Each year, the Edmondson Community Organization (ECO)—a nonprofit in Baltimore dedicated to revitalizing the city's Midtown-Edmondson area—reviews an obscure list of properties released by the government. The task is to see how many are situated within the organization's neighborhood boundaries. The fewer, the better.

The owners of the properties that do appear have fallen behind on their property taxes and, as a result, are poised to lose their real estate in an annual tax sale conducted by the government. After poring over the list, the ECO knocks on those doors to deliver the queasy news and alert the occupants to what is about to happen.

The issue is one ECO knows intimately. A few years back, the organization accrued a $2,543 property tax debt on its community center. So in 2018, the city sold that lien for $5,115 to a California-based investor, who then foreclosed on and sold the ECO's building for $139,500. In return, the ECO got a check for the difference between its debt and the lien purchase price: $2,572.

In other words, all told, the organization paid six figures to compensate for the $2,543 it owed the government, in what a new federal lawsuit alleges is a pervasive practice in Baltimore that illegally deprives people of their equity in violation of the Fifth Amendment's Taking Clause as the city attempts to satisfy modest tax debts.

Every spring, Baltimore bureaucrats conduct a mass auction online to sell off liens like the ECO's. Sometimes the unlucky debtors have fallen just hundreds of dollars behind on their taxes.

For that, they may lose their property and the vast majority of equity tied up in it. Following an investor's purchase, an owner has a certain period to satisfy the amount of the lien, along with interest and fees, to keep their property. That's a tall order when considering these parties were struggling to pay the original debt, much less the new total, which has since ballooned. In the case that debtors are unsuccessful, the investor has effectively purchased the property for the amount they paid for the lien.

In the ECO's case, that meant an investor bought their building for about 2,600 percent less than what it ultimately sold for. The ECO, in turn, was left with a fraction of what their property was worth.

That Baltimore's process robs property owners of huge chunks of equity is not just a regrettable side effect, the ECO's lawsuit alleges; it's baked into the nature of the city's approach. "The City understands there that there is a finite pot of investor capital available to purchase all the liens," reads the complaint. "This creates a perverse incentive for the City to minimize the winning bids"—a.k.a. to depress prices—"to spread that finite pot across the highest number of liens." 

Some of the moving parts of Baltimore's approach do seem to imply that the government is not merely unconcerned with owners retaining some of their equity but that they are actively seeking to keep bids low. The more glaring examples included in the ECO's suit show that the city charges a high-bid premium that punishes investors making offers above a certain threshold and opts to fulfill the law's advertising requirement in part by listing properties in The Daily Record, a business and legal newspaper that is not targeted at the general community. (The ECO says this violates state law, which stipulates that such a sale must be advertised twice in general-circulation newspapers.)

"There's a limited amount of investor money out there," says Maryland Legal Aid's chief legal and advocacy director Somil Trivedi, who is representing the ECO, "and the city has structured a system to spread that money across as many liens as possible instead of getting as much equity back for their citizens."

The ECO is not alone, according to the suit, but is one of many victims. You don't have to travel far to find others. "In the same tax sale in which a bidder purchased a lien on ECO's building, 68 properties in Midtown-Edmondson were also subject to the tax sale," states its complaint. "The winning bids on those properties totaled only 22% of the assessed value of the properties—a dramatic loss of generational wealth for the owner of each Midtown-Edmondson property that was lost in the sale."

Home equity theft, as it's sometimes called, was once an obscure issue limited to discussion in magazines like this one. But last year it took the national stage when the Supreme Court ruled unanimously in Tyler v. Hennepin County that a local government had violated the Constitution when it seized an elderly woman's condo over a modest tax debt, sold it, and kept the profit. Geraldine Tyler, the plaintiff in that suit, had fallen $2,300 behind on her taxes, which ultimately reached $15,000 after Hennepin County tacked on penalties, interest, and fees. The government then sold the condo for $40,000 and kept the additional $25,000.

While the ECO's situation isn't entirely analogous to Tyler's—the organization was paid something—Baltimore's scheme could still very well be unconstitutional, says Christina M. Martin, a senior attorney at Pacific Legal Foundation who represented Tyler before the Supreme Court. "If the procedure that you're using to sell the property is designed in a totally unreasonable manner, then obviously people are going to still get robbed of more than what they owe," she tells me. "There's a longstanding history of courts overturning sales that have a shocking result like [the ECO's]."

Tyler, in theory, should have put an end to stories like these. But the lawsuit out of Baltimore comes as some other jurisdictions have devised creative ways to comply with the law on its face but not really in practice. After Michigan's Supreme Court ruled the practice unconstitutional, for example, the state passed a convoluted debt collection statute that requires owners to complete a Herculean legal obstacle course to reclaim their equity. It is a difficult course to win.

"It is the government's choice in the first place to collect property taxes, to decide what regime they want to use to enforce the collection of those property taxes, and so it can't then complain that the regime that it chose to engage in for an amount of money that it chooses to collect is then too difficult to do constitutionally," says Trivedi. "There are lots of jurisdictions around the country that do it differently. Some don't even have tax sales. Some have much longer periods of negotiation and payment plans….Municipalities around the country have figured out ways to collect taxes without doing it unconstitutionally."

The post Baltimore's Tax Sales Are Robbing People of Their Equity appeared first on Reason.com.

 

The housing crisis is one of the most important policy issues facing the nation. Housing shortages increase living costs for large numbers of people, and also prevent millions from moving to places where they would have better job and educational opportunities, thereby slowing economic growth and innovation. Both Kamala Harris and Donald Trump have taken positions on housing issues. But their ideas are mostly ones that would cause more harm than good. Sadly, neither candidate proposes any meaningful steps to break down the biggest barrier to housing construction in most of the US: exclusionary zoning rules that make it difficult or impossible to build new housing in response to demand.

Harris is the one that has offered more in the way of detailed proposals. She proposes giving $25,000 tax credits to first-time homebuyers and tax incentives for developers selling homes to first-time buyers. She also advocates restricting the use of algorithms to set rental prices, and  capping rent increases and cracking down on "corporate" landlords. The rent control idea may be a reference to the Biden Administration's recent plan to cap rent increases at 5% per year, though it is not clear if Harris endorses it. Harris also promises to build 3 million new homes by 2029, but is extremely vague on how exactly she plans to do it.

These policy ideas range from mediocre to awful. A $25,000 subsidy for first-time homebuyers is unlikely to do much to ease housing shortages. The fundamental problem is one of regulatory restrictions on supply. In that environment, subsidizing demand will simply bid up prices. Moreover, the people who most suffer from housing shortages are mostly renters, not would-be homeowners. This subsidy plan does nothing for them. Much the same goes for the plan to provide tax incentives for developers. This won't do much for supply so long as developers are barred from building much in the way of new housing in many places, especially multi-family housing.

If zoning and other regulatory restrictions do get lifted, Harris's tax credit incentives would be unnecessary. And, indeed, there would be no good reason to have the tax code favor housing purchases over other types of consumption.

Rent control is a terrible idea that is actually likely to exacerbate shortages. This is an Economics 101 point broadly accepted by economists across the political spectrum. Don't take my word for it. Take that of prominent progressive ecoonomists, such as Paul Krugman, and Jason Furman, former chair of Barack Obama's Council of Economic Advisers, who points out that "[r]ent control has been about as disgraced as any economic policy in the tool kit."

Finally, there is no good reason to think that corporate landlords are any worse than other types of landlords, or that algorithmic pricing is somehow making the housing crisis worse. To the contrary, corporate landlords are usually as good or better than their "mom and pop" counterparts. Take it from a longtime renter with experience living under both types of landlords; the corporate ones usually maintain their properties better, and have better customer service. And algorithms can help owners identify situations where they can increase profit by lowering prices, as well as increasing them.

Harris is right to want to build 3 million new homes. Indeed, it would be great to build more than that. But, so far, she hasn't proposed much in the way of effective methods of doing it. Unless and until she does so, her aspiration for 3 million new homes is not much more viable than my desire to add 3 million unicorns to the nation's stock of magical animals.

At times she has made noises about cutting back red tape. I assume, also, that she supports President Biden's plan to make "underutilized" federal land available for housing construction. The latter is a good idea, but it's far from clear exactly which land will be opened up and on what terms.

Trump's housing agenda is less detailed than Harris's, but could well be even worse. The housing chapter of the Heritage Foundation's controversial Project 2025 emphasizes that "a conservative Administration should oppose any efforts to weaken single-family zoning." Single-family zoning, of course, is the most restrictive type of exclusionary zoning blocking new housing construction in many parts of the country. Donald Trump has disavowed Project 2025, and claims he "knows nothing about it." But the author of the housing chapter is Ben Carson, Trump's former secretary of Housing and Urban Development. During the 2020 election, Carson and Trump coauthored a Wall Street Journal op ed attacking efforts to curb exclusionary single-family zoning. He recently reaffirmed that position, promising to block "low-income developments" in suburban areas. On housing, at least, Project 2025 seems to reflect Trump's thinking, and that of the kinds of people likely to influence housing policy in a second Trump administration. The Trump worldview is one of NIMBYism ("not in my backyard").

