Tuesday, July 31, 2012

Housing Disaster in New Albany Indiana

HARBESON: The sad tale of Linden Meadows

> SOUTHERN INDIANA — Linden Meadows. Just the mention of this failed attempt to provide low-to-moderate-income housing in New Albany is enough to make people scream and pull at their hair.

The project is now a complicated, tangled mess of private and government entities, and what may be most troubling is the part the federal government has played in the fiasco.

Let’s begin with the soon-to-be-defunct New Albany-Floyd County Community Housing Development Organization. Although set up as private nonprofits, Community Housing Development Organizations (CHDOs) exist to take advantage of special federal funds (HOME Investment Partnership Program) offered through the U.S. Department of Housing and Urban Development. The government, perhaps learning from past mismanagement, did create various restrictions on HOME funds such as requiring a 25 cent nonfederal donation for every federal dollar received.

It’s clear that this setup is part of the reason people in New Albany thought it would be a good idea to donate an entire neighborhood of old homes that were displaced due to hospital expansion to CHDO. We don’t know what decisions may have been made concerning these houses otherwise, but we do know now that — although this setup was meant to provide more taxpayer fund accountability — what this federal program did for New Albany was provide an incentive that created a perfect storm which has been nothing but disaster for the city.

Once CHDO had the houses, they needed somewhere new to locate them. The land they ended up acquiring from the city for $1, a park area, set the scene for more trouble.

After CHDO bulldozed the area, a suit was filed because this property was originally donated to the city in 1935, specifically to be used as a park. (Not sure what government tax policy was at that time, but could this decision also have been guided by government incentives?) The owner, Catherine Fawcett added a clause that said the title would revert to her heirs if the land use changed.

If the situation remained as it was in 1935, a settlement of the issue would have likely been fairly easy, but that’s not what happened. Ms. Fawcett correctly suspected government mischief might occur, but I bet she had no idea that it would be the federal government who would literally drive right over her deed by way of the interstate highway system.

When the state came to build Interstate 64, they decided they needed to take the park land and one of Fawcett’s heirs was paid $1,600, apparently as compensation for her reversionary interest in the land. I think. More on that in a minute.

To complicate the matter even further, the highway didn’t use much of this land at all. The unused portion remained in the state’s hands and continued to serve as a park, even to the point of spending additional money to add a ball diamond.

The neighbors and heirs who filed suit against CHDO based their objection on the reversionary clause that the property be used as a park but the local court ruled that the heirs had no interest in the property because of the compensation accepted at the time the land was taken. This did not satisfy the plaintiffs, particularly since the 1960 deed included the same reversionary clause. No one can figure that out. Even the appeals court says that’s confusing!

However, in the end, the appeals court decided the deed details were not relevant: “We base our decision on Dible (Dible v. City of Lafayette) and the principle that a reversionary clause cannot be enforced against an entity with the power of eminent domain.” They added that doing so would defeat the purpose of eminent domain. One can expect to be compensated as any other person with interest in a property, but that’s it.

They were very worried about maintaining eminent domain power: “If the reversionary clause would have been enforced against the state, it would have been unable to build I-64 as planned.” The court was much more concerned about the 1960 action than Linden Meadows not only because they needed to back up all the eminent domain actions that have taken place since then, but also to maintain the power for the future.

In other words, the court, and I’m paraphrasing here, said “Holy Cow Batman! We can’t allow this to go through! If we did then that means individuals can avoid having their property taken by government! People would start putting restrictions on land so they could actually own it! We can’t have that! Let’s enforce this stuff for private battles but by golly we need to give the government a special exemption!”

As you can see, we have at least two nasty results of this project — the Linden Meadows deal created another legal precedent which further bolsters the powers of eminent domain and, after seven years of various entities spending money on the project, the homes are apparently going to be razed anyway.

What is the best outcome to hope for concerning Linden Meadows now? I don’t know — maybe create a nice little park?

— Southern Indiana resident Debbie Harbeson has been pulling at her hair ever since she started really looking into government actions.

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