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Limited Equity: An Idea That Still Matters

Amalgamated Co-op, Bronx, NY.

If the single-family house has become a dog of an investment, what should communities do?  I’d say this trend makes the case for developing a new generation of limited-equity (LE) neighborhoods, where the commitment benefits of ownership are separated from the mad lottery of house prices.  Neighborhoods need stakeholders, not just tenants.  (Hold your fire: I still rent.)  Healthy communities require a critical mass of residents who have made temporal, legal, and financial commitments to remain.  They require the political landscape that comes with the presence of enough people for whom it would be more trouble to move than it would be to notice and address local problems.

LE offers this: Cooperators buy shares in a stock company, and the company holds title to the real estate.  Typically, starting prices for units are scaled to the pro rata costs of sinking the initial investment: basically, land and construction loans.  When a cooperator moves out, he sells his unit to a new cooperator for roughly the same amount that he initially paid.  And so, you have a cycle where cooperators who move out will recover their limited equity, and new residents will purchase housing at an affordable price.  At the same time, ongoing maintenance costs are used to cover, well, maintenance costs.  And taxes.  Construction on cheap farmland or (clean) former industrial sites can significantly reduce property costs, making an LE venture an affordable possibility for cooperators with modest incomes.  And so, you have a community of stakeholders that overlaps with a community of affordable housing.

The essence of the LE model can be traced back to the Principles of the Rochdale Weavers.  In 1898, Ebenezer Howard proposed an LE model for his Garden Cities as a viable solution to the crowding and poverty that characterized the East End industrial slums of Victorian London.  In 1902, Theodor Herzl advocated a similar financial model to pay for the founding of Israel.  In the United States, labor-sponsored co-ops in New York City became the most ambitious examples of the limited-equity arrangement.  But over the last generation, LE has faded out.  In the only American locality where the ownership structure had ever gained a foothold, the build-out of affordable land in New York City, combined with the infamous dysfunction of Co-op City, effectively killed the prospect of further LE developments by the mid-1970s.  (The 1971 death of Abraham Kazan simultaneously cost the concept its greatest advocate.)  Presumably, most of the rest of the US was either too conservative, or too affordable during the post-war period, for such an idea to catch fire without a good sales pitch.

But limited equity housing remains a decent and practical idea, and the present flight of capital from urban land could open a new window for its economic viability.  Politically, although LE is unquestionably a creature of the labor-left, it inherently dovetails with a number of fundamental conservative priorities, making it potentially palatable in non-left political landscapes.  For example:

1. LE facilitates a broader base of private property ownership.

2. LE does not require any direct involvement by the State.

3. The LE entity is typically entirely local; by-laws can reflect local customs.

This is because LE was envisioned to work within the conservative, common-law legal system of the British Empire in the latter half of the 19th century.  Rather than being a plank of a political program, it was and is a simple legal strategy.  And because of its origin as a private law device, the LE model remains perfectly compatible with even the most conservative visions of the role of the State, as  relates to property and economics.  At the same time, the LE model can effectively advance the interests of those who require a degree of shelter from the vagaries of capital, by allowing individuals to enjoy a stable ownership stake in their homes and neighborhoods while maintaining a perpetual stock of affordable units in a fixed location.  That is to say, in addition to its direct benefits as a business model, LE offers an approach that can avoid some of the triggers of political hostility while delivering a reliably equitable, even progressive social result.  This quality would make LE a promising strategy for these uncertain political and economic times.

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New Study Finds Fault With New Jersey Land Use

New Jersey 1884.

New Jersey Future presents a concise digest of a sobering new report by researchers at Rowan University, concerning the land use patterns of New Jersey since 1970.  The report finds modest support for a positive impact from the Mount Laurel doctrine, but an overall increase in both exclusionary zoning policies and inefficient land use patterns.  The report also finds a growing separation between the locations of housing and employment opportunities in Monmouth and Somerset, a trend that foreshadows more wasted resources and greater traffic congestion.  This is not how the state should be developed.

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End of El Norte?

For the last generation, Mexican migration to the United States has been one of the strongest factors driving neighborhood change, labor markets, and housing demand in American cities from California to New Jersey.  Now the Times has a report, riffing off of research by Princeton’s Douglas Massey, that suggests that the long era characterized by heavy migration from Mexico may be coming to a close.  If the trend is real, it will be interesting to examine how U.S. urban development is influenced by this change over the next several years.

