What You Need to Know About Eminent Domain

WHEN EVERYTHING IS UP FOR GRABS, WHAT YOU NEED

TO KNOW ABOUT EMINENT DOMAIN

During the post World War II era public officials at the federal, state, and local levels were very concerned about the lack of housing for returning soldiers, the conditions of homes, and the problems of urban blight. In 1945 California state legislators passed and enacted California’s Community Redevelopment Act (CRA) as a way to deal with the housing problem, to eliminate blight and decay in California cities.  The CRA authorized cities and counties in California to establish redevelopment agencies, giving to these agencies the authority to deal with urban decay; and, enabled the agencies to apply for grants and loans from the federal government.  The CRA also gave the agencies tools with which to address blight. They are: The authority to acquire real property, including, if necessary, the power to use eminent domain; the prerogative to develop the acquired property (however, agencies are not permitted to construct buildings themselves); the authority to sell real property without bidding, unlike most public sales; the right – and the obligation – to relocate owners and tenants of property acquired by the agency; the ability to finance their operations by borrowing from federal or state governments and by selling bonds; and the power to impose land use and development controls pursuant to a comprehensive plan of redevelopment. In 1951, the CRA was codified and renamed the Community Redevelopment Law. At the same time, the authority for tax increment financing was added, although it was dependent upon the approval of a state constitutional amendment, which was later granted by the voters in 1952. The CRA has been amended regularly since 1951, with major changes made in 1978 after the passing of Proposition 13, again in 1994, and most recently in 2006. However, the rationale (to address urban blight) and the mechanism (the establishment of an agency with special financing authority) have not changed. Over time, the establishment of redevelopment agencies has become common in California. By 1976, redevelopment project areas had been established in every major urban area of the state. In 1994, there were a total of 385 redevelopment agencies in California.

In April of 1997, The Redevelopment Agency (RDA) of the City of Fresno adopted new by-laws and entered into a cooperative agreement with the City of Fresno so as to establish a new Agency whose charge is urban renewal. The Redevelopment Agency (RDA) of the City of Fresno is established and defined by state law as a separate, government authority with its own revenue, budget and staff. Its powers include issuance of debt and exercising the right of eminent domain in the acquisition of private property. RDA’s stated purpose is to eliminate blight and to promote economic development. An RDA’s cycle of activity is to define a project area, designate the life of the project area (generally 40 years), develop a plan for improvement, finance the improvements including land acquisition and retire the debt with the increased property taxes generated by the redevelopment. This latter revenue source is generally referred to as incremental property tax revenue.

The Agency, under the control of the local governing body of the Fresno City Council, carries out the day-to-day operations of Fresno’s redevelopment plans. The RDA is one of the last available processes with the authority, scope, and financial means to provide the necessary stimulus needed to reverse deteriorating trends, remedy blight, and create a new image for communities. The goal of RDA as therefore said is to breathe new life into deteriorated and blighted areas plagued by a variety of social, physical, environmental, and economic conditions thus acting as barriers to new investment by private enterprise.

A Classic Case Study

The City of New London in Connecticut after approving an integrated development plan designed to revitalize its ailing economy and through its development agent then purchased most of the property earmarked for their revitalization project from willing sellers, but simultaneously initiated condemnation proceedings when the owners of the remaining properties refused to sell. Those who refused to sell “the Petitioners” in a state-court action claimed that the taking of their properties violated the “public use” restriction in the Fifth Amendment’s Takings Clause. By the end of the trial the court granted a permanent restraining order prohibiting the taking of some of the properties, but denied relief to others.

When the case went before the Connecticut Supreme Court the court affirmed in part and reversed in part, but upheld all of the proposed takings of private property by the city. On February 22, 2005 the case went unto the United States Supreme Court. By June 23, 2005 the United States Supreme Court gave its decision on the Kelo v New London case upholding eminent domain under certain conditions for economic development as a “public use”. The Supreme Court also chose the broader and for some a more natural interpretation of public use as “public purpose.” What's more the ruling stated that nothing in their opinion prevents any State from placing restrictions on the use of eminent domain.

Immediately following the Kelo v New London case a definition and protection of property right measures appeared on more ballots throughout the United States than any other issue. Thirty-four states enacted legislation or passed ballot measures during 2005 and 2006 in response to the Kelo decision. For example, in California on the 2006 ballot Proposition 90 (Eminent Domain and Regulatory Takings) limiting the use of eminent domain failed. The laws and bills generally fall into the following categories:

1. Restricting the use of eminent domain for economic development.

2. Enhancing tax revenue.

3. Transferring private property to another private entity.

4. Defining what constitutes public use.

5. Establishing additional criteria for designating blighted areas subject to eminent domain.

6. Strengthening public notice, public hearing and landowner negotiation criteria.

7. Requiring local government approval before condemning property.

8. Placing a moratorium on the use of eminent domain for a specified time period so to establish a task force in order to study the issue and report findings to the legislature.

Every year California State and local governments buy almost a billion dollars of private property for the construction of roads, schools, and public utilities. In some cases the government buys property for the transfer to (1) private owners to develop new businesses or (2) nonprofit organizations to provide affordable housing. Most of the time government purchases property from willing sellers. Sometimes, however, property owners do not want to sell their property. In these cases, California state law allows government to take property from a private owner provided that the government pays the property owner “just compensation” (generally, the property’s fair market value) and relocation costs (including some business losses). The property is designated for a “public use” (a term that has been broadly interpreted to mean a variety of public purposes).

The Following Activities Are Considered a Public Use

Promoting downtown redevelopment by transferring property to other owners so that they may construct new stores, hotels, and other businesses;

Reducing urban blight and crime by transferring substandard apartments in a high-crime area to a nonprofit housing organization to renovate and manage; Securing public control of utility services by acquiring private water and other utility systems and placing them under government ownership; along with just compensation and relocation which includes (1) the fair market value of the property taken and (2) any reduction in value of the remaining property when only part of a parcel is taken. In addition to the payment of just compensation, California law requires governments to pay property owners for certain other expenses and losses associated with the transfer of property ownership.

Currently throughout the state of California there have occurred or are ongoing eminent domain cases in Alhambra, Antioch, Atascadero, California City, Grand Terrace, Grass Valley, Lemon Grove, Los Angeles, Monrovia, Monterey Park, National City, National City, Oakland, Ontario, Pittsburg, Redwood City, Riverside, Rubidoux, Sacramento, San Bernardino, San Diego, San Jose, San Pablo, San Ramon, Santa Clarita, Santa Cruz, Visalia, and Fresno, California.

Presently and before the peoples of California is Proposition 98 Eminent Domain: Acquisition of Owner-Occupied Residence - A Constitutional Amendment.

The Facts about Proposition 98:  California Property Owners & Farmland Protection Act, California Constitutional Amendment. Protect Property Rights for all Californians. Californians for Property Rights Protection is a coalition of homeowners, family farmers, small business owners, and other property owners (small and large) led by the Howard Jarvis Taxpayers Association, California Farm Bureau Federation, and The California Alliance to Protect Private Property Rights. Together, this powerful coalition has qualified Proposition 98, the California Property Owners and Farmland Protection Act (CPOFPA), for the June 3, 2008 ballot.  The CPOFPA is a constitutional amendment. Changes to the constitution made by this initiative can only be made by a majority of voters in the state, not the State Legislature.

A Summary of Key Provisions In The Initiative:

Private property may not be taken by eminent domain for private use under any circumstances (e.g. to build a shopping center, auto mall or industrial park).

Property may be taken by eminent domain only for public use (e.g.. freeway construction, parks, or schools).

Property may not be taken by government and used for the same purposes (e.g. residential housing cannot be used for government housing).

Family farms and open space are protected from seizures by government for the purpose of selling the natural resources.

If a public agency takes property under false pretenses, or abandons its plans, the property must be offered for sale to the original owner at the original price and the property tax would be assessed at the value of the property when it was originally condemned. If farmers or business owners are evicted by eminent domain, they would be entitled to compensation for temporary business losses, relocation expenses, business reestablishment costs and other reasonable expenses Government may not set the price at which property owners sell or lease their property. However, tenants who live in rent-regulated communities will continue to receive the benefit of those regulations as long as they live in their residences.

Key Issues:

The Constitution of the State of California provides that, "All people by nature are free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing and protecting property . . ." Prop 98 reaffirms and strengthens the private property protections set forth in our state constitution.

Property rights are a fundamental, core value among California voters. Statewide survey research shows more than 67% support for an eminent domain reform ballot initiative - Republicans, Democrats, Independents, seniors and baby boomers all support the initiative.

Enhanced farmland protections provided in this amendment increase support for this measure among environmentally concerned voters. Prohibiting sale or lease price regulations protects property owners when they sell or lease their property to others. At the same time, Prop 98 protects current tenants from unanticipated increases in their rents.

Nothing in Prop 98 would prohibit or limit legitimate land use decisions, zoning, work place laws, or environmental protections. Nor would it expose public agencies to costly litigation.” See a comparison chart between the Prop 98 and the League of Cities' initiative, Prop 99.” Or download this copy at http://www.yesprop98.com/facts/

Here in the city of Fresno and confronted with eminent domain are a remaining 15 to 20 successful businesses with a long time standing in the designated area for the Forest City Project. The general attitude among them is that through eminent domain the taking of the property even though legal is still unjust. All are worried that they’ll never be able to re-establish the long term relationships (some longer than twenty years) not only with their cliental but as well with their neighboring business colleagues. While all feel that they will suffer crippling losses; some don’t think that they’ll ever be able to recover nor able to restart their businesses anew.