June 2008 Election: Propositions 98, 99 and Eminent Domain

The Bay Area has a few rent control hotspots (notably San Francisco, Oakland, and San Jose) and is a progressive place in general — so by this point, only one day before the election, I expect most people are up to their ears in chants of “Save Rent Control, Vote No on 98.” The point of this post is not so much to harp more on this, although I do want to strongly urge you to vote No on 98 tomorrow. First, a brief remark on rent control: controversial though it would be, we probably should take a hard look at rent control and honestly assess the extent to which it has helped or not helped increase supply of affordable housing. (Yes, I say that despite living in a rent-controlled apartment.) That said, having doubts about rent control’s efficacy as a policy does not excuse slipping blanket elimination of rent control into a statewide proposition about eminent domain, as Prop 98 does, and then failing to implement a replacement relief plan. It’s a classic example of biting off more than you can chew, and that is basically Prop 98 in a nutshell.

Although the rent control aspect is the most incendiary, easily-encapsulated idea to leave in the minds of voters, Prop 98’s opponents do a partial disservice to the cause by focusing exclusively on rent control — the potential effects of 98 extend far beyond rent control. Prop 98’s extreme uphold-property-rights-at-all-costs approach — yet another attempt after voters (narrowly) denied Prop. 90 in the November 2006 election — is a prime example of the backlash that has occurred around the country since the U.S. Supreme Court’s 2005 decision in Kelo v. City of New London, which affirmed economic redevelopment and revitalization as a public use that would justify transferring property from one private owner to another using eminent domain. The proposition amends Article I of the California Constitution by adding several paragraphs of text to the current single paragraph Section 19. The goal is to prohibit application of eminent domain to the transfer any private property for a private use, while allowing such a transfer only for a more narrowly defined set of public uses. At first glance, this may sound like a reasonable response to Kelo, but the problem lies in the measure’s broad formulations. The amendment gives a few possible definitions of “private use”, including:

SEC. 19(b)(3)(iii) Regulation of the ownership, occupancy or use of privately owned real property or associated property rights in order to transfer an economic benefit to one or more private persons at the expense of the property owner.

Governments regularly impose regulations that fall into this category, as they have been given discretion to do so. Standard planning tools like zoning and impact fees are regulations of private property that limit the property owner’s economic benefit, but the requirement that economic benefit be transferred to one or more private persons is so broad as to not be an effective limitation. San Francisco imposes many impact fees on developers (e.g. for transit, inclusionary affordable housing, child care) that provide valuable revenue, but which could be illegal if Prop 98 passes.

Another clause in the same section establishes that a public agency’s use of private property may also constitute a “private use” that would prohibit eminent domain:

SEC. 19(b)(3)(ii) Transfer of ownership, occupancy, or use of private property or associated property rights to a public agency for the consumption of natural resources or for the same or a substantially similar use as that made by the private owner.

This clause could have ramifications for California’s water supply. Water is clearly a natural resource being consumed, so if private property is involved, under Prop 98 the government could be denied the right to construct canals, reservoirs and other infrastructure necessary to transporting and storing water. This, in turn, affects the supply and easy availability of water used for drinking, agriculture, and other purposes. In other words, if a public agency carries out an action on behalf of the public interest, that action could be classified as a “private use” under Prop 98. So once again, we see that the broad language of the proposition carries with it implications that are undesirable, and at times even nonsensical.

There is no shortage of material on the Internet explaining why Prop 98 should be defeated. Rather than repeat it here, I would urge you to read a few more sources if you haven’t already. SPUR provides a methodical outline of the effects, with an emphasis on possible effects to land use planning, and Marin Maven has posted a vigorous call to action, complete with video clips. Newspapers all around the state have editorialized about these two propositions.

Most progressive discussion has repeatedly chanted the “No on 98, Yes on 99” mantra, in part because competing eminent domain measure Prop 99 includes a poison pill provision that would void Prop 98 if Prop 99 receives more votes. Despite this, SPUR has recommended a No on 99 position (and obviously, No on 98, as well), suggesting that even Prop 99’s much more narrowly defined restrictions on eminent domain would restrict the extent to which local governments could follow through with transit-oriented development. I respect and appreciate SPUR’s advocacy and commitment to promoting dense growth near transit, but encouraging a “no” vote on Prop 99 on that basis might be overcautious. The Legislative Analyst blurb notes that Prop 99 “would not change significantly current government land acquisition practices,” and SPUR itself remarks that residential property (the only use which Prop 99 addresses) is not usually targeted for public uses centered on economic development. But it is a good question: can Prop 99 be reconciled with transit-oriented development, so that we can still take advantage of Prop 99’s poison pill provision, without limiting cities’ freedom of movement to encourage TOD?

