Eminent Domain Report

When public agencies acquire property for public projects, many times only a portion of the property is required.  And, the government usually seeks various types property interests:  (i) permanent easements for street purposes, drainage, utilities, slope, aerial, or access rights, (ii) temporary construction easements, or (iii) fee interests, to name a few.  One common misconception among agencies is that acquiring an easement is completely different than acquiring the property in fee.  In some cases, it can be vastly different, but in others, depending on the scope of the easement, it can be tantamount to a fee taking.  And condemning an easement can create many of the same severance damages to the remaining property that would occur when acquiring a fee interest.  A great example of an easement acquisition receiving significant press right now is taking place up at Martins Beach in San Mateo County.

We've been following this dispute for quite some time, where the State of California is seeking to acquire an access easement over billionaire Vinod Khosla's property in order to secure public access to Martins Beach, and has been considering using eminent domain to condemn such rights.  According to a recent article in the Mercury News, How Much for Martins Beach Access? Try $30 Million, Mr. Khosla has informed the State Lands Commission that such an access easement could be valued at upwards of $30 million.  An access easement?  How can such a limited right result in such a significant price tag?

One, the proposed access easement isn't small -- it's about 6 acres of land (and near the beach, anything's going to have some significant value).  Two, the access easement could cause significant severance damages to the remaining property.  For example, market participants willing to buy a property of that magnitude likely value privacy and solitude, and giving the public unfettered and unlimited rights to travel across the owner's property limits the pool of potential buyers and also creates a less-desirable property.  And likely most significantly, if the property is the only available method to access Martins Beach, the property essentially enjoys its own private beach (even if the beach is not privately owned, it can't be accessed by others).  By changing that otherwise "private" beach into a "public" beach, the owner's property just became significantly less exclusive and valuable.  So you can see where the damages could get substantial.

The Martins Beach dispute provides an important example for public agencies to consider the potential impact a proposed easement can have on the owner's property.  It also provides an important example for private property owners to consider the scope and terms of the easement the agency seeks to acquire (as it may be so broad as to amount to a fee taking), and also to consider how the government's easement acquisition can cause damages to the owner's property.  This is where important precondemnation planning and drafting the scope of the easement acquisition can become crucial before jumping into an eminent domain action.  Such planning and drafting efforts could result in significant cost savings or otherwise result in agreeable terms between the parties.