PropertyProf Blog

Million Dollar Mausoleums

Oh I do love cemeteries.  The Wall Street Journal has a great piece on the very highest-end of the high-end cemetery sales.  (It might be behind a paywall.)  An excerpt:

At Metairie Cemetery in New Orleans, an eight-crypt mausoleum on a 32-by-32-foot lot is scheduled for completion in October with a price tag of about $1.1 million. The buyer, Ray Brandt, a 66-year-old attorney and auto-dealership owner, says he wants space for the whole family. The mausoleum will be carved from pink kershaw granite from South Carolina (his wife's choice) and hold up to 12 burials. There will be two sets of bronze doors, one of which will open to a back patio with picnic-style furniture and a view of a lagoon. "Eventually everyone will end up somewhere," he said. "I guess it's the last house I'll buy."

Above is a picture of Metairie from January, although I didn't get a good picture of Millionaire's Row.  I prefer the older tombs.

Tanya Marsh

Klein and Zellmer on Property, Floods and Hurricanes

Christine A. Klein and Sandra B. Zellmer (University of Florida College of Law) have posted Mississippi River Stories: Lessons from a Century of Floods and Hurricanes on SSRN. Here's the abstract:

In the wake of Hurricane Katrina, the nation pondered how a relatively weak Category 3 storm could have destroyed an entire region. Few appreciated the extent to which a flawed federal water development policy transformed this apparently natural disaster into a “manmade” disaster; fewer still appreciated how the disaster was the predictable, and indeed predicted, sequel to almost a century of similar disasters. This article focuses upon three such stories: the Great Flood of 1927, the Midwest Flood of 1993, and Hurricanes Katrina and Rita of 2005. Taken together, the stories reveal important lessons, including the inadequacy of engineered flood control structures such as levees and dams; the perverse incentives created by the national flood insurance program; and the need to reform federal leadership over flood hazard control, particularly as delegated to the Army Corps of Engineers.

Setting forth what we call the theory of “double takes,” this article argues that improvident coastal and floodplain development is facilitated by a pair of taxpayer-funded subsidies that unintentionally exacerbate the flood dangers faced by low-lying communities. First, floodplain developers “take” federal dollars in the form of subsidized flood control structures that enable construction in otherwise unbuildable areas. As a consequence, many floodplain residents are lured into harm's way. Alternatively, would-be developers may “take” federal dollars in the form of compensation under the Fifth Amendment, paid by states and local communities that forbid risky construction in flood-prone areas. Such claims for compensation are fostered by the 1992 decision, Lucas v. South Carolina Coastal Council, in which the Supreme Court endorsed the view that coastal areas are “valueless” in their natural state - a glaring misconception laid bare by the post-Katrina awareness that wetlands and barrier islands instead perform an invaluable flood-taming function. We conclude with suggestions for reform of federal flood hazard policy, the national flood insurance program, and the regulatory takings doctrine.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Pierre and Stephenson on Katrina and FEMA

John K. Pierre and Gail S. Stephenson (both of Southern University Law Center) have posted After Katrina: A Critical Look at FEMA's Failure to Provide Housing for Victims of Natural Disasters on SSRN.  Here's the abstract:

Disasters affect low-income victims more negatively than middle- or upper-class victims, and Hurricane Katrina was no exception. Hundred of thousands of people, many of them low-to-moderate income residents, were forced to evacuate their homes following Katrina. The Robert T. Stafford Disaster Relief and Emergency Assistance Act guarantees that disaster victims will receive help through the Federal Emergency Management Agency (FEMA). FEMA, however, failed to ensure that the disaster housing needs of Katrina's victims were met, just as it has failed to adequately meet the needs of disaster victims for the last two decades.

This article reviews the impact of disasters on victims, particularly low-income victims whose homes are destroyed or rendered uninhabitable or inaccessible as a result of a disaster, when the federal government fails to carry out its statutorily mandated duty toward those victims. The article further analyzes the issues that may arise when lawyers attempt to seek legal redress against FEMA on behalf of those made homeless by disasters in the United States and suggests changes that could be implemented by the federal government to prevent a recurrence of such failures in the future.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Overby on Mortgage Foreclosure in New Orleans

A. Brooke Overby (Tulane) has posted Mortgage Foreclosure in Post-Katrina New Orleans on SSRN.  Here's the abstract:

Hurricane Katrina, the largest disaster in the history of the United States, caused widespread property destruction throughout the Gulf Coast, but particularly in the city of New Orleans. Although the storm created an environment which facilitated increased mortgage defaults in the area, the Article analyzes data from the Orleans Parish Recorder of Mortgages Office and from the Orleans Parish Civil District Court and concludes that foreclosure filing rates in the year after Katrina in fact decreased significantly from the rates for the corresponding period in the year prior to the storm. This result is contrary to what would normally be expected in a usual mortgage lending market, where an increase in the rate of mortgage default would lead to an increase in the rate of foreclosure.