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Spotlight: Little Falls and Canajoharie, New York

NY's Mohawk Valley. Source: Google.

More than a dozen small towns dot the countryside of New York’s Mohawk Valley between Albany and Utica.  In most, compact urban neighborhoods give way at their edges to farmland and forests:  That is to say, the towns of this region still furnish the contrast between efficient development and pastoral nature that was blurred by the sprawling postwar model.  Internally, a few are near perfect examples of artful, practical town plans.

I like the physical layouts of Little Falls and Canajoharie, in particular:  Both are river towns, built on steep banks, with winding streets worked into the rough topography of the land.  Both have very good surviving stocks of Victorian architecture–  including factories, simple houses, and showcases– arranged around the common spaces that traditionally organized settlements in the Northeast.  And both are, essentially, walkable time capsules.  On a recent drive home from from the Adirondacks, I took some photos of these towns.

A slide show, here:

The Mohawk Valley has been settled for as long as nearby parts of New England.  Visually, the region’s mountainous terrain casts a haunting daylight shade over certain twists in the river.  The valley is largely forgotten by its former industries, and remains mostly undiscovered by sprawl developers or New York City vacationers.  Notably, an Amtrak line that runs through the valley skips over the entire stretch between Amsterdam and Utica without a stop.

The development patterns of the smaller, most isolated Mohawk Valley towns reflect the old urban elements of the early-industrial, pre-automobile constellation.  In particular, the influence of traditions, building codes, physical restraints, and market forces can be observed through the architecture, street layouts, and walkable accommodations of both topography and transportation routes in both towns.  Historically, the the instrumentalities that linked these places with the wider world were the Mohawk River, Erie Canal, and N.Y. Central Railroad (in that order).  From the maps of Little Falls and Canajoharie, it is apparent that the nodes of development were sited in proximity to these routes, and to meet the challenges posed by the rough topography on either side of the river.  Similar evidence could still be found today in more developed regions, but the persistence of the Mohawk towns in the original matrix of a rural countryside allows much evidence of the early functionality of their patterns to be preserved.  (Note the similar street patterns of the river towns along the lower Hudson, here, as they existed in 1906.)

A Google satellite map of Little Falls is here:

And one of Canajoharie:

One tradition worth noting in both towns is the presence of an open public space near the town center.  In Little Falls, two separate greens characterize the upland neighborhood just north of the river, in the tradition of English town planning.  Interestingly, the geometric convergence of several streets around a wide swath of pavement in Canajoharie is (in its current form) more reminiscent of a Continental plaza.

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US Urban Regions from Hammond’s 1910 Atlas

Hammond printed these three unique, regional maps of New York City, Boston, and Philadelphia in its 1910 New Reference Atlas of the World.  All three are copyrighted before 1910, so they might also have been published in earlier atlases.  Together, the maps offer a nice snapshot of development across three major Eastern regions at the end of the Victorian period, and just before cars really began to influence urban land use patterns.  (Note the railroads.) These are the only three maps from Hammond’s regional series that I’ve been able to find. Would be nice to see others if they’re out there. (Chicago? San Francisco?) Maps of American states and cities-proper, from the same atlas, can be found at the US Digital Map Library.

New York City.

Boston.

Philadelphia.

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Adverse Possession in New York

The NYT has a lighthearted story by Sam Roberts about an abandoned railroad track right-of-way in Brooklyn.  Neighbors have enclosed and taken possession of the strip of land for their own ordinary purposes.  Reading the article led me to do some quick research: It turns out that, in 2008, the New York legislature enacted a statutory revision that seems to complicate what otherwise could have been the neighbors’ textbook common law adverse possession claim.

R.P.A.P. §§ 501(2), et seq., now states:

2.  Acquisition of title. An adverse possessor gains title to the occupied real property upon the expiration of the statute of limitations for an action to recover real property pursuant to subdivision (a) of section two hundred twelve of the civil practice law and rules, provided that the occupancy, as described in sections five hundred twelve and five hundred twenty-two of this article, has been adverse, under claim of right, open and notorious, continuous, exclusive, and actual.

3.  Claim of right.  A claim of right means a reasonable basis for the belief that the property belongs to the adverse possessor or property owner, as the case may be. Notwithstanding any other provision of this article, claim of right shall not be required if the owner or owners of the real property throughout the statutory period cannot be  ascertained in  the records  of the county clerk, or the register of the county, of the county where such real property is situated, and located by reasonable means.

