PropertyProf Blog

#PropertySchmooze Panel 1: Takings Revisited

Greetings from the Property Schmooze at Texas A&M!  The first panel is on takings law.  We're about to start, so time to start blogging!  

The first paper is by Tim Mulvaney (Texas A&M), who presented his work, Non-Enforcement Takings.  Tim raises the question of whether the lack of enforcing a propety law could serve as the basis of a taking.  For example, assume there are two land owners, A and B.  The state decides not to enforce a property law against A.  Query:  can B sue for a takings for the non-enforcement of the law against A?  To highlight his example, Tim discussed the recent case, Harris County v. Kerr.  In Kerr, there were two sets of land owners--upstream land owners and downstream land owners.  In the 1980s Harris County made a flood plan which said the county would not allow the upstream owners to develop their property in such a manner as to injure the downstream owners.  Since the paper is about non-enforcement, you can all guess what happened next.  The upstream owners were allowed to develop their property and that development caused problems for the downstream owners.  The downstream owners brought a takings claim againt the county and the Texas Supreme Court easily dismissed their claims.  Tim's paper asks whether that was the right answer and whether there is a broader category of non-enforcement takings.

Next up is Chris Serkin (Vanderbilt) who presented his work, Prospective Grandfathering, which is co-authored with Michael Vandenbergh (Vanderbilt).  Chris' talk commences with the story of natural gas. As he said, we need to move from coal to natural gas soon, but we can't stop at natural gas; in 30 years we need to have developed technology so as to no longer be required to use natural gas.  Chris' story creates a taking in the future--we know today that we need natural gas companies to build up, but only build up for 30 years, and then Congress needs to regulate the natural gas market in such a way as to eliminate natural gas.  Chris' point is that we know a takings case will happen in the future, so can we do anythig about it?  He answers the questionin the affrmative with the idea of prospectively grandfathering in (and thus eliminating) future takings litigation.  His plan is to require regulators to announce but delay the adoption of new regulations, as well as accelerate cost recovery for individuals like natural gas utilities, and in doing so, the future government would be immunized from the takings claim.  In other words, Chris advocates having natural gas companies charge more today to preemptively make up for predicted future industy downturns, thereby removing the future takings claim.     

The last paper for the Takings panel is from Greg Stein (University of Tennessee).  Greg presented his paper, Reverse Exactions.  Greg's work looks at exactions and asserts that current exaction law tips the scale too favorably towards the applicant because the state is too concerned about takings liability and thus allows too many applicants to get their permits or applicants to pay too little money to offset the externalities caused by their permit.  To combat this, Greg's paper argues that we should have a reverse exactions claim whereby members of the community could bring a claim asserting that the state did not acquire enough of an offset from any negative consequences from issuing the permit and demand that more offset must be extracted.  

Panel two on fair housing is up next!

Illegal Property Tax Foreclosures in Detroit

Check out this really fascinating (and disturbing) article about research conducted by Bernadette Athene (Chicago-Kent, currently visiting at Chicago) on illegal property tax foreclosures in Detroit:

This week was the 11th anniversary of Hurricane Katrina.  Over the years, many have said that Detroit is experiencing a hurricane without water.

Like with Katrina, the property tax foreclosure crisis in Detroit has wiped out entire neighborhoods inhabited by poor and working-class black people. From 2011-15, the Wayne County treasurer foreclosed upon approximately one in four Detroit properties for nonpayment of property taxes.

In fact, Detroit has one of the highest number of property tax foreclosures any American city has had since the Great Depression. Most important, once foreclosed properties are vacated, they are often vandalized, burned down or stripped of all valuable materials, creating a flood of blighted properties that decimate communities by reducing property values, attracting crime and causing those who can to evacuate.

There is a debate about the origins of Detroit’s property tax foreclosure crisis.

Popular narratives have focused on a culture of lawlessness in which property owners have cheated the city by not paying their property taxes and then devising ways to avoid foreclosure.

Some have welcomed the record number of property tax foreclosures as a sign that Detroit, at long last, is establishing law and order. But, I recently co-authored a study titled “Stategraft” that demonstrates that Detroit’s unprecedented property tax foreclosure rate is indefensible because property tax assessments in Detroit are, in fact, illegal.  

Michigan’s  Constitution clearly decrees that a property’s assessed value cannot exceed 50% of its market value. In our study, we find that Detroit’s assessor is flagrantly violating this vital state constitutional provision. Consequently, contrary to popular narratives, it is the city that is stealing from Detroit property owners through illegal assessments and inflated property tax bills, and not the other way around. And while the city has reassessed properties during the last two years, those actions have not been enough to bring most assessments in line with the Michigan Constitution. 

