When real property subject to condemnation is within an area of urban renewal2 or is underutilized, understanding the potential for a highest and best use that differs from a property’s current use, as of the date of condemnation, is critical. This article will explore how to identify an underutilized property, provide practical and legal considerations for counsel and appraisers as they approach the highest and best use for a property in urban renewal areas and prepare for trial, and discuss how and when urban renewal may (and may not) impact the maximum potential use of the subject property.
Urban renewal, whether it occurs organically or through government-driven development and condemnation, evokes a discussion of gentrification of neighborhoods that remains a controversial subject, with the benefits of increased economic activity offset by a decrease in affordable housing and the displacement of residents or businesses who can no longer afford rising costs. This article seeks only to provide guidance so that appraisers, condemnors, landowners, and counsel can identify transitional areas in process and effectively evaluate just compensation in an eminent domain case.
IDENTIFICATION OF AN AREA IN TRANSITION
There are a number of signposts that lead to the identification of a neighborhood that may be in transition from a blighted area to one with burgeoning economic development and improved living conditions. These signs include:
Rehabilitation projects in the vicinity;
Growth of restaurant, bars, and retail stores that pop up in historically industrial areas;
Increasing sales activity and property values;
Government investment in infrastructure and updated facilities;
Nearby brownfields redevelopment activity;
Increasing residential population, particularly higher-income individuals or families, attracted by lower property values and rehabilitation opportunities;
Official local and federal government policy findings supporting or encouraging urban renewal (e.g., tax incentives or zoning overlay designations).
Not all of these signs are visible in the initial stages of transition. However, in a geographic area with significant population growth, these changes can occur rapidly. Speculative investment boosts the momentum of such changes, which can often include covered land plays where interim uses may defray the costs of holding the property until redevelopment is imminent and where an eventual sale of the property for such redevelopment would reflect a premium.
Join us in San Diego, CA, in 2025 for ALI CLE’s upcoming program, Eminent Domain and Land Valuation Litigation 2025. Attend in-person or live via webcast on January 30-February 1, 2025. Learn more about the program and stay in touch for program updates here!
APPRAISAL CONSIDERATIONS
Often, a landowner will identify new opportunities for the use of his property. In many circumstances, the landowner has invested in real property in an area of renewal due to the opportunity of growth and increased economic conditions and income. Longstanding property owners are often keenly aware of changing conditions and property value increases and have already considered or planned a conversion of property to a more profitable use. Less frequently, condemnors and their appraisers share this vision, particularly in the nascent phase of transition.
In cases where an appraiser evaluates the opportunity for a change in highest and best use, she must be cognizant of several factors in order to make a proper valuation analysis. These factors include, but are not limited to:
Physical characteristics;
Environmental condition;
Restrictive covenants or other legal restrictions upon use;
Surrounding uses;
Demographics;
Zoning and reasonable probability of rezoning;
Feasibility/market demand;
Consistent use theory; and
Interim uses.
Naturally, these factors are typically examined in the context of the well-known and studied highest and best use criteria: (i) physical possibility; (ii) legal permissibility; (iii) financial feasibility; and (iv) degree of profitability.3
When determining a reasonable probability of rezoning, appraisers may need to address specific criteria, whether by statute or in relevant and binding jurisprudence. In Illinois, for example, the LaSalle/Sinclair Factors4 which detail the following hurdles that must be met in order to satisfy the requirements:
The compatibility with the existing use and zoning of nearby property;
The extent to which property values of the subject property are diminished by the existing zoning restrictions;
The extent to which the proposed amendment promotes the public health, safety, and welfare of the municipality;
The relative gain to the public, as compared to the hardship imposed upon the applicant;
The sustainability of the subject property for the purpose for which it is presently zoned;
The length of time that the subject property in question has been vacant, as presently zoned, considered in the context of development in the area where the property is located;
The consistency of the proposed amendment with the comprehensive plan, and any adopted land use policies; and
That the proposed amendment will benefit the needs of the community.
