Eminent Domain Report

Redevelopment agencies (RDAs) have held a rather infamous position in California history.  While originally created to address urban decay (aka “blight”), generally speaking, RDAs developed into entities that wielded the power of eminent domain to designate large areas of property “blighted,” acquire the property, and then hand it off to private developers.  The RDAs were motivated to engage in this behavior because they captured the increases in property tax revenues that resulted from the increase in property values caused by the urban renewal projects. This resulted ...

There is an ongoing global pandemic and the world is rightly focused on news related to COVID-19.  Given the circumstances, other news is slipping below the radar.  Something you may have missed is another effort to revive redevelopment in one form or another through Senate Bill 795.

SB 795 is focused on affordable housing and tries to give local municipalities some of the tools that were available through prior redevelopment agencies.  But when one mentions ‘redevelopment’ there seems to be an immediate negative reaction. Sure, there were redevelopment projects that were sketchy ...

Ever since the demise of redevelopment agencies in 2012, there have been a variety of legislative efforts to revive, incrementally or in whole, some form of redevelopment in California.  We have seen enhanced infrastructure financing districts, community revitalization and investment authorities, and more traditional affordable housing authorities and joint powers authorities.  But we have yet to truly see a funding source that would revive the use of redevelopment tools.  The political climate is much different now than in was in 2012:  California has a surplus budget, there is an ...

Many states have enacted eminent domain reform since the U.S. Supreme Court's 2005 decision in Kelo v. City of New London, which broadly defined "public use" to include the government's acquiring property for another private owner to realize an economic benefit (such as increasing tax revenues).  However, as reported by the Institute for Justice in its 50 States Report Card, many of those reform efforts have been insignificant.  And, despite repeated efforts over the last 13 years, Congress has yet to pass legislation limiting the use of eminent domain for truly ...

Redevelopment has quite the lengthy history in California.  Yet it has generally been "All Quiet on the Western Front" since redevelopment agencies were abolished in 2011 as part of Governor Brown's plan to fix the state's budget deficit.  Yes, the legislature breathed new life back into redevelopment last year through Community Revitalization and Investment Authorities (CRIAs), but a widespread return seemed unlikely given the safeguards and restrictions put in place -- particularly as to what can constitute "blight" (a term which previously could be interpreted so broadly ...

Back in May, we provided an update on the status of AB2, the bill which would create Community Revitalization Investment Authorities, (see here).  Things were relatively quiet over the summer but this month has the bill seeing a lot of action: It was passed by the state senate on September 9, passed by the assembly on September 12 and has been sent for final review before hitting the governor's desk for signature.  As we discussed previously, Governor Brown vetoed the last iteration of this bill because the bill vested the program in redevelopment law, and the new bill does not.  While he ...

It appears the state assembly is trying to get California back on the redevelopment wagon...again. (For a brief history lesson on redevelopment, see below.)  Assembly Bill 2 (AB2), which passed the assembly earlier this month, would create new entities called Community Revitalization Investment Authorities that would have the same legal authority as redevelopment agencies, i.e., the power to issue bonds, provide low-income housing, prepare and adopt a plan for an area, and among others, acquire property using the power of eminent domain.  The legislature explains that the ...

Undaunted by the so-called "death of redevelopment," several California cities have pushed to reinvent -- a.k.a. redevelop -- their downtown cores.  And it appears to be working.

The San Jose Mercury News recently reported that the city of Fremont is breaking ground soon on its extension to Capitol Avenue, creating a new "Main Street" for its Downtown District.  And Fremont is not alone.  Stockton also has a plan to "Bring Downtown Back."  In Southern California, The Desert Sun reports that Palm Springs is moving forward with its downtown redevelopment.

So perhaps redevelopment ...

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 ...

I saw a couple of California redevelopment-related stories over the past week that seemed worthy of at least a brief comment.

First, a court decision involving a rather bold argument by a public agency.

The City of Loma Linda, like so many California cities, used to have a redevelopment agency.  That redevelopment agency acquired property and embarked on various efforts to, well, redevelop things.  When Governor Brown eliminated California's redevelopment agencies, many projects were left in mid-stream.

In the case of Loma Linda, the redevelopment agency purchased some ...

When Governor Brown eliminated California’s redevelopment agencies with one swipe of his pen (OK, fine, he had a bit of help from the California Supreme Court as well), one of the things that got a bit lost in the ensuing chaos is the fact that California’s redevelopment law had evolved over the decades, becoming hopelessly intertwined with any number of other laws.

One such law is the Polanco Act, Health and Safety Code sections 33459 et seq.  The Polanco Act provided the government with tools to clean up contaminated property.  More specifically, it allowed the government either to ...

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 ...

Today I want to focus on whether the plan to seize underwater mortgages through eminent domain is legal. Getting into this topic, in my view the debate should not focus on whether this plan passes constitutional muster at the federal level.  I've seen much written on this subject, but I really think this is a red herring, and that the answer is pretty easy.   While others disagree, I believe the plan passes constitutional muster at the federal level.

