Nothing in this Act shall be considered to permit any display or use that is inconsistent with--
(1) any provision of chapter 1 of title 4, United States Code, or any rule or custom pertaining to the proper display or use of the flag of the United States (as established pursuant to such chapter or any otherwise applicable provision of law); or (2) any reasonable restriction pertaining to the time, place, or manner of displaying the flag of the United States necessary to protect a substantial interest of the condominium association, cooperative association, or residential real estate management association.
More fodder for Jim Smith's excellent work on The Law of Yards, 33 Ecology Law Quarterly 203-231 (2006). And heartening news for those of us who like to see limitations on the power of neighborhood associations. Of course, some of this might also be handled by the Restatement (Third) of Servitudes § 3.1(2).
I wanted to have an illustration of a flag displayed at a house (hence the first illustration, from our friends at the Library of Congress). However, I also wanted a little color on this story; hence the second illustration (also from our friends at LOC).
Alfred L. Brophy
Comments are held for approval, so they will not appear immediately.
Thursday, March 9, 2006
This resource list is the Appendix from Iglesias, Tim & Lento, Rochelle, eds., The Legal Guide to Affordable Housing Development © 2005 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Thanks to Tim and the ABA for giving their permission. Here's the list:
1. www.abanet.org/forums/affordable/home.html ABA Forum on Affordable Housing and Community Development Law (The Forum hosts conferences and publishes the Journal of Affordable Housing and Community Development Law quarterly (available on Westlaw only; future issues will be available on the website of AHC Forum for Forum members only)
2. www.abanet.org/statelocal/home.html ABA State and Local Government Law Section (The Section serves as a collegial forum for its members, the profession and the public to provide leadership and educational resources in urban, state, and local government law and policy)
3. www.bettercommunities.org Building Better Communities Network (a national organization devoted to increasing community acceptance of affordable housing with award-winning website full of resources)
4. www.communitychange.org Center for Community Change (an organization dedicated to helping low-income people, especially people of color, build powerful, effective organizations through which they can change their communities and public policies for the better) CCC’s resources on housing trust funds are available at http://www.communitychange.org/issues/housing/trustfundproject/ (last visited on June 2, 2005)
5. www.hud.gov U.S. Department of Housing and Urban Development (one of the primary federal agencies responsible for affordable housing development) and www.huduser.org HUD Policy Development and Research Information Service (providing housing information and research with over 800 publications and datasets)
6. www.Knowledgeplex.org (sponsored by the Fannie Mae Foundation this website offers best practices, discussions, research and more for professionals working on affordable housing and community development)
7. www.lisc.org Local Initiatives Support Corporation (a national organization which helps resident-led, community-based development organizations transform distressed communities and neighborhoods into healthy ones by providing capital, technical expertise, training and information; website includes an extensive resource library)
8. www.nlihc.org National Low Income Housing Coalition (an organization dedicated solely to ending America’s affordable housing crisis through public education, organizing, research, and policy advocacy)
9. www.nhlp.org National Housing Law Project (a national housing law and advocacy center seeking to advance housing justice for the poor by providing legal assistance, advocacy advice and housing expertise to legal services and other attorneys, low-income housing advocacy groups, and others who serve the poor)
10. www.ruralhome.org Housing Assistance Council (a nonprofit corporation helping local organizations build affordable homes in rural America since 1971)
11. www.taxcredithousing.com, Affordable Housing Resource Center/LIHTC (sponsored by Novogradac & Company LLP this website offers news and information particularly concerning the LITHC program)
12. www.tcah.org The Campaign for Affordable Housing (offers publications and clearinghouse links to publications, organizations and events to respond to community opposition to affordable housing.
