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Prop 90 (Eminent Domain): The Dark Lord of "Save Our Homes"

by: Brian Leubitz

Thu Jul 13, 2006 at 16:19:16 PM PDT


( - promoted by SFBrianCL)

Have you ever heard of Howard Rich?  Well, consider yourself on notice.  Howard Rich is waging a war on the government, via the "Save Our Homes" initiative.  Shane Goldmacher has the story:

Through a web of organizations, Rich is backing eminent-domain initiatives in Arizona, Idaho, Missouri, Montana, Nevada, Oklahoma and Washington with $4 million--though no state has received as much financial support as California. In each of these efforts, Rich himself is never disclosed as a major donor. Instead, he steers his contributions through nonprofit intermediaries, such as the Fund for Democracy, which he is using to finance California's Proposition 90 campaign.

"I think California often leads the nation," says Rich. "It is the largest, most populous state and it is very important to us that property rights be restored there."

But the influx of out-of-state money pushing measures to amend state constitutions across the country has angered many local activists.

"They are backed by an organization that is chaired by a New York real estate developer and that makes you wonder who is going to benefit," says Aaron Toso, spokesman for the campaign against Washington's eminent-domain measure. "Obviously if people don't live here they wont have to pay the extra taxes and sit in the extra traffic."

Here in California, opponents of the eminent-domain initiative are also accusing Rich of pushing his unwanted, out-of-state agenda on the state's voters.

"The fact that this one guy from New York, an out-of-state multimillionaire, has decided, 'I know what's best for the nation and I am going to tell all the state's how to do things right' … that's offensive," says No on 90 spokeswoman Kathy Fairbanks.(Capitol Weekly 7/13/06)

These out-of-staters come into California because we are such a leader in the initiative process, for better or worse.  If California falls victim to Prop 90, you can bet similar initiatives will be all over the nation. And Prop 90 is merely using the Kelo decision for cover.  It is far more insidious.  The "damage" provision in Prop 90 would prevent zoning and any environmental regulation at the state or local level.  Of all the initiatives, it is most important that Prop 90 be defeated.  Its effects would be felt immediately and permanently in much the same way we still feel the devestation of Prop 13.
Brian Leubitz :: Prop 90 (Eminent Domain): The Dark Lord of "Save Our Homes"
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Prop 90 (Eminent Domain): The Dark Lord of "Save Our Homes" | 17 comments
What's right is right... (0.00 / 0)
...and I don't care who stands with me when it comes down to it.  Mr Rich may or may not be a 'good guy' in your opinion, and I really don't care.  What IS important is that Prop 90 is a good and needed reform.  I urge everyone to read the text of  Prop 90.

http://www.caag.state.ca.us/initiatives/pdf/sa2005rf0146.pdf

Prop 90 restores and codifys the proper use of Eminent Domain takings.

Prop 90 DOES NOT restrict governments from taking private property for parks, highways, prisons, or any other public use.

Prop 90 DOES prevent governments from taking private property and then transfering that property to private developers simply for the reason of increasing a tax base, as was the case in Kelo v. New London.

http://www.ij.org/pdf_folder/private_property/kelo/kelo-USSC-opinion-6-05.pdf

This same tactic has been tried in San Jose in the case of the Tropicana Shopping Center.

Here in San Jose, the San Jose Redevelopment Agency (which shares the exact same board as the San Jose City Council!!) has declared a full 1/3rd of the city as "blighted" for the purpose of taking private property and redeveloping it using third-party commercial developers.  It should be noted that most of San Jose has been built in the last 35 years, so I'd like someone to explain to me how it is that a third of our city is now "blighted"??

http://www.strongneighborhoods.org/Neighborhoods06.asp

In the Tropicana, the SJRDA attempted to steal an operating commercial shopping center for half of it's true worth from American citizens who had no desire to sell and turn it over to developer friends of the City Council.

http://www.bizjournals.com/sanjose/stories/2001/07/30/story1.html
http://www.bizjournals.com/sanjose/stories/2002/10/14/story2.html

During the Tropicana fight, a Mayoral staffer, Avo Makdessian sent an e-mail under the name "Juan Valdez" to an anti-RDA website. In it, Makdessian called Tropicana owner Dennis Fong "a money-grubbing slum lord" and that Fong "doesn't give a shit about the Latinos in the center or the surrounding community."!!

http://www.mailutilities.com/news/archive/133/2061.html

Mayor Gonzales' chief of staff Rebecca Dishotsky called the e-mail an "inexcusable error" and said the person will be "disciplined in proportion to the seriousness of the error." After a 30 day suspension, the $62k/yr Makdessian was back on the job again doing the Mayor's dirty work.

