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Category Archives: real estate development

Addressing water supply issues in the Western Ozarks

Imagine this headline:

Taneycomo trout die as officials refuse to release water from Table Rock Lake

It’s not far-fetched. Something similar happened in the fall of 2011 below Lake Tenkiller, in the Ozarks of eastern Oklahoma, where low water levels resulting from the prolonged drought left that reservoir with no unallocated water. You can get an idea of the reactions from this article in the Sequoyah County Times.  All the water in Tenkiller was spoken for, and the trout fishery suffered.

What’s this about allocation of water? In reservoirs managed by the Corps of Engineers and other federal agencies, the reservoir storage capacity is allocated to various uses. For example, some of the storage capacity in Table Rock Lake is allocated to the Southwest Power Administration, a government agency that sells electricity to private and public utilities. In some reservoirs, some of the capacity is allocated to municipal water supplies or industrial users of water, such as Sequoyah Fuels, mentioned in the article about Lake Tenkiller. The Corps of Engineers is also obligated to store and release water to meet statutory mandates relating to maintenance of adequate water levels for barge traffic downstream. In the western United States, a “recreational allocation” is made to support the whitewater rafting industry.

Water scarcity is moving east, and the pace seems to be accelerating. Jim Milton’s blog, Oklahoma Water Law, does a great job covering water supply issues in Oklahoma and neighboring states. On his blog, you can read about Oklahoma’s proposed comprehensive water plan and conflicts between rural water districts and municipalities, the Tenth Circuit Court of Appeals upholding Oklahoma’s statutes prohibiting the export of water to another state, and the fight over water in Sardis Lake, where Oklahoma City’s attempt to buy the water has been blocked, at least for now, by the assertion of federal power. In reviewing recent blog entries, I was struck by the intensity of the water disputes in eastern Oklahoma and Kansas; Missourians need to pay attention to what is occurring just over the state line.

The Tri-State Water Resource Coalition has been exploring the alternatives for future water supplies for the Western Ozarks. Its annual conference, Securing Our Water Future, will be held in Springfield on November 17 and 18. I’ ll be giving a short presentation at this conference to contrast Missouri’s lack of any allocation system with the ways that surface water and groundwater are allocated in Kansas and Oklahoma. A copy of the text of my presentation is here.

Missouri and Arkansas have had the luxury of pretending that water is free. Unfortunately, the supply is finite. The Tri-State Water Resource Coalition is providing leadership and a forum for discussion. We need wise leaders to learn from the experiences of Kansas and Oklahoma, so that we can be better stewards of the water we all need.

Taxpayers vs. Ratepayers: Taxpayers lose

St. Charles County wanted to widen a road, which required moving the gas line within the right-of-way of Pittman Hill Road. Pittman Hill Road was created by subdivision plats which designated the road’s right-of-way as a utility easement for gas lines (among other utilities), dedicating the entire right-of-way to the public. 

The County asked Laclede Gas Company to pay for the relocation of its gas lines to the right-of-way of the reconstructed road. Laclede claimed that this amounted to an unconstitutional taking of its property. On a motion for summary judgment, the trial court ruled for the County, requiring Laclede Gas to pay for the relocation. Laclede appealed directly to the Missouri Supreme Court.

On appeal, the County made four objections: Read the rest of this entry

Pondering intentional flooding: why are we in this mess?

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The random aspect of tornado damage is one thing. But people have put themselves in the paths of floodwaters. Now the Missouri River’s flood is moving downstream. Who knows what it will do to the Mississippi?

But can you blame people for building homes and businesses in the floodplains? We spent billions to control our rivers and create an economy that depends on our controlling them.

Have we lost the ability to manage our environment, or we were just kidding ourselves that our engineering ability (incorporating politically-mandated compromises) would be effective?

I ponder these things in a longish essay: Unnatural disasters: flooding from managed rivers and what to do. Of course, I don’t know what to do. Maybe you have an idea.

Please read and comment.

Recording a real estate document gives notice, but lack of recording doesn’t?

By Missouri statute, the recording a document relating to real estate in the office of the county recorder of deeds gives notice to all of the contents of the recorded document (called an “instrument”):

Every such instrument in writing, certified and recorded in the manner herein prescribed, shall, from time of filing the same with the recorder for record, impart notice to all persons of the contents thereof and all subsequent purchasers and mortgagees shall be deemed, in law and equity, to purchase with notice.

Is lack of recording notice that something did not occur, even though it should have been recorded?

According to the Missouri Court of Appeals, in the case Warren County Concrete v. Peoples Bank & Trust and Warren County Title Company,  purchaser of real estate had no duty to check to see whether a release of a deed of trust had been recorded, even though the purchaser had provided the money to pay off the deed of trust to a title company that closed the transaction.

The purchaser claimed to have no idea that the bank had not released the deed of trust until four years later, when the purchaser received a notice that the bank was foreclosing on the property. A year later — more than five years after the purchaser closed its purchase of the property — the purchaser filed a lawsuit against the bank and the title company, alleging that they were obligated to record the release.

