California Proposition 98 (2008)

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California Proposition 98 was a proposed initiated amendment to the California Constitution. It appeared on the June 3, 2008 statewide ballot in California, where it lost.

Only 39% of voters in the low-turnout election approved of Prop. 98, while 62.5% endorsed a rival measure, Proposition 99.

Had Proposition 98 passed and earned more affirmative votes than 99, it would have placed constitutional constraints on the ability of local governments to take property from one private owner through the process of eminent domain in California and give it to another private owner. Prop. 98 also would have phased out rent control.[1],[2]

See California Proposition 98 versus California Proposition 99 (2008) for the main article contrasting the two ballot measures, their campaigns and their competing claims.

View complete June 3 election results here.

Background

In the wake of the 2005 U.S. Supreme Court decision, Kelo v. City of New London, a number of states have enacted legislation to rein in what many voters in those states saw as a potential for eminent domain abuse.

Proposition 90, an eminent domain reform measure that also would have significantly restricted the extent to which the government could engage in regulatory takings and would also have repealed rent control, lost 52-48% in 2006. In June 2008, the eminent domain ballot battle will be re-joined again, this time between Prop. 98--which opponents say incorporates issues unrelated to eminent domain--and Prop 99--which opponents say does not go far enough.

The provisions of Proposition 98

The California Attorney General has prepared an official ballot title and summary of Proposition 98.[3]

According to that document, Proposition 98:

  1. Bars state and local governments from taking or damaging private property for private uses.
  2. Prohibits rent control and similar measures.
  3. Prohibits deference to government in takings cases.
  4. Defines “just compensation.”
  5. Requires an award of attorneys fees and costs if a property owner obtains a judgment for more than the amount offered by the government.
  6. Requires government to offer to original owner of condemned property the right to repurchase property at condemned price when property is put to substantially different use than was publicly stated.[4]

Limits on Use of Eminent Domain

Proposition 98 changes the California Constitution to state, in section 19(a), "Private property may not be taken or damaged for private use." Taking for private use is defined, in section 19(b)(1), to include the transfer of ownership of property from a private owner to any person or entity other than a public agency or regulated public utility. As a result, Proposition 98 would prevent governments from using eminent domain to take property and transfer ownership to another private party.[5]

Phasing out rent control

"Taken" is also defined, in section 19(b)(1), to include "limiting the price a private owner may charge another person to purchase, occupy or use his or her real property." This provision would repeal rent control provisions, at either the local or the state level, statewide. It would also prohibit any price controls on the sale of real property. The repeal on price regulation is implemented on a unit-by-unit basis as the tenant who occupies the unit on the day after election day moves out; see Section 6 of Proposition 98. (This phase-out does not apply to the repeal of other laws, however, only to the repeal of price controls.)[6]

Definition of taking for "Private Use"

Proposition 98 defines, in section 19(b)(3)(iii), any "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" to be taking for "private use". As a result, laws or regulations that allow the government to "transfer an economic benefit" from one property owner to another, private, person would be prohibited.[7]

The courts have ruled that land use regulation generally results in a transfer of economic benefit[8], so any laws relating to land use could be repealed.[9]

It is this provision that would result in the repeal of such laws as: inclusionary zoning regulations (requiring that a portion of all new construction be made available as affordable housing); tenant protections such as rules requiring the return of security deposits, requiring 60-day notice for eviction, or requiring just cause for eviction; environmental protections such as CEQA (the California Environmental Quality Act) and AB 32 which limits greenhouse gas emissions; and zoning provisions, such as limits on density, "big box" megastores, or new liquor stores.[10] The initiative does not list any exceptions, such as a provision allowing regulation to protect health and safety.

Unlike the provision regarding price control repeal, there is no phase-in period for this repeal of regulations that "transfer an economic benefit." As a result, all of these laws and regulations would be repealed immediately on the day after election day.

