Thursday, February 28, 2013

The Hamptons: Home of Real Estate Robin Hoods?

Image Credit: Sotheby's Real Estate 
In past posts, I have discussed the (remote) possibility of government regulation in the form of  takings to protect hurricane-prone coastal land in the Northeast and examined the state of affordable housing in low and mixed-income neighborhoods of post-Katrina New Orleans. Today, the theme of weather's effects on housing turns to an unaffordable housing hotspot- the Atlantic coast of the Hamptons lined with multimillion dollar estates- that, as Charles Lane reports, has taken unique measures to overome the usual obstacles to guarding against beach erosion by placing an annual tax on about 200 beachfront homes in the Town of Southampton's special Beach Erosion Control District. The tax requires these homeowners to shell out extra money to do what the U.S. Army Corps of Engineers currently lacks the funding to do- widen and fortify the public beach that separates these estates from the waves. However, the novelty of this approach lies in the fact that, unlike most property owners who seek exemptions from municipal regulations that restrict their development rights and impose new taxes, a majority of these oceanfront homeowners who decided to take beach nourishment into their own hands (and pocketbooks) proposed this tax. Instead of homeowners protesting that they are shouldering the brunt of the cost for the public benefit, these well-heeled residents are offering to carry the cost for the public benefits (bigger and stronger beaches mean good business for the east end of Long Island's tourism-reliant economy and increased property values for residents of Southampton) that accompany their private interests of not having a mansion taken out to sea with the next big storm.
Of course, this special tax zone is not without its critics. Only 60% of the tax zone's households voted in favor of the tax earlier this month and many of these residents believe that all of the town's residents and businesses should contribute to programs that have widespread public benefits and provide funds to public beaches. Some locals who live outside the zone, though they do not have to pay this tax, agree. Still others question the logic of the Town of Southampton's continual permitting of colossal homes to be built or remodeled in grand fashion on shaky, sandy ground so close to  eroding beaches. The homegrown proposal of beachfront owners to shoulder the costs of the public benefit of coastal fortification is likely a blip in contrast to the long list of property owners who would view such policies as unfair and skeptical policymakers who worry about the precedent of allowing a local government to neglect necessary resiliency measures in the face of climate change. Despite this likely reality, it presents a different take on the funding and regulation hurdles that often plague controversial housing policies in communities, both rich and poor, with perennially tight belts. 

Wednesday, February 27, 2013

"The Most Unkindest Cut of All": What Sequestration Could Mean for Affordable Housing

Image Credit: RAND Corporation 
In the days and hours before the indiscriminate spending cuts known as the sequester are set to go into effect on March 1, much media attention has been given to sequestration's effects on the defense industry, education, and everyday services such as air traffic controlling. Regarding social services, national dialogue is quick to point out that programs like TANF and Medicaid will be left mostly untouched if the cuts do indeed come into effect, but such assertions seem to entirely miss the point that the bundle of services that provide much-needed help to low-income Americans goes far beyond the few largest entitlement programs. Affordable housing initiatives will be hit hard by the sequester but, thus far, coverage has been drowned out by the popping champagne corks accompanying the announcements of a rebounding real estate market. However, as early as this past September, the National Affordable Housing Management Association (NAHMA) issued a cautionary fact sheet detailing the estimated $2.8 billion in cuts to HUD and and USDA programs that serve low-income tenants and craft affordable housing policies in the U.S. Such programs include Section 8 projects and vouchers; elderly housing (Section 202), disabled housing (Section 811); the Community Development Fund; rural rental insurance; homelessness assistance; and HUD's innovative Choice Neighborhoods Initiative. As expected, the cuts would indiscriminately inflict hardship on urban, suburban, and rural residents who rely on these programs to survive and thrive in vibrant communities. In the District of Columbia, where nearly 97% of affordable housing funds come from the federal government, a reduction in funding would hamper the D.C. Housing Authority's ability to provide assistance to the many families who are waiting for affordable units in a city that has already seen reduced government investment in housing initiatives since 2007.

Image Credit: Novogradac & Company, LLP 
Beyond the Beltway, housing officials worry that, in addition to jeopardizing the assistance of residents in need of affordable housing options, sequestration would lead to a declining maintenance and repairs of affordable housing facilities and would have a negative impact on the ability of public housing and redevelopment authorities to form partnerships with private foundations and developers and plan mixed-income projects. In a letter directed to a bipartisan group of congressional leaders, the executive directors of the Council of Large Public Housing Authorities, National Association of Housing and Redevelopment Authorities, and Public Housing Authorities Directors Association warned leaders of the dire consequences of sequestration on public housing and related programs and urged Congress to avoid the sequester and seek alternative deficit reduction measures.