Other states have worded the criteria somewhat differently. For example, in Colorado, those factors include the following: (i) rezoning of nearby property; (ii) growth patterns; (iii) change of use patterns and character of the neighborhood; (iv) demand within the area for certain types of land uses; (v) sales of related or similar properties at prices reflecting anticipated rezoning; (vi) physical characteristics of the subject property and of nearby properties; and (vii) the age of the zoning ordinance.5
At minimum, any appraiser should include examples of similarly rezoned properties and an analysis of the factors that would provide support that a market participant would expect future benefits. This might be inferred via land sales or sales of buildings to be adapted for reuse under the proposed (and reasonable) rezoning. In some cases where easily identified transactions are scarce or non-existent, more detailed supply/demand analyses might be necessary. Often the appraiser’s investigation must involve consultation with not only the landowner and market participants, but also environmental consultants, local zoning officials, and other professionals.
Environmental issues merit special consideration in areas transitioning from industrial to commercial or residential. In many circumstances, particularly in properties zoned and used for heavy industrial purposes, contamination is present or has been remediated. If the former, the costs of remediation must be considered in any valuation analysis involving a change of use. If the latter, there may exist restrictions on certain types of uses, or contracts with state or federal environmental agencies which restrict certain uses.
The concept of consistent use theory is sometimes overlooked. In an area of urban renewal, some appraisers will identify a highest and best use of investment (i.e., holding the property awaiting a higher value),6 but omit the benefits or income of an existing use in a valuation analysis. Consistent use is “the concept that land cannot be valued on the basis of one use while the improvements are valued on the basis of another.”7 However, using the example of a hypothetical property which serves as both a potato farm and waterfowl hunting grounds, while “it is a violation of the consistent use theory to value a parcel for two uses that are mutually exclusive, it is permissible to value a parcel for two uses that are not incompatible and can take place simultaneously.”8 Thus, because a property can always be used for something in addition to holding as an investment, appraisers should examine other compatible uses, even if they believe a neighborhood transition makes it prudent for a landowner to hold until values ripen. Thus, the concept of interim use, which embraces the concept of dual highest and best uses, may be suitable in most neighborhood transition cases and should be explored.
Furthermore, many market participants of properties—in the areas where the trend of development begins to be a more fundamental question in the highest and best use analysis of a particular site – will refer to income-producing sites as covered land plays. This reflects a perspective that existing and continuing income is strong enough to warrant a short-to-long-term hold, but where the majority of an investor’s return will be recovered upon sale for redevelopment. In these scenarios, capitalization rates for properties might be lower than average rates, as the overall rate must consider not only the year-over-year return, but also the return at the end of the holding period, which in cases like these would reflect a premium.
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Real Estate Lawyer.
To find our more about ALI CLE’s in-person courses or webcasts, or to check out on-demand CLE, click here.
Ranked Choice Voting (RCV) is gaining attention as an alternative to the traditional “first-past-the-post” electoral system, especially during the lead-up to the 2024 elections. RCV has the potential to make elections more competitive and ensure winners reflect the will of a broader base of voters. It also offers an opportunity to move beyond the limitations of two-party dominance, paving the way for a more representative and inclusive system.
Those participating in RCV elections rank candidates in order of preference instead of selecting just one candidate. If no candidate receives a majority of first-choice votes, the candidate with the fewest votes is eliminated and their votes are redistributed based on second-choice preferences. This process will continue until a candidate secures a majority. The policy behind RCV is that it reduces “spoiler” candidates and vote splitting, which can distort election outcomes; it also encourages a more diverse selection of candidates, leading to results that better reflect the broader choice of the voters.
While RCV promises more representative outcomes, its complexity may pose challenges, especially in terms of voter education. It’s important for voters to have clear information about how to rank candidates and how their votes will be counted. In addition, the counting process in RCV can be more time-consuming, raising concerns about efficiency and the timely certification of election results. Despite these challenges, many believe that RCV can lead to fairer and more representative elections.
In ALI CLE’s upcoming webcast, two election law experts will offer legal insights into and takeaways from the 2024 Election, including election system reform (like RCV). Other topics to be discussed include the changing landscape of the voting process, election certification, gerrymandering, campaign finance, recount procedures, and election litigation.
