BILL NUMBER: SB 1650 CHAPTERED
BILL TEXT
CHAPTER 602
FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2006
APPROVED BY GOVERNOR SEPTEMBER 29, 2006
PASSED THE SENATE AUGUST 29, 2006
PASSED THE ASSEMBLY AUGUST 23, 2006
AMENDED IN ASSEMBLY AUGUST 7, 2006
AMENDED IN ASSEMBLY JUNE 12, 2006
AMENDED IN SENATE MAY 2, 2006
AMENDED IN SENATE APRIL 20, 2006
AMENDED IN SENATE APRIL 6, 2006
INTRODUCED BY Senators Kehoe and Dunn
FEBRUARY 24, 2006
An act to amend Section 1263.510 of, and to add Sections 1245.245
and 1263.615 to, the Code of Civil Procedure, relating to eminent
domain.
LEGISLATIVE COUNSEL'S DIGEST
SB 1650, Kehoe Eminent domain.
Existing law requires the governing body of a public entity to
adopt a resolution of necessity, as specified, and send related
notices before commencing an eminent domain proceeding. Existing law
provides that an owner of property taken by eminent domain is
entitled to compensation, including compensation for goodwill.
This bill would require the governing body of a public entity,
before the public entity may use property that is subject to a
resolution of necessity, as specified, for a public use other than
the public use stated in the resolution to adopt a resolution
authorizing a different use of the property by a vote of at least 2/3
of all members of the governing body of the public entity or a
greater vote as required by statute, charter, or ordinance. The bill
would also require a public entity to sell property that is not used
for the public use stated in the resolution within 10 years of the
adoption of the resolution unless the governing body adopts a
resolution authorizing a different use or reauthorizing the existing
stated public use by a vote as described above. The bill would
require specified property subject to the new resolution procedure to
be offered back to the person or persons from whom the property was
acquired, subject to certain requirements, if the public entity fails
to adopt a new resolution or a resolution reauthorizing the stated
public use, and that property was not used for the public use stated
in the original resolution of necessity or a new resolution
authorizing a different use or reauthorizing the existing stated
public use between the time of the property's acquisition and the
time of the public entity's failure to adopt a new resolution. The
bill would require the Department of Housing and Community
Development to provide specified information to a public entity in
connection with property that is a single-family residence.
This bill would also require a public entity acquiring property
under specified circumstances to offer the owner of the property a
one-year leaseback agreement for that property owner's continued use,
subject to the property owner's payment of fair market rents and
compliance with other specified conditions, unless the public entity
states in writing that the development, redevelopment, or use of the
property is scheduled to begin within two years of its acquisition.
With regard to the calculation of compensation for the property
taken, the bill would prohibit additional goodwill value from
accruing during the leaseback.
The bill would apply prospectively, as specified.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1245.245 is added to the Code of Civil
Procedure, to read:
1245.245. (a) Property acquired by a public entity by any means
set forth in subdivision (e) that is subject to a resolution of
necessity adopted pursuant to this article shall only be used for the
public use stated in the resolution unless the governing body of the
public entity adopts a resolution authorizing a different use of the
property by a vote of at least two-thirds of all members of the
governing body of the public entity, or a greater vote as required by
statute, charter, or ordinance. The resolution shall contain all of
the following:
(1) A general statement of the new public use that is proposed for
the property and a reference to the statute that would have
authorized the public entity to acquire the property by eminent
domain for that use.
(2) A description of the general location and extent of the
property proposed to be used for the new use, with sufficient detail
for reasonable identification.
(3) A declaration that the governing body has found and determined
each of the following:
(A) The public interest and necessity require the proposed use.
(B) The proposed use is planned and located in the manner that
will be most compatible with the greatest public good and least
private injury.
(C) The property described in the resolution is necessary for the
proposed use.
(b) Property acquired by a public entity by any means set forth in
subdivision (e) that is subject to a resolution of necessity
pursuant to this article, and is not used for the public use stated
in the resolution of necessity within 10 years of the adoption of the
resolution of necessity, shall be sold in accordance with the terms
of subdivisions (f) to (g), inclusive, unless the governing body
adopts a resolution according to the terms of subdivision (a) or a
resolution according to the terms of this subdivision reauthorizing
the existing stated public use of the property by a vote of at least
two-thirds of all members of the governing body of the public entity
or a greater vote as required by statute, charter, or ordinance. A
reauthorization resolution under this subdivision shall contain all
of the following:
(1) A general statement of the public use that is proposed to be
reauthorized for the property and a reference to the statute that
authorized the public entity to acquire the property by eminent
domain for that use.
(2) A description of the general location and extent of the
property proposed to be used for the public use, but not yet in use
for the public use, with sufficient detail for reasonable
identification.
(3) A declaration that the governing body has found and determined
each of the following:
(A) The public interest and necessity require the proposed use.
(B) The proposed use is planned and located in the manner that
will be most compatible with the greatest public good and least
private injury.
(C) The property described in the resolution is necessary for the
proposed use.