The huge reduction to funding for affordable housing is a blow that could prevent society's most vulnerable residents from securing the basic human need of housing and the American dream of quality, safe, affordable housing. The sequester will take away vital resources from necessary affordable housing initiatives and must be avoided in order to plan for future affordable housing successes. Indiscriminate budget gutting must be rejected in favor of, as the public housing directors implored Congress, more responsible and nuanced efforts to reduce the deficit. With less than 48 hours left until the deadline, affordable housing advocates (this blogger included) wait with bated breath, rattled nerves, and the firm hope that these across-the-board spending cuts do not come to pass.

Tuesday, February 26, 2013

When Sandy Hits Home(s)

Today we examine Hurricane Sandy's effect on the tri-state areas's low-lying coastal regions, the potential dangers posed to the Jersey Shore's homes and commercial structures by some of the state's coastal zoning laws, and what the current rebuilding effort can learn from past oversight. 

Hurricane Sandy, which destroyed or severely damaged nearly 350,000 homes in New Jersey alone,  and the rebuilding efforts in the storm's aftermath are illuminating many shortcomings of coastal zoning laws that, if left unchanged, could leave the densely-packed Northeast coastline vulnerable to future housing and infrastructure catastrophes. Amidst a backdrop of growing climate change concerns and urban planners' pleas for a focus on resiliency, it seems evident that rebuilding plans that snub meaningful changes to how areas affected by the storm regroup in favor of previous zoning schemes are doomed to repeat history. New Jersey is known for its stringent residential building codes but the state is also home to fairly permissive coastal zoning laws that would allow many of the damaged structures lying in coastal flooding zones- including areas between beaches and seawalls- to rebuild to their exact pre-Sandy locations. Rebuilding plans will almost certainly include the use more storm-resistent materials and heightened building requirement to ensure more durable seaside structures (similar to the 1989 response to Hurricane Hugo on Isle of Palms, S.C.), many New Jerseyans- among other concerned parties- are urging the New Jersey Coastal Commission and various state and local authorities to take a more proactive stance. In particular, Andrew Willner, past NY/NJ Baykeeper former scholar at Monmouth University's Urban Coast Institute has called on Governor Christie and the  Commission to "make the hard retreat from the coast when necessary."

Image Credit: Reuters 
Efforts to prevent rebuilding and future development along the most ecologically and physically vulnerable stretches of the Jersey Shore face the up-dune battle of resistance from developers with their eyes on the oceanfront prize and property owners who ask the eternal question "Why can't I live where I want, how I want?." The idea of the government precluding landowners from developing (or redeveloping) their private property for the public interest may sound undesirable to some, but there is precedent that states, that while outside the state's normal police powers, such action is permissible if just compensation is provided. within a state's police powers, with the caveat of compensation, of course. In 1988, South Carolina passed the Beach Management Act, which tightened regulation of the development and use of coastal land in that state. The restrictions effectively barred a property owner from building on two coastal residential lots near Charleston that were susceptible to beach erosion. SCOTUS eventually held that the state's prohibition on building on these lots amounted to a "total taking", because the regulation deprived the property of any economic value and that the government had to provide compensation to the petitioner. See Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992). Setting aside the cases's shady subsequent history, in which the state compensated the petitioner for the lots and then sold them to another developer to build homes, the Lucas total takings analysis may point to (an albeit controversial) alternative to plans to erect buildings on the same physically unsound lots and wait for the next big storm to wreak coastal havoc. If the state could compensate property owners for the taking of their seaside land, refrain from reselling it to the highest bidder, and construct more seawalls and other protections to prevent further erosion; the destruction of 350,000 more properties could possibly be avoided. However, the understandable nostalgia of the Jersey Shore of yesteryear, homeowners' strong emotional ties to their lots and damaged homes, and the dollar signs in the eyes of developers in search of prime real estate make this option very unlikely. Hopefully, a third way that approaches land use in a sensitive way and avoids the pitfalls of irresponsible rebuilding that leaves the shore open to destruction and further housing crises from a future storm is tenable and can be reached in quick time. Unlike other past storms that have sparked land use arguments, Sandy's housing woes do not allow us to look back with clear hindsight- the recovery efforts are still underway and we have yet to enter the eye of the debate and legal challenges surrounding coastal zoning policy changes.

