When new owners took over an apartment building in the New York City borough of Queens, they promptly set about filing eviction notices, suing nearly half of the building's tenants — some of them multiple times — within the first 16 months. That amounted to 965 court proceedings against 2,124 apartments, compared with just 50 court proceedings in the final year of the previous owner. The complaints alleged that the tenants were subletting illegally or had not paid their rent or security deposits, even though the tenants often had records proving otherwise.To the tenants, it seemed as though every possible legal vulnerability was being sought out in an effort to force them out.
This kind of activity — flushing out low-rent tenants and replacing them with wealthier new renters — has been a staple of strong real estate markets for years. What was different over the past few years was how widespread this Dickensian business model had become, largely fueled by Wall Street money seeking high rates of return. Another difference was how much the general investing public — through university endowments and pension funds — became party to such morally dubious schemes. Consider it another footnote to the Gilded Age we just passed through.
This investment trend, which flourished from 2005 until the financial crisis hit in 2008, threatened a cherished pillar of urban policy — affordable housing, which has long been regarded as essential for maintaining vibrant diversity in our cities. The victims are among the huge numbers of Americans (estimated at close to 100 million before the latest housing boom promoting homeownership) who rent their primary residences — poor, working-class and even middle-class folks — who have been overshadowed in the deluge of media coverage of the debacle in single-family housing. (Affordable housing refers to that costing no more than a third of a family's income.)
But as private equity funds seized on the rental market in major cities in recent years, all this was jeopardized by the need to generate fat returns of 15%-20% per annum.Worse, this business model was based on a dirty secret — expelling as many existing tenants as possible. This is the thuggish reality behind otherwise respectable-sounding prospectuses offered to investors to explain how they could service high debt on mortgage-backed securities.
"The borrower anticipates to recapture approximately 20%-30% of the units [roughly within the first year] and 10% a year thereafter," explained a prospectus for a portfolio of buildings in upper Manhattan being bought by Apollo Real Estate Advisers (now AREA Property Partners), with a primary mortgage from a Credit Suisse subsidiary.
The normal turnover rate in cheap or moderate rent-regulated apartments in New York City is 5.6%, according to data from the New York City Rent Guidelines Board.
"From a public policy standpoint, you can make a strong case that it is not desirable [for Wall Street money to be in this market], and equally strong you can say that housing regulators or authorities in New York and most other cities have been asleep at the wheel for the last five and 10 years — this stuff is going on everywhere," says Guy Cecala, CEO of Inside Mortgage Finance Publications, a stable of industry newsletters, who worries that the very idea of affordable housing is under threat.
But these securitized transactions were considered a legitimate business strategy by investors, who typically focus on the cash flow from these deals, not the fine points on how cash is generated.
"These could have all been brothels or sweatshops underlying them, and nobody would know that either," says Cecala, who notes that "one of the reasons for buying securities ... is supposedly you don't have to worry about any of that; someone else is supposed to have signed off on the legality of the transactions, the business practices, everything."
Those packaging these investments say they regarded them as aboveboard, though their defense is less than robust. Key players included leading banks in tandem with some of the biggest names in real estate and private equity, none of whom would have missed that high tenant turnover was the main motor for profits.
"We truly went into this trying to turn housing that was run very, very poorly by slumlords into affordable working-class housing, and to be portrayed like this is somewhat upsetting, to be quite frank," says Richard Mack, who works at AREA Property Partners, a $9 billion partnership, with his father William, who got his start in 1963 with a 5-acre plot of New Jersey swampland. The turnover targets were perhaps "more aggressive than people think they should have been," but he says, "Life is too short for us to have done this, with this small a part of our portfolio, if we didn't actually think we were doing the right thing. Whether or not we executed as perfectly as we could — I'm sure that we made mistakes — our true intention here was to make money by doing good."
Tenants pried from their homes would see it differently. In a typical Queens building, hired legal guns were able to achieve 23% turnover in the first year of new owners, or about double that of a typical building in Manhattan, where the culture of tenant rights is stronger, according to a new study by affordable-housing advocates, the Association for Neighborhood and Housing Development.
The study focused on New York City, where Wall Street money made the most inroads — capturing about 100,000 units (out of the city's 2.5 million), or about 10% of the city's rent-regulated apartments before the real estate bubble collapse.
In this process, the report explains, the investor-owners were helped by the fact that many transitional neighborhood tenants were new (and possibly undocumented) immigrants, whose lack of English fluency and legal representation put them at a disadvantage in housing court, where deals are typically hammered out with owners' lawyers before ever reaching the judges. Those actually executing these orders were often conflicted about it.
"Having a large property owner as a client is great for the volume of work, but if you ask me about it morally or ethically, well, I'd rather not say," admits a housing court attorney who asked not to be identified.
Others are inclined to give big investors the benefit of the doubt.
"If people are really stretching the law — doing outright harassment to remove tenants — that's not a good thing, but I don't think that most big institutional investors knowingly will target deals like that or knowingly target deals with partners where they think that might happen," says Andy McCulloch, senior residential analyst with Green Street Advisors, a property research shop.
In the end, though, many new owners have been unable to meet their overly ambitious rent roll increase targets,and many of these investments are in danger of buckling under the high debt servicing costs. Finance industry watch lists are already full of private-equity-financed deals in danger of default. That has local officials scrambling to find "preservation buyers" who are willing to take on these properties with the expectation of a more modest 7%-8% annual return.
"I do think it is a problem ... and that's why we are putting our resources to bear to try to correct the problem before it becomes a bigger problem than we can tackle," says Rafael Cestero, commissioner of New York's Department of Housing Preservation and Development.
"Ownership of rental properties in New York City is a long-term proposition, and if you do it right, you can make a fair profit, but trying to make a short-term investment is where you can get yourself in trouble."
Nowhere was that more true than in the ill-conceived investment to turn the twinned 11,000-unit middle-class housing complex known as Stuyvesant Town and Peter Cooper Village, built originally to accommodate World War II veterans, into luxury housing, for which limits on yearly rent increases are chucked in favor or whatever the market will bear. The prospectus offered by the lead investors, Tishman Speyer and Larry Fink's asset-management fund BlackRock, imagined evicting 50% of rent-regulated tenants in just a few years. But tenants fought back and won in a court decision that also undercut plans for using city tax abatements to further sweeten returns on apartments pushed into luxury decontrol. The upshot, according to a recent Deutsche Bank analysis, is that the property, purchased in late 2006 for $5.4 billion, "would fetch less than $2 billion if sold into the current dislocated market." It added that the most natural buyer was MetLife, the insurer and original owner, in part because it represented "patient capital."
Friday, March 12, 2010
Who's the Boss, the States or the Federal Government?
Is the federal government sovereign, with authority over state governments? Or, are individual state governments sovereign, with authority over the federal government? It's a simple question; it's the answer that's a problem.
The federal government exists because representatives of the states created it. This fact should provide a clue. The federal government was designed by representatives from the states in a document called the Constitution of the United States. The federal government became a reality when the Constitution was ratified by the 9th state, New Hampshire, on June 21, 1788. This infant government, created by the states, began operation March 4, 1789. From that day until this, people have been arguing over whether the federal government or the states possess the supreme authority.
It is quite clear that the people who designed the federal government intended it to be limited in its power. Article 1, Section 8 sets forth 17 enumerated powers of the federal government. The first clause empowers the new government to "lay and collect taxes," to provide for the "defense and general welfare" of the United States. Here's where the argument gets nasty.
One group of people argues that the phrase "general welfare" means whatever Congress wants it to mean with no limitations. Another group of people argues that if this is what the designers intended, why on earth would they have bothered to enumerate the remaining 16 specific powers? It's a reasonable question that the first group prefers to ignore rather than answer.
To be sure that the federal government's authority stayed limited, the primary architect of the Constitution, James Madison, introduced the Bill of Rights in the very first Congress in 1789. These first ten Amendments further clarify the authority and limitations of the federal government. The 10th Amendment in particular, limits the federal government to those powers enumerated in the Constitution and explicitly reserves all other powers to the states and to the people.
Among the powers granted to the federal government is what is known as the "Enclave Clause," which happens to be the 17th enumerated power. This clause provides authority for the federal government to exercise supreme authority over an area "ten miles square" ceded by the states to be the Capitol of the new government, and over any lands purchased from the states with the approval of the state legislature for "…the erection of forts, magazines, arsenals, dock-yards, and other needful buildings."
This is where it really gets sticky. Clearly, the designers intended for the federal government to purchase "with the approval of the legislature" any land to be owned by the federal government within any state. The Constitution empowers the federal government, however, to exercise sovereign authority over its territories, and the authority to add states which are carved out of the territories.
