California Eminent Domain Report : a blog following condemnation, inverse condemnation, and regulatory takings written by attorneys with Nossaman LLP.

We've previously reported on some of the major renewable energy projects currently underway, such as Southern California Edison's Tehachapi Renewable Energy Transmission Line Project and GE's plans to design the largest wind farm in the world.  After a major planning effort, it appears that another renewable energy project -- the Sunrise Powerlink project -- may be moving forward as well.  

According to a March 7 San Diego Union Tribune article by Onell Soto, the 123-mile, $1.88 billion Sunrise Powerlink project has obtained approval from the Public Utilities Commission and the Bureau of Federal Land Management, but is still waiting approval from the U.S. Forest Service.  The project is also facing challenges by the County of San Diego. 

Despite those challenges, property acquisitions for the project have commenced.  In addition to several voluntary acquisitions, eminent domain actions to acquire some of the necessary property for the transmission line right-of-way are underway.  (For those wondering, private utility companies typically have the power of eminent domain for public projects.)  Filing the eminent domain actions now is likely necessary in order to obtain possession of the impacted properties in order to meet the project's construction timeline (construction is scheduled to begin this summer).

The eminent domain process is necessary when a condemning agency and the property owner cannot agree on an acquisition price.  For projects like the Sunrise Powerlink project, disputes over "fair market value" typically involve how the high-voltage transmission lines will impact the remainder of the owner's property, not necessarily the value of the right of way being acquired.  

In some instances, a power line's transversing a parcel arguably leaves the remaing property with no remaining economic value, generating significant "severance damages."  Not surprisingly, cases involving such severance damages often involve a wide range of opinions among eminent domain attorneys and appraisers.  

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In February 2009, the city of American Canyon filed an eminent domain lawsuit in Napa County Superior Court to acquire vacant property on which the city intended to build two water storage tanks.  According to a Napa Valley Register article, "AmCan settles deal for water tank property," the city has now settled the lawsuit for $542,909.  In return, the city obtained 3.2 acres of unimproved land and an additional four acres for permanent and temporary easements.

It appears that the settlement was prompted by the court's recent ruling that the property owner was not entitled to severance damages to the owner's remaining 100-acres of property not being condemned by the city.  The court reasoned that "the construction and use of the water tank project did not cause the economic damages claimed by [the owner]."  As part of the settlement, the city has agreed to provide the owner with water and sewer services, potentially a major savings for the owner's planned residential development.

The city obtained prejudgment possession of the property early in the lawsuit, and construction of the first water tank is nearing completion.  The city, however, has been unable to find funds to pay for the second storage tank.  The second tank will eventually be connected to a high-pressure tank on a 313-acre preserve the Napa Valley Unified School District purchased several years ago.

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The City of Placentia has a large redevelopment area, and ambitious plans to redevelop an industrial neighborhood in south Placentia.  But the City has responded to the outrage over eminent domain and, in particular, eminent domain for redevelopment purposes.  The City apparently has no power to condemn property for private redevelopment. 

Yet, this lack of authority has not stopped some property owners in the redevelopment area from complaining that the "threat" of eminent domain has decimated their property's value.  According to a February 17 Orange County Register article by Adam Townsend, "Businessman: City plans could scare land buyers," at least one owner complained to the City Council on Tuesday that "stymied redevelopment plans and past mentions of eminent domain by city officials have decimated the industrial real estate market in south Placentia." 

Mayor Joe Aguirre responded:

"I just want to make clear that I was at the forefront of opposing eminent domain for [re]development." Aguirre said. "This city does not have that power, and we're not attempting to get that power."

The City believes that the hope of future redevelopment (presumably accomplished without the use of eminent domain) actually enhances the value of properties in the redevelopment area, and that the downturn in the real estate market -- not any "threat" of eminent domain -- is to blame for any problems owners are facing. 

Which side is right?  Probably both.  On the one hand, the public is in such fear of eminent domain these days that the mere mention of redevelopment plans and a redevelopment area is likely to evoke images of Mrs. Kelo's quaint pink house being run over by a bulldozer.  This could impact at least some market participants, regardless of whether that ever happened (it didn't; the house is now a historic building) or whether there is any real risk of it happening in Placentia (apparently, there isn't).

On the other hand, if the area truly does suffer from blight, the hope that it may someday be redeveloped to a better use may well have a positive impact on other market participants. 

In the meantime, getting beyond the current economic crisis and seeing real estate prices rising should help, regardless of which of the two competing forces one believes is really at play. 

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We reported back in October that the Long Beach City Council approved the use of eminent domain to acquire nearly 10,000 square feet of property to widen Pacific Coast Highway.  Now in February, the City Council is once again considering the issue.  So why, nearly four months later, is the issue back before the City Council?  According to a recent Costa Costa Times article, the reason is because the project description has changed.

Back in the "pre-Kelo" era, agencies would routinely proceed with planned eminent domain despite minor changes to the project description.  However, with recent procedural reforms and greater public scrutiny of eminent domain, Long Beach has correctly determined that taking a step back is a wise move here. 

While the public hearing procedure can be burdensome and time consuming, a public agency that proceeds with eminent domain using a resolution of necessity that does not match what the agency needs to acquire is at great risk.  Sometimes, even now, the agency will get away with changing the project description without adopting a new resolution of necessity, but for a saavy property owner, such a misstep can provide leverage for a right-to-take challenge that could significantly delay -- or even defeat -- a project.  By going back through its administrative process, Long Beach should avoid such a challenge, which could mean that its "delay" actually gets the project built faster. 

This is a good opportunity to point out how important it is for public agencies (1) to work with their engineers and planners to ensure the project description is perfect the first time around, and (2) to allow for sufficient time in case project details do change.  If the agency is facing tight project deadlines, especially when funding is at risk, changing the project description or take area could mean starting from scratch:  a new appraisal; a new offer and negotiation process with the property owner; and a new hearing on a resolution of necessity.

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We have previously reported on Tulare County's efforts to acquire right of way for its Road 108 widening and its Road 80 widening.  Now, the County is considering condemning four additional parcels for the Road 108 project. 

In a February 1 article in the Visalia Times Delta, Eminent domain on county board's agenda, Valerie Gibbons reports that the County will decide tomorrow whether to file four more eminent domain actions, which would bring the recent total to 25.  Ms. Gibbons reports that the County's apparent rush to proceed has "had residents up in arms in past meetings."

But the County may have good reason for proceeding quickly, and it likely isn't because the traffic is so bad that the County cannot wait another 90 days to negotiate and, hopefully, appease angry residents.  The problem lies in the combination of the post-Kelo changes to California's prejudgment possession rules and the requirement that federal stimulus dollars be applied to "shovel ready" projects.  This combination squeezes the County's time line, requiring that it file the eminent domain lawsuits quickly or risk losing critical stimulus-dollars funding.  As Ms. Gibbons explains:

Planners say they must move forward quickly, otherwise the funding will be jeopardized. Rules for stimulus-funded projects require the proposal be "shovel ready" before the money is approved and it must be used within a certain length of time.

