inversecondemnation.com

A Holdout

The New York Times posts a story, "House Stands as Legacy to Fight Against Developers," about one woman's refusal to sell her modest Seattle, Washington area home to a redeveloper, even when offered $1 million.  If a picture is worth a thousand words...

While the case is not like Kelo -- or the fictional The Castle -- in that the developers apparently did not attempt to get the government to take Edith Macefield's property forcefully by eminent domain once she refused to sell, it does illustrate at least one of the reasons people may have for refusing, even where the offer is obviously well in excess of the home's value:

Everybody that’s come in and tried to talk about this has tried to create that image of her,” said Mike Semandiris, whose family has owned a chili parlor around the corner for more than 70 years. “But she didn’t give a damn about preserving old Ballard. The lady just wanted to live in her house.”

Add Mrs. Macefield to the list of interesting holdout cases (go here for more, illustrated), including that American patriot Bugs Bunny.

New California Law: You Shall Live Near Transit

Given that Honolulu voters recently approved a $4B-plus rail system, an article from the San Francisco Chronicle about a new California law encouraging "local governments and builders to concentrate growth in urban areas or close to public transportation hubs in an effort to reduce Californians' use of cars and lower their greenhouse gas emissions" should be of some interest. In other words, development is "encouraged" in urban areas in "multifamily urban properties" (apartments).

One of the more interesting issues is whether people want to live in these areas, or whether -- like so many other things such as mass transit -- it is a case of "good for others, but not for me." The article quotes the attorney for California Major Builders Council

"Our industry very much supports the goal of building more high-density projects in blighted areas, doing redevelopment and transit-oriented developments," he said. "There is a demand for this type of development, and it's not as if all the home builders in the U.S. and California are stupid."

On the other hand, he said, there is a firm industry conviction that not all of the projected growth in California can be accommodated in multifamily urban properties, nor do all consumers want to live in such homes. There are clear downsides for those builders pursuing projects that don't reflect the model envisioned in the law.

(emphasis added). More analysis and opinion here:

• SB 375 Is Only The Beginning
• SB 375 Is Now Law - But What Will It Do?
• Gov. Schwarzenegger's press release (with video)
• Op-ed: Steinberg's SB 375 isn't a smart growth strategy
• LA Times: Legislature takes aim at urban sprawl
• LA Times Greenspace: Who says we can drive less?

Last year, I discussed the issue of "transit-oriented development" on Jay Fidell's public radio show ThinkTech Hawaii with UH law professor David Callies, and Honolulu attorney and developer Vernon Woo.  Podcasts of that show are available here.

Clearing Up Myths About Hawaii Eminent Domain Law and the Rail

In reviewing some of the comments posted on the Honolulu Advertiser's November 1 report  "Rail study doesn't list all affected properties," it seems several of the commenters have fairly severe misconceptions about how eminent domain law works in Hawaii. Let's clear some up some myths.

• Myth #1: The city will offer a "premium" to property owners whose homes, businesses and churches will need to be acquired, because the city will want their properties quickly. Wrong on two counts. First, the city does not need to offer a premium since Hawaii law has a procedure by which the city can take immediate possession of property it wants, "ex parte" (without notice to the landowner). Second, the city will only offer what it believes to be the amount legally required to be paid for "just compensation" and damage, not a penny more. Indeed, the city will claim it is fulfilling its obligation to the rest of the taxpayers when it offers you nothing more than its own valuation.

• Myth #2: The compensation offered and paid will include attorney's fees and costs.  No, the Hawaii Supreme Court has held that the "just compensation" and damages required by the Hawaii Constitution to be offered and paid to property owners whose land is taken does not include attorney's fees and costs the landowner incurs if the property is taken. State v. Davis, 53 Haw. 582, 587, 499 P.2d 663, 687-88 (1972). In that case, the court held:

  We hold in accordance with the overwhelming weight of authority that attorneys' fees and expenses, including expert witness' fees, are not embraced within the meaning of ‘just compensation’ for purposes of article I, section 18 of the Hawaii Constitution.

  How might that work out for the homeowner? Let's say, hypothetically, that you are going to have your home taken to make way for the rail, and you believe it is worth $614,000, the most recent median price of a home in Pearl City. But the city thinks otherwise and offers you $450,000, the most recent median price for a home in Ewa (this is not how valuation is determined, and I am only using these numbers as an example). You show to a jury that the city has grossly undervalued your property, and you eventually win. You have to pay your court costs, your attorney and your appraiser out of that $165,000 the city should have offered you in the first place, so the city's lowball offer has effectively kept you from obtaining the full value of your home.

