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Solimar Research

Eminent Domain Reform On Horizon

Paul Shigley on
Jan 1, 2007

Only two months after voters rejected Proposition 90, new proposals to alter eminent domain law are already arising. Anti-tax activists, environmentalists, local government organizations and state lawmakers are all working on eminent domain proposals, and it is likely that voters will see at least one ballot measure on the subject during the 2008 primary. It is also possible that voters will decide on another regulatory takings initiative.

It appears all but certain that redevelopment agencies will lose at least some measure of eminent domain authority, as even the California Redevelopment Association is talking about sponsoring its own “reform” legislation.

There are two main reasons the campaign that started with Proposition 90 barely paused after the November 7 election. First, Proposition 90 — which would have prohibited the use of eminent domain for economic purposes and would have required payment to property owners affected by regulations — lost by only 52.4% to 47.6%, even though proponents ran virtually no campaign. And, second, the narrow margin appears to have emboldened property rights proponents and raised concern among local government leaders, redevelopment advocates, planners and environmentalists who fought the measure.

The Howard Jarvis Taxpayers Association made the first post-Proposition 90 move when the group filed the “California Property Owners Protection Act” with the attorney general’s office only two weeks after the election. Like Proposition 90, the proposed initiative combines eminent domain reform with provisions regarding regulatory takings, although the measure does not appear to go as far as Proposition 90.

On the first day of the legislative session, state Sen. Tom McClintock (R-Thousand Oaks) and Assemblywoman Mimi Walters (R-Laguna Niguel) introduced constitutional amendments that would prohibit the use of eminent domain for economic development purposes.

Meanwhile, local government organizations and environmental groups are actively pursuing eminent domain reform via either legislation or a ballot measure. These groups want to frame the issue themselves, defuse some of the other side’s political momentum, and separate the issues of eminent domain and regulatory takings.

“After living through the [Proposition 90] campaign and seeing how the issues were put on the table … it certainly has given me and my board of directors pause,” said Chris McKenzie, executive director of the League of California Cities. “The whole experience demonstrated to us over and over again that the public has a concern about eminent domain.”

Local government officials and attorneys have repeatedly argued that the Supreme Court’s June 2005 ruling in Kelo v City of New London — which inflamed the public — had no impact on California’s eminent domain practices. Still, even the biggest defenders of eminent domain now concede that the rules must change.
“It is the position of the California Redevelopment Association that we need to prohibit the use of eminent domain for single-family homes when the ultimate use is redevelopment, and not a public project like a new school,” said association Executive Director John Shirey. “We still think we need to do some eminent domain reform. As to what form that’s going to take, I don’t know yet.”

McKenzie, Shirey and other leaders of the anti-Proposition 90 effort are hoping to keep the campaign coalition together. That coalition included business, agriculture and real estate interests who oftentimes are at odds with government regulators, as well as environmental groups. Gov. Schwarzenegger also opposed Proposition 90, although he was not part of the campaign. Environmental groups appear to be staying on board, but it is unclear where everyone else, including the administration, will stand.

Tom Adams, board president of the California League of Conservation Voters, said environmentalists are advocating eminent domain reform because the public is demanding changes, and because property rights advocates are using public frustration over eminent domain to advance restrictions on land use regulations.

“The failure to do eminent domain reform gave some property rights extremists cover,” Adams said. Proposition 90 opponents convinced voters that the initiative was about more than eminent domain, but it was a difficult case to make, he said. “It was hard to talk to the general public and get them to see through the eminent domain cloak.”

“If there was a straightforward takings measure on the ballot, I would have a high degree of confidence that it would be defeated,” Adams said.

The proposed Howard Jarvis Taxpayers Association (HJTA) initiative does combine the issues of eminent domain and regulatory takings, but that could change.

“We continue to refine another version,” said Jon Coupal, HJTA president. “It is very likely that we will file another version. We are communicating with other property rights interests.”

The organization endorsed Proposition 90 but did not actively campaign for the measure, which was spearheaded by New York real estate investor and libertarian crusader Howard Rich. Coupal said that an initiative drafted by Californians which reflects the state’s environmental and political concerns might fare better than Proposition 90, and that means addressing regulatory takings in a measured way. The proposed initiative that HJTA filed in November, for instance, would not make routine general plan amendments or rezonings subject to a property owner’s takings claims, as Proposition 90 would have, Coupal said.

The Jarvis organization’s primary focus is on protecting single-family homes, Coupal said. “We don’t want private homes taken and handed over to private developers,” he emphasized.

That concern could be eliminated with amendments to eminent domain law, and Coupal said his organization has not ruled out “working with the municipal interests” on legislation. “We’re keeping our options open.”

State Sen. McClintock and Assemblywoman Walters, however, have shown little interest in working with local government, and they were quick to introduce legislation. Both McClintock’s SCA 1 and Walters’s ACA 2 would prohibit the use of eminent domain for economic development purposes, and would alter the condemnation process in favor of property owners.

“The taking of private property for ‘public use’ should be reserved for explicitly public needs, not to increase local tax collections,” Walters said in a written statement.

During an early December conference at the Cato Institute in Washington, D.C., a conservative think tank, Richard Mercereau, policy director for the Assembly Republican Caucus, said the fight regarding eminent domain and property rights is far from over. He called Proposition 90 a “moon shot” that barely failed despite the overwhelming campaign against the initiative, suggesting that Californians are ready for regulatory reform.

Republicans’ dissatisfaction stems from what the Democratic-controlled Legislature did (or did not) do in response to Kelo. While McClintock and other Republicans charged that local governments were abusing eminent domain and must be restrained, Democrats were circumspect. Lawmakers last year did pass the most significant changes in redevelopment law since 1992, including provisions that require redevelopment agencies to adopt updated blight findings when they extend eminent domain authority (see CP&DR, October 2006). But Republicans and property rights advocacy groups said the changes do not go far enough, and whether they can be won over by the anti-Proposition 90 coalition’s proposals is uncertain.

Proponents of Proposition 90 vowed right after the election that they would return in 2008. So far, no written proposal has emerged, but the CRA’s Shirey and others take the threat seriously. Thus, the possibility that local government organizations may pursue their own ballot measure or legislation. Shirey declined to call any such proposal “pre-emptive,” but politically it may work that way.

“We’re working on it very, very hard,” McKenzie said. “It is a priority issue for us.”

Contacts:
Tom Adams, League of Conservation Voters, (650) 348-0870.
Jon Coupal, Howard Jarvis Taxpayers Association, (916) 444-9950.
Chris McKenzie, League of California Cities, (916) 658-8200.
John Shirey, California Redevelopment Association, (916) 448-8760.