CALIFORNIA EMINENT DOMAIN LAW BLOG

By A.J. Hazarabedian

The city of Rancho Cucamonga began eminent domain proceedings to acquire a private dirt road from the Viramontez family, as reported by the Daily Bulletin.  The city plans on widening the road to 210 feet by 30 feet from Base Line to “connect the already developed Shelby Place, south of Base Line.”

According to the article, “Rancho Cucamonga proceeding with eminent domain for road,” the city offered $14,000 for the rights to the road and the Viramontez family made a counter-offer of $30,500, based on an appraisal obtained by the family’s hired appraiser.

Plans call for widening and paving the road, which as stated by the city’s director of engineering, Mark Steuer, would “provide better access to the subdivision tract, enhance traffic flow and provide access to public safety.”

For the Viramontez family, this private road has sentimental value as they have owned the land since the early 1940s and currently live on a 2.7 acre parcel near Baseline Road and Shelby Place.

It is important to note that a property owner is not required to accept the condemning agency’s offer. Instead, the property owner may make a counter-offer, as the Viramontez family did in this case, or may assert a higher value for his or her property if and when an eminent domain action is filed in court.

Often times property owners, tenants and business owners receive higher, and in some cases much higher, compensation than the amount of the condemning agency’s offer by asserting a claim for greater compensation.  An experienced eminent domain attorney should be contacted to evaluate each case on its own merits and assist in determining the appropriate course of action to the particular case.

At this point, if the City of Rancho Cucamonga rejects the Viramontez family’s counter-offer, the Viramontez family and the City will have to fight it out in the Superior Court – a prospect which given the relatively limited amounts involved, will probably not make much sense for either side.

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By A.J. Hazarabedian

In a recent post, we talked about the City of Hesperia voting on whether or not to join a Joint Powers Authority to begin acquiring underwater mortgages by eminent domain in an attempt to help homeowners.

Since our post, more information has been revealed providing the logistics to this interesting proposal.  A recent Reuters article outlined a plan by Mortgage Resolution Partners to find investors who will finance the process and then turn around and restructure the loans.

The idea is that a local government entity would acquire underwater mortgages by eminent domain, using the money funded by investors, and then pay the homeowners the fair market value for the property.  At that point, Mortgage Resolution Partners would work to restructure the loan so homeowners could keep their homes and have smaller mortgage payments.

Per Reuters, Mortgage Resolution Partners is “backed by a number of prominent West Coast financiers,” including Evercore Partners Inc and Westwood Capital, who would be paid back after the restructured loans were sold off to “hedge funds, pension funds and other institutional investors.”  This article, “Investors tout controversial “condemnation” for housing fix,” explains that Mortgage Resolution Partners would receive a fee for every loan condemned and restructured.

This is certainly one to watch in the coming months.  Many people have been looking for solutions to the housing crisis.  Let’s see if this idea gains any more traction.

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By A.J. Hazarabedian

A restaurant owner in the City of Riverside is suing the city for lost business revenue after a relocation deal never came to fruition.  In the Press Enterprise article, “Restaurant owner sues after relocation deal fizzles,” Lucky Greek restaurant owner Tony Georgopoulos argues that his business has been negatively affected by the City’s Magnolia Avenue underpass project.  The project, he claims, has decreased vehicular traffic by 90%, thereby decreasing his restaurant’s revenue.

Mr. Georgopoulous is seeking $750,000 in damages in a suit filed last month.  He asserts that the City did not follow through with a relocation plan they set out to execute over a year ago.  According to the article, the City had agreed to a land swap; moving his restaurant to the old Marcy branch library.  After some negotiations over the City’s offer, the deal was delayed and then scrapped when Jerry Brown eliminated redevelopment agencies earlier this year.  As noted by Riverside City Attorney, Greg Priamos, the deal was contingent on redevelopment dollars for funding.  Without the redevelopment agency, the deal could not move forward.

