Feds seeks to seize 90,000 acres at Texas border

Link to article here.

From the Daily Paul:
Since 1803 when the Louisiana Purchase was completed, there has been a controversy over the boundary between Oklahoma and Texas. The boundary is supposed to be the vegetation line on the south side of the Red River. But the River has moved over time. The problem is the definition of that boundary line - Oklahoma and Texas each use different semantics to define it. And the BLM is finding ways to use the disputed words to give them the ability to seize the land.

According to the BLM, the Red River is always Accretion (gradual accumulation of sediment) to the south, and always Avulsion (rapid formation of a new river channel) to the north. So according to the BLM, the boundary only moves one direction, never in the direction that favors the ranchers. They are looking to re-draw the entire portion of the Red River boundary. That includes 90,000 acres of land along a 116 mile stretch of the river.

Stand-off with Nevada rancher ends for now

Link to article here.

U.S. Officials End Tense Standoff Between Nevada Rancher, Federal Government
By Oliver Darcy
The Blaze
April 12, 2014

A tense standoff between a local Nevada rancher and the federal government concluded Saturday, with U.S. officials citing public safety concerns as they ended a controversial week-long cattle roundup that drew nationwide attention.

“Based on information about conditions on the ground, and in consultation with law enforcement, we have made a decision to conclude the cattle gather because of our serious concern about the safety of employees and members of the public,” Neil Kornze, director of the U.S. Bureau of Land Management, said in a statement.

Property rights trump in Keystone Pipeline in Nebraska

Link to article here.

Individual property rights trump Keystone XL in Nebraska
By Timothy Carney
February 21, 2014
Washington Examiner

Should a Canadian corporation be allowed to take land rights from a small Nebraska rancher? Should conservatives side with Big Government and Canadians over private landowners?

A court in Nebraska has put the brakes on the Keystone XL pipeline in a case that started with land rights. The plaintiffs were landowners in Keystone's path who didn't want to sell, and so became victims of eminent domain to benefit Keystone.

Eminent domain abuse in wetlands case in WA

Link to article here.

Zing: Wetlands Expert Sees Huge Flaw In Eminent Domain Case
December 11, 2013
Watchdog Wire.com
By Benjamin Nanke

Watchdog Wire reported back in November that Snohomish County, Washington seized a woman’s property through eminent domain and then sued her to get the money back, leaving Kay Kohler without her land and her compensation for it. Now, Ed Kilduff, a hydrogeologist and expert in wetlands within the state of Washington, has noticed a problem with the wetlands designation the county used to justify their actions. He talked about what the county is doing wrong in an interview with Watchdog Wire.

Kilduff stated that wetland designations are determined by the 1987 Corp of Engineers Manual, however any wetland designation is technically legal until it is challenged. Kilduf alleges that the wetland designation of Kay Kohler’s Snohomish County property was incorrect, citing that the land had never been designated as a wetland in any journal or map of the area and shows no traits of a wetland. However, due to the legal issues, the designation stands.

This, however, poses a significant issue for Snohomish County due to their decision on how to use the land seized by eminent domain.

“There are different types of water,” Kilduff explains, “it’s not all the same water.” Virgin water, or receiving water, is the natural water running in streams. Waste water is any water that flows into the receiving water from an outside source. Snohomish County has transformed Kay Kohler’s seized farmland into a storm water runoff reservoir. Storm water is not considered virgin water, but instead falls under the designation of waste water. Therefore, it can’t be considered receiving water. However, a wetland is considered receiving water.

As the law stands, construction on wetlands is considered illegal. However, the larger issue for Snohomish County lies in the realm of water pollution under the Clean Water Act. Kilduff asserts that Snohomish County paid for the land and then, between the payment to Kay Kohler and the completion of the construction project, reassessed the land as a wetland, challenged the initial cost in a court of law and, Kilduff says, “got a very good deal because of it.”

With the designation of wetland, Snohomish County has violated their permit by dumping waste water into a wetland. “If you take them at their word, that it’s a wetland” Kilduff said, “and then see that they have violated a wetland and filled in a wetland, according to the standard set there would be fine for excavating and working in a wetland that would look something like $10,000 a day.”

Dumping waste water, including storm water, into a wetland is, as Kilduff puts it, a “no go.”

Kilduff says Snohomish County has created a big problem by trying to get a good deal on the property. “They’ve decided that it is a wetland, but then want for it to be a wetland only when they want to get a good price, but not when they’re building stuff on it.”

