A Turf War for the Lords of Flatbush

As soaring property values in New York's Brooklyn draw megabrokerages to the area, street-smart local outfits make service their key defense.
For increasing numbers of Manhattanites weary of the big-city hustle and bustle, the quiet, tree-lined streets of Brooklyn have become a welcome alternative. The Flatbush neighborhood brownstones that set the backdrop for The Cosby Show -- the actual home in the show's title sequence can still be seen at 10 Leroy Street -- remain a much-sought destination for families in search of space and value. What's changing, however, is the way local real estate agents and much larger newcomers are competing for the district's business.
With the new year comes a whole new way of doing business. On Jan. 3, the big Manhattan brokerages that have increasingly staked their claim across the East River instituted MLS, a computerized database that allows them to share listings. For brokers who subscribe, it means access to thousands more listings -- that's the upside. But it also means co-brokering those sales, which halves commissions -- a fundamental change that represents a disproportionate blow to smaller firms moving fewer properties.

LOCATION, LOCATION...REPUTATION. In this storied section of New York City, most brokerages operate with exclusive listings, with a single agent having sole rights to represent an individual seller for a specified time. That means one commission for the agent, and often more personalized service for the seller. But because those agents don't share listings, it can also mean a lot more legwork for buyers, since no single broker has access to all potential properties in any given area. It's not uncommon for prospective homeowners to work with half a dozen agents before deals close.

Critics say the old system was inconvenient for customers. Its defenders argue that a neighborhood benefits from a mosaic of small brokers who know it best. "That's how we've been doing business for almost 20 years," says Ali Young, a sales agent with Cobble Heights Realty, which also operates Heights Berkeley Realty, each with about 10 agents per office. "We have great locations, an established office, and a word-of-mouth reputation within the community."

Now a seismic shift is in store for these old-style brokers, who share a unique, small-business culture in one of the last surviving enclaves of independent real-estate brokering in the U.S. Young calls it, "a small, genuine, little brownstone community." These firms are having to adjust as bigger kids move onto the block. Large outfits like Corcoran and Brown Harris Stevens (owned by Terra Holdings) have made a strong push into Brooklyn over the past several years, as the spillover from Manhattan has increased. In the face of takeovers and stepped-up competition, the David-and-Goliath metaphor has become popular in Brooklyn real estate circles.

CUSTOMER FIRST. The corporate firms say they are simply providing potential buyers with more, easier-at-hand choices, and sellers with a deeper pool of potential customers. "The advantages are not for the brokerage firms -- the advantages are for the consumer," says Pamela Liebman, president and CEO of Corcoran, which has operated in Brooklyn since 1998 and now boasts 144 agents there. "The seller wants to expose his home to the widest audience possible, and the best way to do that is to co-broke. And if you're a customer looking for a place in Brooklyn, you might find it very frustrating to see four or five different brokers."

Rather than subscribe to the new listing service and take significant cuts in commission, many smaller firms are ready -- and in some cases, eager -- to defend their niche with personalized service, which they say the heavy hitters have trouble matching.

As with many small businesses facing bigger competitors, the customer-driven method has thrived in Brooklyn, with its unique, high-end properties and "upscale bohemian" residents and would-be residents, says Laurie Bleier, owner and president of local portal HelloBrooklyn.com. For potential buyers, small agencies with exclusive listings can mean more traipsing from neighborhood to neighborhood, looking for just the right fit, but independent shops like Cobble Heights say their reputation and long-standing relationships with the community overcome that disadvantage, making for happier buyers and sellers in the end.

"If you walk down Carlton Street in Prospect Heights, the perception of older people, the real neighborhood people, is that these larger agencies are opportunists," says Young, who has lived in Brooklyn for years and won't be subscribing to the shared-listing database. "I'm certainly not worried."
OLD HANDS. While some firms are mulling buyout offers, Warren Lewis Realty Associates' president, Marc Garstein, just finished a major renovation to his 18-year-old office and plans to continue the same personalized customer service that he credits with the referrals that he says have helped to improve his bottom line every year for the past five years. "We're neighborhood people," he says of his nine agents, whose combined experience amounts to some 117 years. "We work this neighborhood."

"They may say 'we know the neighborhood better,' but that's a bunch of nonsense," counters Corcoran's Liebman. "The brokers who work for Corcoran in Brooklyn have been there for years."

Michael Burke, director of the Downtown Brooklyn Council, a local economic development group, says Brooklyn residents are accustomed to dealing with certain brokerages, and despite the recent influx of Manhattan brokers, "there is still a strong sense of locals promoting locals."

At Cobble Heights and Heights Berkeley, Young makes sure that listed clients are on a first-name basis with almost the entire staff, saying that a personal relationship with the professionals who will be leading strangers in and out of the sellers' homes on inspection tours makes the process less disruptive.

GETTING ALONG. The microculture within the brokerages is also different at smaller agencies. For one, brokers at smaller outfits rely on sharing information and being open about each other's client's, listings, and needs. At larger firms, rife with competition, agents often have to fight to get listings and hold on to clients.

"And besides, which agent is going to work harder for you," asks Young "the one who's working for a 5% commission or the one who's working for half of a 5% commission?" According to Young, collaboration is a key aspect of the sales culture in her office.

For decades, brownstone Brooklyn has been a boutique business, and at least some smaller firms are committed to keeping it that way. Young admits that the larger agencies may work better in certain cases, and her office sometimes refers clients with specific, hard-to-satisfy needs. "Sometimes you go to Target (TGT ) for a pair of jeans, and sometimes you go to Kiwi to get that special pair," says Young. "They both work." As they adjust to life with a new system and new competition, the small brokerages are hoping there's enough room in Brooklyn for both David and Goliath.

Buyers Snap Up Country Houses -- In Other Countries

tefan Lovgren
for National Geographic News

To experience the Swedish heartland, head down one of the remote roads in Småland, a forested district of southern Sweden. At the end of the road, you may reach a torp, the type of small Swedish summerhouse popularized by Pippi Longstocking author Astrid Lindgren in her children's books.

Only these days, the people living there may be German.

During the early 1990s southern Sweden was discovered by German second-home buyers. In 1991 there were about 1,500 Germans owning second homes in Sweden. Today they may number more than 10,000.

Germans are hardly alone in setting up a second life away from their main home. Second-home tourism around the world has exploded in recent decades. While most people still buy second homes in their home countries, an increasing number of people are also venturing abroad.

Just how many is hard to say. Second homes have been a largely neglected research topic, and there are few reliable figures on the number of second homes around the world.

But few people doubt that second homes are an integral part of global tourism, especially in rural areas. Although there are social and environmental drawbacks to second-home tourism, most researchers believe its economic and overall impact is largely positive.

"Second-home tourism forms an important contribution to the local economy," said Michael Hall, co-editor of Tourism, Mobility and Second Homes (Channel View Publications). "However, the local tourism authorities rarely acknowledge this role of second-home tourism and mainly make efforts to attract more high-profile tourists."

Getting Away

In Europe a house in the countryside was once an exclusive asset for the nobility. But in the last century second-home ownership spread to groups outside the upper classes.

In North America second homes were built in wilderness areas, partly as a cultural reminder of frontier development. In Australia many of the first coastal second homes were little more than fishing huts on public land.