Tony Georgopoulos now indicates his business is struggling to keep the doors open, having had to shrink his staff from 17 down to 11.  A court will have to decide whether or not the City must pay damages in this case.

This is just a tiny tip of the iceberg of the carnage that has been left in the wake of the sudden demise of redevelopment in California.  While reasonable persons can differ on the propriety of the use of eminent domain for redevelopment, the manner in which redevelopment agencies were killed almost overnight in California left many victims, such as Mr. Georgopoulos, in its wake.  People were informed their properties and businesses would be acquired.  They made decisions based on that information.  And now, they’ve been left hanging in the wind.

It is questionable whether Mr. Georgopoulos will have a legally viable claim, without any portion of the property he occupies actually being taken.  Generally, Cities and other public agencies are permitted to impact the flow of traffic without liability, provided reasonable access remains to the property.  It will be interesting to see how this one plays out…

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By A.J. Hazarabedian

The City of Hesperia is considering an interesting use of eminent domain during its upcoming City Council meeting.  The Victorville Daily Press reported this week that the City may decide to use eminent domain to acquire underwater mortgages in an attempt to help homeowners.

As the article describes, the City will discuss whether or not they will join a new joint powers authority (JPA) aimed at helping homeowners whose mortgages are underwater due to declining home values.  The joint powers authority would consist of the City of Hesperia, City of Fontana, City of Ontario and the County of San Bernardino.

What’s interesting is that the JPA would not be acquiring the homes themselves as is common in the use of eminent domain.  Here, they would be acquiring only the mortgages so that the loans could be restructured.  Kelly Malloy, spokeswoman for the City of Hesperia states in the article, “the city is really looking at participating in this in order to be part of the dialogue and to be part of the research project.”

Many cities have been left with blighted neighborhoods after homes have gone into foreclosure and the properties eventually end up in despair.  This JPA sounds like an interesting attempt to avoid such cases in Hesperia.

The council will meet Tuesday, June 12th at 6:30pm to discuss this and other issues.

Whether the JPA can exercise the power of eminent domain for this purpose is questionable.  Eminent domain can only be exercised for a public use.  While there is some ostensible public interest in preventing foreclosure blighted neighborhoods, this seems to be stretching the public use requirement to its limits.  If the City decides to proceed, we doubt the lenders will take it lying down (unless, of course, the JPA intends to purchase the loans for the full loan balance – which is doubtful).

Stay tuned on this one…

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By A.J. Hazarabedian

The City of Modesto will consider acquiring properties by eminent domain for the Pelandale Avenue freeway interchange project at tonight’s city council meeting.  According to the Modesto Bee’s article, “Modesto considers seizing sites for Pelandale freeway project,” the City has been negotiating with affected property and business owners since March, yet an agreement has been made with only one of the eight parcels required for the project.

The Pelandale Avenue project plans to “replace an inadequate three-lane span with a seven-lane crossing at a better angle for traffic, with new southbound ramps,” as reported by the Modesto Bee.  The interchange was not built for the amount of traffic it now receives due to the popular businesses in the area.

A few businesses will be affected by this project, including a Quik Stop gas station and convenience store, Dolphin Spas & Stoves, as well as a vacant commercial property.  Temporary construction easements for up to one year are needed from neighboring properties, of which one has agreed to an offer of $4,800.

Under California’s Eminent Domain law, the government is required to pay the “fair market value” of the property.  The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by the seller, being willing to sell under no particular or urgent necessity for doing, nor obliged to sell, and a buyer, being ready, willing and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.

This is a bit different from the definition of market value used in the marketplace.  Put simply, owners in eminent domain proceedings are entitled to the “highest” price that might reasonably be expected.  This is determined by appraisal opinion, and the government’s and owners’ appraisers often differ substantially in their opinions of what the “highest” price should be.  The owners involved in this project are apparently dissatisfied with the City’s appraisals, so the City’s options are to either agree to pay the owners an amount that satisfies the owners, force the sales through eminent domain, or drop the project.

