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Eminent Domain -2- February 9, 1996 At the meeting, concerns were expressed about the potential impacts of eminent domain on individual property owners. As a result, after closing the public hearing and approving the extension of eminent domain authority to a number of properties along Marina Boulevard between San Leandro Boulevard and the I-880 Freeway, and to two properties in the in the Bal/Eden Node (Area B), the City Council continued the hearing on the extension of eminent domain authority to the remaining properties to February 20, 1996. Staff was instructed to use the intervening time to continue to analyze the benefits and impacts of eminent domain on the remaining properties. The City Council specifically directed staff to contact each of the affected property owners, provide additional information, and solicit comments from property owners. There are 36 property owners, owning approximately 45 parcels in the development nodes. Staff has made efforts to contact all 36 property owners by telephone or letter. DISCUSSION In the time period between January 10 and February 9, staff attempted to contact each of the property owners by phone. Telephone numbers for five of the property owners could not be obtained. Subsequently, staff sent letters to the five property owners, providing additional information and asking that they contact staff to discuss the proposal directly. To date, three of the five property owners have not contacted the City. Ten property owners did not return repeated staff phone calls. Potential Benefits of Eminent Domain In conversations with the property owners that could be reached, staff explained the benefits and process related to eminent domain. First and foremost is that eminent domain is rarely used. The Redevelopment Agency generally successfully negotiates with property owners to reach sales terms that are acceptable to the property owner. If a property owner sells property to the Agency when eminent domain is in place, even if eminent domain is not actually exercised, property owners are allowed at least three years, instead of the usual two years, to replace the property before capital gains taxes must be paid. Furthermore, when a redevelopment agency purchases a property through eminent domain or a negotiated sale, the Agency pays all closing costs and expenses related to the sale. This increases the effective sales price received by the owner. When owners or tenants occupy the purchased property, occupants are entitled to relocation assistance, which includes moving expenses, an amount calculated to cover the "good will" or name recognition of the business in a particular location, re-establishment expenses, rent differential payments for a period of five years, and other miscellaneous expenses, such as the printing of new stationery. Staff also explained that the process related to eminent domain is carefully proscribed by California Redevelopment Law which includes specific protections for property owners. Municipalities are required to hold public hearings when initiating eminent domain proceedings. Prior to such a hearing, the Agency would have notified a property owner that the property was being appraised; extended a written offer based on the appraisal; and negotiated in good faith for a purchase price. Municipalities must also pay property owners fair market value for their property. The value of the property is established through independent appraisals and the relocation benefits described above are provided in addition to the fair market purchase price. If a fair market value cannot be determined, all of the evidence is submitted to the court and a judge or jury makes the final determination regarding value. Again this is a process seldom used by redevelopment agencies as satisfactory settlements are usually reached. 310