Trump's immigration policies—a centerpiece of his agenda, if anything is—would also have negative effects on housing. Evidence shows that mass deportations of undocumented immigrants reduce the availability of housing and increase the cost, because undocumented immigrants are an important part of the construction work force (an effect that outweighs the potential price-increasing effect caused by immigration increasing the number of people who need housing). Trump and his allies also plan massive reductions in most types of legal immigration. Slashing work visas is also likely to negatively affect housing construction (as well as damage the economy in other ways).

If there is a saving grace to the Harris and Trump housing policies, it's that most of them cannot be implemented without new legislation, which will be extremely hard to push through a closely divided Congress. That's true of the Harris's rent control policies, and her plans to subsidize home purchases, and crack down on "corporate" landlords. Likewise, a Trump administration would probably need new legislation for any major effort to protect single-family zoning against state-level reform efforts.

But Trump's immigration policies are an exception. The executive could ramp up deportation and slash legal immigration without new legislation. Indeed, the Trump administration did in fact massively cut legal immigration during Trump's previous term in office. Deportation efforts could be partially stymied by state and local government resistance (as also happened during Trump's first term). But Trump could partly offset that by trying to use the military, as he and his allies plan to do (whether legal challenges to such efforts would block them is debatable). At the very least, ramping up federal deportation efforts would drive undocumented immigrants further underground, and reduce their ability to work on construction, where laborers are relatively out in the open and more vulnerable to detection than in some other jobs.

In sum, Harris and Trump are offering mostly terrible housing policies. Their main virtue is the difficulty of implementing them.

There are, in fact, steps the federal government can take to ease housing shortages. Most restrictions on new housing are enacted by state and local governments, which limits the potential of federal intervention. But Congress could enact legislation requiring state and local governments that receive federal economic development grants to enact "YIMBY" legislation loosening zoning rules. Perhaps a stronger version of the YIMBY Act proposed by Republican Senator Todd Young and Democratic Rep. Derek Kilmer (their version could be a useful start, but does not have enough teeth). Those who object to such legislation on grounds of protecting local autonomy should recall that YIMBYism is actually the ultimate localism.

The federal Justice Department could also support litigation aimed at persuading courts to rule that exclusionary zoning violates the Takings Clause (which it does!). Such litigation could do much to break down barriers to new housing construction. Federal government support wouldn't guarantee victory. But it could help by giving the argument instant additional credibility with judges.

Finally, the feds could help pursuing the opposite of Trump's immigration policies, and instead make legal migration easier. That would increase the construction workforce, and make housing construction cheaper and faster.

Sadly, neither major-party candidate is proposing to do any of these things. Instead, they mostly sell claptrap that is likely to make the housing crisis even worse.

The post Harris and Trump Offer Terrible Housing Policies appeared first on Reason.com.

A Michigan couple sued when their local township passed an ordinance to prevent them from opening a cemetery. This week, in a victory for property rights, a judge ruled in the couple's favor and threw out the ordinance entirely.

As Reason reported in January, Peter and Annica Quakenbush wanted to open a "green" cemetery, allowing people to bury their loved ones in a natural and environmentally friendly manner, free of chemicals like formaldehyde and coffins containing metal. They specifically intended to establish a conservation burial ground, in which decedents would be buried in biodegradable coverings like cotton shrouds or wooden caskets and the burial sites would be marked by natural landmarks like rocks or native trees. The site would otherwise remain an undisturbed forest.

The Quakenbushes bought a 20-acre plot near Brooks Township and started putting together the necessary paperwork. But local officials had other plans in mind, and in June 2023, the Brooks Township Board passed an ordinance prohibiting the establishment of all new cemeteries.

"In the past, cemeteries elsewhere have taken up large amounts of sometimes otherwise productive land," the ordinance declared. "Cemetery landscaping, grass cutting, monument repair and upkeep costs have increased dramatically over time. The problems associated with abandoned or 'orphan' cemeteries have increased throughout Michigan, and citizens look to the local municipal government…to take over abandoned or orphan cemeteries."

According to the Quakenbushes' lawsuit, after they first inquired about establishing their cemetery in February 2022, a zoning official emailed the township's legal counsel. "It is our general recommendation that new private cemeteries not be allowed within the Township except under certain very limited circumstances," the attorney replied. "Almost certainly, at some time in the future (whether in a few decades or the distance [sic] future), the family members of the deceased individuals will no longer own the parcel involved. What happens to the burials then? In all likelihood, it would devalue the  property and make it unmarketable or difficult to sell."

"My response to that is, what does it matter? It's not your property," Renée Flaherty, an attorney with the Institute for Justice who represented the Quakenbushes, told Reason in January.

Besides, there were numerous mechanisms in place to prevent that outcome: Establishing a conservation burial ground in accordance with the Green Burial Council's criteria, as is the Quakenbushes' intent, requires obtaining a conservation easement—preventing the land from being used for other purposes—and partnering with a land conservancy that can maintain the property in perpetuity.

Michigan state law also requires all private cemeteries to establish an "endowment and perpetual care trust fund," with $50,000 to start and monthly deposits of "not less than 15% of all proceeds received."

"Nearly 250 people had reserved a burial plot even while the ban was in place," a local FOX affiliate reported.

The Quakenbushes sued to overturn the ordinance as a violation of due process. The township filed a motion to dismiss the lawsuit. This week, after hearing oral arguments, Newaygo County Circuit Court Judge David Glancy not only dismissed the township's motion but found the ordinance unconstitutional.

A written order was not available at press time; a representative of the Newaygo County Circuit Court tells Reason that the court directed the plaintiffs' attorneys to prepare a ruling, which the judge will review in a later hearing.

"We're excited and feel vindicated by this ruling," the Quakenbushes said in a statement released by the Institute for Justice. "We are delighted that the judge understood that Brooks Township's ordinance violated our right to use our property and operate our cemetery."

"The Green Burial Council (GBC) is pleased to learn that Newaygo County, Michigan Circuit Judge David Glancy rejected Brooks Township's attempt to throw out a lawsuit against the 'cemetery ban' ordinance," the GBC said in a statement to Reason. "The Green Burial Council has stated before, that we believe Brooks Township's ordinance stood on a weak foundation of misinformation about green burial's negative impact on soil and water, and other similar fears. Though individuals may experience genuine trepidation about a naturally interred body's impact on their environment, local governments can easily find scientific evidence proving no such impact when burial practices are performed according to industry standards."*

UPDATE: This piece has been updated to include a statement from the Green Burial Council.

The post Michigan Officials Tried To Stop a 'Green' Cemetery. They Just Lost in Court. appeared first on Reason.com.

 

An Indiana court recently touched off a firestorm of media attention and online debate by ruling that burritos and tacos are sandwiches. The decision exemplifies a longstanding issue in legal interpretation: how to figure out the "ordinary meaning" of words in a statute or regulation. It also highlights the absurdity of zoning rules restricting the development and use of property.

The case arose because developer Martin Quintana wanted to use a property he owned in Fort Wayne, Indiana for commercial purposes. In order to be able to do that, he had to get the Fort Wayne Plan Commission (a local government agency) to "upzone" the area from allowing single-family residential housing only, to allowing some types of commercial uses. The Commission was only wlling to do that in exchange for Quintana signing a "Written Commitment" (required at the behest of a local NIMBY group) under which only certain types of restaurants would be allowed in the area.  The restrictions imposed by the Commitment became new zoning rules for these tracts. Specifically, the Commitment bars "restaurants, including fast food-style restaurants," except for the following:

A sandwich bar-style restaurant whose primary business is to sell "made-to-order" or "subway-style" sandwiches (which by way of example includes, but is not limited to, "Subway" or "Jimmy John's", but expressly excludes traditional fast food restaurants such as "McDonalds", "Arbys" and "Wendys"), provided that any such restaurant shall not have outdoor seating or drive—through service….

One of the businesses Quintana recruited as a tenant for the new development is a Famous Taco establishment—a Mexican restaurant that (as the name implies) serves tacos and burritos. The Plan Commission contended the Famous Taco should be barred because these food options are not "sandwiches." Indiana Superior Court Judge Craig Bobay rejected that argument, concluding that burritos and tacos are, in fact sandwiches:

The proposed Famous Taco restaurant falls within the scope of the general use approved in the original Written Commitment. The proposed Famous Taco restaurant would serve made-to-—order tacos, burritos, and other Mexican-style food, and would not have outdoor seating, drive-through service, or serve alcohol. The Court agrees with Quintana that tacos and burritos are Mexican—-style sandwiches, and the original Written Commitment does not restrict potential restaurants to only American cuisine-style sandwiches. The original Written Commitment would also permit a restaurant that serves made-to-order Greek gyros, Indian naan wraps, or Vietnamese banh mi if these restaurants complied with the other enumerated conditions.

In Indiana, as in most jurisdictions, courts are generally required to interpret laws  (or, in this case, an agreement that has the force of law, by virtue of being embodied in a zoning restriction) in accordance with their "ordinary meaning." The Supreme Court of Indiana recently reiterated that rule in its February decision in Spells v. State.

Do tacos and burritos fall within the ordinary meaning of "sandwich"? It's hard to say. I think most Americans would not usually refer to these items as sandwiches. On the other hand, it's not hard to see why a taco or a burrito would fall under what most ordinary people would understand to be the general concept of a sandwich: meat and/or vegetables encased in bread or some other similar wrap. Thus, it may be that Judge Bobay was right to conclude that tacos and burritos are "Mexican-style sandwiches," even if few people would actually refer to them in that way. It all depends on whether ordinary meaning depends on usage or on people's intuitive theoretical understanding of the concept in question.