While Kilduff still doesn’t believe the land is a wetland, he asserted that Snohomish County does, and they need to live within the restrictions. He encourages that citizens put pressure on them, force them to be subject to fines and penalties that citizens are subject to under the Clean Water Act.

While it probably won’t get Kay Kohler her property back, it draws light to the situation and ensures that the county can’t walk away with a good deal in a mess of fraud and abuse.
Link to article here.

WA: Snohomish County Uses Eminent Domain, Keeps Property And Payment
By Benjamin Nanke
November 6, 2013
Watchdog Wire.com

Following the vein of waste, fraud, and abuse, Watchdog Wire has discovered the story of a woman in Snohomish County who, after an eminent domain agreement beginning in 2008, was subsequently relieved of both her property and, after a lawsuit filed against her, the money intended to compensate her for it.

Our story begins with Kay Kohler and her family’s farm. Kohler inherited the farm, which had been in her family since the 1930′s, and was a largely undeveloped plot of four and a half acres in the midst of increasing development projects within Snohomish County. Despite Kohler and her family attempting to receive the permits to develop the land, the requests were rejected by the county.

It was 2008 when Snohomish County contacted Kay Kohler and informed her of a road expansion in the works and their need to use some of her property. The county determined that the value of the land totaled at $404,000 and offered this amount of money to Kohler in exchange for the land. Kohler accepted, and signed a Possession and Use Agreement to seal the deal. This agreement is important, and we’ll touch on exactly why in a moment. However, for the time being, the agreement proceeded as many other eminent domain agreements do.

It was only when Snohomish County approached Kay Kohler a few months later, demanding the money to be returned, that the situation went awry. The county’s justification for this action was that the land had been inaccurately assessed – Snohomish County claimed that Kohler’s land was actually a wetland, and significantly dropped the land value accordingly. However, Ed Kilduff, a licensed hydrogeologist who frequently deals with wetland designations in the state of Washington, asserts that Kohler’s land has never been considered a wetland, and shows no indication of being a wetland.

“If you look at US Fish and Wildlife maps, the National Wetland Inventory, it’s not shown as a wetland on those maps,” Kilduff says, “so it’s never been a wetland, but they’ve identified it as a wetland and devalued it and gotten a good deal as a result.”

The county’s assessment comes out of the blue.

Snohomish County subsequently filed a lawsuit against Kay Kohler to secure the return of the money paid in compensation for seizure of the property. The county was successful in this suit, with Kohler’s appeal unsuccessful, leaving her required to return most of the money paid in compensation, as well as forfeit her land. The county has since bulldozed most of the property, installing a storm water runoff and retention pond and diverting a large amount of storm water onto the property.

Kohler, on the other hand, has been left both without her land and the supposedly agreed upon $404,000 to her name. With legal fees piled on top of that, and no property to serve as her retirement, Kohler doesn’t know what to do.

“At the end of the day,” she says, “it’s your future that they’re really messing up.”

The key point in this story is the Possession and Use Agreement that Kohler signed with Snohomish County. The document, which Kohler trusted in and signed without legal counsel, established that the “just compensation” for the property would be decided at a later date, and included no further specification or protection for the citizen involved in the agreement. This document allowed Snohomish County to renegotiate the terms of the agreement – and the value of the property – at a later date, permitting them to retract the initially agreed upon compensation.

The lesson to be learned from this story is that legally binding documents from local governments are not to be trusted. It is unknown whether other Washington counties have used this Possession and Use Agreement to pull the same trick on other landowners in similar eminent domain cases, but WatchdogWire advises that any citizen faced with one of these agreements, or any legal document presented by a local government for that matter, be extremely skeptical and consult qualified legal counsel regarding the matter before signing or taking any action.

The Freedom Foundation in Washington State is responsible for uncovering this clear case of government waste, fraud, and abuse, and has produced a video highlighting the details of the case in their Tales of Tyranny series. WatchdogWire will give you updates as we dig further into this case and the nature of Possession and Use Agreements.

TCEQ takes private property without notice or hearing

Link to article here.

TCEQ Takes Private Property Without Notice or Hearing
By Caroline Runge
Manager, Menard County Water Control and Improvement District No. 1
Wednesday, October 23, 2013

For the past couple of months rumors have been floating around that the Texas Commission on Environmental Quality is planning to re-classify creeks and streams in the western Hill Country as navigable streams. Last week we learned that they have already done so in Kimble County. A rancher on Bear Creek let us know that he had been issued a citation, setting a fine for having a dam on the creek and ordering him to tear it out within days. He protested that the dam has been there for generations, and the creek is private property.