The main increase in second home ownership since 1960, researchers say, can be explained partly by greater personal mobility offered by cars and air travel. As people have become increasingly urban, the appeal of the country home has grown, too.

While there is no global data on second-home ownership, individual countries maintain some statistics. In 1999 7 percent of Canadian households owned second homes, 77 percent of which were located within Canada. In mainland Spain in the last two decades, growth in second-home ownership has increased 75 percent.

The reasons for buying a second home are universal. Many people seek a place to relax and escape everyday routine. A second home may also represent a step back to nature. "Most of the Germans I met in Sweden were carrying a rather idyllic image of Sweden and were disappointed, because the Swedish countryside is more modern than they expected," said Dieter Müller, who co-edited the tourism book with Hall.

However, I think they created their own little Sweden somewhere in the Småland forests," added Müller, who is German and teaches geography at Umeå University in Sweden.

Many people also buy a second home to retire there. Some southern European countries, like Portugal and Spain, have seen a dramatic influx of retirees from northern European countries, primarily England and Germany. The newcomers are lured by the warm weather, pristine beaches, and abundant golf courses.

"One of the most interesting aspects about tourism in Portugal is how many people who holiday there then go on to buy a second home or even retire there," Hall, the Tourism, Mobility and Second Homes co-editor, said.

So large is the English expatriate population in Algarve, in southern Portugal, that many British political parties routinely come to seek donations for political campaigns back in the U.K.

Some Drawbacks

There is little doubt that second-home tourism can be a major contributor to local economies, boosting local service supply and keeping local entrepreneurs in business.

It can also ensure the survival of rural areas by filling vacancies caused by rural out-migration. In Finland the countryside population declined by 31 percent to about 900,000 between 1980 and 2000. At the same time the number of people using second homes had increased by 79 percent to more than 1.8 million.

However, second homes can also increase the tax burden for the local population. In some areas housing prices may rise beyond the means of locals.

Sometimes social resentment may also develop toward second-home owners, who may be seen as outsiders or even invaders. Many people who buy second homes in foreign countries do not learn the local language. This is particularly true in places like Portugal and Spain, where some resort communities have been completely taken over by English and German settlers.

In Ireland's Gaeltacht—the country's seven, historically Irish-speaking regions along its western seaboard—the local tongue, Gaeltacht Irish, is slowly ceding ground to English as the language of daily life, mainly because of the number of non-Irish speakers moving into Gaeltacht communities.

The environmental effects of second-home tourism may be mixed.

Second-home owners often use indigenous architecture in restoring buildings that may otherwise fall into disrepair. Many second-home owners are committed to environmental issues, and second-home tourism has, in many places, led to the protection of natural areas and wildlife, some researchers say.

"The capacity of [popular second-home tourism destinations such as] southern Portugal to host so many people may be greater than some of the more environmentally sensitive areas in the tourists' own countries," Hall said.

But the demand for development of second homes in previously untouched areas, from the plains of Montana to the north woods of Maine, is also seen as a crisis by many environmental and conservation groups.

Time-Shares

Second-home ownership in the United States is less common than it is in Europe.

"Relatively speaking, this form of tourism is much smaller than other forms, because only a small portion of the U.S. public owns a second home in the traditional form," said Dallen Timothy, a professor at the School of Community Resources and Development at Arizona State University in Tempe.

Still, second-home ownership in the United States has almost doubled in the past 35 years. In 2001 there were more than 3.5 million second homes in the country.

Most U.S. second homes developed as a result of people escaping either intense summer heat or bitterly cold winters. Native Americans commonly sought refuge away from their normal abodes. For example, Cape May, New Jersey, was a popular seaside refuge for the Leni Lenape Indians centuries before the beach homes of the 1800s were built there.

A particularly popular form of second-home ownership in the U.S. is time-shares, where consumers purchase periods of time at a property. Since the late 1970s time-shares have grown between 14 and 17 percent per year. Today the industry is worth more than four billion dollars in the U.S.

There has also been a strong growth in U.S.-owned homes abroad. Americans have long owned vacation homes in Mexico, particularly around Acapulco and Puerto Vallarta. But today some Americans are settling in more exotic territory, such as the rain forests of Cayo in English-speaking areas of Belize.

Researchers say that a demographic shift will have a substantial impact on second-home tourism. As of 2000 11 percent of the world's population was 60 years old and above. By 2050 that figure is estimated to rise to 20 percent.

Particular types of tourism geared toward retirees, such as recreational vehicle cruising, should continue to grow in popularity. But second homes that go on to become permanent retirement homes may also become increasingly important in tourism-development strategies, researchers say.

Don't Miss a Discovery

Here Comes The Neighborhood

Around Araby Bog, A Suburb Rises From the Ashes

By Lynne Duke

Washington Post Staff Writer
Tuesday, December 21, 2004; Page C01

Patricia Stamper's long thin braids swing across her chest as she hikes through mucky soil. She's heading toward the rare magnolia bog she's spent six years fighting to save.

"In the winter, it's not much to look at," she says apologetically. The sweet bay magnolias aren't in bloom. The three-foot-tall cinnamon ferns have gone dormant for the season, along with the panoply of flora that flourishes in this rare pristine ecosystem in rural Charles County known as Araby Bog.

Stamper, 66, a Navy mathematician, steps gingerly. Her horse, a chestnut named Fancy, kicked her and shattered her right elbow several weeks ago and she is recovering from surgery to repair her arm. She has to be careful not to stumble.

"There's the sphagnum moss," she says suddenly, pointing to a bright green patch growing along the bank of a stream that delivers clean water into Mattawoman Creek and the Potomac River.

And just beyond the stream, up a hill and through the trees deep in these woods near Indian Head, the reasons for this field trip are visible. Stamper wants to show how close to the bog the new houses are being built, and how certain is the bog's ultimate demise.

But far more than the bog is endangered, she believes. With 500 homes set to be built in subdivisions called Hunters Brooke and Falcon Ridge, the new traffic, the new people, the new noise all will conspire to rob this region of its tranquillity, its slow country life. Not to mention lowering the water table, which Stamper fears could affect individual wells like her own. Hunters Brooke is just a couple minutes' drive from the 52 acres where Stamper and her husband, John, live in a small bungalow-style house. She especially bemoans the light pollution that will obscure the stars at night.

"It's heartbreaking, the damage to the community," Stamper says. "A way of life is being destroyed."

Up the hill from the bog, though, the view of this region is different. There, in his brand-new home with its soaring foyer, its 33 windows and its high-end kitchen, Sylvester Kelley putters about, arranging his new life. The Christmas tree is up, the houseplants set in the windows, the family photos arrayed on a shelf.

Kelley's doing what suburbanites do everywhere. When he moved in on Nov. 30, he staked his claim in an area sure to grow and sure to appreciate in value once commercial development catches up with the residential.

Kelley, 56, doesn't know Stamper. In fact he knew virtually nothing about the region or its environmental controversy -- until the fires of Hunters Brooke put this obscure community in the national news and exposed the clash of values between the region's old-timers and its newcomers.

The old-timers' frustrations are understandable, says Kelley, an information technology specialist for a defense contractor.

"They have a cause to fight," he says.

Trouble is, "It's a juggernaut effect," he says with a slow drawl. "You can fight all you want, but you're going to get bowled over. . . . It's a way of life. That's just the way it is. Money has power."

