Subscribe to RSS Feed Subscribe to Comments RSS Feed Subscribe ATOM Feed


Rebirth of Redevelopment in California: Impairing Private Property Rights or Revitalization?

In a 63-13 vote, Assembly Bill 2, authored by Assemblyman Luis Alejo, D-Salinas, passed in the California State Assembly last week. The bill allows for so-called “Community Revitalization Investment Authorities” – essentially redevelopment agencies with a different title – to acquire private property through eminent domain and make it available to big developers with the intent to build grand-scale housing or commercial and retail centers.

Back in 2011, Gov. Jerry Brown shut down redevelopment agencies as part of an attempt to balance the state budget. Now, the rebirth of redevelopment agencies puts many private property advocates in fear of Kelo-style outcomes where big developers and big investing companies back out of the redevelopment plan leaving acres of land vacant and the city in debt.

Howard Ahmanson, Jr., a private property advocate, cautioned that the bill “brings back the right of governments to exercise eminent domain against some private parties in order to resell their property to other private parties.”

Alejo’s reasoning for the rebirth of redevelopment differs greatly from those who oppose it. Alejo argues that the bill is a stepping stone towards revitalization for blighted, lower income neighborhoods where development is needed. He states that when a Community Revitalization Investment Authority is created by a city, county or special district, certain prerequisite conditions must be met. First, redevelopment plans must focus on high unemployment, low income and high crime rate areas. Additionally, one of the following four criteria must also be met:

  • Unemployment is at least 3% higher that statewide median unemployment rate
  • Crime rate is 5% higher than statewide median crime rate
  • Deteriorated or inadequate infrastructures like streets, sidewalks, water supply, sewer treatment or processing, and parks
  • Deteriorated commercial or residential structures

While this may look good on its face to some, Ahmanson argues – and we believe rightly so – that the property rights for the lower middle class and poor would be infringed while “only new and wealthy suburbs would be potentially spared from ‘redevelopment.’”

Assemblywoman Melissa Melendez, R-Lake Elsinore, agrees. As one of the 13 voters against the bill she believes that while she understands her colleagues’ interest in redevelopment as an effort to counter blighted neighborhoods, she refuses to support legislation that trumps private property rights.

Alejo is persistent in arguing that the bill is needed for disadvantaged communities. Opponents argue that although disadvantaged neighborhoods need to combat such issues as blight (deteriorated residential and commercial areas), there are other avenues the State can take in order to achieve revitalization. The question is whether it is necessary to use eminent domain and leave open the possibility of eminent domain abuse.

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

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

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

Claremont to Vote on Possible Eminent Domain Action Against Private Water Company, 7/15/14

The City of Claremont is turning to its citizens to ascertain whether or not the city should forcefully take possession of the local privately owned water company, Golden State Water Co. The City Council unanimously voted that a $55 million bond measure will be placed on the November ballot relating to acquisition.

As the water company’s rates and prices gradually increased, so did the backlash from the Claremont city residents. Since 2004, prices have increased 100%. Whether or not the city’s proposed acquisition is to benefit the residents with lower bills, however, is unclear. City officials believe so but Golden State Water Co. spokeswoman, Julie Hooper, believes that the city is trying to convince its residence that its appraised value of $55 million is all that the city will spend for the acquisition. She notes that the city is not disclosing the additional costs for borrowing the $55 million nor the interest it will incur.
Furthermore, there is a major discrepancy between the city’s appraised value and the value the water company claims. According to Hopper, Golden State believes that the company is worth close to $135 million. The city refuses to release its appraisal report to Golden State; its offer stands, as of October 2013, at $55 million.

Nevertheless, Hopper has made it clear that the company is willing to work with the city to try to reach a compromise in the hopes that eminent domain proceedings can be avoided. City officials say that they will not be filing the eminent domain lawsuit until after the November vote on the bond measure, so the City Council can get a better idea of the public’s perception towards the takeover.

Richmond, California Has Yet to Exercise Eminent Domain to Seize Underwater Mortgages, 6/30/14

While the city of Richmond is the first municipality to approve the concept of using eminent domain to acquire underwater mortgages, the city has yet to actually do so.

The City Council has been unable to get the needed 5 out of 7 votes to go through with eminent domain proceedings. Therefore, the city is looking to team up with another municipality in hopes that together a joint powers authority will help carry out the proceedings.

Other cities, however, are reluctant to join in. Reasons for the hesitation comes in two major forms; the first being fear of lawsuits and complex litigation from banks and trusts, and the other being the threat of losing support from the Federal Housing Finance Agency (FHFA).