Not so, said TCEQ personnel, informing him that Bear Creek had been re-classified as a navigable stream on September 3rd. The significance of re-classification is that the stream beds of navigable rivers belong to the state; the beds of non-navigable streams are private property and belong to the owner of the land through which the stream runs.

This distinction dates from the early history of the United States when rivers were a primary means of transport of goods, and the state prevented obstructions in the rivers to protect and promote commerce. The early law cases required that a river be “navigable in fact” – that is, that it really could float a commercial boat. By the 1920’s and ‘30’s, when the Federal government and the states felt that water resources more under government control, the definition of navigable underwent a series of changes. Now a stream can be declared navigable in Texas if the stream bed is 30 feet wide from cut bank to cut bank (the technical term is “gradient boundary”).

That doesn’t mean that the water has to be 30 feet wide – only the bed of the stream. Many streambeds in this area have been widened to 30 feet by the occasional flood, though their normal condition may be only a trickle through the streambed.

A call to the General Land Office, which has jurisdiction over state lands, confirmed that the TCEQ is looking at re-classifying streams in Menard, Mason, McCulloch and Kimble Counties.
There are several serious concerns with re-classification. If carried out to the extent proposed, it converts thousands, possibly hundreds of thousands, of acres in the Edwards Plateau region from private property to state property. And once the streambeds are state property, the ranches they cross are open to free access by the public.

Any place a creek crosses a county road, for instance, anyone can walk or boat from that point up the streambed through the ranch. The main reason people buy ranches these days is to have privacy and a place that the public can’t access, so the reclassification may have a very negative impact on values of properties that have streams.

Another issue is the due process aspect of re-classifying the streambed with no notice to landowners that their land is being taken by the state – a total violation of constitutional principles of law.

And to assess a fine and demand that the property owner tear out the dam without giving the his having been given prior notice that the land is no longer deemed private further violates all notions of due process.

Finally, there is a legal question of whether the land can be declared state property before it has been surveyed and the boundaries defined by the General Land Office.

We need answers about how and why this is happening and who authorized it. The western Hill Country is affected now; if unchecked, it won’t be long before it spreads everywhere in the state where surface water resources are scarce.

FYI. This is TCEQ’s response to the initial op-ed printed in the Menard paper.

TCEQ: No Taking of Private Property
Zak Covar, executive director, TCEQ

Last week’s Menard News and Messenger contained an op-ed, TCEQ Takes Private Property Without Notice or Hearing, that contains misleading and incorrect allegations of TCEQ taking private property without due process in Kimble County. The TCEQ would like to respectfully provide additional information to help fully understand the facts of this case.

In the West Bear Creek case cited in the article, the TCEQ initiated an investigation based on an anonymous citizen compliant. The complaint alleged an unauthorized impoundment of state water. An on-site investigation was conducted where an on-stream dam and impoundment were observed and documented. TCEQ records were reviewed for the presence of an active water rights permit authorizing the impoundment of state water. No authorization for the impoundment was found.

Following protocol, TCEQ requested assistance in confirming the navigability of the stream segment from the General Land Office (GLO). The GLO reviewed historical mapping of the stream and other official state records on file for many years. Based on this information, the GLO concluded that the stream segment in question met the definition of a navigable stream. This conclusion did not “re-classify” the stream segment as indicated in the article. Rather the TCEQ was simply verifying the existing navigability status of the segment as part of its investigation protocol.

After all information was gathered and evaluated, the TCEQ issued a citation to the responsible party in the West Bear Creek case for impounding state water without a required permit. The TCEQ also offered the responsible party the option of obtaining a water permit to authorize the impoundment of state water. Rather than contesting the assessment of this penalty by requesting an administrative hearing, the responsible party chose to sign the field citation, paid the $875 penalty and then removed the dam. Based on these facts, the complaint investigation is in the process of being closed.

TCEQ takes private property rights seriously and enforces state law and rules accordingly. In this case, no re-classification of navigability status, and no taking of private property occurred.

TCEQ Executive Director  Zac Covar has found fault with my characterization of agency action on Bear Creek, saying they had “found” that Bear Creek was navigable, not that they had “reclassified” it as navigable. The effect on the landowner is the same:  his creek bed has been “found” to be state property and the public has access to it.

