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SACRAMENTO � California law firms with real estate, land use and environmental practices have poured more than $100,000 into the campaign to defeat a ballot measure that one leading redevelopment attorney says could cause “a real rat’s nest” in the profession. “For those who deal in eminent domain law, Proposition 90 is going to take a pretty stable statute � and make some pretty radical changes to it. It’s going to create a lot of uncertainty,” said T. Brent Hawkins, a shareholder at McDonough Holland & Allen who serves as general counsel to the California Redevelopment Association. McDonough Holland has contributed $25,000 to the No on 90 campaign. Prop 90 policy adviser Richard Mersereau said critics are intentionally misreading the measure. “They’re scaring the hell out of people with interpretations that aren’t factually true,” he said. Dubbed the Protect Our Homes Initiative, Prop 90 would bar government agencies from seizing private property and giving it to a private developer, a transfer process that cities often use to boost tax revenues. Supporters say the initiative is California’s response to Kelo v. City of New London, the controversial 2005 U.S. Supreme Court decision allowing a Connecticut redevelopment agency to take residents’ homes and land through eminent domain so a private developer could build a hotel, condominiums and offices. Prop 90 would prevent a similar scenario in California, backers say, by requiring any government entity that seizes property to own and occupy that site or to lease it to another agency for a “public use.” Published polls show Prop 90 winning approval by double digits, although many likely voters did not know much about the initiative. The measure lets a jury � currently it’s a judge � decide whether the project is a legitimate public use. And it pays property owners based on their land’s highest potential value, a requirement experts say would cause purchase prices to skyrocket. “The eminent domain provisions would eliminate redevelopment,” said Andrew Schwartz, of counsel to Shute, Mihaly & Weinberger, where he specializes in eminent domain, takings and land use litigation. “Redevelopment agencies have been the primary sources of affordable housing in California outside of grants.” But lawyers like Schwartz say they’re more concerned about a second, less-publicized section of Prop 90. Regulatory takings language would require taxpayers to compensate owners whose property suffers “substantial economic loss” due to government rules. Such actions might include reducing the number of houses or capping the height of a building someone wants to construct on their land, the initiative says. But attorneys say the measure’s language is so vaguely written that it’s sure to trigger almost immediate lawsuits seeking clarification. One of the biggest questions surrounding Prop 90, they say, is whether the takings language only applies to real property. Schwartz doesn’t think so. He predicts businesses will cite the regulatory takings clause to challenge future government laws addressing workers’ wages, consumer safety and environmental restrictions. “Proposition 90 is being sold as eminent domain reform, but actually hidden in it is this regulatory takings provision that would require government to pay business to regulate it,” Schwartz said. “This measure is just simple deception.” In an analysis issued Oct. 13, Richard Frank, executive director of Boalt Hall’s California Center for Environmental Law and Policy, agreed that the initiative’s imprecise definitions of property and economic loss were “perhaps the single greatest uncertainty surrounding” the takings provisions. “If trademarks and other intellectual property are considered ‘property’ subject to Proposition 90, it could plausibly be argued that a consumer fraud law that harms a company’s image and thereby decreases the value of the company’s stock requires compensation under the initiative.” Mersereau said the initiative won’t change any definition of property. “It is long settled U.S. Constitutional law that eminent domain can apply to intangible property. Proposition 90 makes no change in that regard,” he said. The initiative would also nullify any eminent domain ruling that isn’t published, an attempt, supporters say, to bring more transparency to the process. The measure doesn’t clarify whether that refers to all decisions made by trial courts. “If that’s what it means, that’s a lot of mundane and unsubstantive language” to be published, Frank said. The pro-Proposition 90 campaign has been funded largely by groups associated with Howie Rich, a New York real estate developer with a libertarian view favoring small government. Rich has been linked financially to eminent-domain reform measures in other states as well. California’s initiative is similar to one passed by Oregon voters in 2004, which gives landowners the right to compensation for the ill-effects of government regulations. In that state, property owners have filed more than 3,000 claims seeking $5.6 billion, according the Center for Environmental Law and Policy. But initiative supporters note that Oregon’s law, unlike Prop 90, is retroactive and many claims were made dating back to actions taken in the 1970s. The majority of claims in Oregon were withdrawn after government agencies waived the offending rules, according to the center’s report. California’s measure has no such waiver provision, Hawkins said. “For land use lawyers there’s going to be all sorts of prosecuting and defending claims under this regulatory taking section,” said Hawkins. “There’s also going to be a real mess for eminent domain lawyers who have cases pending.” That’s because the initiative, if adopted, takes effect on Nov. 8 and would apply to any eminent domain case that hasn’t been fully resolved. “What does that mean?” Hawkins said. “You’ll have all of these new definitions. Are you going to have to go back and retry the case?” But Mersereau said critics are conjuring scary scenarios that just won’t happen because the initiative exempts laws on the books as of Nov. 8 as well as future changes to those laws that “promote the original policy.”

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