The Power of Eminent Domain in the Aftermath of Hurricane Katrina: Should Common Interest Communities Be Compensated for the Loss ofAssessments?

II. The Relevance of Mariner’s Cove’s Claim to CICs

A. The Question Raised by the Mariner’s Cove Litigation

Like most CICs,¹⁴ the Mariner’s Cove association derives its rights and obligations from a “Declaration of Servitudes, Conditions and Restrictions”¹⁵ recorded prior to the conveyance of the individual lots.¹⁶ Mariner’s Cove’s declarations entitle the Association to levy fees from subdivision units, and to foreclose on subdivision property should the unit homeowners default on their obligation to pay monthly fees.¹⁷ Because the declarations require each individual unit to contribute 1/58 of the total costs of providing services,¹⁸ the condemnation of fourteen contributing units created an assessment shortfall, impairing Mariner’s Cove’s income stream and threatening to jeopardize its obligations to the subdivision homeowners.¹⁹ The Association’s appellate brief stated its damages as follows:

Actual expenses incurred by Mariner Cove Townhomes Assn. to provide these services have increased by $50,000 in 2010, when compared with 2005, notwithstanding the loss of the fourteen units taken by the government. Further, the Mariner Cove Townhomes Assn. has been unable to make the necessary repairs to the streets within the development or other major repairs, and the cash reserves, once as much as $100,000, have been completely depleted and that account stands empty.²⁰

The Association’s claim raised the following issue: Under the Fifth Amendment, are CICs entitled to just compensation when the government extinguishes the association’s right to assess land incident to an exercise of the power of eminent domain?

B. Assessments & Common Interest Communities

CICs are a growing way of organizing residential life in the United States,²¹ and the right to assess residential lots is a critical feature of CICs.²² Mariner’s Cove’s right to assessments is a servitude or covenant: a formal promise that continues to bind successive owners of an estate in land. Servitudes always have a beneficiary with the right to enforce covenants against the owner of a burdened estate.²³ Because servitudes bind successive owners of an estate in land, it is commonly said that servitudes “run with the land.”²⁴

Servitudes emerged through the interstices of jurisdictional competition between the English Courts of Chancery and the King’s Bench.²⁵ American courts later expanded the law of servitudes,²⁶ eroding traditional differences between legal and equitable servitudes.²⁷

The Restatement (Third) of Property has sought to limit servitudes to analytically precise categories.²⁸ The Restatement recognizes only three types of servitudes: affirmative covenants, negative covenants, and restrictive covenants. They are defined as follows:

Affirmative Covenants call for the payment of money, the supply of goods or services, or the performance of some other act, either on or off land owned or occupied by a covenantor. Negative Covenants call for the covenantor to refrain from doing some act. If the required performance limits the uses that can be made by the owner or occupier of land, the covenant is usually called a ‘restrictive covenant.’²⁹

Mariner’s Cove was claiming the loss of a special kind of affirmative covenant; the assessment covenant.³⁰ The assessment covenant differs from other covenants in that it gives associations, like Mariner’s Cove, a right to levy assessments and place a lien on subdivision units as security for the payment of assessments.³¹

A lien is a conditional right to an asset that springs upon the nonpayment of a debt.³² A prominent example of a lien is the mortgage.³³ Like mortgagee banks, associations enforcing liens are treated as secured “priority”³⁴ creditors in bankruptcy and foreclosure.³⁵ Under the terms of the Mariner’s Cove declarations, the Association’s lien was a recorded perfected lien subordinated to a first mortgage.³⁶ Just as the mortgage makes residential finance possible, the association’s power to assess units and to enforce payment by way of a lien is the sine qua non of CICs³⁷ in that they allow associations to solve the collective action problem in the provision of public goods.

Assessments have become a particularly important feature of CICs because developers are increasingly required by local land-use authorities to provide public services as a condition of development approval.³⁸ CIC subdivisions are typically approved as Planned Unit Developments (“PUDs”), which require the submission and approval of sites specified by local zoning authorities.³⁹ PUD planning flexibility creates an informal bargaining process between private developers and municipal authorities.⁴⁰ During the approval process, municipal authorities have broad leverage to extract concessions and impose conditions on developers, prompting the Supreme Court to intervene through the unconstitutional conditions doctrine.⁴¹ The requirement that a landowner pay development fees, transfer land to the public, or contribute to a public project in exchange for development approval, is subject to constitutionally grounded congruence and proportionality tests.⁴²

Developers and localities, however, have found a convenient way around the doctrine by bargaining away the right of future residents to receive public services. The requirement that associations provide basic public services in perpetuity is now a widespread practice.⁴³ In exchange for municipal approval, developers record binding declarations and bylaws and then transfer the lot to a non-profit corporation charged with raising funds from residents to provide traditional public services.⁴⁴

Residents are often happy to pay to provide their own public services, sometimes over and above those required by the locality.⁴⁵ This suggests that CICs may function as complements of, and not substitutes for, local government.⁴⁶ CIC residents are also not oblivious to the fact that they are saddled with assessments and property taxes. However, once residents are saddled with the obligation to provide public services, it does seem “unfair” to hamstring their means of payment through a condemnation. Whether they are owed just compensation, however, is another question.

C. Eminent Domain and the Law of Servitudes

Over forty years ago, Professor William B. Stoebuck warned that “the body of law that has grown to govern takings of restrictive covenants is, to put in the vernacular, a ‘can of worms.’ ”⁴⁷ The law of servitudes takings remains mystifying, in part because for the past fifty years commentators and courts have discussed the compensability of servitudes in binary terms. The “majority view” grants compensation for servitudes, while the “minority view” denies compensation.⁴⁸

This classification is not very helpful because not all servitudes are created equal. Federal courts have both granted and denied compensation for the taking of restrictive covenants.⁴⁹ Apart from the Fifth Circuit, the Ninth Circuit is the only circuit to consider and grant compensation for assessment covenants, and it has only done so in cases involving federal reclamation project district associations.⁵⁰ State appellate courts take a variety of approaches, some compensating only for the loss of affirmative assessment covenants, and others compensating for the loss of restrictive and affirmative covenants.⁵¹

A majority of jurisdictions appear to hold that all servitudes are compensable, but the leading state cases typically involve only restrictive covenants.⁵² Only seven states hold the view that restrictive servitudes are not compensable.⁵³ Perhaps the most relevant Supreme Court case is Mullen Benevolent Corp. v. United States,⁵⁴ decided in 1933. In Mullen, municipal payment bondholders sued the federal government when it condemned several lots subject to an assessment levied by a municipal improvement fund.⁵⁵ The Supreme Court held that the bondholders were not entitled to compensation over and beyond debts accrued to the bondholders at the time of the taking.⁵⁶ However, the extent to which the Mullen holding should govern compensation the taking of assessment covenants is unclear.

III. Mariner’s Cove Goes to Court

Mariner’s Cove lost its right to assess the land as soon as the government condemned the land.⁵⁷ As the district court observed, the United States takes “perfect title” to land condemned in fee simple.⁵⁸ Under the “perfect title” theory, the government acquires land free of encumbrances, including liens, easements, and covenants.⁵⁹ Because the “perfect title” theory extinguished the Association’s rights, Mariner’s Cove argued that the United States owed it compensation under the Takings Clause.⁶⁰

Mariner’s Cove relied on Adaman Mutual Water Co. v. United States⁶¹ to stake its claim.⁶² In Adaman, the Court of Appeals for the Ninth Circuit held that covenants giving the Adaman Mutual Water Company (“Adaman Mutual”) a right to levy assessments on the farmland in exchange for water services was a compensable interest under the Fifth Amendment Takings Clause.⁶³

The district court distinguished Adaman from Mariner’s Cove on the basis that Adaman involved water. The court stated:

First, in Adaman, the assessments were directly connected with the physical substance of the land — the water underneath the land which it served. In contrast, [Mariner’s Cove’s] assessments were not in exchange for extracting, using or distributing a physical element of Mariners Cove’s; instead, they were in exchange for residential building and landscape upkeep.⁶⁴

The district court further distinguished Adaman by noting that the purpose in Adaman was to make productive use of the land, whereas Mariner’s Cove “was a residential subdivision, not tied to cultivating or making productive use of the land.”⁶⁵ The court reasoned that unlike the assessments at issue in Adaman, “Mariner’s Cove assessments were not collected in exchange for the provision of a natural element physically extracted from the land.”⁶⁶ In the final part of the opinion, the district court discussed background state property law, treated it as non-binding, and noted that Louisiana had not decided the issue at hand.⁶⁷

The Court of Appeals for the Fifth Circuit affirmed the district court, albeit on different grounds.⁶⁸ However, the Court of Appeals found that the district court erred when it deemed the application of state property law discretionary. It emphasized that the Takings Clause did not exclude intangible property rights from compensation.⁶⁹ Finally, it found that under Louisiana law, Mariner’s Cove had private property.⁷⁰

The Fifth Circuit then held that the consequential loss embodied in Omnia Commercial Company vs. United States⁷¹ barred recovery.⁷² The court recognized that the Omnia ruling applied only to “business losses,” such as contract rights.⁷³ Nevertheless, the court applied the rule because “the right to collect assessments is a real covenant that functions like a contract and . . . is not ‘directly connected’ with the physical substance of the [land].”⁷⁴ The court also reasoned that significant public policy concerns counseled against finding a taking.⁷⁵

Summarizing its position, the court refused to “give special status to what essentially is a contract, merely because it appears in a title document.”⁷⁶ The court also endorsed the district court’s “physical substance” distinction,⁷⁷ noting that Adaman Mutual had reserved rights in the underlying water, whereas in this case no physical substance was actually involved.⁷⁸

The Court was understandably confused by the Louisiana law governing associations. Louisiana calls the assessment covenant a “business restriction charge,” and the assessment lien a “privilege.”⁷⁹ While the Court of Appeals correctly analogized Louisiana’s business restrictions to covenants running with land, the court failed to notice that Louisiana, like many other Anglo-American jurisdictions, also includes the right to place a lien on real estate as security for the assessment charge. This security was wiped out by the government’s condemnation of the Mariner’s Cove subdivision units.

