Taking Land But Not Using It — CalTrans Is At It Again

Part I – How It All Began

With rhythmic regularity of the tides, dispatches from the state land acquisition front inform us that once again, CalTrans has acquired land for a freeway which is not being built, while the land sits there, consuming public funds but doing no one any good. This time, the locale is South Pasadena, and the new twist is that it isn’t just land. This time, there are houses sitting on it, that CalTrans is maintaining at an eye-popping cost, with no prospects of that freeway being bult in the foreseeable future. You don’t believe it? Then try this: how about $103,472 to replace a roof on a single-family house? Or $171,508 for a roof on another house that has been sitting vacant for over a decade? Etc., etc. See Jack Dolan, Sky-High Prices for Roofs on Caltrans-Owned Homes, L.A. Times, June 19, 2011, at p. A1 – click here

These houses were acquired years ago by CalTrans for an extension to the 70 Freeway, that has not been built due to fierce resistance of the City of South Pasadena — which is another story worthy of telling, but which will have to be told another time.

This isn’t the first time that CalTrans wound up with land it acquired but then could neither use nor sell. In our experience, this kind of boondogglery goes back to the 1960s.  Check out People etc. v. Superior Court (Rodoni), 68 Cal.2d 103 (1968). There, Caltrans, intending to put a 0.65-acre parcel of Roy Rodoni’s Central Valley farmland to use as part of the Interstate 5 right of way, filed a condemnation action seeking to take his entire 54-acre farm. Why take over ten times as much land as would be put to freeway use? Because, said CalTrans, taking only the half-acre would landlock the remainder, making severance damages high, so taking it all would cost less. How is that possible, you ask? How can taking ten times more land be cheaper than taking one tenth of the take? It isn’t. But do read on.

What we have here is government-style arithmetic, which goes something like this. Under eminent domain law,  when a condemnor takes only a part of a larger parcel of land, it has to pay for the part taken, plus severance damages measured by the diminution in  value of the remainder. So by taking all of it, “reasoned” CalTrans, it would not have to pay severance damages, and — voila! — it would save money. But what about the cost of the whole 54-plus acres, as opposed to the cost of only the half-acre that would be used for the freeway and as such be compensable in a partial taking? After all, an entire parcel of land can only be worth 100% of its fair market value, no more and no less. So if you take and pay for all of it, you necessarily pay the highest possible price, as opposed to taking only a part of it whose value necessarily has to be less than the whole, because the remainder (even a landlocked remainder) is always worth something, if only when sold to a neighbor at a bargain price.

But alas, the majority of the California Supreme Court endorsed CalTrans’ argument,  granting CalTrans the opportunity to go to trial and demonstrate that the cost of the partial taking would not be “excessive” and would save the state money.

Justice Mosk, in concurrence with Justice Peters, dissented, pointing out two things. First, that CalTrans’ was engaging in strange mathematics under which more would cost less, and second, explaining why CalTrans was defending the arithmetically indefensible, why it was insisting that acquiring over ten times the amount of land it meant to use for its freeway would cost less money. Justice Mosk noted that the property owners charged, and CalTrans conceded, that  its functionaries were in the habit of engaging in coercive behavior, demanding favorable settlements in part-taking cases, on pain of taking the affected condemnees’ land in its entirety, even though the excess part of it would not be put to any public use. If you don’t believe me (or Justice Mosk) you can see a copy of such a CalTrans demand for yourself in 20 Hastings L. Jour. at 585, n. 73. While we admire the late Chief Justice Traynor, we never could comprehend how a person of his stature and intellectual acumen could fall for so transparent a scam as that presented by CalTrans’ coercive tactics revealed in the Rodoni case. As the King of Siam said to Anna: “Is a puzzlement.”

CalTrans argued that it could “save” by selling the excess land and recouping its money, but the problem with that was that this collided with the settled rule forbidding excess condemnation for recoupment purposes — i.e., the taking of land in excess to the public project being built, in order to resell it, hopefully at a profit and use the sales price to offset the acquisition cost. The court’s majority, in an opinion by Chief Justice Traynor, more or less bought this argument but insisted that CalTrans prove on remad that it would actually save money by taking all of Rodoni’s land.

So what happened then? We are not really sure, but rumor had it at the time, that faced with the arithmetically impossible task of showing that the cost of acquisition of 0.65-acre of farm land would equal or exceed the cost of acquition of 54 acres of that land, CalTrans threw in the towel and settled, paying only for the partial taking and letting Rodoni keep the excess land.

But that was not the end of the story. Shortly thereafter the Little Hoover Commission undertook a study of CalTrans’ excess land acquisition program, and — surprise, surprise! — revealed that the state’s excess land acquisition program, far from being the money-saver CalTrans claimed it to be, was a rathole for public funds. CalTrans was found to be sitting on some $100 million worth of excess land that it acquired but could neither use nor sell. In fact, as revealed by the Los Angeles Times, the program was so poorly managed, that  CalTrans’ excess holdings included some $10 million worth of land that CalTrans was not even aware it owned. And remember — those were 1960s dollars — probably four times as much in today’s dollars.

It was a different story in the federal court where in Sherwood v. Bradford, 246 F.Supp. 550 (S.D.Cal. 1965) District Judge Peirson Hall enjoined the construction of the 210 Freeway because CalTrans had been using excess condemnation. But that case settled.

It seemed at the time that the Legislature put an end to this story when, in 1976, it enacted Cal. Code Civ. Proc. Sec. 1240.410 tightening up the definition of a remnant and providing that excess condemnation of remnants would not be permissible where the condemnee could prove that the condemnor “has a reasonable, practicable, and economically sound means to prevent the property from being a remnant.” And if there is one thing condemnors hate, it is having to defend the extent of their takings on the merits. Moreover, the Legislature also provided that in cases of takings leaving genuine economic remnants, the owner as well as the condemnor can request that they be acquired and compensation be paid for them. Gov’t. Code Sec. 7267.7.  This made the excess taking game a two-sided affair, so we don’t see any overtly excess condemnation cases these days, and presumably, CalTrans is no longer acquiring land that it then fails to use.

Or do we?

(The story of CalTrans’ abuses of land acquisition will continue later)