Not only that, but the agency is planning to “find” more creeks navigable, since they have been checking maps and records at the General Land Office (GLO) for creeks in Menard, McCulloch, Mason and Kimble County - the western Hill Country, as it was characterized to me by GLO staff.
There are several procedural problems with this: (aside from the dubious authority of the TCEQ to unilaterally determine that a creek is navigable).

1) Under Texas statute a waterway is navigable as far up from the mouth of the stream as it averages 30 feet wide. It is not a simple matter to determine whether a waterway is navigable - there have been some cases in which a court has found that a waterway was navigable where it was wider some distance up the stream than it was at the mouth. Ultimately the GLO and the courts have to make the decision if the assertion of navigability is challenged.

2) It would seem that minimal fairness and due process require that the landowners along a stream be notified by certified mail that their creek, which up to now has been assumed to be nonnavigable, has been “found” to be navigable. In this case the landowner only learned that his creek had been “found” to be navigable when he was issued a citation, fined for having an “illegal” dam (which had been there for several generations) and ordered to tear the dam out within days.

3) “Finding” creeks and streams on private property to be navigable is going to have a devastating effect on real estate values in this region, and may subject some realtors to litigation. People buying land for recreational purposes are not going to want to acquire property that is subject to free access by the public. They are buying it for their own quiet peace and enjoyment, and don’t want to have any and everybody entitled to come onto it for “fishing, camping, boating and, in general, any other activity that is legal” as described in the section on navigable streams on the TP&WD website. To say nothing of the well-documented problems landowners have had with people poaching on their properties from the streambeds of navigable rivers.

The objective of the TCEQ appears to be getting rid of dams on creeks to get more water downstream. They take advantage of a complaint by a downstream landowner about an upstream dam to make this “finding”. The downstream landowner often doesn’t realize he is shooting himself in the foot, since his part of the stream will also now be accessible to the public.

If the TCEQ is not willing to adopt regulations requiring that:
1) There be a public hearing in the county where a stream is located which the agency proposes to “find” to be navigable, before any regulatory action is taken based on the navigable status of the stream
2) that they be required to file in every county the exact extent of the area that has been “found” to be navigable, so landowners are on notice that they are liable for regulatory activity and cannot  eject trespassers from their stream beds; and
3) there be procedural requirements that they notify a landowner of the newly “found” status of his stream bed at least thirty days before they  may issue any citations for violations based on the navigable status of his stream. This would give the landowner a chance to challenge the finding of the TCEQ that his creek is navigable or to take action to avoid fines and compliance requirements.

Then legislation requiring these landowner protections should be passed.

The “navigability servitude” was a judicial doctrine that came into being in the early days of the United States to give the Federal government authority under the Commerce Clause of the Constitution to restrict the building of obstructions in rivers, back in the days before railroads and highways when rivers were the principal means of transporting goods, logs, etc. from one place to another . It is ludicrous that the doctrine has been stretched over the years to gain state control over rural creeks and streams that can’t float anything larger than a canoe –and often not that.

I think those counties that are going to be seeing negative impacts on their economies from these “findings”  of navigability should think about filing local legislative bills to declare nonnavigable all streams in the county that have not previously been declared navigable by a court.

Government land heist for private developer in Texas Hill Country

Link to article here.

Terrell Graham and his wife’s family have owned their ranch in the Texas Hill Country for over 100 years. It’s remained a working farm and cattle ranch, and now Texas state government is stealing their land so private developers can discharge treated sewage from 1,500 new homes into the Lux family’s dry creek bed. Texans are supposed to have constitutional protection against eminent domain for private gain, but what about land heists that don’t involve eminent domain yet are still clearly for private gain? What about when government steals private property for its own gain, outside any perceptible public use? Apparently, there is no such protection for Texans.

Read the full article on the Examiner.

Watch the Kens5 news story on it here.

Texas legislature kills property rights bills

Link to article here.

Texas legislature kills property rights bills
By Terri Hall
News & Analysis
Selous Foundation for Public Policy Research
June 5, 2013

A slate of pro-property rights bills died in the 83rd regular session of the Texas legislature that ended on Memorial Day. Texas politicians love to tout their property rights credentials at election time, but when lawmakers are in session, they've yet to give meaningful protection to landowners in several key areas when it comes time to cast a vote.