Back when agencies could acquire possession on short notice (occasionally, as little as three days), the "shovel ready" requirement would be challenging enough, but with possession now taking six to eight months -- or more -- the push to proceed quickly is exacerbated.  

In other words, one of the unintended side effects of the new possession rules (designed to protect property and business owners) is that agencies sometimes must proceed faster than they probably should, thereby harming property owners by forcing owners into litigation even in situations in which a reasonable negotiation period is likely to yield a settlement.  

This problem can be solved, but the solution is not returning to the old, "immediate possession" days.  Rather, funding sources should recognize the changes in the law, and should tie the date upon which the funding is secured to something other than possession and being "shovel ready." 

For now, however, agencies are stuck either pushing ahead regardless of community opposition or risking the very funding that makes the project possible.  My guess is that in Tulare County, residents will show up tomorrow to express outrage over the fact that the County has not completed good faith negotiations and should not condemn now -- and that the County will vote to proceed anyway to protect its funding. 

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For years, Cathedral City has been acquiring property by eminent domain as part of its 23-acre Eastside Downtown Area redevelopment plan, which seeks to redevelop downtown Cathedral City into a 39-unit commercial center.  Our firm has also been involved in the project for years, having assisted several property owners impacted by the redevelopment agency's plans. 

According to a January 26 Desert Sun article, "Cathedral City council votes to pay $535,000 in eminent domain land deal," Cathedral City recently approved a $535,000 settlement with one of the final remaining landowners whose property is being condemned (the property consists of two parcels housing an apartment complex).  Two eminent domain actions remain pending.

While Cathedral City has been busily acquiring property for several years, anyone looking forward to the new redevelopment project should not get too excited.  Many redevelopment agencies are facing budget issues, and Cathedral City is no different.  According to the article:

The city is a long way from seeing the 23-acre project planned for the area come to fruition because of an $11.45 million loss of redevelopment funds to the state to help balance the state budget . . . .

Despite the fact that no actual redevelopment is imminent, the City apparently intends to evict tenants from the recently acquired apartment building.  This is unusual, as condemning agencies routinely allow tenants to remain on acquired property until construction is ready to proceed. 

If the City does evict the tenants now, it will have to pay them relocation assistance, but that will likely be of little comfort to some, including "the owner's 93-year-old mother, who's lived at the same apartment for 35 years."   One can only wonder how the public interest would be served by evicting a 93-year old woman so that her apartment of 35 years can sit vacant while the City waits for funds to move forward with its project . . . someday. 

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The public outcry over eminent domain continues.  Claims of "eminent domain abuse" fill today's popular media; a January 21 article by Steve Cook, Eminent Domain is Alive and Well, claims 2 in 3 Americans oppose eminent domain. 

What so often gets lost in the shuffle is that most of the outrage focuses on a narrow aspect of eminent domain:  redevelopment efforts that involve condemning private property and transferring it to another private owner.   This is what sparked debate in the Kelo case, and it is making major headlines in New York, where the "Atlantic Yards" drama involves plans to build a new stadium for the New Jersey Nets basketball team in Brooklyn (there's an entire blog devoted to the Atlantic Yards saga). 

But let's not forget that a large portion of the eminent domain that occurs involves traditional infrastructure projects:  roads; rail lines; utilities; etc.  And while voluntary acquisitions for such projects may be preferable, where that is not possible, eminent domain makes the difference between having new (or improved) infrastructure and not having it.   Would 2 in 3 Americans really oppose eminent domain in those situations?

In Mr. Cook's article, he claims that "there are indications that as stimulus funds make their way to the state and local levels, more property than ever may be at risk."  To me, this frames the issue incorrectly.   California, in particular, is in dire need of infrastructure improvements. 

If stimulus dollars help bring some of those improvements to reality -- and it appears that is happening -- we should view that as good news.  Some property will be condemned in the process.  However, as long as the condemning agencies treat owners fairly and pay just compensation, I simply can't see using stimulus dollars in this manner as "eminent domain abuse." 

In the end, I continue to believe that the real focus of eminent domain commentators should be on ensuring fair compensation for both property owners and business owners facing eminent domain -- not on attacking eminent domain itself.   And, especially in cash-strapped California, if federal stimulus dollars can get some much-needed projects postponed by our state budget crisis back on track, we should be happy, not outraged. 

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In November, we reported that the Barstow City Council would be deciding whether to reinstate the redevelopment agency's power of eminent domain.  According to a January 20 Desert Dispatch article, "Eminent domain issue sparks fear among residents," the City Council has decided to table the issue until May. 

According to the article, the redevelopment agency sees its eminent domain power as a necessary tool to remove blight in the area northwest of Interstate 15 near the outlet malls.  But like most redevelopment efforts, the issue is drawing much public debate.

At the City Council meeting this month, at least 16 residents spoke against the Council's reinstituting the redevelopment agency's ability to utilize eminent domain.  While the City Council pointed out the redevelopment agency could not use eminent domain to acquire owner-occupied homes (a result of the passage of Proposition 99), residents were also concerned about the use of eminent domain on churches. 

In order to address the residents' concerns, the City Council plans to hold a public forum on eminent domain issues within 30 days. 

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There was both good and bad news this month for San Francisco’s planned Central Subway Project.  Earlier in the month, the Federal Transit Administration issued its approval which permits San Francisco to begin the final design stage of its $1.6 billion subway which will ultimately link AT&T Park with Chinatown. 

To secure the necessary right-of-way, San Francisco's Department of Public Works recently notified 12 retailers along Stockton Street that their minor encroachment permits, authorizing them to occupy City-owned sub-sidewalk space, will be revoked. They were given until the end of this month to vacate those areas. This affects such high end retailers as Macy’s, Neiman Marcus, and Barneys.

A relative newcomer to Union Square, Barneys opened for business in the old FAO Schwartz building in late 2007. Having so recently built a perfume and cosmetics counter beneath the Stockton Street right of way in reliance upon the encroachment permit, Barneys challenged its summary revocation.

Arguing, among other things, that the revocation constitutes an unconstitutional taking of its real property interests without due process or payment of just compensation, Barney’s appealed the DPW's decision to the full Board of Supervisors.  At the hearing earlier this week, there was some dispute as to the actual ownership of the space in question.  However, in a 10-0 vote, the Board ultimately rejected Barney’s appeal. 

While this decision likely seals the fate of the perfume counter, it may only be round one of a more protracted battle.  Could a claim for inverse condemnation be next?  Stay tuned to this blog for updates.