Other cities take no comfort in the fact that Richmond recently won against the trustees for hundreds of residential mortgage-back securities trusts, mainly because the lawsuits were dismissed without prejudice. This means that after Richmond begins the eminent domain process, the trustees will more than likely file more suits. The potential liability of such lawsuits can carry a very high price tag which deters most cities from joining Richmond’s plan.

Furthermore, the FHFA’s position on using eminent domain for such purpose is another deterrent. The FHFA has made it more than clear it is against the use of eminent domain, arguing that using eminent domain to modify the mortgages would eventually be shouldered by taxpayers. Also, the FHFA fears that it would create credit restrictions for home buyers in the future.

The FHFA is not the only organization against the idea of using eminent domain to seize mortgages. The Securities Industry and Financial Markets Association (SIFMA), the National Association of Realtors, and the American Bankers Association have voiced their opposition as well. The fear is mainly the same; an increase in borrowing costs and restrictions on credit availability.

Richmond says it wants to help its residents come out of the slump that has been affecting many U.S. homeowners since the 2008 housing crisis, but does the city truly have its residents interest at heart? Richmond has been working closely with Mortgage Resolution Partners (MRP), a private investment firm that has been pitching the eminent domain route to numerous cities. The assumption is that if the city does acquire the mortgages, it will turn around and offer the mortgages for a lower price and pocket the interest. Only time will tell what the outcome will be; for now, it is still up in the air. And as the real estate market improves, the ostensible justification for using eminent domain to assist underwater homeowners becomes less and less compelling.

By: A.J. Hazarabedian
To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit

San Francisco Bay Commission Suing Feds to Stop Eminent Domain Attempts in Alameda County, 6/25/14

The San Francisco Bay Conservation and Development Commission is ready for a gruesome battle with the federal General Service Administration over McKay Avenue in the county of Alameda. The Commission’s decision to challenge GSA’s exercise of eminent domain to acquire McKay Avenue was reached during a closed session meeting held on June 5th.

After the state refused to grant GSA utility easement rights for McKay Ave, GSA filed suit against East Bay Regional Park District back in April. A number of citizens as well as state and local organizations raised enough signatures to get an initiative on the November ballot to rezone as open space the area where developer Tim Lewis Communities is planning to build luxury homes.

The Committee’s reasoning in regards to filing suit is to compel the GSA to show that it’s eminent domain lawsuit against the Park District is allowed under the federal Coastal Zone Management Act. This Act requires federal coastline projects to be consistent with state law.

The advocates for open space are also suing the city of Alameda for allowing rezoning of the area for residential development without complying with the California Environmental Quality Act. Back in 2008, Alameda citizens voted to use the surplus land to expand Crown beach; however, their bid was trumped by the developer’s near $3 million bid.

If successful, the Commission’s efforts will stop the eminent domain proceedings; though, only temporarily.

Updates on the McKay Avenue takeover will be posted on our blog, Facebook and Twitter. For other eminent domain and inverse condemnation issues and projects, please follow us on Twitter and like us on Facebook.

By: A.J. Hazarabedian
To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit

Feds Use Eminent Domain to Acquire Public Street for Supposed “Public Use,” 6/3/14

On April 17, the federal government filed a lawsuit against the state of California and the East Bay Regional Park District to acquire McKay Ave in the city of Alameda through the process of eminent domain.

Back in 2008, voters of Alameda passed Measure WW which gave the East Bay Regional Park District authorization to purchase a federally owned parcel of land to expand Crown Memorial State Park. McKay Ave falls within the parcel now owned by East Bay Regional Park District. The street leads up to the Crab Cove Visitor Center and connects with Central Ave.

The DOJ office leading the lawsuit is the Environmental & Natural Resources Division. The federal government’s claimed reason for pursuing acquisition of McKay Ave is to secure continuing operation of the federal building complex which is located on Central Ave. The federal government also stated, however, that acquiring McKay Ave will facilitate the sale of federally owned “surplus land,” to a private housing developer. Currently, McKay Ave is used by the federal government to access the 3.89 acre federally owned parcels and recently a bid was accepted for the sale of that land to a housing developer, Tim Lewis Communities.

The opposition to the sale of the land for residential development and the acquisition of McKay Ave is substantial not only in the Alameda community but by numerous organizations all over California and the nation. State Attorney General Kamala Harris has stepped up to speak for those in opposition to the taking. Her November 7, 2013 letter to the Department of Justice expressed her rebuttals against claims made by the federal government regarding the need for McKay Ave in order to operate the federal complex. She also addressed the State’s willingness to discuss the issues of access or security for the federal complex and her failure to see how a public street and sidewalk could be acquired for “public use,” particularly given that the State is willing to discuss any upgrades to the street that the Feds might desire. However, the federal government is confident it will be able to practice eminent domain over the street.