Whether it involves proper oversight over granting private entities the power of eminent domain (which most property rights groups vehemently oppose under ANY circumstances) or ensuring condemning entities actually use the land for the purpose for which it was taken in a reasonable period of time, the leadership of the Texas legislature continues to punt rather than lead.

Eminent domain abuse: Soccer field owner fights off horse park

Link to article here.

Eminent domain for private gain is alive and well in Texas. Texans are supposed to have Constitutional protection from this, yet here it is.

Soccer field owner battles Dallas plan for horse park
February 17, 2013

DALLAS — Activists are fighting efforts by the City of Dallas to seize a private soccer complex to make room for a golf course and equestrian center.

“They’ve just told me they need the land, and they’re going to get it,” said Rhadames Solano.
In December, the City Council approved the use of eminent domain to seize Solano’s 23-acre soccer complex on Elam Road near Interstate 45 and Loop 12.

Bait & Switch: San Marcos Council swaps park land for apts

Link to article here.

Planned development on riverfront riles some San Marcos residents
By Ciara O'Rourke
American-Statesman Staff
Saturday, Jan. 12, 2013

SAN MARCOS — Three-quarters of the San Marcos residents who voted in the November election supported the city acquiring about 70 acres of riverfront property east of Interstate 35 historically known as Cape’s Camp and Thompson’s Island for a public park.

Parkland is still planned on the property, but under circumstances that have some residents planning to try to recall several council members who have backed developing more than half of the land for student housing instead.

Judge gives foreign company eminent domain to build Keystone Pipeline in Texas

Link to article here.

Judge grants foreign company eminent domain powers for pipeline construction

Posted on
By David Yates

A Beaumont judge on Monday granted a foreign company’s petition to condemn land for the construction of a crude oil pipeline.

Last June, TransCanada Keystone Pipeline filed the petition for condemnation against Texas Rice Land Partners, James and David Holland and Mike and Walter Latta.

TransCanada filed the petition seeking to build a pipeline to carry crude from Alberta to the Gulf Coast.

On Sept. 24 Judge Tom Rugg, Jefferson County Court at Law No. 1, ruled that the company has the right to sieze land in Jefferson County for the pipeline.

TX rice farmers sue TransCanada over eminent domain

Link to article here.

Texas landowners fight use of eminent-domain laws in Keystone XL Pipeline development

Thursday, September 13, 2012
9/13/2012 3:29:12 AM

TransCanada Corp. shouldn't be allowed to use eminent-domain laws to seize land to build the southern leg of its Keystone XL Pipeline near Beaumont, Texas, lawyers for property owners told a judge.

A recent Texas Supreme Court decision may give the landowners the right to prevent TransCanada from taking land for the pipeline, Terry Wood, an attorney for Texas Rice Land Partners, said at a hearing in state court in Beaumont on Wednesday.

Farmer sows seeds of doubt over Keystone pipeline

Link to article here.

Texas farmer sows seeds of doubt over Keystone pipeline

Christy Hoppe
August 9, 2012
The Dallas Morning News
Mike Stone/REUTERS
Farmer Julia Trigg Crawford, who is battling with TransCanada over the trenching of her private property for the Keystone pipeline, is seen at her ranch in Sumner, Texas, early this year. (Feb. 17, 2012)

SUMNER, TEXAS—The line across Julia Trigg Crawford’s family farm is practically nothing — a rivet in a skyscraper, a pebble on the highway, just four football fields out of the 2,736 kilometres that would constitute the Keystone XL pipeline.

But as the 6-foot former basketball player spreads her arms marking the planned route across her field of coastal grass, she presents a formidable obstacle for pipeline companies.

“The line in the sand for my family is that we don’t believe a foreign company building a pipeline to put money in their pockets can take a Texan’s land,” Crawford said. “If you’re going to take it, you’re going to have to prove you can.”

Talking to her, it’s tempting to forget the million-dollar campaigns, top lobbyists and public outcry and wonder if this farmer, scraping together a few thousand dollars for a lawyer and experts, is someone who can tie a knot in a pipeline that’s a flash point in the U.S. presidential campaign.

TX land seized for pipelines with little recourse

Link to article here.

Pipeline Companies Seize Land in Texas at Will

Landowners have little recourse when a pipeline company uses eminent domain authority.

Texas Observer
Published on: Wednesday, August 22, 2012
Pipes for the Keystone Pipeline PHOTO BY shannonpatrick17 from Swanton, Nebraska, U.S.A. Pipes for the Keystone Pipeline

In Texas, property rights are sacred. It's encoded into our ethos—in this state, your ranch is your kingdom. If you catch strangers inside your fenceline, by golly, you can shoot them. No one can infringe on your land.