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According to an Orange County Register article, "O.C. may force sale of property for tunnel," Orange County officials are considering the use of eminent domain to acquire 20 parking spaces from a Huntington Beach apartment complex.  The property is necessary for a storm drain project which tunnels under the I-405 freeway.  

The County's storm drain project is in response to a 1995 flood which required the evacuation of the apartment complex's ground-floor units.  The property owner has been offered $96,500 for the 7,200 square feet that make up the 22 parking spaces.  

The County's proposed taking, however, is only temporary, and the property will apparently be returned to the owner when construction is completed.  Such an acquisition is typically referred to as a "Temporary Construction Easement," and although temporary, a property owner is still entitled to just compensation for the taking. 

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The Alameda Corridor-East Construction Authority ("ACE") is working on a $75 million project to improve rail service in the San Gabriel Valley.  The project involves constructing a rail underpass on Baldwin Avenue in El Monte, and it is part of a larger, $1.1 billion project that includes 20 grade separations.   

ACE has acquired nearly all of the right of way for the Baldwin Avenue underpass, but one owner, Fred Jast, has not moved.  According to a recent San Gabriel Valley Tribune article by Rebecca Kimitch, "El Monte man fights eminent domain claim," Mr. Jast has been fighting with ACE for several years:

"They have the right to take my property, but they don't have the right to steal my property," Jast, 69, said.

While the article describes gaining possession of Mr. Jast's property as "one of the last hurdles ACE faces before construction can begin," the Baldwin Avenue underpass is only part of the larger project.  ACE plans another, similar underpass in 2010 on Nogales Street South between Gale and San Jose in the City of Industry.  The Nogales Street (South) underpass will cost $84.1 million.  ACE will need to acquire a number of parcels for that part of the project.  

Other phases of the project are planned for 2011, including the $499-million San Gabriel Trench, and the Ramona Street, Mission Road, Del Mar Avenue, and San Gabriel Boulevard grade separations in San Gabriel. 

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San Bernardino currently has over a dozen overpass or underpass projects planned throughout the county.  Last month, officials had planned to move forward with condemnation proceedings for one such project, the $20 million Hunts Lane overpass located at the Colton-San Bernardino city line. 

But according to a Riverside Press-Enterprise article, "Hunts Lane overpass causes some concern," nearby property owners voiced concern over the railroad grade separation project's impacts to their businesses, such as blocking access and destroying visibility.  As a result, officials have delayed a decision to begin acquiring the necessary property by eminent domain, perhaps in an effort to better understand the project's impacts on nearby property owners and businesses.  

Putting off the condemnation proceedings may just be delaying the inevitable, as officials believe that separating cars on Hunts Lane from the Union Pacific Railroad tracks is crucial to relieving traffic congestion in the area south of Interstate 10.  Construction could begin later this year, and is expected to take around 18 months.

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The City of Rosemead has a vision of its future that transforms the city into "a small town in the heart of a metropolis."  That, according to San Gabriel Valley Tribune reporter Rebecca Kimitch, is the goal of the city's new strategic plan.  Ms. Kimitch's article, "Rosemead defines itself as small town in the big city," explains:

The to-do list is ambitious: landscape medians and plant trees along sidewalks; demolish dilapidated vacant buildings; develop new neighborhood parks; remove graffiti; expand community classes and develop a community computer lab; create a civic center at City Hall and the surrounding city facilities.

To accomplish its ambitious goals, the City plans to reinstate its power of eminent domain -- at least with respect to commercial properties -- in its "redevelopment project area 1."  That redevleopment area was adopted initially in 1972, and it consists of more than 500 acres located generally along the Garvey Avenue and San Gabriel Boulevard corridors. 

As is often the case in the current political climate, the City apparently has no immediate plans to wield its newly reinstated eminent domain authority, but believes that having the power to condemn is key to the plan's success:  "City officials say they need the power as a negotiating tool to redevelop blighted areas of the city."

Time will tell whether Rosemead realizes its vision of the future -- and whether Rosemead resorts to condemnation in an effot to make that vision a reality. 

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Earlier this year, Nossaman sent out an E-Alert providing a status update on the use of federal stimulus dollars for California infrastructure projects.  Here on the blog, we've also recently reported on water-related property rights issues grabbing news headlines.  A recent Mojave Water Agency project -- backed by federal stimulus dollars -- ties the two topics together.    

According to a recent Victorville Daily Press article, "MWA uses eminent domain on land: Property is needed for R-Cubed project," the Mojave Water Agency is using eminent domain to acquire land necessary for its "Regional Recharge and Recovery Project."  The project, dubbed "R-Cubed," is a $60 million effort to expand existing ground water recharge basins, and will require the construction of 15 miles of pipeline, five to seven wells, and several turnouts for local water providers.  The project received over $13 million of federal stimulus funds earlier this year, and will have the initial capacity to supply enough water for 30,000 homes.  

Design of the massive project is essentially complete, and the MWA filed an eminent domain action to acquire four necessary Victorville properties earlier this month.  Utilities will run through two of the properties located on Mesa Street west of I-15; a street re-alignment will impact a third property on Mesa Street; and a turnout facility will be placed on the fourth impacted property located on the west side of Mesa View, south of Bear Valley Road. 

More details on the R-Cubed project can be found at www.r3project.com.  

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This week the Orange County Register reported in an article titled "Transportation agency to spend millions saving habitat" that the Orange County Transportation Commission is "beginning quietly" with what could be "one of the largest habitat preservation efforts in county history" by which the OCTA may acquire millions of dollars of land to protect native landscape. 

The article states:  

The preservation push [is] meant as a hedge against possible habitat damage from a 30-year, $4.8 billion freeway improvement project the agency is planning.

According to the article, the OCTA will use Measure M Funds (the County's 1/2 cent sales tax initiative) to purchase the properties, and the OCTA is currently studying 26 properties for possible acquisition, hoping that the current economic climate will make the owners interested in selling.

Such large-scale habitat conservation efforts are becoming a standard approach for trying to achieve balance between the need to construct infrastructure and the need to protect wildlife habitat.  For example, we previously reported on conservation/acquisition efforts by the Western Riverside County Regional Conservation Authority, which was established by the County of Riverside and other jurisdictions to implement a massive Multiple Species Habitat Conservation Plan, or "MSHCP," and similar plans have been adopted in a number of other parts of California.

Experience from these other conservation plans suggests that in addition to balancing infrastructure needs and wildlife habitat needs, the OCTA will find itself needing to balance the rights of the owners of potential conservation properties, ensuring that they are truly "willing sellers" -- not sellers with no option but to sell because their property has been identified as potential conservation land.

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One of the big eminent domain stories of the last few weeks involved the oral argument at the U.S. Supreme Court in the Florida beach case.  That case involves whether a government program to add sand to parts of the Florida coastline, creating new public beaches in front of private property that had been beach front constitutes a taking.  For more information about that case, see my December 15 article, "Erosion Control, or Coney Island South?" published in the Los Angeles Daily Journal. 

