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California Eminent Domain Report

"…nor shall private property be taken for public use, without just compensation."

City of Needles may use Eminent Domain for I-40 Connector Project

Posted in Projects

According to Robin Richard’s article, “Needles May Exercise Eminent Domain to make way for Highway 95 Connector,” the City of Needles is considering adopting Resolutions of Necessity to acquire 14 parcels for its long-planned I-40 connector project.   The City will be acquiring permanent road easements and temporary construction easements of various sizes.  The impacted properties include residential, commercial and motel uses.  Some of the acquisitions are fairly small, but as my colleague Brad Kuhn recently posted, even these sliver acquisitions can have impacts to the owners.

Traffic Relief for Key Corridor

 The City is seeking to improve the connections between I-40 and Arizona 95, a heavily utilized corridor during the tourist season.  According to the City, traffic volumes increase as much as 100% due to visitor and recreational traffic.   The project will widen West Broadway, J Street, Needles Highway, North K Street and Harbor Avenue in Arizona. The project also includes improvements to several intersections.  Currently, there are no signals at any of the intersections along the corridor, which leads to traffic delays and unsafe conditions.

Why Eminent Domain?

City council members may be sensitive about filing an eminent domain action, concerned that doing so may derail negotiations.  But not necessarily.  With good communication, productive negotiations can continue.  In fact, we have successfully negotiated agreements for our agency clients even after the resolution is adopted.  It appears that is what the City of Needles is trying to do here.  The City’s staff report states that eminent domain is used as a “last resort.”  The City intends to continue negotiating with the owners, but as we see quite often, must proceed with a resolution of necessity and filing of an eminent domain action in order to secure possession of the property to meet key contractual deadlines.

Federal Court States Rationale for U.S. Take of California Land a “Sham”

Posted in Court Decisions, Right to Take

The question now is, is the court’s statement merely a bump in the road or a roadblock?  The United States filed the eminent domain action seeking to condemn certain access rights so it could increase its profitability when it sold vacant federal land in Alameda County, California.  In its complaint and declaration of taking, the United States alleged that it needed to condemn the property interest for the “continuing operations” of the Alameda Federal Center.  In support of the taking, the United States relied on the General Service Administration’s general authority.  The federal court found, however, that while the General Service Administration’s general authority did authorize certain condemnation actions, it would not support the use of eminent domain in this specific situation.  (See United States of America v. 1.41 Acres of Land (N.D. Cal. Nov. 10, 2014).)

In order to streamline the litigation, the United States moved to strike two affirmative defenses:  (1) that the taking is not authorized by Congress; and (2) that the taking is not for a valid public purpose.  In support of the motion to strike, the United States argued that Congress authorized the General Service Administration to condemn land when it will increase the profitability associated with the disposal of federal land, and that the courts have held increased profitability is a valid public purpose.

As to the first issue, the federal court found that in various disposal statutes Congress did authorize the General Service Administration to condemn land when it would result in a more profitable sale of federal land.  However, the United States did not cite that authority in its complaint and declaration of taking.  Instead of citing the disposal statutes, the United States cited the General Service Administration’s general authority.  While this authority would be adequate if the access easement was necessary for the operation of federal property, the court found that it could not reach this conclusion because there was evidence demonstrating that the condemnation was intended to benefit the vacant lot, and there was an existing access easement to service the vacant lot for so long as it was owned by the United States.

As to the second issue, after noting that increased profitability was a valid public purpose, it found that in light of  the stated basis for the condemnation (continuing operations), and the existing access easement “already owned by the United States for exactly that purpose, the supposed rationale for condemnation would appear to be a sham — or so it is alleged — and at this stage, that defensive allegation will not be stricken.”

While the deficiency appeared to be nothing more than a scriveners error, the court expressly declined to decide whether the United States could amend its declaration to correct the error.

