Assembly Bill 2, authored by Assemblyman Luis Alejo, D-Salinas, would give local governments the power to create new entities that would have the same legal authority as redevelopment agencies. These new Community Revitalization Investment Authorities would have the power to issue bonds, award sweetheart deals to businesses and “acquire and transfer property subject to eminent domain,” according to the legislative analysis of the bill.

Property rights advocates warn that the bill’s language contains no restrictions on eminent domain and could resurrect the abuses made possible by the Supreme Court’s controversial Kelo decision.

“It brings back the right of governments to exercise eminent domain against some private parties in order to resell their property to other private parties,” cautioned Howard Ahmanson, Jr., a property rights advocate and founder of Fieldstead and Company. “Only new and wealthy suburbs would be potentially spared from ‘redevelopment,’ the lower middle class and poor would not.”

12 Assembly Republicans back redevelopment, unrestricted eminent domain

In 2005, the U.S. Supreme Court ruled in Kelo v. New London that government agencies have the power to seize property for economic development. The decision was widely criticized across the political spectrum and inspired states to pass tougher laws limiting governments’ eminent domain powers. Here in California, the momentum for property rights reached its zenith in 2011, when Gov. Jerry Brown pushed through a plan to end redevelopment as part of his plan to balance the state budget.

Now a decade since Kelo, the horror stories of small businesses being seized to make way for strip malls and condo complexes have faded from public memory. During the state Assembly’s floor debate on the bill, not a single member – Republican or Democrat – spoke in opposition to the bill, which passed by a 63-13 vote.

Surprisingly, a dozen Assembly Republican lawmakers, including Assembly GOP leader Kristin Olsen, joined the Democratic majority in backing the bill. Olsen’s office refused to comment on the bill or explain how the bill fit with the Republican Caucus’ position on property rights. One GOP lawmaker defended her vote by arguing that redevelopment agencies are an important tool for economic development.

“I ran for Assembly to help create jobs,” said Assemblywoman Young Kim, R-Fullerton. “RDAs give us another tool to do just that while turning around poor and disadvantaged areas.”

Redevelopment focused in areas with high unemployment, crime

Under the bill, a Community Revitalization Investment Authority could be created by a city, county or special district if certain conditions are met. The first requirement is that the area have an annual median household income that is less than 80 percent of the statewide median. Additionally, three of the following four conditions must be met:

• Unemployment that is at least 3 percent higher than the statewide median unemployment rate;
• A crime rate that is 5 percet higher than the statewide median crime rate;
• Deteriorated or inadequate infrastructure such as streets, sidewalks, water supply, sewer treatment or processing, and parks;
• Deteriorated commercial or residential structures.

“It’s redevelopment with a kinder, gentler twist,” explains Steven Greenhut, the state’s foremost expert on eminent domain and author of the book, Abuse of Power: How the Government Misuses Eminent Domain. “If AB2 passes, agencies will take property by eminent domain and use public dollars to fund private projects. Localities will run up debt without a vote of the public. As always, the plans of residents will give way to the edicts of the planners.”

There’s overwhelming evidence that redevelopment agencies harm small businesses, while failing in their mission to stimulate economies. That’s most evident in the landmark Kelo case, where a Connecticut town offered a corporate welfare package to the pharmaceutical giant Pfizer, Inc.

“While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other ‘desirable’ elements,” the Wall Street Journal observed in 2009. “Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.”

Those abuses extended to California’s application of redevelopment, property rights advocates say.

“California has rightly earned the reputation as one of the nation’s largest abusers of eminent domain, given that Redevelopment Agencies routinely abused their power of eminent domain to seize homes, small businesses and places of worship for private development,” wrote the California Alliance to Protect Private Property Rights, the state’s leading property rights group. “Time and time again, these obscure agencies diverted taxpayer dollars from core government programs to finance professional sports arenas, luxury hotels, golf courses and strip malls.”

Alejo: Bill needed to help disadvantaged communities

Nevertheless, supporters of AB2 say that blighted areas are a problem that demand government action.

“There are many areas in the state where the streets are broken and old water and sewer pipes lurk below,” Alejo said of his legislation. “In these areas, businesses do not open up shop. This leads to high unemployment, high crime rates and a hopeless community. This bill will work to tackle issues facing our state’s most disadvantaged communities.”

Several GOP lawmakers that opposed the bill dispute Alejo’s arguments.

“Private property rights are a foundational principle declared by our founding fathers,” said Asm. Scott Wilk, R-Santa Clarita, who opposed the bill. “Eminent domain is used by the government to trample on private property rights and as an individual property owner, there are legal protections in place to prevent government encroachment.”

