Eminent Domain Report

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 ...

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 ...

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 ...

There has been a remarkable movement lately throughout California:  local government agencies are attempting to take over investor-owned, quasi-public utility companies in an effort to reduce utility bills to their constituents.  A number of electric and water utilities are facing pressure from agencies to sell their assets -- or face having them acquired through eminent domain.  Does this make sense?

As just one example, according to one recent article by Garth Stapley in the Modesto Bee, SSJID can boot PG&E from Ripon, Escalon, Manteca, the South San Joaquin Irrigation ...

As traffic continues to increase and roadways become more congested, California's transportation infrastructure needs to keep up.  While there has been a concerted focus on alternative methods of transportation (such as rail, bikeways, etc.), street and highway widenings are still a major focus of local government agencies.  The County of Sacramento is no different, as it embarks on the Hazel Avenue and Fair Oaks Boulevard road widening projects.  These street improvement projects typically require right-of-way acquisition, and while the acquisitions are typically small ...

The Self-Help Counties Coalition's 2014 Focus on the Future Conference is just around the corner.  This year, it is taking place in Santa Clara on November 16-18.  I will be presenting on the topic "Precondemnation Planning & Early Acquisition Efforts: Best Practices to Acquire Right of Way Without Blowing Your Project's Budget" on Tuesday, November 18 from 10:30 a.m. to 12:00 p.m.  My panel includes Bijal Patel at Santa Clara Valley Transportation Authority, Chip Willett at Dokken Engineering, Rob Caringella at Jones, Roach & Caringella, and Joey Mendoza at Overland, Pacific & ...

The Southern California Chapter of the Appraisal Institute will be holding its 47th annual Litigation Seminar on November 13, 2014 at the City Club in Los Angeles.  I'll be presenting on the topic "The Perception of Advocacy and Consequences for the Appraiser."  John Ellis, MAI, from Integra Realty Resources, Steven Fontes, MAI, from Mission Property Advisors, and Lance Hall, from FMV Opinions, Inc., will also be on my panel and will provide excellent insights into appraiser bias and its impacts on a valuation assignment.

At the seminar, my colleague Bernadette Duran-Brown will also ...

For those of you interested in hearing from eminent domain experts across the United States on hot topic condemnation issues, I hope you'll join us at the ALI-CLE's 32nd Annual Eminent domain and Land Valuation Litigation Program.  The Program will take place February 5-7, 2015, at the Hotel Nikko in San Francisco.  I'll be presenting on a panel with Dwight Merriam (Connecticut) and Mark Murkami (Hawaii) on "Denominators and Bright Lines:  The Search for the Relevant Parcel in Eminent Domain and Regulatory Takings."

If seeing me doesn't get you interested (understandably), hopefully ...

Good news California:  local projects are continuing to receive federal funding.  Caltrans announced last week that the U.S. Department of Transportation has granted nearly $35 million in TIGER funds to six local and regional projects throughout the state.

The projects receiving funding include:

• East Side Access Improvement Project ($11.8 million): This Los Angeles County Metropolitan Transportation Authority project will create a network of bike lanes and sidewalks for bicyclists and pedestrians to access the new Regional Connector/1st Central Station in Los Angeles ...

If you're a right of way professional, your fall schedule could be quite busy.  I'm having difficulty keeping track of all the upcoming events, so I thought I'd put them all in one place.  Here's what we have on the agenda:

• September 5:  Mobility 21's annual Southern California Transportation Summit.  The event will take place at Disneyland Hotel, and will feature an array of fantastic speakers from various local public agencies, including Riverside County Transportation Commission (RCTC), Los Angeles County Metropolitan Transportation Authority (LACMTA), the California ...

As public agencies continue to expand and build infrastructure throughout California, I've noticed a few recent themes.  First, many projects are supported by federal funds, usually through the Federal Transit Administration (FTA) or the Federal Highway Administration (FHWA).  And second, agencies are becoming more creative in exploring joint development opportunities with the private sector to enhance their projects and the surrounding community.

To the extent you are part of, or work with a public agency, and are involved with a federally funded project involving a potential ...