Now, two other water-related takings issues are making news.  The first, as reported December 14 by Fox News in "Not So Private Property?: Clean Water Restoration Act Raises Fears of Land Grab," involves a proposed amendment to the federal Clean Water Act that would, if adopted, remove the word "navigable" from the definition of the water bodies falling within the Act's scope.  What makes the elimination of one word so controversial?

As currently written, the Clean Water Act regulates discharges into certain bodies of water, including any "navigable waters."  (What constitutes "navigable waters" is a whole different can of worms, especially since the Act has been interpreted to encompass not only navigable waters, but also waters with a "significant nexus" to a navigable waterway -- and because the definition of "navigable waters" has been the subject of recent litigation.)  

Some claim that eliminating "navigable" from the Clean Water Act's scope will create major problems:

The Clean Water Restoration Act currently pending in the U.S. Senate could reach to control even a "seasonal puddle" on private property. . . .

This bill is described by opponents as a sweeping overhaul of the Clean Water Act that could threaten both physical land and jobs by wiping out some farmers entirely.

Not surprisingly, the Act's proponents feel differently, claiming the amendment contains sweeping exemptions to ensure that it does not unduly impact existing agricultural uses.  

The second issue comes from a December 15 Fox News story, "Not So Private Property?: Florida Man Takes Eminent Domain Case to High Court."  It involves a case my colleague Brad Kuhn reported on last month in In Determining Just Compensation, Should Zoning Regulations Enacted to Depress a Property's Market Value for Future Acquisition be Ignored?   The question there is whether an effort to down-zone a property, deflating its value in anticipation of a future government acquisition qualifies as compensable.  The case arises from efforts to expand the Florida Everglades National Park and has a factual history dating back to the 1960s. 

One of the homeowners impacted by those efforts has fought his case through the Eleventh Circuit Court of Appeals, which sided with the government and found the down-zoning is not compensable.   However, the owner has petitioned the U.S. Supreme Court to take the case.  As reported by Fox News,

The high court hasn't decided yet whether it will hear the appeal in the potentially landmark property rights case -- 480 Acres of Land and Gilbert Fornatora v. U.S.

So is there a thread that ties together beach protection, navigable waters, and an expanded everglades park?  Maybe this:  if the global warming scientists are correct, the world is facing rising sea levels and changing weather patterns.  If this is the case, the importance of clear jurisprudence concerning the interrelationship among property lines, property rights, and the location of water bodies will similarly rise.  Whether these cases ultimately create that clarity or simply add to the existing confusion remains to be seen.  

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We've previously reported on the increase in renewable energy projects in California, such as Southern California Edison's ("SCE") Tehachapi Renewable Transmission Project.  When it comes to wind farms, General Electric now takes the cake:  it has brokered a $1.4 billion contract to supply wind turbines and services for a wind farm that would be larger than any wind farm currently in operation in the world. 

According to a December 10 Bloomberg article GE Wins $1.4 Billion Order for Oregon Wind Farm, the 338-turbine wind farm will stretch across 30 square miles in Oregon, and will help the slumping economy by providing 400 jobs during construction.  With GE already obtaining most of the necessary government permits, the two-year construction project is set to begin in 2010, and will require building 85 miles of road and 90 miles of power lines. 

What does this mean for California?  The wind farm will provide enough clean energy power to power approximately 235,000 California households, and it will supply a tenth of SCE's renewable energy. 

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Everyone knows the sad tale of America's automotive industry:  companies operating only through government subsidies and dealerships shutting their doors across the country.  So when the City of Vista came up with a plan to "create a second downtown car dealership and boost sales tax revenue," one would think the public would embrace it. 

But like many bold plans, this one has a wrinkle.  While most of the property needed to facilitate the plan is available for purchase, including the existing North County Ford site, one additional parcel is needed.  

According to North County Times reporter Cigi Ross, in her December 5 article, "VISTA: City plans to buy North County Ford property,"  the plan requires the acquisition of the Riviera Motel, whose owner does not want to sell.  In fact,

[the owner] accused the city of trying to steal his land and give it to the rich.

Last month, we told you the City was seeking to purchase the motel property.  Having apparently failed in those efforts, the City Council plans to vote today on whether to proceed with the purchase of the other properties needed at a cost of around $15 million -- and on "whether to try to seize the motel through eminent domain."  

For anyone who thinks this is just the kind of thing the post-Kelo eminent domain reform was designed to protect against, it is worth noting that California's primary reform act -- 2008's Proposition 99 -- deals only with protecting certain single-family residences.  Assuming the City of Vista demonstrates that the public interest and necessity require the project -- and that the motel property is necessary for that project -- it is unlkely any significant barriers will exist to the City's exercise of eminent domain to acquire the property should the City choose to proceed.

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Perhaps the most talked-about California eminent domain case in 2009 has been the City of Stockton v. Marina Towers decision, in which the Court struck down the City's right to take property where the resolution of necessity contained no real public purpose (not surprising, since the City did not know at the time it filed the action what it would do with the property).   The case's tag-line usually played out like this:  the "project" was the condemnation itself, which does not qualify as a public purpose.   

This holding was itself somewhat interesting, as California law contains relatively few examples of a court's rejecting the government's right to take property.  What gave it real pizazz, however, was the fact that while the case was pending, the City of Stockton figured out what it wanted to do with the property -- and it proceeded to build the new, Stockton Ballpark on it. 

With no right to take, who now owned the shiny new stadium?  The court's solution was to allow the government a chance to file a new action to condemn the property now that a legitimate public use had attached.  And this week, the City Council voted to do just that, authorizing a new condemnation action to acquire the property. 

Record Staff Writer David Siders writes in a December 2 article "Stockton revisits ballpark land seizure:  Disputed property line divides left field from right" that the City agreed to commence a new action following a short public hearing Tuesday night.  The City's action was in response to a court-imposed December deadline to re-file; despite its action, the City claims to want to reach a settlement:

"This has gone on way too long, and we need to resolve this," Mayor Ann Johnston said.

That said, the parties may have vastly different views about the property's value:

During the initial eminent domain trial, a jury put the value of the Marina Towers property at just less than $2 million. Marina Towers previously said the value is closer to $6 million.

We'll let you know what ultimately happens. 

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The City of Claremont voted 4-1 to extend its redevelopment agency's eminent domain authority for another 12 years.  In a November 29 Inland Valley Daily Bulletin article, Claremont renews its eminent domain power, reporter Wes Woods, II writes that the the City's redevelopment agency amended its redevelopment plan to prevent its eminent domain authority from lapsing in December. 

