Eminent domain battle is imminent.

One of the most potent tools of Los Angeles-area redevelopment agencies--the power to seize private property to make way for major development projects--is coming under broad attack in Sacramento and Washington.

This power of eminent domain, which helped to transform L.A.'s downtown skyline and cleared the way for major projects like the Staples Center and the Hollywood & Highland shopping center, is in the crosshairs as property rights advocates seek to capitalize on widespread outrage over a Supreme Court decision last year.

That decision, Kelo vs. City of New London, Conn., upheld the right of cities and other governments to seize homes and other property and transfer ownership to a developer for redevelopment projects--a cornerstone of California redevelopment law for decades.

The high court found the action by New London officials did not violate the Fifth Amendment's prohibition against private property being taken without just compensation, but it left open the right of Congress and states to further restrict the seizures.

In Sacramento, four ballot initiatives are pending that would severely restrict the ability of redevelopment agencies to turn over property seized through eminent domain to private developers. Similar legislation is also on tap in the state Legislature. Meanwhile, several bills in Congress would effectively overturn the Supreme Court decision and ban most eminent domain seizures.

"This is a very popular issue right now. People are really motivated to put the brakes on redevelopment and its abuses," said Orange County Supervisor Chris Norby, who chairs the statewide advocacy group Municipal Officials for Redevelopment Reform.

Norby and other eminent domain opponents say the process has been repeatedly misused over the years, especially by cities seeking more tax dollars through big, new retail projects. They cite the language of the Fifth Amendment to the U.S. Constitution, which states, "nor shall private property be taken for public use without just compensation." That provision, they claim, has been stretched far beyond its original intent, facilitating the transfer of property from small businesses or homeowners to large corporations that take advantage of public subsidies.

They also claim that even threatening eminent domain forces many property owners to sell against their will. (What's not at issue is the right of government agencies to seize land for traditional public works projects, such as highways, power lines and schools.)

All this has put redevelopment officials on the defensive, trying to preserve their ability to consolidate land to make way for major projects. They say eminent domain has been invoked sparingly, only after negotiations over property acquisition reach an impasse. They also say that enacting restrictions could drive up the cost of redevelopment projects.

"In Los Angeles, eminent domain is used only as a last resort after a lengthy redevelopment process is followed and after extensive negotiations for a purchase of property have failed. The CRA already 'self-regulates' its use of eminent domain," said Richard Benbow, acting chief executive of the Los Angeles Community Redevelopment Agency.

But the ability to use eminent domain has had a profound effect in L.A. Much of the Bunker Hill redevelopment project in the late 1960s and 1970s that helped created Los Angeles' skyline came about through actual or threatened property seizures.

More recently, according to a December CRA report, the agency has obtained L.A. City Council approval for 26 eminent domain seizures on 17 development projects in the last 10 years. Among these: the Staples Center, the Sakura Village project in Little Tokyo, several projects in Hollywood and the "NoHo Commons" project in North Hollywood.

Even now, the CRA may exercise eminent domain actions if a handful of reluctant property owners near Hollywood Boulevard and Vine Street refuse to sell their property to make way for a $326 million mixed-use project that would include a W hotel, 350 apartments, 145 condominiums and 60,000 square feet of retail space. The development consortium includes Foster City-based Legacy Partners, Norwalk, Conn.-based HEI Hospitality LLC and Dallas-based Gatehouse Capital.

But if eminent domain opponents are successful in Sacramento or Washington, much of the leverage the city has over the holdouts at Hollywood and Vine--including the property owners of a luggage store and a bar--could disappear.

"The irony of that Supreme Court decision is that winners are turning out to be the big losers and the losers are emerging as the winners," said John Shirey, executive director of the California Redevelopment Association. "There's been such a public backlash against that decision that it's much easier than it has been in years for the opponents of that decision to pass state and federal laws."

