Eminent Domain Report

California continues its process of dismantling its redevelopment infrastructure.  The state's redevelopment agencies disappeared on February 1, 2012, and today marks another key milestone.  May 1 is the deadline for the creation of the Oversight Boards that will watch over the Successor Agencies as they dispose of redevelopment assets. 

What does this mean?  In many cases, nothing particularly significant.  Oversight Boards have been empanelled for many Successor Agencies before today, and even once empanelled, there is no guarantee that anything will happen immediately.  But ...

As an eminent domain attorney, a litigated outcome nearly always comes with the satisfaction (or devastation) of realizing that you have won or lost.  Sure, sometimes the jury splits (in fact, that probably happens most of the time), but the result can be placed in the context of the settlement negotiations that took place leading to the trial.

A verdict much better than the settlement possibility feels like a "win" and a verdict much worse than an offered settlement understandably feels like a "loss."  It's really pretty simple.

But I have not had enough decisions to have empirical ...

If you've ever watched the show Shark Tank on ABC, you know that many individuals value their businesses much higher than their business' numbers suggest.  It's human nature:  you focus on the upside and tend to ignore the blemishes or risk areas.  As Kevin O'Leary -- "Mr. Wonderful" -- would say, the numbers tell the story, because it's all about the money. 

Mr. Wonderful's it's-all-about-the-numbers concept also holds true in the valuation of businesses in the eminent domain context:  the jury's task is supposed to be a sober inquiry into values, ignoring ...

Yes!  And two separate groups recently learned this fact the hard way.  On April 17, the Eastern District of California issued two separate decisions dismissing two separate inverse condemnation claims with prejudice because the plaintiffs did not have an independent property interest in the subject property.  In Abarca v. Merck & Co. (E.D. Cal. Apr. 17, 2012) Case No. 1:07-cv-0388, a group of minor plaintiffs and a group of non-owner landscape plaintiffs filed an action against the County of Merced, the Merced Irrigation District, and Merced Drainage District ...

My partner Brad Kuhn and I spoke yesterday at the IRWA Chapter 1 Valuation Conference.  Our topic involved large-scale acquisitions, and what makes them different from a typical, single-parcel acquisition.  As always, the Conference was well attend.  And as always, both the panelists and the audience are made up of a great cross-section of the top right of way practitioners in Southern California.  This mix often leads to some great discussions -- and yesterday was no exception.

One of the questions that arose during our presentation involved the fairly recent requirement that agencies ...

About two years ago, I embarked on a path to start blogging about eminent domain issues.  At the time, I didn't read a lot of blogs (OK, I probably didn't ready any blogs).  I also had little idea where the path would lead me, and I certainly had no clue what it might mean for my practice. 

Now, I follow several other blogs and have a much better sense about how it all works.  So much so, apparently, that I've been asked to sit on a panel at an upcoming PLI Conference Lawyers' Guide to Using Social Media for Professional and Client Development 2012.  Truth be told, I'm inclined to think that all the ...

It's common practice for government agencies and property owners to reach an agreement on the acquisition of property without the use of eminent domain.  Agencies understand the negative connotation of condemnation, along with the litigation costs involved, and right-of-way agents typically make strong efforts to negotiate a voluntary purchase.  Acquisitions are usually resolved by the parties' entering into a standard right of way contract or purchase agreement.  But once the eminent domain action is filed, attorneys like to resolve the case through the entry of judgment -- as ...

The demise of redevelopment world tour continues!  Gale's been speaking away up north at the IRWA, the Appraisal Institute, and various other organizations, and Rick and I have been trying to do our part to keep up down here in Southern California.  So, here we go again -- this time down in San Diego, and we hope you'll join us.  We promise to use some new materials and give some updates on the status of pending clean-up legislation and how the redevelopment agency winding up process is playing out in California. 

The details:  we'll be speaking to the San Diego Chapter of the International ...

