pageok
pageok
pageok
My Los Angeles Times Op ed on California Proposition 99 and Eminent Domain "Reform":

In today's LA Times, I have an op ed criticizing California Proposition 99, the eminent domain "reform" initiative sponsored by pro-condemnation interest groups that pretends to protect property rights, but would actually do far more to undermine them. Here's an excerpt:

The U.S. Supreme Court created a huge political backlash when it ruled that local governments could use eminent domain to seize private property and transfer it to other private owners for "economic development." Since the Kelo ruling in 2005, 42 states have enacted limitations on eminent domain — not always effective ones. But like lawmakers in many other states, some California officials are trying to block real eminent domain reform.

On June 3, Californians will vote on Proposition 99, a ballot initiative sponsored by groups representing cities, counties, redevelopment agencies and other pro-condemnation interests. It purports to protect property rights against eminent domain, but it actually provides almost no protection....

Proposition 99 . . . protects only owner-occupied residences against condemnations with the purpose of transferring property to "private persons." That leaves renters — 42% of Californian households — unprotected. If the buildings they live in are condemned, renters can be forced out even if their leases haven't expired. Owners of farms, small businesses and homeowners who have lived in their residences for less than one year also would remain vulnerable.

Even the protection for homeowners covered under Proposition 99 is likely to be ineffective...

Also on California's June ballot is Proposition 98, which really would forbid "economic development" condemnations and other abuses. Absent Proposition 99, Proposition 98 would likely become law — as have anti-Kelo initiatives in 10 other states. Proposition 99 would invalidate any other eminent domain referendum passed on the same day so long as 99 receives a greater number of votes than Proposition 98. Many voters are unlikely to realize this.

Due to tight space constraints, I didn't have room to say much about Proposition 98, the far more effective eminent domain reform initiative that Prop 99 was put on the ballot to block. Fortunately, Tim Sandefur of the Pacific Legal Foundation has recently published an excellent op ed addressing most of the standard objections to Prop 98. The use of Prop 99 to block effective eminent domain reform by exploiting political ignorance is part of a broader pattern common to many states, one that I have discussed in much greaterdetail in this academic article on post-Kelo eminent domain reform.

If time permits, I will have more to say about Propositions 98 and 99 over the next few days. It's hard to fully consider these complex initiatives in a 600 word op ed.

Justin Levine:
"If time permits, I will have more to say about Propositions 98 and 99 over the next few days. It's hard to fully consider these complex initiatives in a 600 word op ed."

Fair enough. But when time DOES permit for you to say more, will you finally address the fact that Prop. 98 eliminates rent control for new renters? Or will you continue to play down that key fact of this debate?

Vote NO on both of these turkeys. They are BOTH equally deceptive in different ways.
5.19.2008 7:10am
Ilya Somin:
will you finally address the fact that Prop. 98 eliminates rent control for new renters? Or will you continue to play down that key fact of this debate?

I addressed it a long time ago in this post. It's also addressed in Tim Sandefur's column that I linked to in the current post. In brief, my view is that 1) the impact of this part of 98 is limited by the fact that most CA cities are already barred from enacting rent control, 2) current rent control tenants are exempted from 98's rent control provision, and 3) it will be easy for Californians to enact new rent control laws if they are so inclined because the CA constitution is easy to amend. I also believe that rent control is ultimately bad policy because it reduces the quantity and quality of housing (a predictable effect of price controls.
5.19.2008 7:27am
Snarky:
The drafters of Proposition 98 are extremely dishonest. As with the previous eminent domain reform proposition, they have drafted something that does much more than forbid Kelo-type takings.

Maybe if they drafters of Proposition 98 were not so dishonest, they would have a chance of winning.

You can blame political ignorance for the defeat of Proposition 98 and the win of Proposition 99. (Yes, I can see into the future.) And you are right. But it is not the ignorance of voters that is the problem. It is the ignorance of the drafters of Proposition 98 who have gone way beyond merely preventing Kelo-style takings.

The problems of Proposition 98 include:
(1) Encouraging frivolous litigation with attorney fee provisions that require the government to pay plaintiff's legal fees, but never require the plaintiff to pay the government's legal fees, no matter how frivolous the plaintiff's claim. Thank you for screwing the taxpayer.

(2) If government decides to convert a fire station to a police station, it first must allow the original owner to buy back the property at the original price paid. There is no time limit on the governments obligation to allow owners to buy back property way, usually way below market value.

If a government uses eminent domain against a corporation to acquire land for a fire station and 50 years later decides to convert that fire station into a police station, the corporation gets a huge unexpected windfall. It gets the value of 50 years of appreciation even while it has been able to invest that money elsewhere.

