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

Several years ago, the Elsinore Valley Municipal Water District filed a "friendly" eminent domain action to acquire a portion of an unimproved "paper" street from the City of Lake Elsinore.  The property was to be used to construct a water pumping station to serve a nearby development, and the City had no objection.  The water district took possession, and began construction of the pumping station.  So far, this seems like a non-story, right?

Well, to the water district's surprise, a nearby property owner appeared in the action and challenged the water district's right-to-take the property; the owner claimed to have an interest in a portion of the unimproved street, and also asserted that the project limited access to his neighboring property, thereby diminishing its value.  The neighboring owner asserted that if he was unsuccessful in challenging the water district's right to take the property, he sought over $750,000 in damages. 

This was not what the water district had planned for when it filed the condemnation, which involved a minimal payment to which the City had already agreed.  And given that construction had already commenced on the project, I'm sure concerns arose about what would happen if the owner won the right to take challenge (for example, see our e-alert on the Marina Towers decision and our subsequent update).  So what happened here?

According to a Press-Enterprise article, "Judge rules in favor of Elsinore Valley water district in eminent domain case," after years of litigation, a Riverside County Superior Court judge denied the neighboring owner's right-to-take challenge, and ultimately found that the owner had no interest in the property being acquired.  Thus, despite the long and unplanned journey through the court system, the water district came out victorious.

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In 2003, the County of Riverside and the cities within western Riverside County formed the Western Riverside County Regional Conservation Authority (commonly known as the "RCA").  They delegated to the RCA the task of acquiring approximately 153,000 acres of privately owned property deemed necessary for habitat conservation under the Western Riverside County Multiple Species Habitat Conservation Plan (the "MSHCP").

Many property owners whose land falls within the MSHCP conservation area find themselves with few options:  generally, they can either (1) sell their property to the RCA at a dramatically below market-value price (usually on the RCA's payment terms); or (2) allow the RCA's looming conservation cloud to hang over the property for years, essentially rendering it worthless.

Nossaman attorneys Rick Friess and Brad Kuhn have assisted several property owners over the past few years in challenging the RCA's acquisition/conservation tactics.  A few past examples:

• Last year, we represented Winchester 700, the owner of 454 acres of property north of Murrieta between the I-215 and SR-79, in an arbitration with the RCA.  The County had refused to process Winchester 700's proposed 1,034-unit residential development, and while the RCA demanded 100% conservation, it never made an offer.  The RCA ultimately agreed to pay over $70 million for the property, along with other acreage owned by Winchester 700.
• Earlier this year, we represented San Jacinto River Ranchos and the Meadows at Lone Cone, two owners working together to develop just over 200-acres of residential property.  Development entitlements for their land were stalled when the RCA deemed the property necessary for conservation.  The owners and the RCA ultimately reached a deal allowing the developers to keep about 70 acres for development purposes, with the RCA paying for the remaining property.

This week, after months of effort on behalf of Saul and Maria Delgado Velazquez, the owners of 80 acres of property in Wildomar that the RCA deemed it wanted for 100% conservation, we were able to assist in closing a sale transaction with the RCA.  The process was not easy, as the Delgados were forced to file a lawsuit against the RCA, alleging that the RCA's actions constituted a de facto taking and resulting liability for inverse condemnation, precondemnation damages, and violations of the state and federal relocation assistance and real property acquisition policies act. 

The RCA offered the Delgados a price well below fair market value, and refused to pay the purchase price until 2013.  After the Delgados filed their lawsuit, the RCA's Board approved a deal whereby the RCA is acquiring the property in phases at a value acceptable to the Delgados.  The acquisition of the first phase just closed.

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