A few months ago, I had a property owner call me and explain he had recently sold his property to a utility company under threat of eminent domain.  He took the sale proceeds and invested the money in a comparable replacement property.  When he applied to transfer his Proposition 13 base year value to the replacement property, the County assessor denied his request.  The assessor explained that because the sale under threat of eminent domain was not to a public entity, it did not fall within the exception that allows for a transfer of the base year value.

I was a bit surprised by the assessor's ...

By now, loyal followers of this blog are well versed in the whys and wherefores of redevelopment's demise.  You know all about the 30+ year struggle between the state and cities over allocation of property tax revenues.  The impact on the State's budget caused by Proposition 98, the creation of ERAFs and Propositions 1A and 22 in the new millennium are by now old hat.  You can recount by heart the story of the rise and fall of the alternative voluntary redevelopment program that was ABx1 27 and the Supreme Court’s decision in California Redevelopment Assn v. Matosantos.

But what does all of ...

 Here's some news making headlines this week in the eminent domain community:

• The Base Year Transfer Rule Under Threat of Eminent Domain:  A new published California Court of Appeal decision -- Duea v. County of San Diego -- came out yesterday addressing whether a property owner can transfer their base year value to a replacement property when the owner sells its property to a private developer under threat of eminent domain.  The Court held that the owner had some procedural missteps which doomed the case, but also went on to hold that this type of transfer does not qualify for a base year ...

Last year I saw Win Win, a movie starring Paul Giamatti, Amy Ryan and Jeffrey Tambor.  The movie, besides receiving critical acclaim, had two hooks for me.  One, the protagonist in the movie is an attorney.  I am a sucker for almost any lawyer movie.  (I still say My Cousin Vinny is one of the best 50 movies of the past 50 years.)  And two, the movie included wrestling.  No, not the Hulk Hogan and Macho Man Randy Savage stuff.  I mean the real folkstyle wrestling that occurs every 4 years at the Olympics and at the collegiate level. 

My dad was a college wrestler, which is probably why ...

In case you didn't have a chance to attend the event my partner, Gale Connor, spoke at earlier today, there's still time to learn about appraising in a litigation context. 

On Wednesday, March 21, I'll be speaking with three of my colleagues, Brad Kuhn, David Graeler, and Bernadette Duran-Brown at a half-day event sponsored by the American Society of Appraisers.  We're presenting Everything You Need to Know About Appraisals for Litigation at Scott's Restaurant and Bar in Costa Mesa.  The seminar runs from 2:00 to 5:00, with a dinner and networking event to follow. 

There may still be some ...

How is an eminent domain appraisal different from other forms of appraisals?  What is the difference between a deposit appraisal and an exchange appraisal and why do condemners usually hire separate appraisers for each?  If I am an appraiser, how do I develop a practice as an expert witness?

These and other questions will be answered in a panel discussion at the Northern California Chapter of the Appraisal Institute's "2012 Annual Spring Conference" to be held at the Doubletree Hotel, in Modesto, CA., on March 19, 2012.  I, along with Norm Hulberg of Hulberg & Associates and Larry ...

California provides a special procedural remedy whenever a lawsuit implicates a defendant's First Amendment right to petition or free speech.  The procedure is commonly referred to as the "anti-SLAPP."  (SLAPP is an acronym for Strategic Lawsuit Against Public Participation.)  Under this procedure, the trial court evaluates the merits of the lawsuit using a summary judgment like process, often at an early stage of the litigation.  In a recent unpublished decision, the California Court  of Appeal affirmed the propriety of applying this procedure when a plaintiff is ...

Shortly before an eminent domain trial, a government agency and a property owner exchange a statutory final offer and final demand. The statute’s sole purpose is to encourage settlement before trial, providing a carrot (to the property owner) and a stick (to the condemning agency). 

If the matter fails to settle before trial, the owner can seek an award of litigation expenses (i.e., attorneys’ fees and expert costs) if the court ultimately determines that, in light of the outcome, the agency’s final offer was unreasonable and the owner’s final demand was reasonable. (See ...