To investigate whether property tax assessments in Detroit are illegal, we use citywide property sales and assessment data for 2009-15. As required by Michigan case law and statute, we included only arm’s length transactions in our analysis, and we find that, in 2009, 65.5% of the properties sold violated the state constitutional assessment limit.  In subsequent years the numbers were equally shocking: 2010 (84.7%), 2011 (54.6%), 2012 (71.4%), 2013 (78.2%), 2014 (83.2%), 2015 (64.7%).

The property tax assessments were not only above the legal limit, but they also exceeded it by a substantial sum. For instance, in 2010, assessments were, on average, 7.3 times higher than the legal limit. In 2015, assessments were, on average, 2.1 times higher than the legal limit.

In all years studied, the illegality was most pronounced for lower-valued properties. That is, the city is more likely to assess modest homes at illegal levels than it is more expensive homes, leaving the most vulnerable homeowners drowning in injustice. 

Detroit’s mayor, Mike Duggan — a former prosecutor — acknowledged that “for years, homes across the city have been over assessed,” and tried to remedy this in 2014 and 2015 by implementing assessment decreases for most of the city, ranging from 5% to 20%.

Our study shows that illegal property tax assessments nevertheless persist for lower-valued properties despite these reductions. For example, in 2015, properties with the lowest values were, on average, assessed at 4.8 times the legal limit, while properties with the highest values were, on average, legally assessed.

Both before and after Duggan’s assessment reductions, those who can afford only modest properties have been subject to the most severe illegality and forced to endure the consequences of Detroit’s broken levees.

In July, the American Civil Liberties Union of Michigan, the NAACP Legal Defense Fund and the law firm of Covington & Burling filed a class action  alleging that the unprecedented number of property tax foreclosures in Detroit is unlawful on several counts, including the fact that the property tax assessments systematically violate the state constitution and the Fair Housing Act. The findings of "Stategraft" strongly support this claim.

The end goal of the class action is to stop all property tax foreclosures that are based upon illegal assessments. As an interim measure, the legal team recently filed a motion for a preliminary injunction that would place a moratorium on property tax foreclosures of owner-occupied properties in Detroit and throughout Wayne County.

To be sure, by reducing city revenues, a moratorium would further wound a city that has been in economic decline for decades and is desperately trying to emerge from the shadow of the largest municipal bankruptcy in our nation’s history. But, just as we do not allow homeless people in desperate need to burglarize homes, we should not allow the City of Detroit to use unlawful assessments and inflated property tax bills to steal money from Detroit property owners. Additionally, the requested moratorium is narrowly tailored so that it protects only vulnerable homeowners and not investors. 

Given the mortgage foreclosure crisis, water shutoffs and historic bankruptcy, the people of Detroit have already had to weather several devastating storms. Now that they are facing a hurricane without water, the federal government cannot leave Detroiters stranded.

Attorney General Loretta Lynch must ensure that the Housing and Civil Enforcement Section of the Department of Justice opens an official investigation, which will supplement the ongoing class action and begin to quell the tides of inequity.

Bernadette Atuahene is a visiting professor at the University of Chicago Law School and a research professor at the American Bar Foundation.

Eagle on Oceanfront Property and Takings

Josh Eagle (South Carolina) has posted Taking the Oceanfront Lot (Indiana Law Journal) on SSRN. Here's the abstract:

Oceanfront landowners and states share a property boundary that runs between the wet and dry parts of the shore. This legal coastline is different from an ordinary land boundary. First, on sandy beaches, the line is constantly in flux, and it cannot be marked except momentarily. Without the help of a surveyor and a court, neither the landowner nor a citizen walking down the beach has the ability to know exactly where the line lies. This uncertainty means that, as a practical matter, ownership of some part of the beach is effectively shared. Second, the common law establishes that the owner of each oceanfront lot holds easement-like interests in adjacent state-owned land; and, the state holds similar interests in the oceanfront lot. For these two reasons, the legal relationship between the oceanfront owner and the state is more interdependent than it may seem at first. It is much more than the usual neighbor relationship.

Disputes over oceanfront property are often framed as cases of wrongful taking under the Fifth Amendment’s Just Compensation Clause. The Supreme Court has historically applied its standard takings test for determining whether or not a state is liable for the impact of its rules on a landowner’s rights. This Article is the first to examine the question of whether use of this standard test is optimal, or even logical, in cases between states and the owners of oceanfront land. Given the fact that climate change impacts such as sea-level rise are likely to increase rates of conflict along the legal coastline, the potential benefits of a test that takes into account the special relationship between these parties are significant. Support for an alternative test can be found in two sets of common law property rules, the upland rights and public trust doctrines, as well as in a mechanism that nineteenth-century courts used to resolve similar disputes.

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.

The Takings Clause and the Contracts Clause: Friends or Foes?

