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CALIFORNIA EMINENT DOMAIN LAW BLOG

California Eminent Domain Project News: Crenshaw/LAX Transit Project, Updates and Current Issues

Construction of the Crenshaw/LAX green line has been underway for many months now. The project is planned to connect the north-south Crenshaw Line and the east-west Green Line into a monorail system that extends towards the LAX.  This 8.5 mile light-rail line will include 8 stations between the Expo Line on Exposition Boulevard and the Metro Green Line with both aerial and below-grade segments.

The construction, however, has been creating issues for merchants along Crenshaw. Recent street closures and blocked sidewalks have made it difficult for patrons and clients to get to some of the businesses. Shop owners had concerns regarding the gradual decline of regular patrons and the outcome it would have during the holiday season. Los Angeles County Metropolitan Transportation Agency has agreed to give shop owners who qualify up to $50,000 each year until the work, which has compromised their business, is done. However, that money is not available until this upcoming year.

For frequent updates on the Crenshaw/LAX Transit Project, and other California projects, visit our blog and look for “California Eminent Domain Project News” for the latest information. Also Like us on Facebook and follow us on Twitter.

California Eminent Domain Project News: California High Speed Rail Settles Lawsuit with Bakersfield

Last month, the U.S. Surface Transportation Board held that the California Environmental Quality Act, or CEQA, is pre-empted by federal environmental law relative to the Fresno-Bakersfield route of the proposed high speed rail.

STB stated in their opinion that CEQA could delay or eliminate a rail project even after a federal board, such as the STB, has authorized the project. This decision expressly pre-empts any state law from attempting to regulate the rail construction project. This means that a California state court cannot issue injunctions to stop the high-speed rail projects filed under CEQA.

The decision led to a recent settlement between California High Speed Rail Authority (CHSRA) and the City of Bakersfield. The City of Bakersfield had filed the lawsuit in June challenging CHSRA’s Final Environmental Impact Report/Environmental Impact Statement, stating that the CHSRA violated CEQA. According to CHSRA’s Jeff Morales, the settlement was a representation of the Authority’s continuous effort to “resolve issues in a constructive manner.” The ultimate goal for CHSRA is to “maximize benefits” while “minimizing the impact.”

The settlement included the dismissal of the city’s lawsuit, CHSRA’s commitment to study a new alignment in Bakersfield and a new location for the Bakersfield station. The new alignment is claimed to decrease the number of houses and businesses affected by the high speed rail project.

Six other lawsuits still remain.  However, the viability of those lawsuits is in doubt.

For frequent updates on the California High Speed Rail project, visit our blog and look for “California Eminent Domain Project News.” You can also stay informed by following us on Twitter and liking us on Facebook.

 

 

Claremonts Ready for Golden State Water System Takeover

In early November of this year, Claremont resident voters backed a measure that gave the city the ability to borrow as much as $135 million dollars to acquire Golden State Water Co., a private water company servicing the City of Claremont. Claremont’s desire to take over the private water company has been at issue since early this year, however, residents have been lobbying for the acquisition for many years now.

More than 11,000 customers of Golden State Water Co. have allegedly been gouged by the company with increasing water rates and higher rates than neighboring communities. Although negotiations between the City and Golden State Water have been ongoing for some time now, no agreement has been reached. The cost for the acquisition has been the subject of significant dispute. Claremont has appraised the water system at $55 million while Golden State Water Co. released a report claiming the value is $222 million. As in any other eminent domain matter, if the parties can’t reach an agreement, the price of the acquisition will be determined by a jury.

The thought of Claremont using its power of eminent domain to acquire the company is not a farfetched idea and seems to be the most likely route for Claremont.  Earlier this month, the city unanimously approved a resolution of necessity to begin eminent domain process and later filed the suit. The City had published two proposals to the issue of rising water cost with respect to Golden State Water Co. The first proposal was to acquire the water system within the city limits. And the second was to acquire the water system outside the city. Per the City, the acquisition of the Claremont system would result in the most benefit for the city residents.

So far the city has invested $1.5 million on consultants and legal fees for the acquisition and has estimated another $2 million in litigation fees to exercise eminent domain. But the most important question is how much will residents save? Claremont claims that if the system is purchased under $80 million it will be able to generate enough revenue to pay for the bond. However, many are skeptical about how much it will actually cost the city to acquire the water system.