Assemblywoman Melissa Melendez, R-Lake Elsinore, one of only 13 members to oppose the bill, said that she understands her colleagues interest in redevelopment, but can’t back legislation that undermines property rights.

“Stripping away property rights in the name of economic development isn’t the answer,” said Melendez, a former member of the Lake Elsinore City Council. “I think it has become more fashionable to allow the government to take over instead of allowing the free market to do so.”

This month, two state legislative panels blocked efforts by Central Valley Republican lawmakers to guarantee the property rights of those caught in the path of the the $68 billion transportation project. State Senator Andy Vidak of Hanford and Asm. Jim Patterson of Fresno are concerned that the California High Speed Rail Authority could use eminent domain to seize land for a project that may never be built.

“I’ve heard from dozens and dozens of property owners – many are farmers, small businesses and homeowners – that they are victims of these flash appraisals and pressure tactics,” said Sen. Vidak, who has been one of the state’s leading high-speed rail critics. “Many of these folks have land, businesses and homes that have been in the same family for several generations.”

Eminent domain requires fair-market compensation

For centuries, governments have used the power of eminent domain to compel property owners to sell their property for large public works projects. In theory, the Fifth Amendment guarantees the rights of property owners to receive just compensation for any property that is seized for public use.

“The U.S. Supreme Court has defined fair market value as the most probable price that a willing but unpressured buyer, fully knowledgeable of both the property’s good and bad attributes, would pay,” Cornell University Law School explains in its Fifth Amendment primer.

However, in practice, government agencies with their unlimited resources and army of lawyers can tip the scales in favor of a lower price.

Lawmakers say “no” to independent audit

In the Central Valley, residents are concerned that the state’s high-speed rail agency, which has already blown its budget estimates, could use “flash appraisals” and other hardball tactics to take property for less than the fair market value.

To make sure that everything’s on the up-and-up, Vidak requested that the state’s independent auditor investigate the California High-Speed Rail Authority’s property acquisition process. Among the questions Vidak wanted answered:

• Has the Authority’s contractors issued any property acquisition offers that the property or business owners were not involved in for the appraisal of their property or business?
• What policies and procedures has the Authority given to its contractors in order to obtain property necessary for the completion of the High-Speed Rail project?

After hearing testimony from the High-Speed Rail Authority, the Joint Legislative Audit Committee rejected Vidak’s audit request on a party-line vote.

“There seems to be a misperception that the High-Speed Rail Authority has unique authorities or abilities with regard to right of way that are separate from other state agencies,” California High-Speed Rail Authority CEO Jeff Morales told state lawmakers. “That’s just not the case.”

A flabbergasted Vidak expressed his dismay at his colleagues.

“I won’t say the result of the hearing was a ‘whitewash’ or ‘cover-up’ for the Authority, but clearly this reasonable request should have been given high priority, not rejected,” he said following the vote.

Assembly Committee rejects Patterson’s property rights proposal

In the lower house, Asm. Jim Patterson, a fellow Central Valley Republican lawmaker, didn’t fare any better with his proposal to place restrictions on when the rail authority can seize property.

Assembly Bill 1138, the Protection from Eminent Domain Act, would prohibit the rail authority from beginning the eminent domain process until all the necessary funding and environmental approvals for the project have been secured.

Central Valley property owners that have held land for multiple generations supported the measure as a way to guarantee that their historic land rights remain intact – if the project is unsuccessful. According to the Sacramento Business Journal, the state has acquired just 209 of the 1,100 parcels needed for the first construction segment from Madera to Bakersfield – with 54 eminent domain lawsuits pending against the state.

“The reality is — this project does not have the funds in line necessary, and it is a grave injustice to the people whose property is being taken,” Patterson said at a press conference earlier this month. “We join with our Central Valley neighbors who are concerned that their property will be taken by the state for a project that doesn’t have a clear funding source and could be abandoned altogether, leaving these hardworking families with nothing.”

Yet, the Assembly Transportation Committee ignored those concerns and defeated Assembly Bill 1138 on a party-line 5-10 vote, with all Republicans in favor.

With ongoing questions about ridership estimates and travel times, the project’s viability remains very much in doubt. CalWatchdog.com’s Chris Reed has pointed out that the chorus of high-speed rail critics is growing – with even liberal journalists questioning the project.

“We are rapidly exiting the realm of rose-colored glasses and entering the realm of pure fantasy here,” Kevin Drum, a writer for Mother Jones magazine, wrote last year. “If liberals keep pushing this project forward in the face of plain evidence that its official justifications are brazenly preposterous, conservatives are going to be able to pound us year after year for wasting taxpayer money while we retreat to ever more ridiculous and self-serving defenses that make us laughingstocks in the public eye.”