I could go on. But its not worth it. Suffice it to say that Proposition 98 is extremely dishonest and/or poorly drafted.
5.19.2008 11:31am
Tony Tutins (mail):
1. most CA cities are already barred from enacting rent control I was not able to find this in the California Codes. I note that the Costa-Hawkins bill ended rent control on new construction -- Prop 98 will end rent control on older construction as well.
2. A ban is a ban, whether current tenants are grandfathered or not. Handgun ownership is effectively illegal in Chicago, even though those who registered them before 1984 can continue to own them (provided they reregister every two years).
3. It will be even easier for apartment owners than for ordinary citizens to place a rent-decontrol-free eminent domain initiative on the ballot. Let this one die unborn.

In the vast majority of cases, the prices that landlords paid for the rent-controlled units they own were discounted to reflect the lower rate of return. They can rerent at market rates when their tenants die, move away, or go to live in a nursing home. Landlords also benefit from property tax control, enacted to help individual homeowners but applied to income property as well.
5.19.2008 11:41am
Snarky:

Still, Prop. 98 would not touch rent control for any person currently living in rent controlled property. It would phase out rent control only when people move, but it does not allow landlords to evict people for paying low rents, or to raise rents for people living on their land. The idea that Prop. 98 would throw people out on the street is a lie spread by Prop. 99's backers to fool people into voting against eminent domain reform.


This is either a dishonest or naive attempt to defend Proposition 98. Let's consider the real world for a moment.

First of all, in most California cities, cause is not required for eviction. Second, even if cause is required for eviction, landlords obviously have an incentive to enforce provisions in their leases and evict tenants in a more strict manner than they otherwise would.

The bottom-line. Anyone who argues that Proposition 98 will not result in evictions is either dishonest or stupid.
5.19.2008 11:49am
Specast:
I haven't finished my study of the propositions, but I believe I will support 99 precisely because it's a more limited protection without all the other non-Kelo-related junk stuffed in by interest groups (such as banning rent control, which has nothing to do with Kelo eminent domain). I think government should have wide latitude re: eminent domain and "land use" (not sure if that's the right term, but you know what I mean), though I'd not like it to be able to easily appropriate residential property for Kelo-type transfers.

I think criticisms of 99 as "sponsored by special interests" are comical. Prop 98 is at least as bad, only in the opposite direction. All this points out the deeply flawed nature of the initiative process in CA. But since I have to choose, 99 is more narrowly tailored to the Kelo objections.
5.19.2008 12:01pm
Specast:
Just having read Snarky's post, I'd like to add that I am a landlord who has been financially harmed by rent control, so I'm not a fan of that law. Still, Snarky has a (perhaps small) point. A key aspect of RC is that it prevents me from declining to rent to someone after the lease term has expired, so long as I do not have "cause" to evict him; I'm stuck with the tenant as long as he pays the slowly-increasing rent. Under 98, I believe, I may not be able to kick someone out for "paying low rent," but I can now decline to keep renting to him after the lease ends, then charge market rent to the new tenant. Since many/most tenants (esp. long term tenants) are continuing to live past the written term of their leases, this change in law means exactly what you think it means: pay more or get OUT.

Again, I dislike this particular RC restriction, but I also dislike 98 as a package "solution."
5.19.2008 12:12pm
Snarky:
Specast,

The problem is not merely not renewing an expired lease. Another problem is that landlords will be tempted to enforce lease provisions in a much more strict manner than they otherwise would in order to get rid of tenants protected by rent control.

Even if rent control were bad policy, it should be phased out in a way that does not cause unnecessary dislocations and disruptions in the lives of tenants.

If you wanted to get rid of rent control in a rational way, what you would do is not link it to a particular tenant, but rather slowly phase it out over time.

I am not against rent control. But if I were, I would make sure that eliminating it did not result in evictions.
5.19.2008 12:23pm
David M. Nieporent (www):
A key aspect of RC is that it prevents me from declining to rent to someone after the lease term has expired, so long as I do not have "cause" to evict him; I'm stuck with the tenant as long as he pays the slowly-increasing rent. Under 98, I believe, I may not be able to kick someone out for "paying low rent," but I can now decline to keep renting to him after the lease ends, then charge market rent to the new tenant.
98 does not change the grounds under which you can renew leases.
5.19.2008 1:44pm
theobromophile (www):
The problem is not merely not renewing an expired lease. Another problem is that landlords will be tempted to enforce lease provisions in a much more strict manner than they otherwise would in order to get rid of tenants protected by rent control.

