Weathering the Storm

by Scott Emerson

Follow your feet on any sidewalk in any great American city and you will eventually stumble into urban decay — blighted cityscapes of littered streets lined with neglected and boarded-up homes in neighborhoods surrounded by closed businesses. Many of these neighborhoods were once respectable, even grand. Now, they are relegated to the poor and disenfranchised — dark streets most of us try to avoid.

Perhaps no city stands out more vividly as an example of this than New Orleans. Now centuries considered the South’s most elegant and prosperous city, New Orleans had fallen on hard times by the time Hurricane Katrina plowed through in 2005. Already a driff in urban blight before the storm, New Orleans found herself choking on it afterwards.

“Before joining NORA, ‘blight’ was merely a legal concept to me — something that I recalled talking about in Professor Hunt’s preservation law seminar, Professor Perea’s constitutional law class or professors Nicholas or Jeurgensmeyer’s land use class while studying eminent domain cases,” said John T. Marshall (JD 97), a project manager for the New Orleans Redevelopment Authority (NORA) “That perception changed when I joined NORA. New Orleans is a city of almost incomparable historic beauty and charm, but it has suffered from nearly half century of population loss — and, as families have moved away of people have passed away, increasing number of homes have become forgotten.”

NORA, formerly called the Community Improvement Agency, was created by the state law in 1968 to “eliminate and prevent the spread of slums and blight.” Its principal legal tool to accomplish this is aquisition of abandoned and blighted properties using eminent domain — a process called expropriation.

Historically under-funded and politically troubled, NORA played only a minor role in New Orleans’ early redevelopment plans, but in response to the vast devastation wrought by hurricanes Katrina and Rita in 2005, the city government breathed a new life into the tiny agency in early 2007.Money was infused into the organization, its governing board was expanded and the state legislature was pressed by the city to pass laws increasing the agency’s ability to assemble land.

For Marshall, NORA’s expansion would create an opportunity to use his education and legal skills to help the city in its redevelopment efforts, but his career path to NORA isn’t one he anticipated. After graduating from the Levin College of Law with honors in 1997, he clerked with U.S. Magistrate Judge Elizabeth A. Jenkins (JD 76) of the U.S. District Court for the Middle District of Florida in Tampa, Fla. In 1999, Marshall joined the Holland & Knight firm as an associate in its Tampa office, where he gained experience working with local governments and  businesses on zoning and growth management issues. He was promoted to partner in 2006.

In September of 2007, Marshall was one of 25 mid-career professionals awarded a Rockefeller Founfation Fellowship in conjunction with the University of Pennsylvania’s Center for Urban Redevelopment Excellence (CUREx). As part of his fellowship, Marshall, along with two other fellows, was selected to work for NORA, an agency the foundation had identified as a Gulf Coast entity whose work it wished to support. Marshall’s fellowship is funded through March 2010.

“Urban redevelopment work is fascinating because it draws on so many different disciplines, like tax law, property law, constitutional law, land use and zoning law,” Marshall said. “There’s no question in my mind that I would not have received the Rockefeller Foundation Fellowship and this opportunity to serve in New Orleans were it not for my professors at UF Law and my mentors at Holland & Knight, because they taught me that revitalizing cities presents many hidden challenges and obstacles beyond designing a more attractive streetscape.”

AFTER THE STORM

In 2000, the U.S. Census reported 27,000 abandoned properties in New Orleans. In the aftermath of Katrina that number ballooned to nearly 72,000 according to Greater New Orleans Community Data Center estimates.

Reasons vary for why properties in the city were abandoned. For many, back taxes owed on the property amounted to more than its market value. Others were abandoned after hurricane storm damage. Still other properties , passed down through the generations without the benefit of formal deed transfers, are mired in convoluted questions of inheritance where many heirs — often the grand children or great grand children of a deceased owner of a record — may have a claim but none have maintained the property taxes. These abandoned properties pose serious health and safety threats to New Orleans’ residents and cause property values to sink.

Desperate to save itself from drowning in debt and squalor, the City of New Orleans expanded use of eminent domain to seize and rehabilitate abandoned and blighted properties. The city’s goal was to was to wield its eminent domain powers through NORA to clean up the city, build new homes for its returning Diaspora and jump-start the city’s economic redevelopment by returning real estate to commerce. Marshall joined NORA just as the agency ramped up its expropriation efforts.

“The city saw that NORA would have to play an important role in addressing the city’s blight problem,” said Marshall. “The consensus among policymakers and local elected officials was that NORA’s expropriation powers could serve as a critical tool to combat urban blight and could dramatically increase the number of public health and safety expropriations.”

Marshall added that before NORA expropriates a property, the agency first offers to purchase the property from the owner of record for its appraised value. This involves providing the last known owner owner, or the owner’s heirs, with notice of NORA’s intent to take the property.

“The process also includes filing a civil action in the state;s trial courts and, ultimately, trying the case before the court,” Marshall said. “The interests of the owners and potential heirs are represented at trail by a court-appointed attorney or ‘curator.'”

