What s New in Eminent Domain, and Why The First 30 Days Is More Likely Than Ever To Make Or Break Your Case

Transcription

1 What s New in Eminent Domain, and Why The First 30 Days Is More Likely Than Ever To Make Or Break Your Case IRWA Chapter 1 Fall 2008 Seminar October 28, 2008 Presented By Rick E. Rayl Copyright, 2008 Nossaman Guthner Knox & Elliott, LLP. All Rights Reserved. The information contained herein does not constitute a legal opinion and should not be relied upon by the reader as legal advice or be regarded as a substitute for legal advice. nossaman.com

2 An Introduction: Who Am I and Why Am I Here? Eminent domain lawyer with 15 years of experience I work for both public agencies and landowners, so I know how both sides think, and how they will look to use recent developments to their advantage My firm does work in the trenches of legislative reform, so I have insights into what has happened and why 2

3 An Introduction: What am I Going to Talk About? Setting the Stage for Recent Reform Efforts: Kelo and the Propositions Legislative Reform since Kelo Nuts & Bolts of the Opening Stages of an Eminent Domain Case Traps for the Unwary 3

4 Eminent Domain Reform How did we get here: Kelo and its aftermath The public reform process: the Propositions The private reform process: the Legislative changes 4

5 The Kelo Decision Susette Kelo This has nothing to do with me. I m nothing, I m a nobody. This is every U.S. citizen, every American. No homes, no properties, no farms. Nothing is safe anymore. 5

6 The Infamous House 6

7 The Infamous House 7

8 The Kelo Decision: The Broad View Prevails Kelo decided two questions: 1) Is economic revitalization, without blight, a constitutional public use for private property taken by eminent domain; 2) How much scrutiny should the Court give to a legislative determination of public use? The Court held that: 1) Economic revitalization is a constitutional public use of taken private property, and 2) The Court will give deference to determinations of public benefits by public agencies. 8

9 Kelo v. New London: The California Reaction Kelo DID NOT CHANGE California law: Art. I, Section 19 of Cal. Const. allows some use of eminent domain for incidental private purpose, e.g., redevelop blighted areas But, PUBLIC PERCEPTION is that it did. RESULT: Media firestorm Increased scrutiny of eminent domain use by local agencies Gave property rights advocates a platform Legislation/Initiatives And, Ultimately, Propositions 90, 98 & 99 9

10 The Cry for Reform Begins... 10

11 The Cry for Reform Begins... 11

12 The Cry for Reform Begins... 12

13 November 2006: Proposition 90 Dubbed the Save Our Homes Initiative Stated purpose was to prevent government from condemning private property and turning it over to another private owner Would have, if upheld, likely accomplished that goal If the condemning agency ever wanted to change the public use, would have had to offer property back to original owner BUT, Proposition 90 went well past this publicly-touted goal... 13

14 Proposition 90 at a Glance Other, less known aspects of Proposition 90 Applied to all agencies and all public works projects Applied to all pending eminent domain cases Changed the way all condemned property is valued Could have made actionable virtually any governmental conduct that causes damage to property Could have rendered preservation of open space cost prohibitive Could have made any government conduct that impacts businesses actionable 14

15 And the Public Relations Response... 15

16 Proposition 90: What Happened? Millions spent on campaign Became one of the Hot Election Issues Narrowly defeated at polls after showing a strong lead in polling data Ultimately, gave rise to Propositions 98 & 99 16

17 June 2008: Propositions 98 & 99 Proposition 98: California Property Owners and Farmland Protection Act (Howard Jarvis Taxpayers Association) Proposition 99: Homeowners and Private Property Protection Act (League of Cities) 17

18 Proposition 98: A Practical Look Promoted by the Howard Jarvis Taxpayers Association Known as Son of Proposition 90 or Proposition Highly Controversial, Sought Fairly Radical Change Contained Significant, Non-Eminent Domain Provisions 18

19 Proposition 98: A Practical Look Re-Defines and Narrows Public Use Re-Defines and Expands Just Compensation Expands Landowner Right to Recover Attorneys Fees Eliminates Waiver of Claims Through Withdrawal of Deposit 19

20 Proposition 98: The Not-So-Hidden Agenda One Key Goal: Eliminate Rent Control Majority of Proposition 98 s Funding (Upwards of 80%) Purportedly Came from Landlord Groups Proponents Dismiss Criticism, Claiming Rent Control is Nothing More than Eminent Domain Without Just Compensation Scope Could go Beyond Eliminating Actual Rent Control, Threatens Inclusionary Housing Requirements (i.e., Low Income Housing Rules) 20

21 Proposition 99: A Practical Look Narrowly Tailored to Address Perceived Problems With the Law Following Kelo Designed to prevent the use of eminent domain to transfer owner-occupied residences to another private party (i.e., curtails redevelopment efforts) Creative Twist: Contains a Kill Provision that Provides that it Trumps Proposition 98 if Both Pass, but Proposition 99 Receives More Votes 21

22 Proposition 99: A Practical Look Critics Claimed: Proposition 99 Contains no Real Reform Designed Purely to Confuse Voters in an Effort to Defeat the Real Reform of Proposition 98 22

23 The Campaigns 23

24 Propositions 98 & 99: What Happened? Again, significant dollars spent on both sides of the campaigns, with most effort on the No on advertising Ended up being the only statewide propositions on the June 2008 ballot Proposition 98 resoundingly defeated, with only 39% approval Proposition 99 passed, with 62.5% approval 24

25 Proposition 99 Key Language Section 19(b): The State and local governments are prohibited from acquiring by eminent domain an owner occupied residence for the purpose of conveying it to a private person. 25

