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!
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.
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 Hodge, Johns 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. Dynkowski, Ackerman 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. Clarke, Waldo & Lyle, P.C., Norfolk, Virginia
- The Red-headed Step Child: Overcoming Reluctance to Take Relocation Cases – Jaclyn Casey Brown, Lewis Roca Rothgerber LLP, Denver, Robert Denlow,Denlow & Henry, St. Louis, and Michael Sullivan, Range 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
- 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, MAI, Executive Managing Director, Valuation and Advisory, Cushman & Wakefield, Charlotte, North Carolina, and Joe Waldo
- Entry Statutes: A Taking or a Free Pass? – Norman E. Matteoni, Matteoni O’Laughlin & Hechtman, San Jose, California, Edward V. O’Hanlan, Robinson & Cole LLP, Stamford, Connecticut, and Michael F. Yoshiba, Richards, Watson & Gershon, P.C., Los Angeles
- 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).
At its meeting last week, the California Transportation Commission allocated $1 billion for local streets, highways and public transit. This means a significant amount of money will be available for city, county and regional transportation agencies who will submit their projects to Caltrans in the coming months. You can read Caltrans District 7 Press Release here.
The projects are spread around the state and include some major funding for rail projects as well as the usual highway improvements and also show that money will be coming to several California regions. You can see a full list of projects receiving funding at the Caltrans website, but I’ve highlighted some of the bigger ticket items here:
- $87 million for the Pacific Surfliner and San Joaquin rail passenger services
- $65 million for the San Antonio Curve Correction on US 101 in Sonoma and Marin County
- $3.4 million for Santa Barbara’s Route 246 passing lanes project
- $3.5 million for improvements to SR 20 in the City of Williams
- $7 million for the Coachella Valley CV Link project
- $1.5 million to the Capitol Corridor for bridge maintenance and access improvements
Most of us have been inconvenienced by road construction or other public works. Streets can be more congested, exits closed, and traffic re-routed, making it more difficult to get to the restaurants, yogurt shops, book stores and other businesses we usually frequent. Not surprisingly, these businesses often see their revenue decline while construction continues. Does the public agency owe these businesses anything for these losses?
The short answer for most of the country is, usually not. Courts generally consider construction-related inconvenience part and parcel of living in a modern society. And this view makes some sense. If public agencies had to compensate every business for every loss caused by construction of every public project, costs would quickly climb, making it more difficult for anything to get built. In most states, this would be the end of the story.
In California, the analysis is somewhat different, especially for businesses who sit on property needed for the project – even if only a tiny sliver of the property is being taken. Such business owners can seek damages for loss of business goodwill in an eminent domain action. (And for one agency’s creative solution for businesses not on acquired property check out this recent article by Rebecca Gibian.)
But there are certain requirements in California’s goodwill statute (Code of Civil Procedure section 1263.510) that can create challenges for business owners seeking to recover for loss of business goodwill. Here are a few that business owners should keep in mind:
- The loss must be caused by the taking. This sounds simple, but things get complicated quickly when other factors may be contributing to the loss in addition to the public project (e.g., general economic conditions, changes in customers’ habits/preferences, etc.).
- Lost profits are not lost goodwill. California law does not allow recovery for lost profits per se. While profits may factor into a goodwill analysis, they cannot form the sole basis for a recovery.
- The business must be real. No, seriously, this can trip some people up. The point is the appraiser must value the business that operates on the property. Not some hypothetical, new and improved business that might develop in the future. (Check out our post on this issue here.)
- A business owner can’t just sit back and do nothing while waiting for the agency to cut you a check. The goodwill statute specifically states the owner must take reasonable steps to preserve goodwill. This might be as simple as adding some signs or offering discounts.
Valuing businesses in eminent domain actions is tricky, and these are just a few of the issues to look out for. Want to know more? Send me an e-mail or give me a call and I’m happy to discuss these issues.