Over the past few years, we've seen California courts go in several different directions when it comes to admitting opinions on the value of a business' loss of goodwill in the context of an eminent domain action.  As a result, eminent domain attorneys, public agencies, and appraisers have been left shooting at somewhat of a moving target as to whether courts will be flexible on the admission of unique or unconventional goodwill opinions.  This week, the California Court of Appeal issued an unpublished decision, City of South Gate v. S&M Auto Sales, which, although not ...

There are a number of redevelopment updates making headlines both in California and nationwide. 

National Redevelopment Update:

We've been following H.R. 1433 -- the "Private Property Rights Protection Act of 2011" --  a bill that would limit the power of eminent domain on a national platform.  We last reported in January that the bill was finally adopted by the House Judiciary Committee, and would next make its way to the House for approval.  According to an article on The Hill by Pete Kasperowicz, House votes to overturn Supreme Court decision on eminent domain, that next step ...

Here's a quick update about some recent headlines in our eminent domain community.

• Eminent Domain for New School in Foster City?  According to a Mercury News article, Charter Square owners resistant to selling property to school district, the San Mateo-Foster City School District is looking for a site for a new school, and it may turn to eminent domain to acquire the Charter Square Shopping Center.  Moving forward with the new school depends on the passage of a $130 million bond measure in June.  If it goes forward, more than a dozen businesses will need to be relocated.
• Orinda to Condemn ...

Reflecting on the Golden Age of Saturday Night Live, icons such as Chevy Chase, Bill Murray, Gilda Radner, Steve Martin, Jane Curtin, and Dan Aykroyd jump to mind.  As such, it should come as no surprise that one of my favorite recurring characters has always been Emily Litella.  An old lady who would spend a minute or so railing against some ridiculous topic premised on a mistaken understanding of some headline or story, only to conclude with a sweet "never mind" after the error was pointed out to her.  In a recent per curiam decision by the United States Court of ...

We all knew that redevelopment agencies wouldn't go down without a fight after the California Supreme Court delivered the elimination-knock-out-punch in California Redevelopment Association v. Matosantos.  As expected, agencies took a two-pronged approach to try and stave off their elimination: (1) through the legislature, and (2) through the court system.  Friday delivered another one-two punch to redevelopment agencies, and this time they may be finally pinned in a corner.  

Legislative Update:  With respect to the legislative fix, we reported a few weeks ago that Senator ...

We've been closely tracking H.R. 1433 -- the "Private Property Rights Protection Action of 2011" -- a bill that would limit the power of eminent domain on a national platform.  (See our August and April 2011 posts.)   There hasn't been much action lately, but we finally saw some significant movement. 

According to an article by Lawrence Hurley in the E&E Reporter, "House panel approves bill limiting federal eminent domain power," the House Judiciary Committee finally approved the bill by an overwhelming 23-5 vote. Now, the legislation will move its way to the House for approval.

Last week, we sent out a blog post with a number of quick updates on right-of-way-related issues making headlines across California.  Rick thought it would be a cool idea if we made this type of post a weekly habit, so here it goes (and, if it doesn't work or happen every week, obviously blame Rick):

• City of Visalia Can't Negotiate With Property Owner:  Here's an interesting story.  According to an article in the Visalia-Delta Times, "Visalia moves to take land near St. Johns," the City of Visalia is using eminent domain to acquire property necessary for a walking trail.  So what makes ...

With the elimination of redevelopment agencies in California, we've been spending quite a bit of time lately discussing the impacts of Proposition 13 on California's budget woes as government agencies continue to fight over a slice of the shrinking property tax budget pie.  Proposition 13 has led to another interesting property valuation battle between county tax assessors and petroleum refineries, and the California Court of Appeal recently issued a published decision, Western States Petroleum Association v. State Board of Equalization, settling the dispute.

Prop 13 ...

On January 19, 2012, the California Court of Appeal issued an unpublished decision addressing this very question.  Specifically, in Flying J, Inc. v. Department of Transportation, Case No. F060545, the Court of Appeal affirmed the dismissal of plaintiff's claim for lost profits, finding that plaintiff's evidence was not sufficiently comparable in character and its calculations relied on too much conjecture about future events.      