And the bog, he says, isn't something he's given any thought to

The Condemned

News: In Ohio, and across the country, homeowners are battling cities and developers conspiring to seize their property.

By Gary Greenberg

From his office at the top of Rookwood Tower, the seven-story, glass-and-steel building that his family’s real estate company built, Jeffrey Robert Anderson Jr., or J.R. as he is known here in Norwood, Ohio, can easily survey his empire. Directly below the tower and its 185,000 square feet of professional and financial services offices is Rookwood Pavilion, 23 acres of shopping and eating. A little farther to the left is Rookwood Commons -- not, Anderson advises me, a shopping plaza, but a "lifestyle center" containing a Gap, Ann Taylor, and 46 of the other usual suspects. This former brownfield, abandoned when a machine tool factory left Norwood, is now the premier shopping destination in Greater Cincinnati, if not all of Ohio, according to anyone around here that you ask. It’s an impressive sight, and perched high up in his well-appointed office with its sculptures and paintings and enormous glass-topped table, you might believe that this tall and fit 32-year-old with flaxen hair and bright blue eyes rules over all that he sees, or at least all that lies this side of the interstate.

And he would, were it not for the 13-acre, triangular spit of land directly below the tower. There, under the spruce and maple trees, are the asphalt-shingled roofs of a tidy neighborhood of modest houses. Bounded by the Cincinnati city line to the east and Rookwood to the south, and cut off from the rest of Norwood by an interstate highway, these 97 homes and small businesses are glaringly out of place, a mid-20th-century remnant amid all this 21st-century glitz. They’re also in Anderson's way. He wants to expand the Rookwood complex, but he has to buy and raze all these houses first, and while most property owners have eagerly accepted his offer to buy their houses at a premium price, five have refused. And so the $125 million-plus project, known as Rookwood Exchange, slated to be under construction by now, is at a dead standstill.

But Anderson has an ace up his sleeve. At his behest, and using his money, the city of Norwood has invoked its powers of eminent domain -- the right, granted by the Takings Clause of the Fifth Amendment to the Constitution, of a government to seize private property and turn it to public use -- to condemn a neighborhood and order residents out of their homes. Norwood is not the first city to act as a real estate broker whose offer can’t be refused, nor is Anderson the first businessman to benefit from this kind of largesse. A 1954 Supreme Court decision stating that the economic benefits of private development are a legitimate "public use" has forged an unholy alliance between cities strapped for cash and entrepreneurs promising economic bounty. (Anderson, for example, forecasts that Rookwood Exchange will net Norwood, a city with an annual budget of $18 million, between $1.5 and $3 million in annual taxes.) Struggling cities have placed their urban renewal hopes in the hands of developers like Anderson, who in turn rely on governments to assemble the parcels for their projects.

According to the Institute for Justice (IJ), a public-interest law firm, this is a growing trend. The institute analyzed eminent domain cases between 1998 and 2002 and found more than 10,000 instances where local governments had attempted to use a power once reserved for indisputably public projects like highways and railroads to obtain properties for private development projects such as box stores and golf courses.

No properties are off-limits -- working-class communities, ski chalets, and one-tenth of San Jose, California, have all been targets of condemnation proceedings on behalf of enterprises as varied as casinos, Costco, and the New York Times -- and no one has yet been able to thwart this newly privatized version of eminent domain. But by litigating against what it calls "eminent domain abuse," the IJ has succeeded in creating enough disarray in state courts to achieve its ultimate goal: convincing the Supreme Court to revisit the issue. This spring, for the first time in 50 years, the court will address the parameters of eminent domain, and the institute hopes the justices will rein in the private use of what the court itself once called government’s "despotic power."

"It was the day before Mother’s Day in 2002," Joy Gamble says. "They said they were going to build this fabulous project, and we were going to be gone. The roof fell in." The Gambles, who have lived in Norwood their entire lives, made an immediate decision. They weren’t selling, no matter what price Anderson was paying. "And start life all over again?" Carl adds. "We started here, we raised two kids here, we finish up here."

"Here" is the Gambles' two-story stucco home a few doors up tree-lined Atlantic Avenue from its terminus at the I-71 off-ramp. An American flag is planted by the brick front stairs, next to a hand-lettered sign that says, "IF YOU WANT THIS PROPERTY YOU SHOULD HAVE BOUGHT IT IN 1969." Inside, a hunting supply catalog sits on the coffee table, a Ronald Reagan calendar hangs from the kitchen wall, and vivid tapestries and paintings of stags and partridges give the overall effect of Field & Stream on acid. The Gambles, who won’t give their ages ("I forgot," says Carl; "I don’t tell," says Joy), appear to be in their 70s, and they speak in clipped sentences inflected with the local twang. "The first time we had contact with these people," Joy tells me, "[Anderson] wanted to meet with us. I said, 'We don’t want to sell.' He said, 'Thank you.' I said, 'You're welcome.' I hung up. Very nice." Joy goes on to list several other unsuccessful attempts, noting that Anderson’s people were always extremely polite.

But what the Gambles didn't know was that in January 2002, before he called them or any of their neighbors, Anderson had asked the City Council to undertake an urban renewal study, the prerequisite to condemning properties. "I figured we wouldn’t have to go through with it," Anderson says. "Just pass the urban renewal study and get things rolling." When he built Rookwood Tower back in 1997, Anderson had easily convinced the city to authorize such a study -- although he was ultimately able to assemble the necessary properties on his own. But in 2003, three years after he was indicted for corruption, the longtime mayor -- whom Anderson had given $23,000 in campaign contributions ("an astronomical sum around here," says one city official) and an undisclosed amount toward legal fees -- resigned. The council, perhaps eager to seem less cozy with its largest private taxpayer, had earlier told Anderson "to go out and pound the doors, go assemble as many houses as possible," he says. "Once I’m completely at a stalemate, then come back and discuss urban renewal."

While Anderson was going door to door in the early summer of 2002, so was Joe Horney, a 35-year-old construction manager. Sitting on the Gambles' couch, bouncing his two-year-old daughter on his lap, Horney proudly recounts how he used an inheritance to buy a two-family house across from the Gambles when he was 21. When he heard the news, he says, "I decided to go out and meet the neighbors. I found out from a lot of people that they were perfectly happy here, they'd like to stay. So we started a petition." At first, about half of the homeowners vowed not to sell. But in September, Anderson and his partners announced their terms: They'd buy everyone's house at a 35 percent premium over its fair market value, but only if they had all the neighbors under contract. If any residents held out, the developers would ask the city to condemn those properties, and a jury would decide the price. Throughout the fall, many of Horney's erstwhile allies signed contracts. In the meantime, Anderson eliminated from his plans a 28-house section of the neighborhood in which resistance was most concentrated, and by year’s end, with 5 of the remaining 69 owners still refusing to sell, Anderson had his stalemate -- in no small part, as it turns out, because condemnation had been in the air all along. "Where I made my decision is when eminent domain was threatened from day one," says Horney. "Once they threatened my rights, my decision was made."

The City Council authorized the urban renewal study, which Anderson paid for, in April 2003. Citing certain facts -- small driveways, narrow streets, lots that don't conform to current zoning regulations, houses that are more than 40 years old, a neighborhood subject to all the light and noise and traffic that progress (much of it Rookwood-related) has brought -- the study declared the neighborhood blighted and thus eligible to be seized, emptied, and razed.

