Easy Voter Guide For new or busy voters (in 7 languages) Smart Voter Your Ballot & Poll Place On Propositions Ballot Measure Analysis Easy Voter Guide Pros & Cons Prop 1A Prop 1B Prop 1C Prop 1D Prop 1E Prop 83 Prop 84 Prop 85 Prop 86 Prop 87 Prop 88 Prop 89 Prop 90 PDF In Depth Prop 1A Prop 1B Prop 1C Prop 1D Prop 1E Prop 83 Prop 84 Prop 85 Prop 86 Prop 87 Prop 88 Prop 89 Prop 90 About Ballot Measures Background Bond Financing How to Evaluate The Initiative Process Other Absentee Voting Register to Vote

GOVERNMENT ACQUISITION, REGULATION OF PRIVATE PROPERTY
Initiative Constitutional Amendment.

QUESTION

Should the California Constitution be amended to require government to pay property owners for substantial economic losses resulting from some new laws and rules, and limit government authority to take ownership of private property?

BACKGROUND

State and local governments pass laws and other rules to benefit the overall public health, safety, or welfare of the community, including its long-term economy. In some cases, government regulatory requirements can reduce the value of private property. This can be the case, for example, with laws and rules that: (1) limit development on real property; (2) require industries to change their operations to reduce pollution; or (3) restrict apartment rents.

To build public transportation, schools, parks and other public facilities, to promote economic development, and/or to carry out other public policies, California state and local governments sometimes have to purchase private property. Most of these purchases are negotiated between the private property owners and public agencies. In some cases, however, a public agency and owner cannot agree upon the value of the property or the owner does not want to sell the property. In these cases, the public agency may decide to acquire the property through its power of eminent domain.

Eminent domain (also called "condemnation") is the power of governments to take private property for a public use as long as the government compensates the property owner. In addition to these uses of eminent domain, governments also have taken property for public purposes that do not include construction of public facilities. For example, governments have taken property to help develop higher value businesses in an area, correct environmental problems, enhance tax revenues, or address "public nuisances" (such as hazardous buildings, blight, and criminal activity).

Under the United States and California Constitutions and other statutes, public agencies may use eminent domain power to: (1) acquire private property (real, business, personal, tangible, or intangible property); or (2) reduce the economic value of property for a public purpose (these are referred to as "damages") if they pay "just compensation" to the owner. Just compensation includes: (1) the fair market value of the real property and its improvements; and/or (2) any diminution in value of the remaining property when property taken is part of a larger parcel.

PROPOSAL

Substantial Economic Losses. This initiative requires a government to pay property owners if it passes certain new laws or rules that result in substantial economic losses to their property. All existing laws and rules would be exempt from the measure's compensation requirement. New laws and rules also would be exempt from this requirement if a government enacted them: (1) to protect public health and safety; (2) under a declared state of emergency; or (3) as part of rate regulation by the California Public Utilities Commission.

While the terms of the initiative are not clear, the initiative provides three examples of the types of new laws and rules that could require compensation.

1. Downzoning Property. This term refers to decisions by government to reduce the amount of development permitted on a parcel. For example, a government action to allow construction of three homes on an acre where five homes previously had been permitted commonly is called "downzoning."
2. Limitations on the Use of Private Air Space. This term generally refers to actions by government that limit the height of a building. For example, a government rule limiting how tall a building may be to preserve views or maintain historical character often is called a limitation of "air space."
3. Eliminating Any Access to Private Property. This term could include actions such as closing the only public road leading to a parcel.

In addition to the examples cited above, the broad language of the measure suggests that its provisions could apply to a variety of future governmental requirements that impose economic losses on property owners. These laws and rules could include requirements relating, for example, to employment conditions, apartment prices, endangered species, historical preservation, and consumer financial protection.

Under current law and court rulings, a government usually is required to compensate property owners for losses resulting from laws or rules if government's action deprives the owners of virtually all beneficial use of the property. By contrast, this initiative specifies that a government must pay property owners if a new law or rule imposes "substantial economic losses" on the owners. While the initiative does not define this term, dictionaries define "substantial" to be a level that is fairly large or considerable. Thus, the initiative appears to require government to pay property owners for the costs of many more laws and rules than it does today, but would not require government to pay for smaller (or less than substantial) losses.

