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CC - Item 2G - Opposing Prop 98D • ROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: OLIVER CHI, CITY MANAGER DATE: APRIL 8, 2008 SUBJECT: RESOLUTION OPPOSING PROPOSITION 98 SUMMARY The League of California Cities (the League) is part of a broad coalition that opposes Proposition 98, the California Property Owners and Farmland Protection Act. The League has requested that the City Council adopt a resolution to formally oppose Proposition 98. Attached is a summary of the California Owners and Farmland Protection Act (Attachment A) and a copy of the text from Proposition 98 (Attachment B). Staff Recommendation Staff recommends that the City Council formalize the City's opposition to Proposition 98 by adopting Resolution 2008-24 (Attachment C). PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Submitted by: Aileen Flores Public Affairs Manager Attachments: A - Summary of the California Owners and Farmland Protection Act B - Proposition 98 C - Resolution No. 2008-24 APPROVED FOR CITY COUNCIL AGENDA: 0 O • - ATTACHMENT A v Summary of California Property Owners and Farmland Protection Act The Howard Jarvis Taxpayers Association, the California Farm Bureau Federation and the California Alliance to Protect Private Property Rights have submitted signatures to place a measure on the June, 2008 ballot, which would make major changes to laws governing use of property, including use of eminent domain and regulation of land use. The proposed initiative would make the following changes to existing law: Governmental Regulations Affecting Price The initiative would define a regulation of property that limits the price a private owner may charge another person to purchase, occupy or use his or her real property as a prohibited taking for a private use. This would prohibit rent control ordinances and make unconstitutional inclusionary housing ordinances adopted in many California communities which require new housing development to include units affordable by low- and moderate-income buyers or renters. The effect of this provision on the inclusionary housing provisions of the Community Redevelopment Law is difficult to predict. Redevelopment agencies might still be able to bargain for the provision of affordable units as a condition of agency assistance, but they would not be able to impose such requirements as a matter of law. Limitation on Use of Eminent Domain for Consumption of Natural Resources In one of its provisions, the initiative would prohibit the use of eminent domain to "transfer the ownership, occupancy or use of private property... to a public agency for the consumption of natural resources..." This provision can be read, for example, to prohibit the use of eminent domain by a city to acquire new drinking water resources. The initiative would also prohibit the use of eminent domain if the public agency would use the property for "the same or substantially similar use as that made by the private owner." This provision would likely eliminate eminent domain as a tool to acquire conservation and open space easements. Regulation of Land Use The initiative requiires a public agency to pay "just compensation" when it regulates the use of land if the regulation transfers an economic benefit from the person who owns the land to another person. Under existing law, public agencies use their police power to enact regulations governing the use of privately owned real property. These regulations range from traditional zoning to nuisance regulations and include conditions imposed on the new development of property. Nearly all of these regulations have an economic impact. Some properties are benefited while others are burdened. Read literally, this provision would make unconstitutional virtually all regulation of land use unless just compensation is paid. Restrictions on the Use of Eminent Domain Propertv may not be taken and then transferred to a private party. For over 50 years, State and Federal Courts have held that the use of eminent domain by redevelopment agencies to eliminate conditions of blight is a public use. The initiative's definitions of "taken" and "private use" reverse those cases and prohibit the use of eminent domain where the ownership, occupancy or use of the property acquired is transferred to a private person or entity. This would end the use of eminent domain by redevelopment agencies except for public works projects. It would also prevent the use of eminent domain by other public agencies in public/private partnerships for facilities such as toll roads and privately-run prisons. Rent controlled units as of January 1, 2007, would be grandfathered, but only for so long as at least one of the tenants continues to live in the unit as their principal place of residence. New definition Of "just compensation." Existing law requires the payment of just compensation to the owner of property taken by eminent domain. "Just compensation" is defined in the Eminent Domain Law (a statute) as "fair market value." A body of well-established law interpreting tke meaning of "just compensation" allows both public agencies and property