California Eminent Domain Report

Once again, I sit at my desk wondering how all of this happened.  For more than a decade, I worked as an eminent domain attorney in utter obscurity; I'm not even sure my family knew what eminent domain was.  But then the City of New London, Connecticut tried to take Ms. Kelo's little pink house, and everything changed.  Since the Supreme Court's 2005 Kelo decision, eminent domain has become a mainstream topic, coming up in late night talk show skits, and now, taking center stage in the Republican presidential race.

At last Saturday's debate, the use of eminent domain turned into a firestorm of ...

Public transit continues to be a major focus throughout Southern California, with virtually all of the county transportation agencies planning or undertaking important passenger rail projects throughout the region.  Some of those transit projects in Los Angeles and Orange County received a major boost this week, as the Los Angeles Times is reporting that the Obama administration has earmarked $500 million in the proposed federal budget for the next fiscal year for LA Metro's Westside Subway (Purple Line) and Regional Connector projects and OCTA's OC Streetcar project.

LA ...

If you happen to be in Austin this week, stop by and see me at the ALI-ABA Eminent Domain Conference.  It starts Thursday, January 28 and runs through Saturday.  I'll be speaking Thursday afternoon on the condemnation of privately-held utility companies -- an issue that's certainly been in the press here in California recently.  I'll be speaking with Christopher Clough of Barron & Adler in Austin, and he's been "in the trenches" on a number of utility-company condemnation issues in Texas.

Aside from my session, there will be a lot of good presentations, including a national eminent domain ...

Public agencies are routinely facing Buy America requirements in their infrastructure projects.  Some of the most difficult situations involve how to satisfy Buy America obligations with public utility relocations.  The rules continue to evolve, making compliance an ever-moving target.  To help provide some guidance, my colleague, Ann-Therese Schmid, recently provided a Buy America update on Nossaman's InfraInsight Blog.

In her blog post, Recent Buy America Developments, Ann informs us that in late 2015 the Federal Transmit Administration (FTA) and the Federal Highway ...

The City of Menlo Park is proceeding with two transportation projects.  The first one, an undercrossing to separate bicycles and pedestrians from rail traffic at Middle Avenue, received the green light from the City Council on December 15.   The City has committed $210,000 and has authorized staff to apply for an additional $490,000 in San Mateo County Measure A sales tax funds to pay for preliminary engineering work on the project.  The City estimates that the design and construction of the undercrossing will cost approximately $11 million.

The City’s second project is the Ravenswood ...

Eminent domain practitioners have been waiting for nearly two years for the Supreme Court to issue its decision in Property Reserve v. Superior Court.  At issue is the constitutionality of California's "Right of Entry" statutes, which allow an agency to enter onto private property for certain inspections and testing without filing a condemnation action.  In Property Reserve, the Court of Appeal rejected an agency's efforts to conduct precondemnation testing and inspections, finding that the statutory procedure essentially amounts to allowing a taking without payment of just ...

Because billboards are typically near public transit, they are routinely impacted by public projects such as street widenings, highway and freeway expansions, and grade separation projects.  When impacted, billboard companies may make claims for (i) the value of the billboard itself (fixtures and equipment), (ii) loss of business goodwill, and (iii) relocation expenses.  Usually the first two items can be addressed through a successful billboard relocation.  But when happens when a moratorium is in place prohibiting new billboards?  Does a moratorium on new billboards ...

Every once in a while, infrastructure projects we're working on involve traversing Indian lands.  For those of you involved in such projects, you should take a look at the Final Rule published by the Department of the Interior, which went into effect last month.  The Federal Register summarizes the Final Rule as follows:

This final rule comprehensively updates and streamlines the process for obtaining Bureau of Indian Affairs (BIA) grants of rights-of-way on Indian land, while supporting tribal self-determination and self-governance.  This final rule further implements the ...

