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Stockton Property Acquisition Rejected; City Gets Another Chance

The City of Stockton had no right to take private property on which it later built a minor league baseball stadium, the Third District Court of Appeal has ruled.

"This is a case of ‘condemn first, decide what to do with the property later,'" Justice Kathleen Butz wrote for the unanimous three-judge appellate panel. "We shall conclude that the project description in the resolutions of necessity was so vague, uncertain and sweeping in scope that it failed to specify the ‘public use' for which city sought acquisition of the property. This crucial defect precluded an intelligent inquiry into whether city had a legal right to condemn the property and fatally flawed the condemnation process."

The court did not order the return of the property – complete with ballpark and parking lot – to the previous owner. Instead, it permitted the city to commence the eminent domain process anew. The court did order the city to pay the property owner's legal costs, estimated at nearly $1 million.

The five-story Marina Towers office building was constructed during the mid-1970s as part of a waterfront redevelopment effort that never took off. By the time an entity called Marina Towers LLC (Marina) purchased the property and an adjacent unimproved parcel in 2000, the office building was vacant. The owners proposed renovating the building and opened negotiations with San Joaquin County officials about a potential lease.

Meanwhile, city staff members were working on a plan that identified the Marina properties and others along the north shore of the Stockton Deep Water Channel for development of the Stockton Event Center, which would feature an indoor arena, a baseball stadium, a hotel and apartments. The city notified Marina in May 2003 that it was considering acquiring the property via eminent domain. Two months later, the City Council approved a preliminary site plan for the Stockton Event Center that called for an apartment complex on the site of the vacant office building.

In September 2003, the council conducted a hearing to consider a resolution of necessity – an essential step before the filing of an eminent domain legal action. At the hearing, Marina's representative complained the city had not defined the project for which it needed the property and questioned how condemnation could benefit the public when it appeared the city was simply transferring the property from one developer to another. Nevertheless, the City Council unanimously approved resolutions of necessity for both parcels, stating that the city already owned 20 acres on the north shore it was preparing for development, that the site was a "catalyst site" for redevelopment and that assembling the north shore parcels would permit development of larger and economically feasible uses.

Six days later, the city filed its eminent domain action. Marina fought the lawsuit vigorously. While the litigation was pending, the city adopted an environmental impact report for the Stockton Event Center project, adopted a new resolution of necessity stating it needed one of Marina's parcels for parking, and then adopted a supplemental resolution designating the other parcel for a ballpark.

By the time a trial began in 2005 on the city's right to take the properties, the city had already constructed the ballpark and parking lot (see CP&DR Local Watch, December 2006). Marina argued the city's acquisition did not serve a public purpose, the resolutions were invalid because they did not identify a public use, the city violated the California Environmental Quality Act by failing to complete a new EIR before condemning the property, and the city unlawfully condemned property in a redevelopment project area without complying with the Community Redevelopment Law.

The property owner got nowhere with a San Joaquin County Superior Court judge, who rejected all of Marina's claims. A jury later awarded Marina $1.97 million as compensation for the taking.

Marina found a much more receptive audience at the Third District Court of Appeal. In its decision, the court reviewed the details of eminent domain law and the Community Redevelopment Law. Although the property lies in a redevelopment project area, the City of Stockton – not the Stockton Redevelopment Agency – acquired the property. Thus, because the property was not being taken to eliminate blight as permitted under redevelopment law, the city had to find (1) the project was in the public interest and necessity, (2) the project was compatible with the greatest public good and least private injury, and (3) the property acquisition was necessary for the project. But the court determined that because there was "no intelligible description" of the project, Stockton could not make the required findings.

"If the governing body does not have before it a definable project for which the property is sought to be taken, any discussion of the pros and cons of the condemnation would be an empty gesture and the necessity findings rendered at the conclusion of the hearing would be devoid of real meaning," Justice Butz wrote.

Instead, the city provided a list of every potential legal reason for taking the property. But, the court held, "A statement that the property is being taken for any or all of the authorized purposes listed in the Government Code or Code of Civil Procedure amounts to a failure to disclose the purpose of the taking."

The fact that the city later changed the resolutions of necessity and actually built public facilities does not matter, the court ruled, because, "a governing body's post-resolution conduct is not relevant" to the validity of the resolutions. Thus, the court ruled, the trial court should have dismissed the city's eminent domain action.

Marina argued that if the city's condemnation was not valid, Marina should get the property back. But the court declined to give Marina a publicly funded stadium and parking lot. Instead, it offered the city "the opportunity to adopt new resolutions of necessity for the Marina property containing an adequate description of the proposed projects."

Exactly how the process might work, however, is uncertain because the new resolutions arguably would be after-the-fact rationalizations and hearings to "consider" the resolutions mere formalities. Ever since Redevelopment Agency v. Norm's Slauson, (1985) 173 Cal.App.4th 1121 – in which the court blocked an eminent domain action because the agency had already contracted with a developer to build housing on the property being condemned – courts have frowned on resolutions of necessity that amount to foregone conclusions.

 The Case:
City of Stockton v. Marina Towers LLC, No. C054495, 09 C.D.O.S. 1848, 2009 DJDAR 2187. Filed February 13, 2009.
The Lawyers:
For the city: Thomas Keeling, Freeman, D'Auito, Pierce, Gurev, Keeling & Wolf, (209) 474-1818.
For Marina Towers: Norman Matteoni, Matteoni, O'Laughlin & Hechtman, (408) 293-4300.