This ruling diverges from a controversial 2006 Massachusetts state court decision, which held that tacos, burritos, and quesadillas do not fall within the ordinary meaning of "sandwich," because that term normally refers to a food item encased in two pieces of bread, while these Mexican foods usually only feature one. Judge Bobay does not cite the Massachusetts precedent, which—in fairness—isn't binding in Indiana. He also doesn't consider the issue of whether a sandwich must have two pieces of bread, as opposed to just one.

To my mind, food encased in a single continuous piece of bread (or tortilla roll) still counts as a "sandwich." The top and bottom of a hamburger bun or hot dog roll are sometimes connected to each other. But that doesn't mean hamburgers and hot dogs can't qualify as sandwiches. My wife (who is both a lawyer and much more knowledgeable about food than I am) points out there are "open-face sandwiches" that use only one piece of bread.

Perhaps these kinds of issues reveal the limits of "ordinary meaning" interpretive rules. Ordinary people (at least those who aren't lawyers) usually just don't think about these kinds of conundrums. Thus, when an issue like whether burritos qualify as sandwiches comes up, there may not be any unequivocal "ordinary meaning" answer to the question at hand.

Whichever way you come down on the definition of "sandwich," this case also highlights the absurdity of zoning restrictions on development. Barring some kind of significant danger to public health or safety (of which there is no evidence here), Quintana should not have had to get special permission to use his property for commercial purposes in the first place. It makes even less sense to allow restaurants that serve "'made-to-order' or 'subway-style' sandwiches," but not those that serve other kinds of food. This distinction appears to be based on little more than the esthetic preferences of the Covington Creek Association, the NIMBY group that pressured the Plan Commission into imposing this restriction on the development.

Such NIMBYism causes real harm to both property owners (who are deprived of the right to use their own land as they see fit) and consumers who wish to patronize their services. I don't especially like tacos and burritos, myself. But many people do, which is why there is a substantial demand for restaurants like Famous Taco.

In a forthcoming Texas Law Review article, Josh Braver and I argue that exclusionary zoning rules restricting housing construction violate the Takings Clause of the Fifth Amendment. Restrictions on commercial development are a more complicated case. But under the originalist theories discussed in Part II of the Article, such restrictions also violate the right to use property protected by the Takings Clause, unless they protect against a serious threat to public health or safety, and thereby fall within the "police power" exception (see Section II.C). Things may be different under the living constitution approaches covered in Part III of the article.

The post Indiana Court Rules Burritos and Tacos Qualify as Sandwiches appeared first on Reason.com.

Bryan Caplan's guest-blogging stint has come to an end. We thank Bryan for his excellent contributions to the blog!

Here is a listing of his posts about his book Build, Baby, Build: The Science and Ethics of Housing Regulation. I myself also wrote a post introducing Bryan and the book.

1."Trillions"

2. "*Build, Baby, Build*: My Most Inexcusable Omission"

3. "The YIMBY Napkin"

4. "*Build, Baby, Build*: Responses to the Best Objections"

I think my forthcoming Texas Law Review article, "The Constitutional Case Against Exclusionary Zoning" (coauthored with Josh Braver), in some ways serves as a complement to Bryan's book. In the book, Bryan suggests that judicial review is "probably the best shot [at] radical housing deregulation," but doesn't elaborate further. Braver and I explain how such judicial intervention can happen, and why it should be done.

The post Compendium of Bryan Caplan's Guest-blogging Posts on His New Book "Build, Baby, Build: The Science and Ethics of Housing Regulation" appeared first on Reason.com.

Suppose, then, that cities embraced housing deregulation. Construction booms, prices fall, and — since cities have the strictest regulation — the national population urbanizes. Won't the new arrivals assimilate to their new Democratic political culture, moving the entire United States in a leftist direction?

My honest answer is: It's complicated. I can't find a single academic article that even tries to study this effect. (If you know of any, please share in the comments).

What's clear is that a lot of the correlation between location and politics reflects reverse causation. To a large degree, leftists are more likely to live in cities because they like cities. Rightists do the opposite because they feel the opposite. Steve Landsburg won't like the wording of the 2014 survey question below, but it captures a meaningful attitudinal difference.

3. Despite these reservations, I suspect that the observed correlation between where you live and what you think about politics is partly causal. Even here, however, the mechanism matters. The default causal story is sheer conformism; or, in social science jargon, "peer effects." Humans crave the approval of nearby humans; imitation is proverbially the sincerest form of flattery; and flattery causes approval. Ergo, being around leftists normally causes you to become more left-wing, and being around rightists normally causes you to become more right-wing.But if conformism is the mechanism of political conversion, mass migration of non-leftists into newly-affordable cities is a double-edged sword. The leftist natives make the migrants more leftist, but the non-leftist migrants simultaneously make the natives less leftist. Net effect on average political orientation: unclear.By analogy, admitting non-Mormons to Brigham Young University probably causally makes them more likely to convert to Mormonism. But if BYU admitted a 50% non-Mormon student body, this would probably also causally turn many Mormons into ex-Mormons. Net effect of the non-Mormon migration on BYU's average religious affiliation: unclear.

   One last political point: Partisan Democrats in safely blue states and partisan Republicans in safely red states both have a strong reason to favor housing deregulation: the electoral college. Unless migration actually flips your state's presidential vote, anyone who prioritizes national politics should hope to attract out-of-state migrants from the other party. This is clearest for California: Due to its famously wonderful weather, much cheaper housing would plausibly attract millions of Republicans, swelling California's population and therefore its electoral vote count. If the migrants come from nearby swing states, even better.

The post *Build, Baby, Build*: Responses to the Best Objections appeared first on Reason.com.

Today, in Culley v. Marshall, the Supreme Court reached a dubious decision in an asset forfeiture property rights case, holding that the seizure of property through civil forfeiture requires a "timely hearing," it does not require "a separate preliminary hearing to determine whether the police may retain the car pending the forfeiture hearing." The justices split 6-3 along ideological lines. However, a concurring opinion by Justice Neil Gorsuch (joined by Justice Clarence Thomas) suggests there may be a majority in favor of a more fundamental challenge to the abusive asset forfeiture regimes that exist in many states.

Civil asset forfeiture enables the government to seize property that has allegedly been used in the commission of a crime, even if the owner has never been charged or convicted of anything. In many states, including Alabama (whose policies are at issue in Culley), law enforcement can then hold on to the property for many months before the owner is allowed to contest the seizure. Moreover, many states allow law enforcement to keep the proceeds from seized property, thereby creating an incentive to take as much as possible. Culley involves two Alabama cases where the owners of cars were subject to asset forfeitures as a result of the use of the vehicles by other people to conduct illegal drug transactions. The owners eventually managed to prevail in state court. But that process took many months. In the meantime, they were deprived of their vehicles, without any compensation.

Critics have long argued that such practices violate the Due Process Clauses of the Fifth and Fourteenth Amendments, which bar the government from  depriving "any person of life, liberty, or property, without due process of law." If the police can seize property and hold on to it for months on end without any meaningful process at all, that surely is not "due process of law."

In an opinion written by Justice Brett Kavanaugh, the Supreme Court nonetheless ruled that a separate "preliminary hearing" is not required in such cases, for two reasons. First, they contend the issue was resolved in two earlier Supreme Court precedents:

Ultimately, we need not reweigh the competing due process arguments advanced by the parties because this Court's decisions in United States v. $8,850, 461 U. S. 555 (1983), and United States v. Von Neumann, 474 U. S. 242 (1986), already resolved the issue. After a State seizes and seeks civil forfeiture of personal property, due process requires a timely forfeiture hearing but does not require a separate preliminary hearing….

The dispute in $8,850 arose when the Customs Service seized currency from an individual entering the United States, but then waited before filing for civil forfeiture of the currency…. The property owner argued that the delay violated due process….This Court concluded that a post-seizure delay "may become so prolonged that the dispossessed property owner has been deprived of a meaningful hearing at a meaningfultime." Id., at 562–563. The Court elaborated that timeliness in civil forfeiture cases must be assessed by "analog[izing] . . . to a defendant's right to a speedy trial" and considering four factors: the length of the delay, the reason for the delay, whether the property owner asserted his rights, and whether the delay was prejudicial. Id., at 564… Those factors are appropriate guides in the civil forfeiture context, the Court explained, because the factors ensure that "the flexible requirements of due process have been met…."

In Von Neumann, the Court addressed whether a timely forfeiture hearing, without more, provides the process that is due in civil forfeiture cases. See 474 U. S., at 249–251. The property owner there failed to declare the purchase of his new car upon driving it into the United States. See id.,at 245. A customs official determined that the car was subject to civil forfeiture and seized it. See ibid. The plaintiff filed a petition for remission of the forfeiture—in essence, a request under federal law that the Federal Government exercise its discretion to forgive the forfeiture. See id., at 245–246. The Government did not respond to that petition for 36 days. See id., at 246. The plaintiff sued, arguing that the Government's 36-day delay in answering the remission petition violated due process…. Justice Brennan's opinion for the Court broadly held that due process did not require a pre-forfeiture-hearing remission procedure in the first place….

