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California Eminent Domain Report

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

Challenging the Right to Take: What Happens When a Government Agency Requires a Property that is Already Devoted to a Public Use?

Posted in Right to Take

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)).
 

Six Regional Projects Awarded Federal Funding

Posted in Projects

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.

Considering the Eminent Domain of Sports Franchises

Posted in Right to Take

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.

Upcoming Event List for Right of Way Professionals

Posted in Events

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. 

FTA Publishes Guidance on Joint Development

Posted in Projects

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.

Appraisal Institute Announces new “Standards of Valuation Practice”

Posted in Events

Last week, the Appraisal Institute unveiled its Standards of Valuation Practice (SVP).  SVP will not replace USPAP (the Uniform Standards of Professional Appraisal Practice) — which have long-been the mainstay of appraisal standards for many appraisals — but will serve as an alternative when USPAP or other standards are not required.

According to AI President, Ken Wilson, MAI, SRA:

The SVP will establish a higher level of professional practice, engender public trust and facilitate the growth and advancement of the valuation profession…The SVP will recognize the broad area of practice of valuation professionals and the diverse needs of users of valuation services

While this is unlikely to make a change in the types of appraisals typically seen in an eminent domain action, which comply with USPAP, the new standards will fill a gap for areas where there are no other standards.

You can read the SVP here.

Did Koontz Stop Illegal Development Exactions in California?

Posted in Court Decisions

The U.S. Supreme Court’s decision last year in Koontz v. St. John’s River Water Management District received quite a bit of national coverage in the development world.  If you’ll recall, Koontz held that the nexus and proportionality standards that apply to the government’s attempt to exact land in exchange for a land use permit similarly apply to monetary exactions.  While the decision may have caused a change in the entitlement process in other states, this was generally already the rule in California under the Mitigation Fee Act.  So deciphering just how Koontz would impact California was a bit uncertain.  My partner, John Erskine, who specializes in representing developers through the entitlement process, recently wrote a great article on Koontz’ effects locally — from a real-world, on the ground perspective.  

The article, Did Koontz Stop Illegal Development Exactions?, concludes that Koontz really isn’t doing anything to change the development landscape in California, because "even with the procedural boost provided by the Mitigation Fee Act in California, most developers are reluctant to sue unless the illegal exaction is so significant in amount that it is considered project-threatening . . . ."

As John so aptly concludes, "obtaining project approvals while avoiding illegal exactions is a tight-rope walk, and Koontz unfortunately appears to be a rather porous net.  Local government officials are not avoiding discussions with developers . . . nor are they getting any less creative in converting potential project revenue into municipal budget supplements."

Give the article a read if you’re interested in hearing more.  

City May Be Liable for Damage to Home Caused by Falling Tree in Inverse Condemnation and Nuisance

Posted in Court Decisions, Inverse Condemnation & Regulatory Takings

During a windstorm, a tree owned by the City of Pasadena fell on Mr. O’Halloran’s residence, causing damage to his home. Mercury Casualty Company paid Mr. O’Halloran for the damage pursuant to his homeowner’s insurance policy, and then sued the City for inverse condemnation and nuisance based on the damages caused by the City’s tree.

Inverse Condemnation

To state a cause of action for inverse condemnation, the plaintiff must allege that defendant substantially participated in the planning, approval, construction or operation of a public project or improvement which proximately caused injury to his/her property. Courts have stated that when a physical injury is the incidental consequence of a deliberate action by the government taken in furtherance of public purposes, the damaged property has been appropriated for public use.

The trial court denied the City’s motion for summary adjudication of the inverse condemnation claim on the grounds that "the evidence shows that the subject tree is part of a work of public improvement that may properly be the subject of an inverse condemnation action." The City disagreed, and sought a writ of mandate in the Court of Appeal (essentially, an effort to get the trial court reversed before there is a final judgment that could be appealed in the normal manner).

In City of Pasadena v. Superior Court of the State of California, et al. (2014 Cal. App. LEXIS 733), the Court of Appeal held that the trial court properly denied summary adjudication because there were triable issues of material fact as to whether the tree was part of a work of public improvement.

The court explained that:

(1) Deliberate action is not found where the purported public improvement is neither an instrumentality of the sate nor controlled by the state. However, the evidence showed that the subject tree was part of the City’s forestry program to enhance the quality of life of its residents and visitors, and that the City took deliberate steps to manage and maintain the trees.