13. Bipartisan Millennial Housing Commission, “Why Housing Matters,” FINAL REPORT 10 - 13 (2002) available at http://www.mhc.gov/MHCReport.pdf (last visited June 2, 2005)
14. ENCYCLOPEDIA OF HOUSING, ed. William van Vliet, Sage Publications (1998) (the most comprehensive encyclopedia of housing available)
15. HOUSING FOR ALL UNDER LAW: NEW DIRECTIONS IN HOUSING, Land Use and Planning Law Report of the ABA Advisory Commission on Housing and Urban Growth, ed. Richard P. Fishman (ABA, 1978)
16. Melanie Putnam, The Internet Guide to Affordable Housing, 7 Internet L. Researcher 3 (2002) (Westlaw only)
1. 1000 Friends of Florida, Creating Inclusive Communities in Florida (2002), available at: http://www.1000fof.org/Affordable_Housing/creatinginclusivecomm.asp (last visited June 2, 2005)
2. American Planning Association, GROWING SMART LEGISLATIVE GUIDEBOOK: MODEL STATUTES FOR PLANNING AND THE MANAGEMENT OF CHANGE, Stuart Meck, Gen. Ed. 2002) (The Guidebook and its accompanying User Manual are an effort to draft the next generation of model planning and zoning legislation for the U.S. to help combat urban sprawl, protect farmland, promote affordable housing, and encourage redevelopment)
3. California Department of Housing and Community Development, The Clearinghouse for Affordable Housing and Community Finance Resources (searchable database of funding programs) available at: http://www.hcd.ca.gov/clearinghouse/ (last visited June 2, 2005)
4. Center for Community Change, HOUSING TRUST FUND PROGRESS REPORT 2002
(2002) This report provides the only comprehensive description of the more than 275 existing housing trust funds in the United States.
5. Corporation for Supportive Housing, BETWEEN THE LINES: A QUESTION AND ANSWER GUIDE ON LEGAL ISSUES IN SUPPORTIVE HOUSING - NATIONAL EDITION (Prepared by the Law Offices of Goldfarb and Lipman, 2001)
6. Bennett L. Hecht, DEVELOPING AFFORDABLE HOUSING: A PRACTICAL GUIDE FOR NON PROFIT ORGANIZATIONS 2d. ed. (John Wiley & Sons, Inc. 1999)
7. Tim Iglesias, Managing Local Opposition: A New Approach to NIMBY, 12 JOURNAL OF AFFORDABLE HOUSING & COMMUNITY DEVELOPMENT LAW 78 (2002) (a practical guide for attorneys on dealing with NIMBY).
8. Barry G. Jacobs, HDR HANDBOOK OF HOUSING AND DEVELOPMENT LAW, WEST (2004) (This publication provides a concise description of federal housing, development, and mortgage finance programs, as well as important housing and development-related provisions of the Internal Revenue Code)
9. National Housing Law Project publications, especially on HUD Housing Programs (available from website www.nhlp.org)
10. Sara Pratt and Michael Allen, ADDRESSING COMMUNITY OPPOSITION TO AFFORDABLE HOUSING DEVELOPMENT: A FAIR HOUSING TOOLKIT (Housing Alliance of Pennsylvania 2004) (provides practical tips and information on confronting common NIMBY concerns and launching a successful community campaign, and is available at http://www.knowledgeplex.org/showdoc.html?id=68549 (last visited June 2, 2005) The authors offer half-day or full-day workshops on managing local opposition to housing development, as well as technical assistance consultations. For more information contact email@example.com or (301) 891-7272.
11. Florence Wagman Roisman, Housing, Poverty, and Racial Justice: How Civil Rights Laws Can Redress the Housing Problems of Poor People, Clearinghouse Review, May-June 2002
12. Robert G. Schwemm, HOUSING DISCRIMINATION: LAW AND LITIGATION, Thomson West (2004) (substantial coverage of fair housing issues and regularly updated)
13. Robert Wiener, ed., AFFORDABLE HOUSING (Solano Press, forthcoming Spring 2006) (title may be revised prior to publication) (overview of affordable housing development in California)
Compilations and Evaluations of Affordable Housing Strategies
1. American Planning Association, AFFORDABLE HOUSING READER (2005) (collection of over 100 articles and documents relating to affordable housing) available at http://www.planning.org/affordablereader/ (last visited June 2, 2005)
2. American Planning Association, REGIONAL APPROACHES TO AFFORDABLE HOUSING, Stuart Meck, Rebecca Retzlaff and James Schwab, eds (APA Planning Advisory Service Report/Number 513/514, 2003) This book evaluates regional approaches to affordable housing including 23 specific programs across the nation, proposes a set of best and second-best practices, and provides extensive appendices.