It is reasonable to conclude that when a state is carved out of a territory, it becomes a state subject to the powers and limitations of all the other states within the jurisdiction of the Constitution, and no longer subject to the federal authority suffered by the people when the land area was a territory.
This is pretty much the way it went when Texas was admitted to the Union in 1845. What was called "public land" was shifted to the state of Texas. Today, only 1.9 percent of Texas is owned by the federal government.
In Utah, however, the federal government required, as a condition of statehood, to "disclaim all right to title" of public land, and the feds retained nearly 60 percent of all the land in the state. In Nevada, the feds retained 85 percent of the land.
How can it be legal for the federal government to own land in a state that it did not purchase with the consent of the state legislature? How can it be legal for the federal government to exercise sovereignty over land within a sovereign state? Why were the eleven Western states and Alaska treated differently upon admission to the Union than were the other 26 states that joined the Union – when all states were supposed to be admitted on an "equal footing"?
There is only one logical conclusion: the federal government should not own the land it now claims within any state unless it is purchased with the approval of the state legislature for the purposes set forth in Article 1, Section 8, Clause 17.
There is a growing effort in Western states to force the federal government to honor its Constitutional limitation on land ownership and return to the states that which is rightfully theirs.
Wednesday, February 24, 2010
Obama to Lock Up Public Lands from Being Used for Timber, Ranching, Mining and Energy Development
By William La Jeunesse, FOXNews.com February 18, 2010
More than a dozen pristine landscapes, wildlife habitats and scenic rivers in 11 Western states, some larger than Rhode Island and Delaware combined, are under consideration by the Obama administration to become America's newest National Monuments -- a decision the administration can make unilaterally without local input or congressional approval.
According to internal Department of Interior documents leaked to a Utah congressman and obtained exclusively by Fox News, the mostly public lands include Arizona deserts, California mountains, Montana prairies, New Mexico forests, Washington islands and the Great Basins of Nevada and Colorado -- totaling more than 13 million acres.
Sources say President Obama is likely to choose two or three sites from the list, depending on their size, conservation value and the development threat to each one's environment.
"Many nationally significant landscapes are worthy of inclusion in the NLCS (National Landscape Conservation System)," according to the draft report stamped NOT FOR RELEASE. "The areas listed below may be good candidates for National Monument designation and the Antiquities Act."
Presidential use of the Antiquities Act is highly controversial because the White House, with the stroke of a pen, can lock up thousands of square miles of federal lands used for timber, ranching, mining and energy development without local input or congressional approval. The Act is generally interpreted to commemorate or protect a specific historical landmark, not prohibit development or deprive local communities of jobs and tax revenues.
"Any federal action that could lead to limited access should be done in an open and public manner using extraordinary caution," said Rep. Dean Heller, R-Nev., upon seeing the leaked report. "The fact that this administration is already circulating internal memos to bypass Congress and the public process is troubling."
In 1996, President Clinton turned 1.3 million acres of southern Utah into the Grand Staircase-Escalante National Monument without telling the Arizona or Utah congressional delegation. Highly controversial at the time, the designation has withstood numerous legal challenges to the president's authority, and the national monument remains one of Clinton's boldest environmental accomplishments.
While Western politicians are still digesting the report, several properties stand out.
-- Otero Mesa, New Mexico: The area stretches over 1.2 million acres and is home to 1,000 native species. Gov. Bill Richardson has sought protection for Otero Mesa for years, but the Bush administration targeted it for oil and gas development.
-- Heart of the Great Basin, Nevada: Researchers call it a "globally unique assemblage of cultural, wildlife and historic values" that includes thousands of petroglyphs and stone artifacts dating back 12,000 years.
-- Owyhee Desert, Oregon: Called one of the most remote areas of the United States, the Owyhee is home to the largest herd of California bighorn sheep.
-- Bodie Hills, California: Located in the fast growing eastern Sierra Nevada mountains, Bodie contains the Golden State's best preserved ghost town. But the area is also loaded with gold, and several mining permits are pending.
-- The Modoc Plateau, California: Spanning close to 3 million acres in the northwest corner of California, the Modoc Plateau is "laden with biological and archeological treasures." Interior officials call it the second largest unprotected landscape in the state.
The list contains a number of political land mines for the president, according to a former Bush Interior Department appointee familiar with the document who asked to remain anonymous.
"Right now a number of senior officials are going over the report," he told Fox News. "When Clinton did it, most of the West was red states and he didn't have any blowback. Obama has to ask himself, if he chooses a Nevada location, will it hurt (Senator Harry) Reid's re-election. The same is true in almost every (Western) state where Democrats have made serious inroads."
The list was leaked just days after a story appeared in the New York Times outlining the administration's plans to use executive power to advance his agenda in the face of congressional opposition.
"We are reviewing a list of presidential orders and directives to get the job done, across a front of issues," White House Chief of Staff Rahm Emanuel told the newspaper.
Western representatives are planning a full-fledged assault on the report when Congress returns from its break next week.
Congressman Rob Bishop, R-Ut., co-founder of the Western States Coalition and now Chair of the Congressional Western Caucus, has also seen the leaked memo.
"We are taking this seriously. The tar is warming up. The pitchforks are ready. We will do what ever we need to make sure Congress is fully informed and fully aware of this action. This process should be open and transparent and President Obama should go though Congress and do it this the right way, not by presidential fiat," said Bishop.
"Outrage. In a country as dependent on foreign oil as this one, this kind of action on public lands is simply unacceptable."
Interior Department spokesman Craig Leff told Fox News late Wednesday the leaked document "reflects some brainstorming discussions within [the Bureau of Land Management], but no decisions have been made about which areas, if any, might merit more serious review and consideration."
Thursday, August 6, 2009
Civil Forfeiture: Can States Seize Your Private Property?
I've never been convinced that the U.S. Supreme Court has any interest in actually defending the Constitution and Bill of Rights. Among other decisions "protecting" our freedoms, the Supreme Court has:
Upheld the power of state and local governments to seize private property from one group of people for the benefit of a more powerful private interest.
Upheld the power of the federal government to prohibit farmers from growing crops on their own land for their own consumption.
Upheld the right of the President to invalidate contracts calling for the settlement of debts in gold or other precious metal, rather than in fiat dollars.
I could go on and on, but the record is clear that for more than two centuries, the Supreme Court has systematically eviscerated the freedoms the Founding Fathers bestowed upon us.
For that reason, I'm not particularly optimistic about the prospects for the latest legal challenge to the horrific practice of "civil forfeiture" to reach the Supreme Court. (Civil forfeiture is a legal procedure in which prosecutors can seize your property without accusing you, much less convicting you, of any crime.)
The Court has agreed to hear a challenge to a law in Illinois that permits the State to seize someone's property without a warrant, and then indefinitely delay a hearing to determine whether there is probable cause to detain the property (Alvarez vs. Smith, Case No. 08-351).
My guess is that the Court will uphold the right of Illinois to simply seize your property and deny you any right to challenge the seizure in court. I make this prediction not only because of the Court's long record of upholding laws and regulations that destroy our rights, but because of a long line of decisions specifically upholding draconian civil forfeiture statutes.
In 1827, the Court confirmed that the government could confiscate your property in a civil forfeiture without a criminal conviction and that property of people entirely innocent of any wrongdoing whatsoever could be forfeited. In 1878, the Court again upheld the right of the government to seize property from an entirely innocent owner. It did so again in 1921 and then, to make sure we really got the point, made the same determination in 1996.
In 2000, Congress enacted a civil forfeiture reform statute that established an "innocent owner" defense for most federal civil forfeitures. But in forfeiture under state law, no innocent owner defense may be available. Even if it is available, in states like Illinois, the government may indefinitely delay legal proceedings to allow you to assert it.
Civil forfeiture is a legal abomination that has no place in a civilized society. A Supreme Court interpreting the Constitution and Bill of Rights as written wouldn't merely restrict civil forfeiture, but abolish it at all levels of government.
There's not a snowball's chance in a blast furnace that will happen in this case. The best we can hope for is that the Court will invalidate the Illinois law due to the ability of the state to effectively deny civil forfeiture victims the right to a hearing. And I'm not optimistic.
What do the Statue of Liberty, Independence Hall, and Monticello have in common? The average American with a smattering of historical knowledge might say that those historic sites are all symbolic of America’s unique heritage of freedom.
