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Mello-Roos Act Can Lawfully Finance Eminent Domain Actions

17 Apr 2015 00:00:00 -0800

The Mello-Roos Act can be used to finance acquisitions by eminent domain, the Second District Court of Appeal affirmed in a published decision. In Golden State Water Company v. Casitas Municipal Water District, handed down Tuesday, the court rejected Golden State Water Company’s contentions and affirmed that the Act should be “liberally construed” to allow for the financing of the acquisition of facilities.

Golden State Water Company, a for-profit regulated utility, has a monopoly in providing water service in Ojai. Concerned about what the opinion described as “sky high water bills,” Casitas Municipal Water District “concluded that the Ojai community would benefit from having its water utility run by a locally controlled entity rather than an out-of-area-corporation seeking to maximize profits for its owners.”

In a Mello-Roos election held in Ojai, 87 percent of the voters approved using Mello-Roos property taxes to finance Casitas’ acquisition by eminent domain of Golden State’s Ojai water system. Golden State, declaring its system was “not for sale,” brought a legal challenge to set aside the voter approved Mello-Roos measure.

Golden State argued on appeal that only “purchases” of “tangible” property could be financed under Mello-Roos and that “purchase” did not include eminent domain, and that Golden State’s water system consisted in part of intangible property.

The appellate court rejected these contentions. It observed that the Act itself requires that it be “liberally construed.” It noted that the Act provides for the acquisition of “rights of way,” which are intangible and that “purchase” has been interpreted in prior case law to include eminent domain. It concluded that “if the public agency otherwise has the power to acquire the facilities, the Mello-Roos Act should not be interpreted to preclude financing them.” It further concluded that litigation expenses for eminent domain could be considered “incidental expenses” that could be financed under Mello-Roos.

The decision observed that “[m]onopolists have long been unpopular in this country” and that “[n]othing is more necessary to life than water.” The decision ended on this note:

“[Golden State] advocates for a rule that would shift the bargaining power decisively in its favor, allowing it to hold out for a sale price far above the market rate while it continues to extract monopoly rents from the people of Ojai. This is neither sound policy nor supportable by the statutory text. Like the trial court, we will not set the will of the voters aside.”

Best Best & Krieger LLP filed a brief on behalf of Casitas as amicus curiae counsel for the Association of California Water Agencies, League of California Cities, California State Association of Counties and California Special Districts, which collectively represent more than 2,000 public entities.

If you have any questions about this decision or how it may affect your public agency, please contact the authors of this legal alert listed to the right in the firm’s Eminent Domain and Special Districts practice groups, or your BB&K attorney.

Disclaimer: BB&K legal alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

Major Interchange Construction Plans in Perris Proceed with BB&K's Help

10 Dec 2009 00:00:00 -0800

A persistent bottleneck in Perris could get fixed in a big way if construction of a new intersection at Interstate 215 and Highway 74 proceeds as planned.

The Riverside County Transportation Commission will hear an update on the intersection project today at its monthly meeting. Officials at the commission, Caltrans and consultants worked over the summer and fall to meet a Dec. 1 deadline for state and federal approvals.

The project was rejuvenated by $16 million in federal stimulus funds local officials steered to the project. But the money also forced officials to have state and federal approvals ready.

With the approvals and land acquisitions in place, construction should start "no later than June," according to a transportation commission report.

The approvals for the project came late last month after officials secured agreements with landowners who will lose property to the expanded intersection. Plans call for the two-lane overpass atop I-215 to be replaced with an eight-lane bridge.

"I think it's unique we were able to get all the property we needed in a short time frame," said Mark Easter, a lawyer with Best Best & Krieger who handled the property deals.

Agreements were reached with the landowners without using eminent domain, the often time-consuming and complex process of public agencies taking private land for public benefit. Easter noted officials were fortunate not to have to employ eminent domain.

Some of the deals delayed haggling over the price of the land, he said.

"They allowed us to take possession of the property we need with the understanding we would resolve the price later," Easter explained.

That allowed the intersection project -- part of an improvement plan started in the 1980s -- to proceed. The intersection is considered by officials one of the high-priority projects because growth in the area and developments near the Perris intersection have strained traffic capacity.

Click here for full article.

Bruce Beach Spoke on Road & Access Law at NBI Seminar

11 Dec 2008 00:00:00 -0800

BB&K partner Bruce Beach presented Road and Access Law: Successfully Handling Disputes at National Business Institute's seminar on December 11, 2008 at the W San Diego.

Conflict is inevitable when it comes to road and access law and who is entitled to what. Yet when clients call you in to determine who has rights in an easement, private road or right-of-way dispute, traditional negotiating tactics can fall short. As a result, agreements blow up, cases don't settle and - too often - you end up in court. Learn proven and positive approaches for addressing and resolving disputes as they arise in the volatile environment of road and access law.

For more information visit the National Business Institute website.

BB&K Partner Bruce Beach Discusses Eminent Domain with Liberia’s Vice President

20 Sep 2007 00:00:00 -0800

Liberian Vice President Joseph N. Boakai recently visited San Diego for a series of meetings. During his visit, the Vice President attended a forum on "Issues, Procedures and Strategies for Land Dispute Resolution," hosted by Best Best & Krieger attorneys Bruce Beach and Shannon Erickson in downtown San Diego. Boakai and recently elected President Ellen Johnson Sirleaf are trying to bring the country back to its pre-war condition. “It was a pleasure meeting with the Vice President and his staff and gaining an understanding of the formidable task they face in rebuilding their country after almost 15 years of war,” said Beach.