Friday, February 22, 2013

A Tale of One City and Two Affordable Housing Markets?

Image Credit: Jason Andrew for the Wall Street Journal 
Nearly nine years have passed since Mayor Michael Bloomberg (I- New York City) enacted the ambitious New Housing Marketplace program in 2004. Now, with the plan's projected end date approaching, the Association for Neighborhood and Housing Development and The Atlantic Cities' Eric Jaffe take a closer look at how the U.S.'s largest municipal affordable housing platform, widely lauded as successfully achieving 85% of its initial goal, has actually addressed the city's lack of affordable options. The ANHD report and subsequent article note that, while the program has incorporated moderately-priced units in middle-income neighborhoods (termed "upper low-income housing" by Jaffe), anywhere from two-thirds to 80% of "affordable" units established by the plan in the city's poorest neighborhoods were affordable to neighborhood residents. The data shows that only 8 percent of the plan's units developed in the past three fiscal years were priced to target residents making 40% of the local median income, creating an imbalanced availability of affordable housing units that falls neatly along socioeconomic faults. Though many keys have been typed in previous posts (and, among other places, The New York Times) in lament of the dearth of NYC's middle-income real estate options, affordable housing activists reasonably assert that preservation of a viable urban middle class should come at the expense of a city's poorest, affordable housing-starved neighborhoods.

Note: For a more detailed analysis of the ANHD report that includes more information about the study's statistical findings and methodology (as well as a fascinating map that breaks down the percentage of unaffordable "affordable" housing by neighborhoods across the five boroughs), read Mr. Jaffe's piece New York's 'Affordable Housing' Isn't Always Affordable in The Atlantic Cities blog. 

Thursday, February 21, 2013

School's In: Inclusionary Zoning and the College Town Affordable Housing Crisis

It is no surprise that college towns have become magnets for newcomers. Concentrations of cultural offerings, school spirit, and incubators of higher knowledge have propelled many a college town to the lists of best places to live- as well as to lists of America's most expensive communities. This influx of middle and upper-middle class residents, including many well-off retirees, into markets with relatively little housing stock creates a scarcity of affordable options. As a result, many college towns have seen a surge in their homeless populations and, as generally small towns or mid-sized cities, they do not have the resources to serve these residents. Creative efforts highlighting college towns' affordable housing crises have turned ivory tower heads towards the reality of the poverty, homelessness, and housing inequality that exists in the backyard of the vaunted halls of academe.  Since the 1970s and 80s, several policies have developed to combat college town housing inequities. Although various policies and laissez-faire market approaches each have their supporters and constant legal challenges, inclusionary zoning (IZ) is by far the most popularly-implemented housing policy to rethink traditional Section 8 housing plans and address affordable housing shortages in college towns.

Image Credit: Chapel Hill/Orange County Visitor's Bureau

IZ plans require a given share of new construction to be affordable to low and moderate-income residents and allow for more affordable options than market forces might compel and provide incentive to introduce affordable housing to the most desirable areas of town (one of the aims of the Town of Chapel Hill IZ scheme). With the exception of statewide implementation of inclusionary zoning in the great experimental laboratory of Massachusetts, IZ policies generally occur at the municipal level. College towns including Chapel Hill, N.C.; Davidson, N.C.; Boulder, Col.; Madison, Wis.; and Berkeley, Cal. have adopted mandatory IZ plans while other, including Ann Arbor, Mich. and Ithaca, N.Y. have pursued voluntary inclusionary policies. See, e.g., Inclusionary Zoning, Boulder City Acts §9-13 (2006). However, many of the nation's most expensive college towns- notably, Berkeley- and 107 of the 135 municipalities with mandatory IZ plans have faced significant legal obstacles to implementing their affordable housing visions. A relatively recent California Appellate Court decision held that Los Angeles's Central City West Specific Plan, which had attempted to place a 15 percent affordable housing requirement on developers violated California's Costa-Hawkins Housing Act. See Palmer/Sixth Street Properties, L.P. v. City of L.A.No. B206102, slip op. (Cal. App. 3d Dist., filed July 22, 2009).  Fallout from the decision led the California legislature's amending the Planning and Zoning Law to allow municipalities to set inclusionary housing requirements. See Cal. SB 184 Amended (2011). 