We've been following the status of highway and transportation funding for quite some time, previously noting that Congress kept kicking the can down the road without agreeing on a long-term solution.  Finally, that is no longer the case, as our colleagues on Nossaman's Infra Insight Blog note that the House and Senate Conference Committees have agreed on a compromise $305 billion five-year surface transportation authorization: the Fixing America’s Surface Transportation (FAST) Act, which is headed to the White House in the next few days.  Check out Billy Moore's post the Infra ...

When the government promises to do one thing and then does another, it usually has myriad excuses.  Sometimes it claims that its staff (the people with whom the opposing side are typically interacting) cannot bind the agency.  Other times, it claims that it cannot contractually agree to things that take away key government functions (e.g., the government cannot contract away its right to condemn property).  But every once in a while, the government gets stuck, even in the absence of a formal written agreement.

In HPT IHG-2 Properties Trust v. City of Anaheim (November 20, 2015), the Court ...

For decades, California public agencies have utilized a statutory "right of entry" procedure to gain access to private property to conduct investigations and testing before deciding whether to move forward with acquiring the property. (See Code of Civil Procedure section 1245.010 et seq.) That process was thrown into flux in 2014 with the Court of Appeal’s decision in Property Reserve v. Superior Court, which struck down an agency’s efforts to conduct precondemnation investigation and testing, concluding that any significant physical intrusion onto private property ...

For several years, we've been following an eminent domain lawsuit in Marin County involving Caltrans' acquisition of 34 acres for a $29.7 million interchange project at the Redwood Sanitary Landfill, which would widen the overpass over Highway 101 and install new frontage roads on both sides of the highway to create safer conditions for traffic going in and out of the landfill.  After a 20-day trial, the litigation has finally ended with a jury verdict that appears to be close to a split between the property owner's appraisal and Caltrans' appraisal.

According to an article in the ...

In an unpublished opinion filed this week, the California Court of Appeal confirmed two fundamental evidentiary rules related to eminent domain matters:

1. A witness intending to testify to an opinion of value must exchange a statement of valuation data; and
2. A witness will be precluded from testifying to a comparable sale if it is determined by the court that the comparable is not comparable and would confuse the jury.

Before we delve into the case, here’s a basic reminder of California law as it pertains to these two issues:

With respect to the court’s first finding, California Code of ...

Most of us are at least vaguely familiar with the tax on gains from the sale of property.  Many of us know that when property is sold voluntarily and the funds re-invested, the gain may be deferred under Internal Revenue Code section 1031.  What is sometimes overlooked is the taxability of gains when property is sold involuntarily, i.e., condemned.  As we posted several years ago, Internal Revenue Code section 1033 contemplates just such a situation, and provides some advantages over a section 1031 exchange: An owner has more time to re-invest and may actually hold the proceeds pending that ...

California's heat-wave continues, and so does the drought.  With water becoming more and more scarce, the topic of water supply and how to value water rights is becoming a key issue in California.  If you're interested in these issues, International Right of Way Association Chapter 57 is hosting is fall seminar this Friday, October 14, titled "Water Supply & Impacts."  There are some great speakers lined up to discuss California's water supply, how to value flowage and drainage easements, and how water can impact a property's highest and best use.

And if you're interested in a ...

It's not every day you're involved in a successful eminent domain case before the California Court of Appeal.  It's even more unusual when the case deals with a number of interesting legal issues, such as the enforceability of a waiver of just compensation, the compensability of a license, the breadth of the "project influence rule" for purposes of a property's valuation, and the substantial impairment of access test.  I was fortunate enough to have dealt with all these interesting issues in a single case, Los Angeles County Metropolitan Transportation Authority v. KBG I Associates ...

We've been closely watching Assembly Bill 2 work its way through the legislature for most of 2015, and last week, it was finally signed by the Governor.  What does it mean?  You can find a detailed analysis by my partner, Bernadette Duran-Brown, in our recent E-Alert, but generally, it means redevelopment is back in California.