Eminent Domain Begins for County of Sacramento Road Projects

Posted in Projects

As traffic continues to increase and roadways become more congested, California’s transportation infrastructure needs to keep up.  While there has been a concerted focus on alternative methods of transportation (such as rail, bikeways, etc.), street and highway widenings are still a major focus of local government agencies.  The County of Sacramento is no different, as it embarks on the Hazel Avenue and Fair Oaks Boulevard road widening projects.  These street improvement projects typically require right-of-way acquisition, and while the acquisitions are typically small strips of land necessary for street and sidewalk improvements, the impacts can often be significant, especially for commercially developed properties.

The County of Sacramento is experiencing just how difficult these street widenings can become.  According to Tony Bizjak’s article in the Sacramento Bee, “Eminent domain set for road projects in Fair Oaks, Carmichael,” the County has adopted resolutions of necessity to acquire parts of 34 properties along Hazel Avenue and Fair Oaks Boulevard for these projects.  The acquisitions are necessary to make room for utility relocations, sidewalks and bike lanes.  These acquisitions are on top of the 41 houses already acquired and knocked down on Hazel Avenue.  While these new part-take acquisitions will not require the demolition of any buildings, they do present the possibility of severance damages — or damages to the remaining property not being acquired.  For example, there could be a loss of parking, visual or aesthetic impacts, or circulation or access impacts.  Local businesses may also attempt to make claims due to construction-related impacts or generally business losses suffered as a result of the projects.

While street widenings — and their resulting sliver acquisitions from the front of properties — may seem uncontroversial and nominal in the sense of property valuations, they do raise a host of issues and present the possibility for much more substantial claims.  Agencies should budget accordingly when planning these projects, and local property and business owners should understand that they are entitled not just to the property value of the sliver easement being acquired, but potentially the damages caused to the remaining property.

Join Nossaman at the Self Help Counties Coalition’s 2014 Focus on the Future Conference

Posted in Events

The Self-Help Counties Coalition’s 2014 Focus on the Future Conference is just around the corner.  This year, it is taking place in Santa Clara on November 16-18.  I will be presenting on the topic “Precondemnation Planning & Early Acquisition Efforts: Best Practices to Acquire Right of Way Without Blowing Your Project’s Budget” on Tuesday, November 18 from 10:30 a.m. to 12:00 p.m.  My panel includes Bijal Patel at Santa Clara Valley Transportation Authority, Chip Willett at Dokken Engineering, Rob Caringella at Jones, Roach & Caringella, and Joey Mendoza at Overland, Pacific & Cutler.

Other Breakout Session topics include:

  • Sustainability – How VTA and LA Metro are Achieving the Triple Bottom Line
  • Statewide Rail Modernization, Including High-Speed Rail, Inner City Rail, and Cap and Trade
  • CM/GC Industry – Alternative Project Delivery
  • Redefining Mobility – Connected/Autonomous Vehicles
  • New Communications Strategies in Transportation with Social Media

If you’d like more information on the event, click here.  If you’d like to register, click here.  We hope to see you there!

There is Still No Private Right of Condemnation (Generally)

Posted in Uncategorized

Most people understand the basic concept of eminent domain: the government takes someone’s private property and pays the owner “just compensation” for the taking.  Sometimes, however, the government “takes” (or “damages”) private property without filing an eminent domain action.  These situations end up as “inverse condemnation” cases, where the property owner sues the government for compensation for the taking.

Assuming the court concludes that the government has indeed taken or damaged property, the end result in an inverse condemnation case is about the same as any other eminent domain action: the jury decides how much compensation the owner should receive.  (Admittedly, there are some unique twists and turns to inverse condemnation cases, such as the owner’s right to recover attorneys’ fees, but those differences aren’t really relevant to this story.)

So we all know generally how eminent domain and inverse condemnation work.  But what happens when the “taking” or “damaging” is by a private person, not the government?  Can the private person essentially invoke the equivalent of an eminent domain power simply by waiting to get sued and then paying compensation to the owner whose property is damaged?  The short answer to that question is “no.”  The long answer, as discussed below, is “noooooo.”