owners to be reasonably certain about the value of property to be acquired. _ In large part because the value of the property is predictable, an acquisition usually does not require the use of eminent domain and rarely will an eminent domain case actually go to trial. The initiative would add a constitutional definition of "just compensation" that would prevail over this settled body of law. This will probably result in the need to have more frequent recourse to the courts to settle disputes over the meaning of "just compensation." Among the other changes that the initiative would make are the following: Just compensation would include an award of the property owner's attorney's fees if the jury awards one dollar more than the amount offered by the public agency. It is unclear which offer to purchase this provision refers to. b. Just compensation would include elements not currently recognized such as temporary business losses. Relocation and other business re-establishment costs would also be elevated to constitutional status, thereby perhaps abrogating existing statutes which place limits on the type and amount of such expenses for which compensation must be paid. 3. Acquiring "immediate possession" of property made more complicated. Under existing law, after depositing-with the court the estimated just compensation, a public agency can obtain possession of property prior to a final judgment based on a showing of an overriding need for the condemnor to take possession prior to final judgment. If the property owner withdraws the deposit, he or she waives their right to contest whether the taking is for a public use but may still contest the amount ofjust compensation. The initiative would change this approach to prejudgment possession by permitting the property owner to contest both public use and just compensation after withdrawing the deposit. This would make the use of prejudgment possession more problematic for public agencies since they would still be at risk of being prohibited from taking the property (if they lose the right to take issue) rather than simply paying more for it. . 4. Balance of power shifts. Under existing law, when a public agency makes findings in connection with the taking of property by eminent domain, those findings are entitled to strong presumptions of validity: Courts will overturn those findings only where the property owner is able to demonstrate a gross abuse of discretion, such as bribery or fraud. Courts are also limited to reviewing the administrative record before the public agency. These rules are rooted in concepts of separation of powers-the respect that co-equal branches of government have for the other's proceedings. The initiative would provide that a court must exercise its independent judgment and give no deference to the findings of the public agency. The court's inquiry would also not be limited to the administrative record, and so the property owner could introduce evidence of value and other matters not before the condemning agency at the time the decision to condemn was made. • • Q 7 ATTACH 5ENT B SECTION 1. . STATEMENT OF FINDINGS (a) Our state Constitution, while granting government the power of eminent domain, also provides that the people have an inalienable right to own, possess, and protect private property. It further provides that no person may be deprived of property without due process of law, and that private property may not be taken or damaged by eminent domain except for public use and only after just compensation has been paid to the property owner. (b) Notwithstanding these clear constitutional guarantees, the courts have not protected the people's rights from being violated by state and local governments through the exercise of their power of eminent domain. (c) For example, the U.S. Supreme Court, in Kelo v. City of New London, held that the government may use eminent domain to take property from its owner for the purpose of transferring it to a private developer. In other cases, the courts have allowed the government to set the price an owner can charge to sell or rent his or her property, and have allowed the government to take property for the purpose of seizing the income or business assets of the property. (d) Farmland is especially vulnerable to these types of eminent domain . abuses. SECTION 2. STATEMENT OF PURPOSE (a) State and local governments may use eminent domain to take private property only for public uses, such as roads, parks, and public facilities. (b) State and local governments may not use their power to take or damage property for the benefit of any private person or entity. (c) State and local governments may not take private property by eminent domain to put it to the same use as that made by the private owner. (d) When state or local governments use eminent domain to take or damage private property for public uses, the owner shall receive just compensation for what has been taken or damaged. (e) Therefore, the people of the state of California hereby enact the "California Property Owners and Farmland Protection Act." • J SECTION 3. AMENDMENT TO CALIFORNIA CONSTITUTION Section 19 of Article