This week we saw a perfect example dealing with a San Francisco law so extreme it seems, well, un-American. Here are the key details from the Pacific Legal Foundation’s website:

Today U.S. District Court Judge Charles Breyer sided with Pacific Legal Foundation’s (PLF) lawsuit and struck down San Francisco’s Tenant Relocation Ordinance, as unconstitutional.

Under the ordinance, rental property owners who want to reclaim use of their own property must pay a massive sum to their tenants – a sum that the tenant doesn’t even have to use for relocation purposes.

PLF’s lead clients are Dan and Maria Levin, who live in the upstairs unit of their two-story home.   They would like to use the lower unit for friends and family, but they would have to pay their tenant $118,000 to withdraw it from the rental market.

The ordinance ‘fails on its face’

This is from Breyer’s decision:

In July 2014, the City and County of San Francisco enacted an Ordinance that requires property owners wishing to withdraw their rent-controlled property from the rental market to pay a lump sum to displaced tenants. The 2014 Ordinance requires that property owners pay the greater of a relocation payment due under a 2005 Ordinance or the new, “enhanced” amount: twenty-four times the difference between the units’ current monthly rate and an amount that purports to be the fair market value of a comparable unit in San Francisco, as calculated by a schedule developed by the Controller’s Office. Plaintiffs, who are property owners now obligated to pay amounts that range to hundreds of thousands of dollars per unit, allege that the Ordinance on its face is an unconstitutional taking in violation of the Fifth Amendment. …

… fundamentally, the Ordinance fails on its face because it requires a monetary exaction that is not roughly proportional to – indeed, does not even share an essential nexus with – the impact of the property owner’s proposed change in use. That is to say, it seeks to force the property owner to pay for a broad public problem not of the owner’s making. A property owner did not cause the high market rent to which a tenant who chooses to stay in San Francisco might be exposed, nor cause the lower rent-controlled rate the tenant previously enjoyed. The Ordinance’s constitutional infirmity being one inherent in the nature of what the monetary exaction is intended to recompense – a dislocation that necessarily arises in all of the Ordinance’s applications – it fails on its face to survive Fifth Amendment scrutiny.

Breyer, like his brother, Supreme Court Justice Stephen Breyer, is a moderate on business and regulatory issues. He didn’t see this as even close to a close call. Oral arguments were held Oct. 6. His decision came out all of 15 days later.

In the federal court system, that’s hardly common.

The takeaway: Property rights live.

Property rights advocates opposed the trio of  bills as bringing back eminent domain abuses and taxpayer-funded corporate handouts.

“Since redevelopment’s abolishment in 2011, the Redevelopment Lobby has been advocating for a replacement that would bring politically connected developers back to the public money trough,” said Nick Mirman, a grassroots activist with the California Alliance to Protect Private Property Rights, an influential property rights group that recently released a radio ad campaign against the measures. “If signed, these redevelopment bills will invite a return to the era of rampant eminent domain abuse and corporate welfare.”

2011: Brown abolished redevelopment

Brown’s signatures reversed his 2011 decision to abolish the state’s redevelopment agencies. At that time, Brown gained $1.5 billion in redevelopment funds to close the state’s budget gap. And he said the state needed to move away from redevelopment agencies.

“Some of this redevelopment has been going on for 20, 30, even 40 years,” Brown said, according to the LA Times. “We’ve got a lot of the redevelopment thrust, and now we’re going to have to move away from it or we’re going to have to cut more deeply.”

And just two years ago, City Journal reported, Brown vetoed “a slate of six bills that would have revived, in one form or another, California’s redevelopment agencies.”

AB229: Infrastructure and Revitalization Financing Districts

AB229, authored by Assemblyman John A. Perez, D-Los Angeles, would allow local governments to create Infrastructure and Revitalization Financing Districts to revive old military bases. According to the Legislative Counsel’s digest, these districts could issue 30 years of debt with the approval of two-thirds of voters in the district.

The California Alliance to Protect Private Property Rights contended, “IRFDs will have all the unchecked powers granted to Redevelopment Agencies, including the unrestricted power of eminent domain to forcibly seize homes and small businesses on behalf of politically connected developers.”

That position is supported by the California Taxpayers Association.

SB628: Redevelopment 2.0

Earlier this year, UT San Diego columnist Steven Greenhut warned the issue was “back with a vengeance.” He is the author of a book on redevelopment, “Abuse of Power: How the Government Misuses Eminent Domain.”

