Eminent Domain Report

One of the prerequisites to instituting an eminent domain action is the governing agency's adoption of a resolution of necessity to acquire the necessary property.  At the time of adopting the resolution, the agency cannot be precommitted to moving forward with the condemnation.  In other words, the resolution hearing cannot simply be a "rubber-stamped," predetermined result.  

While it has happened, it is a very difficult, uphill battle for a property owner to prove that the government agency was precommitted to the taking at the time of the resolution hearing.  The agency can -- and usually does -- have many pieces already lined up, including project environmental approvals, funding constraints, construction contracts, and the like.  However, as long as the agency still has discretion at the time of the resolution hearing (such as the ability to consider alternative design options), the agency is typically safe from the rubber-stamp scrutiny.  A recently issued unpublished California Court of Appeal decision provides an excellent example of this.

In City of San Buenaventura v. Karno, a developer had obtained City approval for a new affordable housing project.  One of the conditions of approval was a condition obligating the developer to connect the project to the City's sewer system.  The connection was planned to take place under an adjacent owner's property.  When the developer was unable to secure the necessary easement from adjacent owner, the City intervened, adopted a resolution of necessity and filed an eminent domain action to acquire the necessary easement. 

The property owner challenged the City's right to take on the grounds that its adoption of the resolution of necessity constituted a gross abuse of discretion.  In particular, the owner argued that at the time of the resolution hearing, the City was irrevocably committed to taking the property since the City had (1) previously approved the affordable housing project, which required the easement, and (2) already lent the developer $3 million for the project.

The Court explained that a properly adopted resolution of necessity "conclusively establishes" the statutory criteria for the taking of property (i.e., (i) public interest and necessity require the project; (ii) the project is planned or located in the manner that will be most compatible with the greatest public good and least private injury; and (iii) the property is necessary for the project.)  The only exception to this rule is if the adoption of the resolution was influenced by a gross abuse of discretion by the governing body, which can be shown by either a lack of substantial evidence supporting the resolution or proof that the agency was irrevocably committed to moving forward regardless of the evidence presented.

The Court held that in this case, the City was not irrevocably committed to the taking.  While the City had approved the project and had entered into an agreement with the developer to acquire the easement, if necessary, the City's obligation to exercise the power of eminent domain was explicitly conditioned upon the adoption of a resolution of necessity.  Likewise, the fact that the City provided the $3 million loan to the developer did not irrevocably commit the City to condemn the easement from the owner, as there were other, more costly alternatives the City could have undertaken to connect the project to the sewer system.

The City was therefore permitted to move forward with acquiring the easement from the adjacent owner on behalf of the developer.  Some may wonder how the City is allowed to exercise eminent domain for the benefit of a private developer's project.  This is actually fairly common and agencies are permitted to utilize eminent domain to acquire property for public facilities (such as streets, sewers, etc.) to benefit private developments.  (See Government Code section 66462.5)