The Article evaluates in detail the legal and market responses to mortgage default after the storm that contributed to the reduction in foreclosure actions in Orleans Parish in the year after Katrina. Secondary mortgage market initiatives provided the principal means for mortgage relief, because Louisiana debtors received little in the way of formal legal relief. Even though secondary market responses were successful in protecting mortgage debtors after Katrina, their limitations in scope make them inadequate to address the years of financial distress that might likely follow any disaster of the magnitude of Katrina. Thus, while the Katrina experience demonstrates that secondary market interventions can effectively reduce debtor distress after a major disaster, such interventions should not been seen as a substitute for more traditional legal responses to address mortgage debtor distress after disasters or other economic crises.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Inniss on Katrina and A Domestic Right of Return

Lolita Buckner Inniss (Cleveland-Marshall) has posted A Domestic Right of Return? Race, Rights, and Residency in New Orleans in the Aftermath of Hurricane Katrina on SSRN.  Here's the abstract:

This article begins with a critical account of what occurred in the aftermath of Hurricane Katrina. This critque serves as the backdrop for a discussion of whether there are international laws or norms that give poor, black Katrina victims the right to return to and resettle in New Orleans. In framing this discussion, this article first briefly explores some of the housing deprivations suffered by Katrina survivors that have led to widespread displacement and dispossession. The article then discusses two of the chief barriers to the return of poor blacks to New Orleans: the broad perception of a race-crime nexus and the general effect of the imposition of outsider status on poor, black people by dominant groups. Finally, the article explores the international law concept of the right of return and its expression as a domestic, internal norm via standards addressing internally displaced persons, and considers how such a domestic right of return might be applicable to the Katrina victims.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Lovett on Property and Radically Changed Circumstances

John A. Lovett (Loyola-New Orleans) has posted Property and Radically Changed Circumstances on SSRN.  Here's the abstract:

Although Hurricane Katrina altered our national dialogue about many issues, few scholars have addressed whether the storm changed thinking about fundamental property relationships. This article fills that void in two ways. First, it creates a theoretical framework for understanding property law in the context of events producing radically changed circumstances. It does this by defining these events, exploring the mismatch between property law's traditional focus on stability and environments of radical change, creating a taxonomy of property relationships tailored for this exploration, describing typical problems confronted after an event of radical change, and finally developing a set of normative criteria to evaluate the resiliency of property regimes.

The second part of the article focuses on two common property relationships—between landlord and tenant and mortgagor and mortgagee—and examines how their default rules, voluntary private ordering, and market practices have fared under the pressure of Hurricane Katrina. This part also analyzes how another kind of property relationship—between a city (New Orleans) and its citizens—has weathered the radical change created by Katrina and how a series of federally funded and state administered programs have fared in restoring housing—a crucial common resource and public good—in the post-Katrina environment.

The article concludes by suggesting that longer term, more indefinite property relationships characterized by private ordering, risk spreading, setting aside exogenous resources and mutual accommodation—commercial lease and mortgage relationships to be specific—show more resiliency than shorter term and more finite relationships where default rules make exit easy for some parties (residential landlords) but re-entry difficult for others (residential tenants). The article also demonstrates how government housing recovery programs can be assessed using the normative criteria developed in Part I and what policy makers can learn from traditional private property regimes facing events of radical change.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Simunovich on Post-Disaster Redevelopment

David Simunovich (Seton Hall School of Law) has posted The Quiet of Dissolution: Post-Disaster Redevelopment and Status Preservation Compensation on SSRN.  Here's the abstract:

In the wake of Hurricane Katrina, Gulf Coast residents, community groups, and policy makers have a uniquely powerful and dynamic charge — rebuild a great city. The chosen vehicle for housing redevelopment in Louisiana is the Road Home, a federally funded program designed to combine administrative flexibility while protecting the homeowner status of Katrina-displacees. The Road Home provides renovation grants of up to $150,000 for Katrina-displaced homeowners to rebuild storm damaged residences.