Natural Resources

Section 19(b)(3)(ii) of the Constitution is added to prohibit transfer property rights for the "consumption of natural resources" to a public agency. This would limit California's ability to implement projects that protect or utilize natural resources or projects to develop the supply of drinking water.

There is no provision in Proposition 98 that would grandfather in existing regulations; repeal would be effective on the day after Election Day if Proposition 98 passes. [11][12]

Other Provisions

The courts generally give deference to government agencies with expertise in a given area in interpreting laws relating to that area. For example, the Coastal Commission and rent control boards currently would be given deference as to interpretation of laws relating to their expertise, so long as that interpretation was reasonable. Proposition 98 changes the Constitution, section 19(c), to prohibit the courts from giving deference to agencies, and requires courts to use their independent judgment.

Proposition 98 would award attorney fees and costs to a property owner if a property owner obtains a judgment for more than the amount offered by the government. (See section 19(c).) It does not have a reciprocal provision providing that a losing property owner would have to pay attorney fees.

Proposition 98 gives a right to the original owner of property taken by eminent domain to repurchase the property at the same price they were paid if the government changes the use of the property in section 19(e). The permitted increase would be that allowed under Proposition 13, without a provision for an increase due to increased value of the property. This right expires if the original owner is a natural person and the person dies, but for a corporation it continues as long the corporation continues to exist.[13]

Supporters say what they see as 98's benefits

As described by the supporters of Proposition 98, what the measure is intended to do is place additional restrictions on eminent domain seizures. These include:[14]

  • Private property may not be taken by eminent domain for private use under any circumstances (e.g., to build a shopping center, auto mall or industrial park).
  • Property may be taken by eminent domain only for public use (e.g., freeway construction, parks, schools).
  • Property may not be taken by government and then used for the same purpose that it was used for prior to seizure. For example, if residential housing is taken, the government cannot then use it for residential housing.
  • Family farms and open space are protected from seizures by government for the purpose of selling the natural resources.
  • If a public agency takes property under false pretenses, or abandons its plans, the property must be offered for sale to the original owner at the original price and the property tax would be assessed at the value of the property when it was originally condemned.
  • If farmers or business owners are evicted by eminent domain, they would be entitled to compensation for temporary business losses, relocation expenses, business reestablishment costs and other reasonable expenses.
  • Government may not set the price at which property owners sell or lease their property.

Opponents say what they see as 98's drawbacks

Opponents of Proposition 98 believe that 98 could affect:

  1. Environmental laws. Opponents believe that it is possible that under the provisions of Prop 98, it would be harder for state agencies to enforce environmental regulations, if those regulations "transfer an economic benefit" from a property owner to another party.
  2. Public safety;
  3. Water projects;
  4. Land use approval processes;
  5. Zoning restrictions, such as limits on density and the types of uses allowed in particular areas;
  6. Tenant protections. Rent control clearly would be eliminated for all new tenancies. In addition, other tenant protections such as the return of security deposits, the right to get 60-days notice before eviction, and requirements that landlords have just cause to evict tenants would also be threatened.

Prop. 98's estimated fiscal impact

The fiscal impact statement released by the official Legislative Analyst's Office starts out by saying that "The measure’s fiscal effect is subject to considerable uncertainty and would depend on (1) how the courts interpret its provisions and (2) future actions by governments to modify existing policies, enact new ones, and buy property."

As their analysis then says, "Because government (if the proposition passed) would have an increased incentive to acquire property from willing sellers, property owners might charge government more for their properties and/or government might buy less property than otherwise would be the case."

Another ambiguous financial aspect of the measure, the LAO office says, is what might happen if a local government responded to the measure's elimination of rent control by "creating publicly funded programs to subsidize affordable housing." This would impose a newburden on that local government's taxpayers, but since the burden would be freely chosen, it is not a foregone conclusion mandated by Proposition 98.

