Condemners Still Coming Up $hort
Tim Cavanaugh | June 9, 2006, 4:55pm
Working on yesterday's New London, CT story, I made several attempts to confim with the New London Development Corporation that none of the revenue-generating parts of the Fort Trumbull development (hotel, condos, retail outfits) currently have any signed commitments for funding. Today I got a reply from John Brooks, development manager for the waterfront and Fort Trumbull:
The public access Fort Trumbull Riverwalk is complete (i.e. paid for). The funding came from two grants. More than $1 million in state funded Fort Trumbull Project funds were used for shoreline structural restoration and environmental remediation, as well as replacement of a 400' long bulkhead (seawall). More than $500,000 in Maritime Heritage Park (state) funds were used for the installation of walkway, lighting, benches, etc.
Parcel 3A (Fort Trumbull Office Building Project) was ground leased to a private developer last December. This parcel (mostly former Navy land) and 88,000 sq. ft. building are now on the City's tax rolls. The building is under construction at the present time (exterior and interior repairs), and is being marketed for future tenants. City Planning & Zoning approval was obtained in late 2001.
Residences at Fort Trumbull (Parcel 2A, 2B and 2C) Project is pending approval at the City of New London Planning & Zoning Commission. These parcels (alll former Navy land) have been remediated, and are infrastructure ready for development. Funding for construction will be the responsibility of the private developer. Property will become taxable as of the date of the ground lease, which must be signed no later than construction start (anticipated next spring).
Hotel Project (Parcel 1B) design requires coordination with USCG Museum (Parcel 1A) design for parking, infrastructure easements and related issues. This coordination has been initiated, and will be ongoing during the next few months. Once these issues are resolved, hotel and museum designs will be presented to City Planning & Zoning for approval. Hotel project will be privately funded. Museum Project, as you noted, will have a mix of funds - federal, state and private. The federal legislation is in place (approximately $10 million). The "quiet phase" of a private capital campaign is now underway.
Parcels 1A and 1B are comprised primarily of three properties: former U.S. Navy (Undersea Warfare Center), a former oil terminal, a former Amtrak rail yard. All were heavily polluted. State funds were used for aquisition, environmental remediation, and installation of new infrastructure (streets, sidewalks and underground utilities). A $2 million Federal grant was applied to the infrastructure installation.
So there is no funding for the hotel, the condos, or the stores, but there is apparently a parcel leased to a private developer that is currently being taxed and developed. Everything else is coming from the state or the feds. Which, given the number of anti-eminent domain bills in Congress and state legislatures, raises a question: If politicians like Connecticut's Governor Jodi M. Rell are serious about wanting to keep people in their homes, wouldn't they be better off not giving millions of dollars to projects that involve forcible evictions? The way to end a problem is to stop funding it, yet so far the only entity that has taken this step is BB&T, a private bank holding company.
It would certainly be politically difficult for the Nutmeg State's executive to hold up funding now; people would ask why, after so many people have been kicked out of their homes, the state isn't stepping up to make it worth the trouble. But there's a simple answer: because as long as the state keeps the money coming, people will keep getting kicked out of their homes.
Paul | June 9, 2006, 6:55pm | #
Fair Market Value. What a tangled web we weave...
Forgive me, but here's a rough draft of an essay I'm writing on so-called Fair Market Value. Forgive the length.
If a small house in a lower-middle class neighborhood would sell to another potential homeowner who intended to occupy the property and use it in the same manner as the seller-- and its price was say, $159,000, then one could argue that the Fair Market Value of the house (and property) is somewhere near to $159,000. But lets say this neighborhood is found to be well located and situated for mixed-use, commercial and residential due to changing demographics in a city. Then lets say that the property catches the eye of a wealthy developer who plans to do large scale redevelopment over the entire area, then the Fair Market Value can no longer be assessed based upon what another homeowner who intended to simply re-occupy the same property would be.
This brings me to look at property based on two views. The first is 'as-is' market value which, in the first case mentioned above, the house and property is probably worth around $159,000 give or take. But the second scenario is a 'will-be' market value. So the question becomes, how do you assess the 'will-be' market value of property whose use will change dramatically once the developer takes ownership?
My belief is that in the second case, fair market value should be assessed as what the property would be worth if the planned development had already taken place, or some reasonable percentage thereof. If multiple parcels are being taken in one action, then the sum total of the whole group should be assessed in this manner, then divided appropriately between each property holder. So, if ten parcels are taken at a 'will-be' fair market value of $8,000,000, then each property owner should receive around $800,000.
The only question remaining is how does one arrive at a 'will-be' figure? It's reasonable to concede that the value is in the redevelopment, so one can't realistically value the property assuming that all developments take place. As we all know, the property gets some of its value by the actions of the owner so the compensation shouldn't be based upon the not-yet completed development. But it should be based upon the type of property that the government zones this land as in the process of the eminent domain taking. For instance, if I buy a piece of downtown real estate in Seattle, and plan to place a 1,900 square foot rambler on it, I'm still going to pay the tens of millions of dollars for that piece of real estate. And, if this miracle occurs and I actually get this real-estate and subsequently place my small rambler on it, the property is not suddenly only worth $159,000. The property is still worth tens of millions (less what structures I had to raze to build the rambler). This is self evident.