I of the California Constitution is amended to read: SEC. 19(aa) Private property may be taken or damaged only for a stated public use and when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner. The Legislature may provide for possession by the condemnor following commencement of eminent domain proceedings upon deposit in court and prompt release to the owner of money determined by the court to be the probable amount of just compensation. Private property may not be taken or damaged for private use. (b) For purposes of this section: (1) "Taken" includes transferring the ownership, occupancy, or use of property from a private owner to a public agev ncy or to any person or entity other than a public agency, or limiting the price a private owner may charge another person to purchase, occupy or use his or her real property. (2) "Public use" means use and ownership by a public agency or a regulated public utility for the public use stated at the time of the taking including public facilities public transportation, and public utilities, except that nothing herein prohibits leasing limited space for private uses incidental to the stated public use: nor is the exercise of eminent domain prohibited to restore utilities or access to a public road for any private property which is cut off from utilities or access to a public road as a result of a taking for public use as otherwise defined herein. (3) "Private use" means: (i) transfer of ownership, occupancy or use of private property or associated property rights to any person or entity other thana public agency or a regulated public utility; , (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: or (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. • • (4) "Public agency." means the state, special district, county, city, city and county, including a charter city or county, and any other local or regional governmental entity, municipal corporation, public agency-owned utility or utility district, or the electorate of any public agency. (5) "Just compensation" means: (i) for property or associated property rights taken, its fair market value; (ii) for property or associated property rights damaged, the value fixed by a jury, or by the court if a jury is waived; (iii) an award of reasonable costs and attorney fees from the public agency if the property owner obtains a judgment for more than the amount offered by a public agency as defined herein; and Ov) any additional actual and necessary amounts to compensate the property owner for temporary business losses, relocation expenses, business reestablishment costs, other actual and reasonable expenses incurred and other expenses deemed compensable by the Legislature. (6) "Prompt release" means that the property owner can have immediate possession of the money deposited by the condemnor without preiudicing his or her right to challenge the determination of fair market value or his or her right to challenge the taking as being for a private use. (7) "Owner" includes a lessee whose property rights are taken or damaged. (8) "Regulated public utility" means any public utility as described in Article XII, section 3 that is regulated by the California Public Utilities Commission and is not owned or operated by a public agency. Re ]gtt ated public utilities are private property owners for purposes of this article. (c) In any action by a property owner challenging a taking or damaging of his or her property, the court shall consider all relevant evidence and exercise its independent judgment, not limited to the administrative record and without deference to the findings of the public agency. The property owner shall be entitled to an award of reasonable costs and attorney fees from the public agency if whose property is taken or damaged for private use may bring an action for an injunction, a writ of mandate or a declaration invalidating the action of the public agency. • • (d) Nothing in this section prohibits a public agency or regulated public utility from entering into an agreement with aprivate property owner for the voluntaar sale of property not subject to eminent domain, or a stipulation regarding the payment of just compensation. e If property is acquired by a public agency through eminent domain, then before the agency may put the property to a use substantialty different from the stated public use, or convey the property to another person or unaffiliated agency the condemning agency must make a good faith effort to locate the private owner from whom the property was taken, and make a written offer to sell the property to him at the price which the agency paid for the property, increased only by the fair market value of any improvements fixtures or appurtenances added by the public agency, and reduced by the value attributable to any removal; destruction or waste of improvements, fixtures or appurtenances that had been acquired with the decreased only as allowed herein, plus any inflationary adjustments authorized by subdivision (b) of Section 2 of Article XIIIA. The right to repurchase shall apply only to the owner from which the property was taken and does not apply to heirs or successors of the owner or, if the owner was not a natural person, to an entity which ceases to legally exist. (f) Nothing in this section prohibits a public agency from exercising its power of eminent domain to abate public nuisances or criminal activity' (g) Nothing in this section shall be construed to prohibit or impair voluntary agreements between a property owner and a public agency to develop or rehabilitate affordable housing. (h) Nothing in this section prohibits the California Public Utilities Commission from regulating public utility rates. state of emergency. 