In Aspen Grove Condominium Association v. CNL Income Northstar LLC et al., an unpublished decision, the California Court of Appeal upheld an injunction, because not doing so would essentially give the private property owner the right to condemn his neighbor’s property.  The case resulted from a dispute over a 2004 water retention basin built in connection with a planned expansion of Northstar Village Ski Resort.  The very same year defendant CNL installed the retention basin, water began overflowing and seeping from the basin downhill onto plaintiff Aspen Grove’s property.  After several failed attempts to fix the problem, CNL gave up.  It told Aspen Grove that it was done trying to fix the problem.  (As a brief aside, one wonders what the “retention” basin actually did, since it obviously failed miserably at the one thing typically associated with a retention basin – actually “retaining” the water.)  In any event, Aspen Grove sued, and the trial court granted a permanent injunction against CNL, requiring it to remove the retention basin.

The appellate court upheld the injunction, agreeing with the trial court’s finding that Aspen Grove had no adequate remedy at law and that the only way to prevent further damage to Aspen Grove’s property was to have the retention basin removed.

But it was part of the court’s reasoning in upholding the injunction that brings the case to our attention.  The court explained that if it simply awarded damages to Aspen Grove without ordering the basin’s removal, it would essentially be giving CNL the right to inversely condemn Aspen Grove’s property.  In other words, if CNL were allowed to continue draining its water onto Aspen Grove’s property so long as it paid for the damage it caused, it would be little different from the remedy afforded owners when the government damages property.  But this “pay-for-the-damage” remedy works for government conduct specifically because the government possesses the power to condemn the property – a power CNL lacked.

The bottom line is that even if CNL were to offer Aspen Grove more money than the losses resulting from the flooding, it couldn’t force Aspen grove to accept that remedy.  CNL simply had no right to force an invasion of Aspen Grove’s property rights. 

In the end, an unpublished decision like this creates no new law, and this one in particular contains only passing references to eminent domain (it was largely a fairly typical nuisance case).  Even so, it serves a purpose – other than forcing the removal of CNL’s failed retention basin – because it reminds us that inverse condemnation derives from the government’s power of eminent domain, making the theory largely inapplicable to conduct by private parties.  (Now before some of you jump all over me with examples of non-governmental entities being sued successfully for inverse condemnation, realize that this is just a rule which, like so many, does have exceptions.) 

Governor Brown Signs into Law AB 229 and SB 628, Giving New Life to Tax Increment Financing

Posted in Articles, New Legislation, Redevelopment

In late September, Governor Brown signed into law AB 229 and SB 628, which are intended to finance public capital facilities or other specified projects of communitywide significance previously financed by redevelopment agencies.

AB 229 and SB 628 both seek to expand existing but underutilized Infrastructure Financing Districts (Financing Districts).

AB 229 authorizes the creation of Infrastructure and Revitalization Financing Districts (Revitalization Districts) by the legislative body of a city or county[1] to finance projects of “communitywide significance” pursuant to an infrastructure financing plan adopted by the district.  A Revitalization District may be formed for up to 40 years by passage of a resolution of intent.  The resolution of intent must specify the boundaries of the Revitalization District, the types of projects the Revitalization District will finance, and state that incremental property tax revenues may be used to finance the Revitalization District’s projects, provided that use of incremental tax revenues allocated to any other taxing agency must be approved by said agency.

The issuance of bonds by a Revitalization District requires 2/3 voter approval.  The legislative body of a city or county may also dedicate a portion of its funds from the Redevelopment Property Tax Trust Fund to the Revitalization District.

SB 628 authorizes the legislative body of a city or county to form an Enhanced Infrastructure Financing District (Enhanced Infrastructure Districts) to finance various infrastructure projects pursuant to an infrastructure financing plan.  First the legislative body must establish a public financing authority, consisting of members from the city, county and the general public.  The public financing authority acts as the governing body of the Enhanced Infrastructure District.  By passage of a resolution of intent, an Enhanced Infrastructure District may be formed for up to 45 years.  The resolution must state the boundaries of the Enhanced Infrastructure District, the types of public facilities the Enhanced Infrastructure District will finance, the need for and goals of the Enhanced Infrastructure District, and state that incremental property tax revenues may be used to finance these projects, provided that use of incremental tax revenues allocated to any other taxing agency are approved by said agency.