IV. The Takings Clause

The third part of this article will provide some background on the Takings Clause, emphasizing concepts relevant to the Mariner’s Cove litigation. The first section introduces the clause and the consequential loss doctrine. The second and third sections aim to show how the Supreme Court has interpreted the terms of the Takings Clause.

A. The Text and Texture of the Takings Clause

The Takings Clause is stated as a perfunctory prohibition: “Nor shall private property be taken for public use, without just compensation.”⁸⁰ The Takings Clause reads naturally as stating a two-part test: A takings claim must assert a cognizable property interest, and that interest must have been “taken.”⁸¹ But this remarkable economy of language is layered in doctrinal complexity.

The consequential loss rule mentioned in Mariner’s Cove appears nowhere in the text, but is often justified by reference to the text: labeling a loss “consequential” is a way of saying that no property was taken, either because the loss was “not property itself”⁸² for Takings Clause purposes, or because no property was taken.⁸³

The “just compensation” provision of the Fifth Amendment naturally relates to the amount of damages available under the clause: when property is taken, the “full and perfect equivalent”⁸⁴ value of the property taken should be restored to the owner.⁸⁵ The full and perfect equivalent value is usually measured by “fair market value,” usually measured by a “sales-comparison” approach.⁸⁶ But the Supreme Court has repeatedly stated that the “just compensation” provision expresses equitable principles, and does not prescribe any strict valuation or appraisal method.⁸⁷

B. What is “Private Property” for Takings Clause Purposes?

Property law is largely a creation of state common law.⁸⁸ In rem rights, and especially rights to real property, spring from customary and local law.⁸⁹ Land is strongly territorial in nature and tied to 17th century conceptions of sovereignty.⁹⁰ At least in theory, the states are constitutionally forbidden from exercising the powers of eminent domain or taxation over property located in other jurisdictions.⁹¹

The power of eminent domain is an established feature of the United States’ inherent powers.⁹² The Takings Clause has been incorporated against the states.⁹³ Under the Supreme Court’s decision in Kelo v. City of New London,⁹⁴ localities have wide discretion to condemn land.⁹⁵ But the scope of “private property” under the Takings Clause remains unclear.⁹⁶ The Supreme Court has hinted in a positivist direction, holding that property rights are defined by “reference to existing rules or understandings stemming from an independent source such as state law.”⁹⁷ In another recent takings case, the Supreme Court stated that “[g]enerally speaking, state law defines property interests.”⁹⁸

In practice, the Supreme Court shows considerable deference to state property law, but it reserves the right to monitor deviations from the common law.⁹⁹ The logic of this principle is simple. A self-interested state cannot evade the Takings Clause by ceasing to recognize an interest as property.¹⁰⁰ However, the process is usually cooperative: federal courts usually rely on state common law to assess the “private property” prong of the Takings Clause.¹⁰¹

The Supreme Court has also invoked the “bundle of rights” theory of property in its takings cases.¹⁰² Relying on the “bundle of rights” metaphor, the Supreme Court has recognized that “intangible” interests are cognizable under the Takings Clause,¹⁰³ holding that a variety of interests, including liens,¹⁰⁴ easements,¹⁰⁵ franchises,¹⁰⁶ trade secrets,¹⁰⁷ and even income producing property invested in specified bank accounts¹⁰⁸ are “private property” for takings purposes.

In regulatory takings cases, the Supreme Court has emphasized that some particular rights are more essential than others by engaging in what commentators call “conceptual severance.”¹⁰⁹ These cases distinguish laws that regulate or prohibit personal rights, such as rights to transfer and assign, and regulations that are confiscatory and threaten to extinguish private ownership, such as regulations that deny the right to exclude or effectively mandate escheat.¹¹⁰

Based on these developments (deference to state law combined with the bundle/ ownership theory of private property), Professor Thomas W. Merrill has proposed synthesizing current doctrine with a “patterning definition” of private property under the Takings Clause.¹¹¹ According to Professor Merrill, the test should be “whether nonconstitutional sources of law confer an irrevocable right on the claimant to exclude others from specific assets.”¹¹² Although the recent Supreme Court decision in Koontz v. Saint John’s River Management District¹¹³ arguably rejects that approach by holding that even monetary “development exactions” are subject to the doctrine of unconstitutional conditions, the patterning definition is broad enough to encompass rights such as the loss of a lien on real or personal property, which includes the rights to exclude creditors and ultimately residents from discrete assets like the homes condemned in Mariner’s Cove.¹¹⁴

In practice, this distinction is unlikely to make much of a difference in eminent domain law since most condemnation cases involve straightforward property interests such as real estate and tangible property. However, in cases where state law does not clearly assign “property” status to a right, rights to exclude can serve as a very indicative proxy.

C. Taken or Damaged?

To anyone unschooled in the “dark corner of the law,”¹¹⁵ the Fifth Circuit’s holding that Mariner’s Cove property was not compensable might seem a non sequitur. As William Stoebuck pointed out, it would seem to follow that “[i]f the covenant was property and if it was violated and extinguished, as the opinion seems to admit, then some compensation was due.”¹¹⁶

But the word taken has not always been interpreted to embrace the incidental extinction of property interests. Early on, the Supreme Court of Massachusetts declared that “takings” under the Massachusetts constitution have “ever been confined, in judicial application, to the case of property actually taken and appropriated by the government.”¹¹⁷ The rule essentially defines the word “taken” to mean “used by the government.”

The Massachusetts rule was often coupled with the presumption that the State only intends to “take” the physical land by eminent domain. Any other losses were held to be consequential or dislocation losses.¹¹⁸ Justice Story and Chancellor Kent disagreed with the Massachusetts rule.¹¹⁹ The Supreme Court would come to emphatically reject value as used by the government as a measure of condemnation damages.¹²⁰

During the 19th century, a flurry of states added “taken or damaged” clauses to their constitutions to expand the scope of the takings doctrine.¹²¹ And in a series of cases involving the loss of a franchises and the loss of water rights, the Supreme Court held that state and federal destruction of property rights are takings of property, regardless of any government intent to appropriate.¹²²

In the 20th century, the Supreme Court also established the right of claimants to proceed in “inverse condemnation,”¹²³ to show they had suffered a “de facto” taking of property in violation of the Fifth Amendment.¹²⁴ In Armstrong v. United States,¹²⁵ a federal contractor defaulted on his contractual obligation to the federal government, and the government took title to the contractor’s ship hulls.¹²⁶ A subcontractor, Armstrong, had a mechanic’s line on the hulls.¹²⁷ The court found that when the government took perfect title to the hulls, Armstrong’s lien was effectively extinguished.¹²⁸ The court rejected the government’s consequential loss defense, and held that the destruction of a lien was a taking “whether with intent and purpose of extinguishing liens or not.”¹²⁹

V. Business Losses

A. The Consequential Loss Doctrine

The consequential loss rule has obscure origins in the early distinction between direct trespass and case, and sovereign immunity pleading.¹³⁰ With the demise of the forms in action, courts discarded the traditional rule as early as 1871.¹³¹ The remaining muddle is exemplified by the Supreme Court’s confusing line of Takings Clause flooding cases.¹³²

The term “consequential losses” describes a broad array of noncompensable damages in eminent domain. Courts use the term to describe “business” or “incidental” losses, such as dislocation losses an owner suffers incident to a taking that may include the loss of goodwill, the costs of moving personal property and removing fixtures, and the frustration of contracts.¹³³ Courts also use the term to refer to the incidental damages to an adjoining parcel,¹³⁴ and to losses that sound in tort or are simply too remote to amount to a taking.¹³⁵

The “incidental loss” doctrine was originally premised on the Massachusetts rule presumption that the condemnor only intends to take the physical land, and not the business that goes along with it.¹³⁶ As mentioned above, the Supreme Court effectively rejected this purposivist approach in Armstrong and other cases by holding that the incidental destruction of intangible rights is a taking.¹³⁷ The presumption’s inherent unfairness to landowners was an additional factor that eventually contributed to its undoing.¹³⁸

To be sure, the Supreme Court has continued to deny going-concern and goodwill value in condemnation cases by presuming that business interests are freely transferable despite the taking of the land.¹³⁹ But the presumption is rebuttable: When a landowner shows that an interest is not in fact transferable, business interests can be considered as part of the property “taken” by the condemnation.¹⁴⁰ Landowners can also ask for severance damages when the condemnation inflicts “special losses” on the remainder of the parcel.¹⁴¹

Under this rubric, the rule would not seem to apply to Mariner’s Cove. Mariner’s Cove has no remaining power to transfer its rights to assess and foreclose on the condemned lots. Arguably, Mariner’s Cove could increase its assessments on other lots to make up for the shortfall, but not without losing its real estate collateral and losing economies of scale in funding its public services.