“Redevelopment offered wide latitude to publicly fund private development projects — and this bill could make it even wider,” he wrote. “Redevelopment revivalists have promoted the use of Infrastructure Financing Districts as a partial replacement for the defunct agencies. This bill that puts those districts on steroids.”

SB628, authored by state Sen. Jim Beall, D-San Jose, would revive redevelopment agencies under a new name, “Enhanced Infrastructure Financing Districts.” These districts would be allowed to “finance public capital facilities or other specified projects of community-wide significance” with the approval of 55 percent of voters in the district, according to the legislative summary.

The influential Howard Jarvis Taxpayers Association called the proposal “Redevelopment 2.0 without any protections whatsoever.”

AB2280: Community Revitalization and Investment Authority

The only bill vetoed by Brown was Assembly Bill 2280, by Assemblyman Luis Alejo, D-Salinas. The legislation would have allowed local governments to create a “Community Revitalization and Investment Authority in a disadvantaged community to fund specified activities.”

According to the California Planning and Development Report, “AB 2280 would revive redevelopment-style tax-increment financing in narrowly chosen urban areas, with 25% affordable housing set-asides. Those provisions are more reassuring to housing and local-government advocates but more likely to trigger the governor’s opposition to former redevelopment mechanisms and his skepticism toward housing affordability restrictions.”

In his veto message, Brown said the bill went too far. “I applaud the author’s efforts to create an economic development program, with voter approval, that focuses on disadvantaged communities and communities with high unemployment,” he wrote. “The bill, however, unnecessarily vests this new program in redevelopment law. I look forward to working with the author to craft an appropriate legislative solution.”

Redevelopment: History of abuses

Redevelopment agencies, which promise to revive blighted areas, have a long history of abusing property rights and granting sweetheart deals to developers. In the landmark case, Kelo v. City of New London, the U.S. Supreme Court allowed the city to seize the homes and property of Susette Kelo and her neighbors in Connecticut in order to provide a corporate welfare package to the pharmaceutical giant Pfizer, Inc.

“While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other ‘desirable’ elements,” the Wall Street Journal observed in 2009. “Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.”

Before they were abolished in 2011, California’s redevelopment agencies were no better than those in New London.

“California’s redevelopment agencies are some of the worst perpetrators of eminent domain abuse in the nation,” said Christina Walsh of the Institute for Justice in 2011 as redevelopment was being abolished; the institute represented Kelo. “Until state legislators abolish these agencies, no private property owner in California is safe.”

Now redevelopment is back.

The case concerned the windstorm that swept through Pasadena in Nov. 2011, toppling 5,500 street trees. The legal decision was handed down Aug. 21 by California’s Second District Court of Appeal in favor of Mercury Casualty Company. The insurance company was acting on a claim by James O’Halloran, to whom it paid $293,000 for damage a fallen tree did to his home.

Eminent domain is the taking of private land by the government for public purposes, such as building a school. The Fifth Amendment mandates that “just compensation” must be paid for “private property taken for public use.”

What if the government doesn’t pay a fair price for the taking? That’s where “inverse condemnation” comes in. According to USLegal.com, “Inverse condemnation actions are usually brought when the government has limited use of private land to an extent that the value of that land is greatly reduced, or where the government has allowed the public to make use of private land.”

Article I, Section 19, of the California Constitution also provides for inverse condemnation. It states private property “may be taken or damaged for a public use and only when just compensation…has first been paid to the…owner” (emphasis added).

But to prevail in an inverse condemnation action against the government, proof is required of deliberate governmental action. The action must serve a public purpose. And the government must fail to prove it was not negligent. Examples of governmental inverse condemnation liability are from flooding, sewage spills, the impairment of street access or noise from aircraft overhead flights.

In the case at hand, Pasadena insisted that no “inverse condemnation” case ever had involved a tree.

A key point in the matter was that Mercury didn’t file a routine nuisance lawsuit that might have been dismissed.  Instead, it filed the inverse condemnation lawsuit.

Public purpose

The appeals court ruled that Pasadena’s urban forestry program was a government program that served a public purpose and thus was subject to inverse condemnation lawsuits.

It ruled that, based on facts brought forth in the trial in the lower Superior Court, the city of Pasadena “did not meet its burden of showing it had fulfilled its duty of care with respect to O’Halloran’s property” (see page 12).  Specifically, mere pruning of street trees by the city was insufficient proof that it was not negligent in planting and allowing large trees to grow to such heights that they could topple in a 100-mile per hour windstorm.

