Precondemnation Procedures: Acquiring Right of Way in a New World October 9, Presented by David Graeler and Brad Kuhn
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1 Precondemnation Procedures: Acquiring Right of Way in a New World October 9, 2015 Presented by David Graeler and Brad Kuhn
2 Pre-Litigation Phases Project Planning Engineering / Design Appraisal Offer / Negotiation Resolution of Necessity
3 The Planning Phase 3
4 Considerations During Planning / Environmental Approval Phase Environmental documents impact right of way acquisition What ROW acquisition activities can agency undertake? Owner: (1) opportunity to create record (2) suggest possible alternatives What coordination efforts should be taking place early on?
5 Consider EIR Comments The Project will create significant and unavoidable adverse impacts to the visual character and quality of the adjacent property Noise and vibration from construction will be significant and unavoidable and will exceed the FTA threshold The project will result in elimination of 20 parking spaces, leaving the property with insufficient parking and thereby creating a significant and unavoidable impact
6 Right of Entry Agreements Avoids formal Petition Proceeding (Code Civ. Proc., , but see Property Reserve under review by the California Supreme Court) Opportunity For Agreement on Conditions: Time, Duration & Scope of Inspection Personnel Type of Tests, Including any Boring Locations Hours of Testing Indemnity & Insurance Restoration Compensation Data & Analysis
7 Planning Activities: Potential Liability Take steps to minimize exposure to precondemnation damages Owner may try to establish record demonstrating unreasonable conduct, delay, and damages
8 Potential Liability for Planning Activities? No liability for general planning (Selby Realty Co. v. City of San Buenaventura (1973) 10 Cal.3d 110) Liability for unreasonable precondemnation activities: Klopping Damages A public entity may be liable for precondemnation damages if: 1) The public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and 2) As a result of such action the property in question suffered a diminution in market value. (Klopping v. City of Whittier (1972) 8 Cal.3d 39, 52)
9 Potential Liability for Planning Activities? Key Distinctions Government activity turns from general project planning into efforts to acquire Government activity directly interferes with owner s use of property and reduces the value Generally, no bright line test, except Cause of action for inverse condemnation if public entity fails to commence eminent domain within 6 months after adoption of a Resolution of Necessity. (C.C.P ) Best Practice Until Resolution of Necessity adopted, never state the property will be condemned
10 The Engineering Design Phase 10
11 Key Considerations Project Schedule Funding Scope of The Acquisition Timing and Status of An Offer Complex Relocation Issues
12 Project Schedule Project schedule key driver Delays in delivering right-of-way result in potential construction delay claims, change orders, or loss of project funding Magnitude usually much greater than property acquisition costs Impact on Owners: uncertainty creates stress and difficulty Cloud on title impacts ability to sell or lease property or otherwise properly conduct business
13 Know the Realistic Possession Schedule Step Days Notice of Intent to Appraise 0 Appraisal & Appraisal Review (Funding Agency?) 90 Written Offer 20 (Day 110) Negotiations / Notice of Resolution of Necessity 60 (Day 170) Adopt Resolution 20 (Day 190) File Condemnation Action 10 (Day 200) File & Serve Motion for Possession 20 (Day 220) Hearing on Motion for Possession (Relocation?) 100 (Day 320) Effective Date of Order of Possession (Add time for Writ, if necessary) 35 (Day months)
14 Other Agency Timing Considerations Court Backlog Problem Parcels / Owners Political / Practical Deadlines Utility Relocation Issues Design Changes Design Build Agency Hearing Timing Board Member Disposition to Condemnation
15 Understand Project Funding Agency: Funding drives schedule FTA, FHWA, Caltrans requirements Project operations date Early acquisition activities
16 Scope of Acquisition Length and Timing of Temporary Easements (County of San Diego v. Bressi (1986) 184 Cal.Rptr. 3d 112) Easement or Fee Take Full or Partial Acquisition (Uneconomic Remnant, Code of Civ. Proc ) Potential Alterations in The Right of Way
17 TCE Language 17
18 Easement Language 18
19 Alterations in Right of Way
20 Involving Attorneys, Consultants, Contractors and Engineers Collaborative Effort to Identify Problems and Devise Solutions Each Discipline Brings Different Perspective Explore Alterations of Project Footprint Explore Mitigation Measures (Temporary & Permanent) Exchange of Information?