In the past, similar acquisitions of water systems have yielded much higher purchasing prices than the original estimates. In a similar acquisition in San Lorenzo Valley Water District, the estimated the price at $5.3 million, it was ultimately acquired for $13.4 million, 250 percent more than the original valuation price. Similarly in Big Bear Lake, the District there estimated the price at $15.7 million, while the final acquisition price ended up being $35 million. Given this history and the parties’ disparate opinions at value, the fear that the actual acquisition price for the Golden State Water Co water system may rise way beyond the $55 million appraisal value is a legitimate concern.

Past acquisitions of private water systems purportedly do show that the city residents did save annually on their water costs. How much the residents of Claremont will save, if anything is uncertain. But it seems as if the community of Claremont has come together to voice their discontent with private utilities raising costs. And their devised plan of using eminent domain to remedy the problem will soon come into play.

By: A.J. Hazarabedian

To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit http://www.eminentdomainlaw.net/aboutAJH.php

Redevelopment Is Back in California

Back in 2011, Governor Jerry Brown abolished redevelopment agencies in California successfully gaining $1.5 billion of the redevelopment funding to close California’s budget gap. Recently, three bills have reached the Governor’s office in an attempt to revive redevelopment in California. Gov. Brown has signed two of those bills, Senate Bill 628 and Assembly Bill 229, into law while vetoing Assembly Bill 2280.

SB 628 will create what redevelopment revivalists call Enhanced Infrastructure Financing Districts, which essentially is redevelopment on a bigger scale, without protections. Old redevelopment law required a city to deem a certain area as blighted, meaning inhabiting the area would be dangerous and against public safety. The new law under SB 628 does not require a finding of blight. Opponents to the bill argue that the new law will make eminent domain abuse much easier to get away with. EIFD also will change the threshold for voter approval from two-thirds to only 55%, a lowered threshold from standard infrastructure finance districts. Furthermore, opponents fear that the new law will give city officials the right to take private property from downtown areas which will decrease or eliminate low-income housing. The new law, unlike the standard IFD, does not require cities to set aside funding for low-income housing.

AB 229 is another form of redevelopment law that targets the revitalization of old military bases. Known as the Infrastructure and Revitalization Financing District (IRFD), this bill can issue 30 years of debt with a 2/3 voter approval in the district. Opponents argue that the IRFD is granting city officials great power over private property, unrestricted power of eminent domain and the ability to fund private party projects with state tax money.

The only bill vetoed by Brown was AB 2280. This bill, known as Community Revitalization and Investment Authority (CRIA), would allow local governments to create CRIA in areas of the city facing disadvantages for funding community specified activities. It would also have revived tax-increment financing which sets aside 25% for affordable, low-income housing. Brown’s veto message stated that, if approved, the bill would “unnecessarily vest this new program in redevelopment law.” However, he did also mention his desire to work with the bill writers to come to a possible consensus on tax-increment financing for disadvantage areas.

Regardless of opposition, redevelopment appears to be back with little or no restrictions on the power to take private property by city and state officials. When the passed bills were showcased, their focus was funding for upgrading roads, sewer pipes, and levees. But it will be interesting to see how far the new law will stretch the definition of “infrastructure.”

 

By: A.J. Hazarabedian

To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit http://www.eminentdomainlaw.net/aboutAJH.php

Studio City Residents and Community Groups Seek to Stop Property Owner’s Redevelopment Plains: Open Space vs. Condos

Open Space vs. Condos

Proposed development of a portion of the privately-owned 17 acre Weddington Golf and Tennis, located on the banks of the Los Angeles River in Studio City, is a hot topic of debate between Studio City residents and the Weddington owners. The public golf and tennis facilities have been a neighborhood gem for many years providing rare open space within the densely developed neighborhood.

In 2008, the Weddingtons submitted a development proposal to the City of Los Angeles for a 200-unit senior housing condominium complex where the tennis courts are presently located. The proposed development would include six four-story buildings and 635 parking spaces. In July, a Draft Environmental Impact Report for the Project was issued for review and comment. Currently, the Weddingtons are preparing for the development by lobbying for necessary development approvals, including a requested change in zoning from agricultural to multi-family residential.