AB2 allows local governments to create Community Revitalization and Investment Authorities (CRIAs), which will have the power to issue bonds, provide low-income housing, prepare and adopt a revitalization plan for an area, and acquire property ...

Back in May, we provided an update on the status of AB2, the bill which would create Community Revitalization Investment Authorities, (see here).  Things were relatively quiet over the summer but this month has the bill seeing a lot of action: It was passed by the state senate on September 9, passed by the assembly on September 12 and has been sent for final review before hitting the governor's desk for signature.  As we discussed previously, Governor Brown vetoed the last iteration of this bill because the bill vested the program in redevelopment law, and the new bill does not.  While he ...

Public agencies in California are once again getting busy with new projects.  It seems at every event I attend all the right-of-way professionals, appraisers and eminent domain attorneys tell me they're fully occupied.  Recent news articles support this conclusion.

For example, according to an article in the Orange County Register, Santa Ana council OKs EIR moving forward on Warner Avenue widening using eminent domain, the City of Santa Ana has adopted a final environmental impact report for the Warner Avenue Improvement Project, which will reconfigure the road from Main ...

With the improving real estate economy, there have been an influx of new large development projects throughout California.  With these new proposed developments, it is common for local government agencies to require public improvements -- such as streets or utilities -- to support the influx of traffic and people to a previously undeveloped area.  Those public improvements commonly take place off the developer's property, so what happens if surrounding property owners do not want to sell their land to support such improvements for a private development?  Can eminent domain be ...

Generally when the United States takes property pursuant to its eminent domain authority, just compensation is based on the market value of the property on the date of the taking.  However, when acquiring a street, road or public highway, the public entity whose property is taken is entitled to compensation only to the extent that, as a result of such taking, it is compelled to construct a substitute highway.  (Washington v. United States, 214 F.2d 33, 39 (9th Cir. 1954), emphasis in original.)  Where it is unnecessary to replace or provide a substitute, the public entity is only entitled to ...

Last week, Jeremy Jacobs posted an interesting article about the U.S. Supreme Court’s recent decision in Horne v. Dep’t of Agriculture, No. 14-275 (U.S. Jun. 22, 2015), and its potential application to Endangered Species Act (ESA) jurisprudence.  (See Raisin ruling seen as lifeline for endangered species, published by Greenwire on August 19, 2015).  In Horne, the U.S. Supreme Court held, in an 8-1 decision, that the forced appropriation of a portion of a farmer’s raisin crop qualified as a clear physical taking requiring compensation under the Fifth Amendment to ...

Despite efforts by Congress to finally approve a long-term highway bill that would have secured funding for key infrastructure projects for the next several years, last week Congress managed only to kick the issue down the road a few more months.  It approved a three-month extension of the existing bill, meaning federal highway funds will continue through October 29.  But come October, funds will once again be at risk of drying up if Congress does not enact another bill.

Not surprisingly, neither party is particularly thrilled with the three-month extension, and for good reason.  As ...

Six weeks ago, I wrote about California Assembly Bill 624 and the Appraisal Institute’s effort to change California law that presently requires all licensed appraisers to comply with the Uniform Standards of Professional Appraisal Practice (USPAP).  While the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) would still mandate that USPAP be followed for federally-related transactions (i.e. appraisals for a financial institution that is federally insured), I observed that a licensed appraiser in California performing an appraisal for a ...

As an eminent domain attorney, when I think about a "takings" claim, I always think about a claim involving someone's real property.  Has the government trespassed onto private property, has it imposed regulations that deny the owner an economically viable use of the property, etc.?  But every once in a while, we get a reminder that "takings" do not always involve real property.  Rather, any private "property" may be taken.

Thus, we get cases like last month's U.S. Supreme Court decision in Horne v. Dept. of Agriculture.  There, the government sought to force raisin growers to turn over a ...

