BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 940 (Vidak)
Version: April 12, 2016
Hearing Date: May 3, 2016
Fiscal: Yes
Urgency: Yes
TH
SUBJECT
High-Speed Rail Authority: Eminent Domain: Right of First
Refusal
DESCRIPTION
This bill would require the California High-Speed Rail
Authority, prior to selling an interest in excess real property,
to send notification by certified mail to the last known owner
of the real property prior to acquisition by the Authority at
his or her last known address, advising him or her that the real
property will be offered for sale. This bill would restrict the
authority from selling the real property until at least 30 days
after the notification has been sent.
BACKGROUND
In 1993, California established the Intercity High-Speed Rail
Commission to develop a framework for creating a statewide
high-speed rail system. Following a study released by the
Commission in 1996 indicating the feasibility of such a
statewide system, the Legislature passed SB 1420 (Costa et al.,
Ch. 796, Stats. 1996), which established the California
High-Speed Rail Authority (Authority) and directed it to
continue planning for the system. The Authority serves as the
administrative body with primary responsibility for overseeing
the planning and construction of the high-speed rail system.
(See Pub. Util. Code Sec. 185024.)
Several years later, on November 4, 2008, the voters of
California passed Proposition 1A, the Bond Act, "to initiate the
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construction of a high-speed train system that connects the San
Francisco Transbay Terminal to Los Angeles Union Station and
Anaheim, and links the state's major population centers,
including Sacramento, the San Francisco Bay Area, the Central
Valley, Los Angeles, the Inland Empire, Orange County, and San
Diego . . ." (Sts. & Hy. Code Sec. 2704.04.) The Bond Act
authorized the issuance and sale of $9 billion in general
obligation bonds "upon appropriation by the Legislature" to
begin construction of the high-speed train system. (Id.) Among
other capital costs, the Bond Act authorized the Authority to
incur costs for "all activities necessary for acquisition of
interests in real property and rights-of-way and improvement
thereof," as well as "relocation assistance for displaced
property owners and occupants." (Id.)
In 2013, the Legislature vested the Authority with independent
power to manage property acquired for the high-speed rail system
with the passage of AB 481 (Lowenthal, Ch. 132, Stats. 2013).
Without such independent power, property acquisition and
management duties and responsibilities for state agencies
generally rest with the Department of General Services. Under
this independent grant of power, the Authority may sell or
exchange real property or interest therein at fair market value
if it determines that the property, having been acquired by the
state for the high-speed rail project, is no longer necessary
for that purpose. (Pub. Util. Code Sec. 185040(a).) Existing
law provides specific procedures for the Authority to follow
when selling excess property to adjoining landowners, as well as
to public sector entities like municipalities and local
agencies. Absent specific procedures, existing law requires the
Authority to sell excess property either by receipt of
competitive sealed bids, or at public auction, depending on
which method is more likely to achieve the higher sales price.
(Pub. Util. Code Sec. 185040(f).)
This bill would require the Authority, prior to selling excess
property, to send a notice by certified mail to the last known
owner of the property at his or her last known address, advising
that the property will be offered for sale. This bill would
also restrict the Authority from selling the property until at
least 30 days after the notification to the prior owner has been
sent.
CHANGES TO EXISTING LAW
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Existing law declares the intent of the Legislature to initiate
the construction of a high-speed train system that connects the
San Francisco Transbay Terminal to Los Angeles Union Station and
Anaheim, and links the state's major population centers,
including Sacramento, the San Francisco Bay Area, the Central
Valley, Los Angeles, the Inland Empire, Orange County, and San
Diego, as specified. (Sts. & Hy. Code Sec. 2704.04(a).)
Existing law states that the net proceeds received from the sale
of $9 billion dollars of bonds shall be used for planning and
engineering for the high-speed train system and for other
capital costs, as specified. (Sts. & Hy. Code Sec. 2704.04(b).)
Existing law specifies that capital costs payable or
reimbursable include, with respect to the high-speed train
system or any portion thereof, all activities necessary for
acquisition of interests in real property and rights-of-way and
improvement thereof; acquisition and construction of tracks,
structures, power systems, and stations; acquisition of rolling
stock and related equipment; mitigation of direct or indirect
environmental impacts; relocation assistance for displaced
property owners and occupants; other related capital facilities
and equipment; and such other purposes related to the foregoing,
for the procurement thereof, and for the financing or
refinancing thereof, as specified. (Sts. & Hy. Code Sec.
2704.04(c).)