Monticello, of course, was the home of Thomas Jefferson, the author of the Declaration of Independence. That document (as well as the U.S. Constitution, later) was signed in Independence Hall. The Statue of Liberty memorializes the free nation under God that those founding documents created.
What about the Great Smoky Mountains, Yellowstone Park, and the Grand Canyon? Well, these priceless natural resources are all managed by the U.S. National Parks Service. They are among the most frequently visited natural recreation areas in America, where millions of American families vacation every year.
Would it surprise you to learn that every one of these unique American landmarks is also controlled by the United Nations? It’s amazing but true. Every one of the natural and historic treasures listed above – plus more than a dozen more in America – has been designated an official World Heritage Site by the United Nations Educational, Scientific and Cultural Organization (UNESCO), which is headquartered in Paris, France.
Sites included in the World Heritage program are considered to have “outstanding universal value” as part of our common world heritage.They are designated as protected areas under the 1972 World Heritage Treaty, which is itself an outgrowth of the 1968 UNESCO Biosphere Conference, where the currently ubiquitous concept of “sustainable development” first saw the light of day.
But, wait there’s more. There are 47 OTHER locations in America designated as UN Biosphere Reserves, which are vast parcels of land set aside for conservation and scientific study. Symbolized by the Egyptian ankh, the UN’s Man and Biosphere program is designed to help humans achieve a “balanced relationship with the natural world” - again, through “sustainable use”of natural resources.
What does this mean in real life? Well, nothing, if you believe the UN. “Biosphere Reserves have no international or other authority,” claims the website of the U.S. MAB program. Their list of common “myths” about MAB includes denials that the program results in any “loss of sovereignty” or threat to private property.
Others see it differently. Henry Lamb, executive vice president of the Environmental Conservation Organization and chairman of Sovereignty International, says that the “Operational Guidelines” developed by the UN are effectively enforced by the U.S. government agencies managing the sites locally.
“Neither Congress, nor any state legislature, has ever voted to approve any of the 47 UN Biosphere Reserves in the United States. The management policy for millions of acres covered by these reserves is crafted by international committees of bureaucrats, none of whom is elected. To comply with ‘international obligations,’ the United States conforms its management policy and, in some cases, its law to accommodate the wishes of bureaucrats that are completely unknown to the people who are governed by the policies,” Lamb insists.
“This reality is but a hint of what is in store for those governed by the rule of international law. Massive documents, such as the 1140-page ‘Global Biodiversity Assessment,’ the 300-page ‘Agenda 21,’ and the 410-page ‘Our Global Neighborhood,’ all paint a picture of the international law that is being devised to govern the world in the 21st century.” (For more information visit http://www.eco.freedom.org/.)
Every Biosphere Reserve site consists of a protected CORE area, set aside strictly for conservation; a surrounding BUFFER ZONE, with limited human activity allowed; and a larger TRANSITION area, where otherwise legal human use may be severely restricted when the site is judged to be “in danger.”
For example, in 1995, Bill Clinton got the UN to declare Yellowstone Park a “World Heritage Site in Danger.”That gave him the “international obligation” to close down a coal mine on private property three miles away, despite the fact that coal had been mined in the area for 150 years before Yellowstone Park was created, and the Crown Butte Mines had won an award for excellence in 1992.
Today, Yellowstone Park is still considered to be “in danger,” according to the UN, because of “year-round visitor pressure.” Too many U.S. tourists taking their kids to see Old Faithful, the global bureaucrats in Paris say.
The President has the sole authority to approve these UN designations. Congress has no oversight, and average American citizens have no input. The House of Representatives has twice passed a bill requiring Congressional approval before any more precious pieces of America can be designated either Biosphere Reserves or World Heritage sites. So far, the Senate has refused to even bring the measure up for a vote.
Call me old-fashioned, but I still think Americans ought to control American land, not UNESCO bureaucrats. Why are both Republicans and Democrats, Liberals and Conservatives, allowing the UN to wield this kind of influence inside our nation’s borders? U.S. taxpayers should be outraged!
By Sean Flynn, Parade.com Originally Published on August 6, 2006
Joy and Carl Gamble bought an English stucco house in Norwood, Ohio, in 1969. They raised two children there and worked seven days a week in their small grocery store to pay off the mortgage.
“We had the house fixed up just the way we liked it,” Carl says. “When we retired, we planned to sit down and enjoy it.”
But now the Gambles live in their daughter’s basement. Their house stands vacant in the weedy field that was their neighborhood—seized by the city and transferred to a developer who wants to build shops, offices and condominiums.
In Long Branch, N.J., Denise Hoagland, 39, has an endless view of the Atlantic Ocean from the cottage she and her husband, Lee, bought 13 years ago. Their garden blooms with so many flowers that their three daughters call home “the place where the butterflies fly.” But Long Branch wants to take their home and about 35 other properties so a developer can build luxury condos.
Technically, it is a forced sale, because the government has to pay for the property. And it is legal: In June 2005, the U.S. Supreme Court ruled that state and local governments can seize homes to make way for private development.The decision inKelo v. City of New London triggered a sort of government land-grab.
In the one year since Kelo, more than 5,700 homes, businesses and even churches were threatened with seizure for private development, according to the nonprofit Institute for Justice (IJ), and at least 350 were condemned or authorized for condemnation. By comparison, about 10,000 were similarly threatened or taken over from 1998 through 2002.
Government always has had the power to force the sale of private property for public use—a process known as eminent domain. But what is “public use”?
Historically, it meant highways, railroads, schools and sweeping urban-renewal projects, such as the redevelopment of the Baltimore waterfront. But Kelo made clear that middle-class homes could be replaced with malls, offices, luxury homes—anything that might increase tax revenue.
“It’s a blatant example of reverse Robin Hood—taking homes from the poor and the middle-income and giving them to the rich,” says Scott Bullock, the IJ attorney who argued (and lost) Kelo.
“The fact is, a shopping mall does usually produce more taxes than a house,” says IJ attorney Dana Berliner. “An office building does produce more taxes than a church. But if that’s the rule—that anyone’s home can be taken away from them because something else will produce more taxes—then no one’s home is safe.”
In Norwood, the Gambles and two other property owners represented by IJ brought their case to the Ohio Supreme Court. In Long Branch, two dozen residents, also working with IJ, are suing to stop their neighborhood from being replaced with 185 condominiums. And in Lakewood, Ohio, my hometown, the people of Scenic Park waged such a successful public campaign three years ago that voters spared their homes from being taken.
In each city, the process unfolded almost identically: A private developer, with the government’s backing, wanted a big piece of property—cliff-side homes with valley views in Lakewood, ocean-front cottages in Long Branch—and tried to negotiate deals with each owner.When some refused to sell, the cities threatened to invoke eminent domain to clear the holdouts.
In order to do that, however, city officials first needed to declare the neighborhoods “blighted.” But the legal designation of “blight” bears little resemblance to a commonsense definition. In Lakewood, for example, Scenic Park is a charming neighborhood of older, well-kept homes. But because they lack such modern touches as attached two-car garages and central air-conditioning, the city deemed them blighted—a standard by which more than 80 percent of Lakewood, even the former mayor’s home, would likewise be blighted.
“We always bit on the word ‘blight,’” says Julie Wiltse, 63, who helped neighbors distribute 20,000 fliers and sponsor a series of blight events: a Blighted Block Party, a Blighted Chili Cook-off, even a Blighted Groundhog Day (which predicted four more months of blight). TV cameras and newspaper reporters loved that stuff.
“We were very successful in explaining to the community, ‘If we’re blighted, you’re blighted,’” Wiltse says.
Likewise, the Hoaglands’ neighborhood in Long Branch isn’t “blighted” in any meaningful way. With one or two exceptions, it’s a few blocks of low-key bungalows where families have lived side-by-side for decades, even generations. The shabbiest touches, ironically, are the posters in nearly every home’s windows with the words “eminent domain abuse” inside a red-slashed circle and the several homes that have been bought by the developer and boarded up. What the area doesn’t have, however, are the $500,000 condos or the restaurants with $12 hamburgers that were built immediately south of the neighborhood.
“When they want to revitalize,” says William Giordano, 41, whose great-grandfather built his house, “suddenly we’re not good enough to live here.”
The city has put prices on the houses it wants to take: $400,000 for the Hoaglands’ house, $374,000 for Lori Ann Vendetti’s, $410,000 for the home her parents built across the street and $325,000 for Anna DeFaria’s tiny gray cottage. Those might sound like hefty sums, but not on the Jersey shore.
“ I can’t get anything in Long Branch for three and a quarter,” DeFaria says, “let alone an ocean view.”
But what’s money?