3. ASSOCIATION OF BAY AREA GOVERNMENTS, BLUEPRINT FOR BAY AREA HOUSING 2001 (2001) (providing suggestions, model policies, and contacts for local governments to increase affordable housing in their jurisdictions)
4. Lauren Breen, Louise Howells, Susan R. Jones, and Deborah S. Kenn, An Annotated Bibliography of Affordable Housing and Community Economic Development Law, 13 Journal of Affordable Housing and Community Economic Development Law 334 (Spring 2004) (an updated version will be published in the Spring of 2005)
5. John Emmeus Davis ed., THE AFFORDABLE CITY: TOWARD A THIRD SECTOR HOUSING POLICY (Temple University Press, 1994) (describing and promoting community-based non-market affordable housing strategies and programs)
6. Maria Foscarinis, Brad Paul, Bruce Porter, and Andrew Scherer, The Human Right to Housing: Making the Case in U.S. Advocacy, CLEARINGHOUSE REVIEW, JULY-AUGUST 2004
7. Chester Hartman, Rachel Bratt and Michael Stone, eds., THE RIGHT TO HOUSING: FOUNDATION FOR A NEW SOCIAL AGENDA (Temple University Press, forthcoming) (a housing policy reader)
8. Katz et al., Rethinking Local Affordable Housing Strategies: Lessons from 70 Years of Policy and Practice, The Brookings Institution Center on Urban and Metropolitan Policy and the Urban Institute (2003) (Discussion Paper)
9. Bonnie L. Koneski-White, Increasing Affordable Housing and Regional Housing Opportunity in New England: A Selected Bibliography, 22 Western New England Law Review 431 (2001) (includes a section on affordable housing generally)
10. MAYORS NATIONAL HOUSING FORUM, NATIONAL HOUSING AGENDA: A SPRINGBOARD FOR FAMILIES, FOR COMMUNITIES, FOR OUR NATION (2002) (offering 60 housing policy recommendations addressing a wide array of housing needs)
11. Peter W. Salsich, Jr., Saving Our Cities: What Role Should the Federal Government Play?, 36 URB. LAW. 475 (2004)
12. Peter W. Salsich, Jr., Will the “Free Market” Solve the Affordable Housing Crisis?, Clearinghouse Review, January-February 2002
13. The National League of Cities, AFFORDABLE HOUSING FINANCE RESOURCES: A PRIMER (resource guide to assist city and town officials in the identification of potential government and private funding resources for affordable housing programs) available at http://www2.nlc.org/nlc_org/site/files/pdf/Affordable%20Housing-final.pdf (last visited June 2, 2005) and STRENGTHENING PARTNERSHIPS FOR HOUSING OPPORTUNITIES: PRACTICAL APPROACHES TO AFFORDABLE HOUSING CHALLENGES (guidebook for identify, prioritize, and implement individualized action plans available at: http://www.nlc.org/nlc_org/site/files/reports/affordhous.pdf (last visited June 2, 2005)
[Comments are held for approval, so there will be some delay in posting]
Monday, November 28, 2005
Susan French (UCLA Law School) has posted Perpetual Trusts, Conservation Servitudes, and the Problem of the Future on SSRN. Here is the abstract:
This short article explores the similarities between perpetual private trusts and conservation servitudes granted in perpetuity, the adequacy of existing doctrines to handle future changes in circumstances, the deference due to donor intent, and concludes that legal changes will be needed to give private trust beneficiaries more power to determine how trust assets will be used and to protect the public interests in conservation servitudes and the continuing utility of the land subject to them.
Sunday, November 27, 2005
NPR has a story that asks whether post-Kelo eminent domain reform is going too far, using the example of waterfront redevelopment in Portland, Maine.
[Comments require approval before posting, so there might be some delay]
Thursday, October 27, 2005
As expected, the presentations at the GELPI Litigating Takings conference have been outstanding. This post only covers the first two panels. Over the coming week, I'll report on the rest of the conference.
Lingle v. Chevron
Bob Dreher (GELPI) and R.S. Radford (Pacific Legal Foundation) were up first, discussing Lingle v. Chevron. For those unfamiliar with the case, the Court's pre-Lingle takings cases had suggested that a regulation that does not substantially advance a legitimate government interest is a taking. In Lingle, the Court rejected the substantially advance test as a takings test. I summarize Lingle and explain my own views of the significance of the case in this essay.