Many inclusionary zoning proponents have heralded this amendment as a confirmation that city-level inclusionary zoning is a desirable and efficient method of achieving economic integration and infusing college town housing markets with more affordable options. While they may be imperfect, and will likely be subject to a revolving door of legal challenges, regulatory obstacles, and questions about whether they could actually reduce housing supply, IZ plans (particularly mandatory schemes) have placed the onus on developers looking to capitalize on the pockets of disposable income and growth in college town markets to graduate to plans that include affordable options for those at risk of homelessness and housing marginalization. Cue Elgar's Pomp and Circumstance, please. 

Friday, February 15, 2013

'No One Leaves': A Grass-Roots Case Study

Image Credit: Kelly Creedon 

This (belated) Valentine's Day, we are highlighting a group of law students, housing advocates, and community organizers in the Boston area who spread their love for fair housing and tenants' rights through a grass-roots legal information campaign. On most weekend mornings during the last three years, volunteers from Harvard Law School's Project No One Leaves, Boston College Law School's Community and Economic Development Project, and other students from across Massachusetts can be seen canvassing  Project No One Leaves, a collaboration between City Life/Vide Urbana, Harvard and Boston College Law School students, and other students across Massachusetts, has coordinated numerous canvassing efforts in the City of Boston and surrounding neighborhoods in Middlesex and Norfolk Counties. Project leaders compile a database of recently foreclosed homes recorded in the public record and aim to establish contact with owners in default within three to four weeks, before banks and predatory groups can come knocking on the door. The organization's volunteers provide defaulting owners with information about pro bono legal representation and monthly City Life meetings in which residents of foreclosed properties can share grievances, ideas, and strategies to preserve their homes, avoid the auction block, and become current once again. 

Thus far, the organization's efforts have resulted in several dozen success stories of owners avoiding the chopping block at auction or asserting their rights of redemption. The success of the program's Greater Boston operations have spread across Massachusetts, with regular canvassing and advocacy meetings in cities like Springfield. In recent months, the project has turned its focus towards tenants whose landlords are facing foreclosure. Oftentimes, these tenants are unaware of their landlords' financial woes and are unlawfully forced out of their units before the end of their lease. Project No One Leaves seeks to provide consultation to these disenfranchised tenants, explaining their protections under federal Protecting Tenants at Foreclosure Act of 2009, which states that certain residential leases may remain valid even after a foreclosure and protects residential leases entered into before "the notice of foreclosure", defined as the final Notice of Trustee Sale by the Act's amendment. See Public Law 111-22. The work of Project No One Leaves (and other similar groups) has shed light on the concerns and marginalization of tenants who are caught off guard by the foreclosure of their residential rental unit and are unequipped to assert their legal rights against banks and new owners. 

It may not be wrapped in red and pink or dipped in milk chocolate, but a little guidance, representation, and a showing of solidarity may be the best way for fair housing advocates to show how much they truly care. 

Tuesday, February 12, 2013

Laissez Les Bon Logement Rouler

Image Credit: Ibreville//Termé Choice Neighborhoods Initiative 
Amidst the celebration of Mardi Gras, one of the brightest spots on the New Orleans calendar, we are
looking at the status of affordable housing in the seven and half years following one of New Orleans's darkest chapters- the devastation of Hurricane Katrina. More than 204,000 homes in Orleans Parish were destroyed, leaving 800,000 residents homeless or displaced by the storm, with the greatest effects felt in primarily low-income and minority neighborhoods like the Ninth Ward. Some reports estimate that, between late 2005 and mid-2007, New Orleans's homeless population more than doubled to a rate three times the national average.

While post-Katrina New Orleans has seen much rebuilding- including a somewhat controversial gentrification movement that is shifting the city's demographic makeup, many homelessness coalitions and fair housing advocates are concerned that the demolition of public housing units in favor of mixed-income projects will provide little relief for the thousands who remain displaced. The mixed-income developments in the Iberville/Tremé neighborhood, part of HUD's Choice Neighborhoods Initiative, have developed ambitious goals for housing, the neighborhood, and the people of Iberville/Tremé, including cultural and historic preservation; one-for-one replacement of the 821 units of the previous public housing complex; infrastructure revitalization; and increased access to commercial, educational, and public health services. The project appears to encompass many of the advantages that supporters of mixed-income housing trumpet as the solutions to affordable housing crises, such as improved housing quality, neighborhood revitalization, enhancement of public goods and services, and people of diverse income groups living adjacent to one another. Likewise, the initiative could be fodder for mixed-income housing opponents, many of whom criticize the market-based approach as a hindrance to the government's ability to serve those most in need and perpetuates damaging "culture of poverty" stereotypes. What is impressive about the Iberville/Tremé project (and, indeed, many of the Choice Neighborhoods plans in other cities) is its holistic approach that purports to focus on the community's residents as much as the neighborhood's reconstruction and the commitment to a one-for-once replacement of public housing units in a city that has recently seen too many of these units destroyed by forces of nature and man-made wrecking balls.