While the Weddingtons seek to develop part of their property, and generate income, local residents want the property to remain as open space.

This debate brings to light the often conflicting interests of the public and a private property owner.

The Community’s Perspective

The surrounding community would prefer that the Weddington Golf & Tennis facilities remain as open space available to the public. Although it is private property, opponents of development argue Weddington Golf & Tennis is a community amenity similar to public parks and designated open spaces. As it has been there for many years, the property has become an established community fixture. Now, the community has a vested interest in its future and views the property as a key feature of the community.

Because the property has become like a public park, some argue that the simple answer is for the City to simply purchase it and permanently establish it as a public park.  This, however, would come at a substantial cost: Councilman Paul Krekorian, who represents the area and is opposed to the project, has attempted to find funding for the City to buy the land from the Weddingtons, possibly resorting to the use of eminent domain. So far, his attempts to secure the $20 to $30 million necessary to purchase the land have failed. Unless the Weddingtons are willing to donate the land, or accept a steep discount, this scenario does not appear likely.

Since the community is opposed to development of the site, can the City simply prevent the Weddingtons from building 200 condominiums on their private property? To answer briefly, possibly. However, the explanation is multi-faceted and the line between government’s reasonable regulation of private land use (called the “police power”) and government’s regulation effectively taking private property (“eminent domain”) is not always clear.

Because development of the Weddington’s private property requires development approvals, the City does have the ability to deny outright, or limit, the Weddingtons proposal for the condominiums. There is an established development process that the City and Weddington are following, including a public review and consideration of the proposed Project. This process allows the community to voice its concerns about the Project and its potential impacts. As long as the process is followed, the City’s ultimate determination – granting or denying development approvals – would probably be technically legally valid.

As a property owner, though, the Weddingtons are permitted to use their property in an economically viable manner– including potentially the right to change the use of their property. What are the incentives for the City to stop the Weddingtons from developing their property as proposed? The public’s dissatisfaction with the Project may influence City officials to side for open space and preserve access to the LA River.  The Weddingtons, however, would probably be entitled to develop their property to some extent – which would probably result in the elimination of some of the existing recreational facilities.

Studio City Residents Association and Save LA River Open Space have submitted their own development impact report to the City outlining impacts of the Project, one of which is the destruction of what they characterize as “rare, irreplaceable open space.” Their intentions are to keep the area open and convert it to the Los Angeles River Natural Park which would include the existing tennis courts and golf course.

The Property Owner’s Point of View 

The Weddington’s have the right to use their private property in an economically viable way. The fact that they have opened their property to the public for many years, and provided an important recreational facility to the community, does not negate their rights as private property owners. One of the most important elements of American society is the concept of strong private property rights and a mechanism for upholding those rights.

Economist Armen A. Alchian does not differentiate between property rights and human rights stating “property rights are human rights.” Private property rights are protected under the Fifth Amendment of the Federal Constitution, “…nor shall private property be taken for public use, without just compensation” and Article 1, Section 19 of the California Constitution, “Private property may be taken or damaged for a public use only when just compensation … has first been paid to … the owner.”

Private property rights are often described as a bundle of rights – including the right to exclude others from your property. Another aspect of property rights is the “exclusive authority” to determine how to use that property. However, the phrase “exclusive authority” is subject to the “police powers” of the government. This means that the government can reasonably regulate such things as one’s use of their private property in the interest of the public health and safety. In this situation, the City’s has some discretion regarding the use of the Weddington property under its “police power.”

Many residents say they relied on the open space and recreational facilities of the area – including Weddington Golf & Tennis – when purchasing their homes in the Studio City neighborhood.

Is a homeowner’s reliance enough to trump private property rights? Generally, the answer is no. Should it matter that the Weddington’s property is privately owned and is not permanently committed as open space like a public park? Of course it should. The City must also consider the potential public benefits of development of the property as proposed – including significant property tax revenues.

Is There A Possible Compromise

Absent some form of compromise, or the City’s outright acquisition of the property, only one perspective is likely to win out. Or, is there a win-win solution in which both the interests of the public and the property owner are served? If so, both sides would need to compromise – with some open space being preserved, and some development allowed. This may not be palatable to either side – but often the best compromise is one in which both sides are equally unhappy.

