In The News › Blight Slight

Mar 30, 2008

Source: Times-Picayune

Blight Slight

This house was completed by Habitat or Humanity. The charity provides housing for needy families.
The City would like to give this lot to the group, but a restrictive 2006 law could end up keeping the property vacant
Sunday, March 30, 2008
By Kate Moran
Business writer

The property that Joseph Burgess owns on Clouet Street has a long rap sheet in the city’s code enforcement office. Three health violations. Ten citations for high grass. Years and years of unpaid real estate taxes. The property remained a nuisance even after the city demolished an abandoned building there in 1997.

Habitat for Humanity wants to buy the Burgess family’s two vacant lots and fill them with tidy houses, of the same sort it has built along Clouet Street and in nearby Musicians Village. The transaction, a seemingly elegant way to cure the long history of blight, has been waylaid by a set of arcane laws Louisiana voters approved in 2006 to protect private property rights.

At issue is the tactic a city agency has used to broker the sale. The New Orleans Redevelopment Authority filed a court petition almost a year ago to take ownership of the property from the Burgess family and transfer it to Habitat for Humanity. An attorney for Burgess contested the forced sale, arguing that it ran afoul of newly passed laws that forbid government from flexing its eminent domain powers for the benefit of a private entity such as Habitat.

The Burgess case, awaiting trial in civil district court, is believed to be the first in the state to test the implications of the constitutional amendments voters approved in 2006. Lawyers and policymakers say a decision favorable to the Burgess family could blunt the city’s ability to take neglected property and place it in the hands of new owners who would gladly repair it.

“Without expropriation, this property would be almost impossible to return to commerce and would pose a continued menace to the neighborhood,” Christopher Gobert, an attorney for NORA, wrote in a court filing.

If the case reaches the Louisiana Supreme Court, the precedent it sets will have far-reaching implications for how the city manages thousands of homes left abandoned or neglected since Hurricane Katrina. The city takes control of blighted property through several different channels, including tax adjudication and code enforcement sales, but the tool in question in the Burgess case — expropriation — provides some distinct advantages the city is loathe to give up.

‘Roach motel’ effect

The state’s push to strengthen property rights began in 2005, when the U.S. Supreme Court ruled in the case Kelo v. New London that governments could seize ownership of a private home or business to promote the economic welfare of a city.

The case involved a Connecticut city that condemned a fading enclave of riverfront cottages in order to replace it with a hotel, luxury apartments and a museum designed to reverse a long economic decline. The court approved the taking, noting that economic development was a long-recognized government activity, same as building a road or a hospital.

The court made a subtle point: Government could not use economic development as a pretext for taking property from one owner and passing it to another for his own enrichment. The city of New London prevailed partly because it drew up its own redevelopment plan with a clear public pursuit in mind — tackling an intractable economic downturn — and only then sought a developer to implement it.

Property rights hawks nonetheless portrayed the decision as an assault on the bedrock American ideal of owning a home. While some lawyers said the ruling was well within the realm of court precedent, others in politics and the press called it a watershed moment that made every homeowner vulnerable to the depredations of private developers.

Thirty-nine states passed laws or constitutional amendments in reaction to the Kelo case, according to Larry Morandi of the National Conference of State Legislatures. These measures were notable for their variety. Some states forbade cities from using eminent domain as a way to increase tax revenue. Others allowed it only for a narrow set of pursuits with a clear public purpose, such as the building of a highway or railroad.

Louisiana passed three constitutional amendments, one of which prohibited the taking of private property “for the predominant use” by another private person or business. Another amendment — this one the crux of the Burgess case — forces government to offer seized property back to the original owner or his heirs before trying to sell it on the open market.

David Marcello, a Tulane law professor, says these provisions create a “roach motel” effect — so called for the roach traps that catch vermin and won’t let them out. The city can use its eminent domain powers to take blighted property into its possession, but it cannot redevelop the property by passing it on to a new and more conscientious owner.

Attorneys for the New Orleans Redevelopment Authority argue that Louisiana lawmakers never intended for the latter amendment to apply to blight takings. It would, they said, be an “absurd” proposition to offer the property back to owners who let the property fester to begin with.

NORA’s lawyers contend that the amendment was supposed to protect owners whose homes or businesses are seized for a project that requires large-scale land assembly, such as a hospital or road. If some of the property goes unused, the government is supposed to give the original owner first crack at buying it back before it seeks a buyer on the open market.