I’ve been doing a lot of research lately on how property law and the law governing debt recomposition interact—specifically in the context of the Puerto Rican debt crisis. Two major concepts that keep coming up in my research are the Takings Clause and the Contracts Clause.

Property law professors routinely teach eminent domain and Takings Clause concepts in class. In fact, it’s rare to attend a property law conference these days without at least several panels being devoted to such topics. But, I’ve not spent much time thinking about the Contracts Clause—or how it’s different from/similar to the Takings Clause.

Let me make this a little more concrete [BEWARE: this is going to be long-winded] . . . the Supreme Court recently struck down Puerto Rico’s Recovery Act. For those who haven’t been following this as obsessively as I have, Puerto Rico has been going through a bit of a debt spiral of late (to the tune of about $72 billion). Rather than waiting for Congress to do something about it, back in June 2014 Puerto Rican lawmakers decided to take things into their own hands and passed something called the Public Corporation Debt Enforcement and Recovery Act. The new law essentially created a bankruptcy-like process for the island to restructure its debt (I am summarizing, of course. For a more in-depth discussion, the good folks over at CreditSlips have some great descriptions and analysis).

Naturally, the island’s bondholders didn’t greet this new law with open arms. A group of them quickly filed a lawsuit in late summer 2014 arguing that the Recovery Act was unconstitutional. They raised a number of claims, including that the Act was preempted by the U.S. Bankruptcy Code. Now, despite the way oral arguments seemed to go, on June 13, 2016 SCOTUS struck down the Recovery Act in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust et al., holding that it was preempted by the federal bankruptcy code (specifically, Section 903).

But the part that got me thinking didn’t have anything to do with the Bankruptcy Clause—instead, I got interested in some of the other claims that the bondholders made, but that were not decided by the Court. They asserted in their complaint that “The operation of the Act, as enacted by the Commonwealth and signed into law by the Governor, threatens to improperly impair Plaintiffs' rights . . .  in contravention to . . .  the Takings Clause, and the Contract Clause.” See Amended Complaint, Franklin California Tax-Free Trust et al., 2014 WL 4954576 (D. Puerto Rico) (Trial Pleading). So, basically, modifying the creditor’s debt would violate the Contracts Clause and the Takings Clause—so Puerto Rico can’t do it – because both constitutional rights apply—or something like that—Right?

THE CONTRACTS CLAUSE

The Contract Clause (Article I, Section 10, Clause 1) states that “[n]o state shall . . . pass any . . . law impairing the obligation of contracts . . . .”

By its very terms, it only applies to the states (i.e., feds, this isn’t a problem for you). The Contracts Clause has a storied history—ebbing and flowing from importance to obscurity. In the early days of the republic (often called the Critical Period, being that time during which the Articles of Confederation were in effect) it was precisely due to a fear of state governments interfering with the rights of creditors that the provision was ultimately included in the federal constitution. As background, after the American Revolution many citizens of the new country found themselves horribly in debt. As a result, various state legislatures began passing laws to ease their pain (which creditors didn’t like very much). Drafters of the constitution found these “invasions into the contracts of private parties” harmful to commerce and the general course of business so they decided to put a limitation in place. See Ogden v. Saunders, 25 U.S. 213, 354 (1827) (for some angry commentary by Chief Justice Marshall).  As with so many other provisions in the federal constitution, numerous state constitutions contain parallel contracts clauses as well.

THE TAKINGS CLAUSE

The Takings Clause (in the Fifth Amendment), on the other hand, provides that “private property [shall not] be taken for public use, without just compensation.”

Going back to the early days of the Republic, Thomas Jefferson and his buddies who were opponents of a strong central government advocated for the Bill of Rights (which contained the Fifth Amendment), but they weren’t the first to come up with the idea of protecting private property from the government. The Magna Carta had a similar idea going on, and the concept was already fairly prominent in various state constitutions during the period of the Articles of Confederation. 

Initially, the Takings Clause only applied to the federal government (i.e., states, not your problem). Chief Justice Marshall stated in Barron v. Mayor and City Council of Baltimore, 32 U.S. 243 (1833) that “The provision in the fifth amendment to the constitution of the United States, declaring that private property shall not be taken for public use, without just compensation, is intended solely as a limitation on the exercise of power by the government of the United States; and is not applicable to the legislation of the states.”

But that all changed with the ratification of the Fourteenth Amendment in 1868. In Chicago Burlington and Quincy R.R. v. City of Chicago, 166 U.S. 226 (1897) the Court stated: “‘Whatever may have been the power of the states on this subject prior to the adoption of the fourteenth amendment to the constitution, it seems clear that, since that amendment went into effect, such limitations and restraints have been placed upon their power in dealing with individual rights that the states cannot now lawfully appropriate private property for the public benefit or to public uses without compensation to the owner.”