This Court's decisions in $8,850 and Von Neumann resolve this case. As the Court stated in Von Neumann, a timely forfeiture hearing "satisfies any due process right"
with respect to a "car" that has been seized for civil forfeiture. 474 U. S., at 251; see also id., at 249. The Due Process Clause does not require a separate preliminary
hearing.

The second reason why the majority rejects the need for a pre-forfeiture hearing is the originalist argument that Founding-era evidence suggests it wasn't required:

Historical practice reinforces the holdings of $8,850 and Von Neumann that due process does not require preliminary hearings in civil forfeiture cases. Since the Founding era, statutes have authorized the Government to seize personal property and hold it pending a forfeiture hearing, without a separate preliminary hearing. For example, the first federal forfeiture law, the Collection Act of 1789, authorized the civil forfeiture of ships, goods, and merchandise involved in suspected violations of the customs laws…. The collector then filed a forfeiture action, which a court would "hear and determine . . . according to law." §36, id., at 47. While that action was pending, the seized property could remain in the custody of the collector." §25, id., at 43.…

The Collection Act did not require a separate preliminary hearing before the forfeiture hearing. Rather, the forfeiture "trial" supplied the opportunity for the property owner to challenge the collector's case.

In a forceful concurring opinion that reads more like a dissent, Justice Gorsuch outlines serious due process flaws in the current asset forfeiture regime, and in the process undermines the majorities arguments. Like Justice Sotomayor in her dissent for the three liberal justices, Gorsuch emphasizes the abusive practices of the modern asset forfeiture regime, and the fact that most of it is of relatively recent origin, arising from the growth of the War on Drugs.  This puts it in serious tension with text and original meaning:

To my mind, the due process questions surrounding these relatively new civil forfeiture practices are many. Start with the most fundamental one. The Fifth and Fourteenth
Amendments guarantee that no government in this country may take "life, liberty, or property, without due process of law." As originally understood, this promise usually meant that a government seeking to deprive an individual of her property could do so only after a trial before a jury in which it (not the individual) bore the burden of proof. See, e.g., 1 W. Blackstone, Commentaries on the Laws of England 134– 135 (1765) (Blackstone); Vanhorne's Lessee v. Dorrance, 2 Dall. 304, 315 (CC Pa. 1795) (Patterson, J.); Wilkinson v. Leland, 2 Pet. 627, 657 (1829) (Story, J.). So how is it that, in civil forfeiture, the government may confiscate property first and provide process later?

The answer, if there is one, turns on history. If, as a rule, the Due Process Clauses require governments to conduct a trial before taking property, some exceptions are just asdeeply rooted. And for just that reason, these exceptions, too, may be consistent with the original meaning of the Fifth and Fourteenth Amendments.

Gorsuch goes on to note that the Founding-era and Supreme Court precedents cited by the majority may not be generally applicable, because they arose in " the discrete arenas of admiralty, customs, and revenue law." That's true of the Collections Act, and also of $8850 and Von Neumann, the two modern precedents emphasized by Kavanaugh. But, as Gorsuch points out, these areas are likely to be special cases, exceptions to the general rule that the government may only seize property after a trial:

The reasons for the law's traditionally permissive attitude toward civil forfeiture in those three contexts may merit exploration, too. From a brief look, it seems they were
sometimes justified for reasons particular to their fields. In the early Republic, for example, once a ship involved in violations of the Nation's piracy or customs laws slipped port for a foreign destination, American courts often could not exercise jurisdiction over it or its crew, let alone its owners…. In many instances, the law recognized that seizing the ship, subject to postdeprivation procedures, represented "the only adequate means of suppressing the offence or wrong, or insuring an indemnity to the injured party." Harmony v. United States, 2 How. 210, 233 (1844) (Story, J.); see also 3 Blackstone 262 (1768) (justifying civil forfeiture in customs cases as necessary "to secure such forfeited goods for the public use, though the offender himself had escaped the reach of justice"). But if history sanctions that line of thinking, it's hard not to wonder: How does any of that support the use of civil forfeiture in so many cases today, where the government can secure personal jurisdiction over the wrongdoer? And where seizing his property is not the only adequate means of addressing his offense?

How indeed?

Notice that Gorsuch's reasoning effectively disposes of both of the main arguments advanced by the majority: $8850 and Von Neumann are not dispositive precedents, because both were customs cases, which are a special, distinct situation. For the same reason, the Founding-era evidence cited by Kavanaugh is also inadequate. It too focuses on customs legislation.

More generally, if Gorsuch is right to conclude that "a government seeking to deprive an individual of her property could do so only after a trial before a jury in which it (not the individual) bore the burden of proof," then the Alabama laws at issue in this case are clearly unconstitutional! A procedure under which the government can seize and hold on to property for many months before providing any kind of hearing clearly doesn't meet that standard. Ditto for the way in which Alabama (like many other states) effectively shifts the burden of proof onto the property owner.

Thus, by their own reasoning, Gorsuch and Thomas should have dissented. Even if a "separate preliminary hearing" isn't required, the government still may not seize property without holding a trial first, and a procedure that, as Gorsuch puts it, allows "it take and keep private property without a warrant or any other form of prior process" is clearly unconstitutional, and violates the requirement of a "timely" hearing.

Justice Sotomayor's dissenting opinion offers additional constitutional criticisms of the Alabama asset forfeiture system, and others like it. Like Gorsuch, she also highlights the perverse incentives created by the current system (which allows law enforcement to profit from seizures), ways in which that system disproportionately burdens the poor and disadvantaged, including property owners who don't have the resources for a prolonged legal battle. Losing the use of your car for many months may be only a moderate burden for the relatively affluent. It's a much bigger one for a poor or working class person. She also points out additional flaws in the majority's use of precedent.

From the standpoint of civil libertarians and property rights advocates, there is a silver lining to today's otherwise terrible decision: at least five justices seem open to issuing a broader ruling curbing asset forfeiture. In his concurring opinion, Gorsuch comes close to inviting litigants to file a broad challenge arguing that most asset forfeitures require a prior jury trial:

Why does a Nation so jealous of its liberties tolerate expansive new civil forfeiture practices that have "led to egregious and well-chronicled abuses"? Leonard, 580 U. S., at 1180 (statement of THOMAS, J.). Perhaps it has something to do with the relative lack of power of those on whom the system preys. Perhaps government agencies' increasing dependence on forfeiture as a source of revenue is an important piece of the puzzle…. But maybe, too, part of the reason lies closer to home. In this Nation, the right to a jury trial before the government may take life, liberty, or property has always been the rule. Yes, some exceptions exist. But perhaps it is past time for this Court to examine more fully whether and to what degree contemporary civil forfeiture practices align with that rule and those exceptions.

If Justice Sotomayor's dissent is any indication, the three liberal justices also seem open to a broader attack on at least the more egregious current asset forfeiture practices, prevalent in many states.  Defense lawyers and public interest organizations should take note—and take up Gorsuch's thinly veiled invitation. Victory may yet be snatched from the jaws of today's defeat.

The post Supreme Court Issues Flawed Ruling in Asset Forfeiture Case appeared first on Reason.com.

The U.S. Supreme Court ruled Thursday that the due process rights of two Alabama women were not violated when they both had to wait over a year for a court hearing to challenge the police seizure of their cars.

In a 6–3 decision, the Court's conservative majority held in the case Culley v. Marshall, Attorney General of Alabama that property owners in civil asset forfeiture proceedings have no due process right to a preliminary court hearing to determine if police had probable cause to seize their property.

"When police seize and then seek civil forfeiture of a car that was used to commit a drug offense, the Constitution requires a timely forfeiture hearing," Justice Brett Kavanaugh wrote in the majority opinion, joined by Chief Justice John Roberts and Justices Samuel Alito, Clarence Thomas, Neil Gorsuch, and Amy Coney Barrett. "The question here is whether the Constitution also requires a separate preliminary hearing to determine whether the police may retain the car pending the forfeiture hearing. This Court's precedents establish that the answer is no: The Constitution requires a timely forfeiture hearing; the Constitution does not also require a separate preliminary hearing."

Under civil asset forfeiture laws, police can seize property suspected of being connected to criminal activity, even if the owner is never charged or convicted of a crime. Law enforcement groups say it is a vital tool to disrupt drug trafficking and other organized crime.

Civil liberties groups across the political spectrum argue that the process creates perverse profit incentives for police and is unfairly tilted against property owners, who bear the burden of challenging the seizures in court. 

Those criticisms have been echoed in the past by not just the Supreme Court's liberal justices but also Justices Clarence Thomas and Neil Gorsuch, giving forfeiture critics hope that a skeptical majority on the Court would clamp down on civil forfeiture.

However, despite writing in a concurrence that "this case leaves many larger questions unresolved about whether, and to what extent, contemporary civil forfeiture practices can be squared with the Constitution's promise of due process," Gorsuch, joined by Thomas, both agreed with the majority opinion.

Today's ruling is a disappointment, then, for groups such as the Institute for Justice, a libertarian-leaning public-interest law firm that filed an amicus brief on behalf of the petitioners. Kirby Thomas West, an Institute for Justice attorney, calls the ruling "a big loss for private property rights."

