1 Proposition 98 Eminent Domain Impacts to Project Delivery April 10, 2008 Presented by CALTRANS - Bimla Rhinehart Tab 37

2 Current Procedures/Facts Caltrans acquires property exclusively for public transportation purposes. Caltrans has to prove to the CTC the property sought is necessary for a transportation purpose. Property owners are responsible for their attorney’s fees and litigation expenses unless the court finds after trial: –Owner’s demand was reasonable. –Caltrans final offer was unreasonable. Caltrans’ annual right-of-way acquisition costs are estimated to average $150-$200 million per year

3 Proposition 98 Impacts on Caltrans Projects Cost of transportation projects will increase significantly. Adds significant time to the acquisition of property. Adds costs for the property acquired for public use.

4 Proposition 98 Impacts on Caltrans Projects (Cont’d.) 1) Withdrawing the deposit does not waive the right to challenge the acquisition. –The Commission’s Resolution of Necessity (RON) is more easily challenged –The acquisition of the property right will be delayed indefinitely pending: –Separate legal hearings. –Litigation on the right to take.

5 Proposition 98 Impacts on Caltrans Projects (Cont’d.) 2) Caltrans will be required to pay for all of the property owner’s attorney’s fees and litigation expenses: –Whenever a judgment is rendered for more than the amount Caltrans has offered.

6 Proposition 98 Impacts on Caltrans Projects (Cont’d.) 3) If Caltrans sells an excess parcel: –A good faith effort must be made to locate the property owner from whom the property was acquired. –A written offer must be made to sell the property at the price that Caltrans paid for the property (gift of public funds?). –This provision does not specify what constitutes a good faith effort, nor set a time limit on the right of first refusal. –Similar to SB 1650 enacted 1/1/07.

7 Proposition 98 Impacts on Caltrans Projects (Cont’d.) 4) Expands the definition of what constitutes “just compensation.”  Includes temporary business losses, relocation expenses, business reestablishment costs, and “other actual and reasonable expenses incurred.” –Caltrans’ ability to obtain property for possible public-private partnership projects would be impaired.

8 Fiscal Impact  Estimated annual project delay (4-6 months) costs: approximately $18 million.  Additional eminent domain litigation expenses due to:  Increased number of lawsuits and trials.  Expanded entitlement to attorney fees and litigation expenses: approximately $41 million annually.

9 Proposition 98 Impact Summary  Lengthens the project delivery process by extending the property acquisition process and increases project costs. –Separate hearings and/or litigation to decide if the property is needed for the project. –“Just compensation” becomes more subjective  Increase in eminent domain actions because:  Caltrans would pay property owners' attorney fees and litigation expenses if the owner recovers $1 more than Caltrans final offer.

10 Questions?