Upcoming Ballot Initiatives on Eminent Domain and Rent Control

Propositions 98 and 99 – Eminent Domain and Rent Control

On June 3rd, California voters will be given the choice to vote for Propositions 98 and 99, dealing with eminent domain and rent control. The current landscape surrounding these issues is as follows:

With regards to rent control, Berkeley, Oakland, San Francisco and San Jose all currently have some measure of rent control, limiting the amount a landlord can increase the rent charged for a unit during a tenant’s residence. Landlords are free to set the rent at any level when tenants change, however.

Respecting eminent domain, Kelo v. City of New London, 545 U.S. 469 (2005) held, in a 5-4 decision, that eminent domain, the right of the government to seize private property for public purposes, allowed cities to seize private property and transfer it to other private owners to further economic development. The Court held that seizure and transfer of property from one private party to another qualified as a “public use” if the new use creates new jobs, increases tax revenues and help to revitalize a depressed urban area. Kelo has generated substantial public backlash and considerable uncertainty. Propositions 98 and 99 are, to great extent, the result of this backlash.

The basics of the propositions are:
Prop. 98 limits the government’s ability to employ eminent domain to seize private property for public uses and eliminates rent control throughout California.

Eminent Domain Effects:

• Private property may not be taken for other private use under any circumstances (i.e. Kelo-type seizures would be prohibited).
• Property may only be taken for public uses like freeway construction, parks, or schools.
• Open spaces and farms may not be seized for the sale of natural resources.
  
• If the government’s purpose change after the seizure, the property must be offered for repurchase to the original owner at the seizure price.

Rent Control Effects

• Tenants living in rent-controlled areas continue to receive the benefit of rent control until they move.
• Once a unit turns over to a new tenant, that unit is no longer subject to rent control.

Prop. 99: In response to a perceived “hidden agenda” behind Prop. 98, evidenced by the substantial financial backing of apartment and mobile home owners, the California League of Cities proposed Prop. 99. The League of Cities claims that the real motivation behind Prop. 98 is the elimination of rent control in order to profit landlords. Prop. 99 also deals with eminent domain, but has no provisions regarding rent control. Under Prop. 99, the government would be prohibited from taking owner-occupied homes for sale to another private party. Prop. 99 is drafted such that if both propositions are passed, the proposition receiving more votes will become law.

Sources
• www.yesprop98.com/facts
• www.eminentdomainreform.com/compare9899
• Tom Chorneau, Eminent Domain Measure on Ballot, SAN FRANCISCO CHRONICLE, MAR. 10, 2008.