To the point about the recomposition of debt, SCOTUS later developed the regulatory takings doctrine in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), which provides that the government need not physically dispossess a person from his property in order for a takings claim to be raised. Rather, the government could restrict or regulate the use of property to such a degree that the state action was tantamount to a physical taking.

THE CLAUSES WORKING TOGETHER (OR NOT)

So now, when a state government takes an action that causes an impairment or modification of a contract, an aggrieved party can asset claims under both the Takings Clause and the Contracts Clause. That got me wondering—are they really, practically different? Do they produce different outcomes? Are those outcomes consistent? Do courts do a good job (or even try) when it comes to differentiating between the two?

I’m still working on the answers to those questions, but what does seem clear to me is that there doesn’t appear to be very clean lines here. The law is a bit…well…cloudy.

Take the Contracts Clause, for instance. Contemporary cases have held that just because a law impairs a contact doesn’t necessarily mean that it’s prohibited. Cases like U.S. Trust v. New Jersey, 431 U.S. 1 (1977) and Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) hold that this clause still has to be squared with “the inherent police power of the State to safeguard the vital interests of its people.” See Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410 (1983). The Supreme Court noted in U.S. Trust that “an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose.” So the prohibition isn’t all that prohibitive after all.

In the context of the Takings Clause, courts have held that various government actions, despite limiting or restricting the use of property, nevertheless do not raise a takings claim. Regulations related to providing for the general welfare, for instance, are perfectly permissible. The court in Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 105 (1978) stated that where the government “reasonably conclude[s] that ‘the health, safety, morals, or general welfare’ would be promoted by prohibiting particular contemplated uses of land,” there is no requirement to compensate the owner. Joe Singer points out in Justifying Regulatory Takings, 41 Ohio N.U. L. Rev. 601 (2015) that:

Key examples of laws that promote the public welfare are zoning and environmental laws and consumer protection laws such as building codes. The Supreme Court has upheld against takings challenges laws that impose height limits and setback requirements, as well as zoning laws that segregate residential, commercial, farming, institutional, and industrial uses. The Court has upheld public accommodation laws and implicitly approved fair housing and employment discrimination laws. It has allowed minimum wage and maximum hours laws and workplace safety laws to operate without challenge.

Both clauses are, in a sense, concerned with protecting the sanctity of property rights (be they tangible—like land or personalty—or intangible—like those arising from a contract creating debt). One obvious difference is that with the Takings Clause it’s still possible for state governments to “take” property as long as they do so for a public purpose and just compensation is paid. Under the Contracts Clause, however, states are flat out prohibited from impairing a contract right. But, as indicated above, both of these commands can ring a bit hollow. States can pass laws that break contracts when it's “necessary and reasonable” and states can regulate property without causing a taking when its “justified.” And if a state is prohibited from impairing a contract, then can they just turn around and claim they're doing it under the Takings Clause? Can a public purpose be "necessary and reasonable" for Contracts Clause purposes and yet not "justified" for Takings Clause purposes? What about the other way around? Are these standards different or are they the same thing?

So what does all this mean for the distinction between the two? Can they always be raised together in the face of state action? What are the defining features/lines that make them wholly separate concepts—or is it better to think of them as being interlocking (like how Justice Kennedy describes the Equal Protection and Due Process Clauses in Obergefell v. Hodges)? I hope to formulate some answers to these questions (or at least sound a bit more like I know what I’m talking about) in the months ahead. Your thoughts are welcome and appreciated in the comments below.

June in Germany: German Basic Law and Eminent Domain

Thanks to the support of the University of Passau, I’m spending the better part of my June doing research in Germany. Now that I’ve had my fill of schwein (pig), radler (lemon-y beer), and, of course, weinerschnitzel, and I’ve driven on the autobahn, and I’ve been hiking through scenic Bavaria, it’s time to get to posting about German property law.

Today we start with eminent domain. Germany, like the United States, constitutionally protects private property from being taken by the State. The German Basic Law, i.e. the German Constitution, provides in article 14(1) that “[p]roperty . . . shall be guaranteed,” property “entails obligations,” and property’s “use shall also serve the public good.”

“Public good” is interpreted by German courts to mean that the use must create a public advantage, regardless of whether that advantage is created by the State or a private entity. While that interpretation is like the Supreme Court’s interpretation of the Fifth Amendment in the U.S. Constitution, unlike the U.S., economic development is an insufficient public good. In other words, Kelo isn’t happening in Germany. In fact, some German courts have interpreted the public use requirement in the German Basic Law to require a public necessity in order for expropriation to occur.