(c) In addition to any notice required by law, the notice required
for a new or reauthorization resolution sought pursuant to
subdivision (a) or (b) shall comply with the requirements of Section
1245.235 and shall be sent to each person who was given notice
required by Section 1245.235 in connection with the original
acquisition of the property by the public entity.
(d) Judicial review of an action pursuant to subdivision (a) or
(b) may be obtained by a person who had an interest in the property
described in the resolution at the time that the property was
acquired by the public entity, and shall be governed by Section 1085.
(e) The following property acquisitions are subject to the
requirements of this section:
(1) Any acquisition by a public entity pursuant to eminent domain.
(2) Any acquisition by a public entity following adoption of a
resolution of necessity pursuant to this article for the property.
(3) Any acquisition by a public entity prior to the adoption of a
resolution of necessity pursuant to this article for the property,
but subsequent to a written notice that the public entity may take
the property by eminent domain.
(f) If the public entity fails to adopt either a new resolution
pursuant to subdivision (a) or a reauthorization resolution pursuant
to subdivision (b), as required by this section, and that property
was not used for the public use stated in a resolution of necessity
adopted pursuant to this article or a resolution adopted pursuant to
subdivision (a) or (b) between the time of its acquisition and the
time of the public entity's failure to adopt a resolution pursuant to
subdivision (a) or (b), the public entity shall offer the person or
persons from whom the property was acquired the right of first
refusal to purchase the property pursuant to this section, as
follows:
(1) At the present market value, as determined by independent
licensed appraisers.
(2) For property that was a single family residence at the time of
acquisition, at an affordable price, which price shall not be
greater than the price paid by the agency for the original
acquisition, adjusted for inflation, and shall not be greater than
fair market value, if the following requirements are met:
(A) The person or persons from whom the property was acquired
certify their income to the public entity as persons or families of
low or moderate income.
(B) If the single-family residence is offered at a price that is
less than fair market value, the public entity may verify the
certifications of income in accordance with procedures used for
verification of incomes of purchasers and occupants of housing
financed by the California Housing Finance Agency.
(C) If the single-family residence is offered at a price that is
less than fair market value, the public entity shall impose terms,
conditions, and restrictions to ensure that the residence will
either:
(i) Remain owner-occupied by the person or persons from whom the
property was acquired for at least five years.
(ii) Remain available to persons or families of low or moderate
income and households with incomes no greater than the incomes of the
present occupants in proportion to the area median income for the
longest feasible time, but for not less than 55 years for rental
units and 45 years for home ownership units.
(D) The Department of Housing and Community Development shall
provide to the public entity recommendations of standards and
criteria for those prices, terms, conditions, and restrictions.
(g) If after a diligent effort the public entity is unable to
locate the person from whom the property was acquired, if the person
from whom the property was acquired does not choose to purchase the
property as provided in subdivision (f) of this section, or if the
public entity fails to adopt a resolution as required pursuant to
subdivision (a) or (b) but is not required to offer a right of first
refusal pursuant to subdivision (f), the public entity shall sell the
property as surplus property pursuant to Article 8 (commencing with
Section 54220) of Chapter 5 of Division 2 of Title 5 of the
Government Code.
(h) If residential property acquired by a public entity by any
means set forth in subdivision (e) is sold as surplus property
pursuant to subdivision (g), and that property was not used for the
public use stated in a resolution of necessity adopted pursuant to
this article or a resolution adopted pursuant to subdivision (a) or
(b) between the time of its acquisition and the time of its sale as
surplus property, the public entity shall pay to the person or
persons from whom the public entity acquired the property the sum of
any financial gain between the original acquisition price, adjusted
for inflation, and the final sale price.
(i) Upon completion of any acquisition described in subdivision
(e) or upon the adoption of a resolution of necessity pursuant to
this section, whichever is later, the public entity shall give
written notice to the person or persons from whom the property was
acquired as described in subdivision (e) stating that the notice,
right of first refusal, and return of financial gain rights discussed
in this section may accrue.
(j) At least 60 days before selling the property pursuant to
subdivision (g), the public entity shall make a diligent effort to
locate the person from whom the property was acquired. At any time
before the proposed sale, the person from whom the property was
acquired may exercise the rights provided by this section. As used in
this section, "diligent effort" means that the public entity has
done all of the following:
(1) Mailed the notice of the proposed sale by certified mail,
return receipt requested, to the last known address of the person
from whom the property was acquired.
(2) Mailed the notice of the proposed sale by certified mail,
return receipt requested, to each person with the same name as the
person from whom the property was acquired at any other address on
the last equalized assessment roll.
(3) Published the notice of the proposed pursuant to Section 6061
of the Government Code in at least one newspaper of general
circulation within the city or county in which the property is
located.
(4) Posted the notice of the proposed sale in at least three
public places within the city or county in which the property is
located.
(5) Posted the notice of the proposed sale on the property
proposed to be sold.
