PropertyProf Blog

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.

Housing, Minority Communities, and Nuisance Law Abuse in NYC

(Photo Credit here)

ProPublica recently came out with a story detailing how NYPD officials are using nuisance law to kick individuals out of their homes, largely based on groundless criminal claims that are ultimately dismissed in court. In at least 74 cases of nuisance eviction that were studied by ProPublica in partnership with The Daily News, residents agreed to warrantless searches of their dwellings (sometimes on an on-going basis) in order to be allowed to return to their homes. More importantly, the vast majority of these nuisance actions are falling on minorities. Over an 18-month study period, 9/10 homes targeted for nuisance abatement were in minority communities. The article notes that ProPublica "identified the race of 215 of the 297 people who were barred from homes in nuisance abatement battles. Only five are white."

This story raises some very interesting legal issues for property law professors in teaching nuisance principles. At the turn of the 20th century, nuisance law began to yield to zoning and land use restrictions, which were viewed as superior methods for regulating competing, adjacent land uses. In fact, in many cases zoning rules can preclude or at least diminish the validity of nuisance claims. For an excellent historical article on the progression of zoning and nuisance law in the U.S., click here. 

The way nuisance law is being wielded in NY raises a host of policy and legal issues, spanning from fair housing, criminal procedure, constitutional law, and beyond. Here's an excerpt from the ProPublica article:

The nuisance abatement law was created in the 1970’s to combat the sex industry in Times Square. Since then, its use has been vastly expanded, commonly targeting apartments and mom-and-pop bodegas even as the city’s crime rate has reached historic lows. The NYPD files upward of 1,000 such cases a year, nearly half of them against residences. . .

A man was prohibited from living in his family home and separated from his young daughter over gambling allegations that were dismissed in criminal court. A diabetic man said he was forced to sleep on subways and stoops for a month after being served with a nuisance abatement action over low-level drug charges that also never led to a conviction. Meanwhile, his elderly mother was left with no one to care for her. . . 

The NYPD has embraced nuisance abatement actions as part of its controversial “Broken Windows” strategy of aggressively pursuing low-level offenders to prevent more serious ones. . . Sidney Baumgarten, the former city official who commissioned the drafting of the nuisance abatement law in the 1970s, said it is now being abused. He is alarmed by the sheer volume of cases, especially those aimed at households in which no one has been convicted of a crime.

“I think it’s wrong. I think it’s unconstitutional. I think it’s over-reaching,” he said. “They’re giving up their constitutional rights. And why? Because they’re afraid they’re going to be evicted from their home, with their children. There’s a certain amount of compulsion, and threat and coercion, by the very nature of the process they’re using.”

Housing in a Time of Expanding Crisis @USFLaw

 

This past Friday I had the pleasure of participating in a symposium on Housing for Vulnerable Populations and the Middle Class: Revisiting Housing Rights and Policies in a Time of Expanding Crisis, hosted by the wonderful faculty and law review folks at the University of San Francisco School of Law (and a special hat tip to our very gracious host, Tim Iglesias). The timing of this gathering couldn’t have been better. 2015 was a busy year in the housing world as SCOTUS upheld the validity of the disparate impact theory under the Fair Housing Act and HUD issued its significantly updated regulations on the obligation to affirmatively further fair housing. Moreover, cities and local governments are being looked to more than ever to solve major and seemingly intractable issues around housing, spurring a host of new policies, programs, and initiatives. The impressive participants of the USF symposium (coming from practice, government, non-profit, and the academy) explored these and related issues, including potential solutions to pressing problems of housing. Here’s an overview of what the panelists had to say:

What’s the matter with housing?
Rachel Bratt (Harvard Joint Center) kicked off the day by giving an overview of the nation’s current housing woes. She noted that the increase in income inequality over the last 20 years, combined with disinvestment and misinvestment of public resources, has been at the core of the affordable housing issue. She also described how political spending has played a role in further entrenching existing housing interests (in 2015, $234M was spend on real estate/finance lobbying, second only to healthcare). Bratt also explained the uneven distribution of federal housing benefits to the wealthy and the continued persistence of concentrated racial segregation. Rosie Tighe (Cleveland State-Urban Affairs) followed by describing the particular housing problems facing so-called “shrinking cities” (those places in an intense population-decline). She noted that the issue for these cities has more to do with poor quality affordable housing, rather than quantity. Tighe described the failure of low-income housing tax credits to meet the needs of these locales, and discussed the need for more scattered-site developments in these areas, while recognizing the financing and property management challenges inherent in such developments. Peter Dreier (Occidental-Poli Sci) rounded-out the discussion by pointing out that the current political discussions around the presidential election have focused much on wages and other issues, but not at all on housing. He described some reasons for the absence of attention to this important area, and drew the strong connection between household over-all health and housing.