Recently, a group of 10 organizations opposed to the acquisition posted an open letter to the U.S. Attorney General urging the Department of Justice and the General Service Administration to not proceed with any and all eminent domain cases against California Parkland. The letter described the taking as “not defensible” and a “misuse “of state park property. The opponents to the taking want the land to be left as “open space.” Allowing a developer to build houses on the currently owned federal parcels is “a contrary notion that parklands are trivial…and can be easily undone.”

(The letter is available to view on Alameda Sun Time’s website.)

The elephant in the room is this: Is the federal government using their nearby federal complex as an excuse to proceed with an eminent domain case in order to make money? It seems a bit fishy that the federal government secured a bid for the sale of the 3.89 acre surplus property at the end of the street for a price that was double the parcel’s appraised value, and then went after McKay Ave. Although the federal government is not hiding the sale to the housing developer, it seems quite a coincidence that things have played out as they have.

Now the State of California must file a response to the lawsuit. It will be interesting to see how this case proceeds. One can’t help but to recall the infamous Kelo case and how its decision has influenced governmental acquisition of private properties for sale to private developers.

By: A.J. Hazarabedian
To learn more about A.J. Hazarabedian, the managing partner at California Eminent Domain Law Group, visit

California Town Uses Eminent Domain To Eliminate Private Water Company, 4/10/14

Notwithstanding the public backlash following the U.S. Supreme Court’s ruling in Kelo v. City of New London several years back, government agencies are getting more and more creative with stretching reasons to support exercising eminent domain. The city government of Claremont, California is attempting to take over a private water company using eminent domain and justifies its attempts by claiming that the residents are unhappy with their water bills.

Claremont’s “solution” is to take the water company. A municipal utility is nothing new. But taking an already existing private utility is suspect and a potentially flawed plan. The residents are not certain about how the City would go about paying the offer of $55 million to Golden State Water Company and they definitely do not have reassurance that the pricing difference will benefit them. But, putting aside those concerns, there is a bigger issue lurking mischievously in the background. Is it really appropriate for a government agency take a private business away from its owners simply because some customers of the business are allegedly unhappy with their bills?

According to Claremont, they have good reasons for seeking to use eminent domain to replace the private water company. The fact that people are unhappy, however, may not be enough. The rules of eminent domain allow, under the U.S. and California Constitution, for the government to take private property for public use by paying just compensation.

In addition, California Code of Civil Procedure § 1240.030 requires:

The power of eminent domain may be exercised to acquire property for a proposed project only if all of the following are established:

(a) The public interest and necessity require the project.
(b) The project is planned or located in the manner that will be most compatible with the greatest public good and the least private injury.
(c) The property sought to be acquired is necessary for the project

While a utility can amount to a public use, here the utility already exists and is privately owned. It is questionable whether Claremont meets the Constitutional “public use” requirements, as well as the requirements of “necessity” set forth in CCP § 1240.030. Moreover, given that the Howard Javis Taxpayers Association estimates the value of the business at $200 million, it is questionable whether the City’s $55 million offer will ultimately amount to just compensation even if the City is allowed to move forward with the taking.

We’ll have to stay tuned to see how this one plays out.

By A.J. Hazarabedian

To learn more about A.J. Hazarabedian, please visit

Elsinore Valley Municipal Water District Prevails in Right to Take Challenge, 4/29/10

By A.J. Hazarabedian

Elsinore Valley Municipal Water District received a favorable verdict in a case involving a right to take action.  Property owner, John O’Doherty was challenging the water district’s right to take a portion of Third Street for a water pumping station.

The verdict was discussed in a recent Press-Enterprise article, “Judge rules in favor of Elsinore Valley water district in eminent domain case.” It appears that the water district did not actually acquire Mr. O’Doherty’s property; rather, the property they did acquire would, according to O’Doherty, “[limit] access to [the] property he owns near Third and Collier, [diminish] the value of the property and [increase] the potential for flooding on the land.”  Mr. O’Doherty sought $768,000 in damages from the water district and challenged their right to use the property.

The result: Riverside County Superior Court Judge Peter L. Spinetta ruled “that the water district had the right to take and use a portion of Third Street near Collier Avenue for the station and that the project was more necessary than the road being used as a footpath or for vehicle traffic.”

As we discuss in our “California Eminent Domain Handbook,” successful challenges to the government’s right to take a particular property are the exception, not the rule, and usually result only in a delay, rather than outright prevention of the government’s right to take.  Each case must be evaluated on its own facts and experienced eminent domain counsel should be consulted.

Next Page »

COPYRIGHT © 2010 Arthur J. Hazarabedian, Esq.