Unless it happens to be a pipeline company. Then pipeline operators can do pretty much what they want. Even, it turns out, if that pipeline company is Canadian.

TransCanada is the Canadian multinational behind the proposed Keystone XL pipeline, a plan to ship bitumen—a low grade, asphalt-like petroleum product— from the tar sands of Alberta, Canada, to the Texas Gulf Coast, where it would be refined into crude oil. In trying to secure the pipeline's route through Texas, TransCanada had to gain consent from thousands of landowners along the way. Where landowners have refused to sign, TransCanada has gone to court and seized control of their land through eminent domain.

It appears that pipeline companies in Texas can seize whatever land they want and that no one is regulating the process.

Thanks to a loophole in the eminent domain laws, certain types of pipeline companies can take over private land. In theory, this process is supposed to be supervised, but it's not clear that anyone in the state of Texas actually audits a pipeline's eminent domain claim. There is no place where the buck stops—no one whose job it is to make sure a pipeline company's request for land seizure is reasonable.

Property rights advocates seek clarity on eminent domain use by private pipeline companies

Link to article here.

Property rights activists seek clarity on eminent domain use by private entities

By Terri Hall
July 24, 2012

"Why is it my responsibility as a Texas landowner to make a foreign corporation prove it has legally obtained the power of eminent domain in Texas?" asked Julia Trigg Crawford, a farmer in East Texas locked in a legal fight with Canadian company TransCanada over the use of eminent domain to acquire land for its Keystone XL Pipeline. Crawford and other property rights advocates addressed the House Land and Resource Management Committee hearing yesterday at the Texas Capitol in Austin, asking lawmakers to exercise greater oversight over private companies’ use of eminent domain authority.

“Rather than mending fences and tending to crops, I’m here in Austin today fighting to protect my land,” Crawford pointed out.

This should not be.

Commission favors pipelines over property rights

Link to article here.

Railroad Commission favoring pipelines over Texas landowners

Updated 08:39 p.m., Friday, July 13, 2012

"Only one candidate for Railroad Commissioner has the proven experience and ability to lead the agency and protect private property rights."

That is the opening line from one of Railroad Commissioner Barry Smitherman's re-election radio ads. The problem, at least from my perspective as an engaged citizen who has fought to protect private property rights in Texas for years, is that Smitherman has not lifted a finger to protect property from eminent domain.

Like his predecessors, Smitherman has presided over a Railroad Commission that has issued T-4 permits, rubber-stamping pipeline claims to common carrier status for any and all pipeline companies who check that box on the form. Those companies then turn around and use their T-4 permit as proof that they have been given the right of eminent domain by the Railroad Commission.

So exactly what has Smitherman or the Railroad Commission done to protect private property? Under Texas law, a pipeline is a common carrier only if it meets a number of strict criteria, but these T-4 permits are granted without any fact checking to determine whether or not the pipeline in question meets those criteria.

Eminent domain: The next big bail-out

Link to blog post here.

Eminent domain: The next big bail-out
By Tyler Durden
July 5, 2012
Zero Hedge.com

It seems that governmental efforts to save the underwater and ineligible homeowner from his own fate are reaching fever pitch. Not only do we hear today of the up to $300mm in Agriculture Department Rural Housing Service loans that may have financed ineligible projects or borrowers with a high potential inability to repay the loans; but yesterday's WSJ reports on the growing call for 'eminent-domain' powers to be used by local government officials in California to stop the "housing bust's public blight on their city". In yet another get-out-of-jail-free card, the officials (helped by a friendly local hedge-fund / mortgage-provider) want to use the government's ability to forcibly acquire property to remove underwater homes, restructure the mortgage (cut principal), and hand back the home to the previously unable to pay dilemma-ridden homeowner.

Following last week's bankruptcy in Stockton, it seems cities are increasingly desperate as they reel from the effects of the housing bust - willing instead to use government funds (provided by the working and mortgage-paying taxpayer) to bailout the underwater (and likely not paying anything at all) homeowner. As PIMCO's Scott Simon puts it: "I don't see how you could find it anything other than appalling", as this would crush property prices further and drive up borrowing costs. As we noted earlier, until these mal-investments are marked to market, there will be no useful growth in our credit-bound economy but transferring wealth to the 'mal'-investor seems like a terrible idea.

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