Only time will tell if mixed-income redevelopment will play a meaningful role in the restoration of affordable housing to New Orleans. While these projects, much like any public-private partnership, present risks, the payoff may just lead to New Orleans neighborhoods that are more diverse, livable, and well-planned. Vive la différence? 

Note: Future entries will return to issues discussed in this post, including further examination of the HUD Choice Neighborhoods Initiative and the effects of another natural disaster- Hurricane Sandy- on affordable housing in the Northeast. 

Monday, February 11, 2013

Adversarial House Hunting and the Recovery

Image Credit: ABC News 
As banks continue to turn their attention toward the glut of foreclosed properties heading to work its the auction block, they are encountering a legal hurdle they likely did not expect-a surprising number of squatters who have been inhabiting seemingly abandoned homes and are attempting to assert adverse possession claims to the properties. Last week, the Florida Sun-Sentinel reported the story of Andre "Loki Boy" Barbosa, a Brazilian national who filed an adverse possession claim of a 7,200 square foot waterfront Boca Raton mansion owned by Bank of America. Mr. Barbosa's claim of the $2.5 million home is reportedly Palm Beach County's largest adverse possession filing. The Sentinel goes on to state that Florida's adverse possession law allows someone to gain title to a property if he or she is living there openly, maintaining the property and paying the taxes. Other coverage of the "Loki Boy" drama refers to the adverse possession law as "obscure" and "archaic", but adverse possession filings have seen a steady rise during the recession and collapse of the housing bubble, particularly in markets hit hardest by foreclosure such as Phoenix, Las Vegas, and much of Texas and Florida. Perhaps most notable is the saga of Kenneth Robinson, the man who made a name for himself by living in an abandoned $340,000 house in an upscale Flower Mound, Tex. subdivision for $16-the cost of an affidavit of adverse possession. Before Mr. Robinson was ultimately ordered out of the home in February 2012, he developed a website entitled the "16 Dollar House" as well as an eBook and series of YouTube videos chronicling his endeavors and dispensing advice to would-be adverse possessors. Robinson and other adverse possessors tout their actions as "one method of relieving the mortgage crisis meltdown."In the years, decades, and centuries before the latest financial recession, the doctrine of adverse possession evolved to discourage absentee land ownership and reward "peaceable possessors" of land who were making the highest and best possible use of the property. The doctrine requires actual, open and notorious, exclusive, continuous, and non-permissive possession of the land in a way in which a normal owner would for a statutory period (ranging from 2 years in Arizona to 30 years in New Jersey). See Brown v. Gobble474 S.E.2d 489 (W. Va. 1996). After the statutory period has run, an owner who has not field an action in ejectment against the adverse possessor has waived their right of possession, the most important stick in the proverbial "bundle of property rights." While the discouragement of  absentee ownership supports the actions of Robinson, Barbosa, and other adverse possessors, their squatting presents formal realizability challenges or, in other words, confusion about who actually owns the property. Such confusion is distressing to lenders acting as the owner of record- not to mention frustrated neighbors and homeowners associations from Boca to Dallas. Thus, the squatters have placed abandoned properties into a vicious cycle: while adverse possession claims can theoretically provide incentive for banks to keep a closer track of abandoned properties and prevent these homes from sitting neglected for years at a time, the presence of an adverse possessor-viewed, of course, by the bank as a trespasser-makes it more difficult for the bank to bring the property to auction and transfer ownership to a new (and paying) owner. Adverse possession, though a doctrine that can potentially protect present and industrious land use, should not be used by a few bold speculators to profit at the expense of reintroducing abandoned properties into the marketplace amidst the housing sector's gradual recovery