With 55% voter approval, an Enhanced Infrastructure District may issue bonds to finance infrastructure projects such as highways, interchanges, transit facilities, sewage treatment and water reclamation plants, brownfield restoration and other environmental mitigation, low and moderate income housing, and transit priority projects

Before the passage of AB 229 and SB 628, a Financing District was prohibited from including any portion of a redevelopment project area.  Now districts formed under AB 229 and SB 628 may be located in, or overlap with, any redevelopment project area, former redevelopment project area or former military base.  Cities or counties that created a redevelopment agency are prohibited from creating a Revitalization District or an Enhanced Infrastructure District until the successor agency receives a finding of completion pursuant to Section 34179.7 of the Health and Safety Code.  These bills also authorize a Revitalization District or an Enhanced Infrastructure District to implement hazardous cleanup pursuant to the Polanco Redevelopment Act.

Statements that AB 229 and SB 628 will bring back redevelopment law are misleading.  These bills do not provide the same development mechanisms that were utilized by former redevelopment agencies, such as the use of development agreements and using another agency’s funds without its approval.  Rather, these bills are a financing mechanism, subject to approval by any agency whose funds are sought by a Revitalization District or an Enhanced Infrastructure District, with high voting requirements.  One can imagine the types of projects another agency will approve for usage of its funds – those that strictly benefit a wider region or those that will enhance property values.


[1] The city or county must be acting as a military base reuse authority in order to form the Revitalization District.

Coastal Commission’s Public Access Easement Found to Be A Taking

Posted in Court Decisions, Inverse Condemnation & Regulatory Takings

In a published decision, the California Court of Appeal for the Second Appellate District rejected the California Coastal Commission’s (“Commission”) collateral estoppel argument and found that there is no rational nexus or rough proportionality between the work proposed by an applicant on a private residence a mile from the coast and a lateral public access easement imposed by the Commission as a condition of approval.  Accordingly, the easement condition amounted to an unconstitutional taking.  (Bowman v. Cal. Coastal Com. (Oct. 23, 2014).)

In 2002, the property owner of 400 acres in San Luis Obispo County submitted a Coastal Development Permit application to the County in order to connect an existing well to an existing, but uninhabited residence.  The property owner subsequently revised the application to also include the replacement of an existing septic tank and the rehabilitation of the residence.  In 2004, approximately a year after the property owner had died, the County approved the Coastal Development Permit.  The approval of the permit, however, was conditioned on the current owner’s (“SDS”) dedicating a lateral easement for public access along the shorefront portion of the property.  The stated basis for the condition was that the residence had not been occupied for several years and its occupation would therefore increase the intensity of the property’s use.  SDS did not appeal the imposition of the condition, although the notice of approval stated that SDS had 14 days to file an appeal.

Instead, approximately nine months later, SDS filed a new Coastal Development Permit application covering all of the activities approved in the prior permit, along with the construction of a new barn to replace the existing barn that had collapsed.  SDS also requested that the County remove the condition from the prior permit requiring the dedication of a lateral public access easement.  After the County approved the new application, along with the removal of the condition, the Sierra Club and the Surfrider Foundation appealed the County’s approval to the California Coastal Commission.

On appeal, the Commission found that the easement condition was permanent and binding on the landowner, and that removal of the easement condition would violate public policy.  Accordingly, the Commission reinstituted the easement condition.

SDS challenged the Coastal Commission’s decision in court, arguing that the easement condition constituted an unlawful exaction under Nollan v. California Coastal Commission (1987) 483 U.S. 825 and Dolan v. City of Tigard (1994) 512 U.S. 374.  The Commission, declining to address the takings issue head-on, argued that the legal challenge by SDS was barred by the doctrine of collateral estoppel because SDS failed to appeal the original County approval imposing the easement condition.  The Court of Appeal made short work of this argument, however, explaining that under the instant facts, “application of collateral estoppel gives primacy to a procedural rule that creates an unjust result and subverts the fair application of the California Coastal Act of 1976.”

Thus, as SDS had neither acted under or accepted the benefits of the prior approval, and because the easement condition amounted to an unconstitutional exaction, the Court of Appeal held that the doctrine of collateral estoppel could not be applied to immunize the Commission’s imposition of the unlawful condition.