If the City decides to pursue eminent domain after tonight’s council meeting, these matters will then move into the hands of the Superior Court, and the owners will be entitled to a jury trial to determine the amount of compensation.  Stay tuned…

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By A.J. Hazarabedian

Recently, the County of Santa Barbara began eminent domain proceedings to acquire property from Wal-Mart for the Union Valley Parkway project.

As reported in the Lompoc Record article, “County files suit in UVP land case,” Wal-Mart Stores, Inc. owns three parcels that will be affected by the project.  These parcels are located on the east side of Orcutt Road near Foster Road.  According to the article, negotiations between the county and Wal-Mart have been ongoing for over a year and will continue to go on until their court date on July 5, 2012.

It appears that Wal-Mart is not disputing the project.  Rather, they want to be sure they are fairly compensated for the impact on their property.  Specifically, Walmart is complaining that “the county has not offered compensation to cover the cost of the four non-legal remnant parcels of land that will be created when the right of way is taken.”

The county has deposited $1.3 million with the state treasurer for the appraised value of the property being taken.  The county is also asking for prejudgment possession and per Scott McGolpin, Director of Public Works at the County of Santa Barbara, “if an agreement with Wal-Mart is not reached by June, the county will take possession of the property on or about the July 5 court date noted in the suit.”

Where, as here, only part of a property is taken, the take can sometimes have devastating impacts on the owner’s remaining property.  Walmart here claims that the part take is leaving it with four remnants that no longer comply with local land use ordinances.  If they are right, they may have a legitimate claim for severance damages.

As for the County’s request for prejudgment possession, prejudgment possession is fairly common in eminent domain proceedings.  California Code of Civil Procedure section 1255.410 authorizes the condemning agency to ask the court for possession of the property even before judgment has been entered in the eminent domain proceeding. The court may only do so, however, if the condemning agency has first deposited into the Court or the State Treasury the amount which it determines as the probable compensation to be paid for the property. In this case, the County of Santa Barbara has indeed deposited what they deem to be probable compensation.  If Walmart opposes the County’s request for prejudgment possession, the County will also need to prove that it has an “overriding need” for prejudgment possession, and that its hardship will outweigh any hardship suffered by Walmart as a result of early possession.  If the court grants the County’s request for early possession, Walmart may have as little as 30 days to turn over possession.

More is to be revealed in this situation.  We’ll keep an eye on the results of this case.

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California Eminent Domain Law Group’s Glenn Block will be speaking at the IRWA Chapter 1 Annual Valuation Seminar on April 24, 2012.

The seminar will be held at Quiet Cannon Montebello.  Glenn will be speaking with Michael Farrand, ASA of Higgins, Marcus & Lovett, Inc. about “How Does a Significant Change in Economic Conditions Affect Loss of Goodwill Calculations?”

Glenn Block is a Partner at California Eminent Domain Law Group.  He has concentrated his law practice solely in eminent domain for more than 14 years.  A successful trial lawyer, he represents both business and property owners in direct and inverse condemnation litigation and has recovered over $100 million on their behalf.  He also represents public agencies in acquiring property for public use.

Mr. Block has been named to Southern California Super Lawyers Rising Stars® in the field of eminent domain.
To learn more about Glenn Block, please visit http://www.eminentdomainlaw.net/aboutGB.php.

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By A.J. Hazarabedian

Governor Brown’s plan to abolish redevelopment agencies followed by the recent California Supreme Court decision to do just that is having a profound effect on planned redevelopment projects.

An article in the Sacramento Business Journal last week entitled, “Rancho Cordova won’t buy property through eminent domain,” explains how the city is now abandoning a project they have been planning for years.  The article states that not only will a current eminent domain lawsuit be dropped, but Rancho Cordova’s redevelopment agency will also be “forced to sell two other parcels that it had previously acquired for redevelopment,” related to the same project.