As a young lawyer in the late 1970s, I marveled at how my colleagues working for large law firms, (now called “Big Law”) could work at least 12 hours per day for at least four days a week and then some on weekends. My observation was that they were often physically and mentally exhausted as they plodded along to meet the mandates of the billable hour. Some boasted that they averaged less than five or so hours a night of sleep without any loss of ability. Hmmm, I thought, as I politely did not contest the point — they were making the big bucks and had solid academic and other credentials. They were smart people in the prime of their lives.
This was before the onslaught of technology changed the way we worked. Our daily tasks were mostly reading and writing on yellow legal pads and some telephone and meeting time. I did not believe that a lawyer could achieve optimal performance with the mind forced to focus and concentrate on a marathon legal march. I once said to a Big Law colleague that he was like a record player, alternating at mental speeds of 33, 45 or 78 revolutions per minute with just small pauses as the records were changed.
Fast-forwarding to the 21st century, how we work has been transformed beyond my wildest imagination. We have evolved to where lawyers, and most people, work and live each day facing screens of various sizes. We exercise visual and motor skills as much if not more than mental acuity, as our muscle memory dances across our keyboards more than our dance floors and bike paths.
Lawyers have always faced the challenge of mental fatigue. This affects our decision-making efficacy and capacity. Our ability to engage in sustained critical thinking in a world of electronic dependency and distraction is integral to success in our chosen business. In the past, I have written about how even in a single day, the decision-making quality can deteriorate or be negatively impacted by fatigue where the brain defaults to the easier path of accepting the status quo or taking shortcuts to conserve energy. I now expand this concept by exploring cognitive endurance, a branch of cognitive science that involves mental stamina, focusing on serial decision-making, and takes a broader perspective on cognitive health.
The Science of Cognitive Endurance
Cognitive endurance is commonly described as the capacity to sustain mentally demanding tasks over an extended duration on a continual, if not continuous, basis. Cognitive endurance is critical to lifelong brain health, optimizing productivity and performing at your best.
Cognitive researchers consider a variety of topics related to thinking processes. Some of these include:
Attention: ability to process information while filtering out irrelevant details.
Choice-based behavior: actions driven by choosing among various possibilities.
Information processing: how human process information (like how computers handle data).
Memory: related to the encoding, storage, and retrieval of information.
Speech perception: how we process spoken language and understand what others are saying.
Visual perception: how the world is perceived and interpreted, and stimuli processed.
All are integral to explaining and enhancing decision-making and cognitive endurance.
Our biology, including the brain itself, is central to all matters cognitive. Each day scientists learn more about the wiring of the brain and how the trillions of neurons interact on a chemical and electrical basis. The cerebellum, occupying only about 10 percent of the brain’s volume, hosts over 50 percent of its total neurons and is central to understanding and optimizing brain function and cognition. Scientists contend that it is essential to engage both hemispheres of the brain to achieve a cognitive balance and efficiency. This requires active participation, exploration and a commitment to lifelong learning within the three-dimensional world, as opposed to passive interactions with flat screens.
We must never become too busy sawing to take time to sharpen the saw.
Dr. Stephen R. Covey
The Problem (or Problems and Challenges)
When lawyers have too much work to do in too little time or travel or engage in remote meetings when they should be sleeping because of clients in different time zones, the deleterious effect may be significant over both the short and long haul. Professor Yuka Sasaki of the Department of Cognitive, Linguistic, and Psychological Sciences at Brown University contends that sleep is not an unproductive use of time and serves as an intensive process for the brain to consolidate learning. Research by her team suggests that brain reorganization may benefit from sleep due to increased energy availability or reduced distractions and new inputs. This is supported by the distinct roles played by two brainwave oscillations: Delta oscillations govern changes in the connectivity of the supplementary motor area (SMA) with other regions of the cortex, while fast-sigma oscillations relate to changes within the SMA itself. Although I do not fully comprehend what this means, I do accept that it means our brains are active and doing important things during sleep to restore and, perhaps, improve our functioning. Although lawyers cannot bill for sleepy time, it is central to effective representation not to discount it.