Join Us at the Appraisal Institute’s Annual Litigation Seminar in Los Angeles on November 13

Posted in Events

The Southern California Chapter of the Appraisal Institute will be holding its 47th annual Litigation Seminar on November 13, 2014 at the City Club in Los Angeles.  I’ll be presenting on the topic “The Perception of Advocacy and Consequences for the Appraiser.”  John Ellis, MAI, from Integra Realty Resources, Steven Fontes, MAI, from Mission Property Advisors, and Lance Hall, from FMV Opinions, Inc., will also be on my panel and will provide excellent insights into appraiser bias and its impacts on a valuation assignment.

At the seminar, my colleague Bernadette Duran-Brown will also be presenting on the topic “Introduction to the Litigation Appraisal Process.”  Included on her panel are Steve Valdez of South Coast Realty Advisors and Adam Dembowitz of Integra Realty Resources.

Other topics include:

  • Case Study:  Severance Damage Issues in Grade Separation Projects (Robert Lea, MAI, Lea Associates; Mark Easter, Best, Best & Krieger)
  • How Real Estate Valuers Have Abdicated Their Role as Expert Witnesses and Expert Service Providers in Commercial Litigation (Richard Marchitelli, MAI, Cushman & Wakefield)
  • Economist vs. Appraiser:  Tools of the Trade in Litigation (George Dell, MAI, Valuemetrics; Louis Wilde, Gnarus Advisors)
  • Dirty Little Secrets:  Part Deux — Toxic Litigation (Orell Anderson, MAI, Strategic Property Analytics; Paul White, Tressler LLP; Michael Leslie, Caldwell Leslie & Proctor LLP; Rick Friess, Allen Matkins)

Here is a link to the Appraisal Institute’s website with details on the litigation seminar.  We look forward to seeing you there!

City of Pittsburg, CA Moves Forward on Controversial Donlon Blvd. Project

Posted in Projects

The Contra Costa Times reported last week that the City of Pittsburg certified the environmental document for the Donlon Boulevard extension after nearly two decades of trying.  Although the vote was unanimous, the project has vocal resistance.   According to the Save Mount Diablo website, the project may induce growth, destroy a “spectacular” ranch and actually create rather than relieve traffic congestion.  That group has made clear it does not agree with the City’s action.

Often once an agency has certified its environmental document, right of way acquisition soon follows.  The California Environmental Quality Act (CEQA) gives opponents a short window to file a challenge, and once that time has passed, the project can proceed.   But the Donlon project’s opponents are unlikely to miss their chance to challenge the project before right of way acqusition starts.  And even when the City does begin acquiring property, it doesn’t mean the CEQA challenges are over.  Courts have allowed property owners to challenge environmental documents as part of an eminent domain action, and I would not be surprised if that happens here.

 

Join Us at the ALI-CLE 2015 Eminent Domain & Land Valuation Litigation Seminar

Posted in Events

For those of you interested in hearing from eminent domain experts across the United States on hot topic condemnation issues, I hope you’ll join us at the ALI-CLE’s 32nd Annual Eminent domain and Land Valuation Litigation Program.  The Program will take place February 5-7, 2015, at the Hotel Nikko in San Francisco.  I’ll be presenting on a panel with Dwight Merriam (Connecticut) and Mark Murkami (Hawaii) on “Denominators and Bright Lines:  The Search for the Relevant Parcel in Eminent Domain and Regulatory Takings.”

