Eminent Domain Post-Kelo

Andrew W. Schwartz

Sarah H. Sigman

Shute Mihaly & Weinberger LLP

San Francisco

September 2016

1

The International Municipal Lawyers Association

Friday, September, 30th, 2016

Land Use Section Meeting

Redevelopment in California

• 2006-07 -- generated $40.79 billion in total economic activity

• 2006-07 -- created 303,946 full and part time jobs

• Since 1995 -- built or rehabilitated 78,750 affordable housing units

• Built or refurbished thousands of low and moderate income housing units

• 2nd largest funder of affordable housing in California after federal government

2

Redevelopment in California

• 2006-07 -- increased State income by $22.74 billion (wages and salaries, proprietor income, corporate profits, property income, and indirect business taxes)

• 2006-07 -- construction activity resulted in increase of $2 billion in tax revenues for state and local governments

• 2006-07 -- created 170,600 construction sector jobs -- 23.4% of all construction industry jobs in California

• 2006 -- increased state construction sector output by $18.97 billion

• 2006 -- 24.1% of all construction industry income3

Redevelopment in California

• Every dollar of redevelopment agency

spending generates nearly $13 in instate sales

of goods and services

• On average, every dollar of RDA spending

increases state income by more than $7

4

Benefits of Infill Development

• Reduce greenhouse gas emissions and energy use

• Reduce traffic congestion

• Increase productivity

• Increased mobility

• Improve health and safety

• Positive social effects

• Increase household income and economic development

• Land conservation

5

Berman v. Parker

• Redevelopment of blighted areas

• “The role of the judiciary in

determining whether that power is

being exercised for a public purpose

is an extremely narrow one.”

5

7

Hawaii v. Midkiff

Redistribution of

land to small,

private owners

8

Poletown Neighborhood Council

v. Detroit

• Last integrated neighborhood

• Not blighted

• General Motors auto plant

• Public purposes: jobs, taxes

• Michigan Supreme Court approved

9

City of Oakland v. Oakland

Raiders

• Public purpose is “broad”

• Agency decision re public purpose

reviewed for gross abuse of discretion

• Condemnation of sports franchise -

intangible property - may be a public

use

• Public purposes: recreation, jobs, local

economy

10

99 Cents Stores v. Lancaster

• Federal Court

injunction

State procedures

for challenging

right to take

Future discretion

• Public purpose

11

Kelo v. City of New London

• Economically

depressed city

• Pfizer research

facility

• No blight

12

Kelo -- Question Presented

Is Fifth Amendment’s public use

requirement met if condemnation

is not to eliminate slums or blight,

but for the sole purpose of

“economic development”?

13

Kelo v. City of New London, 545

U.S. 469 (2005)

The taking before us would be

executed pursuant to a “carefully

considered” development plan.

“public use” = “public purpose”

14

Kelo

Without exception, our cases have defined [public use] broadly, reflecting our long standing deference to legislative judgments in this field.

15

Kelo

Our earliest cases . . . embodied a strong theme of federalism, emphasizing the “great respect” that we owe state legislatures and state courts in discerning local public needs.

16

Kelo

Promoting economic development is a traditional and long accepted function of government.

17

Kelo

We decline to second guess the City’s determinations as to which lands it needs to acquire in order to effectuate the project.

18

Kelo

[N]othing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.

19

Eminent Domain “Reform”

Post Kelo

20

California Proposition 90 (2006)

• No eminent domain for redevelopment

o Regulation diminishing property value requires compensation

o Ballot initiative defeated

21

• California Proposition 98 (2008) –initiative defeated

oNo eminent domain for private use

oRegulation diminishing value requires compensation

• California Proposition 99 (2008) –initiative passed

oNo eminent domain of single family owner-occupied housing for private entity

22

Arizona Public Protection Act-

Proposition 207 (2006)

oNo eminent domain on behalf of a private party

oRegulations decreasing property value require compensation

oInitiative passed

23

• Oregon: Measure 49 (2007) – approved

oReducing impact of 2004 regulation-Measure 37

oCompensation for land use regulations required only for limits on residential, farming, or forest practices

• Florida: Eminent Domain Amendment 8 (2006) – approved

o No eminent domain on behalf of private party, with exceptions permitted by super-majority of Legislature

• Georgia: Eminent Domain Reform Amendment 1 (2006) – approved

oNo eminent domain by nonelected authorities; no eminent domain except for elimination of public harm

• Idaho: Restrict Eminent Domain Initiative 2, (2006) – defeated

oLimit use of eminent domain; judicial review required for eminent domain

o “Public use” excludes transfer of property between private parties

24

• Michigan: Eminent Domain Restriction Amendment, Proposal 4 (2006) –approved

o Eminent domain prohibited for certain private purposes

• Nevada: Property Owners Bill of Rights, Question 2 (2006) – approved

o “Public use” excludes transfer of property between private parties

25

• New Hampshire: Eminent Domain Amendment (2006) – approved

oNo eminent domain for private use or development

• North Dakota: Taking of Private Property Measure 2 (2006) – approved

o “Public use” excludes public economic development benefits; no eminent domain for private benefit

