Eminent domain and the L.A. Live project in Los Angeles

Constitutional Law: Real Estate Eminent Domain in Los Angeles, California

The objective of this work is to find one legal case from which an eminent domain event occurred in Los Angeles, California, within the past five years. Furthermore, this work will locate two articles that are no more than one-year-old that directly relate to this topic. This work will critically analyze the legal case and current event.

Eminent Domain is defined as the power held by a government, either federal, state, country or city and to include school and hospital district and other agency to secure private land for public use and this may be with or even without the permission or approval of the owner of the property. It is provided in the Fifth Amendment to the Constitution that 'private property [may not] be taken for public use without just compensation.' Added by the Fourteenth Amendment is the requirement of 'just compensation' when property is taken and involves a condemnation which includes a public need declaration, next followed by an appraisal, offer and negotiation. In the even the individual whose property is taken is not satisfied they may sue the government agency and have a court determine what is 'just' compensation. Eminent domain in Los Angeles, California is the focus of this review of case law and literature, which reports eminent domain in Los Angeles, California. The Constitution of California allows governments to seize property through the principle of eminent domain and makes requirements that property only be taken in this manner for 'public use' and through 'just compensation' to the property owner. The work of Sanderfur (nd) entitled: "A Natural Rights Perspective on Eminent Domain in California: A Rationale for Meaningful Judicial Scrutiny of 'Public Use' states that the term "eminent domain appears to have been coined by the sixteenth century author Hugo Grotius, although the power itself is much older." (Sanderfur, nd) the work of Boulard entitled: "Eminent Domain- for the Greater Good?" relates that the decision of the U.S. Supreme Court in Kelo v. New London has prompted states to look at their own eminent domain practices." (2006)

I. The ISSUE

The work of Saito (2007) entitled: "Economic Redevelopment and the Community Benefits Program: A Case Study of the L.A. Live Project, a Los Angeles Sports and Entertainment District" states that discussions concerning the development of the corporation Anschutz Entertainment Group (AEG) and Los Angeles City which revolved around the building of a sports arena in downtown Los Angeles began in 1996. Saito (2007) states that in August 1997, a council member, Joel Wachs, "declared that he would launch a voter initiative 'requiring an election before any professional sports facility could receive a public subsidy" and Wachs did file this with the city clerk and explained that while he was in support of the arena he was "against public funding and wanted fuller disclosure about the financial dealings of the project."(Saito, 2007)

Saito states that the officials in Los Angeles desired to receive the huge capital investment in the downtown area "represented by the Staples project" and help was needed from the city by AEG "in the form of eminent domain to assemble the huge parcel of land required by the Staples Center and the future L.A. Live project; city subsidies for the project, and support through the long and complicated approval process for the project." (Saito, 2007) in October 1997, two months following the filing of Wach's initiative with the city clerk a deal was agreed upon between the city and the developer on a deal for the arena that was a new agreement that was stated by Wachs to be of the nature that would result in a $100 million savings for the city. However, "the spokesperson for the arena said the deal would cost the developer additional 'tens of millions'. (Saito, 2007)

The Los Angeles Community Redevelopment Agency "used its power of eminent domain and assembled a parcel of land for the development of the arena. The arena would be called the Staples Center when Staples Inc. agreed in 1997 to a $116 million 20-year deal to have its name on the arena, up to that time, the most ever paid for the naming rights for a sports arena." (Saito, 2007) This arena would replace approximately 184 housing units as well as 28 businesses and the Los Angeles Unified School District Child Care Facility.