• Myth #3: I can use the deposit to pay my attorneys to fight the city's taking of my property.  You can, but you've just "abandoned all defenses...except the sufficiency of the compensation or damage award."  So if you take the money the city deposits when it grabs your property, you can't object to the fact that the city is taking your property, just the amount you will receive as compensation and damages.

• Myth #4: I can count on the city treating me fairly and making a reasonable offer.  Good luck with that one. Read this summary by law professor and eminent domain expert Gideon Kanner and see if you still think that this is true.

• Myth #5: A property owner whose land is taken for the rail project can expect high valuation since the rail project will raise the value of properties near transit stations. Questionable. The city will no doubt claim the "scope of the project" rule requires a lower value. The rule says that increases or decreases in value after the scope of the project is known in the market can't be used to determine value of the property taken.

• Myth #6: I just appealed the city valuation of my home for property tax purposes saying it overvalued my home, but my claims of lower valuation can't be used against me in eminent domain. Oh yes they can. State law provides:

  The valuation claimed by the taxpayer in any appeal regarding the assessment of real property tax shall be admissible in evidence as an admission of the fair market value of the real property as of the date of assessment irrespective of the fact that the assessed value from which the taxpayer appealed is adjusted to one hundred per cent fair market value...

The vote on Tuesday will reveal whether these myths will need further addressing.

D-Day Draws Nigh For Honolulu Rail, Condemnations

On November 4, 2008, Honolulu voters are being asked to say yes or no to a proposed amendment to the Honolulu charter:

Shall the powers, duties, and functions of the city, through its director of transportation services, include establishment of a steel wheel on steel rail transit system?

A "yes" vote means that the proposed $4+ billion rail project is full steam ahead, while a "no" vote would, by all accounts, kill it. Resolution 08-166, CD1, which put the issue on the ballot, is available here.

If the voters approve of the project, it will be the largest public works development in Hawaii's history, and will require the acquisition of private property, either by purchase or eminent domain. In this post, we discussed an earlier report in the Honolulu Advertiser, "189 Hawaii properties in transit's path," which detailed the proposed rail route and some of the properties that may be affected. A few months later, the paper reported that "Dear Homeowner" letters were in the mail.

Yesterday, Sean Hao at the Advertiser reported "Rail study doesn't list all affected properties" --  

The locations of up to 212 properties affected by Honolulu's elevated commuter rail will not be released before Tuesday's rail referendum.

That means some residents who may be displaced by the rail project won't be notified before they vote on whether to authorize it.
. . . .

The city plans to release a new study on the rail project this weekend, but that study does not include the location of properties that may be fully or partially acquired to make room for the rail, the city said yesterday.

Those properties include 20 residences, one church and up to 67 businesses, according to an executive summary of the study.

Also, KGMB-9's Howard Dicus noted on his blog in a post entitled "The other side of the rail property story," that in addition to condemnation of the property to be used for a rail line and stations, property surrounding the stations will probably go up in value due to their proximity. True, "transit-oriented developments," as I discussed last year on Jay Fidell's ThinkTechHawaii radio program (podcast available here) may become vogue, but as this story from the San Francisco area notes, transit villages may need more than mere proximity to a rail station to make them valuable.

Of course, in addition to the property to be taken for the stations and the track, additional property will need to be acquired for construction-related activities, and still other property may be affected by the project in ways that will require the city to pay compensation or damages to the owners.  

Mr. Dicus promises more "after the election," and we look forward to his further thoughts.

The Fifth Amendment and the Eighth Commandment

Professor Kent Schooland has posted "Eminent Domain and the Eighth Commandment," a piece with his thoughts about the morality of condemning property and the system of "just compensation."

Given the realities of eminent domain, perhaps we should prepare our children with relevant civics lessons for the playground. When a gang of kids wants to grab a pretty ring off the finger of a little girl, they can avoid annoying accusations of “theft” by following a few simple steps:

1) The gang must use the Latin words eminent domain, never “stealing.”

2) The gang must designate one of their members as leader—thus the “superior owner” of everything on the playground.

3) The gang leader must instruct his or her lieutenants to “tax” a few coins from other children on the playground in order to offer “just compensation” to the girl when her ring is taken.

4) The gang leader must explain that his actions are for the collective good—as he determines the “good.” If the girl cries over the loss of her ring, this can be justified. The leader can explain that it is selfish to keep one’s own belongings; and it is unselfish to take what belongs to others.

Read the whole thing here.

Eminent Domain and the Holy Rail: "Dear Homeowner" Letters in the Mail?

In a story titled "Honolulu notifying landowners in way of planned rail route," the Honolulu Advertiser reports "The city has started notifying residents living in the path of the planned $3.7 billion elevated commuter rail that all or part of their properties may be condemned.  The letters, which are being sent out in batches, don't specify how much property may be needed along the 20-mile East Kapolei to Ala Moana route." 