Physical activity is also critically important. In a study published in 2013 by Professor Christopher Bergland, researchers at Boston University School of Medicine found that specific hormones that increase during exercise correlate to memory enhancement. This impact on long-term memory is in addition to all the well-documented positive impacts of regular exercise on physical and mental health.
Downtime, “chilling” and relaxing are not only restorative but may promote brain health and cognitive endurance. Unfortunately with smartphones, lawyers are always on call, with clients and colleagues expecting immediate engagement to any communication. The reality is that efficiency often trumps rest because it is so easy to respond with an email or text during “idle” time such as that spent in traffic, waiting in line or when watching television. Many times, work tasks are more engaging than present company when we find ourselves not really wanting to be there. Confess silently; how many of you reading this reached for your smartphone because of an important, cannot-wait matter or simply because you were bored?
The administrative process by which tribal nations obtain trust status for land to conduct off-reservation gaming or other activities has been criticized by some as cumbersome, lengthy, and overly burdensome.1 With recently implemented amendments to 25 Code of Federal Regulations (CFR) part 151, the Biden Administration seeks to make this process more favorable to Tribes and to economic development through gaming.
Background
In 1934, Congress gave the US Department of the Interior (the Department) the power to take land into trust for individual Native persons or Tribes through the Indian Reorganization Act (IRA).2 The purpose of this Act was to allow Tribes to reclaim lands that may have been removed from tribal ownership to be used to “strengthen self-determination and sovereignty.”3 The land-into-trust or fee-to-trust process allows the Department to hold land that the Tribe owns for the Tribe’s benefit. The benefits of trust status include sovereign immunity within the bounds of the land; freedom from state and local jurisdiction; exemption from taxation of the land; new market tax credits; Indian employment tax credits; tax-exempt financing; discounted leasing rates; federal contracting preferences; foreign trade zone customers duty deferral, elimination or reduction; state/county land use exemptions; and accelerated depreciation for business property on the land.4 Trust land is particularly important for Tribes looking to conduct gaming activity: A Tribe can only conduct Class III (Las Vegas-style) gaming activities on non-reservation lands acquired after 1988 which are taken into trust.5
Interested in learning more from ALI CLE? Check out our upcoming webcast, American Indian Law Developments, on November 13, 2024!
In order to be eligible for trust land, a Tribe must be federally recognized and have been “under Federal jurisdiction” in 1934.6 Regulations codified at 25 CFR part 151 govern this land-into-trust process. Generally, they require a detailed application demonstrating eligibility for trust land through historic evidence, consultation with state and local officials with regulatory jurisdiction over the land to be acquired, and compliance with the National Environmental Policy Act (NEPA).7
On December 5, 2022, the Department’s Office of the Assistant Secretary for Indian Affairs published proposed amendments to the regulations governing the land into trust process after consideration
of comments from the tribal community. These proposed revisions were first announced at the 2022 White House Tribal Nations Summit, held on November 30 and December 1, 2022. Secretary Bryan Newland stated that the goal of the amendment is to make this process “easier” for Tribes that have faced barriers with the preexisting system, such as costs, delays, or the complexity of the decision-making process.8 The proposed rules built upon the Secretary of the Interior’s approach, which contrasts with that of the prior administration, to streamline the land-into-trust process by returning approval authority to the Bureau of Indian Affairs (BIA) regional directors and to provide clarity on the compacting process.9
During the rulemaking comment period, the Department met with Tribal representatives during “two listening sessions and four formal consultation sessions” and reviewed comments from Indian Tribes and the public.10 Tribes were largely supportive of the amendments, but some raised concerns about presumptive acquisitions outside of a Tribe’s historic lands and wanted an equal opportunity to comment on acquisitions alongside government stakeholders.11 State and local government commenters opposed the rule on the grounds of lack of administrative authority and federalism and were concerned about the presumptions afforded to applicants, as well as the reduced role of public stakeholders in the process and decreased notice requirements.12
On December 6, 2023, a year after publishing the proposed amendments to the regulations, the Department issued its final rule.13 The updated land-into-trust rule went into effect on January 11, 2024.14 While most of the differences between the proposed version and the final rule were stylistic or clarifying, the provisions regarding evaluation of requests for land received a substantive update to ensure meaningful notice to state and local governments and opportunity for comment.
