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

A January 27 article in California Watch, "Eminent domain battles rage on despite Prop. 99," reflects the ongoing confusion that surrounds the efforts to reform eminent domain in the aftermath of the Supreme Court's 2005 Kelo decision. 

The article's premise is that Proposition 99, approved by California's voters in 2008, did not stop what the author describes as "eminent domain abuse."  But the case example that underlies the article reflects a fundamental misunderstanding about what Proposition 99 does (or does not do), and what people typically mean when they talk of "eminent domain abuse." 

Proposition 99 was one of many responses to the Kelo decision, which involved a redevelopment effort by the City of New London, Connecticut, in which the city sought to condemn some single-family homes in order to redevelop them into a commercial use that would generate more tax revenue. 

What really outraged people was that the city did not even pretend that it was acting to eliminate blight (a traditional justification for condemning property for redevelopment purposes).  Instead, the city simply felt like it could generate more taxes by tearing down the houses for a more profitable use - a plan the Supreme Court said qualified as a public purpose sufficient to justify the condemnation.

Proposition 99 targeted this specific type of "abuse," limiting eminent domain authority involving (1) redevelopment, and (2) residential properties.  I've written in the past about Proposition 99's narrow scope, but the fact is that it was intended to address a Kelo-type situation - not to stop all eminent domain. 

The "abuse" example in the California Watch article misses both of the Kelo/Proposition 99 prongs:  it is not an eminent domain use involving redevelopment; and it is not a condemnation of residential property.  Instead, the City of Laguna Woods condemned a commercial property to use for its own government offices (a space the city had already been leasing for that use for years). 

Sure, the parties had a substantial dispute over the property's value, and in that case, the jury's conclusion of value was much higher than the city thought it would be.  But I have trouble seeing valuation disputes like this as "eminent domain abuse," and nobody should be surprised that Proposition 99 fails to protect against such things.   

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According to a Contra Costa Times article, "San Pablo tries to quell eminent domain fears with promise to residents," the City of San Pablo has promised residents that it will not use the power of eminent domain to acquire owner-occupied residences for purposes of private development.  The promise is a bit odd, given the fact that  Proposition 99, which Caifornia voters passed in 2008, is intended to prohibit exactly that use of eminent domain.  (We'll leave aside for the moment whether Proposition 99 really does effectively prohibit the taking of residential property for redevleopment.)

The article notes that over 100 individuals showed up at a recent city council meeting to oppose a proposal to renew the redevelopment agency's eminent domain powers for another 12 years.  In an effort to calm the residents' fears, the City took a symbolic step and pledged to sign agreements with any homeowner-in-residence, "promising not to use eminent domain improperly."

Notably, citizens correctly pointed out that the proposal does nothing to protect business owners, and given the fact that more than 90 percent of the City of San Pablo is within a redevelopment area, one can imagine it is difficult for such owners to feel secure.

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In December, we reported on Sierra Madre's decision to allow voters to decide whether the City should possess the power to condemn property for redevelopment purposes.  On April 13, 2010, voters will decide the issue by ratifying or rejecting City Ordinance 1304, but for now, the measure has triggered some colorful debate. 

On February 27, Susan Henderson offered a Mountain View News article "Eminent Domain Measure -- Yes or No?"  She purports to analyze the measure in the broader context of recent eminent-domain-reform efforts, including California's Proposition 99, passed in 2008 in the wake of the U.S. Supreme Court's much-maligned 2005 Kelo decision.  She ultimately concludes that the measure is irrelevant, and amounts to mere political "grandstanding" by Sierra Madre's Mayor MaryAnn MacGillivray.

On March 1, "Eric Maundry," aka City Council candidate John Crawford, responded in a Sierra Madre Tattler piece entitled "Has The Mountain Views News Come Down On The Side Of Eminent Domain?"  In addition to several somewhat silly attacks on Ms. Henderson and her analysis, Mr. "Maundry" contends that the measure has real teeth, prohibiting the City from all eminent domain for redevelopment purposes -- i.e., eminent domain where the goal is to turn the condemned property over to another private owner for redevelopment. 

The dispute appears to be part of a larger political controversy in Sierra Madre, where an ongoing debate over growth issues has apparently become the cornerstone of the upcoming election.  I'm smart enough to stay out of that larger debate, but I do want to comment on the eminent domain issue.

As to eminent domain and the impact of Ordinance 1304, I have to side with Mr. "Maundry."  The ordinance goes well beyond the limited restrictions Proposition 99 offers state-wide, and should, if approved, create a real barrier against eminent domain for redevelopment purposes.  Especially with respect to businesses, no current federal or state prohibition exists on condemning property for redevelopment purposes, as long as the condemning agency makes proper blight findings.  Ordinance 1304 would change that, at least in Sierra Madre.   

Is prohibiting all eminent domain for redevelopment purposes a good thing?  I'll leave that to Sierra Madre residents to decide on April 13. 

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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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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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In June 2005, the United States Supreme Court issued its now infamous decision in Kelo v. City of New London.  That decision made eminent domain and condemnation household terms (imagine my shock at hearing my previously unknown, niche area of practice discussed in normal, day-to-day conversations).  The decision sparked tremendous controversy, as the Court ruled that the City of New London, Connecticut could condemn properties for redevelopment purposes for purely economic reasons. 

In other words, the City did not even pretend that it was acting to eliminate blight (the typical justification for condemnation for redevelopment purposes).  Instead, the City proclaimed that the new development would generate more tax revenues than the existing development (largely, single-family homes), and that the increased tax revenue was, in and of itself, a "public use" justifying the takings.  The Supreme Court agreed. 

What followed around the country was a wave of eminent domain reform, designed to protect against the "evil" that Kelo allowed.  Most reformers never bothered to realize that what happened in Kelo was already illegal in most states, including California.  Specifically, even before Kelo, California law prohibited the condemnation of property for redevelopment purposes unless the property was blighted. 

Now, four years later, many states have enacted at least some form of Eminent Domain reform; California has passed several moderate reforms that have narrowed somewhat condemnation for redevelopment, and that have added some procedural protections for property owners.  In 2008, California voters approved Proposition 99, the more moderate of two proposed eminent domain initiatives. 

And as for Susette Kelo and her famous pink house?  She moved across the Thames River to Groton, and her house was moved about two miles for preservation. 

And the economic boom the massive redevelopment project would create?  It hasn't happened.  Though some of the redevelopment area has been re-built, much of it lies as an abandoned wasteland, with no immediate plans to build anything. 

Associated Press writer Katie Nelson describes the area in her October 4 article "EMINENT DOMAIN: Poetic justice, or sour economy?":

Weeds, glass, bricks, pieces of pipe and shingle splinters have replaced the knot of aging homes at the site of the nation's most notorious eminent domain project.

There are a few signs of life: Feral cats glare at visitors from a miniature jungle of Queen Anne's lace, thistle and goldenrod. Gulls swoop between the lot's towering trees and the adjacent sewage treatment plant.

Who knows whether New London will ever reap the financial rewards promised.  In the meantime, Eminent Domain reform seems to have died down (especially in California) and the Eminent Domain lawyers of the world are once again fading into relative obscurity.

Photo credit: Historic Buildings of Connecticut

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