The appeals court also thought it highly significant that Pasadena had an active “urban forestry” program operated by city personnel and relying on professional tree experts.  Property owners are not allowed to prune or remove street trees.  Thus, the city was not able to claim “contributory negligence” by property owners who should have cut down or pruned their own trees.

The decision is significant because it is a victory for property rights in a state that doesn’t always respect them. For example, earlier this year the First District Court of Appeal in the case Powell vs. County of Humboldt sided with the county against charges of the abuse of building permits.

But it you wanted to pick the one state agency that most consistently advocates a radical view of government power, you’ll never top the California Coastal Commission. It was founded and run for a quarter-century by a green zealot named Peter Douglas — a guy who really and truly didn’t believe in private property rights and who pushed the commission to ridiculous extremes. I wrote about one of his crusades in an editorial in 2006:

“Consider the case of San Luis Obispo engineer Dennis Schneider, who hoped to build his dream home on a cliff above the ocean in a remote area north of Cayucos. Incredibly by normal cognitive standards, typically by Coastal Commission standards, the agency blocked his plans on the grounds that the home would be such an aesthetic affront to passing kayakers, boaters and surfers that it would violate their rights. We are not making this up.”

But the courts backed Schneider up, thankfully. So there was a way to deal with Douglas’ assault on conventional notions about property, individuals and government control of property and individuals.

Not just power to assess fines, but limited checks and balances

Now, the San Diego Democrat chosen to be the next speaker of the Assembly wants the commission to be given more powers with fewer checks and balances. CalWatchdog alum Steve Greenhut talks about Toni Atkins’ scary legislation in his latest U-T San Diego column.

“Last year, the Atkins bill (AB 976) was controversial enough even among some environmentally minded Democrats that it was rejected in the Assembly. But as Atkins ascends to the Assembly speakership, it’s likely that this legislative priority will rise again.

“Is it needed? The vast majority of the commission’s complaints against homeowners already are resolved before going to court. If the commission still meets resistance, it petitions the state attorney general for legal action.

“If the Atkins bill passes, the commission can decide on its own to begin assessing daily fines. The property owners can attend a public hearing before commissioners, but it’s not a neutral proceeding with witnesses and due process. The burden of proof would shift from the agency to the individual property owner.

“Not many owners could risk the bank account by challenging the agency. Some critics say the bill would provide an incentive for the commission to target picayune issues because the more fines it imposes, the more money that fills up an environmental-restoration fund.”

Groan. This is not what California needs — further empowering the Peter Douglas disciples who still run the Coastal Commission two years after his death and who still think Douglas’ views about property rights are what matters — not that minor clause in federal law known as the Fifth Amendment to the U.S. Constitution.

By Katy Grimes

SACRAMENTO — The Pacific Legal Foundation just won an important property rights case.

The U.S. Supreme Court case expanded the right to just compensation to “non-takings” of property in Koontz v. St. Johns River Management District.

Paul Beard, the PLF attorney who litigated the Koontz case, said the decision is important for property owners because no longer will the government be able to force them to apply for permits to pay money to the government without constitutional scrutiny on the reason for the extortion.

Until now, permitting agencies have been able to demand money for land use permits without showing just cause.

“The ruling says the Fifth Amendment protects landowners from government extortion, whether the extortion is for money or any other form of property,” Beard told me in an interview. “The Supreme Court said limits imposed by the St. Johns River Water Management District on how Koontz used his land were a ‘taking’ subject to compensation under the Fifth Amendment of the U.S. Constitution.

“The court has recognized that money is a form of property, and the Constitution prohibits grabbing money from property owners the same way it prohibits grabbing land without compensation.”

 The left reacts

“The decision is a very serious loss for local governments,” said John Echeverria, a Vermont Law School professor specializing in land use and property rights, who filed a brief for state and local government associations on St. Johns’ behalf, as quoted by Reuters.

“It means requirements to pay fees or other payments as a condition of permit approvals will be subject to heightened scrutiny. That is a revolutionary change in the law.”

Siding with government power against private property, in dissent were the four most liberal justices: Ruth Bader Ginsburg, Steven Breyer, Sondra Sotomayor and Elena Kagan. Wrote Kagan in the dissent,“The boundaries of the majority’s new rule are uncertain, but it threatens to subject a vast array of land-use regulations, applied daily in states and localities throughout the country, to heightened constitutional scrutiny.”

The Koontz family case

Even though Coy Koontz offered to dedicate much of his 11 acres for conservation, when he sought permission to develop a few acres in Central Florida, he was told he must spend up to $150,000 to improve the government’s property miles away.