I've heard of leases in San Diego - near the beach, no less - which prohibit tenants from storing things like surfboards, kayaks, and bicycles in their apartments. Without rent control, the landlord does not have much of an incentive to kick the tenant out for surfboard-ownership; after all, he isn't going to get more money (necessarily) out of a new renter, and would have to go through the trouble of finding new tenants, screening them, etc. If there were rent control, the landlord would have a huge incentive to enforce lease provisions like that - lease provisions which are basically nit-picky and have little to do with whether or not the person is a good tenant.
5.19.2008 2:15pm
Ilya Somin:
First of all, in most California cities, cause is not required for eviction. Second, even if cause is required for eviction, landlords obviously have an incentive to enforce provisions in their leases and evict tenants in a more strict manner than they otherwise would.

Landlords can't evict people while the term of their lease hasn't yet expired. That's the underlying nature of rental contracts. If they refuse to re-lease to them after the contract expires, it's not an eviction, but simply a refusal to enter into a new lease.
5.19.2008 2:36pm
Ilya Somin:
I think criticisms of 99 as "sponsored by special interests" are comical. Prop 98 is at least as bad, only in the opposite direction. All this points out the deeply flawed nature of the initiative process in CA. But since I have to choose, 99 is more narrowly tailored to the Kelo objections.

My criticism of 99 is not that it's sponsored by "special interests" but that it fails to actually protect property rights. It is also not true that 99 is in any way "narrowly tailored to the Kelo objections" because, for reasons I describe in the op ed, it doesn't actually protect property rights against Kelo-style takings, which will still be able to continue.
5.19.2008 2:39pm
Ilya Somin:
1. most CA cities are already barred from enacting rent control I was not able to find this in the California Codes. I note that the Costa-Hawkins bill ended rent control on new construction -- Prop 98 will end rent control on older construction as well.

They are also banned from enacting new rent control laws in general.

2. A ban is a ban, whether current tenants are grandfathered or not. Handgun ownership is effectively illegal in Chicago, even though those who registered them before 1984 can continue to own them (provided they reregister every two years).


Yes, but the grandfather provision does protect current tenants, and gives rent control supporters time to sponsor a constitutional amendment of their own (which in CA is fairly easy to do).

3. It will be even easier for apartment owners than for ordinary citizens to place a rent-decontrol-free eminent domain initiative on the ballot. Let this one die unborn.

"Ordinary citiziens" are not the only ones who have an interest in rent control. As for the apartment owners, yes they might be able to put an initiative on the ballot. But it would be unlikely to pass.
5.19.2008 2:41pm
Andrew J. Lazarus (mail):
The question is not whether rent control is good policy, but whether Prop 98 is a sneaky, deceptive attempt to get rid of it under color of eminent domain reform.

The answer is Yes. Prof. Somin has yet to admit to the deliberate concealment of this deception, nor to grapple with its implications for the moral defensibility of the proposition as a whole.

I hear a Prop 98 radio ad today. After decrying Prop 99 as a creation of special interests, the fast mumble at the end said that the ad was paid for by, inter alia, the California Association of Realtors PAC. No special interest there, no-siree.

Not only am I voting against this despicable deception, I will vote for 99 (which I might otherwise not do, in view of its flaws) in order to maximize the probability that 98 does not come into force. And the claim that we should support 98 because its anti-rent control provisions (which, I dare say, are the genuine raison d'etre for many of its supporters) can be amended out later is absurd. I might as well argue that Prof. Somin support 99, on the grounds that the easy-to-amend California Constitution will let him fix it up later.
5.19.2008 2:41pm
Ilya Somin:
Problems of Prop 98 include:

(1) Encouraging frivolous litigation with attorney fee provisions that require the government to pay plaintiff's legal fees, but never require the plaintiff to pay the government's legal fees, no matter how frivolous the plaintiff's claim. Thank you for screwing the taxpayer.


The govt need only pay the plaintiff's legal feesunder Prop 98 if he WINS. That creates no incentive to undertake "frivolous" litigation that, by definition, has little or no chance of winning. Given the deep pockets of the government and the high cost of litigation for small property owners, if there were no legal fees provision, the govt could get away with some illegal takings simply because the cost of litigation would deter owners from asserting their rights.

(2) If government decides to convert a fire station to a police station, it first must allow the original owner to buy back the property at the original price paid. There is no time limit on the governments obligation to allow owners to buy back property way, usually way below market value.