The use of eminent domain is often controversial, but especially so when it is for redevelopment purposes.  And, when redevelopment requires condemnation of residential property, the public tends to express real outrage.  In this case, however, residential properties are not at risk.  According to Councilman Sam Pedroza, "there are no residential units that are within our eminent domain powers." 

Also of significance is that the extension does not guarantee that any eminent domain will occur; it just preserves eminent domain as an option for 12 more years:

Councilwoman Linda Elderkin said she felt eminent domain was an important tool to have for redevelopment and economic development in Claremont.

Though some apparently object to the extension itself, perhaps we should wait to condemn Claremont for its condemnation authority until such time as it actually condemns. 

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The City of Visalia's road widening project at the Mooney Boulevard and Walnut Avenue intersection depends on the acquisition of a strip of private property necessary to relocate power poles.  According to the Visalia Times-Delta article, "Power poles, land acquisition trip up Visalia's plans for transforming Mooney/Walnut intersection," the necessary strip of land belongs to the owners of the Peachtree Shopping Center.  Those owners do not want the power poles on their property, and Visalia's City Council has therefore approved the use of eminent domain.

According to the owners, there is no public need to relocate the power poles onto their property.  Visalia, on the other hand, believes it has no other options, and actually believes the project will have significant benefits on top of the intersection improvements.  Visalia's attorney explains:

"Old wooden poles will be replaced with fewer metal poles. There will be fewer lines and a wider street. We're a little disappointed they don't see the benefits."

Visalia appears ready to move forward quickly:  the article reports that it will file the lawsuit in the next few days, seek possession, and then send the project out for bid.

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With recreational travelers bound for Las Vegas and Laughlin combining with commuter traffic and freight movement, the junction of Interstate 15 and Interstate 215, known as the Devore interchange, likely qualifies as the the worst bottleneck on the I-15 in San Bernardino County.

And as Dug Begley reports today in a Press-Enterprise article titled Devore Interchange Discussed Today, the San Bernardino Association of Governments in planning to do something about it:

The interchange, a well-known bottleneck near where traffic enters and exits the Cajon Pass to the High Desert, is part of a $400 million project to widen I-15 and rebuild the ramps linking the two freeways.

SANBAG is currently sponsoring workshops to gather public input about the project and has posted details about the Devore Intechange Reconstruction on its website.  Current projections put the start of construction in 2013.

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Last night, the Riverside City Council approved the use of eminent domain to acquire the land necessary for the Five Points intersection project.  The project includes widening La Sierra and Hole avenues and Pierce Street, adding left turn lanes, and closing Bushnell Avenue off as a cul-de-sac at La Sierra.

According to the Press Enterprise article, "Riverside to spend $5 million on Five Points parcels," the City expects the acquisition to cost $5.4 million in order to compensate 15 property owners for land, furniture, and equipment.  Three landowners have reached deals, while the remaining 12 are still in discussions with the City.

While the project only requires strips of land from the parcels, the city is taking some complete properties because of the loss of access.  Under California law, a condemning agency is typically required to acquire an entire property if the remainder will be left an uneconomic remnant.  (Cal. Code Civ. Proc., sec. 1240.410.)  Interestingly, the city is contemplating whether the current owners should be able to buy back the left-over property if it is possible to develop.

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With the completion of the I-5 widening project in Orange County north to the Orange County-Los Angeles County line, motorists cruised along the new, spacious lanes until they hit the County line, at which point an abrupt bottleneck brought them to a halt.  Now, the I-5 widening has commenced again, as the project moves north into Los Angeles. 

Across the county, the other major freeway connecting Orange and Los Angeles Counties, Interstate 405, could face a similar future.  The Orange County Transporation Authority has plans to widen the 405 freeway north from the 73 freeway to the LA County line.  Los Angeles, on the other hand, has no plans to widen the 405 north of the County line. 

According to Los Angeles Times reporter Tami Abdollah, in her November 17 article "Counties diverge on plan to widen the 405 Freeway," the difference may be one of philosophy: 

L.A. has focused its transportation money on opening new rail lines: the Gold Line Eastside extension, which opened over the weekend, and the Expo Line from downtown to Culver City, which is under construction. Orange County doesn't have light rail and has focused its resources largely on improving freeways and surface streets.

This philosophical difference may make perfect sense, given the different population densities and demographics between the counties.   Even if each county's priority makes sense internally, however, trouble can result at the county line if the counties do not coordinate their efforts. 

What will actually happen remains to be seen.  It does not appear that Orange County's plans are imminent, and the overall funding crisis facing Californa leads one to wonder how long it will be before the County could tackle a project of that magnitiude.  

If the project ever does move forward, we can only hope that the two counties will find a way to resolve their philosophical differences so we don't end up with a permanent bottleneck on the 405 to match the (hopefully) temporary conditions on the I-5, where the widening process continues. 

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The City of Corona has announced plans to extend its eminent domain authority in a downtown area which Corona feels is blighted.  The planned extension could impact businesses in the area, but Corona is carving out residential properties.  According to Riverside Press-Enterprise reporter Leslie Parrilla, in her November 16 article, "Public hearing on eminent domain area":

Hundreds of businesses are in the Main and Sixth Street area covered by the action. Not included would be residential properties within the Merged Redevelopment Project Areas.

Corona's current plans do not involve any immediate plans to condemn property, even if the extension is approved.  A public hearing is set for November 18 [PDF] (the hearing is item 7.A., on page 3 of the agenda). 

The only opposition to the extension noted by Ms. Parrilla was by Bridgestone Tires, which sought an exemption from the project area, claiming that the area is not predominantly blighted -- and, therefore, is ineligible for inclusion in a redevelopment planning area.  The City denied Bridgestone's request. 

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In 2006, what seemed to be a simple real estate transaction occurred:  the Jurupa Community Services District sold 4.3 acres of property it didn't need to Stadium Properties, which planned to re-zone the property and develop it with a mini-storage facility. 

The problem was that the Community Services Distrcit sold the property without first offering it to other public agencies, a requirement under California law (Government Code section 54222).  More problematic was that the Jurupa Area Recreation and Park District had purportedly been expressing interest in the property for years. 

In 2007, the Riverside County Grand Jury determined that the sale violated California law.  And, to make matters more interesting, serious allegations arose concerning the circumstances leading to the 2006 sale to Stadium Properties, an entity in which Representative Ken Calvert has an ownership interest. 

In October, the Riverside Press-Enterprise reported that the FBI was looking into the sale and a 2008 lawsuit filed by the Park District against the Community Services District, accusing it of fraud and deceipt. 

Now, the Park District -- which wanted the property in the first place -- is considering (for the third time) a resolution of necessity to condemn the property.  According to Press-Enterprise reporter Sandra Stokley's November 11 article "Land seizure back on Jurupa park district agenda," the District has continued the hearing on the Resolution of Necessity twice previously, and was likely to continue it again to December 10 in order to give the parties additonal time to seek a settlement. 

