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Proposition 98

Eminent Domain Impacts to Project Delivery

April 10, 2008

Presented by CALTRANS - Bimla Rhinehart

Tab 37

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Current Procedures/Facts• Caltrans acquires property exclusively for public

transportation purposes.

• Caltrans has to prove to the CTC the property sought is necessary for a transportation purpose.

• Property owners are responsible for their attorney’s fees

and litigation expenses unless the court finds after trial:– Owner’s demand was reasonable.

– Caltrans final offer was unreasonable.

• Caltrans’ annual right-of-way acquisition costs are estimated to average $150-$200 million per year

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Proposition 98 Impacts on Caltrans Projects

• Cost of transportation projects will increase significantly.

• Adds significant time to the acquisition of property.

• Adds costs for the property acquired for public use.

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Proposition 98 Impacts on Caltrans Projects (Cont’d.)

1 ) Withdrawing the deposit does not waive the right to challenge the acquisition.– The Commission’s Resolution of Necessity

(RON) is more easily challenged

– The acquisition of the property right will be delayed indefinitely pending:– Separate legal hearings.

– Litigation on the right to take.

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Proposition 98 Impacts on Caltrans Projects (Cont’d.)

2 ) Caltrans will be required to pay for all of the property owner’s attorney’s fees and litigation expenses:

– Whenever a judgment is rendered for more than the amount Caltrans has offered.

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Proposition 98 Impacts on Caltrans Projects (Cont’d.)

3 ) If Caltrans sells an excess parcel:– A good faith effort must be made to locate the property owner

from whom the property was acquired.

– A written offer must be made to sell the property at the price that Caltrans paid for the property (gift of public funds?).

– This provision does not specify what constitutes a good faith effort, nor set a time limit on the right of first refusal.

– Similar to SB 1650 enacted 1/1/07.

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Proposition 98 Impacts on Caltrans Projects (Cont’d.)

4 ) Expands the definition of what constitutes “just compensation.” Includes temporary business losses, relocation

expenses, business reestablishment costs, and “other actual and reasonable expenses incurred.”

– Caltrans’ ability to obtain property for possible public-private partnership projects would be impaired.

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Fiscal Impact

Estimated annual project delay (4-6 months) costs:

approximately $18 million.

Additional eminent domain litigation expenses due to: Increased number of lawsuits and trials.

Expanded entitlement to attorney fees and litigation expenses: approximately $41 million annually.

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Proposition 98 Impact Summary

Lengthens the project delivery process by extending the property acquisition process and increases project costs.– Separate hearings and/or litigation to decide if the property is

needed for the project.

– “Just compensation” becomes more subjective

Increase in eminent domain actions because: Caltrans would pay property owners' attorney fees and

litigation expenses if the owner recovers $1 more than Caltrans final offer.

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Questions?