Plaintiff Flying J operates truck stops.  In 1997, it purchased an 18.8 acre parcel adjacent to State Routes 14 and 58 in the Mojave ...

 Here's a few updates on eminent domain-related issues taking place in California this week:

• City of Covina Condemnation:  According to an article in the San Gabriel Valley Tribune, Covina using eminent domain to take property from Alhassen-controlled company, the City of Covina has filed an eminent domain action to acquire a vacant, half-acre property owned by West Covina-based developer Ziad Alhassen.  The City intends to utilize the property for parking for police department employees and County firefighters.  The condemnation action was necessary after the City and the owner ...

We're looking back on 2011's wild ride and looking forward to the twists and turns still in front of us in 2012.  We've summarized all of this into the 2011 version of our annual Eminent Domain Year in Review piece.

For those who don't want to take the time to read the actual article, here are a few of the highlights:

• In January, Governor Brown proposed eliminating redevelopment agencies.  In June, he finally got legislation to accomplish that goal.  In August, the Supreme Court agreed to hear a legal challenge to the new law.  And on December 29, the Supreme Court upheld the law dissolving ...

The California Court of Appeal recently issued an unpublished decision, Ridge Properties v. County of Riverside Flood Control and Water Conservation District, which addresses whether a government agency's failure to pay an agreed amount of compensation gives rise to a claim for inverse condemnation.  The answer is "no."

In Ridge Properties, a property owner planned to develop an industrial park in Riverside County.  The conditions of approval for the project required the owner to dedicate some of its property and construct a drainage or flood control facility to protect ...

Although best known today as the voice of bumbling Mayor West on Comedy Central’s Family Guy, Adam West’s real claim to fame was playing the caped crusader in the 1960s television series Batman.  Batman and the Boy Wonder regularly matched wits with the Riddler, a villain who would deliver clues to his elaborate criminal plans by deceptively simple riddles.  A recent unpublished decision, City of Southgate v. Jauregui (Court of Appeals of California, 2nd District, Division 4, No. B228334) both poses and solves a deceptively simple riddle, worthy of the Riddler himself. 

Riddle me ...

The last two weeks following the California Supreme Court's decision eliminating redevelopment have been nothing short of a whirlwind.  Stories are flying all over the place on the decision's implications, whether redevelopment may be revived, or whether there may just be some small tinkering with AB1X 26.  While the updates seem to be changing by the hour, here's what we know as of today:

• Senator Alex Padilla (D-LA) has introduced a bill to delay the dissolution of the redevelopment agencies until April 15, 2012.  It's unclear if this is a delay tactic to give RDAs a chance to come up with ...

Here's a new one.  Imagine you have a government agency as your tenant, paying above-market rent, and the lease is set to expire.  The government tells you they're going to move to a new site, but they need to hold over for a while until the new site is built.  You figure, fine, the parties will just continue with the same rental rate until the government tenant moves.  Hey, what other option does the government have?  It would be incredibly expensive to find a temporary site and do a temporary move until the permanent relocation site is finalized.

This logic may work with any typical private-market ...

After our webinar on the California Supreme Court's decision in California Redevelopment Assn. v. Matosantos, we've received a number of requests for the materials both by folks who attended and those who missed the event.

Let us know your thoughts.  And, if you have any follow-up questions, feel free to give us a call or shoot us an e-mail. 

We're taking our show on the road!  In case you missed our webinar on the California Supreme Court's decision in California Redevelopment Assn. v. Matosantos, or if you just want to see our fantastic presentation skills in person (not sure what's wrong with you, but ok...), we hope you'll join us at the International Right of Way Association Chapter 57's monthly luncheon on January 11, 2012. 

IRWA Chapter 57's monthly luncheons typically begin at 11:30 a.m., and they take place at Canyon Crest Country Club at 975 Country Club Drive, Riverside, California.  Here's the ...

We're gearing up for our webinar tomorrow on the Supreme Court's decision last week upholding ABX1 26, but striking down ABX1 27.  I will be moderating a panel that will include my colleagues Gale Connor, Brad Kuhn, Jeff Stava and Jennifer Capitolo.  