B. Contract Takings

Modern courts often rely on the Supreme Court’s ruling in Omnia Commercial Co. v. United States¹⁴² as authority to apply the consequential loss doctrine to contractual interests.¹⁴³ In Omnia, it was held that the frustration of Omnia’s contracts with Allegheny Steel, following the U.S. Government’s seizure of Allegheny’s steel mills for war purposes, did not amount to a valid compensable takings claim against the United States.¹⁴⁴ The Supreme Court characterized the taking as a taking of contractual expectations.¹⁴⁵ The Court reasoned that Alleghany had a frustration of purpose defense under controlling contract law, and that contractual rights impaired indirectly are not compensable.¹⁴⁶ In subsequent cases, the Supreme Court has limited Omnia to contractual expectation losses.¹⁴⁷ The Supreme Court has also distinguished these cases from others involving the taking of liens, franchises, and water rights, holding that these involved actual property rights, not contractual expectations.¹⁴⁸ This approach would seem consistent with the “patterning” definition of property outlined above.¹⁴⁹

VI. Analysis of the Compensability of Servitudes

The next part of this article will analyze the compensability of assessment covenants in more detail. It will analyze arguments made by the Fifth Circuit’s recent application of the consequential loss rule, as well as other more traditional arguments against takings liability. As summarized by one court:

[T]he essence of the minority view is (1) that restrictive covenants are not property entitled to eminent domain protection but are merely contractual rights, (2) that it is against public policy to restrict the government’s eminent domain power through private agreements, and (3) that to require compensation would create an undue financial burden for the public.¹⁵⁰

While the Fifth Circuit in the Mariner Cove litigation casually embraced these “minority view” arguments, in the main, the court reasoned that Omnia applied because assessment covenants “function like contracts.”¹⁵¹ It did so despite holding that the covenant was a property right under Louisiana law.¹⁵² We shall examine this claim first.

A. Do Servitudes Function Like Contracts?

Virtually all modern courts agree that servitudes running with the land are property rights.¹⁵³ Despite this consensus, in Mariner’s Cove, the Court of Appeals for the Fifth Circuit “refused to give special status to what essentially is a contract, merely because it appears in a title document.”¹⁵⁴ Over forty years ago, Judge Mosk criticized this argument in strong terms:

To establish a substantive distinction by merely labeling one a property interest for which compensation must be made and the other a mere contractual right which may be appropriated by a condemner without any compensation is inequitable and rationably indefensible.¹⁵⁵

No other court holds that affirmative covenants should be treated as a contract loss for eminent domain purposes.¹⁵⁶ In the bankruptcy context, the Court of Appeals for the Seventh Circuit holds that assessment covenants function like contract debts for bankruptcy purposes, but that court is contradicted by the Fourth and Ninth Circuits.¹⁵⁷ In the Fourth and Ninth Circuit, a stay serves to freeze and eventually discharge pre-petition assessment debt, but the assessment covenant survives the bankruptcy process, and post-petition debt continues to bind the landowner. In sum, these courts afford assessment covenants the status of a property right.

Affirmative covenants undoubtedly have contractual features.¹⁵⁸ As Professors Thomas Merrill and Henry Smith note, in most cases it is possible to characterize interests as property and contractual.¹⁵⁹ Mortgages, for example, have both a property aspect (the land subject to a lien) and a contractual aspect (the mortgage note). In states with antideficiency statutes, this difference is often crucial.¹⁶⁰ The same is true of the lease, which is noted for being an estate in land with substantial contractual features.

As a general matter, contractual relations are usually governed by default rules that can be modified and optimized by the parties.¹⁶¹ Property interests, by contrast, are usually governed by exclusion strategies,¹⁶² imposing duties on an indefinite and unknown number of parties, and higher information costs on strangers.¹⁶³ Because of their considerable spillover effects on third parties, property interests are more prone to notice, protection, and standardization strategies than contractual interests.¹⁶⁴

Because servitudes “run with the land,” they too have substantial spillover effects on third parties. Assessment covenants in particular give associations the power to exclude creditors in bankruptcy and foreclosure.¹⁶⁵ Assessments continue to bind the landowner even when he is no longer in possession of the land, so long as the landowner does not successfully quit title, which can result in harm to creditors and to any successors in interest.¹⁶⁶ As Merrill and Smith would predict, courts and legislatures have reacted to these “externalities” by experimenting with various standardization mechanisms.¹⁶⁷

State courts protect good faith purchasers from unexpected restrictions on land, including most prominently the “touch and concern” rule.¹⁶⁸ Servitudes also require notice to the purchaser via a recordation system, and are subject to avoidance under the statute of frauds.¹⁶⁹ In order to create a servitude, all interested owners of an estate in land must give their consent.¹⁷⁰ The same is not true of ordinary contracts, or even assignments. CIC assessments can only be modified by a super-majority vote, whereas service contracts can be modified by two or more consenting parties.¹⁷¹

Given these features, the statement that assessment covenants function like contracts is, at best, subject to important qualifications. At worst, it is an arbitrary distinction.

B. Does the Consequential Loss Doctrine Extend to Assessment Covenants?

In Mariner’s Cove, the Fifth Circuit Court of Appeals extended Omnia to assessment covenants, but as we have seen, Omnia applies on its terms only to expectation damages. Even if the right to levy assessments could be categorized as a debt, surely the collateral could not. Two contrasting and practically contemporary Supreme Court cases, display two different approaches to this problem.

In Louisville Joint Stock Land Bank v. Radford,¹⁷² the Court invalidated the Frazier-Lemke Act, which significantly limited the rights of mortgagee banks to foreclose on debtor farms, on the grounds that the statute took the rights incident to the mortgage lien without just compensation.¹⁷³ Although the takings challenge involved Congressional legislation, Justice Brandeis assumed that “if a part of the mortgaged property were taken by eminent domain, a mortgagee would receive payment on a similar basis.”¹⁷⁴ It seems to follow that if mortgages are different from assessment liens only in terms of relative priority, assessment liens should also be compensable.

But, in Mullen Benevolent Corp. v. United States,¹⁷⁵ the Supreme Court applied Omnia to payment bonds. In Mullen, American Falls, an Idaho municipality, created a municipal improvement district and issued payment bonds, which the town financed through prorated assessments levied on the developed land and deposited in a common local improvement fund.¹⁷⁶ If American Falls failed to collect the assessments, the bondholders had a statutory right to enforce the collection of pending assessments and foreclose on landowners that failed to pay.¹⁷⁷

The United States condemned the assessed land for a reclamation project and deposited the accrued assessments into the improvement fund.¹⁷⁸ But the replenished improvement fund was insufficient to satisfy the outstanding principle remaining on the bonds.¹⁷⁹ While Idaho law authorized the improvement district to assess the land in case of funding shortfall, the doctrine of intergovernmental immunity prevented the municipal district from doing so.¹⁸⁰ The bondholders sued the United States, claiming a taking of their right to enforce the levy and foreclose on the land.¹⁸¹ The Supreme Court rejected the claim, finding (1) that Mullen had no lien on the property at the time of the taking, and (2) that Mullen’s right to assessments had not been taken by the government because any right to assessments accrued only after the condemnation of the land.

While Mullen arguably supports the application of Omnia to unsecured bonds, its reasoning does not necessarily extend to Mariner’s Cove. Mullen had a statutory right to collect pending assessments, but Mullen had no perfected right to levy assessments on the lots.¹⁸² The Supreme Court concluded that, at most, the government “frustrated” Mullen’s expectation that the municipal district would replenish the improvement fund.¹⁸³ In other words, Mullen’s assessments were not secured by any specific assets, and because the government had satisfied the pre-condemnation debts, no remaining debt attached to the real estate.

On the other hand, Mullen seems to fit with the Seventh Circuit’s approach to assessment covenants in bankruptcy. Once a condemnation happens, only the outstanding debt has to be satisfied. This rule has the benefit of clarity, but it does not provide “full and equivalent” compensation. The better view is probably analogous to the approach taken by the Fourth and Ninth Circuits in bankruptcy: Just as the assessment covenant is an independent non-dischargeable property right, not limited by the size of the outstanding debt in bankruptcy, so it is not limited to debt in condemnation.¹⁸⁴ Because the right to assess the lots is effectively extinguished, the logic in Armstrong v. United States seems to require compensation.¹⁸⁵ And unlike bondholders, residents of CICs cannot diversify their portfolio of assessments in response to the risk of expropriation, and are consequently much more exposed on the downside than bondholders.¹⁸⁶

C. Other Minority View Policy Arguments

1. THE POLICE POWER
Courts in the minority view often reason that restrictive covenants violate public policy because they encroach on the power of eminent domain.¹⁸⁷ The reasoning fundamentally confuses the power of eminent domain (the power to force a sale) with the ability to pay for the exercise of the power.¹⁸⁸ Taken to an extreme, this reasoning would defeat the Takings Clause: property rights always constrain the ability of Governments to condemn land by forcing them to pay.