"Today's decision will mean many more property owners will never get their day in court when it could do them some good—shortly after the seizure of their vehicle or other property," says West. "Instead, civil forfeiture cases will languish for months or years before they are resolved. Meanwhile owners of seized vehicles will scramble to find a way to get to work, take their kids to school, run errands, and complete other essential life tasks."

The Supreme Court agreed to hear the case—two consolidated cases both involving Alabama women whose cars were seized by police for offenses they were not involved or charged with—last year.

In the first case, Halima Culley's son was pulled over by police in Satsuma, Alabama, while driving Culley's car. He was arrested and charged with possession of marijuana and drug paraphernalia. The City of Satsuma also seized Culley's car. It took 20 months, during all of which Culley was bereft of her vehicle, before a state court ruled that she was entitled to the return of her car under Alabama's innocent-owner defense.

In the second case, a friend of Lena Sutton took her car to run an errand in 2019. He was pulled over by police in Leesburg, Alabama, who found methamphetamine in the car and seized it. Sutton also eventually was granted summary judgment on an innocent-owner defense, but not until more than a year after the initial seizure of her car.

Culley and Sutton both filed lawsuits claiming that the towns violated their Eighth and 14th Amendment rights by depriving them of their cars for months when a pretrial hearing to establish probable cause for the seizures could have quickly determined that they were innocent owners.

Those long waits are not unusual. Last year, the U.S. Court of Appeals for the 6th Circuit ruled that Detroit's asset forfeiture scheme violated residents' constitutional rights by making them wait months for court hearings to challenge the validity of seizures. One of the plaintiffs in that lawsuit waited two years for a hearing.

However, the 11th Circuit rejected Culley's claims, finding the state's civil forfeiture process satisfied the requirements for a timely hearing under the speedy trial test, a balancing test created to resolve allegations of Sixth Amendment violations. However, every other circuit that has weighed in on the issue used a different balancing test established in the 1976 Supreme Court case Mathews v. Eldridge to determine due process violations.

The Supreme Court's conservative majority sidestepped the question of which test to use altogether, ruling that the existing requirement for a timely court hearing in forfeiture cases satisfied constitutional requirements.

"A timely forfeiture hearing protects the interests of both the claimant and the government," Kavanaugh wrote. "And an additional preliminary hearing of the kind sought by petitioners would interfere with the government's important law-enforcement activities in the period after the seizure and before the forfeiture hearing."

In a dissent, Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, wrote that the majority opinion's reasoning was "deeply flawed" and, rather than resolve the question of which test lower courts should apply, creates a universal rule that "hamstrings federal courts from conducting a context-specific analysis in civil forfeiture schemes that are less generous than the one here."

The post Supreme Court Rules No Due Process Right to Preliminary Hearings in Civil Asset Forfeiture Cases appeared first on Reason.com.

 

In addition to finally passing long-delayed and much-needed military assistance to Ukraine, the House of Representatives today also enacted the REPO Act.  That law gives the president the authority to confiscate $6 billion in Russian government assets currently frozen in the United States, and transfer them to Ukraine, in order to assist that country in resisting Russia's brutal war of aggression.

The Senate will almost certainly pass the REPO Act, as well, and President Biden seems certain to sign it and act on it. While $6 billion isn't all that much relative to the costs of the war, hopefully this US action will incentivize our European allies to confiscate the nearly $300 billion in Russian state assets currently frozen under their jurisdiction.

I have long advocated this idea, which is overdue. In a November post, I outlined the case for it, and addressed a number of objections, including claims that confiscation would violate the Takings Clause of the Fifth Amendment, sovereign immunity arguments, arguments that confiscation is unfair to the people of Russia, and fears that it would set a bad precedent deterring foreign investment in the US.

Here's an excerpt:

There is a staggering $300 billion in frozen Russian state assets located in Western nations backing Ukraine…. To put this figure in perspective, it's worth noting that the total amount of US aid to Ukraine from February 2022 through July 31, 2023 was about $77 billion. The European Union, individual European states, and Canada, gave approximately $165 billion during the same period…. The $300 billion in frozen assets is equal to some two years of total Western assistance to Ukraine at the current pace of spending!…

[I]n the US the private property of foreigners is protected against confiscation by the Takings Clause of the Fifth Amendment, which requires the government to pay "just compensation" if it takes "private property." Most European nations have similar constitutional protections for private property rights, as does the European Convention on Human Rights.

But the Fifth Amendment and its European analogues do not offer the same kind of blanket protection to the property of foreign governments. This distinction undermines claims by some critics that uncompensated seizure of Russian state assets would violate the Takings Clause and similar constitutional guarantees in Europe. It also mitigates concerns that confiscating Russian government assets would create a dangerous slippery slope. Private property rights of foreigners would remain protected by constitutional guarantees….

Oona Hathaway argues that confiscating Russian state assets would violate sovereign immunity. I think the Tribe report offers compelling responses to this argument (pp 60-64).

In addition, I am not convinced that sovereign immunity is actually a just principle that we have a duty to obey. It is in fact a perversion of justice, enabling rulers to escape accountability for violating human rights and other injustices they perpetrate. It was a mistake to read it into the US Constitution. It is equally a mistake to allow it to be a principle of international law. Some laws are so deeply unjust that we have no duty to obey them. The law of sovereign immunity is one such case.

At the very least, sovereign immunity should not be permitted to shield authoritarian states like Putin's regime from having their assets confiscated in order to combat their wars of aggression, mass murder of civilians, and other large-scale human rights violations. Such rulers no more deserve sovereign immunity than Mafia bosses….

 

 

The post House Passes REPO Act Giving President Authority to Confiscate Russian Government Assets in the US and Transfer them to Ukraine appeared first on Reason.com.

What do the state's insurance and housing crises have in common? Obviously, homeowner policies have an impact on housing costs, but I'm referring to something different, namely the concept of open-ended risk. Insurers are exiting the market because state policies limit their ability to price policies to reflect the risk of a major wildfire season. They rather pull out of California than risk the destruction of their assets.

I'd argue the same thing is happening in the rental market, thanks to a fusillade of pro-tenant laws that subject landlords to an incalculable level of risk. Landlords have freely entered the business and understand the various ups and downs. They can calculate the costs of mortgages, taxes, insurance, and maintenance. They expect to, say, replace carpets and paint between tenants. They know the cost of the eviction process in those instances where it's necessary.

But the Legislature's anti-property-rights crusade—done in the name of protecting tenants in a tight housing market—has not only increased those easily calculated costs, but also the costs that are potentially devastating. It's one thing to realize it might require x-number of legal fees to remove a bad tenant and quite another to wrap one's head around the possibility of someone staying in a rent-controlled unit forever.

And it's impossible to calculate the emotional drain of, say, fighting with highly sophisticated squatters who have illegally moved into your temporarily vacant home, exerted some right—and are going to strip the place to its studs while you scurry for a legal remedy. I know plenty of would-be landlords who wouldn't dream of renting out their home for those reasons. Most mom-and-pop landlords I know are discussing an exit strategy.

That's reducing needed rental inventory. Why does San Francisco, which has some of the strictest tenant laws in the country, have 52,000-plus vacant rental units? Some of the explanations are ordinary (units are in process of renovation or are on the market), but a major one often is overlooked—especially by city politicians who recently passed an Empty Homes Tax that essentially blames property owners for the situation.

Many owners are afraid if they let strangers rent their units they'll never be able to reclaim them. They rather forego $3,300 a month in rent than take that potentially devastating risk. That's because the risk is not calculable. Investors can navigate their way around costs they understand (extra property taxes, higher insurance rates) but will exit if the risks are too high.

We've seen the news stories. Someone moves into a short-term rental then refuses to leave. In Oakland, a group of organized homeless women commandeered a vacant house. In Los Angeles, alleged squatters turned an empty mansion into a party house. If housing is a "human right," then owners no longer have a right to their property.

The number of incidents has soared, so much so that one entrepreneur has started a business helping landlords retake their own properties. In a sane society, no one should have to worry about this. Other states have passed (or are considering) laws to expedite the removal of these home invaders, but California requires an overly drawn-out process, leaving owners at the mercy of progressive judges.

Does that situation make you more or less likely to invest in rental properties? What's your tolerance for risk? Same questions regarding Assembly Bill 2216 by Matt Haney (D–San Francisco) that's moving through the Legislature. It requires landlords to accept pets and forbids them from charging extra rent or security deposits. Landlords can expect obvious costs (carpet cleaning, various repair costs), but they can't calculate the less-obvious ones.

The landlords would not be allowed to ask tenants if they plan to have a household pet until after they've accepted the application. They would be allowed to impose "reasonable conditions" on the pets, but "reasonable" is ill defined. For instance, the bill refers to "common household pets" but is not limited to cats and dogs. Apparently, that means a tenant could have large aquariums with heat lamps that can cause incredible damage. There's no limit (beyond local ordinances) on the number of pets. It keeps owners from dealing with tenant pet disputes.

Sure, the Assembly analysis explains that a "reasonable condition" includes the right to limit potentially dangerous pets, but it does not allow a prohibition based on breeds, such as Pit Bulls and Rottweilers. Yet insurers typically use a list of potentially vicious breeds that they forbid owners from allowing. If a landlord allows such a breed and it mauls a neighbor, the landlord won't be covered. If this bill becomes law, lawmakers will force landlords to accept an unlimited amount of risk.