Existing law directs the California High-Speed Rail Authority
(Authority) to develop and implement an intercity high-speed
rail service that is fully integrated with the state's existing
intercity rail and bus network, consisting of interlinked
conventional and high-speed rail lines and associated feeder
buses. Existing law specifies that the intercity network shall
be fully coordinated and connected with commuter rail lines and
urban rail transit lines developed by local agencies, as well as
other transit services, through the use of common station
facilities whenever possible. (Pub. Util. Code Sec. 185030.)
Existing law empowers the Authority to do any of the following,
as specified:
enter into contracts with private or public entities for the
design, construction, and operation of high-speed trains;
acquire rights-of-way through purchase or eminent domain;
issue debt, secured by pledges of state funds, federal grants,
or project revenues;
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enter into cooperative or joint development agreements with
local governments or private entities;
set fares and schedules; and
relocate highways and utilities. (Pub. Util. Code Sec.
185036.)
Existing law provides that if the Authority determines real
property or an interest therein, previously or hereafter
acquired by the state for high-speed rail purposes, is no longer
necessary for those purposes, the Authority may sell or exchange
the real property or interest therein at fair market value.
(Pub. Util. Code Sec. 185040(a).)
Existing law states that the Authority may sell excess property
to an adjoining landowner if it makes either of the following
two findings:
that the property is of a size or shape that is below the
average, normal standard size and shape of other privately
owned properties in the immediate neighborhood, and that if
the property were sold to other than the adjoining owner, it
would give rise to a land use development that would be below
and not consistent with the normal land use of other
properties in that neighborhood, that the sale of the property
to a party other than the adjoining owner may cause an undue
or unfair hardship to the adjoining owner in the normal land
use development or operation of his or her property, that the
property considered as part of the adjoining property would
have a higher and better use than under separate ownership,
and that the fair market value of the property considered as
part of the adjoining property would be higher than under
separate ownership; or
that the sale of the excess parcel to other than the adjoining
owner would deprive the adjoining owner of an existing vested
right of access to a public highway and thereby create a
possible cause of action against the authority or the state.
(Pub. Util. Code Sec. 185040(b).)
Existing law provides that the Authority may sell excess
property to municipalities or other local agencies at their
request, without calling for competitive bids, at a price
representing the fair market value thereof, and upon a
determination that the intended use is for a public purpose.
(Pub. Util. Code Sec. 185040(c).)
Existing law provides that if it is improved property, excess
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property may be sold to a former owner who has remained in
occupancy, or to a residential tenant of a tenure of five years
or more with all rent obligations current or paid in full.
(Pub. Util. Code Sec. 185040(d).)
Existing law provides that any real property or interest therein
may in like manner be exchanged, either as whole or part
consideration, for any other real property or interest therein
as needed for high-speed rail purposes, as specified. (Pub.
Util. Code Sec. 185040(e).)
Existing law provides that the Authority may sell or lease
excess right-of-way parcels to municipalities or other local
agencies for public purposes, and may accept as all or part of
the consideration for the sale or lease any substantial benefits
the state will derive from the municipality or other local
agency's undertaking maintenance or landscaping costs that would
otherwise be the obligation of the state. (Pub. Util. Code Sec.
185041.)
Existing law states that, except as provided, excess property
shall be sold either by receipt of competitive sealed bids, or
at public auction, whichever method is determined by the
authority to be more likely to achieve the higher sales price.
(Pub. Util. Code Sec. 185040(f).)
This bill requires the Authority, prior to selling excess real
property or an interest therein, to send notification by
certified mail to the last known owner of the real property or
interest therein at his or her last known address, advising him
or her that the real property or interest therein will be
offered for sale.
This bill states that the Authority shall not sell the excess
real property or interest therein until at least 30 days after
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the notification required in the above provision has been sent.
COMMENT
1.Stated need for the bill
According to the author:
Nearly 1,300 individual properties have been identified by the
High-Speed Rail (HSR) Authority as necessary to complete the
planned 120 mile route from Madera to Bakersfield. Many of
these properties have been in families for generations, and
HSR may end up splitting properties or severely limit the
productivity of any remaining property. While these 1,300
properties have been identified as necessary to complete the
current alignment, there is always a possibility that the
preferred route may change or that the project is never
completed, leaving the state holding onto properties it no
longer needs.
In 2013 the Legislature passed, and the Governor signed, AB
481 which stated that the Authority may dispose of properties
that it deems no longer necessary. Unfortunately this
legislation did not require the Authority to dispose of
unneeded properties. Additionally, AB 481 did not provide the
original landowner, or their family, an opportunity to
repurchase the land.