Genuine public policy challenges can be raised as to the validity of the covenants on other grounds. When restrictive covenants exclude minorities in violation of the Fourteenth Amendment, the covenants would be voidable in an eminent domain proceeding on public policy grounds under the rule of Shelley vs. Kraemer.¹⁸⁹

Some state courts do hold that restrictive covenants can be abrogated by the police power,¹⁹⁰ but most hold that the police power does not apply to ordinary condemnation proceedings.¹⁹¹ In this view, the police power allows municipalities to enact reasonable health, safety and morals regulations without triggering the Takings Clause.¹⁹² But the police power does not apply to ordinary condemnation cases, and certainly not to ones initiated by the United States federal government, which enjoys no “general police power.”¹⁹³

2. UNDUE BURDENS & ADVERSE SELECTION
Minority view courts also reason that awarding compensation for the loss of servitudes would allow claimants to transform losses in economic value into losses in property.¹⁹⁴ Neighbors could enter into sham restrictive agreements to insure against condemnation.¹⁹⁵ In the words of one court, this would be akin to “plucking causes of action from the air.”¹⁹⁶

But this “insurance” argument seems unrealistic as a practical matter. Landowners are unlikely to bind their land to pay assessments in perpetuity when the assessments serve no genuine land-use interest. Assessments covenants do not spring effortlessly: CICs have to follow costly formalities and recordation requirements, as well as engage in expensive negotiations. And as a matter of federal law, courts can reduce damages if they would not result in “just compensation.”¹⁹⁷

Other courts have worried about the impracticability of having to implead an indefinite number of property owners with small claims whose servitudes might be marginally affected by a condemnation.¹⁹⁸ But in cases involving affirmative covenants there will usually be a single creditor owed a single sum: the CIC.¹⁹⁹ Some courts have also suggested the difficulty in assessing damages counsels against finding liability. Besides putting the proverbial cart before the horse, compensation could easily come in the form of the net present value of the assessments, offset by any reductions in services after the taking. In some cases, it might be difficult to figure what “offset” is due to the taking. But as stated by Justice Harry Lee Anstead of the Florida Supreme Court, procedural inconvenience does not trump the constitutional right to just compensation.²⁰⁰

3. PUBLIC POLICY AND FAIRNESS CONCERNS
As a matter of public policy, eminent domain has long been recognized as a necessary but potentially unfair feature of Government.²⁰¹ Just compensation disciplines public officials by placing the costs of eminent domain “on budget.”²⁰² But compensation can also have a negative effect on the provision of public goods.²⁰³

One need not decide which effect predominates to conclude that compensating CICs is consistent with fairness and public policy. CICs provide a range of private and public goods.²⁰⁴ On the public side, they alleviate the financial burdens of cash-strapped municipalities by shifting the cost of providing public services to homeowners.²⁰⁵ This allows municipalities to increase its property tax base without incurring additional liabilities, allowing municipalities to prioritize school funding or other overriding public benefits.²⁰⁶ On the private side, CICs allow individuals to pool their resources together to achieve efficiencies of scale.²⁰⁷ Some economists have argued that CICs increase home values, although the evidence is unclear.²⁰⁸

The U.S. Government itself has played a critical role in encouraging the growth CICs.²⁰⁹ The expansion of Federal Housing Authority mortgage insurance to the condominium ownership form in the 1960’s is widely cited as a major factor in the growth of CIC forms of association.²¹⁰ CICs continue to thrive in no small part thanks to the availability of cheap subsidized federal financing.²¹¹ Regardless of the actual social benefits of CICs, federal public policy currently favors the creation of CICs through its housing programs.

Localities also have a significant stake in protecting the CIC’s right to assess landowners. Because assessment covenants are the sine qua non of CICs,²¹² a diminished assessment fund can imperil an association’s ability to finance insurance, to maintain common spaces, and to repair infrastructure.²¹³ CIC underfunding can lead to neighborhood depreciation, reducing property tax revenue and increasing the risk of foreclosure.²¹⁴

And the benefits of federal subsidies to developers are offset by local “public service” exactions.²¹⁵ As mentioned, developers are often required to ensure that residents provide public services in perpetuity, without public assistance, while still paying local property taxes.²¹⁶ But the unfairness inherent in requiring that public services be privately provided, while cutting short the means to provide those services, provides at least one reason to believe that fairness and justice require compensation for the taking of assessments.²¹⁷

