Fallout from the U.S. Supreme Court’s recent decision permitting use of eminent domain to aid private development continues to rain down on the state Capitol. With two weeks remaining before the Legislature adjourned, it was unclear whether any eminent domain bill would pass this year. However, lawmakers did ensure that no constitutional amendment limiting eminent domain made the November special election ballot.

The eminent domain controversy also has focused new attention on a redevelopment project in California City, in which the city used redevelopment and eminent domain powers to lure a Hyundai automobile test track. Although the Supreme Court’s decision has little direct impact on the California City situation, detractors — including the attorney general’s office — have called the project a “poster child” for redevelopment abuse. That charge comes at a time when defenders of eminent domain use are pointing to the state’s redevelopment laws as assurance that local governments must use eminent domain sparingly.

In Sacramento, the Senate Local Government Committee conducted an informational hearing on the Supreme Court’s decision in Kelo v. City of New London. In a 5-4 decision issued in June, the Supreme Court upheld the Connecticut city’s taking of a handful of residential properties to make room for an economic development project (see CP&DR, August 2005, July 2005).

The committee meeting attracted a full house, including lawmakers who are not committee members, but no decisions were made. Instead, sharply contrasting viewpoints came to the forefront.

Timothy Sandefur, of the Pacific Legal Foundation, and Michael Berger, of Manatt, Phelps & Phillips, presented testimony from the property rights perspective and were bolstered by state Sen. Tom McClintock (R-Thousand Oaks), who argued that cities abuse redevelopment powers. Representing public agencies’ point of view were Bill Higgins of the League of California Cities’ Institute for Local Government, and Joseph Coomes, Jr., of McDonough, Holland & Allen. McClintock peppered them with hostile questions, but they received a friendlier reception from Democratic lawmakers.

Sandefur and Berger recommended that lawmakers:
• Clarify the definition of “public use” for which eminent domain may be used
• Tighten the definition of “blight”
• Increase the amount of time in which to challenge a blight designation
• Shorten the period during which the government may designate property as blighted.

Higgins and Coomes urged a more cautious approach and provided examples of successful redevelopment projects. They and Chief Deputy Attorney General Rick Frank noted that California laws regarding redevelopment and eminent domain are not the same as laws in other states.

The hearing did not directly address the three constitutional amendments and five bills lawmakers introduced in response to Kelo. As CP&DR went to press, none of the bills had passed, although it appeared some action was possible before the Legislature went home on September 9. The legislation is:
• ACA 22 (La Malfa) and SCA 15 (McClintock). Identical constitutional amendments (which require voter approval) that seek to prohibit the taking of private property for private use (see CP&DR, August 2005).
• AB 590 (Walters). Would prohibit government agencies from using eminent domain to take private property for private business development.
• AB 1162 (Mullin) and SB 1026 (Kehoe). Similar bills that would impose a two-year moratorium on the taking of private, owner-occupied residences for private use. During the moratorium, the California Research Bureau would study 10 years worth of government condemnations of owner-occupied homes for private use.
• SCA 12 (Torlakson). A constitutional amendment that would prohibit the use of eminent domain to take owner-occupied residences for private use.
• SB 53 (Kehoe). Essentially restates a number of existing provisions of redevelopment law regarding eminent domain.
• SB 1099 (Hollingsworth). Prevents the taking of agricultural property unless the government agency retains ownership, or the property is transferred for use as a health care facility, for public utilities or for transit facilities.

McClintock and other Republicans clearly believe they have a political winner in their proposed constitutional amendments. Fearing they could get left behind, Democrats responded with Torlakson’s constitutional amendment, and the Mullin and Kehoe legislation.

In general, redevelopment supporters and local governments oppose the Republican legislation. However, they also worry that the Democrats’ proposed two-year moratorium would stall or kill redevelopment projects that are in-process.

During the post-Kelo controversy, redevelopment supporters insisted that eminent domain abuse is exceedingly rare in California. Even property rights advocates have been hard-pressed to name instances in which local government took decent housing to accommodate a private development. With both sides on the lookout for abuse, the California City project has received increased scrutiny.

California City is a largely undeveloped city of 11,500 people spread over 203 square miles of the western Mojave Desert. Three years ago, the city added 15,000 acres to an existing redevelopment project area. The city then went about acquiring roughly 200 parcels, which it turned over to Hyundai for construction of a test track and associated facilities (see CP&DR Economic Development, May 2004). Some property owners sold willingly, but dozens of others sold only after the city commenced eminent domain proceedings. About 15 holdouts are still in court. In the meantime, Hyundai has built its 4,300-acre project.

Some California City residents filed a validation action challenging the redevelopment project area expansion. That lawsuit has ground forward slowly but is scheduled for trial this month in Kern County. The condemnation proceedings are on hold until the court decides the validation lawsuit.

In July, the attorney general’s office filed an amicus brief in the validation action arguing that the city’s basis for placing the property into a redevelopment area — that the parcels were irregularly shaped, too small to use and lacked road access — were bogus.

“This is not a case in which there are some vacant parcels in a deteriorated city — parcels that should be included in the redevelopment area so that slum conditions can be properly addressed,” the brief states. “This entire area is bare land.”

June Ailin, an attorney representing some California City property owners, welcomed the attorney generals’ interest. But she questioned whether the matter was worthy of the attention it has received.

“I have talked to a number of people who do not understand that this is not an eminent domain case,” Ailin said. “I don’t think Kelo has anything to do with this care, or has anything to do with the eminent domain cases [in California City].”

California City officials, who tried to keep the attorney general out of the validation lawsuit, contend they have done no wrong in bringing a $50 million private investment and about 100 jobs to town.

Timothy Sandefur, Pacific Legal Foundation, (916) 419-7111.
Bill Higgins, Institute for Local Government, (916) 658-8250.
California City redevelopment validation action: N.L. Neilson v. California City, Kern County Superior Court Case No. 248874JIK.