While the Tropicana fight was going on, the SJDRA tried to do the same thing to six other shopping malls throughout the city.

http://www.bizjournals.com/sanjose/stories/2002/09/02/story7.html

Eventually, the City and RDA gave up on stealing the Tropicana and agreed to pay the $1.3 million in legal fees Fong racked up plus untold penalties of lost business and $300k to Blake Hunt Ventures for breaking the contract. I think it's safe to assume that between the City, RDA and Fong's lawyers, the Mayor's band of "Federales" cost us taxpayers of San Jose a cool $5 million.

And one more thing, our disgraced Mayor was recently indicted for other shady dealings.

http://www.mercurynews.com/multimedia/mercurynews/archive/norcal/norcal_gonzales_indictment_062206.pdf

The point is, Prop 90 is a much needed and responsible reform, not some theoretical exercise, and I am here to support it!!

ascap_scab, I think you work for someone (0.00 / 0)
Because that comment is far too pat; we'll take appropriate action if you're spamming.

But I'm going to respond to you anyway, for now.

You are intentionally deceptive about the scope of the Proposition.  I hesitate to say you're lying, but it may be appropriate.

Section 19(b)(8)

Except when taken to protect public health and safety, "damage" to private property includes government actions that result in substantial economic loss to  private property. Examples of substantial economic loss include, but are not limited to, the down zoning of private property, the elimination of any access to  private property, and limitations on the use of private air space. "Government  action" shall mean any statute, charter provision, ordinance, resolution, law, rule  or regulation.

That essentially makes it impossible for any government to do anything that might cause economic loss, like, for example, environmental regulation.  It will make California entirely ungovernable.

Also, I note that you cite the Institute for Justice.  That's a rabid right-wing law firm funded by the same people who fund AEI, the Heritage Foundation, and just about every other right-wing "think-tank" dedicated to constructing arguments for pre-determined outcomes favoring the wealthiest.  So, you'll forgive me if I don't buy your Astroturfy goodness.

[ Parent ]
Astroturfy huh?? (0.00 / 0)
Come read the blog I post on and say that!!

http://www.reconstitution.us/seren/

Perhaps you would prefer the .pdf directly from the Supreme Court??  Though I really don't know what difference that makes.  The opinion remains the same.  I simply Googled "Kelo v New London" and that's the first one that popped up.

http://a257.g.akamaitech.net/7/257/2422/23jun20051201/www.supremecourtus.gov/opinions/04pdf/04-108.pdf

<>

Wow, ungovernable??  Really??

<>

Act away tough guy!!  Jeebus, you're as bad as the jackboot bloggers that don't even allow comments!!

[ Parent ]
Yes, yes, Kelo bad and all that (0.00 / 0)
And yet, this Proposition pretends to fix the Kelo problem and creates a whole new set of problems.  If all it did was fix the Kelo problem, that would not be troubling.

But it does far more -- it requires compensation for any economic harm to property that a government may cause, including by zoning.  Think about that for a minute before you start calling us jackboots.

[ Parent ]
Get your Proposition... (0.00 / 0)
...that solves Kelo without the offending section and I'll sign that petition, and I'll vote for that Proposition.  Until then, I'll take half measures and flawed legislation over the status quo.
[ Parent ]
Do you have any idea (0.00 / 0)
what will happen if this gets written into the California Constitution?  This isn't a flaw that can be easily corrected, and the damage it will do is huge.

Just because you're all charged up about Kelo and pissed off about Gonzalez is no reason to enact a stupid policy.  We're in a war in Iraq based on just that kind of "reasoning".

[ Parent ]
I'll take my chances in court. (0.00 / 0)
In the section that offends you,

[Except when taken to protect public health and safety, "damage" to private property includes government actions that result in substantial economic loss to private property. Examples of substantial economic loss include, but are not limited to, the down zoning of private property, the elimination of any access to private property, and limitations on the use of private air space. "Government action" shall mean any statute, charter provision, ordinance, resolution, law, rule or regulation.]

please outline a scenerio where a "Government Action" would cause "substantial economic loss" to a parcel that would cause California to be "ungovernable".

And don't tell me it would roll back the Clean Air Act, Clean Water Act or some other law already on the books because that is specifically exempted here...

[Any statute, charter provision, ordinance, resolution, law, rule or regulation IN EFFECT ON THE DATE OF ENACTMENT that is amended after the date of enactment SHALL CONTINUE TO BE EXEMPT from the provisions added to this section provided that the amendment both serves to promote the original policy of the statute, charter provision, ordinance, resolution, law, rule or regulation and does not significantly broaden the scope of application of the statute, charter provision, ordinance, resolution, law, rule or regulation being amended.])

