Should Californians vote to “protect our homes,” or should they vote against a “taxpayer trap?”
This, in a nutshell, is the campaign about Proposition 90, the property rights initiative on the ballot in November. And, given the way initiative campaigns go in California, a nutshell is all the voters will ever debate. But in planning and development circles, the debate about Proposition 90’s impact is raging because there is little question that if Proposition 90 passes, it will be the most disruptive event in California planning since approval of Proposition 13 in 1978.
Riding the post-Kelo wave, Proposition 90 supporters advertise the initiative as an anti-eminent domain measure that would limit the government’s ability to take homes. It would amend the constitution to narrow the use of eminent domain to uses involving public ownership.
But Proposition 90 is also a regulatory takings measure. It would amend the constitution to require compensation for downzonings and other land use regulatory actions that result in “substantial economic losses” to a property owner unless public health and safety is at stake.
Although the eminent domain provisions are strong, it is the regulatory taking provisions that cause concern among state and local government officials – especially because the supporters virtually never mention regulatory takings in their campaign. If Proposition 90 passes, said David Jones, a California Redevelopment Association lobbyist, “We may never see another general plan revision in California again.”
Proposition 90 is one of six property rights initiatives on the ballot in Western states this year. Similar measures will appear on the ballot in Arizona, Idaho. Montana, Nevada, and Washington (see CP&DR, August 2006). All use some variation of the “protect our homes” theme. All are backed and at least partly bankrolled by Americans for Limited Government (www.getliberty.org), a New York-based group led by libertarian Howard Rich.
Whatever the odds of a “Protect Our Homes” initiative passing in Montana or Arizona, Proposition 90 appears vulnerable in California. Most Republican legislators have signed onto it, as have about two dozen local elected officials, including one Democrat, Orange County Supervisor Lou Correa. The Orange County Register and the Long Beach Press-Telegram have editorialized in favor of it.
But the polls are close, and opponents claim that the more voters hear about Proposition 90, the more likely they are to oppose it. Furthermore, most major business and development groups are against it. And property rights have rarely gotten the same kind of traction in California that they get in other Western states.
This list of opponents includes a number of surprises: the Chamber of Commerce, the California Building Industry Association (which represents homebuilders), the California Farm Bureau Federation (representing agricultural landowners, who own most of the private undeveloped land in the state), and the California Business Properties Association (which represents commercial and industrial property owners).
In a prepared statement, Farm Bureau president Doug Mosebar said the initiative “threatens farmland-protection measures and ‘right-to-farm’ laws that prevent leapfrog development and protect family farms and ranches.”
Rex Hime, president of California Business Properties Association, told the Los Angeles Business Journal: “Because it deals with regulatory taking, this opens up so many cans of worms in the current land use process. …We think it will create a dysfunctional legal nightmare.”
“Dysfunctional legal nightmare” may be a bit much, but there is little doubt that Proposition 90 would impose a huge set of changes on the regulatory system that would take years and many lawsuits to sort out – just as the passage of Proposition 13 did starting in the late ’70s.
Proposition 90 would amend Article I, Section 19, of the California Constitution, which specifies that private property may be “taken or damaged” for public use, and then only when just compensation is paid. The measure would amend the Constitution to state that “private property may not be taken or damaged for private use.”
In the context of eminent domain, the measure would specifically limit the use of the property acquired by eminent domain so that it would be “owned and occupied” by a public agency for the public use originally stated. If the public agency that acquired the property doesn’t use it for the “stated public use,” the original owner gets to buy it back at fair market value – and then the owner is permitted to reclaim his or her lower base tax year under Proposition 13.
But Proposition 90 would define “public use” so that it is narrower than “public purpose,” and would specifically prohibit transfers of land obtained via eminent domain “to non-governmental owners on economic development or tax revenue enhancement grounds.” However, it would apparently permit private companies to operate, if not own, public facilities on land acquired by eminent domain. The measure specifically calls out privately operated toll roads and prisons as “public use.” (Such “privatization” is a favorite of the Reason Public Policy Institute in Los Angeles, whose parent foundation supports the initiative.)
The value of property taken by eminent domain must be the highest value available based on the government’s intended use, and the value cannot be discounted based on the assumption that the government would impose exactions or require dedications of the property were it developed privately.
For routine land use planning, the key provisions involve the definition of “damage” to private property. Under Proposition 90, the government cannot “damage” private property without compensation. The measure specifically lists downzoning, elimination of access to private property, and “limitations on the use of private air space” as examples. The measure also specifically exempts Public Utility Commission rate regulations, emergency situations, and nuisances such as “blight, obscenity, pornography, hazardous substances, or environmental conditions” but circumscribes those exemptions to individual parcels. The measure also exempts government actions taken to protect public health and safety. In essence, Proposition 90 would permit downzonings for health and safety, but not for public welfare.
The key phrase is Proposition 90’s definition of damage – “substantial economic loss to private property.” The measure does not define a “substantial economic loss,” so one inevitable lawsuit would be a test case asking the California Supreme Court to provide a definition. In the meantime, local governments seeking downzonings could do an analysis concluding that no substantial loss is involved.
In addition, it seems likely that local planning departments will stretch the definition of “health and safety” as far as possible, because most planning relies on public welfare as the primary justification for use of the police power. Many more land use restrictions may be passed by relying on floodplains, seismic hazards and the like.
The final area of contention would likely be the nuisance exemption. Specifying “blight” as a nuisance that’s not subject to Proposition 90 opens the possibility that land use restrictions in redevelopment areas might be permissible, while the phrase “environmental conditions” opens another possible door for local governments. But the courts would have to decide how narrowly to interpret Proposition 90’s requirement that nuisance be limited to individual parcels. Would only blighted parcels in redevelopment areas be exempt? Would this mean that redevelopment agencies – currently battling against a similar impulse in the Legislature – have to define blight on a parcel-by-parcel basis? Would downzoning a particular parcel in order to reduce the amount of traffic being generated – thus alleviating problematic “environmental conditions” – be acceptable?
No one knows at this point. And that is the biggest concern about Proposition 90: It is written so broadly that local governments would be encouraged to find creative end-runs, which would lead to years of litigation. Welcome to Proposition 13 redux.