Often times government agencies require property for a public project that is already put to a public use. What are the acquiring agency’s options, assuming an agreement cannot be reached prior to filing a condemnation action?
1. A condemning agency may acquire property that is already devoted to a public use if the proposed use will not unreasonably interfere with or impair the continuance of the existing public use. The complaint and resolution of necessity must specifically reference the Eminent Domain Law for joint public use. (Code of Civil Procedure section 1240.510). If a defendant objects and proves that its property is already devoted to a public use, the acquiring agency has the burden to prove that its proposed use will not interfere with or impair the existing public use.
2. Alternatively, a condemning agency is entitled to acquire property already devoted to a public use if the use for which the property is sought is a more necessary public use. The complaint and resolution of necessity must specifically reference the Eminent Domain Law for more necessary public use. (Code of Civil Procedure section 1240.610). Again, if a defendant objects and proves that its property is devoted to a public use, the plaintiff has the burden to prove that its proposed use is a more necessary public use. Eminent Domain Law provides specific legislative presumptions of what constitutes a more necessary public use, establishing a hierarchy within the government:
- Where property has been put to a public use by any person other than the state, the proposed use by the state is presumed to be a more necessary use. Accordingly, when the state is the condemning agency or property owner, the state carries a presumption of needing or utilizing the property for a more necessary public use over any other party. (Code of Civil Procedure section 1240.640).
- Where property has been put to a public use by any person other than a public entity (such as by a public utility), the public entity’s use is presumed a more necessary use. As such, when a public agency is the condemning agency or property owner, the public agency carries a presumption of needing or utilizing the property for a more necessary public use over any other person (other than the state). (Code of Civil Procedure section 1240.650).
- Where property has been put to a public use by a local public entity, the use is presumed to be a more necessary use than any use to which such property might be put to by another local public entity. (Code of Civil Procedure section 1240.660).
The legislative presumptions are rebuttable, although courts are reluctant to disturb a legislative determination of what constitutes a more necessary public use. Aside from the legislative presumptions, whether a proposed public use is more necessary is a question of fact to be alleged in the condemning agency’s complaint and determined by the court.
Even where a court finds that a proposed public use is more necessary, a defendant is entitled to continue the public use to which the property is already appropriated if continuing the public use will not unreasonably interfere with, impair, or require a significant alteration of the more necessary public use. If the court determines that a defendant is entitled to continue the public use, the parties must enter into an agreement specifying the terms and conditions upon which the defendant may continue the public use, along with the terms and conditions of the acquisition, and the manner and extent of the use by both parties. (Code of Civil Procedure section 1240.630, subdivision (b)).
Good news California: local projects are continuing to receive federal funding. Caltrans announced last week that the U.S. Department of Transportation has granted nearly $35 million in TIGER funds to six local and regional projects throughout the state.
The projects receiving funding include:
- East Side Access Improvement Project ($11.8 million): This Los Angeles County Metropolitan Transportation Authority project will create a network of bike lanes and sidewalks for bicyclists and pedestrians to access the new Regional Connector/1st Central Station in Los Angeles, which is set to open in 2020.
- Willowbrook/Rosa Parks station ($10.25 million): This project will improve several components of the Willowbrook/Rosa Parks Station near the Los Angeles community of Watts, which is a major transfer point for many commuters. The LACMTA project will lengthen the Metro Blue Line platform, enhance pedestrian and car access and link existing rail, bike and bus facilities.
- State Routes 57/60 Confluence Project ($10 million): This realignment project will relieve congestion and improve safety along this regionally and nationally significant goods movement corridor in Diamond Bar and Industry.
- West Sacramento Broadway Bridge Plan ($1.5 million): The grant will complete the environmental documentation phase of a new Broadway bridge crossing the Sacramento River, connecting the cities of West Sacramento and Sacramento.