Who said eminent domain was boring?

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Just a few weeks ago, we reported on Tulare County's plans to condemn a number of properties to facilitate the widening of Road 80.  Now, Visalia Times-Delta reporter Valerie Gibbons reports that Tulare County is considereing condemnation for four additional parcels, this time to facilitate the widening of Road 108 (or Demaree Street) between Visalia and Tulare. 

The November 11 article, "Board of Supervisors moves to seize land for Road 108 project while still in property negotiations," explains that both the Road 80 and Road 108 projects raise the same concerns from property owners:

In both cases, the widening projects will be affecting farmers who say the county isn't offering enough money to stem losses from lost product, moving fences or taking out equipment.

With these new cases, Tulare County will have filed 21 eminent domain actions for the projects, which are being funded -- at least in part -- by government stimulus dollars. 

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As mentioned in the Whittier Daily News article from last week, "Two property owners protest La Mirada plans for Valley View underpass at BNSF Railroad," the City of La Mirada and the City of Santa Fe Springs have moved forward with filing condemnation actions to acquire the necessary property for the Valley View Grade Separation Project.  The project will result in an underpass at the BNSF Railroad crossing. 

The City of Santa Fe Springs' November 9 City Council Agenda discusses the adoption of a resolution of necessity for each of the necessary acquisitions.  It appears a few residential and industrial properties are impacted, along with a number of businesses.

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Today, I attended the IRWA Chapter 67 monthly lunch meeting.   The speaker was Philip Law, Corridors Program Manager for the Southern California Association of Governments (SCAG).  He came to discuss SCAG's 2008 Regional Transportation Plan.  The plan is intended to coordinate efforts to implement transportation improvements through Southern California.  It involves a $531.5 billion, 25-year long range plan of needed improvements.

The Plan's Executive Summary [PDF] describes in detail the various plan components, including:

• Maintenance and improvements to existing right of way;
• Substantial new right of way projects involving roads and mass transit (including high speed rail); and
• Efforts to improve the movement of goods, such as dedicated truck lanes and railway grade separation projects. 

Mr. Law also described some creative uses of technology that should be further explored, including a planned one-year pilot project for parts of the 10 and 110 freeways that will allow solo drivers to use the existing carpool (HOV) lanes by paying a toll.   The ExpressLanes project is scheduled to commence construction in 2010 and open in December 2010. 

Additionally, Mr. Law discussed the ever-decreasing role California's gas tax plays in funding infrastructure improvements, as inflation and construction costs far outpace increases in the gas tax.  Whether through new, creative funding sources such as the ExpressLanes project, an increase to the gas tax, or some combination of the two, raising $531.5 billion will be no small challenge.

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Government agencies often require developers of large projects to build the necessary infrastructure to accommodate those proposed projects.  Examples include building a new roadway to reach the project, widening an existing roadway due to the project's adding extra trips to the daily traffic, and installing improvements for utilities and flood control, among other things.  But how do developers acquire the right-of-way when the necessary property is privately owned? 

The proposed Merriam Mountains residential development project in north Escondido is a perfect example of how the above scenario typically plays out.  In Morgan Cook's November 9 North County Times article, "ESCONDIDO: County could use eminent domain for Merriam Mountains development project," Cook explains that the Merriam Mountains 2,700-unit proposed residential development is conditioned upon the developer's widening Deer Springs Road from two to four lanes for a two-and-a-half mile stretch between Twin Oaks Valley Road and the I-15. 

Since this widening requires the acquisition of private property, the County of San Diego may exercise its power of eminent domain on behalf of the developer, NNP Stonegate-Merriam, in order to acquire the land from the necessary property owners. So what are the impacts of the proposed Deer Springs Road widening?  According to a study completed by one property owner, the widening will require the acquisition of 17.55 acres of private property. 

Mr. Cook's article explains that County policy requires the satisfaction of five criteria before the use of eminent domain may be exercised on behalf of a developer:

1. The developer must have made reasonable offers based on a fair market value appraisal report and made every reasonable effort to acquire the property rights;
2. Alternative locations for the public project must have been considered and found impractical;
3. County staff must have deemed it unwise to abandon the public project altogether;
4. The developer must have agreed to pay all the county's costs, including land purchases and eminent domain proceedings; and
5. The Board of Supervisors must have mapped out the land to be acquired. 

Should government agencies be able to exercise the power of eminent domain on behalf of private developers?  On the one hand, some argue that it is unfair to use eminent domain to accommodate the proposed development of a private developer.  On the other hand, it is the government that is imposing upon developers the requirements to build the infrastructure improvements.  If the agencies that impose the requirements do not provide a means of implementing those requirements, developers may be left with no way to develop their properties, regardless of a project's overall merit.

Photo Credit: Cohdra from Morguefile.com

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The impetus for one of the most infamous eminent domain cases in U.S. history was the City of New London, Connecticut's efforts to utilize a massive Pfizer plant as the basis to revitalize the surrounding area.   (The common myth that Pfizer was itself the intended beneficiary of the Kelo property is not correct.) 

The decision, Kelo v. City of New London, triggered a nationwide backlash against eminent domain when the Supreme Court ruled that economic growth, by itself, qualifies as a public purpose sufficient to satisy the right to take property by eminent domain.

The tale of what followed around the county has been well documented.  Many states passed eminent domain reform in the wake of the Kelo decision.  Less well known is the story of what happend to the "little pink house" at the center of the controversy.  Recently, we reported that the area has not been revitilized as the City of New London imagined. 

Now, another turn of events suggests the revitiliztion may be nothing more than a pipe dream.  Today, Pfizer announced that it is shutting down its 1,400-employee New London facility, creating real doubt that new development is anywhere on the horizon.  In short, leaving aside the debate about the wisdom of the Supreme Court ruling, the Kelo story and its aftermath certainly doesn't seem headed for a happy ending any time soon. 

Photo credit: Historic Buildings of Connecticut

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On Tuesday, the City of Lake Forest voted unanimously to move forward with plans to condemn a 6.11-acre parcel to use as a land swap with the County of Orange.  The property will likely end up being incorporated into Whiting Ranch Wilderness Park. 

According to Orange County Register reporter Erika I. Ritchie, in her November 4 article "City moves forward with seizure of family's land," the property's owner, the Hernandez family, has resisted all efforts by the City to acquire the property voluntarily.   But the City needs the property to complete a land swap with the County that will facilitate the City's plans for a sports park:

[C]ounty officials have agreed to a land swap that will provide the city with more space for its proposed sports park and the county with an added parcel to become part of Limestone-Whiting Wilderness Park.