The U.S. Supreme Court's decision last year in Koontz v. St. John's River Water Management District received quite a bit of national coverage in the development world.  If you'll recall, Koontz held that the nexus and proportionality standards that apply to the government's attempt to exact land in exchange for a land use permit similarly apply to monetary exactions.  While the decision may have caused a change in the entitlement process in other states, this was generally already the rule in California under the Mitigation Fee Act.  So deciphering just how Koontz would impact ...

"Motions in limine" are motions made shortly before trial, and they're typically filed in an attempt to limit the introduction of evidence to the jury.  They are a powerful tool in eminent domain proceedings, and can be used to limit an appraiser's comparable sales, valuation methodology, or even the expert's entire testimony.  In a recent unpublished California Court of Appeal decision, Verizon of California v. Carrick (2014 Cal. App. Unpub. LEXIS 5030), the Court even approved of the use of an in limine motion to determine whether a party had a compensable interest in the property ...

Californians who have owned their properties for years understand the benefits of Proposition 13: their property taxes are based upon the property's purchase price (with only small allowable annual increases), as opposed to the property's current value.  But upon a transfer, the property gets reassessed at its current value.  Consequently, people in California often wind up with higher property taxes when they sell one property and buy another, even if the new property costs exactly what they received for the sale of the old property.

When an owner is forced to "sell" as a result of the ...

Just a few months ago, the California Court of Appeal handed down a significant decision in Property Reserve v. Superior Court which nearly eviscerated public agencies' ability to make use of the statutory "right of entry" procedure to gain access to private property to conduct any significant investigations and testing.  The Court held that any notable physical intrusion onto private property constituted a taking, meaning the public agency needed to proceed with an eminent domain proceeding.  The decision caused an uproar among public agencies across the state.  Well, pump the ...

This week marks the nine-year anniversary of the Kelo v. City of New London decision.  Since I've been practicing as an eminent domain attorney, Kelo is unquestionably the most well-known and stirring court opinion, creating widespread reform to the use of eminent domain across the country -- even on the opposite coast in California.  Last time I checked, about 45 states had passed some sort of eminent domain reform in response to the Kelo decision.

If you're interested in learning more about the Kelo decision, stay tuned for the film Little Pink House, which is being produced in ...

Eminent domain litigation can be expensive.  Not just the cost of acquiring the property (which is valued based on its highest and best use, and the "highest price" a willing buyer would pay), but the attorneys' fees, expert appraisal fees, and court costs all add up as well.  We're seeing the impact of such costs in the City of Adelanto, where the City has changed course on its plans to acquire a property by eminent domain.  

According to Brooke Self's article in the Victorville Daily Press, Adelanto halts eminent domain efforts, the City of Adelanto once planned to use eminent domain to ...

Despite being destroyed and dismantled, redevelopment in California has been born once again, this time reincarnated under the name of "Infrastructure Financing Districts."  Last week, Governor Brown signed into law AB 471, which amends section 53395.4 of the California Government Code to allow infrastructure financing districts to finance a project or portion of a project located within a redevelopment project area or former redevelopment project area.

Infrastructure financing district law now provides a mechanism to finance projects that would have otherwise ...

It's not too often you see one government agency threaten another agency with eminent domain.  But it does happen.  A recent article by Barbara Henry in the U-T San Diego, Encinitas has few options on Pacific View site, highlights on such dispute taking place right now.

According to the article, the City of Encinitas very much wants to acquire the Encinitas Union School District's 2.8-acre property that formerly housed the Pacific View Elementary School.  But the School District has rejected the City's overtures, turning down a $4.3 million offer to purchase.  Instead, the School ...

California's infrastructure received another push in the right direction last week as the California Transportation Commission (CTC) allocated $152 million to 36 projects statewide -- bringing its total transportation funding for 2013 beyond the $3 billion barrier.  

Some highlights of projects receiving funding this year as 2013 winds to a close:

• Los Angeles received (i) $26 million to improve the Port of Los Angeles, (ii) $20 million to widen the I-5 freeway from the Orange County Line to the I-5/I-605 junction, and (iii) $28 million for the Exposition Light Rail Project ...

