Should a city be able to use legislative tricks to acquire land cheaply?

The Constitution requires the government to pay just imagecompensation when it seizes private property for public use. However, if the City of Perris has its way, cities will be allowed to pay less than fair market value for private property they seize merely by amending their general plans. The California Supreme Court is set to consider the legality of that maneuver in City of Perris v. Stamper. PLF, joined by the National Federation of Independent Business, filed an amicus brief in the case supporting the property owners.

In this case, Richard Stamper and Donald Robinson own 9 acres of land zoned light industrial that the City of Perris wants for a road extension. In order to attract a Lowe’s distribution center, the City decided it needed to take 20% out of the middle of the Stamper/Robinson property for a new road. The City argued that because it was going to require the owners to dedicate the land before they could build, the City only had to pay for the land valued at its current, agricultural use. The city also left open the possibility that in the future, the Owners might have to dedicate even more land to the City if they want to develop the rest of their property.

The landowners challenged this action and after four years in the California Courts, their case has finally reached the California Supreme Court. Our amicus brief makes two major arguments:

1) Local governments can’t avoid paying fair market value for property they take via eminent domain merely by amending their general plans. If they could do that, then all governments would diminish property values in that way to acquire land more cheaply.

2) In accordance with PLF’s 1987 Supreme Court victory, Nollan v. California Coastal Commission, government bears the burden of showing that a property owner’s development impacts justify dedication requirements. Therefore, the government can’t merely impose a dedication on land it wants. It must show that if the land were developed privately, the dedication would be necessary to mitigate for the impacts of that development on public infrastructure.

Beyond these legal issues, this reworking of eminent domain law would destroy social wealth. If cities are allowed to under-compensate individuals in eminent domain actions, they will take more land than they need, and in the process use it less efficiently than private parties. As a prominent law professor noted, society “cannot afford to instigate measures whose costs, including costs which remain “unsocialized,” exceed their benefits…any measure which society…is unwilling to finance under conditions of full compensation, society cannot afford at all.” This means that governments should be forced to pay the full cost of land to ensure that the benefits of their projects outweigh the harms. The California Supreme Court needs to rule for the Owners in this case to protect not only landowners, but also the public generally.