2013 was a banner year for developers under the takings clause, as both the U.S. Supreme Court and California Supreme Court issued decisions expanding the developers’ ability to challenge exactions as unconstitutional. In Koontz v. St. Johns River Water Management District, the U.S. Supreme Court held that the essential nexus and rough proportionality standards that apply to government property exactions also apply to monetary exactions that are tied to a governmental approval. And in Sterling Park v. City of Palo Alto, the California Supreme Court held that when a public ...

Next week, Nossaman's eminent domain group will be attending the International Right of Way Association's Annual Education Conference in San Diego.  While we've been attending the conference for several years, we're excited to have it taking place in our own backyard, and we know that our friends and colleagues at Chapter 11 will do an amazing job with it.  If you're going to be there, make sure you take some time to visit with us.  There will be plenty of places to find us:

• On Sunday and Monday, we will be hosting a booth in the exhibition hall.  In addition to it being a great opportunity to seek ...

Two days ago, the Appraisal Foundation issued a memorandum to Appraisal Regulatory System Stakeholders that warned of the Appraisal Institute approaching members of Congress to sponsor legislation that would essentially dismantle the current national appraiser regulatory system.  The Appraisal Foundation states that provisions being suggested by the Appraisal Institute include the elimination of the Appraisal Subcommittee and the removal or significant dilution of the Congressional authority of the Appraisal Foundation."  It asserts that removing the existing ...

In California eminent domain cases, a property or business owner is entitled to recover litigation expenses (attorneys’ fees and expert costs) when the public agency’s final offer of compensation is unreasonable and the property owner’s final demand is reasonable.  (See Code Civ. Proc., § 1250.410.)  But what happens when the government agency’s offer is subject to approval of a federal agency, the City Council, or the Board of Supervisors?  Is this a reasonable offer under Section 1250.410?  This week, the California Court of Appeal in City and County of San Francisco v. PCF ...

As the old adage goes, the three most important things to consider with real estate are location, location, and location.  But any developer who has lived through a real estate cycle, and any public agency that is under a funding deadline or working through a project’s environmental approvals, knows that timing may be even more important than location.  Indeed, timing considerations often create competing interests between public agencies and developers.  On the one hand, before commencing right of way acquisition, public agencies are required to comply with complicated ...

It appears the state assembly is trying to get California back on the redevelopment wagon...again. (For a brief history lesson on redevelopment, see below.)  Assembly Bill 2 (AB2), which passed the assembly earlier this month, would create new entities called Community Revitalization Investment Authorities that would have the same legal authority as redevelopment agencies, i.e., the power to issue bonds, provide low-income housing, prepare and adopt a plan for an area, and among others, acquire property using the power of eminent domain.  The legislature explains that the ...

Gas stations and car washes are primarily owner-occupied convenience businesses, typically located near freeway off-ramps and at the intersections of well-traveled roadways.  As a result, they're frequently involved in eminent domain acquisitions for freeway expansions or road widenings.  A common question is how should such properties and businesses be valued to satisfy California's requirement of "just compensation"?

A recent article by Retail Petroleum Consultants, Condemnation: Appraising Gas Stations and Car Washes, How to Ensure Just Compensation for Business and ...

Right of Way Certification is a key project milestone; not only does it mean a project is ready for advertising but obtaining certification by a certain date is often a prerequisite for funding.  Tying certification to dollars means it’s crucial that agencies acquire property and/or obtain orders for possession in a timely manner.  As we’ve discussed here before, this can mean filing an eminent domain action while still negotiating with property owners, something many agency boards are reluctant to do.

The latest example of the perils of prejudgment possession comes out of Butte ...

One of the issues often disputed between public agencies and property owners in eminent domain actions is the assessment of severance damages, and in particular, whether damages should be based upon (i) the terms of the resolution of necessity, or (ii) construction of the project in the manner proposed.  This dispute grows from a seeming conflict between a court of appeal decision, County of San Diego v. Bressi (1986) 184 Cal.App.3d 112, and Code of Civil Procedure section 1263.420.  Specifically:

• Bressi held that in a condemnation action, (1) the jury must determine damages caused by ...