21 Build Your Team: Consultants & Appraisers Utilize Experts Early / Spot Issues Examples Land Use / Environmental Relocation Engineers (Civil, Traffic, Hydrologist, Acoustical, Soils) Broker/Economist Development Expert Industry Expert
22 The Appraisal Phase 22
23 Precondemnation Appraisal The initial appraisal serves a dual purpose: Supports offer of just compensation Supports deposit of probable compensation to obtain an order for possession Initial appraisals can be subject to considerable scrutiny, especially where possession is contested
24 Appraisal Considerations Appraisal Before Project Design Complete Benefit/Risks For Agency Early Exchange of Appraisals Securing Dual Offer Appraisals Appraisal Reimbursement for Landowners
25 On-Site Meetings With The Appraiser Notice of Intent To Appraise: A written Notice of Decision To Appraise must be given to all landowners as soon as possible after the decision to appraise is reached by the acquiring public agency. (Cal. Code Regs. Title ) Meeting With Appraiser: The landowner must be allowed the opportunity (by written notice) to accompany the appraiser during the appraiser s inspection of the property. (Gov. Code, , subd. (b); Cal. Code Regs., Title 25, 6184, subd. (b)(1); 42 U.S.C (2); 49 C.F.R )
26 On-Site Meetings With The Appraiser Who Should Attend Attorney Presence Fixtures & Equipment Substantive Questions and Requests for Information
27 Benefits of Strong Appraisal Creates Rapport with Property Owner Builds Confidence in the Process More Likely to be Accepted or Settled Close to Appraised Value Reduces Litigation Reduces Likelihood of Challenge to Adequacy of Deposit or Possession Motion
28 Appraiser Due Diligence 11/18/14 28
29 Appraiser Due Diligence 29
30 The Offer & Negotiation Phase 30
31 Precondemnation Offer Amount of offer must equal the approved appraisal of the fair market value of the property Public entity is required to provide written summary of the basis for the amount established as just compensation Best Practice: Provide entire appraisal? Negotiation: every reasonable effort to expeditiously acquire property by negotiation
32 Offer/Negotiations: Best Practices Present Owner with Sufficient Information Owner Exhibits, Plans, Profiles, Grading Plans Consider Before/After Renderings Simplify Contracts / Purchase Documents Accept Reasonable Information Provided by Owner Missed Items, Reasonable Costs Special Provisions re Contractor Responsibility Consider Precedent Setting Decisions
33 Sample Exhibit 33
34 What is Too Much Information?? 34
35 Negotiation Options Possession and Use Agreements Lost Rent Agreements Non-Monetary Concessions
36 Possession & Use Agreements Ensures timely project delivery Considerations: avoid exposure to precondemnation damages claims, right to take, or commitment to acquire It provides greater certainty for owners But owners may also recognize that they are losing potential leverage in project modifications or settlement, loss of ability to challenge right to take or possession Provisions often overlooked: No additional compensation other than for interests acquired Specify rights for mitigation work Effective date Filing of ED action and waiver of RTT challenge Intent to be bound agreement irrevocable Authority of owner AND tenant
37 Lost Rent Agreements Agency: ensures non-duplication of relocation benefits & limits precondemnation damages disputes Considerations: ensure waiver of right to take, stipulation to possession Owner: ensures steady rental income Downside: Loss of potential leverage Upside: Opportunity for other concessions, provides certainty, cost savings
38 Other Non-Monetary Concessions Alternative Solutions and Trade-Offs Relocation Assistance Early Deposit To Facilitate Relocation
39 Negotiating Terms of a Purchase Agreement Compliance with Promises to Property Owners Steps to Minimize Claims Examples Work Hours Access Restrictions Protect-in-Place Requirements Avoiding Change Orders
40 Additional Considerations Lender involvement / Subordination Agreements Potential Apportionment Issues With Lenders Disclosures to Tenants and Prospective Tenants Dismissal of Eminent Domain Action Others
41 The Resolution of Necessity Phase 41
42 Preparation for Hearing on Resolution of Necessity Notices of Hearing Sent by first-class mail; Certified? Anyone whose name/address appears on the last equalized county assessment role Notice to business owners, lien holders? The notice must state the following: Intent to adopt a resolution Right to appear and be heard Failure to file a written request to appear within 15 days after the notice was mailed results in waiver of right to be heard
43 The Resolution of Necessity Hearing Notice of RON Hearing must meet statutory minimum (15 days) Include Service Time Agency Oversight Partners May Have Additional Notice Requirements Caltrans has 45 day notice Prepare an adequate RON package Resolution plus detailed Staff Report Conduct a Hearing before approval body
44 Hearing on Resolution of Necessity Oral & Written Objections Comments and discussion at the hearing is typically focused on four matters and issues: Whether public interest and necessity require the proposed project (Code Civ. Proc., , , subd. (b)(2)); Whether the proposed project is planned and located in the manner that will be most compatible with the greatest public good and least private injury (Code Civ. Proc., , , subd. (b)(2)); Whether the property sought to be acquired by eminent domain is necessary for the proposed project (Code Civ. Proc., , , subd. (b)(2)); Whether the offer required by Government Code section was made to the owner and whether it complied with section (Code Civ. Proc., )
45 Questions? DAVID GRAELER (213) BRADFORD B. KUHN (949) CaliforniaEminentDomainReport.com
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