(Emphasis added.)

What strikes me as interesting, and discordant, about this statutory revision is a statement made by its main sponsor, Elizabeth Little, a Republican state senator from the North Country.  In a 2008 memorandum, quoted by Law of the Land, Senator Little wrote:

[If adverse possession claimants] have a reasonable basis to believe that it is their land then that is exactly the good faith dispute over title to real property for which the adverse possession doctrine was established.  Adverse possession should be used to settle good faith disputes over who owns land.

This strikes me as a very inaccurate statement of the principles that underpin the doctrine.  Adverse possession might occasionally come into play to settle such matters, but ordinary boundary and title disputes are readily addressed with other areas of the common law of property.  Adverse possession, in a common analysis, is a teaching that was traditionally aimed at keeping fallow land from being tied up, in perpetuity, by individuals who not only did not make use of the land, but whose relationship with the land had become so tenuous that they’d failed to even object to its use by an uninvited party for an entire seven-year vesting period.  That is to say, adverse possession is a traditional, common law incentive that works to encourage individuals to make use of abandoned property.  It is a doctrine that values the sweat equity of those who would work the land more than it values the paper titles of those who would let it lie fallow.  And it is a device for preventing the perpetual entrenchment of nonproductive, landed wealth.  Put simply by Justice O.W. Holmes:

Sometimes it is said that, if a man neglects to enforce his rights, he cannot complain if, after a while, the law follows his example.

That said, an adverse possessor has always assumed the risk that his bluff would be called before the vesting period had run.  But once such time had expired without an objection by the title-holder of record, the adverse possessor could expect to have a solid legal claim to the property.  The Metropolitan Transit Authority, as its role is described in the NYT story, is exactly the sort of owner against whom adverse possession ought to work.  The MTA, and its predecessors in title, have been absentee holders that have not exercised any incidents of ownership over the land at issue since, apparently, 1924.  In the mean time, the parcel’s immediate neighbors have made productive use of the abandoned property.  During this time, the neighbors’ use has never elicited any objection from the MTA or its predecessors in title.

Under Senator Little’s amendment to New York’s adverse possession statute, it appears that the MTA could maintain a live claim to the land, against the neighbors, in spite of its nearly nine decades of neglecting the property.  Simply stated, this is not right; the common law approach is.

A Google satellite map of the block at issue (East 18th Street between Avenues U and V) is here:

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Spotlight: ‘New York by Gehry’

Eight Spruce Street, NYC.

Frank Gehry has designed a significant new building at Eight Spruce Street, New York City.  The sinuous, 76-story tower, featuring curtained walls, bay windows, and a structural frame of reinforced concrete, is now nearing completion.  Situated just between the Brooklyn Bridge and the Beaux-Arts canyons of Wall Street, the development is slated to be mostly rental flats, with a mixed-use element near street level.

Today, I had a chance to see the project up close.  It is quite stunning.  Its scale illustrates the spatial possibilities that are feasible on just a small canvas of urban land.  In an interview last October with the WSJ, Gehry explained how he wanted the building’s design to complement the architecture of the surrounding cityscape.  He has largely succeeded.  One disappointment: in contrast to the silvery, free-flowing form of the tower that comprises most of the structure, the street level floors that reach to the traditional build-to lines are composed of horribly mundane walls made of beige brick.

Here are some snapshots that I took today with a BlackBerry.  The building is essentially done, but work is ongoing.  Next time, I’ll try to get inside.

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Old Urbanism: Distilling Elements

Oxford High Street, 1890s photochrome.

One of the most interesting land use riddles is the question of how traditional towns and cities so often achieved such good results in terms of their layouts, massing, and architecture, given the much smaller toolbox of legal devices that existed prior to the early 20th century.  Did people simply have better eyes in the past?  Were they more inclined to cooperate with their neighbors?  It’s hard to believe that human nature has really changed that much.

