Eminent Domain Report

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 District intends to put the property up for auction, with a minimum bid price of $9.5 million.

Since no progress has been made on acquiring the property, the City is apparently contemplating using its power of eminent domain.  But the School District fired back, protesting that the use of eminent domain would (1) be premature, since the CIty has yet to identify a public use for the site, and (2) put the City in a financial quandry, since it would be forced to pay the "highest price" for the site based on its "highest and best use." 

• Right to Take:  The first issue raised by the School District is essentially a right-to-take challenge, as a public agency cannot adopt a resolution of necessity to acquire property by eminent domain without first identifying a public purpose.  This concept was highlighted in a 2009 case, City of Stockton v. Marina Towers, where the court rejected a local agency's adoption of a resolution of necessity to condemn property without identifying a public use for the site.  While the City here could easily come up with a public use for the property, the issue is one of timing, as it will be difficult to accomplish anything before the site is put up for auction.

• Highest Price Valuation:  The second issue raised by the School District is well-known eminent domain valuation law.  Not only is property to be valued based on the "highest price" it could acheive in the open market between a willing buyer and willing seller, it is also based on the "highest and best use" for the property -- which may not necessarily be the property's current use. 

This will be an interesting story to follow, but the City should make sure it knows what its getting into before going much further down the path of contemplating eminent domain.