 

By: Glenn L. Block, Esq.
To learn more about Glenn L. Block, partner at California Eminent Domain Law Group, visit

 http://www.eminentdomainlaw.net/aboutGB.php

Tug-of-War for Martins Beach Access: Possible Eminent Domain Case

martinConflict between Simi Valley billionaire Vinod Khosla and those seeking public access to Martins Beach will make its way to Gov. Jerry Brown. Last week the state Senate approved Senate Bill 968 which, in essence, requires the State Land Commission to negotiate with Khosla to acquire public access to his private property.

Khosla purchased the 87 acre coastal property in 2008 and, like prior owners of the property, he allowed public access to the road which leads to Martins Beach until 2010. Since then, Khosla has advised his property manager to block the gate which leads to Martins Beach Road.
If signed by Gov. Brown, the bill, written by Sen. Jerry Hill, D-San Mateo, requires that the State Land Commission negotiate with Khosla in an attempt to purchase an easement on his property. If negotiations fail and a compromise is not reached by January 1, 2016, the bill will authorize the power of the State Land Commission to use eminent domain to acquire the easement by providing just compensation for the property.

Earlier this month the bill passed the full Assembly, then was returned to the Senate where it was passed and is now awaiting Gov. Brown’s signature. Even if signed by Governor Brown, the decision of whether to exercise eminent domain would still need to be made by Lt. Gov. Gavin Newsom, State Controller John Chiang and State Finance Director Michael Cohen.

Acquisition of an easement on Khosla’s property would allow public access to Martins Beach just a few miles south of Half Moon Bay, a popular spot of surfers. So far, no comments have been made by Newsom and Cohen regarding their decision whether or not to implement the bill. A spokesman for Chiang stated that no decisions by Chiang have been made and he will take a position once all arguments are made and heard from the parties involved.

By: Glenn L. Block, Esq.
To learn more about Glenn L. Block, partner at California Eminent Domain Law Group, visit

http://www.eminentdomainlaw.net/aboutGB.php

California Eminent Domain Project News: California High Speed Rail Construction Slowed Down by Lack of Land

California High-Speed Rail

The recent approval of 160 parcels between Fresno and Kings County for segment two of the high speed rail track has stirred up some excitement for rail backers. As the California High Speed Rail Authority (“CHSRA”) wastes no time in preparing for construction of the second segment, questions about the first segment construction arise. So far, CHSRA has identified 550 properties it says it needs to acquire in order to build the first segment. However, only 71 parcels have been purchased and are available for construction.

The Federal Railroad Administration’s assigned deadline of September 2017 to achieve substantial completion of both San Joaquin Valley segments adds pressure to CHSRA to get its property acquisitions in line. Lack of property means the inability for construction companies, like Tutor Perni Corp., to begin building rail related infrastructures like tunnels, bridges and overpasses. Lagging construction can result in CHSRA not meeting its September 2017 deadline.

A possible cause for the lag in property acquisition could be shaky funding. Until recently, CHSRA was fighting in court to overturn the ruling from the Sacramento County Superior Court banning CHSRA from selling bonds to fund the project. A Court of Appeals decision earlier this month overturned the ruling and allowed CHSRA to continue selling $10 billion in bonds approved by California voters back in a 2008 ballot measure.

Opposition from property owners has also made acquisition of properties more time consuming. Property owners are guaranteed just compensation for CHSRA’s acquisition of private property and in many cases, CHSRA and the property owners have been unable to reach agreement. Absent agreement, CHSRA’s only means of acquiring the properties it claims it needs would be through filing eminent domain actions in court.

The bottom line is that CHSRA needs to move quickly to acquire properties if it hopes to meet its 2017 deadline to substantially complete the two San Joaquin Valley segments. Owner and occupants at properties included in these two segments should be ready, as it is likely that CHSRA will ramp up its acquisition efforts shortly.

Proposition 13: Property Tax Roll-Over in Eminent Domain Cases, 8/20/14

In 1978, California’s Proposition 13 created security for home owners by limiting property taxes to one percent of the property’s value with a maximum two percent increase for inflation of the property value in a year. The property tax is reassessed when the property is being sold or if certain improvements on the property increase the property’s value.