I love pets, but don't be surprised when landlords exit the business and invest their money into, say, a mutual fund that doesn't bite toddlers or call them about unplugging a clogged toilet.

This column was first published in The Orange County Register.

The post California Is Trying To Drive Landlords Out of Business appeared first on Reason.com.

At the Vox website, Dylan Matthews offers a compelling defense of the proposed End Kidney Deaths Act. He makes good points, and I agree the act would be a major improvement over the status quo. But full legalization of organ markets would be better still. Here's an excerpt from Matthews' article:

What if I told you there was a way that the US could prevent 60,000 deaths, save American taxpayers $25 billion, and pay a deserving group of people $50,000 each? Would you be interested?…

I am not a spokesman. I am simply a fan and supporter of the End Kidney Deaths Act, a bill put together by a group of kidney policy experts and living donors that would represent the single biggest step forward for US policy on kidneys since … well, ever….

The plan is simple: Every nondirected donor (that is, any kidney donor who gives to a stranger rather than a family member) would be eligible under the law for a tax credit of $10,000 per year for the first five years after they donate. That $50,000 in total benefits is fully refundable, meaning even people who don't owe taxes get the full benefit.

Elaine Perlman, a kidney donor who leads the Coalition to Modify NOTA, which is advocating for the act, based the plan on a 2019 paper that estimated the current disincentives to giving a kidney (from travel expenses to lost income while recovering from surgery to pain and discomfort) amounted to about $38,000. That's almost $50,000 in current dollars, after the past few years' inflation.

The paper also found that removing disincentives by paying this amount to donors would increase the number of living donors by 11,500 a year. Because the law would presumably take a while to encourage more donations, Perlman downgrades that to about 60,000 over the first 10 years, with more donations toward the end as people become aware of the new incentives. But 60,000 is still nothing to sneeze at….

The End Kidney Deaths Act is trying to solve a fundamental problem: Not nearly enough people are donating their kidneys….

In 2021, some 135,972 Americans were diagnosed with end-stage renal disease, meaning they would need either dialysis or a transplant to survive. That year saw only 25,549 transplants. The remaining 110,000 people needed to rely on dialysis.

Dialysis is a miraculous technology, but compared to transplants, it's awful. Over 60 percent of patients who started traditional dialysis in 2017 were dead within five years. Of patients diagnosed with kidney failure in 2017 who subsequently got a transplant from a living donor, only 13 percent were dead five years later.

Life on dialysis is also dreadful to experience. It usually requires thrice-weekly four-hour sessions sitting by a machine, having your blood processed. You can't travel for any real length of time, since you have to be close to the machine. More critically, even part-time work is difficult because dialysis is physically extremely draining.

An estimated 40,000 Americans die every year for lack of kidneys available for transplant. If enacted, the End Kidney Deaths Act would save many of these people. In addition, as Matthews points out, the $50,000 per kidney tax credits would easily pay for themselves, because kidney dialysis is vastly more expensive, and Medicare ends up paying for most of that expense. If more people suffering from kidney failure could get a new kidney quickly, the government would save a lot money on dialysis expenses, and those people would be able to be more productive (as well as avoiding great pain and discomfort).

Matthews also has a good response to claims that paying for kidneys would amount to problematic "commodification":

When you think of donor compensation as payment for work done, the injustice of the current system gets a lot clearer.

When I donated my kidney, many dozens of people got paid. My transplant surgeon got paid; my recipient's surgeon got paid. My anesthesiologist got paid; his anesthesiologist got paid. My nephrologist and nurses and support staff all got paid; so did his. My recipient didn't get paid, but hey — he got a kidney. The only person who was expected to perform their labor with no reward or compensation whatsoever was me, the donor.

This would outrage me less if the system weren't also leading to tens of thousands of people dying unnecessarily every year. But a system that refuses to pay people for their work, and in the process leads to needless mass death, is truly indefensible.

I agree, and have made similar points myself. And Matthews deserves great commendation for donating a kidney, thereby quite possibly saving a life! At the very least, he probably saved the recipient from having to endure additional years of painful kidney dialysis.

The major shortcoming of the End Kidney Deaths Act is the implicit price control it creates. By setting the payment at $50,000, it prevents higher payments where that would be necessary to ensure adequate supply. While the Act would save thousands of lives, the estimates Matthews cites (some 6000 to 11,500 additional kidney donations per year) would still leave us many thousands of kidneys short, thereby still dooming many people to needless death, or at least additional years on kidney dialysis.  This problem might be especially acute for patients whose genetics make it unusually difficult to find a matching donor. Conversely, if some potential donors are willing to sell for less than $50,000, there is no good reason to ban such transactions.

Full legalization of organ sales, with no price controls, would fix these problems. It's basic economics 101 that markets function best if prices are allowed to fluctuate in response to supply and demand. In a free market, insurance companies, medical care providers, and others have every incentive to pay what it takes, as the alternative of kidney dialysis is far more expensive. If necessary, the government could subsidize consumption by the poor, as it already does for kidney dialysis and many other health care expenses.

Matthews includes a passage lauding the End Kidney Deaths Act in part precisely precisely because it falls short of authorizing a full-blown organ market:

The most common objection to compensating kidney donors is that it amounts to letting people "sell" their kidneys, a phrasing that even some proponents of compensation adopt. For opponents, this feels dystopian and disturbing, violating their sense that the human body is sacred and should not be sold for parts.

But "selling kidneys" in this case is just a metaphor, and a bad one at that. The End Kidney Deaths Act would not in any sense legalize the selling of organs. Rich people would not be able to outbid poor people to get organs first. There would be no kidney marketplace or kidney auctions of any kind.

What the proposal would do is pay kidney donors for their labor. It's a payment for a service — that of donation — not a purchase of an asset. It's a service that puts some strain on our bodies, but that's hardly unusual. We pay a premium to people in jobs like logging and roofing precisely because they risk bodily harm; this is no different.

This formulation is clever. And I myself have noted parallels between organ markets and paying people for doing jobs involving physical risk, such as the work performed by lumberjacks  and professional football players (both of whom accept far greater risks than those faced by kidney donors). Nonetheless, if we compensate kidney donors, it is difficult to deny that such compensation is at least in part for giving up a kidney.

And there is nothing wrong with that! If you believe in the principle of "my body, my choice," the right to sell organs is one of the liberties that ideal entails. And there is no good reason to distinguish organ-selling from other potentially risky activities people are allowed to do for pay.  If anything, organ markets are more defensible than most of the others, because they could save many thousands of lives. By contrast, NFL players take greater risks to provide the rest of us with entertainment.

As for the fear that rich people will hoard or monopolize kidneys, that is highly improbable given that few people—rich or otherwise—are likely to have a need for more than one. In a nation of over 300 million people, full legalization would induce sufficient sales to fully cover the demand (roughly another 40,000 kidneys per year or so). If necessary, as noted above, government could subsidize the purchase of kidneys for poor people suffering kidney failure, as it does for other kinds of medical care for the poor.

A free market might be politically difficult to enact. But survey data suggests it may not be nearly as hard as is usually supposed.

In sum, the End Kidney Deaths Act would be a major improvement over the status quo. Matthews is absolutely right about that. But a more fully free market would be much better still.

In previous writings on organ sales, I have discussed the scope of the problem, and addressed standard arguments against organ market legalization, such as concerns that it would be too dangerous for organ donors,  claims that it amounts to to immoral "commodification" of the body, and fears that it would lead to exploitation of the poor (see also here).

The post Two Cheers for the Proposed End Kidney Deaths Act appeared first on Reason.com.

The Supreme Court is currently considering two cases in which social media firms challenge the constitutionality of Texas and Florida laws requiring them to host content the platforms would prefer to exclude. The issue before the Court is whether these laws violate the Free Speech Clause of the First Amendment. But, in a recent Reason article, Ethan Blevins of the Pacific Legal Foundation—one of the nation's leading public interest law firms litigating takings cases—argues they also violate the Takings Clause of the Fifth Amendment:

While pundits and lawyers cross swords over free speech on social media, a quieter yet critically important principle is being ignored: property rights. In addition to violating the First Amendment, the rush to force social media platforms to host content violates the Fifth Amendment as well—in particular, the Takings Clause.

The Takings Clause says that government shall not take private property "for public use, without just compensation." While many are familiar with the clause's importance when the government wants to seize land through eminent domain, courts have also applied this right as a limit on the ability to overregulate property. For example, if a beach town requires the owners of oceanfront properties to let the public walk across their yards to get to the beach, this would require compensation, because the regulation effectively takes the property owner's right to exclude, a cornerstone of ownership.

Likewise, the Takings Clause shields social media platforms from regulations requiring they host content or users they want to exclude. These platforms have as much right to eject unwelcome digital interlopers as homeowners do to stop the government from using their yard as a public right of way—unless they are given just compensation. If states intend to force social media apps to host users and content against their wishes, they will have to pay for it….

Both state and federal laws already treat online platforms as property. All states criminalize unauthorized access to computer systems, often expressly framing these crimes as trespass….

Laws that mandate online platforms to accept certain content or users effectively invade private property. And the courts have established that when the government grants third parties access to private property without the owner's consent, that requires compensation. The federal government had to pay a private marina owner in Hawaii before it could be compelled to allow public boating access. Similarly, the Supreme Court ruled just a few years ago that California had to compensate employers after it forced them to let union representatives access their property.