“The memories are here,” says Lori Ann Vendetti. “They can come in with a million dollars, two million—we won’t take it. A lot of people think we’re bluffing, that everyone has a price. The Vendettis don’t have a price.”
Neither do the Gambles. Most of the properties that the Gambles and their Norwood neighbors owned—69 out of 75—were sold to the developer, who was required by the city to pay at least 25 percent above market value. Three others later settled with the developer. Then the city used eminent domain to claim the last three, concluding that the neighborhood was deteriorating, based on a study that was paid for by the developer.
Tim Burke, a lawyer for the city, argues that the government had to clear the holdouts, especially because there were so many other property owners who had agreed to sell. “Would Norwood have used eminent domain if it had to acquire 69 of the properties? Clearly not,” he says.
As Burke explains it, Norwood is an old industrial town that lost its industry and a third of its population. The city needs to redevelop to generate new revenues, and clearly most of the Gambles’ neighbors weren’t opposed.
“When you’re a community like Norwood, you’ve got to be concerned with the entire citizenry,” Burke says. “And, yeah, there are going to be instances where, in order to better the lives of the many, the property of the few will have to be taken.”
But what if you’re one of those few?
“That this is happening here,” says Joy Gamble, “in the land ‘ of the people, for the people, by the people…’” The thought trails off, and she just shakes her head.
Most of the world's people have no concept of private property, as it has evolved in the United States.
Most of the world evolved under a system of governance in which the state (king, czar, crown prince, or whatever) owned all the land and all the resources.Individuals are granted (or denied) the privilege of using the land and its resources only as it may please the state.
This underlying philosophy of land use continues to permeate public policy throughout most of the world, and especially in the United Nations.
This philosophy was rejected by the people who created the government of the United States, choosing instead, the philosophy of John Locke, who championed individual ownership.
This principle of private property ownership is the foundation from which America's prosperity was launched.
The principle of private property ownership was challenged in the United States during the 1930's enthusiasm for socialism, through organizations such as the Wilderness Society, whose founder, Robert Marshall, advocated "nationalization" of the nation's forests. The post-war anti-communism campaign quieted this enthusiasm in America, but did not end it.
Advocates of government ownership and control of land use saw more opportunity in a global approach than was offered by the cumbersome American legislative system. Proponents of this philosophy flocked to the International Union for the Conservation of Nature (IUCN), a non-government organization founded by Julian Huxley, who also was the founder of UNESCO - the United Nations Education, Scientific, and Cultural Organization.
A Frenchman, Francois Bourliere, was president of the IUCN from 1963 to 1966. He, personally, and the IUCN were instrumental in the development of the first U.N. Treaty on Wetlands, adopted in Ramsar, Iran in 1971. Bourliere was named to chair the first MAB International Coordinating Council in November 1971. From this meeting grew the current U.N. Man and the Biosphere Program.
In 1973, in Washington, the IUCN was successful in getting the U.N. to adopt its treaty onEndangered Species. The IUCN was responsible for drafting, and bringing into force through the United Nations, a global policy on governing wetlands, endangered species, and biosphere reserves.
By 1976, the United Nations was ready to articulate a general policy on land use. This policy is stated in the final report of the first U.N. Conference on Human Settlements (HABITAT I), held in Vancouver, British Columbia in 1976.
The preamble to the section on Land, says:
"Land... cannot be treated as an ordinary asset, controlled by individuals and subject to the pressures and inefficiencies of the market. Private land ownership is also a principal instrument of accumulation and concentration of wealth and therefore contributes to social injustice; if unchecked, it may become a major obstacle in the planning and implementation of development schemes. The provision of decent dwellings and healthy conditions for the people can only be achieved if land is used in the interests of society as a whole. Public control of land use is therefore indispensable ..."
The land use philosophy of the non-American world was fully incorporated into international law and norms, with the support of the United States government.At the direction of President Carter, the U.S. State Department entered into an agreement with UNESCO in 1979 to launch a U.S. Man and the Biosphere Program. Congress was not consulted, nor was any state legislature consulted, as 47 U.N. Biosphere Reserves were quietly designated in the United States.
In the late 1990s, the 48th U.N. Biosphere Reserve was proposed for the Ozarks. The U.S. MAB office, working through other federal and state agencies and The Nature Conservancy, began the initiative. It failed because local citizens informed themselves about the possible implications and insisted to their elected officials that the designation be stopped.
Congressman Don Young (R-AK) introduced the American Land Sovereignty Protection Act, which passed the House of Representatives in two sessions of Congress, but died in the Senate. His bill would have required that Congress approve each of the existing Biosphere Reserves and all future designations.
Proponents of government control of land use shifted their tactics from the expansion of Biosphere reserves to other land use control measures. The Clinton administration adopted an Ecosystem Management Policy, and used the Antiquities Act to designate "Monuments" so expansive as to give government control of land well beyond the so-called monument. The "Roadless Initiative" had the effect of removing people from wilderness areas by denying access. This was much easier that getting a wilderness designation through Congress.
The"Clean Water Initiative"gave the federal government jurisdiction over private lands adjacent to streams, broadening the scope of the earlier "wetland" policy.Heritage designations, conservation easements, and "open space" are now favorite tools used to expand government control of land use.
"Critical Habitat" authorized under the Endangered Species Act, has become a favorite device for government control of private property. Nearly 2,000 species have been listed as endangered or threatened; government has only to declare an area to be "critical" to the species, then the government can dictate how the land may be used.
All of these measures work together to achieve the original goal of the Man and the Biosphere Program:"to conserve most of the planet for wildlife, forcing people into "sustainable communities." This objective has now been codified into international law in the form of the Convention on Biological Diversity.
The IUCN, author of this concept, also devised Agenda 21, adopted in Rio de Janeiro in 1992 at the U.N. conference on Environment and Development. Agenda 21 is a laundry list of recommendations designed to reorganize society around the central principle of protecting the environment.
Even though the U.S. Senate chose not to ratify the Convention on Biological Diversity, and Congress has never voted to approve Agenda 21, the federal government has been implementing both. The Forest Service is actively developing "corridors" to connect wilderness areas. Bill Clinton created the President's Council on Sustainable Development to translate Agenda 21 into domestic policy.
Why is the government using every excuse it can muster to grab the land of private individuals?The government cannot implement the international agenda if individuals are allowed to do what they please with their own land.
The European socialist philosophy on land use has overwhelmed the philosophy of John Locke and America's founders. It is no longer called socialism. It is called by many names, all associated with "sustainable development."
In most communities, neither the victims, nor the proponents of sustainable development are aware that their plight is a part of a global agenda. Indeed, most would scoff at the idea. Nevertheless, the transformation of America is well underway, without public debate, or Congressional approval.
From watershed, to ecosystem, to village, to city, to multi-county regions, to transboundary biospheres - the U.N. agenda is being systematically implemented - with the help of elected officials, paid for with the taxes of American citizens.
The cap and trade or climate bill is an extension of the United Nation’s Agenda 21 — the globalist plan to “manage, count, and control all of the world’s assets. Included are the forests, fresh water, agricultural lands, deserts, pastures, rangelands, farmers’ fields, oceans and inland waterways, marine environment, marine life, cities, housing, sewer and solid wastes, methods of production, air, pollution, biotechnology — every aspect of living and farming, production and manufacturing, research and medicine, etc., along with you and I.” - Joan Veon
August 19, 2009
USA TODAY - New forests would spread across the American landscape, replacing both pasture and farm fields, under a congressional plan to confront climate change, an Environmental Protection Agency analysis shows.
About 18 million acres of new trees — roughly the size of West Virginia — would be planted by 2020, according to an EPA analysis of a climate bill passed by the House of Representatives in June.
That's because the House bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of the key global-warming gas: carbon dioxide.
The forestation effort would be even larger than one carried out by the Civilian Conservation Corps during the Great Depression, says the U.S. Forest Service's Ralph Alig. The CCC, which lasted from 1933 to 1942, planted 3 billion trees, says the Civilian Conservation Corps Legacy, an alumni group for workers and family members.
The environmental benefits are clear. More trees would not only lower carbon dioxide levels, but they would improve water quality, because they need lower levels of pesticides and fertilizers, says agricultural economist Bruce McCarl of Texas A&M University, who contributed to the EPA analysis.
The plan would, however, be hard on ranchers and farmers and potentially food prices, says American Farm Bureau chief economist Bob Young.
In the Senate, which is likely to consider a similar bill this fall, there are some who worry the loss of farmland would lead to increases in food prices worse than those seen in mid-2007, when costs spiked 7% to 8% above 2006 levels.