Under current law, it is possible for the Authority to decide
that a property they acquired is no longer necessary and they
could decide to hold onto the property in perpetuity or decide
to sell it to someone else, without even contacting the
original property owner to see if they are interested in
buying the property back. Senate Bill 940 would require the
High-Speed Rail Authority to notify previous landowners and
their families of excess land that the Authority has deemed
not necessary for High-Speed Rail (HSR) and that the Authority
plans to sell.
2.Informing prior owners of land sales
Real property, unlike many other saleable assets, is considered
somewhat unique under the law. At common law, because land was
viewed as immovable and, to some extent, eternal, English courts
and the resulting case law considered each parcel of land to be
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distinguishable from all others. The unique character of land
under the law has passed into California's Civil Code in various
forms, including in Section 3387, which provides specific
remedies for breaches of agreements to transfer real property
not normally applicable to the performance of contractual
obligations.<1>
This bill, in a way, follows this common law tradition by
establishing a notification process for prior owners of land
held by the California High-Speed Rail Authority to learn that
it will be offered for sale. The bill would require the
Authority to notify the prior owner, at their last known
address, by certified mail that land they once owned has been
deemed in excess to the Authority's requirements and will be
sold, ostensibly so the prior owner can seek to repurchase the
land. The bill would also require the Authority to refrain from
selling the land for at least 30 days after sending the notice
to the prior owner. However, the bill would not provide the
prior owner with any special right to purchase the land, such as
a right of first refusal. Rather, the prior owner would have to
purchase the land on the open market through the Authority's
sale process just as any other prospective purchaser, unless the
prior owner received priority under some other provision of law,
such as that provided to former owners of improved property who
have remained in occupancy.
3.Logistical concerns
While this bill may be useful in reuniting certain prior owners
with land they formerly owned, its notification provision could
become largely obsolete the further that period of prior
ownership is from the point in time at which the Authority
offers the land for sale. Under the bill, the authority would
only be obligated to send a notice of sale to the prior owner of
an excess parcel at their last known address. If a period of
years has elapsed, it is quite possible that the prior owner
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<1> Civil Code Section 3387 states:
It is to be presumed that the breach of an agreement to
transfer real property cannot be adequately relieved by
pecuniary compensation. In the case of a single-family
dwelling which the party seeking performance intends to
occupy, this presumption is conclusive. In all other cases,
this presumption is a presumption affecting the burden of
proof.
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will have moved away, rendering the notification process
ineffective. If a significant period of time elapses, the
remote chance of notifying a prior owner of a pending sale may
be outweighed by the time and expense endured by the Authority
to retain the necessary records and go through the notification
process.
Support : Citizens for California High Speed Rail
Accountability; Kings County Board of Supervisors; Southwest
California Legislative Council
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
AB 1138 (Patterson, 2015) would have prohibited the High-Speed
Rail Authority, or the State Public Works Board acting on behalf
of the Authority, from adopting a resolution of necessity to
commence an eminent domain proceeding to acquire a parcel of
real property along a corridor, or usable segment thereof, for
the high-speed train system unless the resolution identified the
sources of all funds to be invested in the corridor or usable
segment, and certified that the Authority had completed all
necessary project level environmental clearances necessary to
proceed to construction, as specified. This bill died in the
Assembly Transportation Committee.
AB 481 (Lowenthal, Ch. 132, Stats. 2013) granted the High-Speed
Rail Authority (HSRA) independent authority to manage property
acquired for high-speed rail purposes, similar to the
independent authority provided to the Department of
Transportation. Among other things, this bill authorized the
HSRA to acquire, grant access to, and quitclaim easements and
rights-of-way on property owned or being acquired by the state,
and to sell property no longer needed for high-speed rail
purposes at fair market value to an adjacent property owner, a
local agency, or former owner, as specified.
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SB 1420 (Costa et al., Ch. 796, Stats. 1996) created the
High-Speed Rail Authority and required the Authority to develop
and implement high speed rail services that interconnect with
existing intercity rail and bus services. Among other things,
this bill authorized the Authority, upon receiving either
legislative or voter approval, to contract for the design,
construction and operation of a high-speed rail network, and to
take associated implementation steps, including acquiring land
and rights-of-way for the high-speed rail network.
Prior Vote : Senate Transportation and Housing Committee (Ayes
10, Noes 0)
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