It is fantastically unfair that we then believe that the owner of a $159,000 lower-middle class home in a quiet neighborhood is only going to get $159,000 if the developer plans to put a glass and steel office building, restaraunt, health club and pharmaceutical research facility on it. If after the developer finishes his intended project, the property is valued at $15,00,000, it seems perfectly fair that the rezoned but undeveloped land would be worth maybe 1/4 of that value: $3,750,000. If there were ten equally sized parcels that made up the property package then each owner would receive $375,000.
joe | June 9, 2006, 7:22pm | #
Trying to defend a position logically didn't work out too well for Clean Hands, so now he's reduced to putting his fingers in his ears.
"As for slaves, in theory, they were compensated for their labor with housing and food and medical care - so what on earth could they be complaining about, right?" There was no requirement that this "compensation" be fair, or even close to covering the value of the taken labor. The whole purpose of slavery was to make a profit off the difference between the cost of maintaining the slaves and the value of their labor, whereas the condemnation of land is a break-even deal at best for the government.
"case two might be better illustrated as being drafted into the US Army and then being forced to fight on Ford Motors' behalf against General Motors." No, we are all in agreement that takings without a public purpose, done purely to benefit a private party, are verbotten.
I've got no argument with Paul's point. Redevelopment takings are supposed to have benefits beyond the profit made by the developer, or else they are not "taken for public use." If there is no benefit achieved beyond the increase in value of the taken property post-development, then it should not be taken.
Len, their "property values," as narrowly defined by libertarians, are the same. It is the intagible values, the ones that made the IJ decide to make Kelo its poster child, the ones Clean Hands so casually dismisses as "psychobabble," that are different.
Perhaps I was a little too generous to assume that libertarians grasp this instinctively, like everyone else. The rude guy who's ass I kicked yesterday clearly don't grasp them.
joe | June 9, 2006, 8:16pm | #
Len,
"Since value is subjective, could you clarify further?"
Without a blacklight, a Pink Floyd poster, and a bag of Cheetos, probably not.
isulder, if you can even claim that, then you don't understand the Kelo ruling or even the issues at stake in the case.
Paul,
"Joe, I'm not sure how many of us ever thought that this was a huge profit windfall for government." I'm not claiming it was - my statement was in response to the claim that condemnation of land is the equivalent of slavery, and I was pointing out one significant difference. But I do appreciate the second objection you raise - I just put more weight on the public benefits on the other side of the scale.
uncle sam, "It's the politicians that have blurred the distinction between stopping blight and utilizing the expedience of government extortion to move people out of the way for the benefit of Donald Trump (for example)." Agreed. Damn politicians!
"Homeowners invest a lot in their homes and form strong attachments to the communities they have spent years in." Please, uncle sam, explain this "psychobabble" to Clean Hands. He doesn't seem to get it.
But this is just silly: "The analogy to slavery is that slaves are made that way by the same extortion as used in eminent domain. Be my slave or suffer the consequences...sell me your property at the price I offer or suffer the consequences." Come ON! Stop at the red light, or suffer the consequences. Dispose of your waste oil properly, or suffer the consequences. Keep your hands off women who didn't invite you, or suffer the consequences. What you've identified here is the existence of government power, and there's quite a bit more going on in slavery than that.
bago, "So joe's argument is that if the government can take property for one reason, they can take it for any reason?" No.
joe | June 10, 2006, 8:35pm | #
Tim, consider this:
"My own city did this successfully in a neighborhood in which dense residential uses and small-scale industrial uses were jammed together cheek-by jowl, leaving both unviable. The homes were blighted by the presence of smelly industrial operations, metal shops with barren yards full of rusting materials, and heavy truck traffic. The business environment was deteriorating because there was no opporunity to expand operations, poor access, and small lots that made parking and expansion impossible.
The plan worked by buying up the industrial properties in part of the neighborhood and helping the businesses relocate to land in another part of the neighborhood, made available by the acquisition of that section's residential properties. The vacant land created by the removal of businesses and by the decades of abandonment by commercial, residential, and industrial property owners in the area where the plan called for housing when then used to construct higher-quality affordable housing, to make up for that lost in the industrial area.
The key here was that the acquisitions were site-specific, with the majority of existing buildings untouched. Compared to large-scale clearance plans like Ft. Trumball, this resulted in much less disruption of people's lives and of the neighborhood's established ways of life.
Of course, there is a major conception difference behind this: the goal was not to turn the area from one type of neighborhood to another - that is, it was not an attempt to wipe it out and start over - but to remove locally-specific problems that were preventing it from succeeding on its own terms."
A reliable method of preventing abusive clearance plans without eliminating the possibility of public redevelopment plans like the one I just described would be great.
But in order to formulate one, you'd have to first be able to recognize the difference. Too many of your admirers seems unable or unwilling to do so, because they're so much more concerned with abstract property rights - spitting venom at me for suggesting that condemning a vacant warehouse is different than condemning a street of occupied homes, for example - than with the well being of the communities that people live in.