Standing in the Gambles' tranquil back yard, with its lilacs and bird feeders, it's hard to understand how anyone could think this property was blighted. Horney points out that by the study's criteria, nearly anyone's home could be taken by the government. "You could call the White House blighted because it's over 40 years old, it's got a lack of parking, it's surrounded by commercial development. I'm sure there is noise. If you tore it down and put in a big office building, certainly it would generate more taxes than Mr. Bush living there." The City Council proceeded to condemn the five properties not under contract with Anderson. According to Mayor Tom Williams, they took this action reluctantly, partly to secure tax revenues for the city. "I was a cop for 34 years, got shot once and shot people twice," Williams says. "It's the same with this thing. You hate to pull the trigger, but sometimes it’s a necessity."

When Institute for Justice lawyers Scott Bullock and Dana Berliner first visited Norwood in December 2002, they were pleased with what they saw: "a classic mixed-use neighborhood, in perfectly fine condition," as Bullock puts it. That boded well for the institute -- which Bullock describes as an "unabashedly libertarian" organization and which gets much of its funding from wealthy opponents of big government like energy magnates David and Charles Koch -- and its overall goal of reversing what it sees as a disastrous half-century of eminent domain jurisprudence.

Governments have always taken land on behalf of private interests; owners of mines and railroads relied heavily on condemnations for their rights of way, which were granted because, as one Pennsylvania court put it, "the necessities of a great public industry, which although in the hands of a private corporation, [serve] a great public interest." But in Berman v. Parker, a 1954 case, the Supreme Court ruled that the District of Columbia could seize a fully functional store in a blighted neighborhood on the grounds that, as Justice William O. Douglas wrote in the unanimous opinion, "It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled." It was not up to the courts to insist "that public ownership is the sole method of promoting the public purposes of community redevelopment projects." Legislatures, in other words, were free to determine -- as the Norwood City Council did -- that one private use of a property was better for the overall community than another, and to use eminent domain to enforce this finding.

According to the IJ’s Berliner, the Berman decision has devolved into a license for cities to "rent out" their eminent domain powers to private developers, with bogus blight designations providing the legal cover. But Jason Jordan, a government affairs director at the American Planning Association, sees the decision as underpinning the "hottest" trend in urban renewal: replacing economically obsolete neighborhoods with large-scale, tax-generating developments like Rookwood Exchange. "Eminent domain is an important tool for communities interested in revitalizing themselves," Jordan told me, and, according to Jeffrey Finkle, head of the International Economic Development Council, it's also a needed tool for reducing sprawl. "Unless we want to pave over all the land outside cities, we have to be able to do these projects inside the urban ring. How can we reposition cities if they don’t have the power to acquire private land?" The ability to team up with developers is indispensable to this agenda, Finkle adds. "Communities have to respond to market opportunities," he says. "If you have a developer willing to invest millions of dollars, it’s important to make that happen."

Rick Dettmer, who runs Norwood’s one-man municipal development office out of the basement of City Hall, says this is precisely why Norwood couldn't turn Anderson away. "The reality is that you need to rely on developer interest in order to facilitate projects. We're not paying for this party." If he were, Dettmer says he might throw it elsewhere -- perhaps in Norwood's decaying downtown, less than a mile from the Rookwood complex. But Norwood, which has suffered two decades of factory closings, and which has a $1.5 million budget deficit, desperately needs this party, wherever it is held.

Many American cities are in a similar predicament, and in the wake of Berman and related state and federal court decisions, cities and entrepreneurs have worked out an elaborate courting ritual in which local governments offer up their eminent domain authority while developers tout the economic benefits of their projects to the electorate. "All the developer has to do," says the IJ’s Bullock, "is to convince the city that it’s good for them and that he will pay for it, and the city will start taking away people’s property." He adds that cities often offer more than condemnations. "Eminent domain is part of a whole set of incentives -- tax breaks and deferrals and other public subsidies -- that add up to massive corporate welfare. Often the numbers fail to live up to expectations. Jobs don't materialize or the economic benefits don’t outweigh the subsidies or the drain on public services that the development creates." When this happens, Bullock says, cities are left holding the bag.

The IJ took on its first eminent domain case in 1996, winning a favorable ruling for an elderly homeowner who refused to sell her Atlantic City property for a Donald Trump casino. "After that decision, we were swamped with phone calls," Bullock recalls, "and we started to think that courts might be willing to revisit this issue." The IJ has since taken on several cases nationwide, and saw Norwood -- with its unblighted neighborhood, its developer-driven condemnations, and its questionable public use -- as another opportunity to illustrate to a court how wrongheaded the private use of eminent domain is. An Ohio judge, however, was unswayed, ruling in June that although the neighborhood was not blighted, it was "deteriorating," and on these grounds, Norwood could go ahead and condemn the holdouts' properties; they are appealing.

In the meantime, a series of jury trials will decide the value of the five condemned properties. (In September, in the first of these trials, Horney’s house was valued at $233,000, money that, he says, "I hope I never see.") But developments elsewhere might make these trials irrelevant. In August 2004, the Michigan Supreme Court invalidated its 1981 landmark Poletown v. Detroit decision, which had determined that "one entity's profit maximization contributed to the health of the general economy." Stating that "Poletown's 'economic benefit' rationale would validate practically any exercise of the power of eminent domain on behalf of a private entity," the court refused to allow Wayne County to condemn land for an industrial park. "State courts from Nevada to Connecticut have relied on Poletown in upholding condemnations," Berliner said. "Now the same case will work for our side."

Add this case to those roiling communities across the country (see "Doing Developers' Dirty Work," page 44), and you have the kind of confusion in lower courts that begs for clarification from the U.S. Supreme Court. And indeed, shortly after the Poletown decision, the court agreed to hear another IJ case, in which the city of New London, Connecticut, condemned an unblighted neighborhood in order to make way for a hotel and condominium complex. Bullock hopes the Supreme Court will revisit the scope of the Berman decision, and rein in the privatization of eminent domain.

Out here on Edwards road, yellow signs bearing messages like "HELD HOSTAGE" and "WE SUPPORT ROOKWOOD EXCHANGE" sprout like dandelions from front lawns, and a king-size bedsheet banner hanging from Sandy Dittoe's pink stucco one-story declares, "64 OF 65 RESIDENTS WANT OUT. I AM ONE OF THEM." Dittoe bought her house for $82,000 seven years ago, and she's almost completely rehabbed it since. In 2002, speculating on Anderson's plans, she bought a house around the corner, which she rents out. When Anderson offered her $175,000 for each property, "it was a godsend," she told me. "I was thrilled." She began to make plans to move and to pay off the loan for her Northern Kentucky nightclub. But she has to wait for Anderson to make deals with all her neighbors before she'll receive a penny.

In the meantime, Dittoe's in limbo -- a maddening situation that she blames on her holdout neighbors. "Sure I'm pissed. They're screwing everybody. I've been stuck in a house for two years. There's no point in putting any more money into it, but I still have to live here," she says, pointing out the unfinished trim in her kitchen and the place where she left off putting purple paint on a bedroom ceiling. Her neighbor, Bill Pierani, a part-time security guard for the Cincinnati Reds, agrees. "We'd have been out of here years ago if it wasn’t for them."