II. LOS ANGELES: CASES of EMINENT DOMAIN

The Los Angeles Times article entitled: "L.A. Unified Wins Eminent Domain Claim" reports a win for the Los Angeles Unified School District "in a legal battle with developer Richard Meruelo over the fate of a former rail yard." (Larrubia, 2007) it was fueled by Superior Court Judge Soussan Burguera that "the district had a right to take the 230 acres Glassell Park property from Meruelo through eminent domain." (Larrubia, 2007) Being built is a new 2,300-student high school, which is expected to alleviate the crowding at three other high schools in Los Angeles. It is stated that now that the fight is over concerning the property rights that the question of compensation is next. Meruelo was offered $29 million by the district however, Meruelo paid a stated "$30 million for the parcel in 2005 - a rising real estate market..." according to Meruelo's lawyer, Patrick a. Hennessey. It is held by Hennessey that the District never made a fair evaluation of the land. It is reported that the purchase of the property on the part of Meruelo is "controversial, in part, because the district also was negotiating for the property and had made an offer." (Larrubia, 2007)

The funding source is also stated to have been controversial in that "he tapped a credit line with the public employees' retirement fund, CalPERS - which includes nonclassroom L.A. Unified workers- to buy the vacant lot north of downtown." (Larrubia, 2007) the claim stated by Meruelo is that he wasn't aware of the district's plans when he bought the land and even made an offer to build a school integrated into his own plans and in what would be a placement of the school in a "small adjacent lot that he did not own." (Larrubia, 2007) Complicating the matter of valuation of the property is the additional purchases made by Meruelo of "adjacent properties - a Kia car dealership and a FedEx property." (Larrubia, 2007)

Eminent domain is not always the outcome of personal vs. governmental property disputes and this is evidenced in the battle for South Central Farm in Los Angeles. The work of Mark (2006) entitled: "The Central Question" states that South Central Farm is "Situated among the warehouses, railroad tracks, and truck depots of industrial Los Angeles, South Central Farm is something of an oasis, and it's become a vital food source for 350 low-income, mostly Latino families. Over the last few weeks, the threat of development has earned these 14 acres -- which comprise the nation's largest urban garden -- national and international attention." (Mark, 2006)

This property dispute has been ongoing for more than twenty years and has been in and out of court over and again. The property is stated to be: "...about a 15-minute drive from downtown L.A., is owned by Brentwood developer Ralph Horowitz. In the late 1980s, the city used eminent domain to take it over for a planned waste incinerator. Horowitz's investment company, which owned 80% of the property at the time, received $4.7 million after filing a lawsuit. Neighbors organized to stop the incinerator, but the site then became an illegal dump full of unwanted furniture and appliances." (Mark, 2006)

In 1992, the L.A. Regional Food Bank was assigned a temporary lease by city official and the land was turned into a community garden. Much work has been done including the installation of a water system. Mark (2006) states that finally in 2003 '...after years of wrangling and lawsuits by Horowitz -- who had retained the right of first refusal on the land -- the city council voted in a closed session to sell the property back to him for $5.5 million. The next month, the South Central farmers received their first eviction notice, and they've been fighting to save their plots ever since." (Mark, 2006) the work of the GAO entitled: "Eminent Domain: Information about Its Uses and Effect on Property Owners and Communities is Limited (2006) states that complexities exist in association land assembly and that these have "...led to numerous approaches for acquiring land and providing just compensation." (GAO, 2006) the land acquisition process generally occurs in four stages: (1) project planning; (2) property valuation; (3) property acquisition; and (4) relocation. (GAO, 2006) it is stated by the GAO in its Congressional Report that while few eminent domain cases actually proceed to a jury trial "authority officials stated that eminent domain is the most effective tool they have to acquire needed property from owners who hold out for a higher purchase price or refuse to sell."(GAO, 2006) it is additionally related that certain costs "to communities may not be compensated when eminent domain is used." (GAO, 2006) Issues involved are stated to include "the dispersal of residents in low-income communities to other neighborhoods or cities." (GAO, 2006) it is stated that an inherent right of "sovereignty, eminent domain in a government's power to take private property for a public use while fairly compensating the property owners." (GAO, 2006)

There have been actions in state legislatures toward prohibition of "certain eminent domain practices, such as preventing property from being transferred to one private party to another for specific purposes..." (GAO, 2006) Eminent domain laws in many states have been changed so as to permit "private-to-private transfers only if it meets certain conditions, such as the property having been determined to be blighted." (GAO, 2006) However, these modified eminent domain laws have not undergone testing and moreover there is no available historical data on eminent domain use by which to make comparison of the effects that these laws have upon property rights, states and local government use of eminent domain which remains unclear. (GAO, 2006; paraphrased) it is stated: "Regardless of their stance in the debate on eminent domain, government officials and property rights groups we interviewed identified a few concerns related to the procedures on invoking eminent domain, including the adequacy of compensation amounts and the timeliness of notification about public hearings." (GAO, 2006)