In California eminent domain actions, absent special circumstances (such as an abandonment, successful right to take challenge, or inverse condemnation finding), a property or business owner is typically only entitled to recover litigation expenses (attorneys' fees and expert costs) in one circumstance:  where the public agency's final offer of compensation is unreasonable and the property owner's final demand is reasonable.  In making this determination, the judge is only to consider the final offer and demand that were made at least 20 days before trial.  (See Code Civ. Proc ...

I wanted to provide a quick update on two recent cases from the California Court of Appeal.

The first, Golden State Water Company v. Casitas Municipal Water District (April 14, 2015), involves what appears to be an issue of first impression in California:  can Mello-Roos financing be used to fund an eminent domain action to acquire a utility company's assets?  In Golden State Water Company, the Casitas Municipal Water District wanted to acquire the assets of the Golden State Water Company for the purpose of taking over the provision of water to many residents in Ojai, California ...

It is increasingly important for buildings to be energy efficient.  So-called green buildings can not only lead to more efficient energy use, but can also result in significant cost savings over time.  Indeed, green buildings may be more valuable than comparable buildings that are not as energy efficient.  This is an important factor to consider in eminent domain proceedings.  This point was driven home in a recent presentation made by Michael Frost, LEED AP, First Vice President at CBRE in its Palo Alto, California office.  He made the presentation to a diverse group of right of way ...

The City of Temecula is moving forward with the French Valley Parkway.  The project involves construction of a new arterial, as well as improvements to the I-15 Winchester Road interchange.  Phase I of the project included constructing southbound off-ramps for the future Parkway.  These ramps are complete, but as a post on The Transit Coalition Inland Empire blog asked a year ago - "What the heck is going on with French Valley Parkway?"   The answer is the same now as it was then -- Caltrans and the City are working to establish the scope and phasing of the remaining improvements.  So when will it ...

It depends.  A recent decision out of the Federal Circuit tackled this very issue, and the court's decision strongly suggests that a taking could arise under the right circumstances.  (Filler v. U.S. (Fed. Cir. Mar. 10, 2015) Case No. 2014-5117.)  As you probably already guessed by my use of the phrase "strongly suggests," both the lower court and the Federal Circuit in this case found that the plaintiff's challenge did not present the "right circumstances."

After sustaining a work-related injury, an employee of the U.S. National Marine Fisheries Service visited the ...

On Tuesday, the Lake Elsinore City Council adopted a Resolution of Necessity to acquire a 2+ acre property in order to expand Serenity Park.  As Michael Williams describes in his article "City hopes to take over boat launch,"  the expansion is part of the City's plan to develop a skateboarding arena .  The City's staff report says the City has been negotiating with the property owners for about a year, but that they have not agreed on a price for the property.  The staff recommended the city move forward with an eminent domain lawsuit.

It isn't clear why the owners rejected the City's offers ...

As this article by OCTA explains, the Southern California region is growing both in terms of population and in the volume of goods moving through the region via both road and rail.  I am sure many of us are familiar with the impacts this has on our daily lives -- like being stuck for what feels like hours at a train crossing.  But several local agencies are doing what they can to ease our pain.  In Orange County, OCTA is in the midst of its OC Bridges program building grade separations.  And in Los Angeles, the Alameda Corridor-East Construction Authority (ACE) has completed several new ...

We've been following the saga of the Keystone XL pipeline for a while now, and the battle rages on in Washington.  Yesterday, the Republican-led Senate attempted to override President Obama's veto of a bill to approve the pipeline.  For those a bit lost in all the political and legal wrangling, the recent story began with a bill in Congress designed to grant approval to the controversial pipeline project.  The bill passed the Senate on January 29 and the House in mid-February and was sent to the White House for President Obama's signature.

But just as promised, President Obama vetoed the ...

As California continues to expand and improve its infrastructure, public agencies are more frequently running into contaminated property.  A frequent question for eminent domain attorneys is:  "how does contamination impact 'fair market value' in a condemnation action?"  My general advice is that the contamination should be treated just as it would in an open market transaction.  But how is contamination handled in a typical transaction -- and how does it impact value?  Aside from potential clean-up costs, are there lending issues, and is there a general stigma with contaminated ...

Public projects take years of planning and environmental review usually involving outreach to neighboring property owners and other stakeholders. During this process, potential right of way impacts are identified and property owners (and their potential buyers or tenants) become aware of the planned project. As we have described in the past, this can result in a cloud of condemnation over the property, affecting the value of that property. Property owners often feel they should be compensated for this uncertainty. But it is difficult for owners to succeed on these claims. (Check ...

California’s infrastructure is aging. There have been numerous reports of water line breaks and gas line leaks, and public agencies have been moving quickly to upgrade their utilities to minimize these risks and satisfy increasing demands. When incidents do occur, when do agencies face potential liability in inverse condemnation? A recent California Court of Appeal decision, Kelly v. Contra Costa Water District (Feb. 10, 2015) 2015 Cal.App.Unpub.LEXIS 924, while unpublished, provides some guidance.

In Kelly, the owners of a self-storage facility in Pittsburg, California ...

The burning question, is why?  While this is not the first time the U.S. Supreme Court has ever granted a petition for review in the same case, it is certainly not common.  And, it is downright uncommon for the Supreme Court to grant a second petition for review when the central issue in the case is a takings issue.  So what is the Supreme Court planning to do?  Are they going to revisit their 2013 decision and find that they made a mistake, and that the Hornes are actually required to first bring their takings claim in the Court of Federal Claims?  Or, is the Supreme Court ...

When a public agency acquires a portion of property, under California law the property owner is entitled to "severance damages" -- or damages to the remainder portion of the property that was not acquired.  Usually, determining what constitutes the "remainder property" is relatively straight-forward.  But not always.  And, the determination could have a significant impact on the amount of compensation the public agency must pay, as a property owner is not entitled to compensation for damages to separate and independent parcels that are not touched by the condemnation.

So how is the ...

In the aftermath of last year’s Rails-to-Trails Decision, Marvin M. Brandt Revocable Trust v. United States, 572 U.S. ___ (2014), the valuation of rail corridors may become increasingly necessary.  Typically there are three approaches to valuing rail corridors:  1) Across-the-Fence approach, 2) Comparable Sales approach and 3) Income approach.

1. The Across-the-Fence approach (ATF Method) -- the most popular approach for valuing rail corridors -- appraises land utilized as a right-of-way by assuming that its market value per square foot is equal to the value of adjacent or ...

At its meeting last week, the California Transportation Commission allocated $174.8 million to 85 projects around the state.  Some of the projects receiving allocations this month include:

• $22.5 million for  construction of SR-905/SR-125 connectors in San Diego

• $20 million to realign Highway 1 in San Luis Obispo County away from the eroding shoreline

• $19.4 million to rehabilitate the Elysian Viaduct Bridge in Los Angeles

• $6.3 million for reabilitation of the Sierra Point Overhead bridge near South San Francisco

• $5.9 million to replace the aging Hilt Road Overcrossing on I-5 near ...

On March 5, Nossaman's eminent domain attorneys are hosting a complimentary seminar, "Taking Your Project from Concept Through Construction."  We have some great topics and an exciting group of experts joining us to cover topics such as implementing best practices for design-build projects during right-of-way acquisition, preparing for CEQA challenges at the condemnation stage, acquiring contaminated properties, and addressing business goodwill claims.  We will also provide a recap of the most important eminent domain court decisions and legislation from 2014.  Attendees ...