A recent US Supreme Court decision could be a game changer for real estate owners. This June, in the case of Knick v. Township of Scott, the US Supreme Court decided, overturning a portion of the 1985 case Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, landowners would not need to pursue all state venues before bringing suits to federal court. The decision allows landowners and property owners whose property has been inversely condemned to bring action against government agencies in federal court. Now, a landowner in Riverside is taking advantage of the opportunity in one of the first cases since the new ruling was made.
In EHOF Lakeside II, LLC v. Riverside County Transportation Commission et al., a private property owner in Riverside is bringing an action against The County of Riverside, the Western Riverside Regional Conservation Authority and the Riverside County Transportation Commission. According to the suit, the agencies have blocked the landowner from developing the property because it falls within a conservation area, while simultaneously refusing to purchase the property.
"[The agencies] realized that the endangered species that populated parts of the County were going to get in the way of infrastructure projects. So in the 1990s, they decided that instead of doing individual mitigation on every project, which was adding three-to-five years to every transportation project and preventing some of them from going forward, they decided to do a multiple species habitat conservation plan," Rick Friess, an attorney at Allen Matkins who is representing the private property owner in the case, tells GlobeSt.com. "That was a 153,000-acre plan to conserve the species broadly. It was a good planning concept. In the implementation, they made unrealistic predictions about funding sources and how well they would handle the development processes. To move forward, Riverside County created the regional conservation authority as a joint powers authority to do the actual implementation of this plan."
According to Friess, RCA had 25 years to acquire the necessary land, but has run out of money, effectively stopping the process. "Now, we are into the 15th year of the plan and they have basically run themselves out of money," he says. "They have acquired only a fraction of what they should have by now, so instead of figuring out how to fund and then properly compensating people for their property, they have stopped processing entitlements. This property is just sitting there. That is a form of inverse condemnation."
Now, thanks to the US Supreme Court decision, Friess can take this complaint to federal court. "It is a very big deal for the real estate industry. Property owners have been prevented from suing in federal court. Property owners were forced to pursue these types of inverse condemnation cases in state courts," he says. "That is a problem because California courts in particular are not overly protective of property rights, and create hurdles that prevent ready access or the ability to get judgment. The opportunity to bring these cases in federal court is very significant for property owners."
As one of the first cases to take local governments to federal court, there are some challenges. "Because you couldn't bring these cases in federal court, there is not the deep body of case law," says Friess. "It does make the process more uncertain in terms of advising clients. It is a new forum for this type of litigation, and any time it is new, there are things that haven't come up before." There is also an unknown in terms of timing. In state courts, Friess would expect the process to take a year to a year and a half, but in federal court, the timeline is a question mark.
Ultimately, Friess is looking to force the local government to move forward on its acquisition plans. "At this point, they have so impeded the ability to complete the development process, and they have really prevented the full development from being able to move forward because they cause this delay," says Friess. "And, they don't have any ability to not buy this property. It is required of their plan. The lawsuit is really meant to force them to complete their own process."
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Kelsi Maree Borland