1. In Re Katrina Canal Breaches Consolidated Lit., 533 F.Supp. 2d 615, 618 (E.D. La. 2008), aff'd, 673 F.3d 381 (5th Cir. 2012), cert. denied sub nom., Lattimore v. United States, 133 S.Ct 2855 (2013) [hereinafter Katrina I ].
2. Id. (consolidating orders dismissing in part, striking in part, and granting leave to amend in part, claims concerning the flooding of “80% of the City of New Orleans caused by breaches in the 17th Street Canal, London Avenue Canal, the Orleans Avenue Canal and [the Mississippi River Gulf Outlet].”).
3. See In Re Katrina Canal Breaches Consolidated Lit., 647 F. Supp. 2d 644, 697 (E.D. La. 2009) (finding that the Corp’s negligent failure to maintain and operate the [Mississippi River Gulf Outlet] was a substantial cause for the breaching of the Reach 2 Levee and the subsequent catastrophic flooding”), aff'd, 673 F.3d 381, (5th Cir. 2012), cert. denied sub nom., Lattimore v. United States, 133 S.Ct 2855 (2013) [hereinafter Katrina II].
4. Katrina I, 533 F. Supp. 2d, at 618-19.
5. See id. at 623 n.9.
6. Id. at 637-38.
7. Id. at 643.
8. See ARMY CORP OF ENGINEERS, PERMANENT CANAL CLOSURES & PUMPS FACT SHEET (updated Sept. 2013), available at .mvn.usace.army.mil/Portals/56/docs/PAO/FactSheets/PermanentPumps_September2013.pdf; ARMY CORP OF ENGINEERS, GREATER NEW ORLEANS HURRICANE AND STORM DAMAGE RISK REDUCTION SYSTEM FACTS AND FIGURES FACT SHEET (June 2013), available at http://www.mvn.usace.army.mil/Portals/56/docs/HSDRRS/Facts-Figures2013.pdf.
9. See ARMY CORP OF ENGINEERS, OUTFALL CANALS CLOSURE STRUCTURES FACT SHEET, (May 2013), available at http://www.mvn.usace.army.mil/Portals/56/docs/PAO/FactSheets/OutfallCanalsClosureStructures.pdf. The Corps expects several permanent pumping stations will be operational by 2017, at a cost of $615 million. See PERMANENT CANAL CLOSURES & PUMPS FACT SHEET, supra note 8. The 17th Canal is expected to be able to pump 12,600 cubic feet of water per second into Lake Pontchartrain. See id.
10. United States v. 0.073 Acres of Land, Civ. A. No. 09-3770, 2011 WL 5419725, at *1 (E.D. La. Nov. 9, 2011) [hereinafter 0.073 Acres I ]; see also Michael DeMocker, 14 Mariner Coves Townhomes to be Demolished Today, THE TIMES PICAYUNE, Nov. 2, 2009 (The Corps “eventually acknowledged that property values were devastated by their work and agreed to pay owners fair-market value for the condos.”).
11. The procedural history of the case is set out in detail in Mariner’s Cove initial appellate brief. See Brief of Appellant at 1-11, United States v. 0.073 Acres of Land, 705 F.3d 540 (5th Cir. 2013) (No. 11-31167), 2012 WL 836997, at *5-11, aff’d sub. nom., United States v. 0.073 Acres of Land, 705 F.3d 540 (5th Cir. 2013).
12. United States v. 0.073 Acres of Land, 705 F.3d 540, 543, 551 (5th Cir. 2013) [hereinafter 0.073 Acres II].
13. Mariner’s Cove Townhomes Ass’n, Inc. v. United States, 134 S.Ct. 821 (2013).
14. “A ‘common-interest community’ is a real-estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by non-use or withdrawal.” RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 6.2 (2000). Less formally, it is a set of institutions that allows for the creation of multiple obligations running amongst neighboring lots, usually enforced by granting powers to a homeowners association or a condominium board. See David L. Callies, Common Interest Communities: An Introduction, 371 URB. LAW. 325, 325 (2005).
15. “Declaration means the recorded document or documents that contain the servitudes that create and govern the common interest community. . . .” RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 6.2 cmt. e. Declarations simplify the covenanting process by conditioning the conveyance of land with the buyer’s acceptance of all servitudes and automatic membership in an association with the power to enforce restrictions and collect assessments as a condition of ownership. See id.
16. The declaration is added as Exhibit 2 in Mariner’s Cove’s original answer. See Answer/Notice of Appearance and Declaration of Interest Pursuant to Rule 71.1 on Property Described in Schedule B of Complaint, 0.073 Acres I 2011 WL 5419725 (No. 09-3770), Exhibit 2.
17. See Brief of Appellant, supra note 11, at *13-16; see also Answer/Notice of Appearance and Declaration of Interest, supra note 16.
18. 0.073 Acres I, 2011 WL 5419725, at *3.
19. See Brief of Appellant, supra note 11, at 16-17.
20. See id.
21. In 1970, there were 10,000 common interest communities in the United States, which governed over 2.1 million residents. See Brief for the Cato Institute et al. as Amici Curiae Supporting the Petition for a Writ of Certiorari, Mariner’s Cove Townhomes Assn. Inc., 134 S.Ct. 821 (No. 12-1453) 2013 WL 3730011, at *4-6. In 2010, there were more than 300,000 association-governed communities in the United States, governing over 60 million residents, or about 20% of the population. Id. at 5.
22. See RESTATEMENT (THIRD) OF PROP.: SERVITUDES §§ 6.2 cmt. a, 6.5 cmt. b (stating that “[t]he distinctive feature of a common-interest community is the obligation that binds the owners of individual lots or units to contribute to the support of common property or facilities." and “[t]he assessment power is critical to the financial viability of most common-interest communities.”); see also Julia P. Forrester & Jerome M. Organ, Promising to be Prudent: A Private Law Approach to Mortgage Loan Regulation in Common-Interest Communities, 19 GEO. MASON L. REV. 739, 741-46 (2012) (discussing the relevance of assessments to CIC communities).
23. RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 2.5.
24. See Amco Trust, Inc. v. Naylor, 317 S.W.2d 47, 50 (Tex. 1958).
25. See Spencer’s Case, (1952) 77 Eng. Rep. 72 (K.B.) (enforcing the running of covenants in a leasehold so long as they touched and concerned the land); see also Tulk v. Moxhay, (1848) 41 Eng. Rep. 1143 (Ch.) (holding that when a buyer takes restricted land with notice of the restriction, the promise runs to the buyer). See A. Dan Tarlock, Touch and Concern is Dead, Long Live the Doctrine, 77 NEB. L. REV. 804, 813 (1998) (“English land law viewed real covenants that run with great suspicion, but the law virtually ceased to develop because real covenants became less important after Tulk v. Moxhay.”).
26. See Uriel Reichman, Toward A Unified Concept of Servitudes, 55 S. CAL. L. REV. 1177, 1190-1218 (1982).
27. Traditionally, equitable restrictions (1) did not require the transfer of an interest in land between the covenanting parties (such as a lease or a deed subdividing a property between two parties), (2) did not require privity of estate between the covenanting parties and their successors for the benefit or the burden to run (servitudes attached to the land, so even if the successors did not acquire the same estate, the burden and the benefit would still run), and (3) required that the burdened party take the property with notice of the restriction. See id. However, notice in most jurisdictions was interpreted very liberally. See Sanborn v. Mclean, 206 N.W. 496 (Mich. 1925). Because equitable restrictions are more flexible and depend on the intention of the parties, some early commentators argued that they belonged in the field of contract remedies rather than real property law. See Harlan F. Stone, The Equitable Rights and Liabilities of Strangers to a Contract, 18 COLUM. L. REV. 291, 294-96 (1918). Courts did not enforce affirmative covenants in equity, so assessment covenants are creatures of law. See Tarlock, supra note 25, at 813 (“Tulk created a new class of servitudes which run with the land, equitable servitudes, although real covenants remained the only basis for the imposition of fiscal obligations on landowners. Tulk v. Moxhay applies only to negative use restrictions.”).
28. See RESTATEMENT THIRD OF PROP.: SERVITUDES § 1.3.
29. Id. at cmt. e.
30. See Forrester & Organ, supra note 22, at 741-46 (2012) (briefly discussing the history of the assessment covenant).
31. See Answer/Notice of Appearance and Declaration of Interest, supra note 16, at 11-13 (describing assessment rights and stating that the lien is perfect at filing). Perfection is usually determined by the time of recording or filing a lien. See THOMAS W. MERRILL & HENRY E. SMITH, THE OXFORD INTRODUCTION TO U.S. LAW: PROPERTY 176-81 (2010) [hereinafter OXFORD INTRODUCTION].
32. Thomas W. Merrill & Henry E. Smith, The Property/Contract Interface, 101 COLUM. L. REV. 773, 833-34 (2001) [hereinafter Property/Contract Interface].
33. Most states today adhere to the lien theory of the mortgage. See, RESTATEMENT (THIRD) OF PROP.: MORTGAGES § 1.1. (1997); OXFORD INTRODUCTION, supra note 31, at 176-81 (discussing the history of the mortgage).
34. See OXFORD INTRODUCTION, supra note 31, at 176 (“priority means that secured creditors are to be paid before general creditors, who are to be paid before equity holders.”).
35. See In re Young, No. 11-09267-8-SWH, 2012 WL 5430987, at *2 (Bankr. E.D.N.C. Nov. 7, 2012) (“The lien does, in fact, secure the debtor’s debt to BCHA and is to be construed much like a mortgage.”).
36. Answer/Notice of Appearance and Declaration of Interest, supra note 16, at 13. Subordination is a common feature of assessment liens. See, e.g., In Re Plumber, 484 B.R. 882, 884-88 (Bankr. M.D. Fla. 2013) (holding that first mortgage had priority over association lien, but mortgagee credit union was still liable for assessments). Section 3-116 of the Uniform Common Interest Ownership Act provides that assessment liens are “super-liens” with priority over first priority mortgages for a period of six months. See Uniform Common Interest Ownership Act § 3-116 (2008); 7912 Limbwood Court Trust v. Wells Fargo Bank, 979 F. Supp. 2d 1142, 1149 (D. Nev. 2013) (holding that a “foreclosure sale on the HOA super priority lien extinguishes all junior interests, including the first deed of trust.”); James L. Winokur, Meanor Lienor Community Associations: The “Super Priority” Lien and Related Reforms Under the Uniform Common Interest Ownership Act, 27 WAKE FOREST L. REV. 353 (1992).
37. See Forrester & Organ, supra note 22.
38. See Steven Siegel, The Public Role in Establishing Private Residential Communities: Towards a New Formulation of Local Government Land Use Policies That Eliminates the Legal Requirements to Privatize New Communities in the United States, 38 URB. LAW. 859, 887-99 (2006).
39. See id. at 879.
40. See id. at 879 & n. 57.
41. See, e.g., Koontz v. St. John’s River Mgmt. Dist., 133 S. Ct. 2586, 2599-2600 (2013). For a critical introduction to the doctrine see Dan A. Farber, Another View of the Quagmire: Unconstitutional Conditions and Contract Theory, 33 FLA. ST. U. L. REV. 913, 926-30 (2006).
42. See Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987); Dolan v. City of Tigard, 512 U.S. 374, 389 (1994).