In its December press release, the Department announced that the final fee-to-trust rule furthered President Biden’s goal of “mak[ing] it easier for Tribes to place land into trust” and made the process “simpler, more efficient, and less expensive.”15 After so many years spent in limbo for some Tribes under the existing process, will this prove true in practice? Only time will tell.
Notable changes introduced in the final rule for the land-into-trust process include a 120-day maximum period of application review (compared to the existing average of 985 days with no maximum16), a new “initial Indian acquisition” method designed to make it easier for Tribes to receive their first trust land, “presumptions” of approval of a trust land applications for on-reservation acquisitions, acquisitions contiguous to a reservation, and initial acquisitions, reduced review criteria for applicants, and codification of a definition of “under Federal jurisdiction” for determination of trust land eligibility.17 Pending applications will continue under the prior procedure by default, but applicants can elect to apply the new process except for the 120-day rule.18 The final rule also clarifies that its procedures do not apply to grants of trust land by Congress or a court.19
The land-into-trust amendments create a new “presumption” of approval of a trust land application for on-reservation acquisitions, acquisitions contiguous to a reservation, and initial acquisitions, which will simplify and streamline the process for Tribes looking to acquire land already set aside by the federal government for their Tribe or for those looking to acquire trust land for the first time, even if off-reservation.20 This presumption is intended to affirm that the land is for the welfare and use of the Tribe, as well as to address the historical impact of removal of reservation land by the US government. In making all trust land determinations under the amended scheme, the Department will give “great weight” to important purposes for tribal welfare (e.g., protecting tribal homelands).21
Despite opposition from state and local governments, the Department abandoned the “bungee cord” approach for land that is not contiguous to or part of a reservation. That is, there will no longer be heightened scrutiny the greater the distance between the proposed trust land and the location of the Tribe’s reservation. The Secretary of the Interior will instead consider the location of the land broadly in determining whether to take the land into trust. For land that is an initial acquisition, the location of the land is not considered at all unless it is necessary given state and local government comments (e.g., regarding potential conflicts of land use). The rule assumes that the Tribe will benefit from the acquisition and that the Secretary will consider the location of the land and potential conflicts of land use when reviewing the state and local comments in their holistic review of the application. This is significant because it removes a prior constraint on grants of trust land located farther from the Tribe’s lands and may lead to an increase in trust land acquisitions across state lines.
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Real Estate Lawyer.
To find our more about ALI CLE’s in-person courses or webcasts, or to check out on-demand CLE, click here.
The practice of medicine has undergone a metamorphosis that has materially changed “the increasing gap between what doctors have traditionally been trained to do and the realities of modern clinical practice.”1 This article will examine these developments and offer guidance about the recent laws involving the access of a patient’s medical chart and the nuances of electronic medical records.
THE PATIENT’S CHART
The medical chart is an essential component of a patient’s care and the determination of any medicolegal disputes.2 This documentation sets forth the history of medical care rendered so that all health care providers “can continue to provide the best possible treatment for each individual.”3 A properly detailed record will help the health care provider in recreating what happened at those earlier visits.4 A medical record is also maintained to satisfy the different legal and ethical mandates required by the governments, regulatory agencies, accrediting bodies, and hospital administrations.5
Historically, a patient’s chart was kept in a paper format located in the health care provider’s office or a medical records department at a hospital.6 Paper records do not require extensive training to maintain and can be customized by each health care provider.7 In practice, these charts were often unwieldly, disorganized, unreadable, and had no backup system.8
Medicine underwent a tumult in 2009 with the enactment of the Health Information Technology for Economic and Clinical Health Act (HITECH).9 This law required the meaningful transition of the patient’s chart to an electronic format by January 1, 2014, for health care providers to stay qualified to obtain Medicaid and Medicare reimbursement.10 The impetus for this change was to “improve quality, safety, efficiency, and reduce health disparities, engage patients and family, improve care coordination, and population and public health [and to] maintain privacy and security of patient health information.”11