Here are some things I’ve been able to come up with.  I’m sure there are others:

(1) Tradition.  Some writers have suggested that the advent of more thorough land use laws actually tied the hands of builders who had once worked in their own rich tradition of aesthetic solutions.  As early as 1909, Sir Raymond Unwin observed that English building bye-laws were twisting the architecture of their communities in unintended ways.  Intuitively, this observation makes a good deal of sense, but it doesn’t answer the entire question.  That is to say, if we accept that certain aesthetic traditions of folk architecture suffered a fatal blow when they ran up against the advent of technical legal requirements, we still don’t know what motivated their evolution in the first place; or what has prevented them from adapting, over the subsequent decades, to the fairly standard legal and transportation paradigm shifts that are now nearly a century old.  In other words, we still have the basic question: why do people build so much crap these days?  This question may be begging another, more fundamental one about how much crap really was built in the past.  That is because low-quality buildings are more likely to have fallen apart or been torn down since they ceased to be new, making the new ones much easier to find.  And even at that, a trip through certain parts of Jersey City would dispel any romantic notions about US urbanism during the Victorian period.  Still, there is something uniquely awful about certain elements of the post-World War II American landscape.

A fire insurance map of Brooklyn from 1868 shows building footprints and owners' uses. Source: NYPL.

I think solving the riddle about what’s gone missing requires figuring out what fostered the greater communication between parcels in towns of the past.  This is a separate question from what caused the decline in quality of the architecture of individual structures, and it goes much more to the essence of what effective land-use planning ought to address.  That is, a dozen boxes could be arranged along a table in a logical way, or they could be scattered around haphazardly.  When assessing whether you have order or chaos, the colors and shapes of the individual boxes are less important than their qualities and placement with regard to each other.  And while there is a basic order to the technical arrangement of Euclidean suburbs, even a cursory comparison of a cascade of strip malls and a 19th century town center would reveal that Euclidean zoning doesn’t approach the intricacy and specialization that can be found in traditional towns and cities.  So, aside from tradition, what factors drove the organization of urbanism– when it worked– before land use laws?

Leicester Square, London. Preserved by Tulk v. Moxhay.

(2) Private law devices.  Between private parties covenants were available at common law.  Covenants could be useful for ensuring a certain consistency across  development after a parcel was subdivided, but they were somewhat limited in their permanent application because, in order for covenants to bind subsequent title holders, the law required something called horizontal privity between their original parties.  Essentially, this meant that the affected parcels had to have originated from a single property, or at least from owners who shared some legal interests when they made their agreement.  Because of this, neighboring owners couldn’t simply covenant to have their properties bound by a set of rules in perpetuity.  Eventually, more flexible equitable servitudes were recognized by chancery courts in America (early 19th century) and England (following the 1848 case of Tulk v. Moxhay), but I have no idea whether these played a significant role in town planning.

(3) Building codes, bye-laws, etc.  In Town Planning in Practice (1909), Unwin described the UK’s building bye-laws, which were forerunners to modern building codes and schedules of zoning regulations.  Their scope included a lot of what’s regulated today– but not uses:

Under the modern urban bye-laws adopted in most English towns the number of houses to the acre is … limited by the regulations which fix, first, the minimum width of streets; secondly, the minimum space allowed to be left at the back of buildings. [319]

And later:

Building regulations cover such a multitude of matters, and the combination of circumstances under which difficulties may arise are so numerous, that it is quite impossible to frame absolute regulations on all these points without a considerable amount of needless harassment and restriction of really good buildings. [388]

So, much of the regulation that now falls under the zoning umbrella was established well before the advent of land use zoning, in the forms of building codes, fire codes, and health and safety regulations.   The history of how these ordinances came about, and became increasingly elaborate, would likely shed more light on some of the dimension standards that guided the layout and massing form of traditional towns.

Transportation.

(4) Physical constraints.  Before the onset of industry, building materials and engineering capabilities simply did not permit the height or sprawl that are now possible.  Also, the distances between buildings and the canals, highways, and railroads had to be walkable, or at least sufficiently short to travel in reasonable times with the help of animals.

(5) The market.  The realities of physical constraints put a premium on maximizing land use efficiency on parcels close to transportation arteries; with the hard physical work of transportation as its alternative, crowding was better than distance.  The tension between the desire to maximize the use of space and the physical and economic constraints of pre-industrial building techniques presumably resulted in the relative consistency of the traditional urban scale.

From all of this, we can start to see the landscape that influenced traditional urban development in the common law world.  Before land use planning, a town developed in the matrix of a delicate balance of tradition, private covenants, ad hoc bye-laws, physical constraints, and market forces.  Presumably, community social pressures also played a role.  I suspect that this balance more accurately reflected the interests of communities and their individuals than what we have today, and that this balance is what began to fail when confronted in the mid-19th century by the super-capital of large industry.  In the wake of that moment, the traditional cultural-legal-market constellation was simply lost.

The story of what’s happened since that time is the familiar one.