Unanimous Court of Appeal Decision Rebuffs County of San Diego’s Attempt to Deny Owner State Constitutional Tax Benefits After Property is Taken by Eminent Domain
In a published precedent setting decision handed down on July 18, 2014, the Court of Appeal held that a property owner is entitled to the full protection of Proposition 3 after the County of San Diego seized private property in eminent domain. For the first time, the court of appeal acknowledged that a property owner’s prop 13 tax rate can be considered part of just compensation for a taking. Proposition 3 was passed by the voters in 1982 and amended the California Constitution to allow property owners to find a replacement after their property has been taken in eminent domain, and to have property taxes for the new property locked into the same rate as the old property. Prior to the passage of Proposition 3, property owners were subject to dramatically increased property taxes after they bought a replacement property, even though they were forced to sell the original property to the government through eminent domain.
In violation of the voter intent when Proposition 3 was passed, the state legislature enacted a statute and a related regulation which placed a four year time limit within which a property owner must find a replacement property, and file paperwork informing tax authorities of the replacement. Kassouni Law’s client, Olive Lane Industrial Park, submitted the paperwork after the four year window of time, and the County of San Diego refused to allow the company to obtain the benefit of Proposition 3.
In a victory for property owners statewide, the Court of Appeal rejected the County of San Diego’s attempt to deny Olive Lane the benefit of Proposition 3, and resoundingly confirmed the priority of just compensation under these facts:
“A nonmandatory interpretation of the time limitation…promotes the constitutionally-mandated just compensation principles governing eminent domain proceedings, which -by virtue of governmental action and through no choice of the property owner- create the need for the property owner to purchase replacement property. Absent application of [Proposition 3], the property owner remains uncompensated in the event the property taxes on the replacement property are higher than on the property taken by the government.”
By way of background, Proposition 3 was enacted four years after California’s voters enacted Proposition 13, the famous initiative which linked property taxes to the value of the property at the time of purchase, and which also required a two-thirds supermajority vote for increased taxes. Prior to Proposition 13, property taxes were skyrocketing year after year based upon inflation, to the determine of the vast majority of homeowners on fixed incomes.
Over the years, various governmental entities and bureaucrats have tried to limit the scope of Proposition 13 through regulations such as the one at issue in the case. It is encouraging to see the Court of Appeal confirm the State Constitutional protections for property owners as reflected in Propositions 13 and 3. The result is an important victory for Olive Lane and all property owners in California.
To read more case background click here.
The appeal was briefed by the eminent domain attorney team at Kassouni Law with adept oral argument by Andre Vanier, J.D.. If you are experiencing an eminent domain issue and would like your property rights assessed, call eminent domain attorney Tim Kassouni at 877-770-7379. He will be happy to assess your rights and remedies to help you form a cost-effect legal strategy for positive results.