If seeing me doesn’t get you interested (understandably), hopefully this fantastic list of topics and speakers will:

  • Eminent Domain National Law Update – Amy Brigham Boulris, Gunster, Yoakley & Stewart, P.A., Miami (and Robert Thomas)
  • When Fourth Amendment Seizures Become Fifth Amendment Takings – Herbert W. Titus, William J. Olson, P.C., Vienna, Virginia
  • When Judges Overstep Their Authority: What To Do in the Courtroom – Edward G. Burg, Manatt, Phelps & Phillips, LLP, Los Angeles
  • Condemnors’ Special Considerations When Using Outside Counsel –David L. Arnold, Pender & Coward, P.C., Suffolk, Virginia, and Brandee L. Caswell, Faegre Baker Daniels LLP, Denver
  • Pipelines and Immediate Possession: The Looming Circuit Split Controversy – Justin HodgeJohns Marrs Ellis & Hodge LLP, Houston and Jeremy P. Hopkins, Waldo & Lyle, P.C., Norfolk, Virginia
  • Contaminated Land: The Impact on Use, Utility, Value and Mitigation – Darius W. DynkowskiAckerman Ackerman & Dynkowski P.C., Cleveland; Thomas L. Stokes Jr., Stokes Environmental Associates, Norfolk, Virginia
  •  Equal Access to Justice Act: Recovering Attorney’s Fees if Uncle Sam Condemns –  Stephen J. ClarkeWaldo & Lyle, P.C., Norfolk, Virginia
  • The Red-headed Step Child: Overcoming Reluctance to Take Relocation Cases ­– Jaclyn Casey BrownLewis Roca Rothgerber LLP, Denver, Robert Denlow,Denlow & Henry, St. Louis, and Michael SullivanRange West Consultants LLC, Prescott, Arizona
  • What’s Wrong with the Law of Valuation in Eminent Domain: Four Rules to Change – John C. Murphy, Murphy & Evertz, LLP, Costa Mesa, California
  • How Jury Instructions Frame Your Case – Andrew Prince Brigham, Brigham Property Rights Law Firm PLLC, Jacksonville, Florida and Jack R. Sperber, Faegre Baker Daniels LLP, Denver
  • Challenging the Take – Dana Berliner, Director, Institute for Justice, Arlington, Virginia, Janet Bush Handy, Deputy Counsel, Assistant Attorney General, Maryland State Highway Administration, Baltimore and Matthew W. Fellerhoff, Strauss Troy Co., LPA, Cincinnati
  • How to Simplify Valuation in the Courtroom – Leslie A. Fields, Faegre Baker Daniels LLP, Denver, Susan Macpherson,Senior Litigation and Jury Consultant, NJP Litigation Consulting, Minneapolis, Minnesota, Richard Marchitelli, MAIExecutive Managing Director, Valuation and Advisory, Cushman & Wakefield, Charlotte, North Carolina, and Joe Waldo
  • Proving Your Case: Staying Focused – H. Dixon Montague, Vinson & Elkins LLP, Houston
  • Valuation of Temporary Construction Easements – Keith M. Babcock, Lewis, Babcock & Griffin, LLP, Columbia, South Carolina and Randall A. Smith, Smith & Fawer, L.L.C., New Orleans
  • Severance Damages in Partial Takings Cases: Lessons Learned and Future Considerations – Anthony F. Della Pelle, McKirdy & Riskin P.A., Morristown, New Jersey
  • Cross Examining Appraisers: Taking Apart the Key Witness – Jill S. Gelineau, Schwabe, Williamson & Wyatt, P.C., Portland, Oregon and Michael Rikon, Goldstein, Rikon, Rikon & Houghton, P.C., New York
  • Dropping the Bomb: Challenging Highest and Best Use – Mark D. Savin, Fredrikson & Byron, P.A., Minneapolis
  • Opening and Closing: Laying Out Your Case and Bringing It Home – Joseph P. Suntum, Miller, Miller & Canby, Chartered, Rockville, Maryland
  • Update on Regulatory Takings Jurisprudence: Decisions that Hit Close to Home – Michael M. Berger, Manatt, Phelps & Phillips, LLP, Los Angeles
  • Novel Takings Theories: Testing the Boundaries of Property Rights – James S. Burling, Director of Litigation, Pacific Legal Foundation, Sacramento
  • National Forum: Issues Facing Practitioners Around the Nation and Discussion of Stop and Seizures - plenary session, open forum

Many thanks to Robert Thomas for inviting me to present with this esteemed group of eminent domain attorneys across the United States (and for letting me crib from his blog, www.inversecondemnation.com, with all the details of the Program).