Keith Doley, the New Orleans attorney appointed by the court to represent Burgess and his possible heirs, declined to comment because the case had not gone to trial. Burgess is deceased, but his wife, Kittoria Johnson, is still alive. It did not appear from the court record that she had her own attorney.

Peppi Bruneau, the former legislator who drafted the 2006 amendments, said he never intended for the laws to stand in the way of blight remediation. He was simply trying to prevent Kelo-style takings.

“This was for economic development, not for blighted property or anything,” Bruneau said. “That was not the purpose at all. It really just dealt with government taking property and flipping it to someone else who wanted to do business there.”

No matter what the intention of lawmakers, critics say the amendments have snarled government’s ability to use its long-established powers of eminent domain to address blight and neglect at a time when both have proliferated across devastated neighborhoods.

“The constitutional amendments were an overreaction to the taking in Connecticut,” said Janet Howard, president of the nonpartisan Bureau of Governmental Research. “A lot of states changed their laws, but Louisiana went overboard. The amendment created unnecessary complications and uncertainties for blight remediation.”

Compromise bill filed

Marcello says NORA is taking a risk by continuing to seize blighted property around the city before the Burgess case or another like it has made its way to the Louisiana Supreme Court. If the agency is not, in the end, able to hand property off to groups like Habitat for Humanity, it faces the unwieldly — and expensive — prospect of maintaining dilapidated houses and vacant lots with taxpayer money.

Ommeed Sathe, the agency’s real estate expert, said NORA had completed roughly 200 expropriations since the storm and is preparing to execute about 200 more. Marcello said the agency has accelerated its pace of expropriation since the beginning of the year.

“The 2006 amendments were a nightmare before they got approved by voters. But approved they were, and however unwise we might think the restrictions are, they seem to me to be self-evident and not wisely ignored,” Marcello wrote in an e-mail.

Until state courts establish precedent, Marcello said the redevelopment authority should try to acquire property by means other than expropriation. In particular, he says the city should implement more stringent code enforcement and then auction off properties, as it is allowed to do, if the owner doesn’t correct the code violations.

“My concern about the relentless focus on revivifying expropriation in the wake of the 2006 amendments is that it tends to divert public officials’ attention from the virtues of code enforcement,” Marcello wrote. “Expropriation sucks all the oxygen out of the room. ‘How can we get expropriation to work?’ displaces attention from ‘How can we get code enforcement fully implemented?’ “

Expropriation brings certain advantages that code enforcement does not, however. For one, it gives government immediate and undisputed title to a property — no small feat in a city where many homes have been passed down through families for generations and are plagued by Byzantine ownership.

Others say expropriation is often the most lucrative for the owners of blighted property, which would not fetch much money on the open market or in a public auction. Expropriation wipes out liens and back taxes, which in some cases amount to more than the property is worth.

“It can give the expropriating city or entity a way to cure seemingly incurable title problems,” said John Lovett, an associate professor of law at Loyola University. “Property that’s physically blighted is often marred in a legal sense by very fragmented, unclear ownership — ownership that’s plagued by small interests of co-owners and liens.”

Short of a ruling from the state’s high court — which might be several years in the offing — NORA could get a break if the Legislature approves a bill that Sen. Edwin Murray, D-New Orleans, has filed in advance of the upcoming regular session. The bill would exempt New Orleans from having to offer property back to its original owner in cases when it was seized for blight.

The bill is a proposed constitutional amendment, and it would have to be approved by the Legislature and by voters before it could take effect.

In the meantime, NORA’s attorneys would say only that they were confident in their legal arguments and that the recovery of New Orleans neighborhoods was too urgent a matter for them to wait for a ruling from the Supreme Court.

. . . . . . .

Kate Moran can be reached at kmoran@timespicayune.com or (504) 826-3491.

Mar 30, 2008

Source: Times-Picayune

Fair Use Notice

This site occasionally reprints copyrighted material, the use of which has not always been specifically authorized by the copyright owner. We make such material available in our efforts to advance understanding of issues and to highlight the accomplishments of our affiliates. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is available without profit. For more information go to: US CODE: Title 17,107. Limitations on exclusive rights: Fair use. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.