The Southern California Chapter of the Appraisal Institute will be holding its 46th Annual Litigation Seminar this Friday, November 15.  The list of topics sounds fantastic:

• It's Just a Simple Rent Re-Setting in a Ground Lease
• If the Glove Doesn't Fit . . . Make it Fit (Abuses in the Tax Appeal Process)
• Hot Topics in Eminent Domain
• Planning for and Managing Large Acquisition Projects -- Lessons Learned
• Uneconomic Remnants -- Are They Always?
• We Just Need Your Property on a Temporary Basis -- For the Next 4 Years
• Decisions, Decisions, Decisions (A Review of Recent Major Valuation Cases)
• The ...

Eminent domain litigation can be expensive.  Acquiring small strips of property often costs more in legal and appraisal costs than the value of the property itself.  Sometimes public agencies have no choice but to condemn these minor acquisitions, as property owners cannot be found, will not negotiate, or otherwise take unreasonable positions.  But when property owners are willing to reasonably negotiate, public agencies need to think hard about these cost savings and weigh them against setting a precedent for other acquisitions.  

For example, if it will cost an agency $20,000 in ...

Eminent domain actions are unique in that "the court, rather than the jury, typically decides questions concerning the preconditions to recovery of a particular type of compensation, even if the determination turns on contested issues of fact."  (See Emeryville Redevelopment Agency v. Harcros Pigments, Inc. (2002) 101 Cal.App.4th 1083, 1116.)  This is consistent with the general rule in eminent domain that the jury’s role is only to determine the amount of damages, leaving other questions to be resolved by the Court.  While these factual disputes are typically decided by the judge ...

According to Jason Henry's article in the San Gabriel Valley Tribune, West Covina contests condemnation of properties at Westfield Mall, Lakes Drive, the City of West Covina plans to contest an eminent domain action filed by the California Department of Transportation (Caltrans) to acquire land near Westfield Mall needed for the expansion of the I-10 Freeway.  

Caltrans' proposed acquisition will eliminate a California Pizza Kitchen, the former Bob's Big Boy building, an AT&T store, as well as a row of parking spaces along the I-10 near Lakes Drive.  The City claims that Caltrans ...

More than 50 years ago, Caltrans purchased roughly 500 homes under threat of eminent domain within the planned right-of-way for the anticipated construction of the I-710 freeway (linking Monterey Park to Pasadena).  That freeway project still has not been built, yet Caltrans continues to own the properties.  There have been plenty of negative news stories about the amount of money Caltrans has spent on the upkeep of those residences (see Gideon's Trumpet), but apparently Caltrans' property ownership may finally come to an end.  Not because the I-710 freeway is actually going to be ...

According to an article in the Desert Sun, CVAG OKs plan to help fund passenger rail, the Coachella Valley Association of Governments ("CVAG") recently approved an agreement with the Riverside County Transportation Commission for a new rail fund that will devote a portion of local transportation funds to expanding passenger rail service.  It will likely take at least a year before the agencies are able to report on possible station locations and schedules, but the long-term plan is to have connections through the valley with Los Angeles.

A prior study proposed stops in three cities ...

Property owners are routinely hiring attorneys well in advance of a public agency's filing of an eminent domain action.  Many times, the representation begins before it is even certain whether the agency will actually move forward with acquiring the property.  And sometimes, claims for inverse condemnation may ripen during the public agency's construction of the project on other nearby properties.  When this overlap exists between inverse condemnation and potential future eminent domain actions, owners should be careful to assess how the attorney will be compensated.  A recent ...

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 ...

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 ...

It appears the raisin handlers' luck in the recent U.S. Supreme Court decision Horne v. US Department of Agriculture has spawned a new federal takings challenge by another group of fruit growers.  This time it's a group of tomato growers asserting a takings challenge against the federal government, with a bit of a twist.  (And yes, I had to check, but both raisins and tomatoes are technically fruits -- see the things you learn?)

According to an article in the Packer, Tomato growers say eminent domain applies to 2008 crop, tomato growers are suing the federal government for $40 million in ...

Money is once again being allocated to improve public infrastructure in California.  The California Transportation Commission announced this week the award of $487 million to various projects throughout the state.  Included are:

• San Bernardino Associated Governments' (SANBAG) Lenwood Road Railroad Grade Separation Project in the City of Barstow.
• Orange County Transportation Authority's (OCTA) Lakeview Avenue Grade Separation Project in the City of Placentia.
• The Richmond Rail Connector for a new route between San Pablo and Richmond.
• Several Caltrans State Highway ...