Setting the Standard in Disparate Impact Claims

Today we return to the application of disparate impact theory to fair housing claims. In her recent article, Nikole Hannah-Jones outlined the history of disparate impact theory's recognition by the eleven federal appellate courts and the shift to a view of housing discrimination that focuses on results and not intent. Additionally, she articulated concern that an eventual consideration of disparate impact claims by SCOTUS would result in the Court overturning the theory upon which so many fair housing claims have been built for four decades. While discussing her article on the radio program Tell Me More, host Michel Martin asked Hannah-Jones why HUD had not yet established disparate impact as part of the Fair Housing Act, quoting the FHA's chief sponsor Sen. Walter Mondale as saying the Act was meant to include discrimination causing disparate impacts.
Image Credit: HUD 

Perhaps it was Ms. Martin's fortuitous question; perhaps it was the repeated introductions of the Housing Fairness Acts, which included a fund to test for housing discrimination, by Rep. Al Green (D-Texas); or perhaps it was four decades of swirling controversy, but less than seventy-two hours after the interview, HUD issued a final rule establishing a national standard to evaluate whether housing policies disproportionately harm protected classes under the FHA. The final rule formalizes a framework for proving claims under disparate impact theory and expresses HUD's intention to "prohibit practices with an unjustified discriminatory effect, regardless of whether there was an intent to discriminate."

The enumerated HUD standard is essentially a formalization of the burden-shifting test currently employed by appellate courts in evaluating housing discrimination claims, with the aim of stating a uniform rule that will eliminate the varying standards courts have previously used to make decisions (e.g. the Second and Third Circuit Courts of Appeals have historically weighed the disparate impact claim against the municipality's defense while other courts give more deference to legislative decisions). The final rule's three-part burden-shifting test places the initial burden of proof on the Plaintiff, meaning that Plaintiff must prove that a practice results in, or  would predictably result in, a prohibited discriminatory effect. If Plaintiff proves a prima facie case, the burden of proof shifts to Defendant to prove that the practice is necessary to achieve one or more
substantial, legitimate, nondiscriminatory interests. If the Defendant satisfies this burden, then Plaintiff may still establish liability by proving that the aforementioned interest could be served by a practice that has a less discriminatory effect. Once again, this echoes much of the appellate analysis of disparate impact claims. See Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010).

HUD's final rule standard is an articulation of previous organizational statements and decades of substantive common law and thus HUD has issued a clear and uniform guideline for adjudicating  disparate impact housing discrimination claims that places very few costs or burdens on courts, fair housing providers, or potential litigants. The standard places administrative support behind decades of court decisions and, in a legal system without a disparate impact ruling from SCOTUS, provides more definition to the often confusing fair housing discussions that circulate legislative chambers, courtrooms, and, yes, even afternoon radio shows.

Note: The HUD Final Rule 24 CFR Part 100 [Docket No. FR-5508-F-02] RIN 2529-AA96 for the Implementation of the Fair Housing Act’s Discriminatory Effects Standard has (at this time) been submitted for the Federal Register for publication. The final rule will be effective 30 days after publication in the Federal Register.  