The monetary expense demand by the permitting agency was far in excess of any impact that their land use proposal would create, Beard said.

The Koontz family fought this injustice in the courts for nearly 20 years, during which time Coy Koontz, Sr.  passed away. The family finally won. “Their victory protects all permit applicants from government extortion,” Beard said. “Everyone who values constitutional property rights owes the Koontz family a debt of gratitude for this historic victory.”

The landmark Nollan case

The most notable previous land-use challenge was the Nollan case. In 1987, the Nollans owned beachfront property in Ventura County and wanted to replace a 504-square-foot bungalow which had fallen into disrepair with a 2,500-square-foot house.

Nollan v. California Coastal Commission went all the way to the U. S. Supreme Court because the California Coastal Commission tried to force the Nollans to give up a piece of their beach front land as a public easement as a condition of approval of a permit to demolish the existing bungalow and replace it with a three-bedroom house. The Coastal Commission had asserted that the public-easement condition was imposed to promote the legitimate state interest of diminishing the “blockage of the view of the ocean” caused by the construction of the larger house.

In a highly controversial 5-4 ruling, the court ruled that the requirement by the Coastal Commission was a constitutional “taking” of private property in violation of the Fifth and Fourteenth Amendments of the U.S. Constitution.

Koontz SCOTUS decision

“Our decisions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994), provide important protection against the misuse of the power of land-use regulation,” wrote Justice Alito, who delivered the opinion of the court in the Koontz case. “In those cases, we held that a unit of government may not condition the approval of a land-use permit on the owner’s relinquishment of a portion of his property unless there is a ‘nexus’ and ‘rough proportionality’ between the government’s demand and the effects of the proposed land use.”

But permitting agencies spent decades working around the Nollan and Dolan decisions, which greatly displeased Alito.

“Extortionate demands for property in the land use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation,” Alito wrote. “As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury.”

By Wayne Lusvardi

Chief Justice of the U.S. Supreme Court John Roberts once observed that it was virtually impossible for any landowner to win a regulatory property takings case against local government.  This was because the case that set the precedent in the law, called the Penn Central case, contains three tests that rarely appear in combination and are more difficult to prove.

However, on May 9, 2013 the California State Appeals Court rendered a decision in the case Lockaway Storage vs. County of Alameda.  The court affirmed the County was liable to pay a property owner damages for a temporary taking as a result of an “unreasonable” revoking of an approved land use permit.

A regulatory taking refers to a situation where a government regulates a property by zoning or ordinances that effectively takes all rights to the property or value without formally condemning the physical property.

At issue was 8.45 acres of land in the unincorporated area of Alameda County. In 1999, the County granted the landowner a Conditional Use Permit for a ground storage yard for RV’s and boats.

In 2000, Michael Shaw and Michael Garrity, owners of Lockaway Storage, purchased the land for $800,000.  The land was zoned agricultural. Lockaway assumed ownership of the land and the development rights when it bought the property.

Lockaway operates a number of different types of storage facilities in California, including vehicle and storage yards in Castro Valley, Fremont and Hemet.

Measure D

In November 2000, Alameda County voters approved a “slow growth” initiative called Measure D, the Urban Growth Boundary Initiative.  It specified:

“Shall an ordinance amending the Alameda County General Plan to, among other things, revise the urban growth boundary in the East County to reserve less land for urban growth and more land for agriculture and open space, apply similar policies to rural Castro Valley, require new housing to be located primarily within existing cities, modify land use restrictions applicable to rural area, and require a county-wide vote on changes to the policies, be adopted?”  

The Sierra Club, Livermore-based Citizens for Balanced Growth, and many East Bay city officials supported Measure D, which killed plans for 12,500 housing units.

This measure prohibited the development of a storage facility on the Lockaway-owned property unless it was approved by a public vote. But Measure D contained a legal grandfathering provision of all existing approved development when the law became effective.

Lockaway continued to process its permit for an RV storage yard under the grandfather provision. But it was denied on the grounds Lockaway had not obtained a building permit and had not begun construction prior to the date of the initiative.  Lockaway then pursued administrative and legal remedies to no favorable result.

Lockaway then filed suit in County Superior Court, seeking an order to proceed with development and suing for inverse condemnation and civil rights violations.  Inverse condemnation is when government indirectly takes all the rights and value from a private property but fails to pay compensation for it as required in the Fifth Amendment to the U.S. Constitution.  The Superior Court found in favor of the property owners on all counts.