Government Acquisition. Under the initiative, a government could take private property to build public roads, schools, parks, and other government-owned public facilities. Government also could take property and lease it to a private entity to provide a public service (such as the construction and operation of a toll road). If a public nuisance existed on a specific parcel of land, government could take that parcel to correct the public nuisance. Finally, government could take property as needed to respond to a declared state of emergency.

Before taking property, the initiative requires a government to state a "public use" for the property, and would narrow the definition of public use in a way that generally would constrain a government from taking a property:

• To Transfer it to Private Use. The initiative specifies that a government must maintain ownership of the property and use it only for the public use it specified when it took the property.
• To Address a Public Nuisance, Unless the Public Nuisance Existed on That Particular Property. For example, government could not take all the parcels in a run-down area unless it showed that each and every parcel was blighted.
• As Part of a Plan to Change the Type of Businesses in an Area or Increase Tax Revenues. For example, government could not use eminent domain for economic development purposes, including taking private property to: (1) give to another private person or entity for commercial enterprise; or (2) improve the community's tax revenues, employment base, housing density, or general economic health. The initiative provides limited exceptions to this prohibition, including allowing agencies to use eminent domain to acquire abandoned property, property for use by a public utility, and/or to remove harmful uses of a specific parcel of land that constitutes an immediate threat to public health and safety.

In any legal challenge regarding a property taking, government would be required to prove to a jury that the taking is for a public use as defined by this initiative. In addition, courts could not hold property owners liable to pay government's attorney fees or other legal costs if the property owner loses a legal challenge.

The initiative specifies that a government may not seize private property until just compensation has been deposited with the court and (unless these rights are waived by the property owner), a jury has ascertained just compensation and a court has affirmed an appropriate public use of the property.

Current law requires government to pay "just compensation" to the owner before taking property. Just compensation includes money to reimburse the owner for the property's "fair market value" (what the property and its improvements would sell for on an open market), plus any reduction in the value of remaining portions of the parcel that government did not take. State law also requires government to compensate property owners and renters for moving costs and some business costs and losses.

The initiative appears to increase the amount of money government must pay when it takes property. Under the initiative, for example, government would be required to pay more than a property's fair market value if a greater sum were necessary to place the property owner "in the same position monetarily" as if the property had never been taken. The initiative also appears to make property owners eligible for reimbursement for a wider range of costs and expenses associated with the property taking than is currently the case.

FISCAL EFFECTS

Substantial Economic Losses. The initiative's provisions regarding economic losses could have a major effect on future state and local government policymaking and costs. The amount and nature of these effects, however, is difficult to project as it would depend on how the courts interpreted the initiative's provisions and how governments implemented it.

• How Many Laws and Rules Would Be Exempt? The initiative does not require government to compensate property owners under certain circumstances (such as actions to protect public health and safety). If these exemptions were interpreted broadly (rather than narrowly), fewer new laws and rules could require compensation.
• How Big Is a Substantial Economic Loss? If relatively small losses (say, less than a ten percent reduction in fair market value) to a property owner require compensation, governments could be required to pay many more property owners for costs resulting from new laws and rules. On the other hand, if courts ruled that a loss must exceed 50 percent of fair market value to be a substantial economic loss, governments would be required to pay far fewer property owners.

Under the initiative, state and local governments probably would modify their policymaking practices to try to avoid the costs of compensating property owners for losses. In some cases, government might decide not to create laws and rules because of these costs. In other cases, government might take alternative approaches to achieving its goals.

There probably would be many cases, however, where governments would incur additional costs as a result of the initiative. The total amount of these payments by government to property owners cannot be estimated, but could be significant on a statewide basis.

Government Acquisition. Governments buy many hundreds of millions of dollars of property from private owners annually. Relatively few properties are acquired using government's eminent domain power. Instead, governments buy most of this property from willing sellers. (Property owners often are aware, however, that government could take the property by eminent domain if they did not negotiate a mutually agreeable sale.)

A substantial amount of the property that government acquires is used for roads, schools, or other purposes that meet the public use requirements of this initiative, or is acquired to address specific public nuisances. In these cases, the initiative would not reduce government's authority to take property. The measure, however, likely would increase somewhat the amount that government must pay property owners to take their property. In addition, the measure could result in the sellers increasing their asking prices. The resulting increase in government's costs to acquire property cannot be determined, but could be significant.

The rest of the property governments acquire is used for purposes that do not meet the requirements of this initiative. In these cases, government could not use eminent domain and could acquire property only by negotiating with property owners on a voluntary basis. If property owners demanded selling prices that were more than the amount government previously would have paid, government's spending to acquire property would increase. Alternatively, if property owners did not wish to sell their property and no other suitable property was available for government to purchase, government's spending to acquire property would decrease.