Pierani and Dittoe are glad to show me evidence of "blight": the streaks of grime in eaves; an overgrown back yard, home to rats and snakes; the foundations cracked, they say, by the heavy truck traffic; the "foot traffic" and the "element" it brings in; the guys -- "I won’t tell you what color they were," Pierani says -- who broke into someone's house. They point out the oil change place and the muffler shop down the street and describe how they've long wanted to get away from these nuisances -- although there's little evidence that they or their neighbors tried to sell their homes or otherwise flee the neighborhood before Rookwood Exchange came along. Pierani compares the neighborhood, in which he has lived for nearly all of his life, to the cancer he once had. "The job is to go in and cut it off completely. Not to keep hacking at it."

At a meeting the previous night, the residents' impatience turned on Anderson's lawyer, who assured them that the end was in sight. This statement left resident Walter Sims hopping mad. "That lawyer pissed me off because he stood up there and misled these people," Sims, who is settled into his rocker on the front porch, says in his Kentucky drawl. "He knows these people" -- he points to a holdout's house next door -- "ain’t gonna ever sell to him. But he’s relying on the city to do it for him in court. And he knows that until all these appeals are resolved, they can't do nothing. You know how slow the judicial system is? It takes them months to wipe their ass."

But the residents reserve most of their seething fury for the holdouts, and when Pierani says, "Twenty-five years ago, there would have been a homicide by this point," it's not clear if he's nostalgic or relieved. When Sims says, "I think people are mad and disgusted because they ain't got their money. Why haven't you done something by now to get us the money?" you feel how ugly things might get. And when a man smoking a cigarette on his porch first refuses to talk to you because "the papers always get this story wrong," and then calls you back to say, "Wait a minute. You can quote me on this. Fuck the Gambles. Yeah. Fuck the Gambles, and throw Joe Horney in there, too," you're pretty sure things already have.

In this kind of atmosphere, it's no surprise that the residents don't believe that the Gambles and the others are standing on principle. Explanations vary -- some think that they're angling for a better price, others that they're just stubborn -- but most people seem to agree with Dittoe's assessment that "this project is going to benefit everyone, all the residents here and the whole city." She adds, "There's more to it than just what these people want." But whatever NIMBY concerns may have motivated the holdouts in the first place, they have become galvanized by the large-scale implications of their battle. "What I want to protect is not just myself, but virtually everyone else in the USA from having their constitutional rights undermined," says Horney. "I mean, this is the land of the free and the home of the brave. We're allowed to go out and buy property, and that's being taken away." As they dig in for the appeals, it's clear that these folks are in it for the long haul, that, even with his rented eminent domain powers, Anderson has a lengthy wait before he can extend his empire into this neighborhood. "He can have the house when we're on our deathbed," says Carl Gamble. "Not a minute before."

When property lines run through the front door

The slowly shifting ground in the Berkeley hills area means the land that's yours today may be your neighbor's tomorrow

Patrick Hoge, Chronicle Staff Writer

The land under Robert Mathews' house in the Berkeley hills has slid about 20 feet since the structure was built in 1916. But property lines do not move, which means that today half of his house seems to sit on his neighbor's land.

"I figure the property line runs right through the middle of the front doorway,'' he said.

Three major landslides in Berkeley and neighboring Kensington are creating a dilemma for residents who, like Mathews, live in the well-populated neighborhoods.

When a home, or a driveway or a deck, slips onto a neighbor's land, does it become the neighbor's property?

Public officials in the East Bay have tried to stay out of the disputes, some of which have landed in court, but experts say they are likely to face increasing pressure to decide whether property lines should be redrawn when the stuff inside them moves.

Mathews didn't worry about the issue when he purchased his home at 1062 Keith Ave. in 1999. The area on his side of the street is part of the Keith Slide, which affects scores of neighboring properties.

But Mathews learned recently of two bitter property-line disputes just blocks away that city records show are in a landslide hazard area. In one case, an arbitrator ruled that although the land had moved, a survey determined ownership -- and thus a couple of feet of disputed earth belonged to the downhill neighbor.

"Now I'm worried,'' said Mathews. "What is that going to do to my (home's) resale value?''

Scientists have mapped and studied slow-moving slides in California for decades, and there are thousands in the Bay Area, said Richard Pike of the U.S. Geological Survey. Most move only as a result of moisture or disturbance.

In June, an international team including UC Berkeley scientists reported that large tracts of East Bay land typically move between 5 and 38 millimeters a year.

Land movement in Berkeley has wrecked home foundations, cracked walls and sidewalks, buckled streets and fences and frequently ruptured water lines. Some homes stand abandoned, and others have been rebuilt with massive and deep foundations.

But the impacts on property lines in urban neighborhoods have been discussed very little, Pike said.

"I'm surprised nobody figured this out earlier,'' he said. "As more people build in the hills, you're going to see this problem get larger and larger and larger.''

Howard Brunner, a consultant to the state agency that regulates land surveyors, said there is no state law specifically designed to address property-line disputes where the ground is slowly moving.

"Sooner or later, they're probably going to come up with some law for this situation, but not as yet, that I'm aware of anyway,'' he said.

According to Alan Kropp, a Berkeley geotechnical engineer, there are two major slides in Berkeley -- the Keith Slide and the Thousand Oaks Slide -- and one to the north in Kensington called the Blakemont Slide. Hundreds of homes are in the slide zones, which straddle the Hayward Fault.

In Kensington, Laurence Ellam said his neighbor in 2002 removed a gate, two trees and part of a brick walkway that his father built when he was 5 years old, and then built a new walkway based on the results of a new survey.

Ellam, 58, who with his mother lives at 1 Kerr Ave. on a slope with a stunning view of the Bay, said he spent $10,000 consulting an attorney who said there was little he could do.

Other residents in the area, which was developed primarily in the 1950s and 1960s, tell similar stories of changing lot boundaries.

Everett Moran, a veteran land surveyor in Berkeley, showed two decades ago that numerous houses in the Keith Slide area were crossing property lines.

In an attempt to facilitate the redrawing of boundaries, Moran in 1983 commissioned aerial photographs and superimposed property lines, and the result was dramatic. But getting agreement among all the property owners proved impossible. Richard Schwarzmann inquired about getting a survey of his property on the Keith Slide at 1170 Arch St. before he bought it in 1988, but a surveyor told him it wouldn't do any good because the structures had probably moved.

Schwarzmann shrugged it off and built a house on one end of the property and consolidated and modernized two early 20th-century cabins at the other end.

In 1996, Peter and Ann Coney of Walnut Creek bought the two-flat apartment building next door and applied to the city to add significantly to the back of the building.

Schwarzmann objected, but the Coneys won approval from the City Council. Along the way, neighbors started arguing over the location of Schwarzmann's southern property line, and whether two of his structures were over the line.

After several heated exchanges that included police being called, Schwarzmann sued the Coneys, seeking a court ruling that the land was his. It didn't go that way.

In binding arbitration, retired Contra Costa County Judge Richard Patsey in October ruled that a 2003 lot-line survey marked the edge of Schwarzmann's land, ordering him to pay nearly $41,000 to help build a new retaining wall and fence, among other things.

