It is axiomatic that private property may not be taken for public use without just compensation (Cal. Const., art. I, Section 19; U.S. Const., 5thAmend.), but the nuances of inverse condemnation are growing. So, what constitutes a taking these days?
Jefferson Street Ventures, LLC v. City of Indio
Recently the Fourth District Court of Appeal ruled that a city’s imposition of conditions indefinitely prohibiting the development of over one-third of a commercial property for possible future rights-of-way for an interchange project was an unlawful taking under the 5th Amendment of the U.S. Constitution and the California Constitution, Art. I, Section 19. It was not surprising that the Court found that a public entity may be liable to compensate the property owner for such restrictions, even though the city expressed an intention to eventually acquire the development-restricted property through either eminent domain or negotiated purchase. (Jefferson Street Ventures, LLC v. City of Indio (2015) 236 Cal.App.4th 1175.)
Take away: public entities must be aware of and realistic about timelines when implementing public projects, and refrain from imposing limitations on development until they know they can proceed with the acquisition or condemnation. Private clients should ensure that any conditions relating to acquisition of or restriction on their properties can be tied to impacts arising from their proposed project and are susceptible of being accomplished within a reasonable time period, and pay close attention to governmental actions regulating development.
Horne, et al. v. Department of Agriculture
The property that may not be taken for public use without just compensation includes raisins, according to the Supreme Court of the United States’ June 22, 2015 decision in Horne, et al. v. Department of Agriculture, 576 U.S. ___ (2015). The holding in the Horne case clarifies that the Takings Clause of the Fifth Amendment to the U.S. Constitution applies not only to real property, but also to personal property.
Chief Justice John G. Roberts Jr. delivered the opinion of the Court finding that a decades-old program developed to increase raisin prices by keeping a portion of the crop off the market amounted to an unconstitutional taking of private property.
In Horne, a group of Fresno, CA, raisin farmers refused to recognize the government program aimed at increasing raisin prices by removing some raisins from the market. The government then imposed a fine. The Hornes filed suit, challenging the program as an unlawful taking of private property for public use. The Ninth Circuit held that the reserve requirement was not a Fifth Amendment taking because personal property is afforded less protection under the Takings Clause than real property. The U.S. Supreme Court disagreed, stating “[t]he Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.” (Id. (slip op., at 5)). In this case, the fair market value of the raisins came in just over $483,000.00. (See id. at 17). The Fifth Amendment was once typically understood to apply only to governmental takings of real property; it is now known to apply to personal property as well.
Take away: Public entities should closely scrutinize their interactions with private citizens and businesses to avoid a taking of personal property as well real property interests.