The Superior Court allowed development to proceed.  The basis of the Court’s decision was that the County let Lockaway continue its development plans for 1-1/2 years after Measure D became effective.  Then the County did what was called a “showstopping U-turn” and stopped the project.  At that time the County refused to consider whether the “grandfather” clause in Measure D exempted the Lockaway Storage project.

Additionally, the lower court awarded the owner $504,175 in lost profits and $324,954 in increased construction costs due to a 1-1/2 year delay.

Alameda County then appealed to the 1st Appellate Court, seeking to overturn the lower court decision.  The Appeals court’s had to determine if the Lockaway case met the three-part test in the Penn Central case to be awarded temporary damages:

1. The County’s actions had to have a “substantial, negative impact on Lockaway’s use of the property”;
2. The County’s actions had to “materially interfere with the Plaintiff’s (owner’s) distinct, investment-backed expectations;”
3. “Its conduct could not be justified as a normal regulatory mistake.” 

The Appeals court found that the case met all three criteria. The most important ruling was that, although Measure D did not render Lockaway’s property worthless, it deprived the owner of a “return on investment that it ‘reasonably expected from the intended use’” and prior approvals.

‘Manifestly unreasonable’

The Appellate Court called the County’s application of the voter initiative to the Lockaway case “nonsense” and called its behavior “manifestly unreasonable.”

The Pacific Legal Foundation, a property rights advocacy law firm in Sacramento, said Lockaway came away with “a remarkable regulatory takings victory.”

Lockaway’s attorney, Timothy Kassouni of Los Angeles, was awarded $879,700 in attorney’s fees, which implies the County did not act in good faith. He formerly was with PLF.

Because of this case, we may see more court judgments in favor of property owners for temporary and partial damages to property due to arbitrary and capricious actions by city land planning departments.  There are countless cases of temporary damages and permanent exactions to property owners involving smaller damage sums that most law firms will not take.

By Katy Grimes

What do you get when you have a powerful state commission of 11 unremarkable people, which produces nothing, but regularly takes money and property from taxpaying citizens, while currying favors with others?

I just defined the California Coastal Commission.

However, for 40 years the California the Coastal Commission has managed to fly under the radar of most residents and communities outside of the coast. And it has done this with the help of Democratic lawmakers.

The California Coastal Commission has operated since 1972 without oversight. Attempts to rein in the rogue agency have landed in Superior Court, appellate court and even up to the state Surpreme Court. But it became very clear long ago that the Coastal Commission is not about environmentalism or conservation. This unelected state commission is about power over the people.

How has this happened?

The California Coastal Commission was established in 1972 by voter initiative. Proposition 20 authorized the State of California to regulate development of the coastal zone, and gave the Coastal Commission permit authority for four years. Four years later, the Legislature passed the California Coastal Act of 1976, which extended the authority of the Coastal Commission indefinitely.

Proposition 20 was written by Peter Douglas, a darling of the left, who became the director of the commission and sat on it for more than 25 years.

Coastal “disturbances”

Any “disturbance” imposed on California’s coastal areas without a permit constitutes a violation of the Coastal Act.  Some violations: Sunbathing using a portable umbrella on your own private property above the public beach in Newport Beach; replacing rotten planks on a landing midway down a stairway to the beach; and obstructing the view of the coast in any way imaginable.

The Coastal Commission is the biggest nanny California has. But while the agency may be dressed as a nanny, it behaves like a bully.

The most notable land-use challenge to the Coastal Commission was the Nollan case. In 1987, the Nollans owned beachfront property in Ventura County and wanted to replace a 504-square-foot bungalow which had fallen into disrepair with a 2,500-square-foot house.

Nollan v. California Coastal Commission went all the way to the U. S. Supreme Court because the Coastal Commission tried to require that the Nollans give up a piece of their beach front land as a public easement as a condition of approval of a permit to demolish an existing bungalow and replace it with a three-bedroom house. The Coastal Commission had asserted that the public-easement condition was imposed to promote the legitimate state interest of diminishing the “blockage of the view of the ocean” caused by construction of the larger house.

In a highly controversial 5-4 ruling, the U.S. Supreme Court ruled that the requirement by the Coastal Commission was a constitutional “taking” of private property in violation of the Fifth and Fourteenth Amendments of the U.S. Constitution.

Stolen property and stolen life

In 1997, Dan and Denise Sterling bought nearly 140 acres of land in the hills of El Granada, in San Mateo County, planning to build a large house. Ten acres of the property were classified as prime agriculture located along the El Granada Creek watershed, making it necessary that any development comply with farmland requirements under San Mateo County’s Local Coastal Plan, the Half Moon Bay News reported.

The Sterlings grazed cattle on the land.