43. See Siegel, supra note 38, at 879.
44. See id. at 887-99.
45. See Robert H. Nelson, Privatizing the Neighborhood: A Proposal to Replace Zoning with Private Collective Property Rights to Existing Neighborhoods, 7 GEO. MASON L. REV. 827, 865 (1999) (arguing that CIC residents benefit from these arrangements).
46. William A. Fischel, Revolution or Evolution? 27 REGULATION 48, 48 (2004) (suggesting neighborhood associations function as complements to traditional municipal corporations).
47. WILLIAM B. STOEBUCK, NONTRESPASSORY TAKINGS IN EMINENT DOMAIN 128 (1977). By the term restrictive covenants, Stoebuck also meant affirmative covenants, as is clear from his discussion of Adaman. Id. at 129.
48. See Palm Beach Cnty. v. Cove Club Investors, 734 So.2d 379, 385 (1999) (explaining the majority and minority views).
49. Compare Daniels v. Area Plan Comm’n of Allen Cnty., 125 F.Supp.2d 338, 348 (N.D. Ind. 2000) (‘‘a restrictive covenant in a plat is a covenant running with the land. . . . [and] a state that takes a restrictive covenant for a private purpose violates both the Federal and Indiana Constitutions.’’) (citing Pulos v. James, 302 N.E.2d 768, 771 (Ind. 1973)), and United States v. Certain Land in City of Augusta, 220 F. Supp. 696, 700 (S.D.D. Me. 1963) (taking of restrictive covenant requires compensation), and United States v. 11.06 Acres of Land in City of St. Louis, 89 F. Supp. 852, 861 (E.D. Mo. 1950), with Moses v. Hazen, 69 F.2d 842, 844 (D.C. Cir. 1934) (restrictive covenants are not to be construed against the government), and United States v. Certain Lands in Town of Jamestown, 112 F. 622, 627-30 (C.C.D.R.I. 1899).
50. See, e.g., California v. 25.09 Acres of Land, 329 F. Supp. 230 (9th Cir. 1971) (holding that California’s condemnation of land for highway purposes impairing United States assessment rights enforceable by a lien was a taking requiring compensation); United States v. 129.4 Acres of Land, 572 F.2d 1385, 1386 (9th Cir. 1978) (holding that a reclamation project’s assessment rights were compensable property under the Takings Clause).
51. In particular, Maryland and Texas grant compensation for affirmative covenants. See, e.g., Mercantile Safe Deposit and Trust Co. v. Mayor and City Council of Baltimore, 521 A.2d. 734, 742 (Md. 1987) (restoration covenants touch and concern and are compensable); Harris Cnty. Flood Control Dist. v. Glenbrook, 933 S.W.2d 570, 577 (Tex. Ct. App. 1996) (assessment covenants are compensable). Florida denies compensation for restrictive covenants, but awards compensation for affirmative covenants. See Bd. of Pub. Instruction v. Town of Bay Harbor Islands, 81 So. 2d 637, 643 (Fla. 1955) (applying the minority view and holding that restrictive covenants are not compensable when the government built a public school); Palm Beach Cnty. v. Cove Club Investors, 734 So. 2d 379 (Fla. 1999). Ohio construes restrictive covenants narrowly against the claimant, but grants compensation for the extinction of affirmative covenants. See Hughes v. City of Cincinnati, 195 N.E.2d 552, 555-56 (Ohio 1964) (covenant to pay assessments for the building of a road was compensable).
52. See, e.g., Leigh v. Vill. of Los Lunas, 2005-NMCA-025, ¶ 16, 137 N.M. 119, 125, 108 P.3d 525, 531 (N.M. Ct. App. 2004) (restrictive covenant taken by inconsistent use compensable); see also Ashland-Boyd City Cnty. Health Dept. v. Riggs, 252 S.W.2d 922, 925-26 (Ky. Ct. App. 1952) (same, but construing restriction narrowly); Ladd v. City of Boston, 24 N.E. 858, 859 (Mass. 1890) (restrictive covenants are cognizable property).
53. See Hosp. Serv. Dist. No. 2 of St. Landry Parish v. Dean, 345 So. 2d 234, 237 (La. Ct. App. 1977) (restrictive covenants void for restricting the power of eminent domain); Burma Hills Dev. Corp. v. Marr, 229 So. 2d 776, 782 (Ala. 1969); Ark. State Highway Comm’n v. McNeill, 381 S.W.2d 425, 427 (Ark. 1964); Wells v. City of Dunbar, 95 S.E.2d 457, 461 (W.Va. 1956) (restrictive covenants should not be construed to apply to the government); Smith v. Clifton Sanitation Dist., 300 P.2d 548, 550 (Colo. 1956) (equitable restrictions subject to taking for public necessity); Anderson v. Lynch, 3 S.E.2d 85, 89-90 (Ga. 1939).
54. 290 U.S. 90 (1933).
55. Id. at 38-39.
56. Id. at 40.
57. 0.073 Acres I, 2011 WL 5419725, at *1.
58. Id. at * 3.
59. 2 NICHOLS ON EMINENT DOMAIN § 5.01[5][d-e] (3d ed. 2012) (“When the property itself is taken, all previous estates or interests in land are extinguished.”). See Stringer v. United States, 471 F.2d 381 (5th Cir. 1973).
60. 0.073 Acres I, 2011 WL 5419725, at *4.
61. 278 F.2d 842 (9th Cir. 1960).
62. See 0.073 Acres I, 2011 WL 5419725, at *4; see also U.S. CONST. amend. V.
63. Adaman Mutual Water Co., 278 F.2d. at 846.
64. 0.073 Acres I, 2011 WL 5419725, at *5.
65. Id.
66. Id. Perhaps the court viewed Adaman as a case involving “profits a prendre.” The Restatement defines profits as “easements ‘plus,’ ” or the right to enter and remove some natural resource from land in possession of another. See RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 1.2.
67. Id. at *6. The court did not take notice that Louisiana had passed a constitutional reform which substantially abolished limitations on business losses incident to the exercise of eminent domain. See LA. CONST. art I., § 4(B)(4) (“the owner shall be compensated to the full extent of his loss”). See City of Baton Rouge/Parish of East Baton Rouge v. Broussard, 834 So. 2d 665 (La. Ct. App. 2002). See generally Allen Crigler, Note, Expropriation: Compensating the Landowner to the Full Extent of His Loss, 40 LA. L. REV. 817, 824 (1980).
68. 0.073 Acres II, 705 F.3d at 540.
69. Id. at 544-46.
70. Id. at 545-46.
71. 261 U.S. 502 (1923).
72. 0.073 Acres II, 705 F.3d at 547.
73. Id.
74. Id. (citing Adaman Mutual Water Co., 278 F.2d at 845).
75. Id. at 548; see also NICHOLS ON EMINENT DOMAIN, supra note 59, at § 5.07[4] (constraining the “majority” and “minority” views and stating broadly the multiple rationales supporting the views).
76. 0.073 Acres I, 705 F.3d at 549.
77. Id.
78. Id. at 550-51.
79. See LA. CIV. CODE, art. 778 (2010).
80. U.S. CONST. amend. V.
81. The Federal Circuit takes this approach. See, e.g., Heart’s Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326, 1329 (Fed. Cir. 2012) (“When evaluating whether governmental action constitutes a taking, a court employs a two-part test. First as a threshold matter, the court determines whether the claimant has identified a cognizable Fifth Amendment property interest that is asserted to be the subject of the taking. Second, if the court concludes that a cognizable property interest exists, it determines whether that property interest was ‘taken.’ ” (citations omitted)); see also Members of Peanut Quota Holders Ass’n v. United States, 421 F.3d 1323, 1335 (Fed. Cir. 2005) (holding that a statutory program insulating peanut producers from competition had several property-like features, and had been taken by Congressional termination, was not a compensable right because it was revocable at will by Congress).
82. See, e.g., Kenneth N. Klee, Barbarians at the Trough: Riposte in Defense of the Warren Carve-Out Proposal, 82 CORNELL L. REV. 1466, 1476-77 (1997) (a “lien might be regarded as a contract right or interest in property, rather than property itself.”); Jamesson v. Downtown Dev. Auth. of City of Fort Lauderdale, 322 So. 2d 510, 511 (Fla. 1975) (“The right to business damages is a matter of legislative grace, not constitutional imperative. Lost profits and business damages are intangibles that generally do not constitute ‘property’ in the constitutional sense.” (citation omitted)).
83. Klein v. United States, 375 F.2d 825, 829 (1967) (“[C]ompensation under the Fifth Amendment may be recovered only for property taken and not for incidental and consequential losses, the rationale being that the sovereign need only pay for what it actually takes rather than for all that the owner has lost.”).
84. Monongahela Navigation Co. v. United States, 148 U.S. 312, 326 (1893).
85. This textual explanation is consistent with Justice Scalia’s argument that the conveyance of Transferable Development Rights pertains to compensation and not to the antecedent takings question, and cannot obviate a colorable Lucas claim. See Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 746-47 (1997).
86. See THOMAS J. MICELI, THE ECONOMIC THEORY OF EMINENT DOMAIN: PRIVATE PROPERTY, PUBLIC USE 32-35 (2011).
87. See, e.g., E. Enters v. Apfel, 524 U.S. 498, 537 (1998).
88. See Shoshone Mining Co. v. Rutter, 177 U.S. 505 (1900) (establishing a presumption against federal question review in title disputes concerning federal mine patents). The Court in Shoshane noted that Congress “has so constructed the judicial system of the United States that the great bulk of litigation respecting rights of property, although those rights may in their inception go back to some law of the United States, is in fact carried on in the courts of the several states.” Id. at 506.
89. See Fall v. Eastin, 215 U.S. 1 (1909) (holding that Nebraska did not owe full faith and credit to a deed issued by a Washington commissioner following a Washington decree ordering the transfer of real property located in Nebraska); Livingston v. Jefferson, 15 F. Cas. 660, 663-66 (C.C.D. Va. 1811) (holding that an action for trespass to Louisiana land is local and cannot be maintained outside of Louisiana); In Re Barrie’s Estate, 35 N.W.2d 658 (1948) (holding that local law governs the cancellation of a will involving local land, notwithstanding a judgment rendered in an Illinois probate court).
90. See WILLIAM A. FISCHEL THE HOMEVOTER HYPOTHESIS: HOW HOME VALUES INFLUENCE LOCAL GOVERNMENT TAXATION, SCHOOL FINANCE, AND LAND-USE POLICIES (2001); see also RESTATEMENT (SECOND) OF THE LAW: CONFLICT OF LAWS §§ 214-254 (1971).
91. See Mayor v. Balt. Football Club Inc., 624 F. Supp. 278, 286 (D. Md. 1985) (finding that escheat—and analogously, the condemnation—of land may only be exercised exclusively under the laws of the state in which the property is situated); Union Refrigerator Transit Co v. Kentucky, 199 U.S. 194, 204 (1905) (noting that it is “essential to the validity of a tax that the property be within the territorial jurisdiction of the taxing power . . . . [t]his rule receives its most familiar illustration in the cases of land, which, to be taxable, must be within the limits of the state.”).
92. See Kohl v. United States, 91 U.S. 367, 370 (1875); William Baude, Rethinking the Federal Eminent Domain Power, 122 YALE L.J. 1738, 1743 (2013) (“Federal eminent domain has become a widespread and largely unquestioned part of the federal government’s land-acquisition practice. In 1978 and 1979, the General Accounting Office (GAO) reported between seven and eight thousand new federal condemnations each year.”)