Tuesday, February 5, 2013

A Beaux-Arts Milestone that Almost Wasn't: Happy Hundred, Grand Central

In honor of the celebration of Grand Central Station's 100th birthday, this week we're looking back on the case that, decided differently, could have permanently scarred the iconic Beaux-Arts beauty that Jeff Lunden recently dubbed a "cathedral for commuters."
Image Credit: Wikimedia Commons 
In 1965, responding to the loss of culturally significant Manhattan landmarks- including the original Pennsylvania Station- to the wrecking ball, Mayor Robert Wagner signed into effect the New York City Landmarks Law, to be enforced by a Landmarks Commission. Three years later, the newly formed Penn Central Railroad Company- created by the union of the struggling New York Central and Pennsylvania Railroads- unveiled two designs to update and further develop Grand Central Terminal, both of which proposed the addition of a more than fifty story office tower designed in the Modernist style by acclaimed architect Marcel Breuer. One of the proposals called for the demolition of some of the terminal's original walls. After both Grand Central Tower plans were rejected by the Landmarks Commission, Penn Central filed suit claiming that the Commission's restrictions placed an unfair burden on Plaintiff and the owners of the approximately 400 other properties designated as city landmarks by curtailing their development rights in favor of the public benefit of historic preservation. Plaintiff argued that the Landmark Commission's restrictions amounted to a regulatory taking and that Penn Central was entitled to just compensation from the city. On appeal in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), SCOTUS employed a three-part balancing test to determine whether the Commission's actions constituted a mere regulation or a taking. The Court evaluated (1) the character of the government action- notably whether the action fulfilled a government purpose of promoting the community's health, welfare, and safety; (2) the economic impact of the regulation on Plaintiff; and (3) the protection of Plaintiff's reasonable investment-backed expectations. In an opinion issued by Justice Brennan, the majority held for the city, stating that the Landmark Commission's action of rejecting the Grand Central Tower plans was a protection the city's welfare and that the regulation did not interfere with Penn Central's reasonable investment-backed expectations, because they had purchased a train station and were still entitled to run a train station (the Court also posited that Penn Central could sell their air rights to the developer of another parcel). In short, the character of the Commission's action and the lack of threat to investment-backed expectations outweighed any economic impact felt by Penn Central through the diminution of the parcel's value. This decision, which eventually led to the Metropolitan Transit Authority's acquisition and restoration of Grand Central Terminal, was a milestone not just for takings law but a monumental victory for the preservation movement that sought to protect beautiful and historic public spaces from the threat of bland repurposing. If not for the Landmark Commission's actions, preservation activism from New York celebrities including Jacqueline Kennedy Onassis, and subsequent Court ruling, the candles on Grand Central's centennial cake might have a lot less architectural luster. Here's hoping Grand Central continues to be a beautiful nerve center for Manhattan transit for another century. Happy One Hundredth, Grand Central!

Monday, February 4, 2013

Legal Gridlock Contributing to or Healing Florida's Foreclosure Woes?

Florida recently surpassed Nevada to achieve the unhappy distinction of being the state with the most foreclosures for the first time in five years. As NPR journalist Robin Sussingham reports, 1 out of every 32 Floridian homes received a foreclosure notice during 2012, more than double the national average. While new defaults have undoubtedly contributed to this staggering rate, many angry fingers are pointing to Florida's protracted legal process as an impediment to getting rid of the state's backlog of foreclosed properties. Judges and defense lawyers representing clients in default have been criticized by lenders for allowing clients to stay in their homes for more than 2 1/2 years after their last payment. While sympathetic to the plight of small banks and credit unions, many in the Sunshine State's legal community point to disorganized practices of larger lenders who have misplaced paperwork outside of Florida as the real cause of the housing market's troubles. Lawyers claim that  their representation allows people to stay in their homes when lenders would otherwise forget about the properties and allow them to sit empty, distressed or open to squatters.
Image Credit: Sunny Isles Miami Real Estate 
Though the blame game between the bankers and lawyers may seem to be a showdown between the most unsympathetic players on the stage, it seems that cumbersome legal mechanisms may serve a noble purpose to protect defaulting owners from banks reclaiming the properties quickly. These lenders would then sell the homes to investors at auction before defaulting owners have exhausted all opportunities to retake their home and exercise their right of redemption under Florida statute. With certain real estate markets in Florida, particularly Miami, appreciating rapidly as the housing market recovers, the need for a drawn-out foreclosure process might be even more necessary. Perhaps there are other parties worthy of pointed fingers?

What's In a Name? That Which We Call 'Low-income Housing' by Any Other Name Would Make More Sense

Image Credit: City of Lawrence (KS) 
Earlier today I read Dr. Robert Lerman, American University economist and Urban Institute fellow's fantastic column entitled "Low-Income Housing Doesn't Actually Exist", which discusses how bad  terminology can lead to bad housing policy. Dr. Lerman notes that the inaccurate overuse of the term "low-income housing" has led to policies that rely too much on construction subsidies that restrict where recipients can live, overlook many families living below the poverty line, and do nothing to address the shrinking purchasing power of residents with modest incomes. While I am unsure about Dr. Lerman's suggested paradigm shift from construction incentives to rent vouchers, his words will certainly caution my future framing of affordable housing issues and hopefully inform my future analysis of sources that label units rented or bought primarily by people of lower incomes as "low-income housing."

Note: Since we are discussing housing policy language, I disagree with commenter DanM's aspersions on the use of the less-stigmatizing term "affordable housing." It is precisely the subjective nature of the concept of "affordability" that allows it to be more sensitively incorporated into a particular city's housing discourse and policies. Affordability varies immensely by context, just as the types of affordable housing must vary to fit a municipality's goal of defining its community identity within regulatory limits - a longstanding precept of zoning law. 