In 1982, Proposition 3 was passed to protect those who are forced to purchase a replacement property when their property has been taken through the process of eminent domain. By freezing the base value of the property tax, those who are inclined to replace their property are ensured that the property tax they used to pay for their condemned house is rolled over to their new property.

The recent issued case of Olive Lane Industrial Park, LLC v. County of San Diego, heard in the California Fourth District Court of Appeals, dealt with the interpretation of Prop 3 and 13. In this case, Olive Lane lost its industrial park to the County of San Diego through the process of eminent domain. It eventually purchased a replacement property and asked for the County Tax assessor to transfer the property base value of the previously owned land. The tax assessor denied their petition on the basis that the 4-year statute of limitations under the state tax code had expired. Although the purchase of the new property occurred before the statute of limitations expired, Olive Lane had not requested the transfer of the base value for the property until five and a half years after the eminent domain process concluded.

The court noted that the state tax code was unclear in cases like Olive Lane where a property is purchased before the statute of limitations expires but the petition for base value transfer is made after the statute of limitation passes. The court turned to Proposition 3 to help answer the matter. Proposition 3, which now is incorporated in the article XIIA of the California Constitution, does not specify time period in which to initiate or complete a transfer request. Therefore, the court held that the statute of limitations is non-mandatory; the purpose of Proposition 3 was to treat eminent domain cases as outside a typical purchase of property.

The court also noted that the statutory purpose of the proposition was to allow those whose property has been taken through eminent domain to maintain the same base value for their new property, upholding an important constitutional right.

By: A.J. Hazarabedian
To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit http://www.eminentdomainlaw.net/aboutAJH.php

California Eminent Domain Project News: More Condemnation Approvals: California High Speel Rail Gears Up for More Acquisitions

On Wednesday, the State Public Works Board approved approximately 160 parcels between Fresno and Kings Counties for acquisition for the high-speed rail project. The California High Speed Rail Authority (“CHSRA”) requested acquisition of the 160 parcels which, in addition to several hundred other parcels, they believe are necessary for the construction of the rail project.

Contractors have already begun demolishing improvements on already acquired parcels for the beginning of the first 29-mile segment in Fresno. The 160 parcels will be part of the second construction segment stretching to an approximate 65-mile span. The acquisitions vary from whole takes of many properties to part-takes of others.

An agency’s use of eminent domain or condemnation to acquire property needed for projects, such as the California High Speed Rail, is typically pursued only after negotiations have failed. A lawsuit is filed by the agency, and a jury decides the amount of compensation to which the owner is entitled.

The next step for the acquisition of the second segment will be negotiations with the property owners of the 160 parcels. If agreements cannot be reached, CHSRA will likely pursue eminent domain to acquire the parcels.

CHSRA is wasting no time in preparing for the construction of the second segment. It has already awarded a $71.9 million contract to a Netherland-based construction firm known as ARCADIS U.S. to help manage the construction contracts for the 65-mile segment. CHSRA will be accepting construction bids and will be depending on ARCADIS to help in choosing a construction company to help design and build the segment. ARACDIS will also be in charge of managing contract risks, overseeing inspections of the construction sites and testing material necessary for construction.

California Eminent Domain Project News: Update Part Two – Court of Appeals Decision Means Big Win for California High Speed Rail Authority

Back in April, the California High Speed Rail Authority took a hit when the State Court of Appeals denied its petition to overturn a decision by the Sacramento County Superior Court regarding CHSRA’s alleged noncompliance with the provisions of Prop 1A. On Thursday, ruling on a portion of the Superior Court decision which the Court of Appeals had not yet addressed, the California 3rd District Court of Appeals reached a unanimous decision to allow CHSRA to resume selling $10 billion in bonds to fund the rail project. The bond sales were approved by California voters back in a 2008 ballot measure.

The appeals panel stated that even though there are still legal questions about whether the project is in compliance with the Proposition 1A, their decision focused on the law related to selling the bonds, not compliance with Proposition 1A.

CHSRA has recently been facing funding issues; this appeal is a big win for them, allowing them to obtain funding to move forward with the project.

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COPYRIGHT © 2010 Arthur J. Hazarabedian, Esq.