- San Francisco Bay Core Capacity Study ($1 million): This study will evaluate and prioritize a package of investments that expand transit capacity and connectivity to major core San Francisco job centers (Downtown, Civic Center, South of Market and Mission Bay) to account for job and housing growth.
- Old Town Goleta — Hollister Complete Street Corridor Plan ($235k): The grant will fund a planning project to develop a Complete Streets Corridor Plan for the redesign of the Hollister Avenue Corridor, with a goal to make streets within the corridor safer and more convenient for all users and all travel modes.
California has received $1.4 billion in federal funds for transportation over the past 10 years, as local agencies continue to meet federal funding deadlines. You can find Caltrans’ press release here.
In a thought-provoking article, Anthony F. Della Pelle considers the interesting question of whether the City of Los Angeles could simply “take” the LA Clippers via eminent domain. One might typically associate California’s Eminent Domain Law with the taking of land for public utility easements or mass transit projects. Della Pelle was inspired by an article by Harvey Wasserman, in which Wasserman proposed that the power of eminent domain should be used to take all sports franchises nationwide. Wasserman reasoned:
The Fifth Amendment says the public has the right to take property with “just compensation.” It’s called “eminent domain.” Let’s use it to condemn all [sports] franchises, buy out their “owners” and have the teams run by the cities, counties and/or states in which they reside, and to which they rightfully belong.
Della Pelle notes that the use of eminent domain to take a sports team would not be novel, particularly in California. When Al Davis sought to move the Oakland Raiders to Los Angeles in 1982, the city sought to use the power of eminent domain to take ownership of the franchise. The trial court granted the team’s motion for summary judgment, but in City of Oakland v. Oakland Raiders (1982) 32 Cal. 3d 60, the Supreme Court of California reversed the summary judgment, holding:
- That the taking of intangible property is authorized by state eminent domain law, particularly given that Code of Civil Procedure § 1235.170 defines “property” that may be taken by eminent domain as “including “real and personal property and any interest therein.”
- That the acquisition and operation of a sports franchise may be an appropriate municipal function constituting a valid “public use” for the taking.
Della Pelle analyzes important issues in considering the power of eminent domain to take a sports franchise for the public use, including:
- whether other legal obstacles, such as the “Dormant” Commerce Clause, prohibit the taking;
- the difficulty in valuing sports franchises to determine the just compensation to be paid to the owners for the taking; and
- policy considerations, such as whether in particular cases like those surrounding the Clippers and the Redskins, which were singled out in Wasserman’s article, the taking would violate the freedom of speech guaranteed by the First Amendment of the Constitution.
Though not directed to a topic that regularly confronts eminent domain proceedings, Della Pelle’s article is highly informative and thought provoking, as is Wasserman’s article. Both are recommended reading for anyone interested in eminent domain law.
If you’re a right of way professional, your fall schedule could be quite busy. I’m having difficulty keeping track of all the upcoming events, so I thought I’d put them all in one place. Here’s what we have on the agenda:
- September 5: Mobility 21′s annual Southern California Transportation Summit. The event will take place at Disneyland Hotel, and will feature an array of fantastic speakers from various local public agencies, including Riverside County Transportation Commission (RCTC), Los Angeles County Metropolitan Transportation Authority (LACMTA), the California Transportation Commission & Caltrans, California High Speed Rail Authority, Southern California Edison, the City of San Diego and the Transportation Corridor Agencies. Nossaman’s Geoff Yarema will also be a panelist. There will be over 1,000 attendees from the transportation industry, so this will be a great event. If you’re in attendance, please stop by Nossaman’s booth to say hello.
- September 9: International Right of Way Association (IRWA) Chapter 67′s (Orange County) regular lunch meeting. The luncheon will feature a presentation by Paul Cowdery of ParcelQuest, who will be discussing “Prop. 13 and Prop. 8: Past, Present and Future”, and specifically how property value assessments are handled given the recent decline — and subsequent increase — in property values.