I very much agree, and previously made a similar argument here:

The Takings Clause bars government from taking "private property" without paying "just compensation." In its 2021 ruling in Cedar Point Nursery v. Hassid, the Supreme Court ruled (correctly, in my view) that even a temporary government-mandated "physical occupation" or invasion of private property counts as a per se taking….

The Florida and Texas social media laws are also blatant attacks on the right to exclude. No one doubts that the Twitter site and its various features are Twitter's private property. And the whole point of the Florida and Texas laws is to force Twitter and other social media firms to grant access to users and content the firms would prefer to exclude, particularly various right-wing users. Just as the plaintiffs in Cedar Point wanted to bar union organizers from their land, so Twitter wishes to bar some content it finds abhorrent (or that might offend or annoy other users)….

To be sure, there are obvious differences between virtual property, such as a website, and more conventional physical property, like that involved in the Cedar Point case. But the Taking Clause nonetheless applies to both. If Texas decided to seize the Twitter site, bar current users, and instead fill it with content praising the state government's policies, that would pretty obviously be a taking, much like if California decided to seize the Cedar Point tree nursery's land.  In the same way, requiring Twitter to host unwanted content qualifies as an occupation of its property, no less than requiring a landowner to give access to unwanted entrants…

One could argue that forcing a website owner to host unwanted users isn't really a "physical occupation," because the property is virtual in nature. But websites, including the big social media firms, use physical server space. Other things equal, a site with more user-generated content requires more such space than one with less. Even aside from the connection to physical infrastructure, it seems to me that occupation of virtual "real estate" is analogous to occupation of land. Both are valuable forms of private property from which the owner generally has a right to exclude.

The post Laws Requiring Social Media Firms to Host Content they Prefer to Exclude Violate the Takings Clause appeared first on Reason.com.

UPDATE: This event has been postponed till September, for scheduling reasons. I will post the new date and time when it is set.

Note: I am reposting this in order to include the registration link.

On April 23, the Schar School of Policy and Government at George Mason University will hold an event on "Solving the Nation's Housing Shortage." I will be speaking along with economist Bryan Caplan (George Mason University), author of Build, Baby, Build: The Science and Ethics of Housing, and Jerry Howard, former Director of the National Association of Home Builders. Bryan will discuss his book,  which addresses the causes of the housing crisis, and potential solutions. I will speak about how exclusionary zoning—the most significant cause of our housing shortage—violates the Takings Clause of the Fifth Amendment, and how judicial review can help address the problem. These issues are covered in greater detail in my forthcoming Texas Law Review article on exclusionary zoning (coauthored with Josh Braver).

The event is free and open to the public. Here is the time and address:

12-1 PM, Schar School of Policy and Government, George Mason University, Van Metre Hall, Rm. 111, 3351 Fairfax Dr., Arlington, VA

You can register at this link.

The post Upcoming Event on "Solving the Nation's Housing Shortage" [update] appeared first on Reason.com.

A San Marcos, Texas, couple would like to remove a reference to a Ku Klux Klan supporter from the front of their home, but the local historic preservation board has said no dice.

The reference in question is a large metal "Z" bolted to a wrought iron Juliette balcony on the front of Kristy Kay Money and Rolf Jacob Sraubhaar's house in San Marcos' Burleson Historic District.

That "Z" is the initial of the home's owner and builder, Frank Zimmerman, a prominent local businessman and owner of the city's downtown historic theater who served as San Marcos mayor from 1949 to 1951.

Zimmerman also has ties to the Ku Klux Klan. His theater hosted Ku Klux Klan days and screenings of Birth of a Nation.

Given this legacy, Money and Sraubhaar decided they wanted to remove the balcony and its large "Z" from the front of their home.

But because their home is in a historic district, although not a historic structure itself, the couple needed to get the sign-off of San Marcos' Historic Preservation Commission to alter its façade. In May 2023 the commission voted unanimously to deny their application to remove the balcony from the front of the house.

In response, Money and Sraubhaar sued San Marcos in federal court, arguing that the city's refusal to let them remove the balcony and initial is an uncompensated physical taking in violation of the Fifth and 14th Amendments and an unconstitutional exercise of police powers under the Texas Constitution.

"It's an occupation of property for a public benefit. It's for an alleged public purpose, in this case, the people on the design review board want to look at it. So, we think that's a taking," says Chance Weldon, a lawyer with the Texas Public Policy Foundation, which is representing the couple.

In response, San Marcos filed a motion to dismiss the case, primarily arguing that Money and Sraubhaar should first have to appeal their case to the city's Zoning Board of Adjustment before taking their case to court.

The U.S. District Court for the Western District of Texas Austin Division is currently considering the case.

"We think it's wholly un-American that if you want to change something to the aesthetic of your property, you have to get sign-off from a board of unelected bureaucrats based on what they think looks right," Weldon tells Reason.

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Hopes that the U.S. Supreme Court might strike down rent control this term were dashed today when the Court declined to take up the two remaining rent control cases on its docket. But a short statement from Justice Clarence Thomas otherwise agreeing not to take up the cases does provide rent control critics some optimism that the Court might reconsider the issue at a future date.

The cases, 74 Pinehurst LLC v. New York and 335-7 LLC v. City of New York, both involved New York City rental property owners' challenges to their state's stabilization regime and related New York City regulations implementing that regime.

The petitioners argued that the 2019 amendments to New York's rent stabilization law amounted to a physical taking because they prevented property owners from choosing their tenants or withdrawing their property from the rental market. They also argued that New York's post-2019 rent stabilization law amounted to a regulatory taking by tanking the value of their properties and removing avenues to "deregulate" (charge market rents on) their units.

Lower courts rejected these arguments. So, last spring, the landlord plaintiffs in both cases petitioned the Supreme Court to take up their case.

The fact that the two cases stayed on the Supreme Court's docket even after it had declined to take up another, higher profile, and more sweeping challenge to New York's rent stabilization law in October raised hopes that the justices might still take up these cases.

At a minimum, rent control critics offered some hopeful speculation that one or more of the justices might write a lengthy dissent to any court decision to not take up the cases that would outline how another rent control challenge could make its way back to the Supreme Court.

Neither of those things happened today. But today's order wasn't a total loss for rent control opponents.

Justice Clarence Thomas did issue a short statement saying that the "constitutionality of regimes like New York City's is an important and pressing question."

Ultimately, Thomas agreed with the Court's denial of cert, saying that petitioners' claims in their lawsuits "primarily contained generalized allegation." In order to evaluate their "as-applied" challenges, the Court would need to see more specific arguments about the circumstances of individual landlords.

For that reason, Thomas wrote, the 74 Pinehurst and 335-7 pleadings would "complicate" the Court's review.

"Any time you get something more than just a denial, I would say that gives you reason for optimism," says Mark Miller, an attorney with the Pacific Legal Foundation, which has supported constitutional challenges to rent control. "Oftentimes justices give statements like this to give you a roadmap for how to better tee up the issue."

In the meantime, however, New York City property owners are offered no relief from the state's rent stabilization regime.

Rent-stabilized owners argue the state's limits on rent increases are so punishingly strict that they can't finance basic repairs or turn over vacant units. The ongoing struggles of New York Community Bancorp, which lent heavily to rent-stabilized buildings, are only compounding this problem.

Without greater flexibility to raise rents or obtain private capital, "the future of rent-stabilized buildings is in the hands of the state government," said the Community Housing Improvement Program (CHIP) and the Rent Stabilization Association (RSA) in an emailed statement reacting to the Supreme Court's decision today. "Thousands of buildings housing hundreds of thousands of tenants are in financial distress. Without action, the homes of many hard-working New Yorkers will deteriorate.

CHIP and RSA had been plaintiffs in another challenge to New York's rent stabilization regime that the Supreme Court also declined to take up last year. Thomas' statement seems to have done little to raise their optimism about future rent control cases.

"We do expect there will be many more challenges to this law, which remains irrationally punitive," they said.

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Happy Tuesday and welcome to another edition of Rent Free. Despite the ink still wet on many state-level YIMBY reforms prodding local governments to allow housing, we're already witnessing a concerted counter-revolution from the forces of local control. This week's stories include:

• Slow-growth activists in the Boston-adjacent suburb of Milton, Massachusetts, have successfully overturned state-required zoning reforms that allowed apartments near the town's train stations.
• Local governments in Florida are trying to defang a new state law allowing residential high-rises in commercial zones with lawsuits and regulatory obstructions.
• A lawsuit against Arlington, Virginia's exceedingly modest "missing middle" reforms that were passed last year trundles on.

But first, our lead item is a short take on how America's overregulated, undersupplied housing market turns good things, like economic growth, into bad things, like more evictions.

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Why Evictions Go Up in a Good Economy (and Why It Doesn't Have to Be This Way)

In an article from last week, L.A. Times columnist LZ Granderson asks "If the economy is so great, why are evictions soaring?" Despite low unemployment and better-than-expected economic growth "evictions have spiked and homelessness has reached a record high," he notes.

Granderson's explanation for this incongruity is that it's all just the latest ill effects of Reaganite low taxes, slim government benefits, and underregulated corporations.

The more compelling answer is that evictions are up because the economy is so great (or at least better than it used to be).