Prop 99 restricts government from applying eminent domain against “owner-occupied residence[s]” only (i.e. single-family residences, whether attached or detached; but not businesses, farms, or other uses). Compare this to Prop 98, which provides restrictions for any private property, no matter the use of the land. Prop 99 amends Article I of the California Constitution, including this provision:

SEC. 19(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.

And then it lists exceptions to this general rule. The SPUR analysis focuses on the following exception:

SEC. 19(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.

What is a “public work or improvement?”

SEC. 19(e), 5. “Public work or improvement” means facilities or infrastructure for the delivery of public services such as … streets or highways, public transit, railroad, airports, and seaports … and private uses incidental to, or necessary for, the public work or improvement.

Of course, the transit right-of-way itself would undeniably be classified as a public work or improvement. SPUR, I believe correctly, raises the issue that dense residential development around a train station, however desirable, may not be enough to qualify as a private use “incidental to, or necessary for” a public improvement. In the world of planning, transit and land use are inextricably linked, and decisions made about the one both influence and are influenced by decisions made about the other. But there is a real question as to the extent that symbiotic relationship has entered or will ever enter the general (and, more importantly in this case, the legal) consciousness.

However, it seems possible that eminent domain for transit-oriented development could still be approved under Prop 99. A fundamental assumption underlying redevelopment is that it is carried out to erase blight, with the goal of upholding the “health, safety and general welfare of the people.” See California Health and Safety Code (CHSC) §33030. In particular, if blight cannot be addressed through less forceful means, then “it is in the public interest to employ the power of eminent domain, to advance or expend public funds for these purposes, and to provide a means by which blighted areas may be redeveloped or rehabilitated.” (CHSC §33037(b).) One controversy, especially post-Kelo, is that under California law, a wide range of properties may be classified as “blighted,” because the conditions are far-reaching and not all that difficult to satisfy. Of course, it includes the basic provision we would all naturally think of as blighted; that is, that the property is “unsafe or unhealthy for persons to live or work.” (CHSC §33031(a)(1).) But it also includes other characteristics that may not jump immediately to mind, like depreciated property values. A property may also be deemed blighted if uses are incompatible with the surrounding area, with zoning, or even with a General Plan goal, such as building high-density housing near transit corridors. In terms of TOD these two characteristics are especially relevant:

CHSC §33031(a)(3): Adjacent or nearby incompatible land uses that prevent the develpoment of those parcels or other portions of the project area.

CHSC §33031(a)(4): The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions.

What does this have to do with Prop 99? The relationship is a bit oblique, because the Prop 99 amendment does not insert the actual word “blight” into the Constitution, nor does it explicitly incorporate the characterizing conditions of blight from §33031 into the amendment — quite understandably, because that would have made the proposition more vulnerable politically. Instead, Prop 99 confers upon governments the following exception to the 19(b) general rule:

SEC. 19(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. (Emphasis mine.)

So the Prop 99 amendment allows eminent domain to protect “public health and safety” — the same phrase as in the Health and Safety Code, with the “general welfare” part deleted. If a government can establish that not constructing TOD in a certain location forces the property to be blighted, does the phrase “public health or safety” here justify use of eminent domain on that basis, or does the missing “general welfare” shut the door? I don’t know, but upon reading the phrase “public health or safety” phrase in Prop 99, the blighted property issue jumped immediately to mind, so it seems like you could at least make the argument.

And, even more basic than the blighted property issue: Sec. 19(b) prohibits eminent domain “for the purpose of conveying it to a private person.” (Emphasis mine.) If a government can establish a legitimate purpose other than wanting to convey the property to a private party, would that purpose be enough to justify eminent domain? In the case of TOD, it is not too hard to establish such a purpose. In fact, that purpose is basically the whole point of this website– to extol the societal and environmental virtues associated with livable cities built around transit, as opposed to auto-dependent sprawl that exacerbates congestion, pollution, and global warming.

Someone in favor of Prop 98, who is operating under the assumption that most government intrusion is detrimental, could easily turn many of the clauses cited earlier to argue that Prop 99 does not go far enough to provide true eminent domain reform, but Prop 99 does restrict use of eminent domain in the most sensitive cases while still affording government necessary flexibility. Prop 99’s more narrow focus is not a bad thing — much better to proceed carefully than to open the destructive Pandora’s Box that is Prop 98. In the future, restrictions on Kelo can and probably should be considered — and if so, they should be narrowly tailored to address specific concerns from Kelo. Prop 98’s broad-sweeping language is deeply troubling, and it is a strong impediment to the government’s ability to act on behalf of the public interest. “True” eminent domain reform can be dealt with after the election. For now, we should concentrate on the immediate goal of defeating Prop 98.