4 • • SECTION 4. IMPLEMENTATION AND AMENDMENT This section shall be self-executing. The Legislature may adopt laws to further the purposes of this section and aid in its implementation. No amendment to this section may be made except by a vote of the people pursuant to Article II or Article XVIII. SECTION 5. SEVERABILITY The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. SECTION 6. EFFECTIVE DATE The provisions of this Act shall become effective on the day following the election ("effective date"); except that any statute, charter provision, ordinance, or regulation by a public agency enacted prior to January 1, 2007, that limits the price a rental property owner may charge a tenant to occupy a residential rental unit ("unit") or mobile home space ("space") may remain in effect as to such unit or space after the effective date for so long as, but only so long as, at least one of the tenants of such unit or space as of the effective date ("qualified tenant") continues to live in such unit or space as his or her principal.place of residence. At such time as a unit or space no longer is used by any qualified tenant as his or her principal place of residence because, as to such unit or space, he or she has: (a) voluntarily vacated; (b) assigned, sublet, sold or transferred his or her tenancy rights either voluntarily or by court order; (c) abandoned; (d) died; or he or she has (e) been evicted pursuant to paragraph (2), (3), (4) or (5) of Section 1161 of the Code of Civil Procedure or Section 798.56 of the Civil Code as in effect on January 1, 2007; then, and in such event, the provisions of this Act shall be effective immediately as to such unit or space. CITY OF ROSEMEAD • ATTACHEMNT C RESOLUTION NO. 2008-24 A RESOLUTION OF THE CITY COUNCIL OPPOSING PROPOSITION 98, THE CALIFORNIA PROPERTY OWNERS AND FARMLAND ACT WHEREAS, a constitutional amendment ballot measure, Proposition 98, will appear on California's June 2008 ballot; and WHEREAS, Proposition 98 proponents want voters to believe the initiative is about eminent domain, but in fact the measure contains hidden agendas and flawed language which will eliminate rent control and other renter protections, threaten development of public water projects, stymie local land use planning and impair our ability to protect the environment; and WHEREAS, the majority of the funding to qualify this measure comes from wealthy apartment and mobile home park owners who are attempting to trick voters into abolishing rent control and other renter protections, thereby jeopardizing an important affordable housing tool to protect working families, seniors, single-parent homes, veterans and others; and WHEREAS, provisions in the initiative would also preclude the use of eminent domain to acquire land or water to develop public water projects that are needed to provide our residents, businesses, farmers and economy with a reliable and safe supply of water; and WHEREAS, Proposition 98 is opposed by the Association of California Water Agencies and the Western Growers Association, who warn the initiative will impair water projects to protect water quality and supply; and WHEREAS, language in the initiative will also prohibit the passage of regulations, ordinances, land use and other zoning laws that enable local governments to plan and protect communities; and WHEREAS, the California Police Chiefs Association opposes the measure because it threatens their ability to keep communities and the public safe; and WHEREAS, leading environmental groups warn provisions in the measure would impair our ability to enact environmental protections such as laws that control greenhouse gas emissions, preserve open space, protect coastal areas, and regulate development; and WHEREAS, the No on Proposition 98 campaign is represented by the League of California Cities, California State Association of Counties, League of California Homeowners, California League of Conservation Voters, California Alliance for E • ATTACHMENT C Retired Americans and other leading state and local associations who oppose Proposition 98. NOW, THEREFORE, BE IT RESOLVED BY the City Council of the City of Rosemead that we hereby oppose Proposition 98 on the June 2008 ballot. NOW, THEREFORE, BE IT FURTHER RESOLVED that we authorize the use of - our name by the No on Proposition 98 campaign in opposition to Proposition 98. We direct staff to fax a copy of this adopted resolution to the League of California Cities at (626) 301-0387. PASSED, APPROVED AND ADOPTED THIS 8T" DAY OF APRIL 2008. JOHN TRAN MAYOR ATTEST: GLORIA MOLLEDA CITY CLERK