Landlord Incentives

As Granderson notes, unemployment is low. The unemployment rate has been under four percent for the past two years. Real wages have also been growing.

For landlords, that means that there are a lot of workers with steady incomes out there who would likely make for steadily paying tenants. If their current tenant isn't paying rent or is behind on rent, a low unemployment rate boosts their confidence that they'll be able to find another one who will pay their bills on time. That makes it less risky to take on the costs of evicting a tenant and turning over a unit.

That's a counterintuitive answer. The intuitive assumption is that since evictions are a bad personal economic event, they'll happen more often when economic times are bad generally.

This was the assumption that prompted both Republican and Democratic presidential administrations, and almost every state government, to adopt eviction moratoriums during the pandemic. The fear was that sudden, mass unemployment would result in millions of delinquent renters being kicked out of their homes.

Lessons from the pandemic 

This turned out to be wrong. Even after most state moratoriums had lapsed, the federal moratorium had been struck down by the U.S. Supreme Court, and rental assistance programs expired, evictions stayed well below pre-pandemic averages.

Evictions did rise slowly over time, but there was never the sudden "avalanche" or "tsunami" of people getting kicked out of their homes that some housing activists predicted. Today, according to Princeton University's Eviction Lab data, evictions nationwide are slightly below pre-pandemic averages.

The fact that evictions fall during bad economic times and rise during good times might seem to validate the left-wing view that economic growth under capitalism just means more hardship for poor and marginalized renters. Therefore, the thinking goes, we need more legal restrictions on evictions, rent control, and/or direct government provision of housing to keep a roof over people's heads. That too is a mistaken view.

More homes, fewer evictions

All else being equal, economic growth and low unemployment will give landlords a greater incentive to evict a delinquent tenant. But economic growth and low unemployment should also raise the demand for housing, and therefore lead to new housing construction.

More housing supply will in turn make the housing market more competitive for suppliers. A landlord with a delinquent tenant can't be so sure they'll be able to find a replacement so easily, as the pool of potential tenants will have a lot more housing options. More housing supply will also lower housing prices, which in turn should result in fewer tenants risking eviction by falling behind on their rent in the first place.

Thanks to zoning, restrictions on mortgage financing, needless environmental reviews, and more, we're not seeing as much new supply as we would under a free market. That means we're also not seeing the eviction-suppressing effects of new supply.

The result of restricted housing supply in a time of economic growth and low unemployment is higher prices and higher evictions.

As Kevin Erdmann explained in his Substack last June, when there's not enough housing to go around, "somebody has to be displaced, and the displacement is achieved through rising housing costs, which tend to pile up the most on the poorest residents."

The good news in the short term is that in the places where evictions are going up the most (mostly booming sunbelt metros), there is a rash of new supply coming onto the market. This glut of new homes and apartments should cool price increases and evictions.

The better news in the long term is that many states are passing YIMBY zoning reforms that will make housing supply even more elastic. That is unless NIMBY forces manage to handicap these laws right out of the gate…

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In Massachusetts, A Popular Rebellion Against New Housing

This past Wednesday, 54 percent of voters in Milton, Massachusetts, an inner suburb of Boston, approved a ballot initiative repealing recently passed local zoning amendments that allowed apartments near local rail stations.

In doing so, the town has made itself non-compliant with Massachusetts' signature YIMBY reform—the 2021 MBTA Communities Law—which requires towns with rail transit service to allow apartments near rail stations.

The vote sets up a crucial test for the state law: can it prod reluctant local governments to zone for infill housing in a way that actually gets units built? Or will it be another state YIMBY reform that's bested by clever NIMBY intransigence?

The backstory

Prior to Wednesday's vote, it appeared most localities were complying with the letter of the MBTA Communities Law. All twelve of the towns required by the law to pass upzoning legislation by the end of 2023 had done so.

That includes Milton. In December 2023, the town passed the state-required zoning changes. But shortly thereafter, local activists gathered enough signatures to put the zoning changes up to a popular vote.

State officials, including Gov. Maura Healey and Attorney General Andrea Campbell, had warned the town that a vote for repeal would make Milton ineligible for numerous state grants and a lawsuit from the state.

Consequences

Having voted for repeal anyway, Milton is now ineligible for three grant programs, including the state's largest capital grant program for localities. It's uncompetitive for another dozen grants.

The attorney general's office has made clear that "communities cannot avoid their obligations under the Law by foregoing this funding." Campbell said in a sharply worded, pre-vote letter to Milton that her office would bring legal action to enforce the MBTA Communities Law "without hesitation."

Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, tells Reason that there's speculation that developers could also sue non-compliant town governments should projects they propose that meet the state law standards are rejected.

The combined weight of all these potential enforcement actions is seemingly encouraging most communities to come into line. Milton is thus far the exception, and even there, the margin on its referendum was a little under 800 votes.

An uncertain road ahead

The longer-term risk is that communities will find ways to comply with the MBTA Communities Law on paper while thwarting it in practice. The zoning amendments Milton had approved, for instance, required that newly legal apartments come with parking spaces and below-market-rate units—both of which are a tax on new housing.

Kanson-Benanav suggests some towns might come into paper compliance by upzoning commercial parcels that wouldn't likely be redeveloped into housing or upzone near environmentally protected areas where development is infeasible.

"It's hard to know what's written on paper, what its impact will be in practice," he says.

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In Florida, the Backlash to the Law That Allowed Too Much Housing 

Was it too good to last? That's the question that YIMBYs in Florida might be asking themselves as local governments rebel against, and state lawmakers mull reforms of, the state's year-old Live Local Act.

The law allows developers to build apartments in commercial and industrial areas, local zoning be damned, provided the new housing includes affordable units.

Because the law's affordability requirements are turning out to be pretty modest, and its density allowances are turning out to be mouth-wateringly generous, developers have made ready use of the law to build massive new high-rises that would have otherwise been prohibited by local zoning.

Now the backlash. The Tampa Bay Times reports that Pasco County threatened to sue developers trying to use the law to build apartments. Another city adopted a six-month building moratorium to block a Live Local Project.

At the state level, the Florida Senate approved a bill that weakens the Live Local Act's zoning preemptions in one respect while strengthening them in another.

S.B. 328 would allow local governments to say no to Live Local projects that are more than 150 percent taller than adjacent buildings if its near a single-family neighborhood. In applicable areas, that's a significant reduction in the law's height allowances.

On the other hand, S.B. 328 would prohibit local governments from imposing floor-area-ratio regulations on Live Local projects. That would significantly pare back localities' ability to thwart Live Local projects they don't like.

All things considered, S.B. 328 doesn't appear to be a bad trade. It's now being considered by the Florida House of Representatives.

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In Virginia, Lawsuits Challenge Modest 'Missing Middle' Reform

Early last year, Arlington County, Virginia, approved a series of zoning changes that allowed up to at least four units of housing to be built in neighborhoods formerly zoned for only single-family housing.

The architects of the reforms described them as intentionally "small 'c' conservative" by only allowing a modest amount of new housing. A yearly cap on how many new duplexes, triplexes, and the like could be built made sure of that.

The cap's done nothing to mollify opponents of the missing middle reforms, who expressed heated opposition during the local legislative process and are now suing to undo the already passed reforms.

Last month, an Arlington Circuit Court Judge rejected a motion from Arlington County seeking to stop the lawsuit from going to trial later this summer. Also last month, residents in neighboring Alexandria, Virginia, sued to overturn that city's also-quite-modest ending of single-family-only zoning.

Zoning reformers might consider these lawsuits good news in a way. Middle-housing opponents lost in the democratic process, so now they have to resort to the courts.

On the other hand, local courts have recently issued some truly bizarre rulings overturning other state and city laws abolishing single-family zoning. The Arlington and Alexandria lawsuits will be an important test of whether even modest missing middle reforms can stick.

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Quick Links

• California's zoomer socialist lawmaker, Assemblymember Alex Lee (D–Milpitas), has introduced a bill that would ban corporations from purchasing and renting out single-family homes. Studies suggest such bans mostly work to exclude renters from living in more expensive single-family neighborhoods where they could afford to rent but can't afford to buy.
• Earlier this year, Rent Free covered the case of Vanie Mangal, who was stuck with an abusive, non-paying tenant for close to four years because of eviction moratoriums and New York's dysfunctional housing court system. Real Deal reports that Mangal is at last rid of her tenant (who trashed the place before she left).
• A Washington bill capping annual rent increases at seven percent statewide has passed the state House of Representatives. It will now be considered by the state Senate.
• A proposed Illinois bill would lift the state's preemption on local governments adopting rent control policies.
• "The most magical place on Earth's" plan to build a 1,400-unit affordable housing project is failing to enchant neighboring residents.
• The "year of the granny flat" is picking up steam. The Rhode Island House of Representatives passed a bill last week that will allow homeowners to build accessory dwelling units within the footprint of their existing home and on large lot single-family properties. It's a pretty modest ADU reform, all things considered.
• Is exclusionary zoning unconstitutional? Yes, say George Mason University law professor Ilya Somin and University of Wisconsin Law School professor Joshua Braver in a new article.
• The Federation of American Scientists argues the federal government should require localities to liberalize their zoning codes in order to receive federal highway funds.
• The Boston Globe has a new article on the perilous politics of zoning reform in Boston.

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