The work of Salkin and Lavine (2008) entitled: "Negotiating for Social Justice and the Promise of Community Benefits Agreements: Case Studies of Current and Developing Agreements" states that a 'Community benefits agreement (CBA) is a private contract negotiated between a prospective developer and community representatives." Specified in the agreement are the "benefits that the developer will provide to the community in exchange for the community's support or quiet acquiescence, of its proposed development." (Salkin and Lavine, 2008) CBA negotiation generally occurs between "coalitions of community groups that often include labor, environmental and religious organizations." (Salkin and Lavine, 2008) Stated as the first "full-fledged CBA" is that of the Staples Center in Los Angeles (2001). It is related however, that "Community residents suffered a blow when the developer failed to provide orally promised benefits after the completion of the project's first phase." (Salkin and Lavine, 2008)

In the case of HFH, Ltd., Petitioner, V. The Superior Court of Los Angeles County, Respondent; City of Cerritos Et Al., Real Parties in Interest. Von's Grocery Company, Petitioner, V. The Superior Court of Los Angeles County, Respondent; City of Cerritos Et Al., Real Parties in Interest L.A. Nos. 30382, 30383 Supreme Court of California 15 Cal. 3d 508; 542 P.2d 237; 125 Cal. Rptr. 365; 1975 Cal. Lexis 248; 6 Elr 20062 (1975) stated is that it is not suggested by the court that "...inverse condemnation lay to challenge a zoning action whose only alleged effect was a diminution in the market value of the property in question. In this particular case, the Plaintiffs wanted the "long-standing principles of the law of just compensation" changed asking that municipal zoning bodies be held liable "for full compensation for any fall in market price due to zoning actions." (1975) in the dissent of Clark J. stated is "California has long recognized that while 'the police power is very broad in concept, it is not without restriction in relation to the taking or damaging of property. [on] the one hand, the policy underlying the eminent domain provision in the Constitution is to distribute throughout the community the loss inflicted upon the individual by the making of public improvements.... On the other hand, fears have been expressed that compensation allowed too liberally will seriously impede, if not stop, beneficial public improvements because of the greatly increased cost." (1975)

Clark J. continues by stating that one fact that should be considered in making a determination of such limits "...is the extent of the diminution. When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and as this court has recently recognized in viewing these conflicting policies, the ultimate test whether compensation is constitutionally required, resolves itself into one of fairness. The constitutional requirement of just compensation derives as much content from the basic equitable principles of fairness... As it does from technical concepts of property law." (1975) it is the opinion of Clark J. that there is not a requirement of compensation for all "governmental downzoning, However, the compensatory 'or damaged' provision of the California Constitution should apply when by public action land has:

1) suffered substantial decrease in value, 2) the decrease is of long or potentially infinite duration and 3) the owner would incur more than his fair share of the financial burden.(1975)

IV. ETHICAL DILEMMAS

There are inherent ethical dilemmas, which arise in eminent domain cases. For instance, in cases of blighted communities there is the question of 'what happens to those who are disadvantaged and live in and around the area?' Also present is the question of 'where should cities house the disadvantaged who are perhaps "pushed" out of the area because of the new development?' Finally, the question of governmental policy protection in eminent domain cases for those who do not receive the provision of alternative dwellings.

CONCLUSION

After having conducted the foregoing review it is the conclusion of this writer that eminent domain, while necessary is also fraught with ethical dilemmas. As noted by the GAO in its Congressional Report, the laws of the states relating to eminent domain have not been challenged and are still as of yet very unclear. Arising from this review of California case law is a recommendation that all U.S. states, to include the state of California, conduct further research in this area of study toward the goal of identifying the principles that should guide the use of eminent domain by government and governmental agencies in the future.