Over the past several months, the United States Supreme Court and the California Courts of Appeal have issued several significant regulatory takings opinions addressing the liability of government agencies for enacting regulations or otherwise conditioning proposed developments.  To really dig into these opinions and their importance, Law Seminars International will be putting on a one-hour telebriefing, Regulatory Takings Claims In California, on August 19 at 1 p.m. (PST).  I will be moderating the discussion with two other outstanding regulatory takings attorneys:  Robert ...

The Press Democrat is reporting that Sonoma County has agreed to pay $815,000 to acquire by eminent domain a family's 6.5-acre property next to the Charles M. Schulz airport for a runway extension project, settling the contentious case on the eve of trial.  According to the article, Landowners, Sonoma County settle airport expansion lawsuit, the County valued the property at $135,000, while the owner's appraiser reached a valuation conclusion of $1.5 million.  Why the large spread in appraisals?  Apparently because of a dispute over the property's highest and best use.

To provide ...

It's not too often a property owner succeeds with an inverse condemnation/regulatory takings claim based on a general plan amendment or zone change.  The owner must generally demonstrate that the regulation either on its face, or when specifically applied to the owner's property, deprives the owner of the economically beneficial uses of the property.  The first attack (a "facial challenge") is difficult to prove, as it is uncommon that a general plan amendment/zone change is drafted in such a way that it -- on its face -- prevents all economic uses of the property.  The second attack (an ...

We haven't provided much in the way of updates recently on California infrastructure projects requiring eminent domain.  Either we've been too busy to notice or it's been surprisingly quiet recently.  But, some headlines did just catch our attention, so we thought we'd provide an update to our readers.

• San Luis Obispo to Institute Eminent Domain:  according to a recent article in the Tribune, City Council approves temporary easement on private land for work in congested area, the San Luis Obispo City Council unanimously adopted a resolution of necessity, approving the use of ...

Following up on my post on the case, I had the opportunity to speak with Colin O'Keefe of LXBN regarding the Supreme Court's ruling in Koontz v. St. Johns River Water Management District. In the interview, I explain the court's ruling and what impact it could have nationally. 

In our niche practice of eminent domain, inverse condemnation, and regulatory takings, the blogosphere world is going bonkers.  Why?  Because the United State Supreme Court just issued its decision in Koontz v. St. Johns River Water Mgmt District, No. 11-1447 (cert. granted Oct. 5, 2012), holding that the "essential nexus" and "rough proportionality" standards that apply to the government's attempt to exact land in exchange for a land use permit similarly apply to the government's attempt to demand monetary exactions.  This isn't necessarily shocking news for those of us ...

According to an article in the Mercury News, Fremont may use eminent domain process to buy land needed for proposed downtown, the City of Fremont's City Council will be holding a public hearing on Tuesday to consider the adoption of a resolution of necessity to acquire a property for the Capitol Avenue Extension Project.  The impacted property is located at 39138 Fremont Blvd., and it consists of 65,150 square feet of land improved with a three-story building.

The Mercury News article indicates that the staff report supporting the adoption of the resolution of necessity provides ...

Given the maze of procedural and substantive hurdles involved, property owners rarely succeed with regulatory takings claims.  Even when owners do win, it is yet more uncommon for courts to award damages, instead allowing the public agency to repeal the regulation.  But securing a victory on liability and a damages award for a temporary regulatory taking, well, that is nearly uncharted territory (going into the realm of unicorns, the Loch Ness Monster, and other mythical creatures); we've heard stories of such events, but it is rare to find reliable documentation.

That all changed ...

The California Transportation Commission (CTC) recently announced the award of $878 million to fund 114 transportation projects.  Brian Kelly, the acting Secretary of Business, Transportation & Housing Agency, stated:

This billion-dollar investment helps preserve California’s great infrastructure of the past and put thousands of Californian’s to work building something new.  These investments in preservation and innovation are absolutely critical to California’s economy:  In 2010, traffic congestion caused 95 million hours of delay, wasting fuel and ...