We'll also be joined for additional commentary by former California Senate Republican Leader Dick Ackerman and former Los Angeles County Counsel Bill Pellman. 

We're going to spend about an hour talking about the law and how it will be implemented.  We'll also take questions - and even do our best to answer them.  If you already ...

Yesterday, we reported briefly on the Supreme Court’s decision in California Redevelopment Assn. v. Matosantos.  As many of you undoubtedly know by now, the outcome was the nightmare redevelopment agencies feared most, but that many (including us) had forecast after listening to oral argument last month. 

The Court upheld ABX1 26, allowing the dissolution of California’s redevelopment agencies to proceed, but struck down ABX1 27, the voluntary buy back program that would have allowed redevelopment to continue.  In particular:

• The Court had little difficulty upholding ABX1 ...

Today, the California Supreme Court issued its much-anticipated opinion in California Redevelopment Assn. v. Matosantos, the case challenging ABX1 26 and ABX1 27.  In a decision foreshadowed by the tone of last month's oral argument, the Court upheld ABX1 26, but struck down ABX1 27 as a violation of California's Proposition 22:

• "Assembly Bill 1X 26, the dissolution measure, is a proper exercise of the legislative power vested in the Legislature by the state Constitution."
• "A different conclusion is required with respect to Assembly Bill 1X 27, the measure conditioning further ...

It's Christmas Eve Eve here in Southern California.  Our chances for a white Christmas seem small; as I look out my window, I see bright sunshine and know the temperature is in the 70s.  Still, it's easy to see that the holiday season is in full swing.

If you are in need of some last minute shopping ideas and don't know what to get the eminent domain practitioner on your gift list, there are some great choices to be found.

Perhaps the most all-inclusive option comes to us through the Institute for Justice.  Its "Rally in a Box" comes complete with stickers, posters, signs, and six ...

Yesterday, we wrote about the Avenida San Juan Partnership v. City of San Clemente decision.  For more information on the decision, see the following:

• Man Bites Dog! California Property Owner Wins Regulatory Taking Case in the California Court of Appeal, a blog post by Gideon Kanner on Gideon's Trumpet;
• Either Reverse Your Unconstitutional Spot Zoning, Or Pay. Your Choice, by Robert Thomas on his inversecondemnation.com blog; and
• Eminent Domain: Winning Owner In Inverse Condemnation Battle Cannot Recoup Fees By Attorney Owner Or Reap A Fee Multiplier Request, a piece in ...

Last April, we reported on a bizarre case arising out of the City of San Clemente's attempt to down zone a piece of property.  The trial court had concluded that the down zoning constituted a taking and ordered the City to rescind a decision supported by that down zoning.  The City had denied an application to develop the property because the application did not conform to the current general plan and zoning ordinance (the City seems to have sidestepped the fact that the development applications included applications to amend the general plan and zoning). 

In addition to a writ of mandate ...

The debate over the extensions of some of the Bush-era tax cuts have been making national news for some time.  It's splattered all over the newspaper and has its own running commentary on the political talk shows. 

But today, there's a different twist for those of us who deal with eminent domain.  Congress is debating the extension of the payroll taxes yet again, but this time, a major eminent domain issue is wrapped up in the fray.

Specifically, Republicans in Congress had said they planned to couple the extension of the tax cuts with a requirement to fast-track approval of a ...

One of the peculiarities with California's eminent domain law lies with the way it addresses situations in which an agency makes a deposit of probable compensation in a case in which one or more of the defendants raise a right-to-take challenge. 

The issue came to a head yet again, with the California Supreme Court holding that a lender's withdrawal of a condemnation deposit does not result in a waiver of the property owner's right to take challenge.  The decision, Los Angeles County Metropolitan Transpiration Authority v. Alameda Produce Market (November 14, 2011), chronicles the long ...

Before a public agency can exercise the power of eminent domain, it must adopt a resolution of necessity making certain findings in support of the taking of property.  The resolution defines the scope of the agency's acquisition, and the agency is typically prevented from contradicting the terms of the resolution in the eminent domain action.