While the basic tenets of the Road Home are largely commendable, the program remains fundamentally flawed because it fails to protect Louisiana's most politically and economically vulnerable residents. In an effort to concentrate post-disaster redevelopment, the Road Home administrators will deny renovation grants to qualified residents living in neighborhoods where too few homeowners are returning to rebuild their community. This Comment argues that the restriction triggers federal displacement benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA). The URA's displacement benefits will be triggered by certain Road Home property acquisitions under a theory of functional displacement.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Rebuilding Post Katrina: Homeowner Autonomy or Planning Anarchy?

The media is providing a dizzying array of material devoted to post-Katrina New Orleans this week.  Spike Lee's HBO movie "When the Levees Broke" aired last night and tonight.  This week's New Yorker includes a carefully crafted Letter from New Orleans, by Dan Baum, and Fortune has published a special report, entitled "The Long, Strange Resurrection of New Orleans."

I spent a few days in New Orleans this summer as part of a public health and environmental justice meeting.  The city is not wholly recovered, but as the media has reported, the real devastation is in the Lower Ninth Ward and New Orleans East.  Both areas are predominantly African American.  New Orleans East is an affluent community and the rebuilding has clearly begun there.  The Lower Ninth is a much more complicated story.

The Lower Ninth is known for its high poverty and crime rates -- but pre-Katrina, it was also home to families who had been present for generations.  Baum reports that sixty percent of homes were inhabited by homeowners.  In the early days after the flooding, many people, including Mayor Roy Nagin, were skeptical that the Lower Ninth should be rebuilt.  The Bring New Orleans Back Proposal proposed "shrinking the footprint" of the City.  Some discussed using eminent domain to force buy-outs of areas that would better serve the City as wetlands or green space.  Eminent domain was a political non-starter, however, and the idea of shrinking the footprint was widely criticized by residents of the Ninth as well as civil rights leaders.  Shrinking the footprint was replaced by the mantra "let the homeowners decide." 

The State of Louisiana has adopted a plan, the Road Home Plan, that in some sense lets homeowners decide whether to rebuild.  It awards funding to rebuild or repair homes, or offers state buy out for homeowners who would prefer to relocate.  But in small print, it also gives the state and local government the option of limiting some homeowners to the buy out provision "in areas where a high proportion of homeowners are choosing not to invest." 

This tactic seems reasonable in some respects.  If few homeowners plan to rebuild in a particular area, it will become blighted.  But it raises many troubling questions as well.  The document gives no guidance on how the government will determine what constitutes a "high proportion."  And, this portion of the plan has gotten little attention that I can see.  If displaced homeowners don't know that their fate is tied to their neighbors, they have no incentive to work collectively to decide whether to rebuild.  They may simply find themselves forced to sell.  But the state and local government are protected from the claim that they chose to shrink the footprint. 

In light of New Orleans' recent experience with governmental failure, the distrust of any governmental land use planning that will force people out of their homes is not surprising.  However, the government's abdication of rational land use planning in favor of a non-plan that nevertheless may force people from their homes seems far worse. 

Rachel Godsil

New Orleans Rebuilding

For those following post-Katrina issues, John Lovett (Loyola-New Orleans and Chair of the AALS property section) has an op-ed in the Times Picayune on some aspects of proposed rebuilding policies.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

So Much For Planning

Today's NY Times has a story on the ad hoc rebuilding of New Orleans:

Every day the line snakes down a spartan corridor on the eighth floor of City Hall here, as hundreds of people clutch a piece of paper inscribed with a fateful percentage that could force them to abandon their home.

The number is always over 50, and it means a house was so damaged in the flooding after Hurricane Katrina — more than half-ruined — that it faces demolition, unless the owner can come up with tens of thousands of dollars to raise it several feet above the ground and any future floodwaters.

But there is a way out, and that is why so many people stand in line every day, collectively transforming this battered city. "What you need to do is talk to a building inspector and get that lowered below 50 percent," a city worker calls out to the crowd. And at the end of the line, in a large open room down the hall, that is exactly what happens, nearly 90 percent of the time, New Orleans officials say.

