Eminent domain law continues to evolve in California

Many states have enacted eminent domain reform since the U.S. Supreme Court's 2005 decision in Kelo v. City of New London, 545 U.S. 469 (2005), which broadly defined "public use" to include the government's acquiring property for another private owner to realize an economic benefit (such as increasing tax revenues). California immediately reacted in 2006 with the passage of five bills geared towards restricting the use of eminent domain. While the 2006 legislation provided some additional benefits and protections for property owners (such as allowing for an appraisal reimbursement and extending the timeframe for an agency to secure prejudgment possession), no significant changes were made to truly restrict the use of eminent domain for economic development purposes. Additional legislation was proposed, but nothing substantive ever made meaningful progress at the ballot box.

In 2011, things radically changed, as redevelopment agencies were eliminated in California. While many felt the dissolution of redevelopment agencies was tied to their perceived widespread abuse of eminent domain, in reality, this had nothing to do with it at all. Instead, their elimination was pursued by Gov. Jerry Brown as a means of helping to balance California's floundering budget by shifting property tax revenues away from redevelopment agencies and back into other funding obligations.

Since their elimination, legislators have been looking for a variety of ways to bring back redevelopment opportunities, but in a more limited or restricted form. In 2014 and 2015, legislation was passed to create and later increase the powers of Enhanced Infrastructure Financing Districts. The legislation allowed local governments to form public financing authorities and invest in infrastructure projects using tax increment funding streams -- including those once used by redevelopment agencies.

Similarly, in 2015 legislation was adopted which allowed local governments to create Community Revitalization and Investment Authorities. CRIAs have many of the same abilities as the redevelopment agencies that were previously dissolved: the power to issue bonds, provide low-income housing, prepare and adopt a plan for an area, and the power to acquire property using the power of eminent domain. The purpose of CRIAs was, similar to redevelopment agencies, to allow government agencies to "invest in disadvantaged communities with a high crime rate, high unemployment, and deteriorated and inadequate infrastructure, commercial, and residential buildings." However, their creation has a number of high hurdles, and we've yet to see any real activity in this area.

Other legislative efforts have also been proposed to provide property owners with greater eminent domain protections. For example, in 2013 legislation was proposed to make it easier for businesses to recover for loss of business goodwill, but Governor Brown vetoed the bill. Similarly, in 2017 legislation was introduced to substantially enhance the likelihood that a property owner would recover litigation expenses (and attorneys' fees) in an eminent domain action. That legislation never came to fruition as it would have likely dramatically increased the costs of public infrastructure projects.

On a national level, efforts to pursue eminent domain reform has continued, although unsuccessfully. The Private Property Rights Protection Act was approved by the Senate in 2005, 2012, and 2014, yet it has never been considered by the Senate. It is currently up for consideration at the House Judiciary Committee, and if it is ever approved, the act would prohibit any state or federal government agency that received federal economic development funds from using eminent domain for purposes of economic development. The bill would also provide private property owners with more rights should their property be taken for economic development purposes.

Aside from the legislative activity (or inactivity), there remains a heightened sensitivity to the use of eminent domain by public agencies, and there is still a public outcry when agencies are perceived to abuse their powers. Board members or city council members are more hesitant to exercise eminent domain, and continue to emphasize to staff the importance of attempting to negotiate voluntary acquisitions. At the judicial level, courts appear more sensitive to hardships presented by property and business owners, and the use of eminent domain and efforts to secure early possession are more heavily scrutinized.

Regardless of the reform, eminent domain continues to be a particularized area with its own set of rules under the California Code of Civil Procedure, and an area that continues to evolve.