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California Voters Pass Eminent Domain Reform: Impact Limited

June 5, 2008

California Voters Pass Eminent Domain Reform: Impact Limited

June 5, 2008

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Results of June 3, 2008, Ballot

On June 3, 2008, California voters convincingly approved Proposition 99 and at the same time rejected Proposition 98. Entitled the California Homeowners and Private Property Protection Act, Prop. 99 is designed to prohibit state and local governments from using eminent domain to take an owner-occupied, single-family home for the purpose of transferring it to another private party for the "public purpose" of economic development. Prop. 99, sponsored by the League of California Homeowners, the League of California Cities and the California League of Conservation Voters, received 62.5% of the vote, easily surpassing the 50% needed to pass.

California voters rejected a competing eminent domain proposal, Proposition 98. Prop. 98 would have taken eminent domain reform to a new level. Termed "Kelo-plus" by its opponents, Prop. 98 sought to place strict limits on governments' right to exercise eminent domain and would have effectively prohibited the use of eminent domain for many, if not all, of the traditionally accepted purposes. The most controversial feature of Prop. 98 was a minor provision to eliminate rent-control ordinances in cities across California, including San Francisco, Oakland, Los Angeles and Berkeley. Prop. 98 received only 39% of the vote.

Voter turnout was estimated at 22.2%, a potential record low.

History of Proposition 99

Proposition 99 is a narrowly tailored provision that is specifically designed to prohibit the use of eminent domain sanctioned in the controversial U.S. Supreme Court decision Kelo v. City of New London, Connecticut, 125 S.Ct. 2655 (2005). In Kelo, the Supreme Court held that the transfer of property from one private owner to another private owner was permissible, and in some instances necessary, to stimulate economic redevelopment, an accepted "public purpose" under traditional eminent domain law. Equally as important, Kelo held that a finding of "blight" was not required for condemnation, and a determination that a certain area was "sufficiently distressed to justify a program of economic rejuvenation . . ." was sufficient for the exercise of eminent domain.

In Kelo, this meant that the government of New London, Connecticut, could forcibly remove a homeowner, who had lived on her property for 87 years, for the purpose of transferring that property to Pfizer Pharmaceutical Company so it could build a $300 million research facility. Not surprisingly, this case stirred some opposition.

Proposition 99 was specifically targeted to prevent a similar result from the exercise of eminent domain in California.

Details of Proposition 99

Proposition 99 amends Section 19 of Article I of the California Constitution to prohibit state and local governments from acquiring, by eminent domain, an owner-occupied residence (such as a single-family home, condominium or townhouse) for the purpose of conveying it to another private owner (such as an individual, association or developer). The measure defines "owner-occupied" as the owner's principal place of residence for at least one year. It will be important to see how implementation of Proposition 99 impacts, if at all, redevelopment for traditional "blight."

Though Prop. 99 purports to protect against the Kelo-style use of eminent domain, it has many exceptions to its protection. In fact, critics of Prop. 99 complain that it fails to deliver meaningful eminent domain reform and is unlikely to significantly alter current eminent domain practices. Specifically, Prop. 99 creates exceptions for: 1) public health and safety; 2) present serious and repeated criminal activity; 3) response to an emergency; 4) remedy of environmental contamination that poses a threat to public health and safety; and 5) a public work, such as a toll road or airport even though operated by a private party.

The End Result of Prop. 99

Despite the fact that Prop. 99 was promoted as California's answer to Kelo, the exceptions to the new rule are likely to minimize any meaningful effect it was hoped to have. Though the proposition should forestall the government-sanctioned transfer of a residential property from one private owner to another for the sole purpose of economic development, the exceptions to the new rule leave most, if not all, of the traditional uses of eminent domain securely in place. So, while some redevelopment in the state will be impacted, most homeowners and developers will likely see little change on the current practices of government land acquisition in California.

For Further Information

If you have any questions about this Alert or would like to learn more about eminent domain and redevelopment laws, please contact George J. Kroculick or any of the other attorneys in our Eminent Domain and Land Valuation Practice Group.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.