If an agreement with owners or heirs is not reached, expropriated properties navigate the legal channels and enter NORA’s property pipeline for redevelopment or rehabilitation. Once title is obtained, the property is then offered for sale to adjacent property owners in accordance to the Lot Next Door Ordinance. Passed in 2007, this ordinance aims to stabilize and improve neighborhoods comprised of blighted lots and structures. If a neighbor does not purchase the property, NORA works with the community to craft redevelopment proposals.

“Based on ongoing meetings with neighborhood leadership, NORA works with the community to craft a request proposals (RFPs) for rehabilitation and redevelopment for neighborhood properties,” Marshall said.

“This RFP is published in the Times-Picayune ans transmitted to a database of neighborhood leaders, interested individuals, and non-profit and for-profit developers.”

In February 2008, Marshall helped recruit a team of 12 outside lawyers he now manages. These attorneys are pursuing expropriation of more than 800 blighted or abandoned properties in the city, and each case will take roughly six to eight months to proceed to trial from the time of filing. Using eminent domain, NORA has or will soon obtain titles to more than 250 blighted properties.These properties have recently been packaged into seven different neighborhood RFPs and put out for bid by small entrepreneurs, for-profit developers, and non-profit developers. Once the new owners take title, the have nine months to eliminate health and safety code violations and begin redevelopment or rehabilitation.

As part of the overall recovery scheme, NORA and the city developed recovery target zones — areas where the city would focus use of federal disaster funds. With one of the highest percentages of abandoned properties in New Orleans, Pontchartrian Park, featuring one of the city’s most distinctive parks and a loyal group of longtime residents, became a strategic area of focus for NORA’s redevelopment efforts.

Developed in 1954, Pontchartrian Park was one of the first in New Orleans designed to provide homeownership to middle-and  upper-income African-Americans. This model community near the shores of Lake Pontchartrain was built around a city-owned park and golf-course designed by Joseph M. Bartholomew Sr., a nationally-known African-American golf course designer. As families began to move into the community, churches, businesses and schools thrived, including Mary Dora Coghill Elementary School, Southern University and Dillard University. In the 1970s, like many U.S. neighborhoods, the community saw significant residential turnover. Now, after the catastrophic damage caused by Katrina and its flood waters, the community is largely abandoned.

“Before Hurricane Katrina, Pontchatrian Park was a very nice neighborhood where kids could play in its huge park,” said Laurie Watt, president of Gentilly Civic Improvement Association, a coalition of 19 neighborhood groups that advocates for rehabilitation and development of their storm-ravaged neighborhoods. “There was a golf course and a recently opened senior center. It was family-oriented with a lot of older folks who were the original homeowners. But today, the community suffers from the ‘jack-o-lantern effect.'”

“This is where a nice rebuilt home is next door to a lot with 8-foot weeds growing next to a dilapidated house next to another lot of weeds. It’s just like teeth carved in a jack-o-lantern, except this goes on for blocks,” Watt explained.

According to the U.S. Census Bureau, the population of Orleans Parrish in 2005 was 453,726. In 2007, the population had plummeted to 239,124. Using postal records to measure recovery, the Greater New Orleans Community Data Center determined the number of households Pontchartrain Park driooed from 1,025 in 2005 to 398 in 2008.

As NORA’s community liaison, Marshall consults regularly with community leaders like Watt to learn the community’s wishes in regard to development.

“John Marshall has been the voice of NORA,” Watt said. “He has fielded thousands of questions during community meetings and provided information resources for countless action committees. He and his organization have done a great job in our community.”

Watt added that while there are other agencies and ongoing efforts addressing abandoned property, NORA has consistently been there to provide information to action groups about current programs and how they work.

TROUBLED WATERS

Despite NORA’s success rehabilitating abandoned properties in New Orleans using the strategy of expropriation, eminent domain in the State of Louisiana has caused a political part-in-the-water.

At the center of this legal storm was the 2005 U.S. Supreme Court ruling in Kelo v. City of New London, in which the court decided local government could use eminent domain to take private property for the sole purpose of economic development.

“The decision created a sort of ‘storm surge’ of public backlash,” said Marshall. “Immediately, people became frightened that the court’s decision would mean that their local government could take their well-kept home if the government articulated an economic development purpose for the expropriation. or taking of property.

In the wake of nationwide outrage following the Kelo decision, lawmakers rushed to draft amendments restricting the use of eminent domain. According to the National Conference of Stare Legislatures, 39 states successfully passed measures restricting government’s ability to seize private land following the Kelo decision.

Swept up in this tide of public disapproval of the Kelo court’s holding, Louisiana voters enacted two constitutional amendments eliminated the possibility that a local government could use eminent domain  to eliminate threats to public health and safety — a basic government power long accepted.