26 Proposition 99: The Exceptions Section 19(c): Subdivision (b) of this section does not apply when State or local government exercises the power of eminent domain for the purpose of protecting public health and safety; preventing serious, repeated criminal activity; responding to an emergency; or remedying environmental contamination that poses a threat to public health and safety. 26

27 Meanwhile... While the public s attention was on Propositions 90, 98 & 99, the California Legislature was also looking at eminent domain reform Proposals came from both sides of the aisle with, generally speaking, Rebublicans favoring strong restrictions, Democrats favoring mild reform Many, many bills proposed, some nearly as farreaching as Proposition 90 Little extreme reform passed, but incremental change has occurred and has a big impact on practitioners 27

28 The Key Republicans SCA 15 McClintock SCA 20 McClintock AB 590 Walters AB 1990 Walters 28

29 The Key Democrats SB 53 Kehoe SB 1206 Kehoe SB 1650 Kehoe SB 1210 Torlakson SCA 24 Torlakson 29

30 Seven Eminent Domain Reform Bills Signed Into Law Since Kelo Senate Bill 1650 (September 2006): Limits the ability to change a public use Must re-sell property to original owner after 10 years of no public use Lease-back to owner requirement added Senate Bill 1210 (September 2006): Appraisal fees required to be offered to owners Limits pre-judgment possession 30

31 Seven Eminent Domain Reform Bills Signed Into Law Since Kelo Senate Bill 1206 (September 2006): Narrows definition of Blight Increases state oversight of redevelopment Make it easier to challenge redevelopment decisions Senate Bill 53 (September 2006): Requires finding of significant remaining blight before redevelopment agency can extend time to commence eminent domain proceedings 31

32 Seven Eminent Domain Reform Bills Signed Into Law Since Kelo Senate Bill 1809 (September 2006): Tightens recording time limits for filing descriptions of the land within a redevelopment project area Assembly Bill 1322 (October 2007): Requires Department of Transportation to provide a copy of all appraisals performed or obtained by the Department to the owner Requires owner to provide a copy to the Department of any appraisals paid for by the Department 32

33 Seven Eminent Domain Reform Bills Signed Into Law Since Kelo Senate Bill 698 (October 2007): Agency must provide defendant property owner with informational pamphlet at the time of sending an offer to purchase Declaration stating facts supporting hardship required if defendant s written opposition to motion for prejudgment possession based on hardship 33

34 NUTS AND BOLTS How do the New Rules Work in Practice, Especially at the Outset of an Eminent Domain Action?

35 Traps for the Unwary and How to Avoid Them: Timing of Possession Recent changes have dramatically increased the time it takes government to obtain prejudgment possession Many right-of-way agents do not understand the new rules and can get project timeline in trouble because they wait too long to commence action Solution: Make sure everyone involved in rightof-way acquisition process knows the new rules and set a firm deadline by which condemnation process must commence 35

36 The New Possession Rules: Timing Hearing on Motion for Order of Possession must be set at least 90 days after service of motion (60 days for unoccupied property) Practical effect requires approximately 100 days (or more) from filing, both to effect service and to secure a law and motion date Possession order effective 30 days after service of order on owner 36

37 Possession: Best Case Timing Step Notice of Intent to Appraise Appraisal Written Offer Negotiations Notice of Hearing on Resolution of Necessity Adopt Resolution File Condemnation Action File Motion for Possession Hearing on Motion for Possession Effective Date of Order of Possession Cumulative Days days 37

38 New Possession Rules: A Quirk in the Law Regarding Timing Possibility exists that timing can be shortened if property owner does not file an objection New rules require owner to object within 30 days If owner fails to object, Court shall sign the order of possession if it finds: Plaintiff entitled to take the property Plaintiff has made a qualifying deposit Statute does not make clear whether Court must still wait 90 days in the absence of an objection, so Plaintiff can seek order ex parte upon expiration of the objection period 38

39 The New Possession Rules: Substance If owner objects to motion for possession, Court must hold hearing Plaintiff no longer gets possession without regard for hardship to property owner; balancing test now applies If property owner claims hardship, must make factual showing based on declaration 39

40 Possession Order Findings: Plaintiff entitled to take the property; Plaintiff has made a qualifying deposit; Overriding need exists for Plaintiff to possess property prior to judgment; Plaintiff will suffer substantial hardship if possession denied or limited; and Hardship Plaintiff will suffer if possession denied outweighs hardship Defendant will suffer if possession granted 40

41 The New Possession Rules: Emergency Exception for Utilities Timing relaxed for certain emergency situations Provision limited to a water, wastewater, gas, electric, or telephone utility Emergency order authorized on ex parte basis to protect the public s health and safety or the reliability of utility service Even under an emergency order, Court must find that order will not displace or unreasonably affect any person in actual and lawful possession Defendant has 30 days from issuance of emergency order to seek to have order modified or vacated 41

42 Traps for the Unwary: Precondemnation Procedures New rules about what government must do before passing Resolution of Necessity Failure to follow new rules could give landowner a viable right to take challenge This can be devastating, especially in light of the timing of possession rules we just discussed Solution: Circulate checklist to right-of-way agents listing all the things that must happen before Resolution of Necessity 42

43 Precondemnation Checklist Offer of compensation Informational pamphlet Summary of appraisal (with recent date of value) Notice regarding $5,000 payment for landowner appraisal Well-supported justification for prejudgment possession 43

44 Questions? Rick E. Rayl NOSSAMAN LLP Von Karman Avenue, Suite 1800 Irvine, CA nossaman.com/eminentdomain 44