An electronic medical record (EMR) is a digital adoption of the paper chart containing “a patient’s medical health information” including “sensitive and protected data such as a person’s medical past, medications, and test reports that only approved personnel can retrieve.”12 While a paper chart cannot be immediately shared with others, EMRs permit third parties to see patient medical records at any time.13 The EMR also promotes efficiency, improves treatment, and allows for self-directed care and home supervision.14 Presently, about 90 percent of office-based physicians employ EMR systems.15 Nevertheless, various EMR obstacles can retard the health care providers’ capacity to concentrate on patient care, hinder communication, and harm the patient-doctor relationship.16
Obtaining Medical Records—HIPAA
The Health Insurance Portability and Accountability Act of 1996 (HIPAA)17 required the creation of national standards to protect patient health data from being disclosed without the person’s consent or knowledge.18 The law also gives patients the ability to review and secure a copy of their chart and demand corrections to their medical records.19 Accordingly, the US Department of Health and Human Services (HHS) promulgated a HIPAA Privacy Rule (Rule) to enforce the mandates of the legislation.20 This Rule sets forth the standards for the use and disclosure of a person’s protected health information (PHI) by parties subject to the Rule known as “covered entities.”21 The Rule establishes uniform standards on how covered entities, health care clearinghouses, and business associates reveal and maintain PHI to protect patients’ records while providing health care services.22
The requirements to obtain a patient’s medical records will differ based upon whom the attorney represents. A patient’s counsel merely has to provide a signed authorization supplied by the client that satisfies HIPAA’s mandates and appropriate state laws.23 Other counsel, however, have a much more difficult task. Health care providers may require a subpoena or court order before releasing the requested information. While a subpoena cannot be disregarded, covered entities are warned not to provide PHI without protecting a patient’s privacy and confidentiality.
A key element of the statute is that a covered entity may only divulge the “minimum necessary” information to fulfill the request for medical data.24 This mandate means that a covered entity must take reasonable steps to disclose “only the minimum amount of protected health information required to accomplish the intended purpose of the use, disclosure, or request.”25 Unfortunately, the phrase “minimum necessary” is not well-defined, thus producing confusion. This vagueness requires a covered entity to ascertain what materials to release and the efforts that should be utilized to limit the disclosure of materials.26 The covered entity’s decision as to what constitutes the minimum necessary information should be premised upon a reasonable justification standard and the technical skills of the covered entity and focused on privacy and security concerns.27 This means that counsel who requests “any and all records” of a patient may trigger an objection from the health care provider since this type of broad request may not identify the information in a specific and meaningful fashion.
The EMR should contain the same information as the paper chart, including diverse sections that set forth the relevant facts gleaned from patient encounters and telephone calls.28 However, some parts will be combined, repeated, or not printed out.29 The printed account of the EMR will not be the same as what is shown on the computer screen, and the layout of the records may differ premised upon the doctor’s specialty and software used.30
Many record-keeping schemes are created for a particular health care provider, and each has an idiosyncratic operator interface for producing a medical record.31 This diversity makes it problematic for counsel to gain a comfort level when analyzing a digital chart. An electronic record copying system may also vary based upon the needs of a department or medical specialty.32 For example, radiology may use different software than other departments in the medical facility, and the staff may employ a system unlike the one used by physicians.33
One would think that the conversion to a digital format would eliminate the need to decipher a physician’s illegible handwriting. Surprisingly, that is not always the case. Not all health care providers converted to EMRs, and older medical records continue to be in a handwritten format. Physicians also write notes that are understandable only by themselves and not focused on how third parties may interpret their comments.34 Needless to say, illegible notes can have weighty repercussions on a patient’s health and present unfavorable medico-legal consequences.35 These factors can raise risk management apprehension, accreditation issues, enlarged audit risks from public and private payers, and medical malpractice concerns.36 The National Academy of Medicine has reported that doctor’s unreadable notes result in about 7,000 deaths annually.37
Several states have remedied this problem by passing remedial measures to fix this construct. For example, Pennsylvania has crafted a regulation that mandates a health care provider to “maintain medical records for patients which accurately, legibly, and completely reflect the evaluation and treatment of the patient.”38
CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Lawyer.
To find our more about ALI CLE’s in-person courses or webcasts, or to check out on-demand CLE, click here.
