In 2006, California voters wisely rejected Proposition 90, a stealth measure that would have dramatically reduced government’s ability to protect the environment, enact zoning laws, and engage in many other regulatory activities that enhance Californians’ quality of life. Having lost on Prop 90, the Howard Jarvis Taxpayers Association has come back with a supposedly scaled back version, Prop 98.

Prop 98, however, is every bit as overbroad and dangerous as Prop 90, and even more deceptive. If it passes, it will repeal rent control. It also may cripple California’s ability to deal with the significant natural resource and infrastructure challenges facing the state, as well as undermining government’s ability to enact effective zoning measures and to protect the environment.

First, some history. In 2005, the Supreme Court, held that a city could use eminent domain, consistent with the U.S. Constitution, to forcibly purchase a private home to encourage private redevelopment. The decision sparked an outcry across the political spectrum, and broad support formed for banning government from taking private homes for private development projects.

It would be straightforward to accomplish that goal by simply banning government from transferring private homes to private developers. But, unfortunately, certain conservative anti-government groups took advantage of the situation by submitting ballot measures across the country that, in name, were limited to the taking of private homes for private use, but in effect, contained buried text that exploded the definition of eminent domain to include most regulation, including environmental and zoning laws. Prop 90 was one of those stealth measures.

After the defeat of Prop 90, Democrats in the California Legislature introduced a constitutional amendment (Assembly Constitutional Amendment 8) to reform eminent domain by prohibiting use of eminent domain to acquire an owner-occupied home or a small business for transfer to another private party. ACA 8 had the strong support of the League of California Cities and the League of Conservation Voters, but Republicans in the Legislature killed it, because they wanted a broader Prop-90-style measure. (The League of California Cities then collected signatures to place the measure on the ballot as Prop 99, which is a good, common-sense eminent domain reform without a hidden agenda.)

That measure is Prop 98. Its statements of findings and purpose seem innocuous enough and appear to limit the measure to reforming eminent domain. However, when one examines the text, and particularly the definition section, its broader impacts becomes clear:

→→ Prop 98 explicitly repeals rent control statewide. It leaves local jurisdictions with no ability to control escalation of rents. Whatever one’s views on rent control, this is a draconian measure that would eliminate local control of this very local issue.

→ After banning the taking of private property for private use, the measure defines “private use” to include the taking by a public agency of private property “for the consumption of natural resources.” The measure therefore would prohibit government agencies from using eminent domain, for example, to acquire property for public water projects to increase California’s capacity to store, transport, and deliver water. The language also likely bars use of eminent domain for preservation of open space.

→ Prop 98 further defines prohibited “private use” as regulation of private property in order to “transfer the economic benefit” to another person. This language could have devastating effects on land use planning and environmental regulation by barring government from engaging in regulation that reduces the market value of property. Examples of prohibited activities could include historic preservation laws and height limitations. All zoning decisions arguably transfer economic benefits among property owners, as courts have held, and this measure therefore would reduce the ability of government to engage in traditional land use regulation – regulation that is especially important in dense urban environments.

→ The “transfer economic benefit” prohibition also would create problems for new development. Any land use or zoning decision designed to facilitate new construction could be tied up in court on the ground that it transfers an “economic benefit” from current property owners to new ones, such as reduction of a view or changes in traffic patterns – changes that could reduce property values.

→ Prop 98’s “transfer economic benefit” language also could seriously limit government’s ability to require developers to provide public benefits in connection with development, such as making street improvements, contributing to park enhancements, or other expenditures traditionally required of developers in order to provide adequate public infrastructure to support the increased population that development spurs.

→ Prop 98 also fails to provide an exception for health and safety regulations and is arguably retroactive to existing regulations. This makes Prop 98 more extreme than Prop 90, which contained a health → Given how vaguely Prop 98 is drafted, it will create immediate and significant litigation. Any decision by government in California that arguably affects the value of property or arguably transfers an economic benefit from one property owner to another will result in a court challenge seeking compensation and injunctive relief. Even if courts eventually interpret the measure narrowly, taxpayers will spend huge sums of money litigating its scope. In San Francisco, the funding for this litigation will typically come directly from the General Fund – i.e., the fund that pays for parks, street repairs, police, and other services on which we all depend.

California, and the Bay Area, are growing rapidly and will continue to do so for decades. We have seen the results of poor planning in California – clogged roads, pollution, suburban sprawl that covers up open space, inferior public transit, and a looming water crisis because of inadequate storage capacity. We need our government to be able to plan effectively for growth. Prop 98 is exactly the opposite of what we need and will take California in the wrong direction.

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