"I think the whole thing is absurd,'' said Schwarzmann. "The judge said I should go to my uphill neighbor to get my property from them. I don't want to do that.''

The Coneys and their attorneys could not be reached for comment.

A nearby resident, Howard Menashe, built a partial fence down the middle of a driveway that crosses his land -- even though his uphill neighbors, Linda Aurichio and Ruth Ellen Pearce, claim they have a deeded right to use the driveway to reach a back lot.

Aurichio and Pearce contend in court documents that Menashe built the fence and a concrete barrier in 2003 to block their access after a survey showed that the land had moved significantly downhill -- 5 feet since 1946 alone.

Menashe's attorney said the dispute has nothing to do with land movement, but Aurichio and Pearce's lawyer said that is exactly the issue.

Philip Daunt, Schwarzmann's attorney, tried to argue that such cases should be decided using the Cullen Earthquake Act, a state law passed in 1972 to allow redrawing of property lines. The law was enacted after an earthquake shifted numerous lot boundaries simultaneously in the San Fernando Valley.

The Coneys successfully argued, however, that while the act specifically mentions landsides, it was written to address large, sudden disasters,' not individual disputes arising out of continuous, ongoing occurrences like a slow- moving landslide.

In the past two years, Berkeley officials have started routinely requesting lot surveys from residents seeking to do additions or other modifications to their homes.

City planning director Dan Marks said it was unlikely that officials would allow modifications to a structure that crossed a lot boundary, or allow such a structure to be rebuilt on the same footprint if it is destroyed.

Schwarzmann and others wish that the city or some other government entity would craft an overarching solution to the problem of slow-moving land. Although the arbitrator's decision settled the dispute involving his property for now, the land continues to slide.

Assistant City Attorney Zach Cowan said the city has no authority over property line issues.

But retired Alameda County Superior Court Judge Roderic Duncan, who lives two doors down from Mathews on Keith Avenue, said he has contacted a friend who works for a committee in the state Legislature in hopes that someone there will get interested.

"It's a giant problem,'' Duncan said.

Loophole Pays Off on Upscale Buildings

By Joe Stephens

Washington Post Staff Writer

First of two parts

Two years ago, after leaving her job as Vice President Cheney's spokeswoman to join a lobbying firm, Juleanna Glover Weiss bought a new house. Weiss and her husband, lobbyist Jeffrey Weiss, settled on a century-old, 10-bedroom home sandwiched between foreign embassies in Kalorama. Today it is one of the most prominent party venues in Washington.

The Georgian-style mansion came with 11-foot ceilings, vintage chandeliers, inlaid hardwood floors -- and a $1.5 million price tag.

After closing on the house, the Weisses signed papers promising that they would not alter its outward appearance without first obtaining permission. They "donated" that pledge, known as a historic facade easement, to a nonprofit preservation trust. That allowed the Weisses to seek a federal income tax write-off for the estimated cash value of the gift.

Easement donors in D.C. usually write off about 11 percent of the value of their homes. That means owners of a $1.5 million mansion can claim tax breaks of $165,000 or more.

Such tax deductions are increasingly common although the District already bars unapproved and historically inaccurate changes in the facades of homes in the city's many historic districts. As a result, easement donors largely are agreeing not to change something that they cannot change anyway.

"It really is money from the taxpayer for nothing," said lawyer John D. Echeverria, director of the Georgetown Environmental Law and Policy Institute. "People are absolutely delighted -- and astounded -- that the federal government would send them $50,000 and more for doing nothing."

The Weisses are among hundreds of affluent Washingtonians who have taken part in the once obscure but rapidly growing program, created by Congress 28 years ago with the goal of preventing developers from ravaging historic streetscapes across the nation.

Before they bought their home, the Weisses already were well acquainted with the facade program. Records show that in 2000 they donated an easement on their previous home, which they purchased for $480,000.

Glover Weiss declined to comment, other than to say, "Washington is a beautiful, historic town, and I would like very much to have it remain that way for my children and grandchildren."

The tax deductions are supposed to represent the decrease in value of the property caused by the easement restrictions. Increasingly, though, the easements have become a way for owners of expensive houses to reap a windfall.

An analysis by The Washington Post of federal and local government data identified about 900 residential facade easements in Washington covering a total of 1,400 homes and condo units. Nationwide, the number of easement donations has been increasing rapidly, hitting about 700 last year.

Today, the average assessed value of residential structures covered by facade easements in the District is more than $1 million, the analysis showed.

The homes tend to be clustered in affluent neighborhoods in Capitol Hill, Dupont Circle and Georgetown. Most display brass plaques, many of them round and bearing a star, identifying the trust that holds the easement.

Homes enrolled in the program need not be architecturally striking. The houses also need not be especially antique -- homes built as recently as 1950 may qualify. And many preservationists say the easements may increase a building's value -- making the tax breaks unwarranted.

"They are giving up absolutely nothing," said former Treasury official Daniel Halperin, now a nonprofit tax specialist at Harvard Law School. J. Peter Byrne, a historic preservation specialist at Georgetown University Law Center, called the donations "bogus gifts" that have been supplying homeowners with "free money."

The increase in easements has been driven by the emergence of for-profit "facilitators" -- businesses that market the program and process the paperwork for homeowners, making the procedure quick and painless. In recent years, such companies and the nonprofit preservation groups that hold the easements have taken in millions of dollars for processing paperwork and monitoring the easements.

All those payments are underwritten by the tax breaks.

"Taxpayers are taking improperly large deductions for facade easements," Steven T. Miller, commissioner of the tax-exempt entities division of the Internal Revenue Service, warned appraisers meeting Oct. 22 in Washington. "The taxpayer can't give up a right to change the facade of a building if he or she doesn't hold that right in the first place."

'Perfectly Legitimate'

The rich, the famous and the merely well-to-do are joining the program in swelling numbers. Easement donors in recent years have included Sen. Christopher J. Dodd (D-Conn.), Sen. Kent Conrad (D-N.D.), film producer Sidney Ganis, Public Citizen President Joan Claybrook, National Public Radio host Steve Inskeep and New Yorker magazine investigative reporter Seymour Hersh.

"In my neighborhood, almost everybody has one," Hersh said. "If I remember, there was much hooting at us for not doing it."

Although public records do not establish whether donors actually took a deduction, tax specialists said it would be unusual to forgo the benefits. All donors who agreed to be interviewed acknowledged taking the tax breaks or planning to take them soon.

The exception was Dodd, who with his wife owns a three-story brick townhouse on Capitol Hill, assessed at more than $700,000. Dodd planned to take the deduction this tax season but is rethinking that decision after being contacted by The Post.

"We were using the best guidance of attorneys and accountants," said Jackie Clegg, Dodd's wife and a former vice chairman of the U.S. Export-Import Bank. "We'll reconsider and do the most appropriate thing."

Officials at nonprofit preservation groups contend that the easements serve a valuable purpose. Some are donated in areas where preservation laws are nonexistent or weak and enforcement spotty, the officials said. In cities with strict laws and enforcement, such as Washington and New York, easements act as an insurance policy, in case ordinances change or authorities fail to enforce existing law.

Not all the donations are identical. Some easements go beyond local ordinances by restricting changes to interior spaces and barring development on adjacent land. The easements also often restrict changes in subtle details, such as exterior paint colors, that are unaddressed or laxly enforced by local authorities.