Dreher, who had been counsel to Hawaii in the Lingle litigation, began the discussion by explaining how the substantially advance test had crept into takings law through citation to early substantive due process cases. Beyond eliminating the substantially advance test from takings doctrine, Lingle may have enduring significance due its separation of takings doctrine from substantive due process doctrine. This separation may be reflected in takings cases in several ways. It resolves the relevance of cases like Euclid v. Ambler Realty to takings doctrine (i.e., no relevance at all). It greatly reduces the ability of the government to rely on early substantive due process cases like Mugler v. Kansas. And it makes the economic impact on the property owner the paramount consideration in the takings analysis. I agree with Dreher completely on all of these points.
Dreher also noted that the rejection of the substantially advance test was a big deal because it killed off a pernicious doctrine that had been used by the 9th Cir. to invalidate rent control regulations. I've never taken the substantially advance test very seriously, largely because it so obviously engaged in Lochner-style review of legislative actions that I had a hard time seeing contemporary courts using the test to strike down regulations. But other panelists discussed a number of state cases that seemed to apply the substantially advance test, so I'm coming around to Dreher's view that it was a big deal.
R.S. Radford, who had been a leading proponent of the substantially advance test, began his talk with a good-natured acknowledgment of Bob's win in Lingle. The introduction to his paper written for the conference begins with the following from Monty Python and the Holy Grail:
Arthur: Now stand aside, worthy adversary.
Black Knight: 'Tis but a scratch.
Arthur: A scratch? Your arm's off!
Black Knight: No, it isn't.
Arthur: Well, what's that then?
Black Knight: I've had worse.
Radford's argument was that the character of the government action (which is at the heart of the substantially advance test) will survive in regulatory takings cases, allowing the effectiveness or lack of effectiveness of a government action to play a role in the regulatory takings inquiry. Radford noted that the character of the government act is certainly relevant to issues like the applicability of the nuisance exception. More importantly, he thought that the effectiveness of the government action will always play into the fairness inquiry that underlies much of the Court's regulatory takings jurisprudence. In the Q&A, Dreher and Radford agreed that the character of the action would remain in Court's unstated fairness analysis, but they disagreed on whether the fairness inquiry should focus on the impact on the property owner or on the benefit conferred to the public by the regulation.
Following up on this fairness point, Frank Michelman asked a very interesting question during the Q&A about squaring fairness concerns with "background principles" like necessity and the nuisance exception that allow the uncompensated destruction of property. Dreher said that he was uncomfortable with the underpinnings of some of the necessity cases, though he noted that in firefighting cases, the courts may allow property to be destroyed without compensation because they don't want firefighters to be thinking about the cost of their actions. Radford added that in many fire cases, the property is likely to be destroyed anyway.
Kelo v. New London
Tom Merrill (Columbia) and Scott Bullock (Institute for Justice) next discussed Kelo.
Bullock focused on the Kelo decision itself, arguing that Kelo broke new ground in allowing economic development takings. While I agree that the Court had never previously allowed this type of taking, I think that Midkiff and Berman all but required the result in Kelo by articulating a highly deferential approach to public use (as discussed further here and here). So I think the Court might have broken even more ground new ground if it had disallowed the taking in Kelo. Bullock also criticized the way in which the Court seemed to think that fact that the agency exercising eminent domain had a detailed plan in place was relevant. I agree with his view that this is completely disconnected from the real world. Bullock wrapped up with a short discussion of the Kelo backlash, noting that 90+ percent of Americans disagree with the result in Kelo and that the backlash cuts across ideological lines.
Tom Merrill focused his discussion on the Kelo backlash, saying that the backlash has made him think about the different ways that academics and the general public frame eminent domain issues. He labeled the two approaches the utilitarian frame and the moral rights frame, which he noted had some similarity to Ackerman's distinction between the perspectives of the scientific policymaker and the ordinary observer. To the utilitarian, we have the institution of eminent domain to overcome holdout problems, and reconfiguration of rights should go forward any time there is a net benefit to society. As a result, the utilitarian would want public use to be broadly construed.
The moral rights perspective, in contrast, focuses on the property owner, and views eminent domain as government coercion against innocent parties. At one extreme, this view could call for a ban on eminent domain outright. A more moderate position is that you only take when there is some good moral reason to do so, and the moral justification for the taking is stronger if the benefits are transferred to the public. In this context the fairness test is the opposite of that articulated in Armstrong, focusing not on the impact on the condemnee but on the distribution of benefits of the taking to the public. People holding this view favor a more strict interpretation of public use, and tend to think that this should be an issue for the judiciary to resolve.
