BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 902
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Vidak
VERSION: 4/7/14
Analysis by: Eric Thronson FISCAL: yes
Hearing date: April 22, 2014 URGENCY: YES
SUBJECT:
Eminent domain proceedings for high-speed rail
DESCRIPTION:
This bill restricts the High-Speed Rail Authority (HSRA), or the
State Public Works Board on behalf of HSRA, from adopting a
resolution of necessity to commence an eminent domain proceeding
unless the resolution meets certain requirements.
ANALYSIS:
Existing law created the California HSRA in 1996 to direct
development and implementation of intercity high-speed rail
service that is fully coordinated with other public
transportation services. In 2008, voters approved Proposition
1A (Prop 1A) authorizing $9.95 billion in general obligation
bonds for the high-speed rail project. Prop 1A authorizes HSRA
to use bond funds for, among other things, acquisition of real
property and rights-of-way for the purpose of constructing the
rail system.
Like other governmental agencies, HSRA attempts to purchase any
necessary property by offering the appraised fair market value
of that property to the owner. If the transaction is unable to
proceed in this way, the State Public Works Board (PWB), on
behalf of HSRA, may use the state's eminent domain authority to
acquire the property. Property acquisition processes, including
eminent domain proceedings, generally result in a settlement
transferring the ownership of private property to a governmental
entity for public use, typically at a justified and documented
price based on sound business practices. In order to commence
an eminent domain proceeding, PWB must adopt a resolution of
necessity explaining why the state needs to acquire the
property.
This urgency bill restricts HSRA, or PWB on behalf of HSRA, from
SB 902 (VIDAK) Page 2
adopting a resolution of necessity to commence an eminent domain
proceeding unless the resolution includes:
Identification of the sources of all funds to be
invested in that property and the anticipated time of
receipt of these funds;
A declaration that the offer to the property owner is
either HSRA's approved appraisal of the fair market value
of the property, or the amount necessary to discharge any
liens against the property, whichever is greater.
Further, this bill designates PWB as the responsible party for
compliance with any environmental protection laws applicable to
any property acquired through an eminent domain proceeding on
behalf of HSRA.
Finally, this bill is an urgency measure.
COMMENTS:
1.Purpose . According to the author, some properties in the
Central Valley still have not recovered their pre-recession
value. The fair market value appraisal process in existing
law does not provide a proper remedy for land owners who may
continue to be underwater on their mortgages. Under current
law, it is possible that a land owner could still be
responsible for a balance on his or her mortgage for land
seized through eminent domain. The author contends this bill
is necessary to fairly resolve this situation.
2.Gift of public funds ? Existing law includes a general
prohibition of gifting public funds to private individuals,
such as when an agency compensates a land owner for more than
the appraised fair market value of a particular property. In
practice, when agencies negotiate the purchase of property
they have to weigh the costs of further negotiations and
litigation against the appraised value of the property, and
sometimes agree to a settlement above the fair market value in
order to get the best deal possible. According to the author,
the intent of this bill is to require the state to provide
compensation above fair market value if the land owner owes
more than the appraised value of his or her property. While
it is generally the current practice of agencies to reach
settlements that are fair and reasonable, it is dangerous
precedent to require in law that governmental agencies
compensate owners above the appraised fair market price for
any particular reason. While any number of justifiable
SB 902 (VIDAK) Page 3
reasons to require agencies to compensate land owners for more
than the value of their property exist, requiring the state to
do so in statute could lead to significant increases in the
cost of future capital projects.
3.Achievable ? One requirement in this bill is that the state,
before beginning the eminent domain process, must identify the
sources of all funds to be invested in that property and the
anticipated time of receipt of these funds. Presumably, this
means that HSRA must identify the source of all funds
necessary to construct, maintain, and operate a high-speed
train system that may someday exist upon the property, for any
system will require funds to be continually invested in that
property. No other governmental entity is held to this
standard when exercising eminent domain authority because it
is very difficult to predict all future investment in a
particular property. According to HSRA's business plan, once
the initial operating segment is complete and high-speed
trains begin operating on the system, the state will likely
turn the maintenance and operation over to a private
concessionaire. That will not occur for many years, or maybe
decades. It seems unreasonable to expect HSRA to be able to
identify the sources of all funds ever to be invested in the
property. The committee may wish to amend the bill to remove
this unachievable requirement.
4.The PWB is never the responsible party for environmental
clearance . In California, existing law requires that one
governmental entity be the lead agency responsible for
obtaining environmental clearance for public works projects.
This lead agency is responsible for compliance with all
environmental protection laws or regulations applicable to the
project. Existing law exempts PWB from being the responsible
agency for compliance with environmental laws when it acquires
property pursuant to an eminent domain proceeding because PWB
does not have the staff available to ensure environmental
clearance, nor is environmental review part of PWB's role in
the development of projects. PWB relies on the department or
agency for which it is exercising its eminent domain authority
to do the environmental work necessary to complete the planned
project. This bill would require PWB to increase its staff
and do duplicative work as HSRA. The committee may wish to
amend the bill to remove this costly, duplicative requirement.
5.Double-referral . The Rules Committee has referred this bill
to both this committee and the Judiciary Committee.
SB 902 (VIDAK) Page 4
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 16,
2014.)
SUPPORT: Citizens for California High-Speed Rail
Accountability
Howard Jarvis Taxpayers Association
Kings County Board of Supervisors
Tos Farms, Inc.
OPPOSED: State Labor Federation
Sierra Club California
State Building and Construction Trades Council,
AFL-CIO