The real issue, as is most often the case when the government resorts to eminent domain, appears to be money.  The Hernandez family believes the property should be valued for a commercial use, and claims that such properties are selling for $25 to $45 per square foot.  The City's appraiser has apparently concluded that the property's highest and best use is not commercial, as the City's offer is purportedly for only $3 per square foot.

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One of the oddities of California's public utility system is that private companies own and operate many of them, yet they behave very much like governmental entities, especially when it comes to eminent domain.  Major examples include Southern California Edison and Pacific Gas & Electric ("PG&E"); both are private companies functioning as public utilities, delivering electricity to their constituents, and both are overseen by the Public Utilities Commission. 

Occasionally, an actual governmental entity will seek to replace the private utility company.  Such is the case with the South San Joaquin Irrigation District ("SSJID"), which is exploring the option of acquiring some PG&E facilities in an effort to reduce the cost of providing electricity to customers in Manteca, Ripon, and Escalon.  According to Manteca Bulletin Managing Editor Dennis Wyatt, in his October 26 article "LAFCO legal study key to SSJID:  May decide who powers South County economy," SSJID is seeking to acquire PG&E's power infrastructure in the area for $79.5 million, though PG&E claims its facilities are worth more than $300 million. 

One of the key issues in the dispute is whether SSJID can -- or should -- exercise the power of eminent domain to condemn PG&E's facilities if the parties cannot reach an amicable agreement.  Mr. Wyatt's article also notes that SSJID has focused some attention on the irony of PG&E objecting to the use of eminent domain:

The SSJID has said if eminent domain does become an issue it will only be between the district and PG&E. The SSJID also notes PG&E uses eminent domain to take property it wants for everything from power lines to substations when people do not want to sell.

The matter is likely to go before the San Joaquin County Local Agency Formation Commission sometime in Spring 2010.  If the Commission decides that SSJID has the authority to enter the retail power business, the real battle between SSJID and PG&E may ensue, and eminent domain attorneys may find themselves at the heart of the battle.   

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When LifeChoices sought to expand its rehabilitation center in 2002, the City of San Jose rejected the proposal, citing its plans for a future Berryessa Bay Area Rapid Transit ("BART") station, which would require freeway interchange improvements on the property.  According to John Woolfolk's October 23 Mercury News article, "San Jose to pay $2 million to acquire parcel and settle lawsuit," five years later LifeChoices' owner, John Licking, filed suit, challenging the City of San Jose's denial as constituting discrimination against the disabled.

Now, San Jose has agreed to pay LifeChoices $2 million for the property to settle the lawsuit and avoid eventual eminent domain proceedings.  LifeChoices will be able to rent the property for $1 a year until it is needed for the freeway improvements.  LifeChoices will also be compensated for the value of the business.  Sound like a great deal for the owner?  According to City Councilman Sam Liccardo, just the opposite might be true.  "[I]t's a bargain" for San Jose: 

"I would characterize this in technical legal terms as a twofer . . . . We're resolving the suit with the added benefit of getting land that we wanted to buy anyway."

While LifeChoices focused on a discrimination claim based on the City's denial of its plans to expand, the case could have been crafted as a claim for precondemnation damages or unreasonable precondemnation delay.  Fortunately, this particular story has a happy ending, as the City purchased property it badly wanted, and the owner received fair compensation.  If the City had changed its mind about its need for the property after delaying the owners' plans for years, the outcome might have been much different.   

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In an October 23 Los Angeles Times article, reporter Ronald D. White describes a lawsuit filed by the NRDC against a proposed project to replace the aging, seismically unsafe Schuyler Heim Bridge with a new modern bridge that will also bypass three existing stoplights and five existing railroad crossings. 

This is not the first project designed to ease traffic congestion and to facilitate the movement of goods in and around the Port of Los Angeles, and while the lawsuit alleges potential environmental problems with the project, it ignores the vast benefits projects like these generate for the public.  The high-profile, $2.4 billion Alameda Corridor project stands as perhaps the largest recent example of an immensely successful and beneficial project.  

In addition to providing major improvements to the way goods flow within the Los Angeles basin, the public also reaps significant benefits from the Alameda Corridor project through reduced pollution previously created by slow-moving trains and idling cars waiting at train crossings. ACTA's Pacific Coast Highway Grade Separation project created similar benefits

Infrastructure projects provide another immediate public benefit:  they create jobs.  Mr. White's article quotes John Husing, an economist who follows international trade, who sums it up nicely:

"Are the ports going to be an economic engine or are we going to drive that business to other ports?" he said. "Unemployment is a health issue too."

According to the Alameda Corridor Transportation Authority, the Bridge Replacement and SR-47 Expressway project the NRDC is challenging will also generate the following benefits:

• Replaces the seismically-deficient Schuyler Heim moveable bridge with a new safer fixed bridge
• Creates an expressway between Ocean Blvd. on Terminal Island and Alameda St. at Pacific Coast Highway
• Enhances mobility on local freeways by diverting 5-8% of the port-related trucks
• Diverts trucks from certain local arterials and commercial and residential areas
• Facilitates future improvements to the Long Beach I-710 Freeway
• Provides alternative route to the existing near-dock rail yard
• Eliminates traffic conflicts at 5 at-grade rail crossings and 3 traffic signals

Finally, as an eminent domain attorney, I can't help noting that major infrastructure projects such as this one could likely never happen absent the government's power to acquire property through eminent domain.  Indeed, few projects involving substantial right-of-way could ever be built if the government could not condemn the needed right of way as a last resort.

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According to Visalia Times Delta reporter Valerie Gibbons, in her October 20 article "Tulare County now wants 11 more parcels on Road 80," Tulare County is moving forward with condemnation plans for 11 properties in order to widen Road 80:

The county has been trying to acquire properties — many of which are in 40- to-60-foot-wide strips, and about a mile in length — since the beginning of 2008. Eighty-five other property owners along the route have reached sale-price settlements.

The widening project, designed to ease congestion between Dinuba and Visalia, has been planned for years.  According to Sarah Jimenez of the Fresno Bee, funds for right-of-way acquisitions were secured in 2006.  Regardless of the traffic problems the project is designed to alleviate, the County's decision to use eminent domain to acquire the final few properties along the right-of-way, is generating considerable controversy.      

According to an October 22 article in the Porterville Recorder,"11 more parcels grabbed for Road 80 project," the County is not taking the decision to use eminent domain lightly:

“It’s a difficult decision to make, but the necessity is there,” Supervisor, Dist. 2, Pete Vander Poel said.

County staff argued that without these parcels the Road 80 Project would be incomplete. The undertaking consists of widening Road 80 from two lanes to four lanes and creating a dividing center median from Goshen Avenue in Visalia to Avenue 416 in Dinuba that will improve traffic flow, alleviate flooding and improve access to Dinuba.