If those food prices seemed high, "wait till you start moving agricultural acres into climate-change areas," warns Sen. Mike Johanns, R-Neb., Agriculture secretary for President George W. Bush.
McCarl says food costs would stay roughly the same.
The latest EPA analysis does not say where the farmland would be lost. However, an EPA study done in 2005 that analyzed climate-change policies similar to the House bill found that trees would overgrow farms primarily in three areas:
•Great Lake states: Michigan, Minnesota and Wisconsin.
•The Southeast: Virginia, North Carolina, South Carolina, Georgia and Florida.
•The Corn Belt: Illinois, Indiana, Iowa, Missouri and Ohio.
Forests once grew there, says study author Brian Murray of Duke University, so trees would sprout quickly in those areas if farmers got financial incentives. The House climate bill would allow landowners who reduce carbon dioxide to sell carbon permits to polluters, such as power plants.
Agriculture Secretary Tom Vilsack last week hailed the possibility that climate-change action could help forests.
"We have our own deforestation problem right here in the U.S. of A," he said. "Just keeping forest as forest is a significant challenge."
Roughly 1 million acres of forests every year were flattened to make way for homes and other development in the 1990s, Alig says. Without a climate bill, a net total 26 million acres of forest will be lost to development by 2050, he says.
By Tom Deweese, American Policy Center Originally Published on March 25, 2008
Which do you choose? A way of life where you are the master of your destiny, or one where virtually all decisions are made for you by one ruling body or another? It’s the classic struggle facing every human on earth. Freedom or control.
Truth be known, there are many who actually choose control. It makes for a well-ordered society with few surprises.
In a controlled society, one doesn’t have to make complicated career choices, health care is provided.
Community planners decide where housing will be placed. Committees decide what industries are to be allowed and how they will operate. Self-appointed watchdogs decide the foods that you shall be permitted to eat, to protect our health, of course.
Family planners decide the number of children allowed and how they will be raised. Those children, of course, will be well taken care of every day in public education centers that not only provide a centrally planned curriculum, but also provide for all physical and mental health needs.
Crime can be eliminated in the coming Utopia because there will be no real possessions or personal property to steal and no personally-owned weapons to threaten the authority of the State. Economic security is promised in a better world as everyone equally sacrifices their earned wealth to the State so all may live in harmony, free of greed and the stress of daily living. Everything is well organized, peaceful and controlled. Everyone is secure in the knowledge that tomorrow will be just like today.
On the other hand, there is the chaos of what some call freedom. In such a society, people are fully responsible for their own actions.
Untethered individuals throw a monkey wrench into a well-ordered society by inventing new gadgets that make life easier and more productive, but threaten old ways.
“Selfish” people pursue their own dreams and ideals without ever worrying about how they fit into the order created by the State. They want to benefit from the fruits of their labor, own property, and raise families without controls established from the wisdom of the community.
Imagine such a society in which parents get to decide how best to educate their children. And think of the irresponsibility of individuals actually being able to choose if and how they want to invest their money to prepare for retirement.
In the so-called free society, people eat what they want without benefit of government approval. Children are part of the family that bore them, not overseen by the State. People start enterprises without asking permission. Nothing stays the same, except that individuals are secure in their homes and have the ability to live their lives as they choose.
Control today has a name: “Agenda 21.” This is the name of a policy document first unveiled at the United Nations’ Earth Summit in 1992. Implementation of the treaty is through a policy called Sustainable Development.
This program is now the official policy of the United States and is being systematically imposed in every single state of the Union and in every city and town. There are very few exceptions.
Sustainable Development is no less than a ruling principle through which decisions for all aspects of our lives are determined through public/private partnerships between government (at all levels) and private institutions in our communities.
They provide guidelines to determine business decisions, property use, medical care, education curriculum, foreign policy, economics, taxes, labor policy, career decisions, housing, building material, farming policy, and much more.
Agenda 21 is based on the principle that government is the maker of rights.
If you choose freedom, then there is a counter to Agenda 21 and its Sustainable Development program. It’s called Freedom 21, and it’s quickly growing into a “freedom movement.” Freedom 21 is not an organization. It is a loose coalition of groups and individuals who believe that our nation’s Founding Fathers had it right when they established this nation as one with tightly controlled reins on government.
The Founding Fathers believed that all individuals were born with their rights of individual liberty, and that government’s job is to protect those rights as individuals pursue their own dreams and goals.
"[Communism] is, in fact, man's second oldest faith. Its promise was whispered in the first days of the Creation under the Tree of the Knowledge of Good and Evil: 'Ye shall be as gods.' It is the great alternative faith of mankind. Like all great faiths, its force derives from a simple vision. Other ages have had great visions. They have always been different versions of the same vision: the vision of God and man's relationship to God. The Communists vision is the vision of man without God. It is the vision of man's mind displacing God as the creative intelligence of the world." [Whittaker Chambers, "Witness," p.9.]
These Ten Planks are the hallmark of a Communist Government. You will see that ALL but ONE have been completely implemented in the U.S. Government. And that ONE remaining “plank” is soon to be completed.
Graduated Income Tax - Established in America in 1913.
Rights of inheritance government controlled – the U.S. government Inheritance Tax
Central Bank – the U.S. Federal Reserve Bank
Government ownership or control of communications and transportation - FCC and Department of Transportation
Government ownership or control of factories and agriculture – through the Interstate Commerce Commission and the Environmental Protection Agency and U.S. Department of Agriculture
Government control of labor – U.S. Department of Labor
Corporate farms and regional planning/U.S. control of factory farming – three large corporations own virtually ALL the farmland and production facilities in the U.S.
Regional governments are being appointed (NOT elected) and have significant power and control, but are not beholden to the voters.
Federal Government control of education – U.S. Department of Education (with National achievement tests and Federal government control of curriculum). This was NEVER to be the case in the U.S.A. It is unconstitutional.
Confiscation of property of rebels – the local police departments are confiscating property if marijuana is found being grown on the property, they are confiscating and selling cars of those stopped for highway infractions, they are confiscating the property of those who disagree with the government on the war or income tax.
Abolition of private property – For years, the government has had the doctrine of eminent domain through which they can condemn your property for a freeway or other public road. Now they have extended this eminent domain to include the confiscation of your property if your city wants to build a hotel or other building on your property to increase their tax revenue.
They can also abolish private property just by raising your taxes higher than you can pay. They then confiscate your property for non-payment of property tax.
The Fifth Amendment of the United States Constitution limits the federal power of eminent domain solely to the purchase of private property with just compensation for public use, such as military reservations and government office buildings - not for public ownership, such as urban renewal, environmental protection, or historic preservation. Under no circumstances may the federal government take private property, by means of rules and regulations which preclude or substantially reduce the productive use of the property, even with just compensation.
Our Founding Fathers knew that to preserve this land of liberty, the individual citizen had to have rights even the government could not take away. Most precious of those rights is the ability to own and use private property. From that right, all others are secured.
Citizens for a Constitutional Republic call for a return to the states and to the people all lands which are held by the federal government without authorization by the Constitution.
We also call for repeal of federal wetlands legislation and the federal Endangered Species Act. Moreover, we oppose any attempt to designate private or public property as United Nations World Heritage sites or Biosphere reserves. We call for an end to United States participation in UN programs such as UNESCO, Man and the Biosphere, and the UN Council on Sustainable Development. We oppose environmental treaties and conventions such as the Biodiversity Treaty, the Convention on Climate Control, and Agenda 21, which destroy our sovereignty and right to private property.
Pundits both Left and Right condemned the Supreme Court’s Kelo v. City of New London ruling last June as an unjust, even un-American, abuse of state power. And surely it’s hard to defend a decision that lets government take well-kept property away from one private individual or business to give it to another who might make it more upscale.
But what critics haven’t noticed is that the decision simply expands the Court’s approval of a practice that state and local governments have long used to bring about urban renewal or economic development. More important, they have also failed to notice that, over its long history, this practice has almost never worked. The Court’s decision fails not just on moral but also on utilitarian grounds.
The crux of Kelo’s injustice is its further enlargement of the power of eminent domain granted by the Fifth Amendment, which recognizes that “private property” can “be taken for public use.”
“Public use” once meant the obvious: the state could seize private land to build a road, for example, or it could allow a railway or a utility company to build track or power lines across private farmland, since they’d be available to everybody. But 50 years ago the Court replaced the “public use” rationale for eminent domain with a more nebulous concept of “public purpose,” in order to allow cities to condemn slums to remove urban blight.
