Oftentimes, an offsite acquisition is required to construct a public improvement required by the city as a condition of a subdivider’s development project, and the offsite improvement is not complete when the subdivider files a final map for approval.  For example, a subdivider’s development may be conditioned upon the construction of a roadway leading up to the future development site, but the developer has been unable to purchase the necessary rights to build the road.  Under these circumstances, Section 66462.5 of the Government Code gives the city the right to commence eminent domain proceedings to acquire the necessary rights to allow the public improvement to be constructed by the subdivider.

Before beginning the condemnation process, however, the city should make every effort to assure that it will be reimbursed by the developer for the cost of the offsite acquisition.  Always consider the possibility that a developer may become insolvent or abandon the project after significant acquisition costs have been incurred. Also to keep in mind is the city’s liability to the property owner if the developer walks away from (i.e., abandons) a condemnation award that it considers too high.

Additionally, the city may want to consider requiring — in addition to the standard subdivision agreement or deferred improvement agreement — a replenishing security deposit from the developer/subdivider (or a bond indemnifying the public entity) in advance of final map approval to cover all acquisition costs.  This listing of costs should be comprehensive and include, at a minimum, the city’s and property owner’s court costs, the city’s legal fees, appraisal and other expert fees, the deposit necessary for an order of possession, the payment of the judgment, interest, and any awarded expenses and costs.  The city may also wish to consider other terms regarding the city’s retention of litigation discretion (including an allocation as to whether the city or developer is responsible for any sanctions awarded in the litigation), the developer’s right to participate in settlement discussions and decisionmaking, and access to the city’s status reports and billing records related to any eminent domain litigation.

A good discussion of the rights and obligations provided under Section 66462.5 may be found in the case of  Hill v. City of Clovis Co. (2000) 80 Cal.App.4th 438.  If you’d like more detailed information about this topic, let me know and I’d be happy to point you to additional materials on the subject.

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