93. Chi., B. & Q.R. Co. v. Chi., 166 U.S. 226, 238-41 (1897). But see Dolan v. City of Tigard, 512 U.S. 374, 405-07 (1994) (Stevens, J., dissenting).
94. 545 U.S. 469 (2005).
95. See id. at 503 (O’Connor, J., dissenting) (“[t]he specter of condemnation hangs over all property.”); see also NICHOLS ON EMINENT DOMAIN, supra note 59, at § 5.01[5] (“All property, including all personal and real property, is susceptible to being acquired by eminent domain.”).
96. See Thomas W. Merrill, The Landscape of Constitutional Property, 86 VA. L. REV. 885, 891 (2000) (stating that while “there is an enormous literature about what it means to ‘take’ property, . . . the threshold requirement that a claimant have ‘private property’ has received less attention”) [hereinafter Landscape of Constitutional Property].
97. Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998) (emphasis added).
98. Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702, 707 (2010).
99. See id. at 2601 (“States effect a taking if they recharacterize as public property what was previously private property.”).
100. See Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 163-65 (1980).
101. See Preseault v. United States, 100 F.3d 1525, 1534 (Fed. Cir. 1996) (discussing how the determination of created property interests “requires a close examination of the conveying instruments, read in light of the common law and statutes of Vermont then in effect”) (emphasis added).
102. See United States v. General Motors, 323 U.S. 373, 378 (1945) (restating the bundle quartet of “rights to exclude, use, transfer, or dispose.”). The theory is attributed to Professor Hohfeld. See generally Wesley N. Hohfeld, Fundamental Legal Conceptions as Applied in Judicial Reasoning, 26 YALE L.J. 710 (1917).
103. See Rucklehaus v. Monsanto Co., 467 U.S. 986, 1003 (1984) (“That intangible property rights protected by state law are deserving of the protection of the Taking Clause has long been implicit in the thinking of this Court.”).
104. See, e.g., Koontz, 133 S. Ct. at 2599-2600. See generally Julia P. Forrester, Bankruptcy Takings, 51 FLA. L. REV. 851, 866-870 (explaining the Frazier-Lemke Act, Radford, and the line of secured creditor takings cases following Radford).
105. See Nollan, 483 U.S. at 834 (“requiring uncompensated conveyance of the easement outright would violate the Fourteenth Amendment”).
106. See Monongahela Navigation Co., 148 U.S. at 345 (holding that federal “just compensation requires payment for the franchise to take tolls, as well as for the value of the tangible property”); see also Int’l Paper Co. v. United States, 282 U.S. 399, 407 (1931) (“The petitioner’s right was to the use of the water; and when all the water that it used was withdrawn from the petitioner’s mill and turned elsewhere by government requisition for the production of power it is hard to see what more the Government could do to take the use.”).
107. See Rucklehaus, 467 U.S. at 1003.
108. Cf., Brown v. Legal Found. of Wash., 538 U.S. 216, 235 (2003); Adams v. United States, 391 F.3d 1212 1224-25 (Fed. Cir. 2004) (holding that a depositor has cognizable property in accrued interest stemming from a bank account).
109. Margaret Jane Radin, The Liberal Conception of Property: Cross Currents in the Jurisprudence of Takings, 88 COLUM. L. REV. 1667, 1677 (1988) (discussing conceptual severance). In Andrus v. Allard, 444 U.S. 51, 53-54 (1979), the Supreme Court held that a denial of transfer rights to owners of artifacts made of eagle feathers did not violate the Takings Clause, noting that the owners retained rights to possess and devise feathers. Subsequently, in Hodel v. Irving, 481 U.S. 704, 717 (1987), the Supreme Court held that a statute depriving decedent Indian landowners from the rights to transfer or devise their property so that private land would escheat to the Indian Tribe violated the Takings Clause. In Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979), the Supreme Court held that the Corps’ imposition of a “public access” servitude on a private marina denied the marina owners essential rights of exclusion. See generally Thomas W. Merrill, Property and the Right to Exclude, 77 NEB. L. REV. 730, 730 (1998) (arguing that the right to exclude is the “sine qua non” of property rights).
110. See Koontz, 133 S. Ct. at 2601-02 (citing cases to distinguish the seizure and confiscation of income from ordinary exercises of taxing powers).
111. See Landscape of Constitutional Property, supra note 96, at 969-81 (setting out a theory of “Property as Ownership”).
112. Id. at 969.
113. 133 S. Ct. 2586.
114. It is interesting to note that, in current debates over whether mortgages can be condemned, nobody doubts that mortgages are property subject to the power of eminent domain. For an introduction to this debate, see generally Katharine Roller, The Constitutionality of Using Eminent Domain to Condemn Underwater Mortgages, 112 MICH. L. REV. 139 (2013).
115. See Gideon Kanner, Developments in Eminent Domain: A Candle in the Dark Corner of the Law, 52 URB. LAW. 862, 862 (1975).
116. William B. Stoebuck, Condemnation of Rights the Condemnee Holds in Lands of Another, 56 IOWA L. REV 293, 308 (1970).
117. Callender v. Marsh, 18 Mass. (1 Pick.) 418, 437 (1823). The language is misleading as an expression of common practice, since the Massachusetts Constitution explicitly provided for compensation only for cases of appropriation: “[W]henever the public exigencies require that the property of any individual should be appropriated to public uses, he shall receive a reasonable compensation therefor.” Id.; MASS. CONST. OF 1780, pt. I, art. X (emphasis added).
118. Mitchell v. United States, 267 U.S. 341, 345 (1925) (“If the business was destroyed, the destruction was an unintended incident of the taking of land. There can be no recovery under the Tucker Act (21 Stat. 505), if the intention to take is lacking.”).
119. See, e.g., Charles River Bridge v. Warren Bridge, 36 U.S. 420, 638 (1837) (Story, J., dissenting) (“With all possible respect for the opinion of others, I confess myself to be among those who never could comprehend the law of either of those [Massachusetts] cases [referring to Callender v. Marsh and Thruston v. Hancock]; and I humbly continue to doubt, if, upon principle or authority, they are easily maintainable. . .”). For a critical discussion of the history of the appropriation theory, see Andre S. Gold, Regulatory Takings and Original Intent: The Direct, Physical Takings Thesis “Goes too Far,” 49 AM. U. L. REV. 181, 187 (1999) and STOEBUCK, supra note 47, at 16.
120. See Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949) (noting that “[b]ecause gain to the taker . . . may be wholly unrelated to the deprivation imposed upon the owner, it must also be rejected as a measure of public obligation to requite for that deprivation); United States v. General Motors Corp., 323 U.S. 373, 378 (1945) (“the deprivation of the former owner rather than the accretion of a right or interest to the sovereign constitutes the taking”); Bos. Chamber of Commerce v. City of Bos., 217 U.S. 189, 195 (1910) (holding that the question is, “What has the owner lost?”, rather than the question, “What has the government gained?”).
121. See Robert Brauneis, The First Constitutional Tort: The Remedial Revolution in Nineteenth-Century State Just Compensation Law, 52 VAND. L. REV. 57, 115-20 (1999); Linda J. Oswald, Goodwill and Going-Concern Value: Emerging Factors in the Just Compensation Equation, 32 B.C. L. REV. 283, 307-09 (1991).
122. See Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166, 178 (1871) (holding that limiting the Michigan Takings Clause to direct invasions would pervert the meaning of a Constitutional clause intended to protect private citizens); Monongahela, 148 U.S. at 345 (holding that federal “just compensation requires payment for the franchise to take tolls, as well as for the value of the tangible property; and that the assertion by congress of its purpose to take the property does not destroy the state franchise.”); United States v. Cress, 243 U.S. 316 (1917) (awarding damages for the partial flooding of the land following the construction of a federal dam); Int'l Paper Co., 282 U.S. at 407 (“The petitioner’s right was to the use of the water; and when all the water that it used was withdrawn from the petitioner’s mill and turned elsewhere by government requisition for the production of power it is hard to see what more the Government could do to take the use.”); see also Stoebuck, supra note 116, at 296 (“It has been clear since the Supreme Court decided Pumpelly v. Green Bay Co. in 1871 that there is no longer a requirement that, to be taken, an interest must be appropriated to government use.”).
123. “Inverse condemnation is a means by which a property owner may recover just compensation for private property that was taken or damaged without a condemnation action being instituted.” City of Chicago v. ProLogis, 890 N.E.2d 639, 645 (Ill. App. Ct. 2008).
124. “A de facto taking involves a claim by a property owner that governmental activity has so effected the use and value of the property as to have, in effect, constituted a taking of his property for public use without payment of just compensation. The claim may arise during an eminent domain proceeding or during an inverse condemnation proceeding. In contrast to a de jure taking, which is identifiable by its formal procedural characteristics, a de facto taking presents the constitutional problem of determining whether a taking has actually occurred, and if so, when it occurred.” Thomas S. Szatkowski, De Facto Takings and the Pursuit of Just Compensation, 49 FORDHAM L. REV. 334, 344 (1979).
125. 364 U.S. 40 (1960).
126. Id. at 41.
127. Id.
128. Id. at 48.
129. Id.
130. See M. J. Prichard, Trespass, Case and the Rule in Williams v. Holland, 22 CAMBRIDGE L.J. 234 (1964) (detailing the demise of the forms of action).
131. See Brauneis, supra note 121, at 91.
132. See Pumpelly, 80 U.S. (13 Wall.) 166 (holding that permanent flooding of land by the building of a dam was not so intermittent as to be consequential in nature); United States v. Cress, 243 U.S. 316, 328 (1917) (“it is the carácter of the invasión, not the amount of damage resulting from it, so long as the damage is substantial, that determines the question whether it is a taking”); Arkansas Game and Fish Comm’n v. United States, 133 S. Ct. 511, 522 (2012) (holding that “governmentinduced flooding temporary in duration gains no automatic exemption from Takings Clause inspection,” but doing little to clarify the applicable rules).
133. See Mitchell, 267 U.S. at 345; Oswald, supra note 121, at 291.