Light rail and rapid transit appear to be the hot ticket in California.  Most of our right-of-way acquisition and eminent domain work over the last few years has centered on such projects.  One interesting dispute that regularly pops up between the land owner's appraiser and the public agency's appraiser is whether or not there are "project benefits".  In analyzing the property's "before-condition" value, such benefits need to be excluded (whether positive or negative).  (See Code Civ. Proc., sec. 1263.330.)  But when assessing the property's "after-condition" value in the case ...

California's loss of business goodwill statute, Code of Civil Procedure section 1263.510, provides that before a business can submit its goodwill claim to a jury in an eminent domain case, the business must first demonstrate that:

• The loss is caused by the taking;

• The loss cannot be prevented by relocation or other reasonable mitigation efforts; and

• The loss will not be covered through another form of compensation, such as relocation benefits.

In late-2012, the California Court of Appeal issued a decision in People ex rel. Dept. of Transportation (Caltrans) v. Dry Canyon ...

Acquiring property for public projects typically does not occur until after the project has received environmental approval. While this is the generally accepted rule – and it makes sense for a number of reasons – must a project receive environmental clearance before an agency may begin the property acquisition process? In a recent published decision, Golden Gate Land Holdings, LLC v. East Bay Regional Park District, the California Court of Appeal answered no, and permitted an agency to proceed in reverse order: filing an eminent domain action prior to its complying with the ...

Next Tuesday, April 16, Rick Rayl and I will be hosting a teleconference for the National Business Institute titled "Acquiring Right-of-Way".  It's a 90 minute conference geared towards a national audience of attorneys, real estate professionals, government agencies, appraisers, energy companies, and right-of-way consultants.  You can find a link to the conference here.  For those of you who may be interested, here's the agenda:

1. Acquiring Right of Way for Public & Private Projects (environmental review process & funding constraints, acquisition process & timing, and ...

According to an article in the Daily Republic, Jury: County owes $1.24M in eminent domain dispute, Solano County and a local land owner recently completed an eminent domain trial, and the jury sided with the owner.  The case, Solano County v. Valine, involved the County's partial acquisition of about 10 acres through the middle of the owner's 82-acre farmland in order to develop the Suisun Valley Parkway.  

Our esteemed colleague, professor Gideon Kanner, reports that the government agency initially offered $575,000 for the partial acquisition.  After no agreement could be reached ...

According to an article in the Whittier Daily News, La Mirada agrees to pay $1.8 million to settle eminent domain case for new railroad underpass, the City of La Mirada has agreed to pay $1.8 million to settle the last eminent domain case involving acquisition of easements and property for the Valley View Avenue underpass at the BNSF Railroad crossing.  The parties were likely close to trial as they had recently exchanged final offers and final demands (see Code of Civil Procedure section 1250.410).  

The $1.8 million settlement sounds like a good deal for the City, as the owner's final ...

For those of you who have followed Nossaman's blog since the very early days, you'll recall our coverage of a significant regulatory takings case, Monks v. City of Rancho Palos Verdes.  The 2008 California decision received much press coverage in that it was one of the very few instances where property owners overcame the myriad substantive and procedural obstacles and succeeded under a regulatory takings theory.  While the Court found a taking occurred, the case was remanded back to the trial court to determine the appropriate remedy.  Now, nearly five years later, the dispute has now ...

Over the past several months, we've been following some of the recent takings cases that have made their way up to the United States Supreme Court.  So where do things currently stand?  As you've likely heard, the Court issued its decision in Arkansas Game & Fish Commission v. United States (see our summary here); we're waiting for a decision after oral argument in Koontz v. St. John's River Management District (see our summary here); and just this week, the Court heard oral argument in Horne v. U.S. Dept. of Agriculture.  

If you're looking for an excellent summary of the Horne oral argument ...

Rick Rayl and I will be speaking this Tuesday, March 19, at the International Right of Way Association (IRWA) Chapter 1 (Los Angeles) annual co-luncheon with the Appraisal Institute.  We'll provide an eminent domain "Year in Review," covering all the important court decisions from the past year.  To make it a bit interesting, we'll be coming up with some funny phrases, and we're hoping some of you will be able to guess what case we're talking about.  Rick promises there will be prizes....

The annual lunch between the IRWA and the Appraisal Institute is always a good one, so we hope you'll ...