Posted by: Patricia Salkin | October 1, 2016

CA Supreme Court Holds Requirements of “Essential Nexus” and “Rough Proportionality” were Questions for the Court Requiring Inquiry into Sincerity and Reasoned Planning Decisions

The City of Perris condemned a 1.66–acre strip of defendants’ property in order to build a road. By taking the strip, the City divided the property into two irregularly shaped parcels. The City claimed that defendants would have been required to dedicate the strip to the City, with no compensation, had they sought to put the property to its highest and best use: light industrial development. The City therefore offered to pay defendants the agricultural (undeveloped) value of the strip, relying on City of Porterville v. Young (1987) 195 Cal.App.3d 1260, 241 Cal.Rptr. 349 (Porterville ).) After bifurcation and court trial on legal issues, the Superior Court entered judgment for City regarding the dedication issue. Following stipulated judgment as to appraisal, the landowners appealed and the Court of Appeals reversed and remanded. The City petitioned for review, and the Supreme Court granted review, superseding the opinion of the Court of Appeals.

The Court first addressed whether the essential nexus and rough proportionality inquiries must be submitted to a jury. It determined that legal questions that affect the type of compensation to which a landowner is entitled in a condemnation action must be decided by the court. Similarly, whether access to a property has been “substantially impaired” for purposes of determining severance damages is a question for the court, even though the court determined that substantial impairment could not be fixed by abstract definition, but by the factual situations of each case. Furthermore, the court found that whether a dedication requirement meets the essential nexus and rough proportionality tests is a matter of means-ends scrutiny familiar to constitutional adjudication. This inquiry requires a court to evaluate whether a legislative or quasi-adjudicative body had made sincere and reasoned planning decisions, and to “balance landowners’ vulnerability to the type of coercion that the unconstitutional conditions doctrine prohibits”.

The court next analyzed the Owners’ contention that even if the City’s dedication requirement was lawful and its imposition was reasonably probable, the project effect rule of section 1263.330 barred the City from introducing evidence of the dedication requirement at a trial on just compensation. Specifically, the Owners’ alleged that the project effect rule required the exclusion of any evidence regarding the City’s dedication requirement in determining just compensation. The Court of Appeals in Porterville held that when a city would lawfully have conditioned development of property upon the owner’s dedication of a portion of the property, the fair market value of that portion in a subsequent condemnation action is its value in its undeveloped, agricultural state. Thus, the court found that in a condemnation action, when a government entity makes a claim under Porterville that it would have required a dedication of some or all of the property being condemned had the property been developed, courts determining just compensation should look to whether that dedication requirement was put in place before it was probable that the property would be included in a government project. Here, because the date of a property’s probable inclusion within a project is a preliminary factual determination that pertains to the admissibility of evidence regarding valuation, the court held it was for the trial court rather than the jury to determine.

Accordingly, the court remanded the case to the trial court to determine whether the inclusion of the property at issue in the project for which the property was ultimately condemned was probable in 2005, when the dedication requirement was put in place.

City of Perris v. Stamper, 376 P.3d 1221 (Cal. 2016)

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