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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I mentioned in an article last week that many redevelopment agencies are facing budget issues; the city of Imperial Beach is facing a similar, but slightly different, problem:  after investing over $8 million in bond money for redevelopment of the Miracle Shopping Center, the economic climate has made it impossible for the city to find an interested developer. 

Nevertheless, the city decided to raise more funds, and purchase the shopping center anyway, hoping the city's ownership would make the site more attractive to developers.  With city ownership now in place, the eminent domain process begins.

According to a San Diego Union Tribune article, "2 shopping center tenants won’t budge," two tenants of the Miracle Shopping Center have refused the city's $63,357 offer, which is meant to cover relocation costs, along with the value of fixtures and equipment in the stores.  The owners, meanwhile, have demanded $1.4 million.  The city council this week voted to approve the adoption of a resolution of necessity, the first step in filing the condemnation lawsuit. 

Four shops have already relocated, one plans to close down, and the city believes it can work out deals with the other eight tenants. 

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I previously reported on a political discussion taking place in a San Diego community, San Ysidro, with respect to whether the city should reinstitute its expired power of eminent domain.  While San Ysidro contemplates this issue, another San Diego community -- this time Chula Vista -- is in the process of drafting its five-year redevelopment plan, which could include expansion.

Like San Ysidro, Chula Vista recognizes the public concern over the city's wielding its condemnation power, especially for redevelopment purposes.  Chula Vista, therefore, has sought public input before it drafts the new redevelopment plan.  

According to a San Diego Union Tribune article by Tanya Sierra titled "Public opinion sought on redevelopment plan -- Subject has been a sore one in past," the redevelopment area in Chula Vista currently encompasses Third Avenue, Broadway, Main Street, and the bayfront, but city officials do not know what the expansion area will include until they hash it out with residents.

Despite seeking public input, the city's announcement of potential expansion of the redevelopment area did not go over too well with community members that turned up at the council meeting to oppose the proposal.  Part of the anger stems from how the redevelopment agency is being run, including the amount of funds devoted to administrative costs and salaries.  The city has responded by stating only three professional staff remain at the agency.

A concluding comment by councilmember Rudy Ramirez likely sums up the problem for most residents:

I’m convinced we’re falling far short of what we could be doing,” he said. “For me, redevelopment is a political, public process because you’re moving into neighborhoods and effecting change and changing people’s lives. We haven’t yet developed that sensitivity.”

Stay tuned in the coming months for how Chula Vista addresses these issues.

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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 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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