(2) The public improvement element of an inverse condemnation claim is satisfied where the instrumentality that allegedly caused the plaintiff’s damages (such as a tree) is part of the construction of a public improvement (such as a highway beautification project). The evidence showed that the tree was part of the City’s program to maintain trees along the roads, thus serving a public purpose of improving public roads.

The Court of Appeal found that the evidence presented demonstrated that the City’s forestry program, of which the subject tree was a part, is the result of a deliberate action by the state serving a public purpose. Accordingly, summary adjudication was properly denied.

Nuisance

A nuisance is "anything which is injurious to health . . . or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property." (Civil Code, § 3479.)

The trial court also denied the City’s motion for summary adjudication with respect to the nuisance claim. The trial court found that negligence is not required to establish nuisance, and that the City failed to submit evidence excluding the likelihood that the public improvement was a substantial factor in causing damage.

The Court of Appeal agreed that nuisance liability is not necessarily based on negligence. However, where the liability for nuisance is based on the failure to act or an omission, then negligence is required. Liability for negligence is based on a defendant’s breach of its duty of care to plaintiff, and damages caused by that breach. The court explained that the City was required to present some evidence that it had not breached its duty of care by first establishing the nature and extent of its duty. Because the City failed to do so, it did not meet its burden for summary adjudication. Accordingly, the Court of Appeal affirmed the trial court’s denial of summary adjudication as to the nuisance claim as well.

Note that the ruling does not mean that the City is necessarily liable under either the inverse condemnation or nuisance theory. At this point, the Court has only ruled that the City could not escape liability through its summary adjudication motion, meaning the case will now proceed to a trial on the merits of the plaintiff’s claims. Note also that this opinion was not ordered published by the Court of Appeal, meaning it is not citable as precedent in any other case.

 

California Legislature Moves One Step Closer to Authorizing Eminent Domain for Martins Beach

Posted in Events

Just in case you lost track of the Martins Beach saga, here is a quick summary and update.  According to reports, a couple of years after billionaire Vinod Khosla bought beachfront property in San Mateo County for over $30 million, his property manager locked a gate to a private access road on the property.  This access road, however, in addition to providing access to the property’s residence, also had been used by the public to access Martins Beach (the parties do not agree as to whether the public use was permissive or under claim of right).  

Following the gate closure, lawsuits have been filed, the Coastal Commission has initiated an investigation into a possible public prescriptive easement, and State Senator Jerry Hill has introduced legislation (SB 968) requiring the California State Lands Commission to acquire public access by eminent domain.  As recently reported by Aaron Kinney of the San Mateo County Times, the legislature has moved one step closer to passing SB 968, "clearing the Assembly Appropriations Committee on a party-line vote."  Having cleared the Committee, SB 968 will now go to the full Assembly for a vote, and, if it passes there, to the Senate floor.  It should be noted that while SB 968 originally "required" the State Lands Commission to acquire public access should negotiations with the property owner fail, the version approved by the Committee would "ask" the State Lands Commission to use eminent domain to acquire public access. 

Keeping its Options Open: Lodi Passes Resolution of Necessity as Negotiations Continue

Posted in Projects

As we have reported in the past, public agencies are often faced with deadlines to secure possession of necessary right of way and ensure project funding.  Given the amount of time it takes to secure possession through the court process, agencies must proceed with condemnation actions even where they need additional time to negotiate with property owners.  Delaying the condemnation action for several additional months, while likely to lead to a settlement, ultimately places the project at risk if no deal is reached and thereby forces the agency’s hand.  This is exactly what happened in the City of Lodi. 

The Lodi Sentinel-News reports that the City Council passed a Resolution of Necessity to aquire the two remaining properties needed for the Harney grade separation project.  According to the article, the Council would have preferred to avoid filing a condemnation action, but delaying the action put the project’s Measure K funding at serious risk.  So the Council hedged a bit — it adopted the Resoultion, but directed the City Attorney not to file an action for 30 days while negotiations continued. 

Will 30 days be enough?  Apparently, the owners are supportive of the project, but question the City’s offer of compensation.  My guess is they won’t be able to bridge the gap and the risk of losing project funding will mean the City will be forced to file the action.