United States: What Passage Of Proposition 99 Means To The California Homeowner

Last Updated: July 20 2009
Article by Victor Pappalardo

When Proposition 99 was passed in June 2008, supporters argued that it would assure the a situation like that in Kelo v. City of New London, Connecticut 545 U.S. 469 (2005) would not happen in California. Opponents argued that it would not change the law in any meaningful way. In the end both sides were partly right, in part, because a lot of the overheated rhetoric from property rights groups that condemned Kelo had little basis in the reality of governmental takings.

In Kelo, several homeowners had objected to the City of New London, Connecticut's attempt to acquire their homes through the condemnation process. Even though the nine homes in question were not blighted, the City desired the properties for the purpose of bringing a private business to the area for the purpose of local economic revitalization. The U.S. Supreme Court upheld the City's right to take these properties holding that a local government's promotion of economic development (including condemnation of land for private uses) was a traditional and long-accepted governmental function, and there was, in the context of condemnations, no principled way of distinguishing this function from other public purposes.

In Kelo, the Court did not overturn its longstanding "public use requirement", which holds that a public agency cannot not take a property from one private party and give it to another private party for purely individual benefit. The Court recognized that use of the parcels by the private developer would not "open the condemned land – at least not in its entirety – to use by the general public", but held that such a literal reading of the "public use requirement" was not required.1. In Kelo, the City had formulated an economic development plan to "provide appreciable benefits to the community, including...new jobs and increased tax revenue."2. According to the majority opinion, authored by Justice Stevens:

Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate...to resolve the challenges of the individual owners not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged...satisfy the public use requirement of the Fifth Amendment.3.

As such, the Court found the taking in Kelo to be for a public purpose, and thus permitted under the Fifth Amendment of the U.S. Constitution.

While politically charged, the Court's decision appeared to be a reaffirmation of long held legal principles (albeit in a rather extreme circumstance). In some circumstances, local governments and redevelopment agencies have found it necessary to condemn private property, including homes, in order to promote economic revitalization. Usually, such condemnations have been of commercial properties or extremely blighted homes, but clearly exceptions like those in New London did, and could, occur. In any event, however, the court recognized that economic revitalization may sometimes require public agencies to condemn property for the purpose of transferring it to private parties. According to the court:

Petitioners contend that using eminent domain for economic development impermissibly blurs the boundary between public and private takings. Again, our cases foreclose this objection. Quite simply, the government's pursuit of a public purpose will often benefit individual private parties... 'We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects.'4.

However, the fact that Kelo led to the condemnation of homes for private industry struck many people as an abuse of governmental power. Possibly anticipating such a reaction, Justice Stevens in his opinion, made clear that states could individually tighten these restrictions, stating:

(i) In affirming the City's authority to take petitioners' properties, we do not minimize the hardship that condemnations may entail, notwithstanding the payment of just compensation. We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.5.

As a result, property rights groups all over the nation began pushing ballot initiatives limiting governmental eminent domain authority with the stated purpose of preventing a similar outcome in the individual states. However, many of these ballot initiatives attempted to put a myriad of additional restrictions on governmental rights to restrict property rights, from local government rights to impose rent control to broader rights to impose environmental regulation. California voters rejected two such broad initiatives, Propositions 90 and Proposition 98.

Proposition 99, which was sponsored in part by the California League of Cities, was tailored to address the actual concern created by Kelo, i.e. taking of a home for the benefit of a private party as well as to undermine support for Proposition 98. Specifically, Proposition 99 amended Section 19 of the California Constitution by adding additional sections (b), (c) & (d). These sections read as follows:

(b) The State and local governments are prohibited from acquiring by eminent domain an owner-occupied residence for the purpose of conveying it to a private person.

(c) Subdivision (b) of this section does not apply when State or local government exercises the power of eminent domain for the purpose of protecting public health and safety; preventing serious, repeated criminal activity; responding to an emergency; or remedying environmental contamination that poses a threat to public health and safety.

(d) Subdivision (b) of this section does not apply when State or local government exercises the power of eminent domain for the purpose of acquiring private property for a public work or improvement.6.

These provisions would prohibit state and local governments from taking an owner-occupied dwelling (including a condominium) in which the owner has resided for a year or longer, for the purpose of transferring it to another private party such as a person, business, or association absent urgent, public safety-related, circumstances. In other words, no individual's home can be taken in California's unless that person has lived in the home for less than one year or such a taking will "protect public health and safety, prevent serious, repeated criminal activity, assist in the response to an emergency or remedy environmental condemnation."

In California, the vast majority of takings for economic development purposes take place in the context of redevelopment. However, prior to the enactment of Proposition 99, California redevelopment law already provided if the taking was not located in a "predominantly urbanized", physically and economically blighted area then a redevelopment agency had no authority to take the property. Moreover, such a taking required there to be a logical relationship between the redevelopment and alleviation of the blighted conditions.7. As a result, while Proposition 99 made clear that an "owner occupied residence" could not be taken for private use, in fact, prior to its passage few homes in non-blighted areas were subject to condemnation.

However, anti-Proposition 99 activists also argued that Proposition 99 contained a "loophole" that essentially nullified any effect it may have on existing law:

when the government's purpose is to convey property to another private party...[g]overnment can always claim that its purpose is something else. For example, under the Prop 99 'purpose' test, a government could change the zoning of an area – from residential to commercial, for example – and then, with the alleged purpose of making the properties in the area meet the new zoning requirements, use eminent domain to transfer homes to private developers. Courts give great deference to a government's claim of purpose, so Prop 99 would be of little use to homeowners whose cities are determined to take their properties.8.

This analysis, however, completely ignores the fact that government cannot simply condemn a property simply because it does not conform to local zoning.9. Failure to conform to local zoning might be one finding in an argument for blight, but it is not, by itself, a reason to condemn a home. Condemnation requires a myriad of findings, not the least of which is that the agency has to identify the use to which the property is to be put. If there was some nefarious plan to transfer the properties to a private developer post condemnation, such an action would run afoul of the plain language of Proposition 99. It would also run afoul of numerous other laws too, including the responsibility of local government to do its business in public.

CONCLUSION

Anti-Proposition 99 activists were correct in arguing that it would not change much in terms of government eminent domain practice. On the other hand, it appears that those same activists overplayed the actual effect of Kelo in order to convince the public to approve more wide ranging restrictions on governmental regulatory authority. In fact, the passage of Proposition 99 actually appears to have remedied the perceived unfairness of the Kelo outcome. And though Kelo was never the great threat that the property rights groups made it out to be, any threat that did exist seems to have vanished with its passage.

Footnotes

1. Kelo v. City of New London 545 U.S. 469, 478 (2005).

2. Id. at 483.

3. Id. at 484.

4. Id. at 485-486 (2005), quoting Berman v. Parker, 348 U.S. 26, 34 (1954).

5. Kelo 545 U.S. at 489.

6. Proposition 99 also added a Section (e) which created some new definitions in Section 19 of the California Constitution.

7. California Health and Safety Code Section 33030(b)(1).

8. Analysis of Proposition 99 by the Institute for Justice, a private non-profit that represented Suzette Kelo before the U.S. Supreme Court.

9. See Graber v. City of Upland 99 Cal.App. 4th 424 (2002).

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Authors
Victor Pappalardo
 
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