In Kelo, the 5-4 majority went a step further, ruling that governments don’t need to show that property they condemn is even nominally blighted; the vague promise of higher tax revenues and the hope of private-sector jobs through planned development are no less public goods than a road or a water-treatment plant. And so the Court allowed New London, Connecticut, to condemn a middle-class waterfront neighborhood and to parcel it out to private developers who would make more lucrative use of the property, including building luxury condos.
Americans are serious about the sanctity of private property because they understand that it is not only inseparable from liberty but also the foundation of prosperity.
If Soviet-style central planning actually worked, America’s vast urban renewal projects that used eminent domain to bulldoze slums would have produced flourishing communities rather than high-rise housing projects awash in social pathology. And the megaprojects of today — the stadiums, convention centers, Renaissance Centers, and so on, for which urban planners have condemned acres of private property — would actually have produced the economic development that their sponsors promised.
Like so many who have believed those promises, Justice John Paul Stevens, in his majority opinion in Kelo, puts much stock in the fact that New London “has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” More than 50 years of experience say it won’t.
Urban planners like to dream big dreams, though in the U.S. until the mid–twentieth century they mostly remained dreams. From at least the 1920s, planning orthodoxy held that the slum neighborhoods whose conditions Jacob Riis had documented as the century began were too diseased to heal themselves — they had to be eradicated wholesale, and even run-down neighborhoods should be knocked down before they turned into slums.
Urban “experts” and government-sponsored developers would then plan new residential districts in concert with political leaders, with government itself providing housing for many of the poor. Of course, officials would need the right to use eminent domain freely to plan new districts; as University of Pennsylvania law prof Wendell Pritchett puts it, the experts believed that “only major changes”—that is, erosions—“in property law could prevent urban decline.”
New York planners began making the dream a reality in a relatively modest way in the early 1940s, when they cleared 18 square blocks of Manhattan’s East Side above 14th Street so that MetLife could build Stuyvesant Town, a high-rise suburb-within-a-city for middle-class whites whose rich cultural capital made the architecturally sterile project succeed socially.
The full scale of the planners’ ambitions soon emerged, however, as they pondered what to do with the unskilled minorities who were migrating north and destabilizing urban neighborhoods as the whites moved out. Their decision: raze those overcrowded neighborhoods to build “modern” housing complexes.
So in New York, as elsewhere, acres of shabby but functional neighborhoods—from the Lower East Side to Harlem in Manhattan, and all over Queens, Brooklyn, and the Bronx—disappeared under the bulldozer to make room for the boxes of high-rise housing projects that still sap vitality from Gotham today.
As Robert Caro writes in The Power Broker: “The eastern edge of Manhattan Island . . . was completely altered between 1945 and 1958. Northward from the bulge of Corlears Hook looms a long line of apartment houses . . . hulking buildings, utilitarian, drab, unadorned, not block after block . . . but mile after mile.”
Hundreds of millions of dollars in “modern” housing investments proved no solution, however; the housing projects instead turned economic and social assets—whole swaths of the city—into economic and social liabilities. In fact, in New York and elsewhere, the construction of housing projects only exacerbated middle-class flight to the suburbs, as people fled the fringe neighborhoods that survived these new and efficient crime factories. Instead of being uplifted by their new housing, as the planners intended, the poor became increasingly dysfunctional and dependent on the government.
Projects like these were soon under way all over urban America, and Congress gave them its blessing, and its money, in 1949, when it funded a massive urban-renewal program for housing, Title I, which cities would carry out using local contractors.
In 1954, Congress cemented the new orthodoxy—central planning of whole neighborhoods after leveling them through eminent domain to remove “blight”—by amending the law to require that municipalities submit comprehensive community development plans in order to get urban-renewal grants. Mayors had to destroy their cities in order to save them—so they did.
The Supreme Court first ratified using eminent domain for this purpose that same year, affirming the right of the Washington, D.C., government to condemn much of the city’s depressed southwest region, including a thriving, privately owned department store, and to transfer the land to a private construction company for redevelopment. The district government had argued that the area was too decayed ever to repair itself; it had to be razed, department store and all, and rebuilt all at once in order to succeed.
“The area must be planned as a whole [in order to overcome its blight],” the Court ruled in Berman v. Parker. “The concept of the public welfare is broad and inclusive. . . . If those who govern the District of Columbia decide that the nation’s capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.”
But as the cities began to lose middle-class residents and manufacturing jobs to the suburbs, and as the urban poor multiplied and became increasingly demoralized, such central-planning schemes proved no solution to what was starting to be seen as urban decline.
Consider the fate of New Haven, Connecticut, the most willing victim of the urban-renewal era. Mayor Richard Lee, a Democrat who took office in 1953, had pledged to create “a slumless city, the first in the nation.” During his 16-year tenure, as Yale University’s “Model City” history project relates, Lee procured more urban-renewal funds per capita than any other American mayor—more than $1 billion in today’s dollars, and nearly four times as much as runner-up Newark. In 1958, the Saturday Evening Post hailed Lee for embarking upon “saving a dead city.”
New Haven officials used eminent domain to raze block after block of immigrant and working-class communities to build “Modernist” office complexes, industrial buildings, and housing projects, as well as a strip mall, a parking garage, and connections to highways. Going beyond earlier planners’ ambitions, limited merely to solving housing problems, the New Haven planners would revitalize an entire economy.
But bulldozers and central planning didn’t save New Haven. Between 1950 and 1980, the city’s population declined by 30 percent—and poverty increased. “In 1970, as urban renewal ended, the census ranked New Haven as the 38th-poorest city in America,” local journalist Paul Bass and Yale prof Douglas Rae wrote in a New York Times op-ed in July. “Ten years later, it was ranked seventh, with 23.2 percent of its population living below the poverty line.
Today, more than a quarter of its families live in subsidized housing.” Rae thinks that without urban renewal, New Haven’s poverty rate would be lower today: “They destroyed a lot of economic and social vitality,” he told me. Even Mayor Lee saw that top-down planning had failed; by the end of his final term, he observed: “If New Haven is a model city, God help America’s cities.” Unfortunately, cities all over the country had replicated New Haven’s experience.
As planners recognized that they couldn’t solve the problem of housing (and uplifting) the poor, and certainly couldn’t remake entire cities, they scaled back, rather than relinquished, their ambitions.
By the seventies and eighties, cities focused on using eminent domain to build sterile business districts and industrial centers to trap disappearing well-paying jobs in inner cities, or to build convention centers, stadiums, and subsidized hotels to lure free-spending out-of-towners. Eminent domain for urban renewal morphed into eminent domain for economic development—with similarly dismal results.
Detroit, for instance, spent some $200 million to destroy the “blighted” Poletown neighborhood in 1981 so that General Motors could build a factory there. But this investment never paid off. Poletown’s destruction was supposed to create 6,000 jobs but created less than half that. And that’s not the worst of it. “If we assume that the 600 eliminated businesses employed a modest average of slightly more than four workers, their total lost work force turns out to be greater than the 2,500 jobs created at the GM plant,” wrote famed urbanist Jane Jacobs in her amicus brief supporting the Kelo homeowners. “Even if we consider its impact in purely economic terms, it is likely that the Poletown condemnation caused more harm to the people of Detroit than good.” Moreover, Detroit’s condemnation of Poletown certainly didn’t stop the decline of the auto industry—or of Detroit.
In New York, politicians’ efforts to trap corporate jobs through government planning resulted in a similar centrally planned boondoggle: downtown Brooklyn’s Metrotech. For decades, New York pols had fretted that the city was losing its white-collar jobs to New Jersey, Connecticut, and other lower-cost regions, even as skyrocketing crime and taxes sent middle-class residents fleeing from the outer boroughs.
The solution? Nearly two decades ago, Gotham decided to build a walled camp in the middle of a lower-class area of Brooklyn to lock white-collar jobs in. This project would accomplish two goals, pols thought. In addition to keeping jobs in New York, Metrotech would spark further development in a slummy neighborhood that never had grown on its own, despite its proximity to lower Manhattan. City and state officials used eminent domain to displace 250 owners and tenants so that developer Bruce Ratner could build the suburban-style office campus.
Metrotech tenants have received about $270 million in state and city subsidies (of which more than $200 million went to JPMorgan Chase). But Metrotech hasn’t “kept” the nation’s financial-services jobs in New York: Gotham’s share of U.S. securities-industry jobs has fallen from one in three to one in five since 1980. Metrotech, despite its Class A office space and its quiet campus lush with greenery, can’t even attract enough private-sector tenants to remain fully occupied; its tenants include an array of government agencies.