26

• South Carolina: Amendment 7, Eminent Domain Act (2006) –approved

o No eminent domain except for public use; economic development not a public use

27

28

Congressional Proposals

29

• H.R. 4128: Private Property Rights Protection Act (2005) –passed by House; failed in SenateoWould prevent government entities

receiving federal funds from using eminent domain for economic development

30

• H.R. 3405: Strengthening the Ownership of Private Property Act (2005) – failed in CommitteeoProhibits federal financial assistance

to governments using eminent domain to transfer property to private entity

31

• H.R. 4772: Private Property Rights Implementation Act (2006) – passed by House; failed in SenateoWould allow property rights cases to

be filed in federal court

32

• H.R. 4128: Private Property Rights Protection Act (2005) –passed by House; failed in SenateoWould prevent government entities

receiving federal funds from using eminent domain for economic development

33

• H.R. 3405: Strengthening the Ownership of Private Property Act (2005) – failed in CommitteeoProhibits federal financial assistance

to governments using eminent domain to transfer property to private entity

• S. 1313: Protection of Homes, Small Businesses, and Private Property Act (2005) – failed in Senate oWould limit eminent domain to

public use, excluding economic development

34

• H.R. 3058: Amendment to 2006

Transportation/HUD Spending

Bill – became law

oNo covered funds allowed for

projects using eminent domain

primarily benefiting private entities

35

• H.R. 926: Strengthening the

Ownership of Private Property

Act (2007) – failed in

Committee

oNo federal assistance to governments

that use eminent domain for private

entities; creates a private right of

action for owner of property taken in

violation of the Act36

• S. 48: Private Property Rights

Protection Act (2007) – failed

in Committee

oNo federal funds for condemning

authority that takes real property for

private use

37

• H.R. 1433: Private Property

Rights Protection Act (2011) –

passed by House; failed in

Senate

oProhibits governments receiving

federal economic development

funding from using eminent domain

for economic development

38

• H.R. 1914: Private Property

Rights Protection Act (2014) –

passed by House; failed in

Senate

oProhibits economic development

takings; government must show

taking is not for economic

development

39

• H.R. 3013: Private Property

Rights Protection Act (2015) –

stalled in House Committee

oProhibits economic development

takings; government must show

taking is not for economic

development

40

California: Proposed Legislation

41

• S.B. 1206 (2006) – passed

oNarrowed definition of blight and

urbanized (prerequisites for

redevelopment)

• S.B. 1210 (2006) – passed

oChanged prejudgment possession

process- extended time to take

possession, and required notice to

property owners

42

• S.B. 53 (2006) – passed

oRequires redevelopment agencies to

describe eminent domain procedures;

boosts awareness of policies.

• S.B. 1650 (2006) – passed

oLimits uses of condemned property;

requires offer of resale back to

original owner

43

• S.B. 1809 (2006) – passed

oRequires redevelopment plan to

record a statement of eminent

domain provisions

• S.B. 437 (2007) – passed

oRedevelopment agencies must report

project areas’ time limits

44

• A.C.A. 8 (2007) – failed

oWould have placed constitutional

amendment on the ballot to prohibit

eminent domain for private use

except in blighted areas

45

• S.B. 698 (2008) – passed

oOpposition to motion for an order of

possession must be signed under

penalty of perjury; public entities

must create informational pamphlets

on eminent domain for property

owners

46

• A.B. 1080 (2013) – held in

Committee

oAuthorized establishment of

Community Revitalization and

Investment Authority to address

blight; collect tax increment

47

• S.B. 628 (2014) – passed

oAuthorizes local governments to

create Enhanced Infrastructure

Financing Districts to finance

infrastructure projects; can issue

bonds with 55% voter approval

48

• A.B. 229 (2014) – passed

oAuthorizes local governments to

create Infrastructure and

Revitalization Financing Districts to

finance community projects; can

issue bonds with 2/3 voter approval

49

• A.B. 2280 (2014) – vetoed by

Gov. Brown

oWould authorize creation of

Community Revitalization and

Investment Authority and use of tax

increment revenues

50

• A.B. 1138 (2015) – failed in

Committee

o Prevents High Speed Rail Authority from

using eminent domain

• A.B. 2 (2015) – passed

o Authorizes creation of Community

Revitalization and Investment Authority

in disadvantaged areas (replacement for

redevelopment authorities abolished in

2011)51

• S.B. 107 (2015) – passed

o Streamlines redevelopment agency

dissolution process

• A.B. 2492 (2016) – pending in

Committee

o Clarify Community Revitalization and

Investment Authority law, including by

changing conditions for eligible locations

52

Recent Examples of

Eminent Domain

For Redevelopment

53

Columbia University Expansion

• $6.3 billion, 17 acre satellite campus in

Harlem

• Owners of 4 warehouses and 2 gas

stations refused to sell; sued Empire

State Development Corp.

54

Atlantic Yards/Pacific Park

• $4.9 billion, 22 acre plan for sports

arena for N.Y. Nets, high rise

residential and commercial buildings in

Brooklyn

• N.Y. Court of Appeals upheld use of

eminent domain

55

Atlantic City- Trump’s Proposed

Development

• Proposed mixed-use project

• Three property-owners, including

elderly widow Vera Coking, refused to

sell to Trump

56

Alternate Methods to Reform

Eminent Domain

• Narrowing definitions of key terms, e.g.

“blight”

oBlight revoking judicial deference of

determinations of “blight;” applying

heightened judicial review

• Increasing community participation;

granting communities veto power

• Limiting duration of redevelopment plans

oRequiring voter renewal of plans57