Even if the city of Sacramento wins a court battle to wrest a key part of the K Street Mall from property owner Moe Mohanna, it could lose the war on another front: the state ballot.
Mohanna has thrown his support behind an initiative headed for the June election that would forbid local governments in California from using eminent domain to buy property from one private owner and award it to another – exactly what the city is seeking to do on K Street.
"We'll be spending a lot of money on that, and I'll have a series of fundraisers in my buildings," Mohanna said on Christmas Eve.
Mohanna has aligned himself with a coalition of anti-tax groups and property rights advocates led by the California Farm Bureau Federation and the Howard Jarvis Taxpayers Association, the force behind California's landmark property tax cutting measure, Proposition 13.
Last month, the group submitted more than 1 million signatures to qualify its anti-eminent domain measure for the ballot.
Mohanna said he'll be a champion of the statewide effort that he describes as a flesh and blood example of the heavy-handed use of eminent domain.
"I'll be going to different cities, and talking about private property rights, and the taking of private property for private use," Mohanna said.
"Today it is my buildings, tomorrow it is your home," Mohanna said, adding that local governments might even "take every church and turn it into a Costco."
On the other side of the debate stands Sacramento Mayor Heather Fargo and other local officials in California who view eminent domain as a crucial tool for fighting urban decay in places like the K Street Mall.
Fargo said her constituents applauded the City Council's unanimous vote to authorize eminent domain against Mohanna.
"People come up and say, 'Good for you, K Street is such a public street, and it's so tied up in people's perception of downtown, that it's just really a critical place for us,' " she said.
Fargo supports a rival initiative, which also has gathered more than enough signatures to qualify for the June ballot. Backed by the League of California Cities, the League of Conservation Voters and the California Redevelopment Association, it proposes more limited changes to current law.
The measure would prohibit local governments from using eminent domain to acquire owner-occupied homes and transfer them to a private developer. It would not affect the taking of commercial properties such as Mohanna's.
"There's some room and a need for some eminent domain reform to give homeowners some sense of security that they apparently don't now feel," said Fargo, who in September will start a term as president of the League of California Cities.
"In our city, we haven't done a lot of that, but in some communities there has been a real concern. We're hoping to get some reform done that people will think is meaningful, and will put this issue to rest."
State law has long given cities – acting through their redevelopment agencies – the right to exercise eminent domain to acquire land in areas defined as "blighted."
Sacramento used these powers to build the new Central Library in downtown Sacramento, as well as a new apartment complex that occupies a former hole in the ground at Ninth and J streets.
Outside downtown, the city used eminent domain to overhaul the crime-plagued Franklin Villa development – now renamed Phoenix Park.
On Dec. 18, the City Council authorized the use of eminent domain to acquire nine properties owned by Mohanna in the 700 and 800 blocks of K Street – an area with a high retail vacancy rate, crime, and gaps where buildings have been demolished.
The city plans to award the properties in the 700 block to Joe Zeiden, owner of the Z Gallerie furniture chain, so he can create a retail row in the historic buildings just outside the entrance to Downtown Plaza.
Mohanna had agreed to a voluntary property swap that would have left Zeiden in control of the 700 block, and him with the 800 block. But he has balked at completing it since a fire in one of his buildings last year resulted in the demolition of much of the 800 block.
It's unclear what stage in the eminent domain process against Mohanna the city would have to reach to avoid the impact of the Howard Jarvis ballot measure, should it pass. Would simply filing the eminent domain case be enough? Or would the city need a final judgment in the entire case? The measure contains no language clarifying this question.
Marko Mlikotin, a spokesman for the coalition pushing the far-reaching ballot proposition, opined that possession of the properties is the key. If the city doesn't gain possession of Mohanna's properties before June, and the measure passes, it would not be able to move forward, Mlikotin said.
"They would be under pressure to seize the property prior to June," Mlikotin said.
Assistant City Manager John Dangberg said it will likely take at least six months before a judge rules on the city's right to force the properties' sale. The city will likely go to court in January to start the process, he said.
An eminent domain case has two phases. First, a judge decides if a city has the right to acquire properties through eminent domain. Then a jury sets the price.
The law allows a city to take possession of a property while the value phase of the trial is ongoing. Doing so is a risk, however, because property owners have the right to appeal, which can add years to the process.
Pressure to scale back eminent domain power has been building since the U.S. Supreme Court's 2005 decision, Kelo v. City of New London, which found that the city of New London, Conn., was justified in demolishing houses owned by Susette Kelo and her neighbors for a commercial development.
On its face, the decision strengthened the hand of local governments. But it also ignited a backlash against the use of eminent domain, giving property rights advocates an issue to rally around.
It isn't the first time the Howard Jarvis Taxpayers Association has tried to persuade Californians to scale back eminent domain. In 2006, voters narrowly rejected Proposition 90, which was similar to the measure the group is now promoting.
Mlikotin said the new measure stands a better chance of passing because, unlike Proposition 90, it doesn't require local governments to compensate property owners every time they adopt a regulation that could hurt property values.
Private polling shows public support for scaling back eminent domain powers, Mlikotin said. "With those results we felt comfortable going forward."
The League of California Cities has highlighted what it says are deceptive provisions of the measure, including language that would abolish rent control.
Sacramento CA Bee: http://www.sacbee.com