With these uncertainties and ambiguities, in the final analysis, the LAO office determined that many governments would probably have a "net increased cost" but that these costs "would not be significant".[15]

Competing campaign claims

See California Proposition 98 versus California Proposition 99 (2008).

Early skirmish over ballot title

Both opponents and proponents of Proposition 98 filed lawsuits against the California Attorney General's office in February 2008 regarding the ballot descriptions. The proponents argued that rent control repeal should not have been mentioned in the description. Proponents argued that the measure's ballot title, set by that office, was misleading because it said nothing about Prop. 98's stance toward rent control. Both lawsuits were unsuccessful.

The California Attorney General agreed that rent control repeal is a chief purpose of Proposition 98, and Judge Frawley concurred, commenting that he might have written it differently had it been his task. However, Judge Frawley concluded that the Attorney General had not gone beyond his discretion in writing the title and description, taken together. In the lawsuit by proponents, the judge rejected the argument that the rent control provisions should not be characterized as "repeal." [16] [17]

Supporters of Proposition 98

The official group supporting Prop. 98 is Californians for Property Rights Protection, which is a project of the Howard Jarvis Taxpayers Association. Named sponsors on the official filing are Doug Mosebar, Jon Coupal and Jim Nielsen. Other notable supporters include the California Farm Bureau Federation, the California Alliance to Protect Private Property Rights Committee, the California Republican Party, and the California Association of Realtors.[18],[19]

The top 10 donors to the "Yes on 98" campaign as of May 23, 2008 are the California Association of Realtors, AOA Political Action Committee, California Farm Bureau Federation, Orange County Property Rights, Howard Jarvis Taxpayers Association, Thomas Tatum, Friedkin Realty ($100,000), Jeffrey Kaplan ($100,000). An alternative San Francisco newspaper has written that "83% of funding for Proposition 98 comes from landlords and landlord groups." In their calculation, they define the Howard Jarvis Taxpayers Association as a landlord group.[20]

Other supporters of Prop. 98 include:

Sacramento property owner Moe Mohanna announced his support for the initiative in December 2007. "I'll be going to different cities, and talking about private property rights, and the taking of private property for private use," Mohanna said. "Today it is my buildings, tomorrow it is your home," Mohanna said, adding that local governments might even "take every church and turn it into a Costco."[24],[25]

The official web site in support of Proposition 98 lists three newspapers that have come out in favor of Proposition 98.[26]

Opponents of Proposition 98

Opponents of Proposition 98[27] largely overlap with supporters of California Proposition 99.[28] The coalition of groups opposing Prop. 98 includes lobbying associations that represent California municipalities, tenant groups, environmental groups, and unions. Public finance firms&emdash;broker/dealers and other for-profit firms that do bond-writing and debt management business with local governments&emdash;also oppose 98. A PAC representing these interests and eight individual broker-dealer, financial advisory and bond counsel companies have donated to the campaign to defeat Prop. 98.[29]

Notable groups and individuals opposing 98 include Governor Arnold Schwarzenegger, Senator Dianne Feinstein, former Governor Pete Wilson, AARP, the League of California Cities, California League of Conservation Voters, the California Teachers Association, SEIU, and the California Chamber of Commerce.

The official web site opposing Proposition 98 lists 70 newspapers that have come out against Proposition 98.[30]

Top donors opposing Proposition 98

Donor Amount through 5/23
League of California Cities $4,290,000
Californians for Neighborhood Protection $1,555,000
California Redevelopment Association $940,000
California State Association of Counties $912,000
California Public Securities Association $275,000
California Alliance for Jobs $250,000
California Construction Industry $250,000
Nature Conservancy $250,000
Forest City Residential West $100,000

See also:

Poll results

The Public Policy Institute of California (PPIC) released a poll in May 2008 that suggests that while Californians are concerned about property rights, they are not convinced Prop. 98 is the answer.[31] PPIC's March poll showed higher support for 98 than the May poll.[32],[33]

Month of Poll In Favor of 98 Opposed to 98 Undecided
May 2008 30 percent 48 percent 22 percent
March 2008 37 percent 41 percent 22 percent

Whether Proposition 98 becomes law or not depends on the results of the election on June 3. Jonathan Coupal, head of the Howard Jarvis Taxpayer Association, has said, "The voter turnout model for June should be very low and should be very conservative."[34] If voter turnout is significantly lower than indicated by these poll results, Proposition 98 could pass even if these polls accurately reflect the sentiments of California voters.