(k) For purposes of this section, "adjusted for inflation" means
the original acquisition price increased to reflect the proportional
increase in the Consumer Price Index for all items for the State of
California, as determined by the United States Bureau of Labor
Statistics, for the period from the date of acquisition to the date
the property is offered for sale.
SEC. 2. Section 1263.510 of the Code of Civil Procedure is amended
to read:
1263.510. (a) The owner of a business conducted on the property
taken, or on the remainder if the property is part of a larger
parcel, shall be compensated for loss of goodwill if the owner proves
all of the following:
(1) The loss is caused by the taking of the property or the injury
to the remainder.
(2) The loss cannot reasonably be prevented by a relocation of the
business or by taking steps and adopting procedures that a
reasonably prudent person would take and adopt in preserving the
goodwill.
(3) Compensation for the loss will not be included in payments
under Section 7262 of the Government Code.
(4) Compensation for the loss will not be duplicated in the
compensation otherwise awarded to the owner.
(b) Within the meaning of this article, "goodwill" consists of the
benefits that accrue to a business as a result of its location,
reputation for dependability, skill or quality, and any other
circumstances resulting in probable retention of old or acquisition
of new patronage.
(c) If the public entity and the owner enter into a leaseback
agreement pursuant to Section 1263.615, the following shall apply:
(1) No additional goodwill shall accrue during the lease.
(2) The entering of a leaseback agreement shall not be a factor in
determining goodwill. Any liability for goodwill shall be
established and paid at the time of acquisition of the property by
eminent domain or subsequent to notice that the property may be taken
by eminent domain.
SEC. 3. Section 1263.615 is added to the Code of Civil Procedure,
to read:
1263.615. (a) A public entity shall offer a one-year leaseback
agreement to the owner of a property to be acquired by any method set
forth in subdivision (b) for that property owner's continued use of
the property upon acquisition, subject to the property owner's
payment of fair market rents and compliance with other conditions set
forth in subdivision (c), unless the public entity states in writing
that the development, redevelopment, or use of the property for its
stated public use is scheduled to begin within two years of its
acquisition. This section shall not apply if the public entity states
in writing that a leaseback of the property would create or allow
the continuation of a public nuisance to the surrounding community.
(b) The following property acquisitions are subject to the
requirements of this section:
(1) Any acquisition by a public entity pursuant to eminent domain.
(2) Any acquisition by a public entity following adoption of a
resolution of necessity pursuant to Article 2 (commencing with
Section 1245.210) of Chapter 4 for the property.
(3) Any acquisition by a public entity prior to the adoption of a
resolution of necessity pursuant to Article 2 (commencing with
Section 1245.210) of Chapter 4 for the property, but subsequent to a
written notice that the public entity may take the property by
eminent domain.
(c) The following conditions shall apply to any leaseback offered
pursuant to this section:
(1) The lessee shall be responsible for any additional waste or
nuisance on the property, and for any other liability arising from
the continued use of the property.
(2) The lessor may demand a security deposit to cover any
potential liability arising from the leaseback. The security deposit
shall be reasonable in light of the use of the leased property.
(3) The lessor shall be indemnified from any legal liability and
attorney's fees resulting from any lawsuit against the lessee or
lessor, arising from the operation of the lessee's business or use of
the property.
(4) The lessor shall require the lessee to carry adequate
insurance to cover potential liabilities arising from the lease and
use of the property, and shall require that insurance to name the
lessor as an additional insured.
(5) Additional goodwill shall not accrue during any lease.
(6) The lessee shall be subject to unlawful detainer proceedings
as provided by law.
(d) A public entity shall offer to renew a leaseback agreement for
one-year terms, subject to any rent adjustment to reflect inflation
and upon compliance with other conditions set forth in subdivision
(c), unless the public entity states in writing that the development,
redevelopment, or use of the property for its stated public use is
scheduled to begin within two years of the termination date of the
lease. At least 60 days prior to the lease termination date, the
public entity lessor shall either offer a one-year renewal of the
lease or send a statement declaring that the lease will not be
renewed because the development, redevelopment, or use of the
property is scheduled to begin within two years of the lease
termination date. The lessee shall either accept or reject a lease
renewal offer at least 30 days prior to the lease termination date.
The lessee's failure to accept a renewal offer in a timely manner
shall constitute a rejection of the renewal offer. A lessor's failure
to offer a renewal or give the notice as required shall extend the
lease term for 60-day increments until an offer or notice is made,
and if a notice of termination is given after the lease termination
date, the lessee shall have no less than 60 days to vacate the
property. A lessee's failure to accept within 30 days a renewal offer
made subsequent to the lease termination date shall constitute a
rejection of the offer.
(e) A party who holds over after expiration of the lease shall be
subject to unlawful detainer proceedings and shall also be subject to
the lessor for holdover damages.
(f) A leaseback entered into pursuant to this section shall not
affect the amount of compensation otherwise payable to the property
owner for the property to be acquired.
SEC. 4. This act shall apply prospectively and shall apply to
property acquired after January 1, 2007.