I’ll hold your breath until YOU turn blue
How a couple of years can change things!
In real estate development, wise developers always heed Brutus’s advice:
Not that I loved eminent domain less, but that I loved
There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat;
And we must take the current when it serves,
Or lose our ventures.
For those who oppose development, block the flood with litigation, and even if you lose, you may win, because the developer will lose its ventures.
Such a strategy appears to have worked for the foes of eminent domain for economic development (ED4ED) in
Two years ago, the Supreme Court issued its landmark decision, Kelo v. New London, a pyrrhic victory for eminent domain advocates if ever there was one. While reaffirming ’settled law’ insofar as ‘public use’ has been construed to mean ‘private use subject to an approved public-use redevelopment plan’ — a grammatical and linguistic stretch — Kelo nevertheless kicked off such a tempest of voter and editorial outrage that it’s led to considerable blowback.
I’ll huff and I’ll puff and I’ll take your house by eminent domain
The actual Kelo litigation itself ended in farce nearly a year and a half ago:
A week later, Ms. Kelo and Mr. Cristofaro both were accommodated — extraordinarily, one might say, as very helpfully summarized in Bizzyblog:
Kelo’s pink house to be relocated
Susette Kelo’s little pink cottage, the home that was the subject of a landmark U.S. Supreme Court case and a national symbol of the fight over eminent domain, will be spared from the wrecking ball. In a compromise between Kelo and
Irony of ironies — the house over which so much ink has been spilled … was moved here from somewhere else!
One would think that the story couldn’t get any more absurd — but, as reported a few weeks back in
A bestseller in fiction
The new agreement, forged Monday, allows Corcoran Jennison six months — until
It’s moved to
If financing is arranged, it would allow a late June 2008 groundbreaking and completion of the housing project by
If it fails to come up with the money for the housing portion of the project, the developer would forfeit [without litigation] all rights to that housing as well as two office buildings and a hotel it planned to build [] and would allow the NLDC to seek another developer.
“It is time for them to perform,”
You get half a year before there’s no tomorrow
There is certainly something nobody-expects-the-Spanish-Inquisition about a public official saying, with an entirely straight face, there is no tomorrow … six months from now.
“You have one last chance — confess the heinous sin of heresy,
Reject the words of the unbelievers — two last chances.”
The housing project, approved by the Planning and Zoning Commission in July 2006, would mark the first new construction on the
A couple of dates there are more significant than they sound. Even though the overall plan was approved 7½ years ago, the Kelo litigation held up development for six years — before losing — so the housing development couldn’t be agreed until six years later, or a year and a half ago. As I observed in ending in farce:
While some parcels are moving forward as planned, via the New London Day (free registration required), here’s the state of play:
[Apartment building owner Bill Von Winkle, a Kelo plaintiff] has settled with the city, agreeing to sell [his] building.
The last of the holdouts appear ready to leave what remains of the neighborhood at
City officials are beginning to speak of their eight-year fight –– and the debate it sparked about the power of the government to seize a private home –– in the past tense.
Eight years! Bear that in mind.
Plus one!
What could make a six-month extension a little more credible?
Corcoran Jennison requested the six-month extension on Nov. 26, the day it failed to meet an already-extended financing deadline.
How about a complete freeze in the credit markets, brought on by the subprime mess?
A combination of a construction price tag $1 million greater than originally expected and lenders willing to finance 70% rather than the anticipated 80% of the total project cost left the company facing an upfront project cost of $5.7 million rather than $3.6 million, the developer told the agency.
In other words, the foes of development delayed it long enough that hard costs rose and financing became less favorable.
“Uh, captain, conditions aren’t so good to launch the development right now.”
Professing its continued commitment to the project, Corcoran Jennison requested extra time to bridge that gap.
In consultation with city councilors and officials,
Any questions about the severance?
I suspect that it’s the fear of litigation — what, more litigation ?!? – that has made the NLDC gun-shy.
Litigation is so noisy, and someone might get hurt
The money’s pretty trivial:
The pact requires Corcoran Jennison to make an upfront payment in lieu of taxes of $15,000, equivalent to the amount of taxes the 4-acre housing parcel would have generated for the city during the six-month extension period had the company met last month’s deadline and taken control of the land.
Corcoran Jennison must also deposit $20,000 with an escrow agent immediately and make additional payments of $20,000 in January, February, March and April if the company wishes to continue with the financing extension. Those funds may be used for municipal building fees associated with housing construction if the company successfully secures financing and proceeds with the project.
I think these payments are mostly window-dressing, a sop to the town’s voters.
If the company misses the May financing deadline or wishes to withdraw from the housing project before then due to “financial infeasibility,” the 2005 development agreement between Corcoran Jennison and the NLDC would be terminated and the developer would give up the rights to parcels not already under ground lease.
If my hypothesis is correct, NLDC is using a fairly common exit strategy. Given NLDC’s ability to perform its obligations in a timely way, Corcoran Jennison may well have a claim that NLDC has breached its side of the bargain. That NLDC’s breach was caused by circumstances beyond its control — namely, the Kelo litigation — would be irrelevant to its non-performance.
So NLDC’s taken a sensible way out; swap six extra months to Corcoran Jennison in exchange for a quitclaim and release from future litigation.
I release you, you release me — fair enough?
Project permits, approvals, plans, specifications and other documents will become the property of the NLDC if the agreement is terminated, allowing the development agency to seek a new developer for the projects.
Also logical, and a nice careful feature.
If Corcoran Jennison withdraws from the project, a previous deposit of $250,000 would be returned when its renovation of a
That project — the $15 million renovation of the former Naval Undersea Warfare Center building for future tenants that would include the U.S. Coast Guard Research & Development Center — is not affected by the extension agreement reached Monday. The developer must proceed with the already underway project according to the terms of the 2005 development agreement.
“We’re done talking,”
Actually, Mr. Joplin, you hope you’re done litigating — but then you can’t say that, can you?
Don’t mention litigation, okay?
I’ll hold my breath, says the child, until I turn blue.
I’ll hold your breath, says the litigator, until your market turns blue, and you turn blue with it.
I’m going to outlast the market
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