- September 10: IRWA Chapter 57′s (Inland Empire) regular lunch meeting. Mike Parker from Overland, Pacific & Cutler (OPC) will be speaking on issues related to utility coordination in California, especially for projects that have state, federal, or stimulus funding. The topic will include Buy America issues, and how it relates to Right of Way Certification.
- September 13-16: The American Planning Association, California Chapter’s annual conference. The event will also take place at Disneyland Hotel, and will feature some exciting topics on issues facing the development industry. There will also be topics on regulatory takings, eminent domain, and inverse condemnation, and with my colleagues Rick Rayl and Jeff Stava, we will be providing an update on the status of redevelopment in California and what the future holds.
- September 17: The Northern California of the Appraisal Institute’s Annual Fall Conference: Real Estate and Appraisal Symposium to be held at the Marriott Marquis in San Francisco. The keynote speaker is Maria Ayerdi-Kaplan, Executive Director of the Transbay Joint Powers Authority and she will be speaking on Enhancing Real Estate Values Through Transit Oriented Development. There are a number of breakout sessions for you to enjoy as well. See the conference schedule here.
- October 10: IRWA Chapter 67′s Educational Seminar on Rail Road Right of Way. The event will take place in Santa Ana and will includes speakers from Union Pacific and BNSF discussing the Real Estate Application and Contract process. Topics also include valuing railroad right of way, regional rail projects and federal funding. You will hear from folks in Arizona and Nevada, as well as get an update on the California High Speed Rail Project.
- October 17: IRWA Chapter 57′s Education Seminar and Casino Night Fundraiser at the Eagle Glen Golf Course in Corona. The seminar will feature Lindy Lee from LAMTA. There will also be three panels discussing how various businesses are impacted by public projects. My colleague Bernadette Duran-Brown is a panelist.
- November 16-18: Self-Help Counties Coalition annual Focus on the Future conference. The event will take place at the Hyatt Regency in Santa Clara. You can join your fellow participants in a bike tour of downtown San Jose or enjoy some time with colleagues on the links. Then enjoy hearing speakers in various breakout sessions on topics from Autonomous Vehicles to Sustainability. Yours truly will also be presenting a session on Precondemnation Planning Best Practices to Acquire Right-of-Way without Blowing Your Project’s Budget.
- December 2: IRWA Tri-Chapter Lunch hosted by Chapter 1. This year the Los Angeles hosts Chapter 67 (Orange County) and Chapter 57 (Inland Empire) for the annual gathering of right-of-way professionals from throughout the region. Everyone will gather at Universal Studios for the festivities.
- December 4: WTS-OC Awards & Scholarships Gala- “Pathway to Excellence.” This event will be at Disney’s Grand Californian and promises to offer a great opportunity to enjoy the holiday spirit with your colleagues throughout the transportation industry.
This should keep everyone busy this fall and we look forward to seeing many of you at these events.
As public agencies continue to expand and build infrastructure throughout California, I’ve noticed a few recent themes. First, many projects are supported by federal funds, usually through the Federal Transit Administration (FTA) or the Federal Highway Administration (FHWA). And second, agencies are becoming more creative in exploring joint development opportunities with the private sector to enhance their projects and the surrounding community.
To the extent you are part of, or work with a public agency, and are involved with a federally funded project involving a potential joint development, you’ll be interested to learn that the FTA recently published guidance for agencies interested in pursuing joint development projects within the FTA’s framework. Circular 7050.1 clarifies FTA’s policy on joint development and provides guidance on joint-development-related provisions from MAP-21.
For example, the Circular:
- Defines "joint development";
- Explains how joint development projects can qualify for FTA assistance;
- Describes the requirements applicable to the acquisition, use, and disposition of real property previously acquired with FTA assistance; and
- Identifies how FTA processes and reviews joint development proposals.
If you’re interested in learning more about joint development within the FTA framework, you can view the Circular here.