Nor has Metrotech, completely cut off from the surrounding streetscape, encouraged the growth of an unsubsidized business community in its neighborhood. Metrotech is what it was when it opened: a suburban-style office campus carved out of inner-city downtown Brooklyn. The two worlds don’t meet. The government’s newest solution for “underdeveloped” Brooklyn is another top-down project by eminent domain planned by the same developer nearby. It seems that the distortion of the free market via eminent domain for economic development just begets more of the same.
True, Ratner’s new proposal for remaking Brooklyn, the massive Atlantic Yards development project, glitters with modern urban-planning language, but it is a perfect illustration—only one out of many recent eminent-domain projects like it—of how little today’s central planners have learned from half a century of failure.
Ratner’s sweeping master plan for the Prospect Heights neighborhood envisions a basketball arena over some uncovered railyards he’ll buy at a below-market price from New York’s Metropolitan Transportation Authority, and he’s petitioning the state and city to condemn the adjoining blocks so that he can build nearly 6,000 high-rise apartments there. Ratner’s supporters, including Mayor Michael Bloomberg, dismiss the entire Brooklyn neighborhood as “the railyards” to denote a region in economic distress.
But the properties Ratner wants the government to condemn, like the houses in Kelo, are hardly distressed. They include two historic warehouses converted into fancy condos and sold at high prices just two years ago, a neighborhood bar that dates to pre-Prohibition days, and a flourishing arts-supply factory that employs two dozen legal immigrants and has recently opened a modest art gallery as well. The owners and tenants on the soon-to-be-condemned properties pay their sales, income, and property taxes. They create jobs. And they do all this without government subsidy. Ratner’s plans, by contrast, require huge investments of state- and city-taxpayer money.
The taxpayers sure won’t get much in return. They will pour about $200 million in public subsidies into the stadium portion of Ratner’s project up front. In return, the city and state could receive an annual net surplus from that part of the project of about $7.8 million over 30 years. (And that’s if everything goes perfectly according to plan, and if the city and state don’t have to pony up more millions up front to pay for unspecified infrastructure improvements, as is hinted at in early project documents; as Steven Malanga has reported in these pages, nearly a dozen economists have studied stadium projects across the country for decades and have found that they almost always fail to deliver their promised benefits.)
But if New York simply deposited that $200 million in a savings account and left Prospect Heights alone, it could receive about $8 million a year in interest—and at no risk, as it could withdraw the $200 million at any time. For Ratner, of course, the arena provides a signal advantage; since politicians never fail to fall in love with the idea of urban stadiums, they are willing to condemn the land that Ratner needs to make his project viable and to allow him to build his apartment buildings higher and denser, and thus more profitable, than current zoning permits.
Ratner knows the criticism of the failed centrally planned projects of the past, of course: that big, single-use, housing developments, no matter for low-, middle-, or high-income residents, don’t create lively streetscapes with urban vitality. “Look what we have built,” Jane Jacobs wrote of the 1950s version of the “model city” in her seminal 1961 classic, The Death and Life of Great American Cities. “[L]ow-income projects that become worse centers of delinquency. Middle-income housing projects which are truly marvels of dullness and regimentation, sealed against any buoyancy or vitality of city life . . . . Commercial centers that are lackluster imitations of standardized suburban chain-store shopping.”
Today’s sophisticated megaproject developers like Ratner and his supporters speak the language of Jane Jacobs. Ratner and co. talk of building a “mixed-use urban complex” of residential, commercial, and retail “space,” as opposed to the failed purely residential and purely commercial districts planned by past renewers. And they’ve brought in one of the trendiest celebrity architects, the overrated Frank Gehry, who enthuses about building a neighborhood from scratch.
But even with a fashionable architect, one cannot decree a healthy mixed-use urban complex that will serve as the anchor of a new neighborhood and make it so. Just look at New York’s sterile Roosevelt Island. Is the risk at Prospect Heights really worth the economic and social cost of bulldozing an existing “mixed-use urban complex”—that is, an actual neighborhood—that doesn’t require taxpayer subsidies?
Remember, nobody set out to create the urban-renewal failures of past decades—and such projects didn’t fail because politicians are inherently dumber than businessmen; many smart developers have built failed urban-renewal projects. They failed because neighborhoods, and economies, are built not by government and developer fiat but through individual initiative in pursuit of profit.
Jacobs wrote more than 40 years ago that neighborhoods built all at once by one developer, even those designed for affluent residents, “offer no economic possibilities to city diversity. The practical penalties of dullness . . . stamp the neighborhood early. . . . The neighborhood shows a strange inability to update itself . . . by a new generation. It is dead. Actually, it was dead from birth.”
“They say they’re not doing what they did 30 years ago,” John Norquist, the former mayor of Milwaukee, remarks of today’s urban planners. “But they’re taking out the urban fabric of neighborhoods. Sometimes you get it right, but it’s not likely. If the person isn’t brilliant, you end up withCeauçescu’s Bucharest. It’s much better to go with multiple-owner development over a long period of time.”
Just consider the difference between Boston’s North End and its West End, says Norquist. Modest immigrant communities before the 1950s, both appeared slums to planners. Boston used urban-renewal funds and eminent domain to develop the West End as a self-contained modern high-rise apartment district, but it left alone parts of the North End. Despite the Central Artery highway that bisects it, the North End is now a vibrant mixed-income community of old and new construction, where people want to live, work, and visit. The West End, while benefiting from the heated real-estate market, is stagnant and boring by comparison. “The West End has some value, but nowhere near the value of the North End,” Norquist concludes.
Similarly, in New York, the old slums of Hell’s Kitchen and the Upper West Side, relatively untouched by urban renewal, now house an economically diverse collection of small firms, restaurants, and apartment dwellers, while on the Lower East Side, the dead weight of the central planners’ housing projects serves as a thick boundary to natural residential and commercial growth in nearby neighborhoods that were once America’s worst tenement slums and now bustle with hip and trendy vitality.
Like these former slum areas, Ratner’s Prospect Heights prize used to be distressed—longtime neighborhood residents remember the days of drugs and hookers all too well. But wedged in between three prosperous areas of Brooklyn, including Park Slope, it has benefited from natural growth over the past decade, like Hell’s Kitchen and the Upper West Side before it. (That’s part of the reason Ratner wants it—he isn’t asking the government to use eminent domain to help him put luxury apartment towers among the projects of East New York to bring “economic development” to that stagnant, centrally planned community.)
Without government intervention, prosperous people have chosen to move in, and one Prospect Heights property owner, Henry Weinstein, had tentative plans to develop his land to its full potential, including, possibly, more luxury condos. In order to win the bid for the state-owned railyards, Ratner also had to stymie rival developer Gary Barnett’s competing bid to build apartment towers over the railyards’ footprint, which did not require eminent domain and massive stadium subsidies. So taxpayers will end up subsidizing economic growth that would have happened naturally, and far more rationally, anyway.
There’s another danger here. In the free market, a poorly designed project will fail and be replaced by a well-designed project—or just won’t find private financing to get built. With government central planning, ill designed projects last forever—and they retard natural growth around them.
Take Mayor Bloomberg’s recently scuttled plan to subsidize a football stadium on Manhattan’s West Side. Like Ratner in Prospect Heights, Bloomberg pitched the deal as a necessary stimulant for a long-dormant neighborhood.
In truth, developers have been moving midtown Manhattan steadily westward for two decades, beginning with the Worldwide Plaza office and condo tower on Eighth Avenue in the early 1980s and now extending westward and southward with new apartment towers along Ninth, Tenth, and Eleventh Avenues throughout the West 40s and 50s. A stadium would only serve as a wall against the continuance of that natural growth. We can see the effects of 1950s-style urban renewal—the housing projects still stand. It’s harder to see missed opportunities.
But pols and planners insist that they can’t simply watch decayed neighborhoods (real and perceived) fester while they wait for the possibility that economic growth, and tax revenues, will develop on their own. That’s why the National League of Cities and the U.S. Conference of Mayors filed briefs supporting New London in Kelo. After the case was decided, D.C. mayor Anthony Williams, the head of the NLC, breathed a sigh of relief:
“Local officials [need] the continued use of eminent domain to bolster depressed neighborhoods,” he said. Eminent domain “has been indispensable for revitalizing local economies, creating much-needed jobs and generating revenue that enables cities to provide essential resources. . . . [W]e need all the help we can get to redevelop our neighborhood and provide jobs for our citizens.”
One of the most oft-cited examples in support of this argument is the revitalization of Times Square. Without government’s power to condemn the blighted blocks at Manhattan’s heart, the story goes, New York would never have been able to bring tourists back to the Crossroads of the World.
