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HomeMy WebLinkAboutSS - Legality of Instituting Eminent Domain to Acquire DeAnza Bayside Village Mobile Home ParkMEMORANDUM OFFICE OF THE CITY ATTORNEY February 22, 1983 Study Session Agenda Item No. 6 To: Honorable Mayor & Members of the City Council From: Robert H. Burnham - City Attorney Re: Legality of Instituting Eminent Domain to Acquire DeAnza Bayside Village Mobile Home Park BACKGROUND The City Council, on February 14, 1983, directed this office to prepare an opinion regarding the legality of institut- ing an eminent domain action to acquire the DeAnza Bayside Village Mobile Home Park. This request was initiated, in part, in response to a request by the mobile home park owners, as set forth in a letter submitted by their attorney, Paul Morgan and dated February 7, 1983, which requests that "serious consideration" be given by the Council "to the acquisition of the mobile home park leasehold for low and moderate income housing." It is the opinion of this office that the City is em- powered to acquire this property for the purpose of providing low and moderate income housing. However, certain facts and issues have come to light during the course of our research on this question, and it is, thus, recommended that the Council refer this matter to this office for further study. The following is a brief discussion of the issues resolved, and raised, by our initial research. DISCUSSION A. Public Use The right of eminent domain exists only when the taking is for public use. The courts have determined that a public entity is empowered to purchase property with the intent to demo- lish substandard housing and build safe and sanitary housing to accommodate persons of low income. Housing Authority v. Dockweiler (1939) 14 Cal 2d 437. More recently, in the context of redevelopment and rehabilitation, California courts have found a public purpose in legislation which authorizes cities to finance, through low interest loans, residential rehabilitation in depressed areas, with no requirement that only low income persons would be eligible for such loans. The State has also authorized Charter Cities to sell City property, at less than market value, subject to certain restrictions, e.g., at least 40% of the units must be affordable to those of low or moderate in- come and at least half of the affordable units are affordable to those of low income. Section 37364 Government Code If the City can demonstrate that a substantial percentage of the persons living within DeAnza Bayside are of low or moderate income and that their ability to maintain residence at that location is jeopardized due to rapidly increasing costs, it is likely that the court would find the acquisition for a public use. B. Acquisition of DeAnza Bayside Incident to Condemnation of Boat Launching Facilities Counsel for DeAnza Bayside Homeowners suggests that the City could support acquisition of the trailer park as incident to condemnation of the boat launch facilities and/or highway right- of-way. California law does allow a public entity to acquire "excess" property for the protection or preservation of the attractiveness, safety, and usefulness of a project. It would be very difficult to argue that the taking of the residential por- tion of the property was necessary to protect or preserve the interests of the City in acquiring either the highway or boat launch facility. While the Resolution of Necessity is ordinarily conclusive as to the necessity of the taking, the property owner can raise the issue of improper excess taking by claiming an abuse of discretion on the part of the legislative body in the sense that it does not actually intend to use the property as it resolved to use the property. 2 Thus, if the residential portion is acquired, it must be on the basis of a proposed use for low and moderate income housing. C. Disposal of Property It has been suggested that the City could acquire the DeAnza Bayside trailer park and lease the park back to a non- profit corporation consisting of the then -current residents. It is clear that, under California law, the City can acquire proper- ty with the intent to sell, lease, exchange or otherwise dispose of it, subject to such reservations or restrictions as are neces- sary to protect the public nature of the project. A leaseback arrangement, thus, appears viable - so long as the lease speci- fies that a particular percentage of units are maintained for low or moderate income persons or families. D. Requirement of Referendum Article 34, Section 1 of the Constitution provides that "no low rent housing project shall hereafter be developed, con- structed, or acquired in any manner by any State public body until, a majority of the electors of the City...in which it is proposed...approves such project by voting in favor thereof at an election to be held for that purpose, or at any general or spe- cial election." It is unclear whether this requirement applies to cases where no new housing is constructed and the intent of the public entity in the acquisition is, essentialy, to maintain the status quo. Further advice will be given on this subject at such time as this office is directed to again report to the Council. E. Impact on Leasehold Interest This office received a copy of the Master Ground Lease covering the property subsequent to February 14th. Paragraph XVI of that Ground Lease, entitled "Eminent Domain," suggests that the leasehold interest would terminate if, during the term of the Lease, the principal premises, or any part thereof, was taken by a public entity under the laws of eminent domain. The impact of this provision also requires further study on the part of this office. 3 F. Improper Pre -Condemnation Activity In 1972, the California Supreme Court awarded damages to a property owner where the condemnor, in that case the City of Whittier, acted unreasonably in issuing pre -condemnation state- ments and excessively delayed the filing of an eminent domain action. Klopping v. Whittier 8 Cal 3d 39. The evaluation, or planning in anticipation, of a public acquisition does not con- stitute a taking - but caution should be exercised in making statements relative to the project prior to the adoption of a Resolution of Necessity and an eminent domain action must com- menced within six months after the date of the adoption of the Resolution of Necessity. RECOMMENDATION It is recommended that the Council refer this matter back to the City Attorney's office for further review and analysis with a report to be prepared for the Council and placed on the Study Session Agenda for the meeting of March 28, 1983. In the interim, this office would like authority from the Council to engage in discussions with interested parties such that their opinions can be made part of the report to Council. RHB/pr MMP/DeAnza 4 Robert H. Burnham City Attorney