“Louisiana voters jumped on the anti-Kelo bandwagon by passing two ballot initiatives that provided a detailed definition of ‘public purpose’ and placed restrictions on the resale property that the state had previously expropriated,” said Michael Allan Wolf, a UF professor of law and chapter author of “Hysteria versus History: Public Use in the Public Eye,” in a book entitled, Private Property, Community Development and Eminent Domain.

“It seemed as if politicians and activists throughout the nation felt the need to respond to the anti-Kelo sentiment, to take advantage of that sentiment to achieve their preexisting goal of placing restraints on government acquisition and regulation for real property, or both,” said Wolf, who holds the UF Levin College of Law Richard E. Nelson Chair in Local Government. The first measure passed by Louisiana voters was Amendment 5. It provided that an acceptable “public purpose” for expropriation is the “removal of the threat to public health or safety caused the existing use or disuse of the property.” However, the amendment also states “property shall not be taken or damaged by the state or its political subdivisions for the predominate use by any private person or entity.”

This provision seemed to challenge NORA’s strategy of taking blighted private property and transferring it to another private entity, such as Habitat for Humanity, and was in stark contrast to the verdict handed down in the Kelo v. City of New London. In the Kelo decision, Associate Justice John Paul Stevens, writing for the majority said New London could pursue private development under the Fifth Amendment, which allows governments to take private property if the land is for public use.

“Promoting economic development is a traditional and long accepted governmental function, and there is no principled way of distinguishing it from other public purposes the court has recognized,” Stevens wrote, adding that local officials are better positioned than federal judges to decide what’s best for the community. Moreover, both the majority opinion and the dissent in Kelo, fully embraced the use of eminent domain — and the transfer of expropriated property to third parties — when the taking eliminates some “harmful property use.”

Amendment 6 arguably undermines the ability of governments to transfer expropriated property to a third party. The combined force of the two amendments seems to be a mandate that seized property must be held for 30 years by the seizing authority before it can be transferred to a third party, and that seized property must be first offered for sale at fair market value to the owner, or the owner’s heirs, from which it was seized. These could negate the city’s incentive to expropriate blighted properties and seem to gut its strategy of using expropriation to eliminate threats to public health and safety.

However, Marshal said NORA doesn’t believe the 2006 constitutional amendments prevent it from using statutory power to eliminate threats to “public health and safety.”

“The primary purpose of NORA’s expropriation of blighted property id not transfer the property to a third-party,” said Marshal. “It is to accomplish removal of a proven threat to public health or safety.”

To force examination of the constitutionality of the amendments, NORA quietly sought an appropriate suit to make its case, The suit found the agency first.

BURGESS V. NORA

In 1997, the city of New Orleans demolished an abandoned building on two lots owned by Joseph Burgess. At the time of demolition, Burgess owed years of back taxes and fines for health and code violations. Burgess — believed t be deceased — is survived by heirs who could inherit any profits from the sale of the lots.

In 2007, Burgess, represented by a court-appointed curator, sued NORA on the grounds that Amendment 6 prevents the agency from transferring he property to Habitat for Humanity and makes it mandatory for NORA to offer to sell the property back to Burgess.

“Since 1994, NORA has expropriated thousands of blighted properties and has never been accused of abusing its statutory expropriation authority,” Marshall said. “This lawsuit represented a direct challenge to NORA’s critical power to return thousands of dilapidated and blighted properties to commerce by taking property and conveying the land to private persons or entities who agree to remediate the properties’ blighted conditions.”

In May 2008, the case went before Judge Madeline Landrieu in civil district court. In her decision she wrote it would be “nonsensical” to offer expropriated property back to the person responsible for the blight.

The court finds that the amendments passed in 2006 do not preclude the city from expropriating properties that are blighted in the context in which the city has historically acted, so the exception to the constitutionality is overruled,” concluded Judge Landrieu.

Marshall joined a team of legal experts representing NORA in this landmark case that included Chris Gobert, one of Louisiana’s top expert attorneys, Frank Alexander, former dean and professor at Emory University School of Law and John Costonis, professor and former chancellor of Louisiana State University. The Burgess case in now on appeal to Louisiana’s intermediate appellate court. A brief on behalf of Burgess was filed in October, and NORA filed a response soon after.

ROUGH WATERS AHEAD?

Today, NORA’s quest to turn the tide on urban decay continues despite voter rejection of an amendment on the Nov. 4 ballot that would have clarified the meaning of the troublesome Amendment 6. The law remains that expropriated properties must be held for 30 years before being sold to a third party.

Now, all eyes are fixed on the appellate court. If the Burgess family prevails in the appellate and Louisiana Supreme courts, the result will be a significant setback for New Orleans’ efforts to use eminent domain to resuscitate dozens of neighborhoods crippled by neglected and abandoned properties.

But, the determination of the people of New Orleans to rebuild despite these political woes is a testament to their resolve. “Spending evenings and weekend days with the residents in their homes, church halls, schools and community centers has been transformative for me,” Marshall said. “The people who have returned to New Orleans following the storm are the most informed and resilient citizens I’ve ever encountered.”

Marshall is certain they will find a way to weather the storm.