[ Parent ]
You are unbelievably short-sighted (0.00 / 0)
What this means is that any new regulation of any sort gets challenged in court.  Any new zoning gets challenged in court.  Any decision about rights-of-way gets challenged in court.

Every single planning decision gets challenged in court.  And those challenges cost money that can't be spent on anything else.  You basically want to turn over control of every city in California to the largest and most obstreperous land-owners.

And all because you have a beef with Ron Gonzalez and you're falling for the Republican Kelo propaganda.  Do you seriously think the people pushing this have the best interests of regular people at heart?

Seriously, this is not what you think it is.  Think ahead just a little bit.

[ Parent ]
I'm giving you a chance to convince me... (0.00 / 0)
...there is anything in Prop 90 that is a deal breaker.  So far you've called me a short-sighted astroturf plant.  You've attributed my desires to be free of the Kelo threat to "beefs" and falling for Republican propaganda.

And yes I am under the Kelo threat because I happen to live in that 1/3rd of San Jose that has been deemed "blighted" by a bunch of money grubbing DLC-type developer sellouts.

So I'm giving you this chance to convince me and any others reading this why I shouldn't be for Prop 90.

What new highway or dam or large public project doesn't have its objective or EIR challenged in court now??  (Often by anti-growth environmental groups, I might add -- not that there's anything wrong with that ;') ) Give me a real life probable scenario where the consequences of Prop 90 becomes a deal breaker.

Convince me and I'll not only not vote against Prop 90, I'll work against it.

P.S.: Have you been following the NAFTA SuperHighway developments??  They want to use Eminent Domain to swipe a swath of land from Laredo, Texas to Duluth, Minnesota, to build a quarter-mile wide, 10 lane private toll road!!  That is your Kelo decision in action!!  You probably haven't because only conservatives-like-me are against it!!

http://www.humaneventsonline.com/article.php?id=15763
http://www.nascocorridor.com/
http://www.keeptexasmoving.com/

P.P.S. Human Events Online may be wrong on the threat of Mexican immigrants, but they are right on opposing this stealing of property by a corrupt government.  Like I said before, I don't care who goes with me when they're going my way.

[ Parent ]
Here are real-life scenarios (0.00 / 0)
City decides to make it harder to evict tenants without cause.  Big landlord sues, because that reduces the value of their property holdings.

City can't raise taxes to handle infrastructure costs of new development (Prop 13 and progeny).  Developer proposes to build huge new development.  City says "no", limits development size.  Or city says "yes", requires certain amount of affordable housing.  Developer sues.

City decides that all new construction and substantial renovations must have noise insulation.  Developers sue.

City decides that new construction must meet certain energy-efficiency standards.  Developers sue.

County decides to limit sprawl by imposing urban growth boundaries.  Developers sue.

State has plan for highway expansion.  Developers buy land along proposed route.  Voters decide that they want green development, change highway plans by referendum.  Developers sue.

It's ANY regulation of any kind that has a "substantial" economic effect.

[ Parent ]
What I have been trying to tell you (0.00 / 0)
is that Prop 90 doesn't do what you think it does, or rather it does what you think it does, and then it goes on to to much much more, all of it guaranteed to make it impossible for people to decide what kind of community they have.

Look, you and a lot of other people are worked up about Kelo, and you're not really going to find anyone here defending the idea of turning individual homes over to big corporations.  Instead, you're supporting a measure that allows big land-owners to steamroll local governments in almost exactly the same way -- they only difference is whether the eminent domain happens first.

What I'm trying to explain is that Prop 90 is not the vehicle for your anger.  Your anger is being used to enact a developer's dream -- the ability to prevent any government (you know, the politically accountable entities) from doing anything to slow or stop any billionaire developer (not accountable to anyone) from doing whatever they want to with land once they get hold of it.

Here's the official (brief) legislative analysis:

Bars state and local governments from condemning or damaging private property to promote other private projects, uses. Limits government’s authority to adopt certain land use, housing, consumer, environmental and workplace laws and regulations, except when necessary to preserve public health or safety. Voids unpublished eminent domain court decisions. Defines “just compensation.” Government must occupy condemned property or lease property for public use. Condemned private property must be offered for resale to prior owner or owner’s heir at current fair market value if government abandons condemnation’s objective. Exempts certain governmental actions. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Unknown, but potentially significant major future costs for state and local governments to pay damages and/or modify regulatory or other policies to conform to the measure’s provisions. Unknown, potentially major changes in governmental costs to acquire property for public purposes.

You're being used.