"This is a perfectly legitimate program," said James M. Kearns, president of the National Architectural Trust, the nation's fastest-growing easement organization. "We are doing historic preservation and doing it extremely well, in my opinion."

Nonetheless, some homeowners who have profited from the program describe the tax write-offs as a waste of government funds. They asked not to be identified, for fear of attracting an IRS audit.

One homeowner, who is claiming a six-figure write-off for his Capitol Hill townhouse, described the program as "a boondoggle." Another, who is claiming a similar-size tax break on his Logan Circle home, said he had difficulty understanding why the "stupid" program exists.

"I was giving up nothing and getting a considerable amount of money in return," the homeowner said. "The government shouldn't allow it."

Last year, The Post began publishing articles examining tax deductions taken for donations of conservation easements -- deed restrictions added to land to preserve scenic vistas and wildlife habitat. The articles sparked investigations by the IRS and the Senate Finance Committee. More recently, their attention has turned to facade easements.

"The facade tax break itself makes it too easy for people to take a big tax deduction they don't deserve," Finance Committee Chairman Charles E. Grassley (R-Iowa) said in a statement to The Post. "I intend to take strong steps in the next Congress to end the abuses."

Also serving on the Finance Committee is Conrad, who lives nine blocks from the U.S. Capitol in a 96-year-old red brick house assessed at $597,000. In December 2000, Conrad donated a facade easement on his four-bedroom home to a trust in the District, property records show.

Conrad said through his spokesman, Chris Thorne, that although he could not recall exact figures, he believed his easement was appraised at 10 percent of the value of his townhouse at the time. After he was told of The Post's findings, Conrad said he believes the Senate should consider lowering the percentage donors may claim, perhaps to 5 percent. In view of the federal budget deficit, he said, lawmakers also should consider capping the amount that donors may deduct.

"The senator continues to believe there is strong support across the country for preserving historic properties, but it needs to be reformed," Thorne said.

Conrad is among many high-profile figures whose donations have helped make Washington the nation's leading city for such easements. At The Post, participants include Book World Editor Marie Arana and her husband, Pulitzer Prize-winning book critic Jonathan Yardley.

"In D.C., virtually the Who's Who has done this," real estate appraiser James D. Donnelly said. "Their lawyers and accountants are all looking at this, and they are all saying 'My goodness, it is for real.' "

There is no comprehensive list of homes with easements. But The Post's study shows that Capitol Hill has about 340, followed by Dupont Circle (290), Georgetown (250) and Cleveland Park (90).

Hersh, a Pulitzer Prize winner best known for his reporting on the My Lai massacre and the Abu Ghraib prison abuse scandal, said he donated an easement three years ago. He called the restrictions a "minimal intrusion" that did not affect how he used his Cleveland Park house, built in 1910 and assessed this year at $985,000.

Hersh said he made the donation primarily for the tax write-offs. There was "nothing illegal" about the deduction, Hersh stressed, or his accountant would have waved him off -- particularly given that he was audited repeatedly during the Nixon administration. Hersh said he could not recall how much he saved but described it as "a nice benefit to have."

"Of course," he added, "it isn't helping the Treasury."

Ganis, who splits his time between Hollywood and his native New York, said he donated an easement on his circa 1825 Federalist townhouse in west Greenwich Village. Ganis has worked as a senior executive at Sony, Columbia and Paramount Pictures, and has produced such films as the Adam Sandler vehicles "Mr. Deeds" and "Big Daddy."

Even though Ganis said his easement is no more restrictive than local New York preservation ordinances, "we get a nice, healthy tax deduction."

"It really is a good business decision," he said. "There aren't that many good, solid tax incentives these days, and this happened to be one of them. Lucky for us."

'It's a Paper Concept'

The tax breaks are available to owners of residential and commercial structures in designated historic districts or individually listed on the National Register of Historic Places.

The owner must find a nonprofit organization willing to accept the easement as a charitable donation. The nonprofit becomes responsible for monitoring the facade, approving changes and suing if it finds violations. The easements are attached to property deeds and remain there in perpetuity.

Property owners who live in historic districts generally begin the donation process by asking the National Park Service to certify their buildings as historic. Since 1996, the Park Service has received 1,632 such applications nationwide, according to federal data analyzed by The Post. All but eight requests were granted.

Although national in scope, the 28-year-old program first found traction in Washington, where preservationists mobilized in the late 1970s to protect the capital's rich architectural history.

One of the first local nonprofits to accept facade donations was the Foundation for the Preservation of Historic Georgetown, whose directors have included such prominent figures as former secretary of state Dean Acheson, former White House counsel C. Boyden Gray and Carolyn A. Fortas, wife of former Supreme Court justice Abe Fortas.

Following the Georgetown group into the business were the L'Enfant Trust, in 1978, and the Preservation Trust, in 1980. The organizations charged each donor a fee, which they described as a charitable contribution. The money was meant to establish endowments and underwrite the cost of annual facade inspections.

Beginning in 1998, facade easement donations increased dramatically. That surge coincided with the rise of for-profit facilitators, such as the Capitol Preservation Alliance. In Washington, the facilitators found lots of opportunity: 25 residential historic districts encompassing about 23,500 structures and 17 percent of the city's land area.

The program has proved popular because it provides money to everyone involved -- the facilitators, the nonprofits that accept the donations and the homeowners.

The size of the tax deduction is determined by appraisers who estimate how much the property value has dropped because of the easement restrictions. Owners generally may write off the value of their donation over as many as six years, offsetting as much as 30 percent of their annual income.

Homeowners typically claim tax deductions of 10 to 15 percent of their home's value, according to preservationists. Until earlier this year, an IRS guide suggested that easement valuations "should" fall in that range.

In Washington, easement promoter Tim Maywalt said, "I have never seen an appraisal come in at anything but 11 percent -- and I have seen 350 appraisals."

Maywalt and other easement promoters said courts in the late 1980s confirmed that such large write-offs are permissible. "That's just as crystal clear as can be," said Kearns, of the National Architectural Trust.

Some analysts, however, described the court rulings as contradictory, narrow and dated.

In one U.S. Tax Court case often cited as authorizing today's large deductions, the judges' ruling specifically warned donors that they were not automatically entitled to substantial write-offs.

"By this decision we do not mean to imply that a general '10-percent rule' has been established with respect to facade donations," the judges wrote in the 1988 case, Nicoladis v. Commissioner of Internal Revenue. "Valuation itself is still a question of facts and circumstances."

Halperin, the former Treasury official now teaching at Harvard, described the large tax breaks routinely taken today as "just crazy." He estimated the true value of the average donation as "pretty close to zero."

In fact, in pitches to prospective clients, some promoters of the tax deductions have undercut the argument supporting the large write-offs by stressing that the easements add few meaningful restrictions that would decrease market value. Those promoters include Maywalt, a contractor for the Washington-based Capitol Preservation Alliance.

At a seminar in January of this year in Washington, Maywalt emphasized in a talk to prospective donors that "prior approval of facade changes are already restricted in exactly the same way by the city's historic preservation review board." A tape recording of Maywalt's talk was provided to The Post by a participant.

The only difference, he said, is that the easements allow the trusts to review color changes and prohibit homeowners from allowing their houses to "fall down" from neglect.