Circulating initiatives

Shirey said redevelopment officials are working to come up with compromise legislation that would restrict the most egregious cases of eminent domain while not stripping away the right entirely.

More immediately, attention is centering on a raft of ballot initiatives now making their way through the qualification process and aiming for placement on the November ballot. All the initiatives would ban, or severely restrict, the ability of state and local governments to seize private property to transfer the use of that land to another private entity.

After the Kelo decision, "Californians no longer have any federal protection against their property being taken for the private gain of others," the language of one of the initiatives states.

One initiative has already entered circulation and must garner at least 600,000 signatures by July 6. It's co-authored by Norby; State Sen. Tom McClintock, R-Thousand Oaks; and John Coupal, president of the Howard Jarvis Taxpayers Association. The other three--including a revised version of this initiative--are awaiting title and summary from the state Attorney General's office.

The key for any of these initiatives to qualify for the November ballot is the ability of backers to raise the $1 million to $1.5 million necessary to collect about 1 million signatures. (Initiative supporters always shoot for at least 50 percent more signatures than required to ensure enough are left over after some signatures are disqualified.)

While backers say they have significant grassroots support, they make no secret of their desire for a deep-pocketed property rights advocate.

"There is philosophical money that can go after some of these initiatives," Norby said. He cited the example of Ron Unz, who in 1998 used some of his fortune from a Silicon Valley software firm that he founded to qualify and pass an initiative banning bilingual education in public schools.

Should one or more of these initiatives qualify for the ballot, development interests and municipal government supporters are certain to pour in millions of dollars into a campaign to defeat them. But backers cite overwhelming popular support for their position, including some polls showing 80 percent to 90 percent of people against the practice of seizing private property for private use.

Legislative action

Eminent domain opponents are just as active on the legislative front. McClintock has re-introduced legislation from last year that would require the government agency seizing any private property to own and operate that property. The previous legislation was held in committee as the legislative session wound down last August amid intense opposition from municipal and redevelopment lobbyists.

In an op-ed column he penned last summer, McClintock wrote: "Under the Kelo v. City of New London decision of the U.S. Supreme Court, government has become the thug ... It is now entirely permissible for government to seize the home of one person for pennies on the dollar to give it to another--not for some vital overarching public necessity, but simply because the new owner can pay more taxes than the old."

McClintock last week said he was not optimistic about his legislation's chances of passage. He said that the Legislature was more likely to adopt what he termed "cosmetic reforms." Reform proponents say one such cosmetic measure is a moratorium on eminent domain seizures in which property is transferred to a private developer.

Meanwhile, several bills are pending in Congress that could place national limitations on how eminent domain is used. The most stringent of these are S 1313 by Sen. John Cornyn, R-Tex, and HR 4128 by Rep. James Sensenbrenner, R-Wis. The Sensenbrenner bill would bar federal funds for agencies that use eminent domain.

Both of these bills were introduced last year just weeks after the Kelo decision, but they languished as Congress' attention was diverted by the Gulf Coast hurricanes' damage and the budget. Now, these bills are moving once again with hearings scheduled in the next few weeks.

Whatever the outcome of the proposed legislation, redevelopment officials are already facing a changed reality.

"Everyone's nervous about using eminent domain right now," said Larry Kosmont, an economic development consultant based in Encino. "All this pressure is already forcing public agencies to pay more to acquire properties. And if any of these things pass, it could limit the number of large scale redevelopment initiatives that come forward."

Owning up

The L.A. Community Redevelopment Agency has not been shy about using
eminent domain over the past 10 years.

                                               Property
Project                            Seizures     Owners     Parcels

Staples Center                         6          49         107
NoHo Commons                           3          15          19
Metropolis (downtown)                  2           3           4
Slauson Central Shopping Center        2           2           4
Block 29 (Wilmington)                  1          10          21
Others                                12          14          28

Total                                 26          93         183

Source: Los Angeles Community Redevelopment Agency