Or maybe it does exactly what you think it does, and you think that it's a good idea to allow developers to sue cities and counties if they want to zone for density, enact a noise ordinance, make it harder to evict tenants without cause and so on.  Maybe you want big developers and landlords doing whatever they want, building whatever they want.

[ Parent ]
Rebuttal (0.00 / 0)
*City decides to make it harder to evict tenants without cause.  Big landlord sues, because that reduces the value of their property holdings.*

That would go to court anyway, I don't see anything changing.

*City can't raise taxes to handle infrastructure costs of new development (Prop 13 and progeny).  Developer proposes to build huge new development.  City says "no", limits development size.  Or city says "yes", requires certain amount of affordable housing.  Developer sues.*

That already happens.  Most large developers already negotiate with planning commissions to add parks, open space, common usage, schools, fire stations, etc., and pass on costs to ultimate purchasers because the developers have to move on to the next project and bad vibes on one project gets passed on to the next, making the next project harder.

*City decides that all new construction and substantial renovations must have noise insulation.  Developers sue.*

Again, developers negotiate.  Here you have a case where individual homeowners doing renovations, not developers, might have a problem, but individual homeowners would probably want more insulation.  Not likely to be a real problem.

*City decides that new construction must meet certain energy-efficiency standards.  Developers sue.*

Maybe, but the ultimate buyers may want those energy standards and developers can call them a selling point.  Not likely to be a real problem.

*County decides to limit sprawl by imposing urban growth boundaries.  Developers sue.*

Nothing new here.  That happens all the time.  Developers would have to prove "substantial economic loss".  Still not an easy feat and most counties already have growth plans on the books that are automatically exempted.

*State has plan for highway expansion.  Developers buy land along proposed route.  Voters decide that they want green development, change highway plans by referendum.  Developers sue.*

Developers speculated and lost.  Tough.  That would be tossed out of court.

Since you tried (but still haven't convinced me yet), I'll be a nice guy and toss you a bone.

Legislators want to implement a new "prop 65 type" law mandating property sellers disclose their property is in an "earthquake zone".  Residents sue. 

Prop 65 made it mandatory for businesses to post a sign warning about cancer causing chemicals.  When that passed, grocery stores sued and lost.  Net effect of Prop 65??  Nothing.  It was a useless, feel-good law.  Does anybody even bother to read the Prop 65 mandated sign before going into a store anymore??  Same thing here.  All suits will be combined into a class action and ultimately tossed because they can't prove "substantial economic loss".

Here's a hint if you want to convince me, you may want to try a different approach than the "evil developer" route.  Try airport hours and noise, smokestack polluters, mining waste, underground aquifers, off-shore drilling, garbage collection/recycling/waste water treatment, erosion issues, forestry issues.

Care for another crack at it??

P.S. Thanks for the welcome, SFBrianCL.  I've been a RSS reader for quite a while, but this issue has me riled (obviously) so I had to speak up for it.

[ Parent ]
ascap, this thread is getting too long (0.00 / 0)
And about all I'll say is that you're wishing away a lot of problems.  I came up with my list in about 3 minutes.  You came up with another list that I assume you're preparing to wish away as well.

Beyond that, some brief thoughts:

1)  What Prop 90 does is take away any of that "negotiation".  Developers and landowners don't have to negotiate -- why bother?  Prop 90 completely changes the power relationship to one where the land owner has no incentive to negotiate anything.

2) Any change to any regulation, including an existing plan, that increases the scope of that regulation is not exempted.  Also, "substantial" is not defined.  Let's say land is worth $1M if you can develop it.  Is a 10% loss substantial? 5%? 20%?  That kind of profit covers a lot of legal fees.

3)  You're blase about "speculated and lost".  If you own land that has a certain economic value based on a government decision, and the government changes that decision, you get to sue, and I don't see how you're tossed out of court.  Right now, yep, not much of a case.  Post Prop 90, certainly worth a go.

Last, I note that in each case, those law suits cost money, and a lot of cities will just knuckle under.

[ Parent ]
Now think about this. (0.00 / 0)
Suppose my city of San Jose wants to tear down my entire neighborhood of single family homes and turn it over to the Mayor's developer buddy to put up a business park, increase the tax base, and score some PAC money kickbacks in the process.  I don't want to move to Merced (which is where the nearest affordable housing is).  What is my recourse without Prop 90??

Suppose my city wants to widen the street I live on from four lanes to six (which they can still do under Prop 90).  Because I bought my property way back in 1982, the city only wants to pay me double my 1982 cost instead of today's fair market rate.  The city has paid attorneys on staff.  I have myself, my property, and $2k in my bank account.  How far am I going to get trying to fight city hall??  Under Prop 90, the city can still use ED to confiscate my property, and I still have no recourse, but they have to pay me fair market rates.