The government need only, under Prop 98, make a "good faith effort" to find the original owner and offer to resell to him. Moreover, they need only do this is the new use of the property is "substantially different" from the one originally asserted to justify the taking. A police station vs. a fire station may not be "different" enough to trigger the provision, since both are public agencies that provide security.

Many years after the fact, such an effort is unlikely to result in actually finding him, nor is it likely that he would want to repurchase even if he or she was found. While imperfectly drafted, this provision is intended to prevent the government from "bait and switch" tactics - asserting that property is being taken for a particular public use, and then quickly switching to something else - a not uncommon tactic. It would have been better if there were a time limit (e.g. - 5 years). But in practice, the lack of one won't make a huge difference.
5.19.2008 2:51pm
Snarky:

The govt need only pay the plaintiff's legal feesunder Prop 98 if he WINS. That creates no incentive to undertake "frivolous" litigation that, by definition, has little or no chance of winning. Given the deep pockets of the government and the high cost of litigation for small property owners, if there were no legal fees provision, the govt could get away with some illegal takings simply because the cost of litigation would deter owners from asserting their rights.


Can you say contingency?

Lawyers who are ideologically committed to disrupting eminent domain could take cases that have even a slight chance of winning (where winning is defined as getting even one penny more for the property from a jury than the government offered) and win settlements for nuisance value.

The bottom-line. If property holders get attorney's fees when they WIN, they should pay attorney when they LOSE.


A police station vs. a fire station may not be "different" enough to trigger the provision, since both are public agencies that provide security.


Then again, a police station versus a fire station MAY indeed be "different" enough to trigger the provision.

This is a really stupid provision. What they could have said is that if the government tries to transfer the land to a PRIVATE use, this provision will kick in. Instead, it comes into play whenever the property is put to a "different" use.

Whatever the meaning of "different" this is an unnecessary restrictions on rational government decision-making. This will cause unnecessary and expensive litigation for taxpayers.


Many years after the fact, such an effort is unlikely to result in actually finding him, nor is it likely that he would want to repurchase even if he or she was found.


If the property has appreciated in value (which it typically will have after any significant passage of time) then any rational owner will want to buy the property at the original value from N years ago.

Furthermore, while it may sometimes be difficult to find individual owners, it is not difficult to find corporations who used to own the property.

There is no time limit. Which makes the provision much worse. A corporation never dies, unless it is dissolved. So, if eminent domain is used on corporate property and 100 years pass, and the property is then shifted to another government use that is "different," that corporation receives a huge windfall if the property has appreciated in value.

Ultimately, there is no reason to restrict the government to a particular public use. That is just wasteful. Any public use should do. If the government decides to build a library instead of a park, that should not trigger this provision.

The provision should have simply allowed property owners a right to buy the property if the government subsequently transferred the property to a PRIVATE use.
5.19.2008 5:57pm
Justin Levine:
1) the impact of this part of 98 is limited by the fact that most CA cities are already barred from enacting rent control,

The actual number of cities with or without rent control ordinances is irrelevant. What is key here is how POPULOUS the cities are that do happen to have it. If only 4 cities have it, but they happen to be among the 4 most populous cities in the entire state, then it is completely silly on your part to suggest that Prop. 98's rent control impact will be "limited".

But for the record, here are the cities in California that currently have rent control:

Berkeley
Beverly Hills
East Palo Alto
Hayward
Los Angeles
Los Gatos
Oakland
Palm Springs
San Fransisco
San Jose
Santa Monica
West Hollywood

Are you really going to tell me that Prop. 98's rent control impact will be "limited" with places like L.A., Oakland, San Fransisco and San Jose being affected?? Please...This is a dishonest argument on your part and is very unbecoming for a Volokh Conspiracy author.

There are also a number of other communities that have rent "mediation" ordinances that require landlords to justify rent increases to a governmental authority (which I presume would affected by Prop. 98 as well).

Those communities include:

Campbell
Fremont
Gardena
San Leandro

Naturally, this doesn't even touch on the issue as to why cities should be prevented from passing their own rent control provisions in the future if they choose to do so. Prop. 98 would prevent this.

So let's stop with the nonsense that Prop. 98's rent control provision would somehow only be of "limited impact". Just be honest and argue that you are ideologically opposed to rent control, and then support an HONESTLY WORDED proposition that deals with that issue and that issue alone.
5.19.2008 6:53pm
Justin Levine:
I should also add that the above list of cities with rent control do not include several other communities with mobile home rent control ordinances. The list above catalogs rent control ordinances OTHER than mobile home parks.

http://www.caltenantlaw.com/RCcities.htm
5.19.2008 6:58pm