This is nonsense, as William J. Stern, who headed New York State’s Urban Development Corporation when it cooked up the 42nd Street Development Plan, has written in these pages (“The Unexpected Lessons of Times Square’s Comeback,” Autumn 1999).
Times Square reemerged in the 1990s as a corporate and tourist mecca thanks to the skillful and aggressive policing that began in the mid-1980s and became pervasive under Mayor Rudy Giuliani, and thanks also to tax benefits for selected developers, in a city where overall tax cuts seemed politically too hard to accomplish.
Sure, the state government chose developers to build new office towers to anchor the new Times Square. But nothing happened. As government-sponsored developers dithered for years and didn’t build, private activity filled the vacuum. In the early nineties, Stern recounts, Viacom, Bertelsmann, and Morgan Stanley moved in on their own. The boom was on—because Times Square was safe again.
The state’s $300 million worth of eminent-domain condemnations, mostly along 42nd Street, did have one important effect: they drove Times Square’s critical mass of sex shops, and the lowlifes they attracted, out of the heart of the square. But Stern argues that government could have achieved the same effect through effective, and aggressive, zoning. “You don’t have a sex shop in Times Square for the same reason you don’t have a pig farm,” Stern told me. “The sleaze business poisons other businesses.” Tourists don’t want to visit streets teeming with pimps, prostitutes, and perverts.
It’s not just Times Square that has prospered from more than a decade of outstanding police work and falling crime in New York. Harlem, too, has revitalized; newly safe streets there have unlocked millions of dollars of value along the rows of brownstones that were spared the housing-project wrecking ball 50 years ago.
In light of the resurgence of so many once-blighted neighborhoods after crime was cut down, it’s hard not to wonder if unsubsidized residential and commercial investment from Brooklyn Heights and lower Manhattan might not eventually have spilled into an unbulldozed downtown Brooklyn as the city repaired itself, too—without a subsidized Metrotech.
If megaprojects built through eminent domain fail over and over, why do state and city governments continue to take private property away from rightful owners for taxpayer-subsidized stadiums, convention centers, and office parks that, in the best-case scenarios, will only suck economic activity away from other sectors, not generate new economic activity? The truth is, eminent domain is a gold mine for the political racket—the pols and interest groups who benefit when private assets are forced into the public sphere for political redistribution.
Politicians line up behind megaprojects like Ratner’s Prospect Heights scheme because they can boast that their sponsorship will create jobs and economic growth, whereas no politician can take credit for gradual and organic free-market economic development.
The big, politically connected, unionized construction companies love such projects, too, because subsidized construction mandates unionized contractors, and the politically active construction unions love them no less. The Wall Street firms that underwrite the bonds for the public subsidy are also big supporters, as are the industry associations whose members stand to gain, even while other taxpaying businesses stand to lose.
Such highly politicized enterprises require finely honed political skills, and Ratner honed his as a commissioner in former New York City mayor Ed Koch’s administration. For backup, he has hired a former assistant to the project district’s state assemblyman to work on “community relations.” Ratner himself gave a revealing glimpse into how the system often works, in former New York mayoral candidate Mark Green’s book on campaign finance reform.
“When you do business with the city, you get solicited by everyone from U.S. Senators down to members of the City Council,” he told Green. “You knew your competitors were doing it, and so when someone would call, it was hard to say no. For businesses that do a lot of business with the city, it was expected. . . . I didn’t want to be a person on the outs, nor could my business afford to be a person on the outs given how much business we do with government.” So when Ratner announced in 1997 that he would contribute no longer, he recounts, “[P]eople said I was crazy: ‘You’re going to get yourself killed.’ ”
In fact, Ratner had only found an even smarter way to play the political game. His new Prospect Heights project comes complete with a 51-page “Community Benefits Agreement,” which could serve as a textbook for politicized economic development. In it, he offers sweeteners to “community” activists, among them at least 2,000 units of below-market “affordable” housing and a generous percentage of jobs for minority contractors and employees.
The sweeteners attracted some powerful, if unsavory, political support.
Unsurprisingly, Al Sharpton climbed on board, leading a march around Brooklyn in support of Ratner’s master plan and winning political credit, because he can claim that he helped push Ratner to lavish those benefits on minority contractors and employees.
But, more crucially, Ratner’s chief “community” cheerleader is Bertha Lewis, head of the New York chapter of Acorn, the nation’s biggest left-wing activist group. Acorn has perfected the art of turning community activism to its own profit, as evidenced above all in its manipulation of the federal Community Reinvestment Act, which requires banks to show that they’ve lent sufficiently in poor neighborhoods if they want government approval of prospective mergers.
Since complaints from “community” organizations are a sign of possible noncompliance with the act, banks had ample incentive during the era of industry consolidation through mergers to keep such organizations happy by paying them fees to market their loans in poor communities. Acorn has mastered this game, receiving $760 million from the Bank of New York to distribute as loans to low-income homebuyers, and receiving hundreds of thousands of dollars in “donations” from J. P. Morgan and Chase when the two banks sought to merge in 2000.
Ratner’s ransom payment to Acorn isn’t so direct, but it’s the same principle; he must provide “community benefits,” brokered by Acorn, in order to get “community” approval for his plan. Acorn’s Lewis, as “enforcing member” (the literal term the agreement uses) of the plan’s affordable-housing component, will have a huge say in deciding who will get the project’s subsidized apartments—a rich patronage plum indeed. Lewis thus has a big voice in shaping the long-term voting pattern of Ratner’s brand-new community. In return, Acorn will take “reasonable steps to publicly support the project by . . . appearing with the developer before the public parties, community organizations and the media as part of a coordinated effort to realize and advance the project.”
This is no trivial matter, since Lewis is not only a “community” leader but also co-head of the powerful Working Families Party, the political face of Gotham’s public-sector unions. Some 30 members of New York’s 51-member city council won election with Lewis’s endorsement; it would be hard for Ratner to find more a powerful political ally, even if he made the head of the Democratic Party his “enforcer.”
Ratner’s benefits are attracting newcomers to New York’s political follies, such as James Caldwell, a small-change Brooklyn activist who now heads a new coalition called Brooklyn United for Innovative Local Development (Build). Caldwell started Build just two months after Ratner announced his Prospect Heights project—but despite its total lack of a track record, Build will help execute the Community Benefits Agreement. Earlier this year Caldwell told a public meeting: “If this thing doesn’t come out in favor of Ratner, it would be a conspiracy against blacks.” Build’s small-business director, Michael West, added: “When you reject the Ratner project . . . you’re saying you don’t care about the 55 percent unemployment rate in the black community.”
Build has filed documents with the IRS that show that Caldwell and his partners in the group expect to get nearly all of their funding, which they estimate at $5 million over the next two years, from . . . Bruce Ratner. Of that money, Caldwell expects to draw a $125,000 salary for himself and six-figure salaries for two partners. (For his part, Ratner claims that his company will indeed pay for some of the community programs Build plans to execute under the benefits agreement, but that he has not agreed to a specific amount.) As Jane Jacobs wrote in her Kelo brief: “Economic takings serve as a virtual license for exploitation of the eminent-domain power on behalf of powerful interest groups”—including pols, developers, and “community” beneficiaries.
Kelo has generated a backlash. Even Justice Stevens said in an August speech that he would oppose the use of eminent domain if he were a state or local legislator. “My own view is that the free play of market forces is more likely to produce acceptable results in the long run than the best-intentioned plans of public officials,” he said.
In response, more than half of the states, and hundreds of cities and towns, have introduced legislation to rein in eminent domain. The governors of Alabama and Texas have already signed such legislation. Even in seizure-prone New York, bills are pending: New York City councilwoman Letitia James (of the Working Families Party, yes, but also of the Prospect Heights neighborhood that Ratner would bulldoze) has introduced a bill to outlaw using city funds for Kelo-style eminent domain, and state assemblyman Richard Brodsky has introduced a bill to require closer review of condemnations and to increase the mandated payments to displaced property owners and renters.
Congress has several bills pending: one in the House would prohibit federal assistance to a state for economic development if that state did not expressly outlaw Kelo-type economic development.
Though these efforts have attracted supporters across the political spectrum, from the NAACP and the AARP on the left to the Claremont, Rutherford, and Goldwater Institutes on the right, such unanimity doesn’t guarantee success.
The political class is likely to view those who care about property rights and sound economic principles in the same way it increasingly views individual property owners and the free market: as stubborn, or stupid, obstacles in the way of “economic development”—and in the way, of course, of political profit.