Merrill than asked what to make of all this? He said that he is not ready to chuck utilitarianism out the window just because 95% of Americans disagree with it, but that he is open to a more constrained view of eminent domain. He said he would agree with a ban on eminent domain where the sole purpose is to raise tax revenue, and would agree to a ban on the economic development takings of homes. (I've discussed banning economic development takings of homes, but allowing it for other types of property, here and here.) He also suggested that he doesn't disagree with a ban on the use of federal funds for economic development takings, because it would make state and local governments focus on costs of development projects.
In the Q&A, an interesting question was raised about why increasing the compensation paid to homeowners hasn't been more popular in the legislative response to Kelo. Merrill thought it was because the post-Kelo backlash is being driven from a moral rights perspective, which is more focused on the absolute right of the property owner. Bullock agreed, saying that people are concerned about possession of their homes. Merrill did note, though, that there is some empirical evidence that opposition goes down to eminent domain as compensation goes up.
Merrill also noted in answer to a question that it was somewhat discouraging that legislative reform needs a highly unpopular Supreme Court decision to go anywhere, and gave credit to the IFJ's very effective P.R. campaign about Kelo. Bullock, who had used the home as castle metaphor in his earlier discussion, was also asked whether poor people have castles. He answered emphatically yes, noting the importance in this context of making sure blight clearance is used to take truly blighted property.
[Comments are open, but as always I have to review them before they post. Due to the HLS WiFi ban, discussed below, there will be some delay before I can get on-line to review comments]
Thursday, October 13, 2005
I was just on Smart Talk, a public affairs show on WITF, our local PBS station here in beautiful Harrisburg, PA, for a panel discussion on Kelo and eminent domain reform. The other guests were Dana Berliner of the Institute for Justice and Ed Troxell of the Pennsylvania State Association of Boroughs. Surprisingly enough, we all agreed on many issues. Dana and Ed predictably sparred a little bit over the inherent goodness of local government officials (e.g., whether eminent domain is used as a last resort), but Ed and his organization are in support of reasonable eminent domain reform so there wasn't anyone on the show arguing for local governments' ability to take homes and replace them with box stores.
Two of the more interesting issues that we discussed were raised by people who called into the show. One asked about the potential for future government condemnation of conservation easements. This seems like a real potential problem to me. Dana raised the very good point that if you take away government power to engage in economic development takings, you take away a lot of the potential desire for governments to take the conservation easements.
The other issue raised by a caller was what to do when the government no longer uses taken property for a public use. The example raised by the caller was land taken to protect a watershed twenty years ago that was recently sold to a developer who put houses on the property. One possible solution to this problem is to have the property revert back to the original owner when the government ceases using it for a public use. I'm not a big fan of reverter clauses because (a) I prefer to avoid future interests whenever possible; (b) if the reverter has too long a duration, finding the former owner (or successors) can be difficult; and (c) the owner already received compensation for the property.
If anyone has any thoughts on these issues, please leave a comment. [As always, comments require approval before posting, so there may be a delay]
Wednesday, October 12, 2005
Consider the following definition of blight from Pennsylvania's Urban Redevelopment Law:
35 Penn. Stat. § 1702:
It is hereby determined and declared as a matter of legislative finding--
(a) That there exist in urban communities in this Commonwealth areas which have become blighted because of the unsafe, unsanitary, inadequate or over-crowded condition of the dwellings therein, or because of inadequate planning of the area, or excessive land coverage by the buildings thereon, or the lack of proper light and air and open space, or because of the defective design and arrangement of the buildings thereon, or faulty street or lot layout, or economically or socially undesirable land uses.
. . .
Therefore, [blight clearance and related redevelopment activities] are declared to be public uses for which public money may be spent and private property may be acquired by the exercise of the power of eminent domain.
This definition of blight is absurdly overbroad. It allows for eminent domain to be used to take property that falls into any one of the laundry list of conditions in paragraph (a). Any of the categories in this list could be subject to abuse, but focus on the last one: "economically or socially undesirable land uses." Here is a translation of that language: "Kelo-style economic development takings can be done in Pennsylvania under the guise of blight." To add insult to injury, property owners are held to a high standard in challenging blight designations.