In order for the State to take property, the State must pay compensation. Under Article 14(3) of the German Constitution, the compensation required is an “equitable balance between the public interest and the interests of those affected.” Thus, the U.S. notion of “just” compensation is not required; instead there is a balancing test which, of course, means that compensation in Germany for a takings could be lower than fair market value. This may seem objectionable at first to an American audience, but keep in mind that less property can be taken in Germany because of the more limited interpretation of public good under the German Basic Law. (Side note: a number of countries use public use/good and compensation to balance one another, i.e. the broader the definition of public use, the higher the compensation required and vice versa. Whether this works better/worse/or just differently than the U.S. approach is worthy of discussion, but that will be for another post.)

Finally, article 14(3) of German Basic Law requires that any taking be made “pursuant to a law,” which essentially means that legislation must set forth the necessary takings procedure. In practice, this works pretty similarly to the U.S. notion of procedural due process.

There you have it—a brief primer on takings in Germany. Over the next couple of weeks we’ll look at other classic property doctrines under German property law, so if there’s a burning question you have about the Bürgerliches Gesetzbuch (the German Civil Code), fire away. No guarantees you’ll get an answer—there is, afterall, a lot of radler here to consume—but I’ll see what I can do.

Now Germany is about to play Ukraine in Euro 2016, so time to do as the Germans and head for the biergarten.

RPTE Professors' Corner: Law and Public Art

Professors’ Corner's FREE monthly webinar featuring a panel of law professors, addressing topics of interest to practitioners of real estate and trusts/estates.
Sponsored by the ABA Real Property, Trust and Estate Law Section Legal Education and Uniform Laws Group

Tuesday, May 10, 2016
12:30 p.m. Eastern/11:30 a.m. Central/9:30 a.m. Pacific
A Lawyer’s Guide to the Law of Public Art

Speakers:

Tyler T. Ochoa, Professor of Law, High Tech Law Institute, Santa Clara University School of Law

Anthony L. François, Senior Staff Attorney, Pacific Legal Foundation, Sacramento, CA

Moderator: Christopher K. Odinet, Assistant Professor of Law, Southern University Law Center

The use of art in public spaces has captivated the minds of federal, state, and local policymakers in recent years, with some cities even requiring that private developers include public art in all new projects. Moreover, ownership of public art has drawn the attention of lawyers and advocates, particularly when it comes to competing property and management rights between the public, the artist, landowners, and interested third parties. This program begins with an overview of the intellectual property rights in connection with public art, explaining the differences between the rights in the intangible work and the rights in the physical object itself. The program continues with a case study of the City of Oakland's art requirement for private real estate developers, exploring the property and related legal issues that surround such regimes.

Register for this FREE webinar by clicking here. 

 

Feeling the Bern for Eminent Domain

When last we blogged (which was a while ago, my apologies), we learned that Trump won’t dump the Fifth Amendment, Cruz can be TRUSTed to not use eminent domain (unless it’s to build a wall between the United States and Mexico), and Kasich is happily warrior-ing on somewhere in between. Now on to the Democrats!

It’s been a big week for Bernie, filled with ups and downs. First he had a tough meeting with the Daily News Editorial board, then he won Wisconsin, then he noticeably did not attack Clinton in his victory speech, then he went to the other extreme in Philadelphia and said Hillary was not qualified to be President. The Communications team for Senator Sanders must be running on coffee fumes after the busy week they have been having!

As a self-proclaimed democratic socialist, my expectation was that Sanders would be pro-eminent domain given that the Fifth Amendment advances government ownership of formerly private property for a public use. That certainly fits in line with a socialist agenda. And Sanders did not let me down. In December 2007, Senator Sanders voted no on an amendment to that year’s Farm Bill Extension Act, which would prohibit the federal government from taking farmland or grazing land for “parks, open space, or similar purposes.” This makes sense. To grossly oversimplify Sanders’ semi-socialist view:

public parks > private farmland

This led me to Kelo and wondering what would Sanders think. Strong use of government power would not be offensive to Sanders’ philosophy, but the factual end result of the case was a middle-class individual being ousted from her house by a private corporation, and that struck me as antithetical to Sanders war against the economic and political oligarchy. What’s then-Representative Sanders to do? As predicted, Sanders was not hot to trot for Kelo. At the time of the decision, Sanders said, “I believe that the result of [Kelo] will be that working families and poor people will see their property turned over to corporate interests and wealthy developers.” To Sanders credit, that is essentially the same line he has used throughout the entire campaign about, well, everything, so he’s got a consistent message. Again, to oversimplify Sanders’ brand of socialism:

land held by individuals of modest means > land held by Pfizer

But there is a little more to the Sanders-Kelo story. Representative Sanders was also among the largely Democratic minority that voted against an amendment in June 2005 offered to that year’s House Transportation Appropriations Bill that prohibited using any funds appropriated by the bill to enforce Kelo. You read that last run-on sentence correctly. An amendment was made to the Transportation Appropriations Bill in 2005 that said none of the tens of billions of dollars in the bill could be used for any purpose that would help enforce the Supreme Court’s decision in Kelo. If a member of Congress’ dislike of Kelo was, as Trump would say, huuuuuuuuuge, one way to stop it was to vote for the amendment, which is what a number of Democrats and a lot of Republicans did. But Sanders didn’t. He voted against the amendment meaning he voted to allow federal money to be used to enforce the judgment. For Sanders, this vote could have been more about separation of powers than his true views on Kelo. He did not make any floor speeches on the specific amendment so who knows what he was thinking at the time, but perhaps it was something like this:

separation of powers > using Congressional authority to defund Court’s authority

If that’s what Sanders was thinking, then I say good for him. What all of his other statements and votes on eminent domain seem to indicate is that while his pro-government values push him to look favorably on takings, he’s got result-oriented sunglasses on that impact his ultimate decision.

Last up, Hillary who, like Trump, has previously used eminent domain. What will she say on the topic? Tune in soon to find out!

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.

Fennell & Penalver on Exactions Law

Lee Fennell (Chicago) and Eduardo Penalver (Chicago) have posted Exactions Creep (Supreme Court Review) on SSRN.  Here's the abstract:

How can the Constitution protect landowners from government exploitation without disabling the machinery that protects landowners from each other? The Supreme Court left this central question unanswered — and indeed unasked — in Koontz v St. Johns River Water Management District. The Court’s exactions jurisprudence, set forth in Nollan v. California Coastal Commission, Dolan v. City of Tigard, and now Koontz, requires the government to satisfy demanding criteria for certain bargains — or proposed bargains — implicating the use of land. Yet because virtually every restriction, fee, or tax associated with the ownership or use of land can be cast as a bargain, the Court must find some way to hive off the domain of exactions from garden variety land use regulations. This it refused to do in Koontz, opting instead to reject boundary principles that it found normatively unstable. By beating back one form of exactions creep — the possibility that local governments will circumvent a too-narrowly drawn circle of heightened scrutiny — the Court left land use regulation vulnerable to the creeping expansion of heightened scrutiny under the auspices of its exactions jurisprudence. In this paper, we lay out this dilemma and suggest that it should lead the Court to rethink its exactions jurisprudence, and especially its grounding in the Takings Clause, rather than the Due Process Clause. The sort of skepticism about bargaining reflected in the Court’s exactions cases, we suggest, finds its most plausible roots in rule-of-law concerns implicated by land use dealmaking. With those concerns in mind, we consider alternatives that would attempt to reconcile the Court’s twin interests in reining in governmental power over property owners and in keeping the gears of ordinary land use regulation running in ways that protect the property interests of those owners.

Steve Clowney

July 10th Professor's Corner Call to Discuss Koontz

Professors’ Corner:  Wednesday, July 10, 2013:  Koontz v. St. John’s River Water Management District:  A Significant Victory for Property Rights?

Professors’ Corner is a monthly free teleconference sponsored by the ABA Real Property, Trust and Estate Law Section's Legal Education and Uniform Laws Group. Each month’s call features a panel of law professors who discuss recent cases or issues of interest to real estate practitioners and scholars.   Members of DIRT are invited to participate in the call (as well as to join and become involved in the ABA Real Property, Trust and Estate Law Section).

Wednesday, July 10, 2013

12:30 p.m. Eastern time (11:30 a.m. Central, 9:30 a.m. Pacific). Call is ONE HOUR in length.

Call-in number: 866-646-6488

Passcode: 5577419753

This program will feature a roundtable discussion breaking down the Supreme Court’s important June 25 decision in Koontz v. St. John’s River Water Management District. If “monetary exactions” have always seemed a little untamed to you, you’re not alone. The 5-4 decision in Koontz leaves a lot of room for analysis, and this month’s panel is prepared to guide you through it by parsing the decision and the dissent.  Our distinguished panel will include Professor Jonathan H. Adler, who is the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at Case Western Reserve University School of Law; John D. Echeverria, Professor of Law at Vermont Law School; and David L. Callies, who is the Benjamin A. Kudo Professor of Law at the University of Hawai’i. 

For those that haven’t already seen it, here’s a link to the opinion:

http://www.supremecourt.gov/opinions/12pdf/11-1447_4e46.pdf

Please join us Wednesday for this great program!

Tanya Marsh

Adverse Possession, Takings and the State

William Marra, Harvard Law School, has posted Adverse Possession, Takings, and the State on SSRN.

Here's the abstract:

Normally, the government may not seize private land without paying for that land. Yet it turns out that governmental bodies sometimes avail themselves of the laws of adverse possession, taking title to private land without paying the landowner. This phenomenon, largely ignored by the scholarly literature, raises two questions. First, should the government be allowed to adversely possess land in the same manner as private individuals? Second, when the government commits adverse possession, does this constitute a constitutional “taking” that requires the payment of just compensation? These two questions are of practical importance because they affect the resolution of numerous property claims, and they are of theoretical significance because they implicate both the appropriate scope of private property rights and the proper relationship between the individual and the state. Part I provides an introduction to adverse possession, and Part II studies the law of government adverse possession, detailing how nearly every jurisdiction permits the government to adversely possess private land in the same manner as private individuals. But as Part III demonstrates, government adverse possessors are not similarly situated to private adverse possessors, and the laws of adverse possession are built on a trio of assumptions — that the landowner has a property rule entitlement to her land, that the trespasser develops robust reliance interests, and that society’s primary interest is in quieting title — that do not necessarily hold when the government is the adverse possessor. Part IV concludes that because the current rules of adverse possession incentivize government trespass upon private land, special rules should apply to the government. When the government adverse possessor trespassed in good faith, a longer statute of limitations should apply; when the government trespassed in bad faith, it should be entirely denied the right to adverse possession. One quick fix to the problem, proposed by a federal court and endorsed by some commentators, is to call government adverse possession a constitutional taking and require the state to pay just compensation. Part V explains that the problem cannot so easily be wished away, and contends that the text of the Constitution, its history, and Supreme Court precedent all suggest that government adverse possession is not a taking. The solution to the problem presented by government adverse possession rests in righting property law, not distorting constitutional law.

By way of comparative comment:

• It is interesting how "takings" issues are such a significant part of constitutional discourse in the US, and in my nearer neighbour, Australia.  New Zealand, without a formal written constitution, and without any "takings" provision, is in a different world in this sense.  I have recently been exploring how the absence of this regime makes it easier to "propertise" resources (and also regulate them without having to worry about compensation issues) for a forthcoming article for the New Zealand Universities Law Review.
• Adverse possession was a part of my NZ Land Law course, as it remains part of US property courses.  In New Zealand the law is statute based, and there would be very few adverse possession cases in New Zealand: one of the recent ones concerned a fairly isolated block of farm land with a fence in the wrong place (rather than the "squatter's rights" (of an abandoned house, for example) I imagined at law school).
• Marra hasn't steered away from takings.
• An empirical study of adverse possession (comparative, Commonwealth or otherwise) would seem to deserve attention.
• 

Thomas Gibbons

Rule on Airspace and the Takings Clause

Troy A. Rule (Missouri) has posted Airspace and the Takings Clause on SSRN.  Here's the abstract:

This Article argues that the U.S. Supreme Court’s takings jurisprudence fails to account for instances when public entities restrict private airspace solely to keep it open for their own use. Many landowners rely on open space above adjacent land to preserve scenic views for their properties, to provide sunlight access for their rooftop solar panels, or to serve other uses that require no physical invasion of the neighboring space. Private citizens typically must purchase easements or covenants to prevent their neighbors from erecting trees or buildings that would interfere with these non-physical airspace uses. In contrast, public entities can often secure their non-physical uses of neighboring airspace without having to compensate neighbors by simply imposing height restrictions or other regulations on the space. The Supreme Court’s existing regulatory takings rules, which focus heavily on whether a challenged government action involves physical invasion of the claimant’s property or destroys all economically beneficial use of the property, fail to protect private landowners against these uncompensated takings of negative airspace easements. In recent years, regulations aimed at keeping private airspace open for specific government uses have threatened wind energy developments throughout the country and have even halted major construction projects near the Las Vegas Strip. This Article highlights several situations in which governments can impose height restrictions or other regulations as a way to effectively take negative airspace easements for their own benefit. The Article describes why current regulatory takings rules fail to adequately protect citizens against these situations and advocates a new rule capable of filling this gap in takings law. The new rule would clarify the Supreme Court’s takings jurisprudence as it relates to airspace and would promote more fair and efficient allocations of airspace rights between governments and private citizens.

Ben Barros

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

Be Warned

I'm about to teach Kelo to my Property students. They'd all remember the hubbub about the case, right?  It was only a few years ago, right?  Wrong.  Many of them were in 9th grade.  I asked the class how many people remembered the case.  Only about 15% raised their hands.  Be warned.  We are old.

Ben Barros

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

Rethinking Kelo

In case you missed it last week, Jeff Bendict, author of a book about the Kelo case and the failure of New London's development project, has reported that one of the four Connecticut Supreme Court justices who voted against Susette Kelo recently said, "Had I known all of what you [Benedict] just told us, I would have voted differently." 

In the comments on the blog, Tim Iglesias makes a nice point:

As anyone who works with real estate development knows, litigation can kill projects. It's hard to sort out how much the litigation that Ms. Kelo brought and pursued all the way to the USSC contributed to the failure of the proposed redevelopment project. I don't see how anyone could confidently state that the project would have failed if the lawsuit had not been brought.

Steve Clowney

Kelo in the News II

Justice Richard N. Palmer of the Connecticut Supreme Court, one of the four justices who voted with the 4-3 majority against Susette Kelo and her neighbors, had a face-to-face encounter with Ms. Kelo and Jeff Benedict, author of Little Pink House, at a 2010 dinner party. According to Benedict, the Justice said "Had I known all of what you [Benedict] just told us, I would have voted differently."

Justice Palmer later provided some context for the remark.  "Those comments," he wrote, "were predicated on certain facts that we did not know (and could not have known) at the time of our decision and of which I was not fully aware until your talk — namely, that the city's development plan had never materialized and, as a result, years later, the land at issue remains barren and wholly undeveloped." He later added that he could not know of those facts "because they were not yet in existence."

Benedict's take on the encounter is here.

Steve Clowney

(HT: Sarah Waldeck)

Patashnik on Bringing a Judicial Takings Claim

Josh Patashnik (Stanford student) has posted Bringing a Judicial Takings Claim on SSRN.  Here's the abstract:

In Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, the Supreme Court breathed life into the doctrine of judicial takings – the idea that judicial decisions, like executive and legislative action, might be deemed to take property rights under the Takings Clause of the Fifth Amendment. Before the case, judicial takings were the province only of law review articles, a few offhanded mentions in Supreme Court concurring and dissenting opinions, and one or two cases in the lower federal courts. Stop the Beach Renourishment firmly established the proposition that the federal Constitution provides some protection against judicial redefinition of property rights, though the Court was unable to determine whether that protection emanates from the Takings Clause of the Fifth Amendment or the Due Process Clause of the Fourteenth Amendment. In this Note, I seek to shed some light on the unexamined questions of how and where, in the wake of that case, a party aggrieved by a judicial property law decision might actually go about bringing such a claim, and what remedy she might hope to obtain. I conclude that a plaintiff bringing a judicial takings claim (or a due process claim rooted in judicial takings) should be able to bring her case in federal court, notwithstanding the barriers the Supreme Court has erected that keep the vast majority of federal takings litigation in state court. I further argue that while the Eleventh Amendment likely precludes a federal court from awarding money damages to a judicial takings plaintiff, equitable relief – in the form of invalidation of the offending state court opinion – should be available.

Steve Clowney

Sprankling on the Interaction Between the Fifth and Third Amendments

Thomas Sprakling (Columbia - student) has posted Does Five Equal Three? Reading the Takings Clause In Light of the Third Amendment's Protection of Houses (Columbia Law Review) on SSRN.  Here's the abstract:

The Supreme Court’s 5-4 decision in Kelo v. City of New London broke new ground by holding that the seizure of owner-occupied homes as part of a plan to foster economic development was a taking for “public use” under the Takings Clause of the Fifth Amendment. Kelo’s many critics have yet to advance a constitutionally-grounded rationale for why homes should receive special protection from condemnation. This Note argues that the Third Amendment’s solicitude for the home provides a constitutional basis for distinguishing between homes and the other forms of “private property” covered by the Takings Clause. The Amendment, which provides that “[n]o soldier shall, in time of peace be quartered in any house, without the consent of the owner, nor in time of war, but in a manner to be prescribed by law,” shares both historical and textual links with the Clause. These connections suggest the judiciary should apply a form of heightened scrutiny similar to the “meaningful” review standard proposed by Justice Kennedy’s concurring opinion in Kelo when determining whether the government’s seizure of an owner-occupied home is for “public use.”

Steve Clowney

Supreme Court Grants Cert on Judicial Takings Case?

Over at Land Use Prof, Tim Mulvaney has a nice write-up on PPL Montana v. State of Montana, a recent property/enviro case that the Supreme Court has decided to grant cert on.  The central issue in the case is who owns the beds and banks of three Montana rivers that play a significant role in state's economy.  Whether the rivers are privately owned or belong to the state under the public trust doctrine depends on whether the rivers were “navigable” when Montana was admitted to the Union in 1889. 

As Tim points out, there may also be a looming judicial takings issue.  Tim writes: "In its petition for certiorari, PPL Montana cited to Stop the Beach in asserting that, '[b]ecause [the Montana Supreme Court was] the operative force behind this land transfer [from private ownership to state ownership], it remains to be seen whether property owners in general have a Takings Claim or due process objection to [such a] land grab.'"  Moreover, the Cato Institute is arguing that the "Montana Supreme Court adopted a retroactive rule that destroyed title already accrued in violation of the Takings Clause," and calls the Court’s ruling a “thinly-disguised judicial taking.”

Steve Clowney