Further Note: While I read Dr. Lerman's piece on The Atlantic Cities, it originally appeared on the Urban Institute's MetroTrends blog. 

Sunday, February 3, 2013

Disparate Impacts and Affordable Housing in the Champagne Belt

For many, the term "public housing" conjures images of grim blocks of buildings situated in poorer neighborhoods. While this is by no means a truth universally acknowledged, public housing has been historically shunted to areas with struggling schools and high crime levels. In a vicious cycle, the construction of more public housing units has led to further decreased property values in these neighborhoods, not to mention increased stigma and economic segregation, with affordable housing opportunities scant in more affluent neighborhoods with better public services. The reality of a divided urban (and suburban) landspace has contributed to the construction of more mixed-income communities and attractive housing projects that defy stereotypes as well as support for the filing of claims of violation of the Fair Housing Act of 1968 under a theory of disparate impact. 
The Fair Housing Act "prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status, or national origin." In relation to the FHA, disparate impact theory states that a particular housing policy has a disproportionate negative impact on a class of people protected by the Act by creating, perpetuating, or increasing segregation, even if the policy was not implemented with a discriminatory purpose. Since the Second Circuit Court of Appeals held that a municipality's neutral policy (restricting affordable housing to an "urban renewal zone" populated mainly by ethnic minorities) can have a disproportionate negative impact and thus be in violation of the Act even absent discriminatory intent in Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926 (2d Cir. 1988), other courts have followed suit (Huntington differed from a previous case, which used discriminatory intent as a criterion to evaluate the zoning plan). See Village of Arlington Heights v. Metropolitan Housing Corp., 429 U.S. 252, 264-271 (1977). 
Image Credit: Greenwich Housing Authority 
However, more than two decades after appeals courts began allowing administrative disparate impact claims, many affluent communities remain devoid of affordable housing. Notable is Westchester County's dragging its heels following a desegregation agreement that involves reshaping exclusionary zoning policies and marketing affordable housing to racial minorities in some of the county's overwhelmingly white communities. In response to this resistance as well as the dismissal of Magner v. Gallagher (Sup. Ct. Docket 10-1032), the case set to go before the Supreme Court last February to decide whether disparate impact claims are cognizable under the FHA; and, if so, what test should be used to analyze them, the Department of Housing and Urban Development (HUD) has developed a proposed burden-shifting standard- with the initial burden on the plaintiff- for evaluating disparate impact housing claims. On the state and local levels, a federal judge in Texas has authorized the state's Department of Housing and Community Affairs to challenge the opposition of residents of affluent areas to publicly supported housing while communities such as Chapel Hill, NC have instituted an Inclusionary Zoning Ordinance, which mandates that 15% of the entire town and 10% of CH's highly desirable town center should be set aside for affordable units in response to criticism of racial homogeneity in the town. See Inclusive Communities Project, Inc. v. Texas Department of Housing & Community. Affairs,  2012 WL 953696. Other municipalities, such as Charlotte, have considered voluntary inclusionary zoning plans, though opponents claim that voluntary plans are less likely than their mandatory counterparts to spread affordable housing opportunities to primarily white affluent and upper-middle class neighborhoods. Mant of these efforts can trace their historical roots to an unlikely source- the elite hedge fund kingdom of Greenwich, CT, whose Housing Authority has been awarded HUD's highest honor and has maintained a surprisingly large amount of attractive and well-maintained publicly supported housing for five decades (though, of course, affordable housing in Greenwich is not without its community opposition and social tensions). These affordable housing efforts have contributed to a racial diversity that belies Greenwich's lily-white reputation and differentiates the town from tony Fairfield County neighbors such as New Canaan and Darien. While Greenwich boasts perhaps the proudest history of such housing in traditionally homogenous wealthy suburbia, decade-long waiting lists demonstrate that the amount of units remains inadequate. 
The adoption of mandatory inclusionary zoning policies, government challenges to racially-inclusive affordable housing opposition from well-heeled neighbors, and efforts of communities like Greenwich to blend wealthy surroundings and publicly supported options all provide possible ways forward- an present new challenges-in the struggle to diversify affluent neighborhoods with affordable housing opportunities. However, as the vast majority of policies resemble the voluntary inclusion plans often challenged for developing affordable housing along racial lines perpetuating de facto segregation, there is a high possibility that the SCOTUS will have to decide the question unanswered by Magner- whether disparate impact claims will be recognized under the FHA in order to bring some affordability to heretofore unreachable areas.