The proposed rail project, if it survives an initiative vote this November, is shaping up to the biggest public works and largest singular use of eminent domain in Hawaii's history (I say "singlar," since the Land Reform Act -- the law challenged in Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229 (1984) -- might still be considered the largest use of eminent domain, but it was piecemeal).   I guess our December 2006 prediction of the "dear homeowner" letters has come to pass.  We've posted on the issue of eminent domain for the rail project before here and here (with link to a podcast on the subject).

Public Use/Kelo Round Up

Several items today with a common theme of eminent domain and public use -

• PropertyProf Blog posts a link to Professor Richard Epstein's latest article, "Public Use in a Post-Kelo World."  I agree with Professor Barros' recommendation: "Given the author, obviously a must-read for anyone interested in public use issues."

• The Honolulu Advertiser's Sean Hao details the issues when takings for Honolulu's proposed +$4B rail transit project runs into a unique "old Hawaii" neighborhood in "Pearl City's Banana Patch at risk."  A neighborhood without city water, street lights, or sidewalks (but a community nonetheless) is slated for removal for a "park and ride."

• From the St. Louis Post-Dispatch comes "Owner of land in redevelopment path anxious, some suing to be paid" about how a group of owners have been waiting more than a year to be paid for their properties which were taken for redevelopment.

• Thanks to Castle Watch Daily for cheekily pointing out that the web site of the New London Development Corporation, the entity at the heart of the infamous Kelo case, is "Under Construction."  The web site might be, but the project sure isn't.

Honolulu Rail Takings

In "189 Hawaii properties in transit's path," the Honolulu Advertiser's Sean Hao writes about the potential use of eminent domain to take private property along the path of Honolulu's proposed $4B rail transit project:

Some landowners in the path of the new rail line, who may have little choice but to sell to the city, are not pleased with the potential eviction and complain that the process so far has left them in the dark.

The city, which has budgeted $70 million to purchase land needed to build the rail system, will offer property owners fair market value for their land based on an appraisal. That could prove controversial as some owners challenge the appraised value.

The article notes that the City's web site has listed these properties for more than a year, but the information is difficult to locate, so many of the owners were not aware their properties may be acquired.  The amount the City has budgeted -- $70 million -- may be an unrealistic estimate:

Fighting the city on property condemnation is not easy. Because mass transit serves a public purpose, there's little preventing the city from acquiring property needed to build it, said Robert Thomas, managing attorney for the Pacific Legal Foundation's Hawaii Center, which lobbies for property owner rights. The U.S. Constitution allows local government to take private property if there is a compelling public interest in doing so.

"Right now, it looks like the chances of a fight on whether they can take this land is pretty remote," Thomas said. "There's very little standing in the way."

Once the acquisition process starts, the city will determine the fair market value for properties and offer to pay owners that amount, the city said. If landowners refuse to sell, the city may condemn the property.

The key battles between property owners and the city will be over what constitutes fair value for the lands being acquired, Thomas said. That decision will hinge on when the property assessments are made.

"The critical piece in the puzzle is, when are we valuing this?" he said. "The owner could claim a higher valuation, if it's an earlier date, especially if it's a slightly declining market." However, "If our economy is going the way people think it's going, then property values are going down, which could benefit the city's acquisition prices," Thomas added.

Read the complete Advertiser article (plus reader comments) here.

In a similar vein, last year, UH Law professor David Callies, Honolulu attorney Vernon Woo, and I were guests on Jay Fidell's KHPR program on the topic of Honolulu rail, and the development and land use issues sure to surround the project.  Audio of the show is available here.

Hawaii Public Radio on Transit, Land Use, and Growth (mp3)

Hawaii Public Radio has posted a five-part series of reports on "Transit and Growth in Hawaii," the third of which is the most interesting since it focuses on Honolulu's proposed $4 billion+ rail system.  Each of the segments, however, is worth a listen:

• Part I - did 1970's projections match up to reality?
• Part II - gas prices and growth
• Part III - the cost of rail, and who will pay
• Part IV - the EIS
• Part V - which technology will be employed?

In a similar vein, last year, UH Law professor David Callies, Honolulu attorney Vernon Woo, and I were guests on Jay Fidell's KHPR program on the topic of Honolulu rail, and the development and land use issues sure to surround the project.  Audio of the show is available here.

eminentdomainsucks.com

Here's a property owner from Denver, Colorado not afraid to tell us what he really thinks about eminent domain: the URL for his blog is eminentdomainsucks.com. 

No surprise that someone who grabbed that domain name is a property owner on the business end of a condemnation action.