But when they tried to get building plans approved by the San Mateo Planning Commission, the delays began.  The San Mateo Board of Supervisors eventually approved the plan two years later, largely noting that the Sterlings were already using the agricultural land for cattle grazing.

Then things got nasty. Two Coastal Commission members appealed the county’s approval of the Sterling home and delayed hearing the case for another two years. Until the Sterling’s threatened a lawsuit, nothing happened.

Eventually the Coastal commissioners offered an unconstitutional deal to the Sterlings: If the family wanted to build their house, they had to put easements on the rest of their property to keep it as farmland in perpetuity, according to the Pacific Legal Foundation.

But the real objection of the Coastal commissioners was the 6,500 square-foot home the Sterlings wanted to build. “This isn’t a farmhouse; this is a 6,500-square-foot house,” said Christopher Pederson, deputy chief counsel for the agency. “This pattern of luxury development can undermine an agriculture economy.”

According to the Pacific Legal Foundation, “Under this condition, the Sterlings would have been forced to farm or raise cattle on 142 acres of their land, forever, in order to build a single family home on a 10,000 square foot site — even though they aren’t farmers or ranchers!”

After a Superior Court judge struck down the “forced farming” requirement, the judge sent the case back to the Coastal Commission so it could reconsider the Sterlings’ application.

“But the Commission proceeded to impose a new condition that was as objectionable as the first,” PLF wrote.  “This new condition — the one that has just been struck down — did not require the Sterlings to engage in farming or ranching, but did demand that they record a deed restriction permanently converting more than 140 acres of their land outside the home site into open space for the public good.”

PLF filed a new complaint on the Sterlings’ behalf. The Judge held that the Commission lacked the authority to impose the deed restriction condition, and that, even if it had such authority, the condition amounted to an unconstitutional taking because it had no relation to any public need created by the proposed home-construction project.

“The new condition, in the form of an open space deed restriction, is not tailored to the development and is once again irreconcilable with Nollan v. California Coastal Commission and Dolan v. Tigard,” the court concluded. That was because Supreme Court precedents forbid using the permit process as a means of seizing property without compensation, according to PLF.  “As compared to the Commission’s prior failed attempt to impose an agricultural easement on the property, the Commission’s new attempt is a distinction without a difference.”

Nearly 15 years later, the Sterlings won back their property rights. But with four children, living in a mobile home on the property became just too much, and they moved elsewhere.

California Legislature’s purview

The California Legislature has the authority to rein in this abusive and tyrannical agency, but does not. But there is something the Legislature could do.

The abuses of the coastal commission are made even worse because taxpayers foot the bill for all of the Coastal Commission’s legal cases and legal staff. The California Coastal Commission uses the Department of Justice to do its dirty work.

Perhaps this is the best example of why it is so important for the California Coastal Commission to pay for its own legal bills, as proposed by the Department of Justice.

Until the the California Coastal Commission is brought under serious reform, the commission will continue to abuse its power, and the property rights of California residents.

By John Seiler

Lt. Gov. Gavin Newsom, trying to conjure up something useful from his worthless job, has positioned himself supposedly as a “pro-business” Democrat. He even went to Texas to say how the Golden State could learn something about jobs creation from the Lone Star State.

But he just backed the assault on property rights in San Bernardino County that would use eminent domain — government seizing property — to dispose of distressed mortgages. He said, “This idea is bold. This idea is meaningful.”

No, it isn’t. It’s robbery.

As my colleague Steven Greenhut wrote about it on our site last week:

“It’s a “win-win,” according to supporters, except that it comes out of the hide of the current lenders, who would lose their property – or at least lose the chance to collect the money owed them. I can come up with a similar “win-win” scheme whereby I steal your money and spend it on a new car. Don’t complain. It’s a “win-win” for me, the car dealer and even the DMV.

“For those who shrug off this money grab out of dislike for banks, consider that the plan, in order to avoid political push-back, exempts all Fannie Mae and Freddie Mac mortgages and those held by major banks, so it only targets privately held mortgages.

“This is a troubling abuse of government power to advance the interests of private parties. Likewise, the only beneficiaries from the new Homeowner Bill of Rights will be private attorneys who gain a new target. These laws aren’t about fixing the mortgage crisis. They are about special interests using government to help them get their piece of the action before the crisis goes away.”

But Newsom, a favorite to be the next governor, probably is ahead of the curve. Led by California, America quickly is becoming an anti-property rights, anti-capitalist, socialist hellhole. Here’s Gavin enthusing, although on a different policy. But he thinks the same about government grabbing your property: