Housing and Land Use: Eminent Domain

What Will Kelo Mean in California?
Legislature Debates Issues Arising
from Controversial Supreme Court Decision

By James Keene, Executive Director jkeene@counties.org

The hue and cry over the recent United States Supreme Court ruling in Kelo v. City of New London, that a public agency may use eminent domain to take a privately-owned, non-blighted property for the purpose of economic development, has been heard loud and clear throughout the country. What has struck fear in the heart of property owners has subsequently placed redevelopment agencies and their practices under a microscope. Depending on which expert is asked, the court’s ruling may have wide-reaching effects in California. State legislators have taken notice and there has been a flurry of activity on this issue this week.

The Senate Local Government Committee convened an informational hearing this week to discuss the impacts of Kelo on California’s local governments. Senator Christine Kehoe, committee chair, invited panelists representing the private property rights perspective, as well as that of local governments, to discuss how California law could be changed to further protect the rights of private homeowners and businesses, while maintaining the use of eminent domain for legitimate public purposes. The divergent viewpoints presented highlight the need for a broader discussion about the appropriateness of California’s redevelopment policies with respect to the Supreme Court’s decision.

The property rights perspective was represented by Timothy Sandefur of the Pacific Legal Foundation, a public interest legal foundation that specializes in cases involving private property rights, and Michael Berger of the law firm Manatt, Phelps & Phillips, where he has been active in eminent domain and land use law for 35 years. (Mr. Sandefur and Mr. Berger filed amicus curiae briefs with the U.S. Supreme Court in Kelo v. New London.) Both offered examples of eminent domain use in California similar to that in the City of New London, Connecticut. Both offered concrete suggestions for changing redevelopment law in California: clarify the definition of “public use;” tighten the “blight” definition in statute; remove or lengthen the time limit to challenge a blight designation; and limit the time during which a property can be designated as blighted. When questioned by members of the committee, the panelists indicated that, with the Supreme Court’s decision in Kelo, they were concerned that California courts would provide a significant level of deference to a legislative body’s determination of “public use,” opening the door to a greater number of takings in the state.

In contrast, public agencies, represented by Bill Higgins, an attorney with the League of California Cities’ Institute for Local Government, and Joseph E. Coomes, Jr., a senior attorney with the Sacramento firm of McDonough, Holland & Allen and the co-author of Redevelopment in California, emphasized that California is not Connecticut. In fact, California’s laws on existing rights and procedural protections for property owners in redevelopment areas are not merely adequate, but superior to those in other states. Further, eminent domain is an important tool for local governments to battle economic and physical blight and to provide important public infrastructure, such as schools, roads, or other public facilities. There are a number of success stories throughout the state that point to the community improvements that legitimate redevelopment practices, including the use of eminent domain, can generate.

While committee members certainly did not agree on an approach to shoring up private property owners’ rights in California, it was clear that something would be done. We expect additional discussions and debates to occur over the next weeks as the legislative session winds down and even over the next year. Here is a summary of a number of legislative measures have surfaced to address issues raised by Kelo.

AB 590 (Walters) is a statutory prohibition against using eminent domain to acquire private property for private business development. AB 590 has been referred to the Assembly Housing and Community Development Committee.

SCA 12 (Torlakson and Kehoe) would prohibit government agencies from using eminent domain for the taking of “owner-occupied residential property” for private use. This measure is currently in Senate Rules Committee.

SCA 15 (McClintock) and ACA 22 (La Malfa) are identical measures that prohibit private property from being taken for private use. Under these constitutional amendments, property taken under eminent domain must be owned and occupied by the condemner and must be used only for the stated public purpose. If the property ceases to be used for that purpose, it must be offered to the original owner or the owner’s heirs for the amount of compensation originally received, or the property’s new fair market value, whichever is less. Both measures have not yet been set for hearing in their respective houses.

SB 53 (Kehoe) would require new redevelopment plans to declare whether eminent domain will be used, including prohibitions on the use of eminent domain, and a time limit for the commencement of eminent domain proceedings not to exceed ten years. For plans adopted prior to January 1, 2006, the plan must be amended by July 1, 2006 to include such declarations, including a time limit of January 1, 2009 for the commencement of eminent domain proceedings. SB 53 awaits hearing in the Assembly Local Government Committee.

We expect SB 1026 be amended to contain language that would impose a two-year moratorium on the use of eminent domain for the taking of owner-occupied residential property for private use. Authored by Senator Christine Kehoe, the bill would also require the California Research Bureau to report to the Legislature by January 1, 2007 on all condemnations of owner-occupied residential property for private use from 1996 to 2006 and what became of those properties.

SB 1099 (Hollingsworth) would prohibit the use of eminent domain for “agricultural property” unless the condemning government retains direct ownership of the property or the property is transferred to a private entity for health care facilities, public utilities, or transit facilities. SB 1099 is currently in the Senate Rules Committee.