What’s the matter with our current solutions?
Chris Odinet (Southern) started the discussion by describing some current efforts by states and local governments to deal with the fall-out from the housing crisis and on-going issues of blight and abandoned property. He then explained a number of recent federal court cases and acts taken by the FHFA that have significantly frustrated these efforts and also seriously call into question the ability of states and local governments to be innovative in dealing with issues of housing when federal programs are involved. Michael Allen (Relman, Dane, & Colfax) discussed the Fair Housing Act and the new “affirmatively furthering” regulations. He went into depth on contemporary disagreements between affordable housing advocates (who support more affordable units) and fair housing groups (who support integrated housing, and advocated for a way to reconcile their views under the auspices of these new HUD regulations. John Infrana (Suffolk) followed by describing the types of housing in and changing household composition of many cities. Despite these changing demographics, however, housing has not kept pace. In connection with this, Infranca pointed to the many possibilities that micro-housing and accessory-dwelling units (ADU) provide in the way of meeting this need. He noted that ADUs allow for greater economic diversity and can better align with demographic trends, but noted current legal barriers to them such as occupancy requirements and zoning restrictions. Marcia Rosen and Jessica Cassella (both of the National Housing Law Project)) concluded the panel by discussing the current state of the public housing program in the U.S., noting that there are currently 1.2M units (and ever-declining). She described HUD’s recent efforts to give public housing authorities (PHAs) a financing tool to rehab and rebuild these properties through the Rental Assistance Demonstration Program (RAD). This program essentially allows PHAs to convert their public housing stock into section 8 funded housing, and to combine section 8 with tax credits and other forms of debt and equity financing to fund the project. Cassella stated that although the program has great potential in terms of revamping old and decaying public housing properties, there are draw-backs in the way of transparency and long-term funding stability.

What are some new solutions?
For this final panel, John Emmeus Davis (Burlington Community Development Associates) gave an overview of community land trusts (CLTs)—currently over 280 exist nationwide—and their successes across the country. He noted that these types of entities are usually most successful in communities where there would otherwise be no affordable housing available. He noted the ability of CLTs to empower communities, protect tenants, and provide street-level land reform. Andrea Boyack (Washburn) followed by noting the current lack of rental stock compared to the growing demand across the country. She pointed out that in 2015 over half of the population of the U.S. is renting, with an annual demand of 300K new rental units per year. She followed by describing some current statistical trends in American homeownership and posited a number of ways in which cities and states in particular can seek to achieve solutions to these major housing problems. Lastly, Lisa Alexander (Wisconsin) discussed the the human right to housing, not through the lens of federal law, but rather through the ways in which localities across the country are building legal structures that provide many of the rights associated with a right to housing. She noted that market participation has been important to this process, and she used the “tiny homes for the homeless” movement and community control of vacant land as examples.

You can watch each of these presentations by clicking on the youtube video above. Participants, moderators, and USF Dean John Trasviña (former HUD assistant secretary for fair housing) are pictured below.

"It's Easy to Tell Who's Going to Win in Eviction Court"

That's the conclusion of sociologist Matthew Desmond, reporting in the New York Times on his study of eviction court proceedings.

On one side of the room sit the tenants: men in work uniforms, mothers with children in secondhand coats, confused and crowded together on hard benches. On the other side, often in a set-aside space, are not the landlords but their lawyers: dark suits doing crossword puzzles and joking with the bailiff as they casually wait for their cases to be called.

Desmond reports that in many housing courts around the country, 90% of landlords are represented by counsel, and 90% of tenants are not.  What difference does it make?  As Desmond reports, a recent study of the Boston Bar Association showed that in a randomized sample of 129 cases, "two-thirds of tenants offered full representation avoided eviction, compared with one-third who were offered limited assistance like instructional clinics."  

As Desmond points out, the consequences of eviction can be at least as economically, socially, and psychologically devastating for the evictees as incarceration.  And, there is a benefit to providing representation to low-income tenants facing eviction for the rest of us: it's expensive, but providing shelter to those left homeless by eviction is actually more expensive.

And yet . . . there is something in us that revolts at the thought that someone behind in their rent should get a free lawyer.  I know that if I presented the idea to my students, some would balk.  Especially my older students who are landlords, who believe that the system is already stacked against them, not against their tenants.  It seems to me that there is a greater disconnect about the balance of legal power between landlords and tenants than in most other areas of law.  Both sides see the other as unfairly advantaged by the system.