The bank and title company claimed that the five-year statute of limitations period had run for negligence and breach of contract, and the purchaser was out of luck. The trial court agreed.

The purchaser appealed, claiming that the statute of limitations only began to run when the purchaser became aware that he had been wronged, which would have been the date the notice of foreclosure was delivered to the purchaser.

In the appeal, the bank and the title company argued that the purchaser should have checked the recorder’s office after the closing to make sure that the release had been recorded. The appeals court reversed the trial court’s judgment, stating that the burden of searching the public records after the closing was “a duty we are unwilling to place on the purchaser.”

The Court of Appeals was probably influenced by the injustice that would result when a purchaser hires a title company to close a transaction and provides money to pay off an existing loan, but the title company fails to follow up to make sure that the lender receives the payoff and records a proper release.

The Court of Appeals’ opinion isn’t specific about the reason for the mix-up, but it looks like the bank recorded a release after receiving the payoff, but that the release described a different piece of real estate than the piece that purchaser bought.

Glaize Creek Sewer District blows condemnation case, but gets new chance

At a condemnation trial, Glaize Creek Sewer District (in Jefferson County, Missouri, just south of St. Louis), didn’t put on any admissible evidence of damages to the Gorhams’ property. The Gorhams put on proper evidence of damages, showing that the value of their property after the sewer line was installed declined by $29,000. The Missouri Court of Appeals reversed the jury verdict of zero damages (based on an appraiser‘s unsubstantiated opinion testimony), and sent the case back for a new trial.

Two things are unusual about this case: Read the rest of this entry

Kimberling City’s acceptance of sewer system didn’t negate contractor’s warranty

Kimberling City occupies several ridges and valleys where Missouri Highway 13 crosses the heart of Table Rock Lake. You would have a hard time finding a place where the installation of a sewer system was more difficult and expensive per customer, due to the steep and rocky terrain and the necessity of pumping the wastewater collected in each valley over the hills to eventually reach the treatment plant.

Kimberling City grew from almost nothing to a population of nearly 5,000 since the completion of the dam that created Table Rock Lake in 1959. Permanent residents and vacationers are attracted to Read the rest of this entry

What good are economists if we don’t listen to them?

Economists, as a group, have been criticized for not predicting the collapse of the economy in 2007 and 2008, even though there were a few lonely voices. We need to learn to listen to the ones who sometimes tell us what we don’t want to hear.

Here’s Raghu Rajan from his blog, Fault Lines: Read the rest of this entry

Never mind, Missouri cities can charge different tap fees in different parts of town

Earlier this year, I wrote that the Eastern District of the Missouri Court of Appeals, in  City of Sullivan v. Sites,  had struck down an ordinance of the City of Sullivan that established a higher tap fee for connecting to the city’s sewer main in a particular part of town. The voters of the City of Sullivan had approved a $3.3 million bond issue to extend sewers to a part of  the city without sewer service. The city’s board  of aldermen adopted an ordinance imposing a connection fee in the newly-served area that was higher than the connection fee charged in the remainder of the city.

The Sites trust challenged the constitutionality of the ordinance establishing the higher connection fee, claiming that the ordinance violated Article III, section 40(30), which prohibited the passage of local or special laws where a general law would suffice. A general law relates to persons or things as a class, while a special or local law relates to particular persons or places.

However, Missouri Supreme Court’s opinion in City of Sullivan v. Sites, reversed the Court of Appeals decision and affirmed the trial court’s decision upholding the ordinance. The Supreme Court reviewed court decisions that recognize that prohibitions against special or local laws “should not prevent necessary geographic classifications premised on legitimate distinguish characteristics.” The Supreme Court determined that the Site trust’s property was not singled out, but was a part of a geographic area n area that was defined as a class.

The Supreme Court held that “the city was justified in creating the class of new sewer connections charged higher connection fees,” having demonstrated good financial and practical reasons for requiring property in the newly-served area, noting that the imposition of higher fees in the new area “contributed to the City’s ability to fund the sewer project as a whole.”

Purchase option is assignable without consent, but there can still be a fight

The Hulls signed a real estate lease with a purchase option and put down a deposit of $56,000, which could be applied to the $198,500 purchase price, but would otherwise be non-refundable. The Hulls created a limited liability company (LLC) called Briar Road, and Briar Road attempted to exercise the purchase option. Stenger, the seller, refused, claiming that it had not approved the assignment of the purchase option by the Hulls to Briar Road.

What difference does the identity of the purchaser make? Read the rest of this entry

Real estate tax in the health care bill?

I received an email from a Realtor friend which included some strong rhetoric about the 3.8% tax on gains from the sale of residential real estate included in the new health care law, the Patient Protection and Affordable Health Care Act.

The point of the quoted rhetoric was to fuel voter sentiment against Democrats running for Congress in November by alleging that the bill is “set to screw the Read the rest of this entry

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