Eminent Domain Report

OK, I'll admit it.  A year ago I thought this whole condemnation-of-underwater-mortgages thing would die off pretty quickly.  I predicted we'd never see any large-scale condemnation effort.  So far, I've missed badly on the first prediction -- but it remains to be seen whether I'm right on the second one.

To date (unless I've missed something), not a single condemnation action has been filed anywhere in the U.S. to condemn an underwater mortgage.  But the concept certainly has not disappeared quietly into the night.  Instead, some cities continue to pursue the idea.

One in particular ...

Caltrans just announced that California will be receiving $155 million in extra funding for launching its new construction projects before federal deadlines.  Caltrans will receive about $97 million of that award, with local and regional agencies receiving the balance.  States that fail to meet federal deadlines lose funds, which revert to a pool that benefits states like California, that consistently launch projects on time.  This year, California received the largest share of that pool, with New York the next highest at $81 million.

"The federal government has rewarded Caltrans ...

As reported by our colleague Robert Thomas on inversecondemnation.com, the California Supreme Court granted the California Building Industry Association's (CBIA) petition for review in California Building Industry Association v. City of San Jose.  The case will be the first test in California post-Koontz on whether the nexus/proportionality requirements apply to general regulations such as affordable housing exactions.

The CBIA filed the petition after the Court of Appeal for the Sixth Appellate District reversed and remanded the Superior Court's decision ...

Yesterday, the City of Richmond caught a small reprieve with respect to its plan to condemn underwater mortgages.  As reported by Reuters, the federal district court ruled that the lawsuit filed by lenders Wells Fargo, Deutsche Bank and The Bank of New York Mellon is unripe. The judge denied the lenders' request for an injunction to halt the City's plan to condemn underwater mortgages even though the lenders argued that the City's use of eminent domain in this context is unconstitutional.  Next Monday, the judge will decide whether to dismiss the action or leave it pending.

Despite three major banks filing federal lawsuits against the City of Richmond last month related to its plan to condemn underwater mortgages, the City continues to press on.  On Tuesday, the City voted 4-3 to continue its partnership with Mortgage Resolution Partners (MRP), the mastermind behind the scheme. (See articles from The Press Enterprise and Contra Costa Times.)   The council and MRP will form a Joint Powers Authority to administer the plan and will attempt to attract more cities to join the effort. 

While the City is still moving forward, there continues to be ...

The Southern California Chapter of the Appraisal Institute holds a great conference each year covering a variety of hot-topic issues.  The 2013 Conference will be held this Thursday, September 12, 2013, and my partner Rick Rayl and I will be presenting on the future of redevelopment in California.  So, if you're interested in what's played out over the last year for redevelopment agencies, what lawsuits have been filed, what projects are moving forward, and what the future holds for all the property that is now owned by the successor agencies, come join us.  

The rest of the Conference is ...

In July, the City of Hayward passed several resolutions of necessity to acquire property for its Interstate 880 / State Route 92 Reliever Route Project.  The Project will extend Whitesell Street to provide access to State Route 92 from Winton Avenue, which is more of an industrial area.  While it sounds straight-forward, there appears to be some complex acquisitions.  Last week, the San Jose Mercury News provided some insight to the complicated project.

The city prides itself on never having filed an eminent domain action for its public project and here, the city is only seeking to ...

Eminent domain cases typically revolve around a "date of value" – the date on which property is valued in determining the amount of just compensation the condemning agency must pay.  That date is set by statute; typically, it is the date on which the agency deposits the amount of "probable compensation" to be awarded.  But sometimes, the agency's activities, such as project planning and acquisition efforts, negatively affect the value of the property.  In such circumstances, property owners may attempt to hold the agency responsible for such declines in value by claiming (1 ...

Downzoning property is always a thorny issue:  on the one hand, zoning changes are typical, "police power"-type governmental activities; on the other hand, they can significantly impact property values, and in some cases can result in governmental takings liability.  When a property owner experiences a change in zoning, there are typically two theories that can be pursued:  one is so-called "spot zoning," and the other is a regulatory taking.  

Under the first theory, "spot zoning," a property owner can have a zoning designation invalidated if it can prove the government targeted the ...

I'll give you a hint, this is a bit of a trick question.  Give up?  Okay.  Whenever you name a State agency, of course. 

In Lavine v. State of California (pdf), a property owner filed a lawsuit after the Regional Water Quality Control Board adopted, and the California State Water Resources Control Board approved, a ban on on-site septic systems in Malibu.  (Case No. B238030, Aug. 20, 2013, Unpublished.)  The plaintiff owned a single-family residence in Malibu that utilized an on-site septic system; no public sewer system was available to residences in the area.  Although the ...