Overall, the net impact of the limits on government's authority to take property is unknown. It is estimated, however, that is it likely to result in significant net costs on a statewide basis.

Potential Changes in Government Costs to Acquire Property. The initiative would decrease the purposes for which public agencies may use eminent domain and reduce their ability to acquire property quickly. Because governments would have an increased incentive to acquire property from willing sellers, property owners might charge governments more for their properties and/or governments might buy less property than otherwise would be the case.

Potential Changes in State or Local Government Tax Revenues. The initiative limits government's ability to use eminent domain to promote economic development. The fiscal effect of this provision is unknown, as it would depend on such factors as the efficacy of economic development programs involving eminent domain. For instance, to the extent that the measure's provisions prevent governments from taking actions that otherwise would have increased economic activity and state or local tax revenues, this measure would have a negative fiscal effect on governments. In other cases, the measure could result in a shift in the location of certain economic activities and/or a change in the nature of economic activities in a particular.

(LWVC )

• Due to recent court cases, there is significant public interest in the rights of property owners as opposed to the right of governments to use the power of eminent domain for a broad range of community purposes.
• There is also significant public interest in the level of governmental regulatory activity and the potential adverse impact such regulations have on the rights and interests of individuals and businesses.
• Proposition 90 would require governments to compensate individuals and businesses if they incur substantial economic losses as a result of the operation of new laws and regulations. Due to the broad language in the proposition, this would likely apply to substantial economic losses related to real property, but also from the operation of laws affecting the environment, business operations, employment, historic preservation, etc.
• Proposition 90 would limit government's use of the power of eminent domain to the acquisition of private property for specifically public uses. This would preclude the use of eminent domain to acquire property for economic development within the community, although governments could negotiate to acquire private property for such purposes.

WHAT A YES OR NO VOTE MEANS

A YES vote means that the California Constitution should be amended to require government to pay property owners for substantial economic losses resulting from some new laws and rules, and limit government authority to take ownership of private property.

A NO vote means that the proposed amendments to the California Constitution will not be made to require government to pay property owners for substantial economic losses resulting from some new laws and rules, and limit government authority to take ownership of private property.

SUPPORTERS SAY

• State and local governments have undermined private property rights through excessive use of eminent domain power and the regulation of private property for purposes unrelated to public health and safety. Proposition 90 is needed to limit the use of the power of eminent domain by governments in California to legitimate public use projects.
• The courts have allowed local governments to exercise eminent domain powers to turn property over to private developers.
• Proposition 90 ensures that the owner will receive just compensation for any property taken or damaged. Whenever a property owner and the government cannot agree on fair compensation, the California courts should provide through a jury trial a fair and timely process for the settlement of disputes.

OPPONENTS SAY

• Proposition 90 is a trap which will lead to huge new costs for all California taxpayers as unscrupulous property owners exploit these new provisions.
• Proposition 90 is not limited to land-use laws. It could impact the implementation of consumer protection laws, employment-related laws, etc., and will lead to thousands of expensive lawsuits.
• This is a poorly written proposition loaded with unrelated and far-reaching provisions that will harm, not protect, California property owners.

SUPPORT AND OPPOSITION

Official ballot arguments in support are signed by: Manuel Romero, Eminent Domain Abuse Victim; Bob Blue, Eminent Domain Abuse Victim; Pastor Roem Agustin, Eminent Domain Abuse Victim; Mimi Walters, Honorary Chair, California Protect Our Homes Coalition; Martyn B. Hopper, California Director, National Federation of Independent Business (NFIB); John M. Revelli, Eminent Domain Abuse Victim

Official ballot arguments in opposition are signed by: Chief Michael Warren, President, California Fire Chiefs Association; Chief Steve Krull, President, California Police Chiefs Association; Edward Thompson, Jr., California Director, American Farmland Trust; Kenneth W. Willis, President, League of California Homeowners; Jacqueline Jacobberger, President, League of Women Voters of California

FOR MORE INFORMATION

Supporters

Protect our Homes Coalition, 916-443-6703; www.90yes.com

Opponents

No on 90, Californians Against the Taxpayer Trap, 916-443-0872; www.noprop90.com

Web Resources

Analysis by the Legislative Analyst's office

Voter Information Guide (ballot pamphlet)

Reports of campaign expenditures for ballot measure