I'd be curious to know whether other professors find the same about their students.

 

Mark A. Edwards

 

 

Welcome Back, Tenant

The New York Times has a fun editorial by a landlord in Cleveland, Ohio:

At cocktail parties, I say, “I’m a landlord.” People hate that. Everybody hates landlords. That’s because nobody paid rent as a child. Renters think apartments should be free, like the wind, rain and baby food. I used to say, “I’m in real estate.” That sounded better; however, I spend a fair amount of time peering in apartment windows for cats, to charge pet fees. That probably doesn’t say “real estate” to most people.

Steve Clowney

The Number One Sign Your Land Use Controls Might be Too Restrictive. . .

. . . landlords can get away with charging a $40 application fee to anyone interested in renting an apartment.  In San Francisco, a very tight rental market has allowed landlords to milk thousands of dollars from desperate prospective tenants:

At a “nice” $3,500-per-month loft in the Mission, “80 people showed up for the open house,” said Ms. Lamas, 23, who recently began working at a tech company in SoMa. “And the landlord said to me that he’d gotten 250 applications.” The cost of applying was $40, so if the landlord wasn’t exaggerating, he grossed $10,000 in application fees.

Steve Clowney

Tips for New Landlords

The New York Times runs an article designed to help first-time landlords navigate their rights and obligations:

Five suggestions for beginning landlords.

KNOW YOUR RIGHTS Will your building allow subletting? In condos, generally the answer yes. For co-ops, well, it’s complicated.

LEGALESE Don’t make it up as you go along: standard lease and sublease forms are available online. It may be wise to line up a lawyer before problems develop.

MR. FIX-IT Compile a list of trusted tradespeople, and make sure they’ll come at all hours of the day or night.

PICKY, PICKY Friends, colleagues and acquaintances are usually a safer bet than strangers as tenants. A broker can take a lot of the emotion out of the screening process.

THE LITTLE THINGS Build a relationship with your tenants by picking up checks in person, or allowing them to manage minor repairs on their own.

Steve Clowney

Weird Landlord-Tenant Hypo of the Week

A reader asks the Chicago Tribune the following question:  My landlord comes into the house I'm renting to use the shower and groom himself.  I feel so violated that I stopped paying rent, fo which he immediately served me eviction papers.  What are my rights in this situation?  Was I justified in not paying rent?

The paper's real estate pro responds:

My experience tells me that it is not a good idea to withhold the rent — regardless of the reason. . . .  My suggestion: You should give your rent to a third party — usually your attorney — to hold in escrow. That shows good faith on your part. Clearly, however, your landlord has no right to interfere with your privacy and your right to peaceful enjoyment of the home. I hope you have a good attorney to defend you in the eviction procedure. I suspect you will prevail.

Steve Clowney

Must Tenants Allow Landlords to Install Equipment to Benefit the Building

If the landlord wants to install antenna equipment on your balcony to improve Wi-Fi reception, do you have to allow it?

The L.A. Times says no.

Steve Clowney

Steve Clowney is Complaining About His Landlord

How social media is changing the landlord-tenant relationship.

Steve Clowney

A Landlord's Letter to Her Tenants

Jodie Allen writes a handful of sarcastic notes to the anonymous every-tenant, explaining how to properly care for her property.

Steve Clowney

Nichols on the Federal Protecting Tenants at Foreclosure Act

Elan Nichols (Michigan State) has posted Unanswered Questions Under the PTFA: Exploring the Extent of Tenant Protections in Foreclosed Properties (Journal of Affordable Housing) on SSRN.  Here's the abstract:

The somewhat new Federal Protecting Tenants at Foreclosure Act (the “PTFA”), as recently amended, still leaves many questions of interpretation in states with the foreclosure by advertisement process, and in states with laws related to issues on which the PTFA is silent. The PTFA is vague in places, and does not address certain issues raised by the foreclosure processes in certain states, where state law is not clearly preempted.

This article will examine how the PTFA, including the recent amendments and any recent judicial and advisory opinions, applies in states with the foreclosure by advertisement process (as opposed to judicial foreclosure). The article will use Michigan as a case study for this inquiry, briefly discussing other states with a similar process. In so doing, the article will discuss issues raised in these states concerning matters on which the PTFA’s terms are vague or wholly silent.