The U.S. Supreme Court has issued a long line of cases that all make pretty clear that the government could constitutionally condemn ...

The parade of lawsuits involved in the redevelopment dissolution process continues to grow.   Here are a few quick updates:

• Five San Diego County cities have sued the state over AB 1484.  Chula Vista, National City, Oceanside, San Marcos and Vista have joined forces to attack the law.
• In Northern California, El Cerrito has also sued, claiming the "true up" payment it purportedly owes ($1,756,794.67) is unlawful.  Read more about the El Cerrito lawsuit in the July 17 El Cerrito Patch article, City Sues State, County Over $1.76 Million "Demand for Payment".  Other cities have also reportedly ...

Ever since the Supreme Court issued its decision in the Matosantos case last December, facilitating the dismantling of California's redevelopment agencies, there has been talk of new legislation -- either in the "clean up" variety or in the substantive overhaul variety. 

Today, the Legislature passed AB1484 as a budget trailer bill (the Senate approved the bill at around 1:30 p.m., and the Assembly followed about an hour later).  

AB1484 probably qualifies as too substantive to be characterized as mere "clean up," though it falls short of a major overhaul of the system.  And it ...

A few odds and ends for our readers:

• New Federal Eminent Domain Legislation:  According to the Eminent Domain Law Blog, two Senators have introduced a new bill, Protection of Homes, Small Businesses, and Private Property Act of 2012.  This, again, you may ask?  What ever happened with HR 1433, the Private Property Rights Protection Act of 2011?  HR 1433 appears to be dying a slow death, but the new 2012 bill seeks to pick up the slack.  In particular, it is targeted at the same issue:  preventing the federal government from using its eminent domain power and state and local ...

The opening skirmish in the next phase of the battle between cities and the state over control of property taxes played out in Sacramento Superior court yesterday afternoon.  At issue was property taxes formerly controlled by redevelopment agencies.  While the court ruled against the petitioning cities, as with every other aspect of the California’s budget battles, it is difficult to say that there were any real winners.   

In City of Palmdale, et al. v. Ana Matosantos, Palmdale and eleven other cities sued the Department of Finances and various county auditor-controllers ...

The demise of redevelopment in California has surely sparked strong emotions from both its supporters and its opponents.  And while the wind-down process continues to dominate the headlines, a recent article caught my eye about the tale of a long, hard-fought redevelopment battle -- with a happy ending, for everyone. 

If you have a moment, check out a great story in last week's Park La Brea Press, Eminent Domain Didn't Send Bernard's Packing, detailing a property owner's successful fight against redevelopment in Los Angeles.  The article provides a current update on a ...

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 ...

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 ...

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 ...

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 ...

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.

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 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 ...

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 ...

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 ...

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 ...

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 ...

Want the scoop on what future challenges local government agencies face with respect to eminent domain and redevelopment?  Want to hear from some of the most well-recognized eminent domain attorneys across the nation?  Want to get some CLE credit?  Want to get all your questions answered?  Want to do it all from your desk, in a short one-and-a-half hour presentation?

Come join us on Thursday, December 1, at 10 a.m. (PST) for the online seminar, "Eminent Domain: Redevelopment Challenges for Local Government, Navigating Federal Funding Requirements, Challenges for Public ...

I wanted to provide a quick update on what is going on in the lawsuits involving ABX1 26 and ABX1 27.  For those trying to keep score on who stands where, the following is a list of the amicus briefs that have been filed. 

In support of the CRA / League of Cities' position, seeking to overturn the laws:

• Association of California Cities - Orange
• City of Irvine
• Long Beach
• Public Interest Law Western Center
• San Bernardino County
• Southern California Coalition
• Southern California Non Profit Housing
• Riverside County

In support of the State's position, seeking to uphold the laws:

• Affordable Housing ...

As probably everyone following this blog already knows, redevelopment is under attack in California.  While some might assume the attack flows from continued outrage over the Supreme Court's Kelo decision, the reality is actually quite different.  Here in California, the driving force is not moral outrage, but budgetary crisis. 

As I learned earlier this week at the IRWA Chapter 67 lunch meeting, Governor Brown's plan to eliminate redevelopment is not part of some long-planned effort.  According to a presentation by one of my partners, Gale Connor, when now Governor Brown was Mayor ...

The existence of California's redevelopment agencies continues to make headlines across the state.  Despite the pending lawsuit between the CRA and the State concerning the constitutionality of AB1X 26 and AB1X 27, local government agencies are still taking things into their own hands, sometimes in very opposite directions.  Two examples:

The City of Ukiah:  Over a year ago, we reported that the local business community was urging the City of Ukiah to reinstate its redevelopment agency's power of eminent domain in an effort to eliminate blight.  (Yes, you read that correctly.)  The ...

We reported earlier this month that a referendum to ultimately decide the fate of redevelopment agencies could make its way onto California's 2012 ballot.  Eminent domain opponent Marko Mlikotin had obtained clearance to begin collecting signatures to overturn ABX1 27, the bill that allows California's redevelopment agencies to avoid extinction by paying money back to the State.  With the CRA's pending lawsuit to decide the fate of ABX1 26 and ABX1 27, Mlikotin's collection efforts have apparently been nixed. 