By agreeing so often to these appeals — more than 6,000 over the last few months — city officials are in essence allowing random redevelopment to occur throughout the city, undermining a plan by Mayor C. Ray Nagin's rebuilding commission to hold off on building permits in damaged areas for several months until more careful planning can take place. That plan, greeted by widespread opposition, including from the mayor himself, is now essentially dead.

House by house, in devastated neighborhoods across the city, homeowners are bringing back their new-minted building permits and rebuilding New Orleans. As many as 500 such permits are issued every day, said Greg Meffert, the city official in charge of the rebuilding process.

And there is no particular rhyme or reason to who gets a permit, or consideration of whether their neighborhoods can really support its previous residents. One city building inspector, Devra Goldstein, called the proceedings on the eighth floor "really fly-by-night, chaotic, Wild West, get-what-you-want."

The floor, she said, represents "a plan by default." . . .

But there may be a steep price to the city's largess in allowing so many people to move back into flood plains without having to elevate their homes. Past federal flood insurance directors say the practice violates the program, which established the 50-percent rule to guide safe building in flood-prone areas. Most communities have adopted it as a minimum standard, say officials of the Federal Emergency Management Agency, which runs the flood program.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

Rebuilding New Orleans Report

New Orleans Mayor Ray Nagin’s Rebuilding New Orleans Commission committee recently released a report on urban planning.

The plan, which does not have the force of law, envisions a revitalized, ultra-planned, sustainable, light rail connected, new New Orleans in a reduced geographic footprint. By far the most controversial suggestion is that some neighborhoods in the city will not be rebuilt because they are too dangerously flood prone and just too expensive for the city to maintain with satisfactory public services and utilities.  To determine which neighborhoods get rebuilt and which are abandoned or bought out to create parks, green spaces and flood plains, the Commission proposes a lightning fast, four month planning process through which residents of the neighborhoods themselves will demonstrate which neighborhoods are sustainable by showing that at least half of the residents plan to return and other indicators of urban sustainability are in place. The plan also recommends that the city impose a four month moratorium on any new building permits so that residents do not invest money and resources rebuilding homes in areas that will ultimately not be rejuvenated. Finally, the plan proposes creation of a Crescent City Recovery Corporation, a public corporation that would have the power to buy out residents who do not want to rebuild (by paying 100% of their pre-Katrina equity) and the power of eminent domain as a last resort to acquire property of those who do not want to sell.

Not surprisingly, there is heated opposition to these recommendations in some quarters, particularly to the proposed permit moratorium and the potential eminent domain threat  Some residents claim they can rebuild on their own just fine without the assistance of the city and the visionary planners it has assembled.  They want the city to simply get out of the way.  Other residents, especially those from the lower Ninth Ward and New Orleans East, fear that the city or an aligned pubic redevelopment corporation will exercise the power of eminent domain to take the property they have struggled to create and maintain over generations against their will. Yesterday at the public meeting unveiling the plan some of these residents were threatening Waco-like resistance to any exercise of eminent domain.

My gut level prediction at the moment is that the Mayor will not have the political fortitude to impose the permitting moratorium but will let the planning process go forward in order to convince the state and federal authorities to release funds for rebuilding infrastructure and housing. This makes some sense because the permits granted and acted upon can themselves serve as an important piece of data in making the necessary planning decisions.  Further, the threat implicit in the plan of shutting down some neighborhoods is probably going to stimulate a lot of quick community building in neighborhoods that want to survive.  So, ultimately, the planning controversy could help invigorate the city in the long run.

But two big question marks remain.  First, FEMA has yet to issue flood plain maps that will tell people where they can rebuild (and how high they have to rebuild) to obtain federally supported flood insurance.  The maps are supposed to be released next month.  And second, Congress and the President need to pass and sign the Baker Bill (HR 4100) to create some public corporation with sufficient funding that can settle mortgages, buy out some portion of homeowner’s equity, and perform some land assembly tasks to facilitate large scale redevelopment. The President was just in New Orleans, and we will see over the next few months what happens on all of these fronts.

In some sense, we are also seeing an echo of the Kelo controversy, with utilitarian oriented, welfare maximizing urban planners battling moral rights oriented property owners. It will be interesting to see who wins, or, what would be better, if everyone can walk away claiming victory in the end.

John Lovett

[Comments are held for approval, so there will be some delay in posting]