To that end, this article picks up where the article, “Interpreting the Protecting Tenants at Foreclosure Act of 2009,” 19 J. of Affordable Housing & Community Dev Law 205 (Winter, 2010), by Allyson Gold, left off. Of particular assistance will be the recent statutory amendments, any relevant case law, interpretive statements from the Department of Housing and Urban Development, and the “working interpretation” adopted by legal services providers and others agencies dealing with the foreclosure crisis. Consequently, this article will conclude with a proposal for a reasonably fair interpretation of the PTFA in states with foreclosure by advertisement and in states where the PTFA is not expressly preempted but still leaves questions.

Steve Clowney

From Apartments to Vacation Rentals

Property owners in San Francisco are converting large numbers of rental apartments into short-term quarters for tourists.  Some are blaming the city's rent control laws for this "hotelization:"

Ms. Kelley predicted that more units would be turned into vacation rentals as landlords sought to avoid rent-control laws available to long-term tenants.

“The city has made its bed with restrictive rent-control laws,” she said, “but with a vacation rental you can avoid that.”

Steve Clowney

Marion Barry's Housing Shenanigans

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? 

Steve Clowney

Blasi on Tax Benefits in Leasing Transactions

Ronald Blasi (Georgia State) has posted Electing Tax Benefits in Leasing Transactions (Daily Tax Report) on SSRN.  Here's the abstract:

This article recommends allowing a lessor and a lessee to decide between themselves which party will be entitled to the tax benefit associated with the ownership of the leased property. It describes why the current linkage of tax benefits to property ownership is economically inefficient and disadvantageous to the parties and to the economy as a whole. Existing law diminishes the intended effect of tax incentive legislation, reduces a firm’s cash flow and reported earnings, distorts competition and decision making, and inhibits investment in efficient business assets. The proposed election addresses these shortcomings, while not violating anti-avoidance tenets of taxation.

Steve Clowney

 

A Landlord at the Door

The LA Times on when a landlord can access a tenant's apartment.

Steve Clowney

Rose on The Due Process Rights of Tenants in Mortgage Foreclosure

Henry Rose (Loyola Chicago) has posted The Due Process Rights of Residential Tenants in Mortgage Foreclosure Cases (New Mexico Law Review) on SSRN.  Here's the abstract:

The purpose of this article is to explore the rights of tenants who reside in buildings undergoing foreclosure to receive notice and an opportunity to be heard when foreclosures threaten to terminate their tenancies. The federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) will significantly reduce the incidence of residential tenancies being terminated as a result of foreclosure. However, PTFA offers weak procedural protections if the mortgagee or the person who acquires ownership pursuant to a foreclosure seeks to terminate the tenancies of residents in the foreclosed building. In those states that require judicial foreclosures, the Due Process Clause of the Fourteenth Amendment to the United States Constitution should afford tenants faced with termination of their tenancies due to foreclosure with notice and an opportunity to be heard before their tenancies are terminated. In states that allow non-judicial foreclosures, Due Process protections are not likely to be available to tenants due to a lack of state action in the foreclosure process. PTFA should be amended to afford all tenants, including those who reside in non-judicial foreclosure states, with notice and an opportunity to be heard before their tenancies are terminated pursuant to a foreclosure.

Steve Clowney

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.

Steve Clowney

Renting While Deaf

This is troubling:

In a year-long test conducted by the Fair Housing Partnership of Greater Pittsburgh, researchers found 28 percent of landlords contacted by deaf people either hung up the phone, gave false information or used some other illegal means to deny the deaf person a place to live.

Test reviewers found 11 violations were so severe they filed complaints against the landlords with the U.S. Department of Housing and Urban Development, and the Pennsylvania Human Relations Commission. Seven of those cases have been settled and those landlords have undergone training in fair housing law. The other cases are pending.

Steve Clowney

Iglesias on the FHA and Private Residential Occupancy Standards

Tim Iglesias (U. San Francisco) has posted Moving Beyond the Two-Person-Per-Bedroom: Revitalizing Application of the Federal Fair Housing Act to Private Residential Occupancy Standards on SSRN.  Here's the abstract:

New empirical evidence demonstrates that the common residential occupancy standard of two-persons-per-bedroom substantially limits the housing choices of many thousands of families, especially Latinos, Asians and extended families. The federal Fair Housing Act makes overly restrictive policies illegal, but the enforcement practices of the U.S. Department of Housing and Urban Development (HUD) have enabled the two-persons-per-bedroom standard to become de facto law. This article urges HUD to use its regulatory authority to remedy the situation and offers several solutions. And, if HUD fails to act, it encourages private plaintiffs to challenge the two-persons-per-bedroom standard and provides guidance to courts in deciding these cases.

Ben Barros

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