Cities and other government agencies will inevitably attempt some workarounds in order to enhance and improve their areas.  For Rancho Cordova, “the city’s leaders said they will continue to improve Folsom Boulevard through grants and other funding.”

Metro’s Gold Line Construction Authority is another agency scrambling to keep a project moving forward in the midst of last week’s decision.  The Pasadena Star News reported in their article, “Monrovia, Gold Line officials continue attempts to execute land deal for maintenance yard,” that Gold Line and City of Monrovia officials are trying to understand what to do about their previously negotiated deal.  For a planned maintenance yard to be built in Monrovia, the Metro Gold Line Construction Authority had negotiated a deal to purchase 14 acres of Monrovia Redevelopment Agency-owned land for $41.6 million.  In anticipation of last week’s ruling, the Authority recently voted to condemn the land in order to keep the project on schedule.  Under the eminent domain proceedings, the land could be purchased for $17.3 million.  The City of Monrovia stands to lose millions of dollars if the eminent domain proceeding moves forward rather than the previously negotiated deal.

Per the Pasadena Star News article, Monrovia officials are “working with lobbyists to draft potential legislation that would carve out the project from the new redevelopment rules.”

Stay tuned…

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By A.J. Hazarabedian

A new article in the Victorville Daily Press about a large difference in opinion of value caught our attention this week.  The city of Victorville and the First Assembly of God church have been negotiating for three years about the La Mesa/Nisqualli interchange project and how it will affect the church operations.

The article, “Church, city have $7.5M difference of opinion” talks about the problems involved and discusses both sides of the issue.

Per the article, the project will cause the church to lose about 3 percent of their property which includes 56 parking spaces.  The church was offered “$560,000 last spring based on a real property appraisal, but the offer has since been lowered to $436,000 in light of a small redesign and recent property value declines,” according to the Victorville Daily Press.

The church’s attorney, however, claims the total damages to the property are valued at $8 million.  As we explain in our “California Eminent Domain Handbook,” a property owner is not required to accept the condemning agency’s offer.  Instead, the property owner may make a counter-offer, or may assert a higher value for his or her property once the eminent domain action is filed in court.  Property owners, tenants and business owners often receive higher, and in some cases, much higher compensation than the amount of the condemning agency’s offer by asserting a claim for greater compensation in the eminent domain proceeding.  This is, of course, not always the case.

In this circumstance, the difference of opinion is $7.5 million.  City Manager Doug Robertson states in the article that “the City has rejected their demand for over $8 million as compensation for these 56 parking spaces, which comprise less than one half acre of land.”

The church’s pastor Josh Gerbracht explains “it’s not just the land they’re taking, but it’s the overall impact on access, traffic, parking spots, future building, the visual impacts…”

A mediation is scheduled between the two parties for January.  If a settlement is not reached, a jury will determine just compensation in a February trial.

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By A.J. Hazarabedian

Caltrans is moving forward with a widening project on the 5 freeway from the 605 to the Orange County line – a project which has been in the works for many years.  An article in the Downey Patriot, “Caltrans plans to widen 5 freeway” discusses some of the impacts the project will have on property and business owners in the surrounding areas.

As discussed in the article, 440 parcels will be impacted by the widening in the cities of Downey, Norwalk, Santa Fe Springs, La Mirada and Cerritos.  Caltrans project manager Emad Gorgy explains that “the goal of the project is to mitigate the bottleneck along the I-5 corridor and push the carpool lane towards Downtown Los Angeles.”  They will “divide the corridor into six sections and the existing lanes will be expanded to 10 lanes across.”

We have been informed that Caltrans has already begun the process of acquiring property for this project.  It is likely they will use the power of eminent domain as they did for the Carmenita Interchange project.

To better understand the eminent domain process, visit our website to read our “California Eminent Domain Handbook.” In the handbook, we provide a breakdown of the steps involved when the government wants to acquire property by eminent domain, as well as general information regarding property and business owners’ rights when faced with eminent domain.

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