The Court of Appeal in Rutgard v. City of Los Angeles, 52 Cal. App. 5th 815 (2020) held that a public agency desiring to retain condemned property that has not yet been put to public use must adopt a reauthorization resolution within ten years of the initial resolution declaring the public need. The Court also clarified that the deadline for this reauthorization must be “finally adopted” according to local rules within ten years.
On May 29, 2007, the City of Los Angeles (“City”) adopted an ordinance that served as a resolution of necessity declaring that a certain commercial property (“Property”) was being acquired for public purposes under California’s eminent domain law. The City filed an eminent domain lawsuit against the property owner, plaintiff Richard Rutgard (“Plaintiff”), and the parties ultimately settled the suit with the City agreeing to pay $2.5 million for the Property. However, due to the economic downturn in 2008, the City never developed the property as planned.
Section 1245.245 of the Code of Civil Procedure (“CCP”) requires that when property acquired through eminent domain is not used for its intended public use within 10 years “of the adoption of the resolution of necessity,” the agency must allow the property owner to buy it back unless the governing body adopts a new resolution reauthorizing the existing stated public use. On June 23, 2017, the City Council enacted an ordinance reauthorizing the use of the Property for public purposes, and the Mayor approved the ordinance on June 27, 2017 as required by the City’s local rules governing adoption of ordinances.
The City calculated the effective date for the 2017 ordinance as July 9, 2017 based on a posting date of June 29, 2017 and upon a finding that the ordinance should take effect immediately upon publication as authorized by the City’s charter. Plaintiff filed a writ petition in civil court seeking an order requiring the City to offer him a right of first refusal to purchase the Property under CCP 1245.245, arguing the City’s 2017 reauthorization ordinance was untimely. The trial court granted the petition, finding that the City had a ministerial duty to offer Plaintiff the right of first refusal because the 2017 ordinance was adopted beyond the ten-year limit imposed by CCP 1245.245. The trial court rejected the City’s argument that the effective date of the May 29, 2007 ordinance should start the ten-year period based on the plain language of the statute which starts the period at the date of “adoption.” The City appealed.
California’s eminent domain law allows a public entity to condemn private property only if the public interest and necessity require it and the owner is justly compensated. At the outset, the public entity must adopt a resolution of necessity specifying the public use for which the property is to be taken. To prevent public agencies from acquiring and “banking” property indefinitely, CCP 1245.245 requires that if the agency does not use the property for the stated public purpose within ten years of the adoption of this initial resolution, it must be offered for sale back to the prior owner unless the agency adopts a second resolution reauthorizing the existing stated public use of the property.
The Court of Appeal agreed with the trial court that the effective date of the City’s 2007 ordinance is not the triggering date because the statute uses the word “adoption” and not “effective date.” This determination led the Court to further determine that, for purposes of CCP 1245.245, “adoption” does not refer to the resolution’s effective date or the date the resolution was initially adopted, but rather refers to when a resolution of necessity is finally adopted under the agency’s local rules and procedures. The Court reasoned that because initial adoption of an ordinance or resolution is ineffective absent completion of all necessary steps required by local rules for the enactment to become effective, CCP 1245.245 refers to the date the reauthorization resolution is finally adopted pursuant to local rules. Here, the City’s charter requires that an ordinance is “finally adopted” after it has been passed by the city council and then separately approved by the mayor (or passed by an overriding vote of the council). Under these rules, the ten-year period started on June 8, 2007 when the mayor approved the 2007 ordinance. Also under these rules, the City adopted the reauthorization ordinance on June 27, 2017 when the mayor approved it. Because this was not within ten years, it was untimely and the City is required to sell the Property and give Plaintiff a right of first refusal.
This decision makes clear that cities who own condemned property must carefully review their procedures for adopting ordinances and resolutions to ensure that the necessary reauthorization enactments are “finally” adopted prior to the ten-year anniversary of when the original resolution of necessity was “finally” adopted. Final adoption for purposes of eminent domain is considered the date when all actions required by local rules are completed and does not refer to initial adoption or the effective date of a given enactment.
Information on www.jones-mayer.com is for general use and is not legal advice. The posting of this Municipal Law Update is not intended to create, and receipt of it does not constitute, an attorney-client-relationship. Should you have any questions or require further clarification of the above, please contact Keith F. Collins at our office at (714) 446-1400, or by email firstname.lastname@example.org.