[ Parent ]
If that's better than current law (not clear at all) (0.00 / 0)
that would be fine.  But I don't think it's reasonable to  pretend that everything else in Prop 90 doesn't exist or won't be a problem.

It's just about as reasonable as me saying I've got a great law:  it makes sure that no puppies will ever have to be put down again, *and* it has this unrelated provision where we kill every single cat in the country.

People against this law must hate puppies!

[ Parent ]
Welcome to Calitics! (0.00 / 0)
Hi Ascap-scab: Welcome to Calitics.  I appreciate your opinion, but I think you underestimate the baby with the bathwater problem.  Namely, Prop 90 would do so much to harm the governance of the state that any benefits from the Kelo issues would be small compared to the harm of the "damage" provisions, as jsw has pointed out.

It's one of those "reforms" they like to scream about on the right. It's right out of Prop 13 Central Casting.  I'll leave jsw's arguments to stand on their own for now, but we'll be posting a lot more on Prop 90 during the summer.  Feel free to come back and talk about it.  I'm hoping we can change your mind before November. :)

I think?

[ Parent ]
But it DOES limit acquisitions for public use and services (0.00 / 0)
As a commercial real estate appraiser, I have been involved in numerous public projects over the last 15 years, and while I agree that change is warranted for the redevelopment aspect, Prop 90 all but destroys the "good" elemnts of eminent domain.

First, from a professional standpoint, I stand to benefit from its passing.  There will be much work to be done if/when Prop 90 passes and all current projects have to be re-valued.  Many projects I have worked on have been given to the acquiring agency through an "Order of Posession" but the case not gone to trial.  Under Prop 90, these projects will be subject to the amendment even though the project may already be completed.

I honestly do not have much of an argument with the need for redevelopment reform, but it is in the provision of roads, utilities, and public services that Prop 90 will be most damaging, for two reasons:

1) Prop 90 does away with dedication requirements, and
2) Prop 90 requires payment at the highest use.

Say you have a two lane road in a partially devloped suburban area, with areas of commercial development beginning along it.  This will one day be a big four lane signalizd commercial thoroghfare, but the city simply has not yet gotten that big (a very common scenario in the state). 

Commercial development has now intensified, and there are a few strip centers, neighborhood centers, etc.  The street is getting busy.  It is now about time for the city to widen it to is ultimate width, put in some signals, and turn it into the road that was designed to handle the traffic of a growing city.

This might happen when, say, 50% of the properties along the road have developed.  When developing, the owner applies for the site plan and permits, and as part of the process, is required to dedicate the portion of the road running over his property. 

But the other 50% of propertis haven't developed, and they have not then been required to dedicate the right of way for the road. 

Under current ED law, the City would acquire the road right of way to its ultimate width from the remaining 50% of property owners at very low value, based on the fact that they would have to ddicate the area anyway whenever they decided to develop their land.

Under Prop 90, the City would not be able to use the dedication requirement logic (defined by City of Fresno V. Cloud), and would have to pay the remaining 50% of property owners full commercial value for that road area -- EVEN though if they simply waited for everyone to develop, they could get it for free.

Roads require a lot of area -- maybe not from any particular parcel, but over the course of a mile, the square footage really adds up.  The difference between getting this road area for almost nothing and having to pay up to 100 times more for it (or much more) is substantial.  Suddenly, the acquisition budget for the widening of this road goes from $100,000 to $10,000,000 -- plus construction costs.

Either that kills the budget for the widening project, they have to get the money some other way, or they wait for more property owners along the street to develop and dedicate before they go ahead with the project.

Most likely the project will either get killed or the money will have to come from private sector developers interested in the project.  Neither is a good alternative, as the first results in long delayed public improvement projects, and the latter in higher development costs, and higher prices neded to recoup those costs.

I used a road as an example, but the theory holds true for any public utility corridor.  This proposition stands to severely limit the ability of growing municipalities to meet the needs of their residents.

Again, professionally I stand to benefit from this proposition working for property owners, but both professionally and personally, I firmly believe that this is bad, bad and harmful legislation.  The use of ED should be reformed, and could be eliminated althogether as far as I care, but the impact of this Proposition is so much more far-reaching that that it is not even funny. 

Those who say this Proposition does not impact the ability of municipalities to provide public improvements are eithr uninformed, or worse -- doing the public a huge disservice through misrepresentation.  It ALLOWS ED for public improvements, but increases the COST of such projects beyond anything feasible.

Prop 90 (Eminent Domain): The Dark Lord of "Save Our Homes" | 17 comments
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