PropertyProf Blog

RNC Party Platform on Housing/Property Law

(Photo Credit: Engine Blog)

With both of the conventions over, now is a good time to take a look at what the parties have to say about property law and housing policy. Notably, affordable housing has been largely left out of the big policy discussions from both the Clinton and the Trump camps. So, who knows how significant these policy prescriptions (such as they are) will be as we move into the general.

First up for today are the property/housing items from the 2016 Republican Party Platform:

Responsible Homeownership and Rental Opportunities

Homeownership expands personal liberty, builds communities, and helps Americans create wealth. “The American Dream” is not a stale slogan. It is the lived reality that expresses the aspirations of all our people. It means a decent place to live, a safe place to raise kids, a welcoming place to retire. It bespeaks the quiet pride of those who work hard to shelter their family and, in the process, create caring neighborhoods.

The Great Recession devastated the housing market. U.S. taxpayers paid billions to rescue Freddie Mac and Fannie Mae, the latter managed and controlled by senior officials from the Carter and Clinton Administrations, and to cover the losses of the poorly-managed Federal Housing Administration. Millions lost their homes, millions more lost value in their homes.

More than six million households had to move from homeownership to renting. Rental costs escalated so that today nearly 12 million families spend more than 50 percent of their incomes just on rent. The national homeownership rate has sharply fallen and the rate for minority households and young adults has plummeted. So many remain unemployed or underemployed, and for the lucky ones with jobs, rising rents make it harder to save for a mortgage.

There is a growing sense that our national standard of living will never be as high as it was in the past. We understand that pessimism but do not share it, for we believe that sound public policies can restore growth to our economy, vigor to the housing market, and hope to those who are now on the margins of prosperity.

Our goal is to advance responsible homeownership while guarding against the abuses that led to the housing collapse. We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders, and avoid future taxpayer bailouts. Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices. Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.

We call for a comprehensive review of federal regulations, especially those dealing with the environment, that make it harder and more costly for Americans to rent, buy, or sell homes.

For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them. Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all loses. The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home-buying.

The Federal Housing Administration, which provides taxpayer-backed guarantees in the mortgage market, should no longer support high- income individuals, and the public should not be financially exposed by risks taken by FHA officials. We will end the government mandates that required Fannie Mae, Freddie Mac, and federally-insured banks to satisfy lending quotas to specific groups. Discrimination should have no place in the mortgage industry.

Zoning decisions have always been, and must remain, under local control. The current Administration is trying to seize control of the zoning process through its Affirmatively Furthering Fair Housing regulation. It threatens to undermine zoning laws in order to socially engineer every community in the country. While the federal government has a legitimate role in enforcing non-discrimination laws, this regulation has nothing to do with proven or alleged discrimination and everything to do with hostility to the self-government of citizens.

The Fifth Amendment: Protecting Private Property

The Framers of our government knew, from history and experience, that when private property is not secure, freedom is at risk. That is why the Fifth Amendment declares that private property may not be “taken for public use without just compensation.” The Supreme Court’s Kelo decision undermined this safeguard by allowing local governments to seize a person’s home or land not only for vital public use, but also for “public purpose,” which thus allowed the government to seize it for transfer to private developers or other private entities. We call on any state legislatures that have not already done so to nullify the impact of Kelo within their jurisdiction by legislation or state constitutional amendments declaring that private property may be taken only for true public use, and we join House Republicans in supporting the Private Property Rights Protection Act.

The government at every level must always pay just compensation whenever it takes private property to achieve a compelling public use, with the money coming from the budget of the agency performing the taking. This includes the taking of water rights and the taking of property by environmental regulations that destroy or diminish the property’s value.

Civil asset forfeiture was originally intended as a way to cripple organized crime through the seizure of property used in a criminal enterprise. Regrettably, it has become a tool for unscrupulous law enforcement officials, acting without due process, to profit by destroying the livelihood of innocent individuals, many of whom never recover the lawful assets taken from them. When the rights of the innocent can be so easily violated, no one’s rights are safe. We call on Congress and state legislatures to enact reforms to protect law-abiding citizens against abusive asset forfeiture tactics.

The Fifth Amendment: Intellectual Property Rights

Private property includes not only physical property such as lands and homes, but also intellectual property like books and patents. Article 1, section 8 of the Constitution gives Congress the power to safeguard intellectual property rights for “Authors and Inventors.” By protecting the proprietary rights of creators and innovators, the Constitution promotes the general welfare by providing incentives for investment in all sorts of technology and artistic works. Intellectual property is a driving force in today’s global economy of constant innovation. It is the wellspring of American economic growth and job creation. With the rise of the digital economy, it has become even more critical that we protect intellectual property rights and preserve freedom of contract rather than create regulatory barriers to creativity, growth, and innovation.

Protecting intellectual property is also a national security issue. We must guard against counterfeit parts that can compromise the reliability of our weapons systems and the safety of military personnel. Today, the worst offenses against intellectual property rights come from abroad, especially in China. We call for strong action by Congress and a new Republican president to enforce intellectual property laws against all infringers, whether foreign or domestic.

A couple of thoughts: The platform promotes "clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices." Assumedly this means that the Dodd-Frank Act's "ability-to-repay" mandatory analysis is not what the RNC is aiming for here, but I'm curious to know what would replace it? Do they mean mandatory underwriting (i.e., imposed by law) or do they mean industry self-regulated standards? They also note that "compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers." The "qualified mortgage" rule is  a safe-harbor that insulates mortgage lenders from predatory lending suits related to proper underwriting, so is that what the party is talking about (if so, then it already exists) or do they mean something different?

Also, the platform states that "For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them." This is pretty much false all the way around. The Housing and Economic Recovery Act of 2008—which put Fannie and Freddie into conservatorship—was signed by President George W. Bush back in July 2008. The entire effort was lead and supported by his treasury secretary, Henry Paulson. So this was hardly the work of Democrats. Indeed, it was entirely bipartisan. And the fact that the conservatorship hasn't ended yet is also a bipartisan problem. Members of Congress from both parties have tried (i.e., the Corker-Warner Bill, the Johnson-Crapo Bill) but failed to get any traction for their proposals. 

As to zoning, the platform criticizes the Affirmatively Furthering Fair Housing regulations as being merely a way to socially engineer a community and a form of "hostility to the self-government of citizens." There may be reasons to criticize the AFFH rule, but I wish there would have been  more here about what the RNC thinks should be done about the very real problem of housing discrimination in this country.

The platform also seems to take a muscular view toward Takings Law by emphasizing the need to pay just compensation when property is taken (with a focus on environmental regulation and water rights). Whether this leads to any real pull back on federal takings seems unlikely. 

Lastly, there's some mention about the emergence of the digital economy and the need to protect IP rights, but nothing more than that. It mostly appears to be centered on cyber-security.  There are some bigger issues dealing with online commerce that could use some treatment (i.e., how to deal with the rise of virtual assets, the growth of online lending, possibilities with trustless public ledgers etc.).

Next week I'll post the 2016 Democratic Party Platform and share some musings on that as well. Would love to hear your thoughts on the RNC's platform in the comments section below. Have a good weekend!

Weiss on Housing Tax Credits and Residual Value

Brandon M. Weiss (UMKC) has posted Residual Value Capture in Subsidized Housing (Harvard Law & Policy Review) on SSRN. Here's the abstract:

This Article argues that our primary federal subsidized housing production program, the Low-Income Housing Tax Credit (LIHTC), will result in the unnecessary forfeit of billions of dollars of government investment and the potential displacement of tens of thousands of households beginning in 2020 when LIHTC property use restrictions start to expire. The LIHTC example is presented as a case study of an inherent dynamic of public-private partnerships—namely, the potential capture by for-profit providers of “residual value.” For purposes of this Article, this is value generated by a public-private transaction that is unnecessary to incentivize a private provider to deliver the contracted for good or service. 

Drawing on corporate organizational theory, which has highlighted the role that nonprofits play in solving certain contract failures and generating positive externalities, the Article argues that, in certain contexts, partnering with nonprofit providers can be an effective approach to increasing the share of residual value that flows to public purposes. The LIHTC program is one such context, given that a nonprofit preference results in a three-sector approach whereby the federal government provides tax credits to nonprofit developers that must attract private investor equity. This framework leverages institutional strengths, including the access to capital of government, the relative fidelity to public purposes of nonprofits, and the market-based underwriting and oversight of for-profit investors.

CFP: "Property in the City" Conference at the University of British Columbia

Douglas Harris over at the the Peter A. Allard School of Law at the University of British Columbia passes along the following call for papers. The conference will take place March 3-7, 2014 in Vancouver. Cribbing from the announcement:

In The Great Transformation (1944) Karl Polanyi argued that economies were not separate and apart from larger social forces, but embedded within them. The project of nineteenth century economic liberalism, he continued, was to strip the influence and constraints of those larger social forces from markets, something he viewed as utopian in its pursuit of the unachievable ideal of free markets, and dangerous to the extent that it succeeded because unfettered markets would destroy society. Nonetheless, Polanyi considered the dis-embedded market to have been at least partially achieved in the industrializing economies of northern Europe in the nineteenth century, and the reconstruction of land as a commodity that might be “freely” bought and sold was among his primary exhibits.

In this workshop, we turn Polanyi’s metaphor of embeddedness towards property relations and the city. In doing so, we intend to consider the processes by which property, including intellectual property, is embedded and dis-embedded in its urban location. We are particularly interested in the role of law, including but not limited to property law, in the processes that embed and dis-embed property in urban ecosystems, economies, communities, and polities. This workshop is not intended only as a conversation with Polanyi’s work, but we hope the metaphors of embeddedness and dis-embeddedness will help animate the papers and the discussion of property as we grapple with its urban location as well as questions about its conceptual salience, the justifications for various forms of property, and the inequality of its distribution.

Submit paper proposals of up to 500 words to [email protected] by October 1st, 2016. Authors will be informed by November 1st, 2016, about acceptance. Confirmed workshop presenters will be expected to submit papers in draft form by February 17th, 2017, for circulation to the other participants.

A selection of papers may be chosen for publication in a special issue of a scholarly journal. We ask that you indicate your interest in publication with the special issue in the paper proposal. There is no registration fee for paper presenters. We may be able to provide out of town presenters with assistance in accommodation.

If you have any questions, please contact Douglas Harris ([email protected]) or Graham Reynolds ([email protected]).

Financial support has been provided by The Peter A. Allard School of Law and the Franklin Lew Innovation Fund.

Registration Open for the Central States Law Schools Association Conference

Registration is now open for the Central States Law Schools Association 2016 Scholarship Conference, which will be held on Friday, September 23 and Saturday, September 24 at the University of North Dakota School of Law in Grand Forks, ND. We invite law faculty from across the country to submit proposals to present papers or works in progress.

 

CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend. 

Please click here to register. The deadline for registration is September 2, 2016.  

Hotel rooms are now available for pre-booking. The conference hotel is the Hilton Garden Inn in Grand Forks. The hotel phone number is (701) 775-6000. When booking, identify yourself as part of the “UND School of Law” block to receive a daily rate of $89. Please note that conference participants are responsible for all of their own travel expenses including hotel accommodations.

For more information about CSLSA and the 2016 Annual Conference please subscribe to our blog.
           
We look forward to seeing you in Grand Forks!

Sincerely,

The 2016 CSLSA Board
For more information about CSLSA, visit our website at http://cslsa.us/ or contact a board member.

Brown and Merriam on Takings Claims and Lucas

Carol Necole Brown (Richmond) and Dwight H. Merriam (Robinson+Cole LLP) have posted On the Twenty-Fifth Anniversary of Lucas: Making or Breaking the Takings Claims (Iowa Law Review) on SSRN. Here's the abstract" 

In Lucas v. South Carolina Coastal Council, the United States Supreme Court established the premier categorical regulatory takings standard with certain limited exceptions. The Lucas rule establishes that private property owners are entitled to compensation for a taking under the Fifth Amendment Takings Clause when a government regulation “denies all economically beneficial or productive use of land.” Today, Lucas remains the controlling law on categorical regulatory takings. But in application, how much does Lucas still matter?  

My review of more than 1,600 cases in state and federal court reveals only twenty-seven cases in twenty-five years in which courts found a categorical regulatory taking under Lucas. By percentage, that works out to a Lucas claim success rate of just 1.6 percent. This does not mean Lucas is unimportant, however. Rather, the paucity of successful Lucas claims itself tells a significant story about the importance of pleading takings claims. I contend that Lucas’ most enduring value is not its contribution to the positive law but rather its effect on how litigants shape their cases. A crucial aspect of the Lucas categorical regulatory takings analysis has been, and will continue to be, the problem of defining the denominator in the regulatory takings equation. My research suggests that Lucas’ holding incentivizes the private contractual agreements entered into by property owners to shrink the takings denominator and tilt the scales slightly in favor of the plaintiff. The ability of a property owner to reduce the denominator remains the loadstar for a Lucas case-winning strategy. 

This is important for not only theorists but also for practitioners to know — those who litigate and conduct transactions in Lucas’ shadow.

Professors' Corner: Conservation Easements

Professors’ Corner
A FREE monthly webinar featuring a panel of law professors,
addressing topics of interest to practitioners of real estate and trusts/estates

Tuesday, July 12, 2016
12:30 p.m. Eastern/11:30 a.m. Central/9:30 a.m. Pacific
Conservation Easements: Contemporary Issues and Challenges

Speakers:

Federico Cheever, Professor of Law & Co-Director of the Environmental and Natural Resources Law Program, University of Denver Sturm College of Law

Nancy A. McLaughlin, Robert W. Swenson Professor of Law, University of Utah S.J. Quinney College of Law

Jessica Owley, Associate Professor of Law, SUNY Buffalo Law School

Moderator:

Amy Morris Hess, Waller Lansden Dortch & Davis and Williford Gragg Distinguished Professor of Law Emeritus,
University of Tennessee College of Law

Conservation easements have become an increasingly popular land protection tool, in part due to the availability of generous federal and, in some cases, state tax incentives for their donation. There are, however, a number of contemporary issues and challenges associated with conservation easements that all attorneys should be aware of. The speakers, each of whom has extensive experience with conservation easements, will address:

• the sometimes surprising laws that impact the creation and administration of conservation easements,
• the due diligence required when a client is considering conveying a conservation easement, and
• the lessons learned from the voluminous case law regarding qualifying for a federal charitable income tax deduction for the donation of a conservation easement.

Register for this FREE webinar by clicking here.

Sponsored by the ABA Real Property, Trust and Estate Law Section
Legal Education and Uniform Laws Group

Davidson & Infranca on the Sharing Economy

Nestor Davidson (Fordham) & John Infranca (Suffolk) recently posted The Sharing Economy as an Urban Phenomenon (Yale Law & Policy Review) on SSRN. Here's the abstract:

Seemingly overnight, companies like Uber, Lyft, Airbnb, WeWork, Taskrabbit, Shyp, and many others have transformed transportation, accommodations, personal services, and other sectors. The evolving regulatory response to this “sharing economy” presents an intriguing puzzle. Where telephone, broadband, early Internet companies, and similar previous technologies were shaped by battles with federal regulators, the fate of sharing enterprises is playing out in front of taxi and limousine commissions, zoning boards, and city councils. 

The reason for this atypical dynamic, this Article argues, is that — unlike prior technological disruptions — the sharing economy is fundamentally an urban phenomenon. The platforms that enable sharing leverage or confront conditions of density, proximity, specialization, and even anonymity that mark city life. And many sharing companies flourish through a kind of regulatory arbitrage that finds value in frictions and barriers generated by urban regulatory regimes. 

A fascinating experimentalist dialectic is emerging from the resulting decentralized regulatory landscape. Local economic, political, legal, and social conditions are generating regulatory responses that range from full embrace to open hostility. And sharing enterprises are responding by adjusting their business models and reconciling in various ways to these regulatory constraints. These compromises are generating creative solutions to balancing innovation and public welfare. 

The interaction between urban governance and the sharing economy, however, flows both ways. Local governments are being pushed to be more transparent about their policy interests, creating spillover effects in regulatory regimes beyond the sharing economy. And the sharing economy is transforming cities themselves. The shift from ownership to access is altering development and mobility patterns as traditional links between transportation, housing, and labor markets and the shape of metropolitan space morph. 