Maywalt also told the property owners they would receive tax breaks for a drop in their property values but stressed that there would be no actual decline.

"It's a paper concept," he stressed on the tape recording. "The reality of it is that the property is going to continue to accrue in value. . . . Properties with easements have turned over one, two, three, four, five times. We have not seen any decrease in value."

Tom Branham, chief tax assessor for Washington, said his office has searched in vain for evidence of lost value, to determine whether property taxes should be reduced for the donors.

"We don't see any difference in value here between the homes that have the facade easements and the ones that don't," Branham said.

Writing last year in the Journal of Financial Planning, Steven McClain, co-founder of the National Architectural Trust, asserted that "the presence or absence of an easement is only a minor factor in the buying decisions of future purchasers."

Interviews with donors show the vast majority have no interest in altering the look of their homes, even if they could.

"I can't imagine anybody who would ever want this house would ever want to alter the facade," said Paul Sherrill, who donated an easement on the brick and limestone exterior of his Georgian Revival townhouse, off Dupont Circle. The home, assessed at $1.1 million, was featured in an eight-page photo spread in the September issue of Architectural Digest.

Some preservationists argue that the easements increase property values, by making neighborhoods well preserved and even more exclusive.

"The property generally becomes more valuable with the easement because buyers place a premium on the architectural integrity of all such properties in the community," Maywalt wrote in January in a Washington-based newsletter for financial planners.

The fact that easements are lucrative and painless puzzles potential donors. Kearns wrote recently in a newsletter for accountants that homeowners' initial reaction to the program was skepticism, "because the opportunity sounds 'too good to be true.' "

Kearns said in an interview that he knew of one easement that recently was valued at $1 million. In another recent case, he said, an easement on a New York commercial building was valued at $150 million; the tax benefits went to a partnership of about 35 people. He would not identify the owners.

Recent data on abuses in the program are scarce. But a 1984 IRS study examined 42 deductions taken for easement donations and determined that all but one appeared inflated, resulting in overvaluations totaling nearly $32 million. The study found that property owners generally overvalued their easement deductions by an average of 220 percent.

The report also found that the tax benefits had largely gone to "higher income" people and companies. Low-income families have difficulty paying for appraisals and coming up with the cash demanded by trusts, preservationists said.

"These tax deductions are only useful to people of great wealth or great income," George Mason University professor James D. Riggle said. He dismisses the write-offs as "tax deals for rich guys."

Advocates put familiar faces on housing need

Next generation, local workers cannot stay

By Emily Shartin, Globe Staff

Bonnie Sims was running out of options.

The single mother of two wanted to stay in her hometown of Northborough. The town's high cost of housing had forced her to move in with her parents, but she knew that arrangement couldn't last forever.

''I like Northborough," said Sims, 35, who works as an office manager for her father's company. ''It's the town I grew up in."

''This is where all their friends are," she added, referring to her children.

Last year, a new housing development called Sunnyside Estates on Route 135 offered Sims what she was looking for -- a chance to own a home in Northborough at a price she could afford. Under a state law that aims to increase affordable housing by allowing builders to sidestep zoning restrictions if a quarter of the units are offered at below-market rates, four of the condominiums in the 16-unit development were sold for $125,000 apiece. Through a lottery, Sims was selected to buy one of them.

Local housing advocates are hoping people like Sims will help put a familiar face on the need for affordable homes in Boston's western suburbs, where the median price of a home in 2003 was $380,000.

Affordable housing advocates have teamed up with leaders in the economic development and building communities to hold a series of meetings throughout the region aimed at debunking what they call persistent misconceptions about affordable housing, and to show how a lack of affordable homes can affect the whole community. The next meeting will be held at 7:30 tonight at Bolton Town Hall. Another is scheduled for 4 p.m. next Thursday at Franklin Town Hall.

Sims is one of several local residents and officials featured in a video that will be shown at the meetings. The campaign has been organized primarily by the 495/MetroWest Corridor Partnership, an economic development organization based in Westborough, and the Boston-based Citizens Housing and Planning Association, which hopes to channel public awareness into the creation of 13,000 new homes across the area by 2010.

For many suburban residents, their introduction to the debate on affordable housing has often been a specific -- and controversial -- proposal for a development in their community. Sunnyside Estates, for example, was attacked by residents who were concerned about the development's density and potential traffic problems. But organizers of the new campaign say they hope people will begin to think about the issue of housing in newer, broader ways.

Lynn Sand, chief executive of the 495/MetroWest Corridor Partnership, said she prefers to think of affordable housing as ''workforce housing," because many of the people who are struggling with the region's home prices are teachers, police officers, or firefighters.

Westborough, for example, used to require that all firefighters live in town, said Chief Walter Perron, who also is featured in the video. When the town's housing prices started to increase, the rule was modified to include a ring of contiguous towns such as Shrewsbury and Northborough. When that rule, too, became difficult to abide by, it was expanded to include an additional ring of communities, Perron said in an interview. Westborough has lost applicants for firefighting positions once candidates learned about the residency requirement, Perron said.
'The housing market out here is just completely out of sight," he said. ''I don't think there's really a whole lot the town can do about it."

In the private sector, too, many employers have identified the high cost of housing in Massachusetts as a barrier to recruiting job candidates. That could ultimately force a company to relocate, Sand said, which would mean a loss of revenue to the town. It could also force established homeowners to face moving or losing their jobs.

''The haves can become the have-nots," Sand said.

Along with concrete hurdles such as the high cost of land and the lack of helpful zoning laws, housing advocates have said they are hamstrung by public misconceptions about what affordable housing is and for whom it is meant. The bleak image of a high-rise apartment is what many people conjure, they said, rather than the neatly appointed villages of condominiums that have been built recently in many communities.

Helen Lemoine, a former Framingham Planning Board member who is helping to organize the local meetings, said it is difficult for residents to recognize the need for more housing when they have been comfortable in their own homes for so long.

''The feeling has been that the need for affordable housing is overblown," Lemoine said. She came face-to-face with the realities of the local housing market when her daughter, a teacher in Framingham, had to move back home while searching for housing she could afford.

Under state guidelines, 10 percent of a community's total housing stock is supposed to sell or rent at below-market rates, and several communities in the region are still far from that goal. Less than 1 percent of Dover's housing is considered affordable, according to the state Department of Housing and Community Development. In Boylston, the number is 1.5 percent; in Sherborn, 2.35 percent.

But many communities are making progress toward the goal. Locally, both Westborough and Framingham have achieved the 10 percent mark, according to the state. Franklin is over 9 percent, and Lincoln and Marlborough are both over 8 percent. The community meetings will include some discussion of what communities are doing to increase their affordable housing stock.

''There's some good news out there," said Aaron Gornstein, executive director of the housing and planning association.

Bolton, Lincoln, Shrewsbury, and Stow are among about 25 communities that have state-approved affordable housing plans, which are intended to map out housing production.

Bolton is about to open a 28-unit apartment complex for residents 55 and older that will rent almost entirely at below-market rates, said Doug Storey, a member of the Planning Board and chairman of the town's affordable housing partnership. The town also has been presented with several proposals under the state's Chapter 40B law, Storey said.

Although residents have had concerns about some of those proposals, he believes Bolton has been proactive in raising awareness about the need for affordable housing.