134. See United States v. Miller, 317 U.S. 369, 376 (1942) (“As respect [to] other property of the owner consisting of separate tracts adjoining that affected by the taking, the Constitution has never been construed as requiring payment of consequential damages . . .”).
135. See, e.g., Ridge Line, Inc. v. United States, 346 F.3d 1346, 1355-56 (Fed. Cir. 2003).
136. Mitchell, 267 U.S. at 345 (“If the business was destroyed, the destruction was an unintended incident of the taking of the land.”).
137. See supra Part III.C.
138. See Gideon Kanner, When is “Property” not “Property Itself ”: A Critical Examination of the Bases of Denial of Compensation for Loss of Goodwill in Eminent Domain, 6 CAL. W. L. REV. 57, 61-63 (1969).
139. See Kimball Laundry Co., 338 U.S. at 10-11.
140. See id. at 14; see also Denver v. Denver Union Water Co., 246 U.S. 178, 191 (1918); Omaha v. Omaha Water Co., 218 U.S. 180, 202 (1910) (“The difference between a dead plant and a live one is a real value, and is independent of any franchise to go on, or any mere good will as between such a plant and its customers.”).
141. See United States v. Grizzard, 219 U.S 180,183 (1911) (“Whenever there has been an actual physical taking of a part of a distinct tract of land, the compensation to be awarded includes not only the market value of that part of the tract appropriated, but the damage to the remainder resulting from that taking, embracing, of course, injury due to the use to which the part appropriated is to be devoted.”); Baumann v. Ross, 167 U.S. 548 (1897); United States v. Pope & Talbot, Inc., 293 F.2d 822 (9th Cir. 1961).
142. 261 U.S. 502.
143. See Int’l Paper Co., 282 U.S. at 408; Cienega Gardens v. United States, 331 F.3d 1319, 1334 (Fed. Cir. 2003); United States v. 677.50 Acres of Land, 420 F.2d 1136, 1138 (10th Cir. 1970). Note that consequential losses in the contracts context are variously referred to as indirect, incidental, derivative, or consequential.
144. Omnia Commercial, 261 U.S. at 513.
145. Id. at 510.
146. See id. at 511-13; see also Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 138 (1924) (“I can find no sufficient basis for holding that the Fleet Corporation expropriated the claimant’s contract or intended so to do, or consciously assumed liability for the value thereof. Claimant never had either title to or possession of the vessel. It was only a responsible party to an executory contract for construction, always subject to frustration by condemnation of the vessel.”).
147. See Int’l Paper Co., 282 U.S. at 408 (holding that an executive order commandeering a power company to divert International Paper’s water to enhance its own productive capacity was a taking of International Paper’s franchise rights.); Brooks-Scanlon Corp., 265 U.S. at 121.
148. See Armstrong, 364 U.S. at 48; Int’l Paper Co., 282 U.S. at 408; Monongahela Navigation Co., 148 U.S. at 345.
149. See supra Part III.B.
150. Leigh, 108 P.3d at 530.
151. 0.073 Acres II, 705 F.3d at 547.
152. Id. at 545.
153. See, e.g., Leigh, 108 P.3d at 530. Courts that deny compensation for restrictive covenants mention the contractual features of servitudes in passing, but the basis for the decision is usually a public policy construction of the restriction. See e.g., Anderson v. Lynch, 3 S.E.2d 85, 89-90 (Ga. 1939).
154. 0.073 Acres II, 705 F.3d at 549.
155. S. Cal. Edison Co. v. Bourgerie, 507 P.2d 964, 966-67 (1973).
156. See infra note 169.
157. See In re Rosteck, 899 F.2d 694, 697 (7th Cir. 1990) (treating covenants as contracts and arguing that “[s]ince the Rostecks’ debt for future assessments, based on their pre-petition agreement to pay those assessments, existed when they filed their bankruptcy petition, that debt was discharged by the bankruptcy court in its discharge order”). But see In re Rosenfeld, 23 F.3d 833 (4th Cir. 1994) (holding that postpetition assessments are property in land and are not discharged); In re Foster, 435 B.R. 650, 660–61 (B.A.P. 9th Cir. 2010) (holding that the duty to pay homeowner association assessments is “a function of owning the land with which the covenant runs and not from a prepetition contractual obligation”); In re Hall, 454 B.R. 230 (Bankr. N.D. Ga. 2011) (holding that post-petition condo association assessment were not “claims” subject to automatic stay); In re Smith, 206 B.R. 113 (Bankr. D Md. 1997). See also Samuel Sherry, Condominium Assessments in Bankruptcy: The Curious Case of the Vanishing Assessment, 29 CAL. W. L. REV. 345, n.8 (1992).
158. Cf. OXFORD INTRODUCTION, supra note 31, at 208-09 (noting that restrictive covenants are simply contracts that run with the land with the additional feature that the interests run with the land).
159. See Property/Contract Interface, supra note 32, at 783 (arguing that in rem rights are characterized by indefinite classes of duty holders in both directions that attach to persons through their relation to particular things, and that involve mostly duties of abstention).
160. See, e.g., Lawrence D. Jones, Deficiency Judgments and the Exercise of the Default Option in Home Mortgage Loans, 36 J.L. & ECON. 115, 135 (1993).
161. See Property/Contract Interface, supra note 32, at 799-801.
162. See id. at 820.
163. See generally Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110 YALE L.J. 1 (2000).
164. See Property/Contract Interface, supra note 32, at 810.
165. See supra note 36 and accompanying text.
166. See Pocono Springs Civic Ass’n v. MacKenzie, 667 A.2d 233, 236 (Pa. 1995).
167. See Forrester & Organ, supra note 22, at 756-66 (analyzing the enforceability of a financing restriction running with the land).
168. The classical test was formulated by Judge Charles E. Clark: (1) The covenant satisfies the statute of frauds, (2) the parties intended the covenant to run to assignee’s and successors, (3) the covenant touches and concerns the land, (4) there is vertical privity of estate between the covenantor/covenantee and the successors in interest, and (5) there is horizontal privity between the covenantor and covenantee. CHARLES E. CLARK, REAL COVENANTS AND OTHER INTERESTS THAT “RUN WITH LAND” 94 (2d ed. 1947).
169. RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 2.7.
170. Id. at § 2.3.
171. Id. at § 6.5 cmt. a.
172. 295 U.S. 555 (1935).
173. Id. at 594-95.
174. Id. at 596.
175. 290 U.S. 90 (1933).
176. Id. at 92-94.
177. Id.
178. Id.
179. Id.
180. Id. at 90-91.
181. Id. at 91-92.
182. Id. at 90.
183. Id. at 95.
184. See supra Part V.A.
185. See supra Part III.C.
186. Lee A. Fennell, Homeownership 2.0., 102 N.W. U. L. REV. 1047, 1047 (2008) (noting that homeowners are subject to considerable downside risks they cannot escape).
187. Hosp. Serv. Dist. No. 2, 345 So. 2d at 237.
188. See, e.g., Town of Sanford v. Vuano, 143 A. 245, 249 (Conn. 1928) (arguing that there is a clear distinction between enforcement by injunction and compensation); Richard I. Brickman, The Compensability of Restrictive Covenants in Eminent Domain, 13 U. FLA. L. REV. 147, 163-64 (1960) (questioning the failure to distinguish the constitutional duty to pay from injunctive relief ).
189. 334 U.S. 1, 20 (1948) (discussing the Court’s obligation to “enforce constitutional commands” of the Fourteenth Amendment when state action would effectively deny constitutional rights).
190. Smith v. Clifton Sanitation Dist., 300 P.2d 548, 550 (Col. 1956). But see City of Steamboat Springs v. Johnson, 252 P.3d 1142, 1147 (Colo. App. 2010) (limiting Smith to “a narrow” public policy exception).
191. See Allen v. City of Detroit, 133 N.W.2d 317, 320 (Mich. 1911).
192. See Lucas v. S. Carolina Coastal Council, 505 U.S. 1003, 1020-27 (1992) (citing nuisance cases and explaining the doctrine).
193. See id.
194. Certain Lands in Town of Jameson, 112 F. at 627-30 (arguing that if restrictions are compensable “then only a mere device for conveyancing is necessary to defeat entirely the rule that depreciation of property incidental to a public use does not constitute a ‘taking.’ ”)
195. Smith, 300 P.2d at 550 (Col. 1956) (holding void against public policy a restrictive agreement entered on the eve of condemnation).
196. S. Cal. Edison Co., 507 P.2d 964.
197. See United States v. Miller, 317 U.S. 369, 376 (1942).
198. Meredith v. Washoe Cnty. Sch. Dist., 435 P.2d 750, 752 (Nev. 1968).
199. See Palm Beach Cnty. v. Cove Club Investors, 734 So.2d 379, 386 (1999) (Anstead J.) (“Thus, these monthly fees constitute a determinable sum to which Cove Club was entitled and said sum is directly linked to the lot owners’ right to use and enjoy Cove Club’s adjoining golf course and country club.”).
200. See, e.g, Palm Beach Cnty., 734 So.2d at 386; Meredith, 435 P.2d at 753 (refusing to find a procedural impracticability exception).
201. See Abraham Bell and Gideon Parmachovsky, Givings, 111 YALE L.J. 547, 553-554 (2001).
202. See, e.g., William A. Fischel & Perry Shapiro, Takings, Insurance, and Michelman: Comments on Economic Interpretations of “Just Compensation” Law, 17 J. LEGAL STUD 269, 269-70 (1988); Lawrence Blume and Daniel L. Rubinfeld, Compensation for Takings: An Economic Analysis, 72 CAL. L. REV. 569, 621-622 (1984).
203. Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of “Just Compensation” Law, 80 HARV. L. REV. 1165 (1967).
204. Susan F. French, Making Common Interest Communities Work: The Next Step, 37 URB. LAW. 359, 360 (2005).
205. See, e.g., Ron Cheung, The Interaction Between Public and Private Governments: An Empirical Analysis, 63 J. Urb. Econ. 885 (2008); Siegel, supra note 38, at 869-871 & n. 31 (noting the public benefits to municipalities but casting doubt on the overall social benefits of associations).
206. See Siegel, supra note 38, at 905.
207. French, supra note 204, at 360 (“At all levels, from starter condominiums to high-end gated estates, common interest communities can provide homebuyers with extra value because they provide a workable mechanism for homeowners to share resources with their neighbors.”).
208. Amanda Agan & Alexander Tabarrok, What Are Private Governments Worth?, REGULATION, at 14 (Fall 2005).
209. See, e.g., Aaron R. Gott, Ticky Tacky Little Governments? A More Faithful Approach to Community Associations under the State Action Doctrine, 217 FLA. ST. U. L. REV., 201, 215-217 (2012); Siegel, supra note 38, at 878.
210. See Siegel, supra note 38, at 869 n. 23.
211. See Gott, supra note 209, at 215-217.
212. See RESTATEMENT OF PROP.: SERVITUDES § 6.5 (2000).
213. See id.
214. See U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-12-34, VACANT PROPERTIES: GROWING NUMBER INCREASES COMMUNITIES’ COSTS AND CHALLENGES 48 (2011).
215. Siegel, supra note 38, at 923.
216. Id.
217. See, e.g., Armstrong v. United States, 364 U.S. 40, 49 (1960); Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 478 (1973).