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California legislature considers changes to eminent domain law

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On Oct. 26, representatives from four California Senate and Assembly Committees came together to hear expert and public testimony on the issue of redevelopment and blight. This California Joint Interim Committee Hearing is the first of two scheduled to brief state representative on the affects of the June 2005 United States Supreme Court ruling Kelo vs. City of New London in preparation for the 2006 California legislative session reconvening in January.

The Kelo decision created a wave of public response regarding the issue of eminent domain and it put the issue back on the individual states to address. During the 2005 California legislative session there were nine state bills addressing eminent domain and six addressing the issue of redevelopment and blight. All but one of which are two-year bills that will be up for review and discussion during the 2006 legislative session.

Attendees at the October hearing on redevelopment and blight included Senator Christine Kehoe, Senator Tom Torlakson, Assembly member Gene Mullin and Assembly member Simon Salinas. These legislators are acting chairs of the Senate Local Government Committee, Senate Transportation and Housing Committee, Assembly Housing and Community Development Committee, and the Assembly Local Government Committee, respectively.

Speakers in attendance addressed a number of topics concerning impacts of the Kelo decision on California, the need for state legislature to redefine blight, expected issues to watch for during the 2006 legislative session, and, as expected, the pros and cons of utilizing the awesome power of eminent domain.

Impacts of Kelo on California

In August 2005, the Senate Local Government Committee held an information hearing to examine the affects of the Kelo decision on local agencies. According to the expert testimonies, there were no reported impacts of Kelo on California's counties, cities, special districts or school districts. Nonetheless, it was determined that Kelo will likely impact California's community redevelopment agencies.

Under the Community Redevelopment Act of 1945, cities and counties are authorized to establish redevelopment agencies, which are tasked with encouraging new development, creating jobs and generating tax revenue in declining areas by creating partnerships between local governments and private entities.

Current state law limits redevelopment agencies' eminent domain powers to project areas determined to be blighted. According to John Shirey of the California Redevelopment Agency, California has 771 of these community redevelopment project areas, of which 40 percent have no authority to use eminent domain and 30 percent have limited use.

The San Diego Redevelopment Division of the City's Community and Economic Development Department administers 10 of the Redevelopment Agency's 16 project areas, encompassing approximately 6,643 acres and one survey area.

Definition of blight

The definition and use of blight by California's local 418 redevelopment agencies is the core of the current state debate. Prior to 1993, the state redevelopment statute did not have a clear definition of blight, but rather described various characteristics of blight. Since 1993, nine appellate decisions have helped to better define what blight is and is not.

According to the October joint interim hearing briefing paper, a project area must satisfy four requirements in order to be considered a blighted area, and therefore be eligible for use of eminent domain. Those four requirements are:

Must be predominantly urbanized: meaning 80 percent of the land in the area has been developed for urban use; or has irregular and inadequate sized lots in multiple ownership; or is an integral part of an urban area surrounded by development parcels. Must exhibit one condition of physical blight: (1) Unsafe or unhealthy buildings; (2) factors that hinder economic use of buildings and lots; (3) incompatible uses that prevent economic development; irregular and inadequate sized lots in multiple ownership. Must exhibit one condition of economic blight: (1) depreciated or stagnant property values or impaired investments; (2) high business vacancies, low lease rates, high turnover rates, or excessive vacant lots; (3) lack of neighborhood commercial facilities; (4) residential overcrowding or an excess of adult business; (5) high crime rate. The area cannot be helped without redevelopment: meaning the blight cannot be reversed or alleviated by: (1) private enterprise; or government action; or both private enterprise and governmental action.

Some of the expert testimony addressed issues associated with defining or redefining blight. Bruce Tepper, a redevelopment attorney for California City recommended that state officials better define blight and force redevelopment agencies to prove blight on a parcel by parcel basis during condemnation proceedings. Tepper was not alone when describing the current definition of blight as "soft" and recommending state legislatures better explain the term as well as the process.

Pros and cons of the power of eminent domain

The first Joint Interim Committee Hearing was held at the newly built Weingart City Heights Library in San Diego, which is part of recently redeveloped City Heights Urban Village.

The City Heights project is touted as an example of how eminent domain can effectively be used to address problems of urban decay, create new jobs, put tax revenue back into the local community, and set aside some tax increment funds for low-and moderate income housing by creating a successful public/private partnership.

The current task of the state is to continue to allow redevelopment projects, such at the City Heights Urban Village, while also addressing many of the problems associated with the use of eminent domain.

Concerns about eminent domain voiced during testimony and by impassioned citizens included the need for responsible use of redevelopment funds and for a public benefit to be present in each project; preventing vacant lands from being wrongly labeled as blighted; mitigating the high costs for homeowners to fight condemnation; ensuring homeowners receive fair market value for their property; and increasing state and local accountability.

2006 California state legislation

The Kelo decision was an event that increased public consciousness on the issue of eminent domain, which resulted in the nine pending state eminent domain bills and six bills on redevelopment and blight in 2005.

According to Peter Detwiler, a consultant for the Senate Local Government Committee, five issues will likely be addressed in Sacramento in 2006, including: statutory changes to use of eminent domain; specification on how local agencies and officials will use and apply state eminent domain law; discussion on whether or not state oversight of eminent domain is necessary; if there is not a state oversight agency, how the courts will address this issue; and lastly, specific discussion on when, where, how, and why eminent domain can be used by state agencies.

The second joint interim hearing will be held in Sacramento on Nov. 17. For more information on the meeting or a copy of the Joint Interim Hearing Briefing Paper, visit the Senate Local Government Committee's Web site at www.sen.ca.gov/locgov.

Curtin is legislative affairs manager for National Association of Industrial & Office Properties (NAIOP) San Diego Chapter. This article contains research from City of San Diego Report No. RA-05-03, September 6, 2005 - City of San Diego Redevelopment Agency Use of Eminent Domain and the California Legislature Briefing Paper for the Joint Interim Hearing, October 26, 3005 - Redevelopment and Blight.

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