There is a delicate balancing-act in drafting the scope of the taking in the resolution.  If the scope is too narrow, the agency may ultimately need to go back and acquire additional rights or property.  On the other hand, if the scope is too broad, it ...

We've covered in the past the impacts property and business owners suffer when government agencies plan for public projects.  We've also covered when agency planning crosses the line and results in precondemnation damages or a de facto taking.  A recent unpublished Court of Appeal decision, Joffe v. City of Huntington Park, highlights (1) the types of impacts owners suffer and (2) the difficulty owners face in trying to recover for such impacts.

In Joffe, a related property owner and furniture manufacturing business claimed that the city repeatedly expressed a desire to ...

The Supreme Court heard oral arguments yesterday in California Redevelopment Assn. v. Matosantos, the action filed by the California Redevelopment Association, League of California Cities and others challenging the constitutionality of ABX1 26 and ABX1 27.  Based upon their questions it appeared that the Justices were satisfied that ABX1 26, the bill abolishing redevelopment agencies, passes constitutional muster.  However, ABX1 27, the bill allowing for their reinstatement by the making of  voluntary payments, seemed to be on much shakier grounds.  The ...

Last Friday I spoke at the CLE Eminent Domain Conference in San Francisco.  The topic of my talk was "The Death And Possible Rebirth of Redevelopment in California."  I spoke on the current state of limbo in which redevelopment agencies find themselves as a result of the passage of ABX1 26 and ABX1 27 and the ensuing lawsuit challenging their constitutionality.  While I mentioned that the California Supreme Court would be hearing arguments on November 10th, I neglected to mention how to access the webcast of the proceedings.  For those interested in watching the arguments, direct ...

As you may recall, we've been closely following an eminent domain action pending in Sacramento County Superior Court involving the Rancho Cordova Redevelopment Agency.  The case involves the RDA's efforts to acquire a 9-acre site owned by the Lily Company.  After the property owner lost its challenge to the RDA's right to take the property, the case proceeded to a jury trial with respect to the property's value.  The results are in, and it's not a happy ending (at least so far) for the RDA. 

The Sacramento Bee reports in its article, "Price tag sky rockets for Rancho Cordova in land ...

Anyone involved in the right-of-way industry understands that communication is key.  Whether you are on the side of a property owner or a public agency, a forced acquisition of property is never comfortable.  But being straightforward and opening an honest dialogue usually goes a long way.  Public agencies and their agents should be prepared to explain the need for the public project, the details of the take, the potential impacts, and how the value of the property was determined.

A perfect example of what happens when there is miscommunication is highlighted in a Redding.com article by ...

When we think of some of the most well-recognized and controversial decisions from our judicial system, cases like Roe v. Wade (abortion) and Dred Scott v. Sandford (slavery) come to mind.  Within our group of right of way professionals, we obviously think Kelo v. City of New London is a huge deal, as it allows for the use of eminent domain for purely economic purposes.  But does it rank up there with the others?  It does, according to US Supreme Court Justice Scalia.

According to an ABA Journal article, Justice Scalia was recently speaking to a group of students at Chicago-Kent School of Law ...

Most of us in the right of way profession are following closely the redevelopment lawsuit pending before the California Supreme Court.  The decision could have widespread implications.  So, to keep you fully informed, here's another quick update.

Yesterday, the California Supreme Court announced it will hear oral argument from 9 a.m. to 10 a.m. on Thursday, November 10, 2011.  For those of you up north who are keen on seeing the event in person, oral argument will be taking place at the Supreme Court Courtroom, Earl Warren Building, Fourth Floor, 350 McAllister Street, San ...

Many times before a government agency actually commits itself to moving forward with acquiring a property for a public project, the agency needs to undertake certain testing at the site to make sure the site is viable and feasible.  After all, no agency wants to unknowingly be stuck with a contaminated property or one that cannot support the proposed use.  The testing involved usually involves various degrees of soil sampling and boring. 

Public agencies typically seek permission from the owner of the property in question to conduct the testing.  But what happens when the ...