By framing the sharing economy as an urban phenomenon, this Article sheds important new light on a rapidly emerging scholarly discourse. To date, scholars have failed to recognize the sharing economy’s deep reliance on the urban fabric and its potential to mold that fabric. Understanding this relationship will also lead to better calibrated regulatory responses that reflect the sharing economy’s holistic impact on cities. Equally important, it will firmly ground our understanding of the sharing economy in its urban birthplace as it matures.

DeBarbieri on Community Benefits Agreements

Edward W. De Barbieri (Brooklyn Law School) has posted Do Community Benefits Agreements Benefit Communities? (Cardozo Law Review) on SSRN. Here's the abstract:

Community Benefits Agreement (CBA) campaigns and public discussions about community benefits are becoming the norm in deciding how large urban projects are built outside of formal public land use approvals. CBAs have revolutionized land use approvals for large, public-private economic development projects: now developers and coalitions representing low-income communities can settle their disputes before formal project approval. As a result, CBAs are now commonplace nationwide.

Legal scholarship, however, has failed to keep up with these important developments. This Article aims to do just that by examining how CBAs, when properly negotiated, lower transaction costs, enhance civic participation, and protect taxpayers. It argues that CBAs achieve all these outcomes well, and more efficiently than existing government processes. Indeed, this Article’s central argument is that to the extent that scholars have analyzed CBAs, their analyses have gone astray by either dismissing CBAs as harmful to communities or by focusing on the role of the state in negotiating what really should be a private contract between a coalition of community groups and a developer. It is a mistake to give the state’s role in CBAs primacy over the community coalition because the inclusion of government in the CBA bargaining process creates a host of constitutional protections for developers — namely that the community benefits must be connected to and proportional with the instant government approval.

This Article places focus back on CBAs as private contracts enforceable by inclusive and representative community coalitions. It presents a case study of a successful CBA negotiated for the development of the Kingsbridge National Ice Center in the Bronx. This Article proposes a framework for assessing the impact of CBAs in economic development — one that recognizes the nuanced role that states and municipalities play in the formation and enforcement of CBAs. The framework focuses on the extent to which CBAs (1) lower transaction costs by effectively resolving disputes among developers and community groups, (2) increase civic participation in public processes, (3) protect taxpayers, and (4) avoid government intervention and constitutional protections for developers. This Article concludes with recommendations for the appropriate, limited role of government in CBA negotiations.

Roark gives TED Talk on Development and Human Impact

Marc Roark (Savannah) recently gave a TED Talk on his article Human Impact Statements (Washburn Law Journal). Here's the abstract from SSRN:

When a city undertakes a development project, low income and homeless persons face risks of expulsion. Public and private developers often target low-income neighborhoods and public lands because those spaces are viewed as economically more attainable or available for development. Moreover, the legal system's preference to treat disputes as individual entitlement claims tends to relegate disputes to broad questions of entitlements rather than unpacking the impacts that property changes have on the vulnerable populations. Whether by gentrification or by enhancement of city infrastructure, developer decisions disrupt what are already unstable living environments by imposing increased costs of relocation. These changes also destabilize community relationships by separating individuals and families from their support networks, local transportation options, and local employment that they have come to rely on. In short, low-income and homeless persons find themselves even more destabilized when public and private development projects force their evacuation from where they live. This article argues that though development may be necessary, it should not be undertaken without more serious evaluation of the human impacts in relation to the space. Such evaluations should include the impact on communities, employment, education, and environment for impacted persons. Importantly, failure to take notice of these impacts continues to promote cycles of poverty that plague American cities.

Drawing on similarities in the environmental context, the article argues that a NEPA-like approach to human housing can offset externalities that homeless persons and those living in low-income housing are forced to internalize through environment changes. Amongst those impacts are the imbalance between the well-funded developer and low income populations; the view that low income properties can be classified as nuisance-type properties; and the tendency to only consider the highest best use of property as the rationale for development. The article concludes by offering model legislation that could be implemented to provide a NEPA like assessment to city development.

And here's his TED Talk. Good job, Marc!