Based on the recent articles, it appears the disputes center not on the need for the project, whether the County should acquire it, or what the County is wiling to pay for the land it is acquiring.  Instead, it appears that owners are concerned largely with severance damages and loss of business goodwill that they believe the project will cause.  Of particular concern to some dairy farmers is that the loss of land will purportedly impact the number of cattle they may have on their remaining property, based on restrictions imposed by state waste-water treatment regulations.

It appears from its published Agenda for its October 27 meeting [PDF] that Tulare County may decide then whether it will expand the scope of the takings to include additional parcels (Ms. Gibbons' article indicates that three additional parcels are being considered).   

Notably, even as it moves towards filing condemnation actions, the County intends to continue negotiations to acquire the properties voluntarily.  In fact, the County reports that it recently began negotiating directly with the remaining owners in response to complaints that the relocation consultants the County hired were not adequately reponding to owners' concerns. 

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This week, the City Council for Long Beach approved using its power of eminent domain to acquire a nearly 10,000-square-foot strip of land north of Second Street in order to widen Pacific Coast Highway for a right-turn lane.  The property is behind City National Bank and in front of Hof's Hut restaurant.

Paul Eakins reports in his Long Beach Press Telegram article "Council OKs eminent domain for PCH turn lane" that the City offered $655,000 to the property owner, which offer had been rejected.

Photo Credit: City of Long Beach

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San Francisco's 99-year-old, historic Hugo Hotel, famed for furniture hanging off its outside walls, has been acquired by eminent domain by the San Francisco Redevelopment Agency.  

Kaleene Kenning's October 3, 2009 article, "Furniture on the Outside," explains that the historic site was purchased by the Patels in 1964 for $400,000, but when the Redevelopment Agency came knocking, they wouldn't sell for less than $7 million.  The Redevelopment Agency's $3.25 million offer was not accepted and an eminent domain action was filed.  The owners were eventually awarded $4.6 million for the property.

Kenning reports that:

the historic site is slated to be demolished and replaced with low-cost housing units with stores at street level.

Photo Credit:  Flickr, Whole Wheat Toast

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The City of San Ysidro, a community on the border of San Diego, is currently contemplating whether it should extend its eminent domain powers, which expired last year.  The backlash from the Supreme Court's decision in Kelo v. City of New London appears to still be taking its toll, as the City's advisory committee, the San Ysidro Project Area Committee, is currently deadlocked on the topic.

Liam Dillon covers the story in a Voice of San Diego article, Masters of Their Domain, which provides some great examples of the positives and negatives of the City's use of eminent domain.

For example, community members touted some San Diego projects that likely could not have been accomplished without the power of eminent domain:

• The Las Americas outlet mall;
• The Horton Plaza mall;
• Petco Park; and
• La Entrada, a $38 million affordable housing project in the Barrio Logan

Proponents also touted that the power may be necessary in order to:

1. Build a new football stadium for the San Diego Chargers, and
2. Redevelop some commercial corridors where there is a high concentration of crime

On the other hand, community members voiced concerns about broken promises and perhaps misguided projects, such as the non-construction of a needed library and mixed-use projects, which were planned in the City of Villages concept.

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In his September 16 article entitled “DWP outmaneuvered on Kern County land purchase,” Los Angeles Times reporter David Zahniser described a story full of political intrigue. It seems someone with ties to Mayor Villaraigosa acquired a property out from under the Department of Water and Power (“DWP”), only to immediately offer to sell the property to DWP at a hugely inflated price. While the article focuses mainly on the political aspect of the situation (e.g., did the buyer know about DWPs plans for the property when it purchased it, etc.), the eminent domain angle is also interesting.

The property, known as Onyx Ranch, encompasses about 68,000 acres east of Bakersfield. It has long been viewed as a potential site for a wind farm, and the DWP sought to acquire it for that purpose. As DWP was working on obtaining control over part of the property through a partnership with Padoma Wind Power, J. Ari Swiller stepped in an bought the property for $42 million. Even before closing escrow on the purchase, Swiller offered to sell part of the property to DWP for $65 million. When DWP balked, Swiller sold the property to the City of Vernon (which has its own electric utility company). Now, DWP must contemplate condemning the property from Vernon if it wants to proceed with the wind farm.

Stripping away the politics, this situation highlights a precondemnation strategy that landowners can sometimes use. By knowing an agency’s planned condemnations in advance, sophisticated landowners look for opportunities to purchase properties ahead of the condemnation. Where they can negotiate a great deal or, more typically, where they can assemble multiple parcels to create a more valuable highest and best use for the combined parcels, they can reap huge rewards. With a known government buyer waiting in the wings, such property “flips” can be quite profitable. Of course, as with all high reward strategies, this gambit comes with considerable risk:

1. The government’s plans or funding may change, and the intended condemnation may never materialize, leaving the owner with a property he or she probably never wanted in the first place, facing the prospects of looking for a buyer that may not exist.
2. Such purchasers must buy knowing they are walking into a lawsuit against the government, a though many may find unappetizing.
3. The government holds a significant ace up its sleeve any time an owner tries to hold it hostage by charging far more than a property is really worth because it knows the seller badly needs it. In the “real world,” sellers in such situations can command huge premiums, because a seller who must have a particular property will pay far more than its “fair market value.” When the purchaser is the government, it can largely ignore such demands for premiums, knowing it can condemn the property at its fair market value.

In the end, while this landowner strategy can (and has) been used quite successfully in some circumstances, it requires a sophisticated landowner and an initial seller willing to sell for far less than what the buyer thinks will be its fair market value when the government comes calling.

Photo credit: LA Times

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One of the odd things about a blog is that it is often difficult to determine who the authors really are – and whether any reason exists to listen to what they have to say about a particular topic. The lawyers in Nossaman’s Eminent Domain and Valuation Group are among the top eminent domain and inverse condemnation lawyers in California. We practice together out of three offices: in Orange County; Los Angles; and San Francisco. Collectively, our attorneys have over 100 years of eminent domain experience. We have been shaping California eminent domain law for years, having been involved in many of the seminal published eminent domain decisions in this generation.

I am a partner in our Orange County office. I have been a practicing eminent domain attorney for more than 15 years. I typically split my time about half and half between agency side work and landowner/business owner side work (later, I’ll post about why I think that balance is so significant). I’ve handled everything from precondemnation strategy, to right-to-take challenges, and goodwill and real estate valuation trials, all the way through the Court of Appeal. I write and speak frequently about eminent domain and other valuation issues, and I am on the Board of Chapter 67 of the International Right-of-Way Association. (I’m also an Aries and a huge Cal football fan, but that’s probably less important.)

Hopefully, I’ll find many interesting things to blog about in the coming months, and get to any issues you might care about, but in the meantime, if there is something you want to know about eminent domain, let me know. On the one hand, I may choose not to blog about it, but on the other hand, it’s always nice to know what other people are thinking about.
 

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