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98 v. 99: Hyperbole Dominates Eminent Domain Campaigns

I hate to be repetitious, but sometimes in the column-writing business it's inevitable.

Eighteen months ago, I wrote in this space that the debate over Proposition 90 came down to two unfortunately simpleminded campaign slogans "protect our homes" or "taxpayer trap." Proposition 90 would have greatly restricted the use of eminent domain hence it would have protected our homes. But it also would have required the government to compensate landowners for virtually any downzoning hence the taxpayer trip.

"Taxpayer trap" won, but not by much. So now we've got Proposition 98 on the June ballot a watered-down and slightly sideways version of Proposition 90. And for good measure we've got Proposition 99 a countermeasure put forth by local government organizations that would restrict eminent domain, but only in the case of owner-occupied single-family homes.

In campaign terms, it doesn't look much different than it did before. On the one hand, we've got Proposition 98 the "Protect Renters, Protect Homes" initiative or the "Hidden Agenda Initiative," depending on your point of view. On the other hand, we've got Proposition 99 the "Homeowner Protection Act" to its supporters. So far, opponents haven't come out with their pithy three-word negative characterization. They've fallen back on the trusty old "Don't Be Fooled" approach.

And the campaign rhetoric will likely be pretty shrill and pervasive, because these two propositions will be the only measures on the June ballot thanks in large part to the fact that California moved its presidential primary (and hence some other ballot measures) from June to February.

The whole reason this issue is even on the ballot at all in California is because of the U.S. Supreme Court's ruling in 2005 in Kelo v. City of New London. On a 5-4 vote, with Sacramento native Anthony Kennedy as the swing vote, the court upheld a local government's power to use eminent domain for "economic development" purposes. That is, the court ruled the government has the power to take property via eminent domain from one private owner and convey that property to another private owner.

Kelo didn't change the state of the law in California, but it provided a political opening for property rights advocates here and elsewhere. Proposition 90 came pretty close to passing, setting up a rematch on the ballot this year.

Underneath all the typical political rhetoric rehashed above, what do we really have? Three things:

1. A weaker property rights initiative that does not address the regulatory takings issue.

2. A property rights initiative that unlike its predecessor seeks to outlaw rent control.

3. A countermeasure that seeks to limit the damage.

Of these three things, only the third is not surprising. The local government organizations got caught flatfooted during the 2006 election, when only a last-minute media blitz one that was hard to place on TV, given the political competition (see CP&DR Insight, October 2006) averted the passage of Proposition 90. In putting forth Proposition 99, the local government establishment is throwing a bone to the other side. OK, they're saying, we recognize eminent domain has to be limited, so let's limit that limitation as much as possible.

The first two items on the list above, however, are something of a surprise, especially the interplay between the two.

A pull-back from Proposition 90's aggressive position on land use regulations was probably inevitable if the property rights crowd wanted to broaden its base of support. And rent control is always a favorite target of landowners, even though it affects only a small percentage of rental properties in the state. The addition of rent control which was not a part of Proposition 90 augmented Proposition 98's fundraising base.

Yet trading land use regulation for rent control as a target doesn't seem to have done the property rights advocates much good. Proposition 98 didn't win the support of the state Chamber of Commerce. And while Proposition 98 popped open the landlord fundraising base, it has fueled opposition from a wide variety of tenant groups.

Chief among these are the state's mobile home residents a mostly older and highly organized group of folks who typically own the "coach" in which they live but not the land underneath it, on which they must pay rent. In dozens of communities throughout the state (including the one where I serve as an elected official), the city government has passed a rent control ordinance restricting the land rents that mobile home park owners charge the residents.

The archives of CP&DR are littered with the failed attempts of mobile home park owners to take down these rent control ordinances. So it's not surprising that mobile home park owners are glomming onto Proposition 98 as the solution to their long-time rent control problem. They are important donors to the Yes on 98/No on 99 campaign. In trading the regulatory takings issue for the rent control issue, the property rights advocates clearly traded a large group of landowner and developer supporters who each had a little to gain for a much smaller group of landlords who stand to obtain enormous gains if Proposition 98 passes. Whether that campaign can come up with a winning message, however, remains to be seen.

The No on 98/Yes on 99 campaign is engaging in more than its fair share of hyperbole, arguing not only that landlords would win and renters would lose, but also that water projects, land use planning and environmental protection are all at risk, which is stretching the truth at best.

But that's nothing compared with the stretches coming out of the Yes on 98/No on 99 campaign. As noted earlier, the advocates have not yet come up with a single, pithy campaign slogan against 99. They are using familiar themes arguing, for example, that the League of California Cities is not segregating membership funds (which are tax revenues) from Proposition 99 campaign funds.

The most amusing argument is that Proposition 99 opens a "back door" to a split roll a property tax assessment system that would circumvent Proposition 13 by assessing commercial property at a higher rate than residential property. How? By setting the "dangerous precedent" of treating owner-occupied, single-family homes differently from other properties.

There is a good argument to be made that houses should not be treated differently because they are rented by the occupants rather than owned. But it is unlikely that Proposition 99 will revise Proposition 13 to allow split roll. Nor does it seem like this is a winning argument in June. But it's probably a pretty good fundraising strategy because the most likely donors to Proposition 98 are income property owners who would fork out big bucks to fight a split roll.

The bottom line: Proposition 98 would not have nearly the wide-ranging impact on land use planning that Proposition 90 would have had even though it would outlaw rent control. And it is fair to say that the Proposition 98 folks still have not figured out their message, even though we have only a few weeks to go.