According to a Capitol Alert article by Torey Van Oot, "Referendum of ...

On Thursday we reported the California Supreme Court’s decision to assert jurisdiction over the writ petition challenging the constitutionality of AB 26 X1 and AB 27 X1.  The Court also issued a partial stay of AB 26 X1 and a complete stay of AB 27 X1.  While the Court’s actions were designed to preserve the status quo until it renders a final decision in January, the status quo can mean very different things to different agencies.

For those that could not afford the payments necessary to re-establish themselves, the Court’s action is nothing short of a stay of execution.  But for those ...

We'll have more soon, but I wanted to report quickly that the California Supreme Court announced today that will assert jurisdiction over the CRA's lawsuit involving the constitutionality of AB 26 X1 and AB 27 X1, the bills involving the dismantling of California's redevelopment agencies. 

The Court also announced a partial stay of the legislation while it considers the case.  A news release by the Judicial Council of California describes the scope of the Court's stay as follows:

The court allowed the first statute [the one that eliminates redevelopment agencies] to remain in effect ...

The California redevelopment circus continues today, as California's Secretary of State approved two potential referendums for the 2012 ballot.  One involves rural homeowners and payments for fire services; for our purposes, it's not very exciting (and since I'm pretty sure I don't live in a rural area, I'm not going to join that fray). 

But the other one is more interesting.  It's a proposal promoted by eminent domain opponent Marko Mlikotin to overturn AB X1 27.  For those who have trouble keeping score with all the bill numbers, this is the one that allows California's redevelopment ...

While the redevelopment battle wages on in California, there's a somewhat similar discussion taking place on Capitol Hill.  We reported back in April about the House Judiciary Committee's consideration of H.R. 1433 -- the "Private Property Rights Protection Act of 2011" -- a bill that would prevent states and municipalities from using eminent domain for economic development purposes (such as redevelopment) on any project for which the agencies are receiving federal funding.  But there has not been much news since.  That may all change today.

According to an Energy & Environment ...

The heavy-weight boxing match continues:  after California Attorney General Kamala Harris filed an "informal" opposition, the California Redevelopment Association (CRA) has countered with a not-so-"informal" reply brief of its own in an effort to overturn AB1X 26 and AB1X 27.

The CRA's informal reply requests oral argument in the Fall of 2011 since no one seems to dispute the urgent need for the California Supreme Court to decide the constitutionality of the recently passed legislation.  The CRA then focuses on the Attorney General's request to consider the statutes ...

The battle continues over redevelopment in California.  Yesterday, the Attorney General filed an "Informal Opposition to Petition for Writ of Mandate."  The document is 20 pages long, with a 4-page list of Legal Authorities, so it really isn't very "informal"; still, that's what she called it.

Not surprisingly, Attorney General Kamala Harris takes the positions that:

1. AB1X 26 and AB1X 27 are constitutional, and
2. The CRA has not justified a stay in their enforcement. 

The Attorney General does not challenge the CRA's decision to file its lawsuit directly in the California Supreme ...

While Governor Brown's push to eliminate redevelopment agencies seemed to drag on forever, California's redevelopment agencies were not so slow to act once the long-contemplated ABX1 26 and ABX1 27 became law.  On Monday, the redevelopment agencies filed suit directly in the California Supreme Court seeking to overturn the recent enactments.

The redevelopment agencies are represented by the California Redevelopment Association and the League of California Cities.  San Jose and Union City also joined in the lawsuit claiming they will face elimination since they cannot make the ...

For months, we've been reporting on the impending death of California's redevelopment agencies.  Even we had started to feel like the "boy who cried wolf" as we reported on iterations of the Governor's budget plan that didn't come to fruition. 

But this time, it's real.  Along with an overall budget package, this week the Governor signed into law ABX1 26 and ABX1 27.  ABX1 26 eliminates redevelopment agencies in California.  ABX1 27 provides a means of survival if the agencies will pay the state, collectively, $1.7 billion next year (the savings the Governor claims ABX1 26 would generate by ...

When last we posted on the topic (see Days that Make Being an Eminent Domain Attorney Exciting: More Redevelopment Developments), the bills that would end redevelopment in California as we know it, AB 26x and AB 27x, had been passed by both the Assembly and Senate, but were left hanging when the Governor vetoed the main budget bills.  It was unclear what life, if any, these budget trailer bills had absent a budget.  The Legislature therefore simply held them without forwarding them to the Governor for his signature.  They have remained in a state of procedural and legal limbo for ...

We're trying to keep on top of the developments over the future of redevelopment in California, but by the time we can get something drafted and posted, the story has already changed.  Here's a quick recap of what we know (and what we don't):

• Back in January, Governor Brown announced plans to eliminate California's redevelopment agencies as part of his plan to fix California's budget woes. 
• After several heated legislative sessions, bills to accomplish the Governor's proposal repeatedly fell a single vote short in the Assembly.
• In the aftermath of the failure to pass the Governor's plan ...