Prop. 98's petition drive

Arno Political Consultants conducted the petition drive to qualify Prop. 98 for the ballot, charging the campaign $1,583,000.[35] Competing ballot measure, Proposition 99 paid Progressive Campaigns, Inc. $3,559,970 to qualify that measure for the ballot.[36]

See also

External links

References

  1. ↑ Competing eminent domain measures set for June ballot Capital Press, February 8, 2008
  2. ↑ Real Eminent Domain Reform Ballot Measure Qualifies for California's June Ballot, PRNewswire, Jan. 16, 2008
  3. ↑ Text of initiative.
  4. ↑ Attorney General's official ballot title and summary of Proposition 98
  5. ↑ Text of Proposition 98
  6. ↑ Text of Proposition 98
  7. ↑ Text of Proposition 98
  8. ↑ See Hernandez v. City of Hanford (2007) 41 Cal.4th 279
  9. ↑ Western Center on Law and Poverty, An Analysis of the Potential Effects on Housing Laws of the “The California Property Owners and Farmland Protection Act"
  10. ↑ Analysis of impact of Proposition 98 on the environment from the California League of Conservation Voters
  11. ↑ California Coastal Commission Bill Analysis
  12. ↑ Text of Proposition 98
  13. ↑ Text of Proposition 98
  14. ↑ Californians for Property Rights, Initiative Language
  15. ↑ Fiscal Impact Statement
  16. ↑ San Diego Union-Tribune, "Judge approves description of eminent domain initiative on ballot" March 7, 2008
  17. ↑ Beyond Chron March 10, 2008
  18. ↑ List of supporters of Proposition 98
  19. ↑ C.A.R. Supports Yes Vote on Prop. 98 to Protect Homeowners from Unjust Eminent Domain Takings, May 13, 2008
  20. ↑ Beyond Chron, "Campaign Filings Show Landlords Provide 83% of Funding for Prop 98
  21. ↑ Largest Statewide Hispanic Business Organization in the Nation Supports Eminent Domain Reform, California Hispanic Chambers of Commerce endorses June Ballot Measure, PR Newswire, Oct. 25, 2007
  22. ↑ Victimizing the Vulnerable, Institute for Justice
  23. ↑ Editorial: Ballot measure seeks to rein in cities' land grabs, OC Register, Nov. 27, 2007
  24. ↑ K Street Fight Will Resonate On State Ballot San Jose Mercury News, December 30, 2007
  25. ↑ Earth Times, OBSNews.com Reports Eminent Domain Reform Ballot Measures Debated in Sacramento, March 7, 2008
  26. ↑ Supporter List
  27. ↑ Opponents of Proposition 98
  28. ↑ Supporters of Proposition 99
  29. ↑ The Bond Buyer, Betting against Prop. 98, May 23, 2008
  30. ↑ 70 “No on 98” editorials
  31. ↑ Contra Costa Times, PPIC poll shows big property rights concern but indecision on Props 98, 99, May 21, 2008
  32. ↑ Californians and their Government
  33. ↑ California Progress Report, California Prop 98 Heading for Rejection by Voters—Rival Prop 99 Has Narrow 8 Point Lead, May 22, 2008
  34. ↑ Jon Coupal - 2008-02-27
  35. ↑ Prop. 98 campaign expenditure details
  36. ↑ Expenditures of the Eminent Domain Reform Now committee

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