Now consider this definition of blight, from the same chapter of the Urban Redevelopment Law:
35 Penn. Stat. § 1712.1
(a) Notwithstanding any other provision of this act, any Redevelopment Authority shall have the power to acquire by purchase, gift, bequest, eminent domain or otherwise, any blighted property as defined in this section . . .
(c) Blighted property shall include:
(1) Any premises which because of physical condition or use is regarded as a public nuisance at common law or has been declared a public nuisance in accordance with the local housing, building, plumbing, fire and related codes.
(2) Any premises which because of physical condition, use or occupancy is considered an attractive nuisance to children, including but not limited to abandoned wells, shafts, basements, excavations, and unsafe fences or structures.
(3) Any dwelling which because it is dilapidated, unsanitary, unsafe, vermin-infested or lacking in the facilities and equipment required by the housing code of the municipality, has been designated by the department responsible for enforcement of the code as unfit for human habitation.
(4) Any structure which is a fire hazard, or is otherwise dangerous to the safety of persons or property.
(5) Any structure from which the utilities, plumbing, heating, sewerage or other facilities have been disconnected, destroyed, removed, or rendered ineffective so that the property is unfit for its intended use.
(6) Any vacant or unimproved lot or parcel of ground in a predominantly built-up-neighborhood, which by reason of neglect or lack of maintenance has become a place for accumulation of trash and debris, or a haven for rodents or other vermin.
(7) Any unoccupied property which has been tax delinquent for a period of two years prior to the effective date of this act, and those in the future having a two year tax delinquency.
(8) Any property which is vacant but not tax delinquent, which has not been rehabilitated within one year of the receipt of notice to rehabilitate from the appropriate code enforcement agency.
(9) Any abandoned property. A property shall be considered abandoned if:
(i) it is a vacant or unimproved lot or parcel of ground on which a municipal lien for the cost of demolition of any structure located on the property remains unpaid for a period of six months;
(ii) it is a vacant property or vacant or unimproved lot or parcel of ground on which the total of municipal liens on the property for tax or any other type of claim of the municipality are in excess of 150% of the fair market value of the property as established by the Board of Revisions of Taxes or other body with legal authority to determine the taxable value of the property; or
(iii) the property has been declared abandoned by the owner, including an estate that is in possession of the property.
Unlike Section 1702, Section 1712.1 is a serious and reasonable attempt to define property that is actually blighted. The contrast between the two contains two related lessons for post-Kelo economic domain reform. First, legislators considering reform must take a hard look at all of the definitions of blight in their state. Second, definitions of blight like Section 1702 must systematically be replaced by narrower definitions like Section 1712.1.
Wednesday, October 5, 2005
Kaimi Wenger over at Concurring Opinions has an interesting post on a California bill designed to make it easier to remove racial covenants from titles:
Racial restrictions were declared illegal half a century ago, in Shelley vs. Kraemer. It's not as if anyone is enforcing them today. But they remain in the titles to many pieces of property, and they serve as a painful reminder of the past. Under current law, property owners can petition to have them removed, but the process is cumbersome and time-consuming, and it affects only single parcels.
AB 394 would provide a streamlined method for removing these covenants from entire subdivisions. Seems like a reasonable idea to me.
I haven't seen much academic discussion of the legislative response to Kelo, which to me is far more interesting than the Court's decision itself. The Kelo backlash presents a rare opportunity to get state legislatures to pay attention to eminent domain law and procedure. This opportunity extends beyond the relatively narrow "economic development takings" issue raised by Kelo. I think that in the current political climate, many legislatures are willing to consider a wide range of reform ideas.
I will have some substantive postings on legislative reform soon, but in the meantime, I'm trying to put together a list of links to resources on the issue. Here is what I have so far:
The Castle Coalition maintains listings of pending legislation on the federal, state and local levels. They also have model legislation and the Institute for Justice's white paper on legislative reform.
Will Baude has posted notes on a debate on the issue between Merrill and Nicole Garnett (Notre Dame).
I've given testimony to the Pennsylvania legislature on the issue.
I'm sure there is more out there. Please e-mail me or leave a comment if you know of anything I should add to the list. To be clear, I'm not looking for material about the Kelo decision itself; rather, I'm looking for material on what legislatures should do (or not do) in response to Kelo.
[Please note that there might be a delay in comments going up because they won't appear until I have had a chance to review them.]