Proposition 90 - The Protect Our Homes Act: The End of Local Planning and Land Use Regulation?

September 25, 2006

On November 7, 2006, California voters will vote on a controversial initiative that has the potential to reshape state and local land use regulation.  Titled the "Protect Our Homes Act," Proposition 90 is marketed as a fix to the landmark Supreme Court case, Kelo v. City of New London, 545 U.S. 469 (2005).  That case upheld the ability of a local redevelopment agency to condemn private property for use by another private entity to further economic development in a depressed area of the community.  The Court found that, under the power of eminent domain contained in the Fifth Amendment to the United States Constitution, the "public interest" is sufficiently served through the benefits of economic development, notwithstanding their private character.

Proposition 90 aims to prevent the taking of private property for private use approved in Kelo, by significantly altering the text of the Article I, Section 19 of the California Constitution, to expressly exclude taking private property for another "private use."  The proposition would further define public use - a term currently undefined in the constitution - in a manner designed to nullify the effect of Kelo:  "‘Public use' shall have a distinct and more narrow meaning than the term ‘public purpose;' its limiting effect prohibits takings expected to result in transfers to non-governmental owners on economic development or tax revenue enhancement grounds, or for any other actual uses that are not public in fact, even though these uses may serve otherwise legitimate public purposes."

While these provisions are unlikely to have far-reaching impact and would likely receive widespread support, the remainder of Proposition 90 goes much further.  The Act would define "damage" for purposes of takings claims to include "government actions that result in substantial economic loss to private property."  This language could potentially require compensation for nearly any government regulation that would reduce the highest value of a property.  For instance, and as spelled out by the act, a zoning ordinance that down zones a property from commercial to residential could require compensation.  Further, "limitations on the use of private air space" would also constitute an express "substantial economic loss" such that height restrictions could trigger compensation.  Even collateral "damage" by zoning changes on a parcel adjacent to an aggrieved property owner - such as someone next to a newly permitted noxious business - could be sufficient to trigger compensation.  The only exceptions to the damage requirement is for "public health and safety," which the Act does not define.

If passed, Proposition 90 is likely to have significant and far reaching impacts on private property and business owners, governments and taxpayers alike.  The language of the proposition is sufficiently broad so as to significantly increase the cost of land use regulation and potentially overwhelm local agencies.  In Oregon, a similar initiative passed by voters in 2004, Measure 37, has had just such impacts.  At a minimum, Proposition 90 is almost certain to spawn litigation that will take years to resolve, leaving many project applicants and development agencies without clear guidance on the effects of this law on their projects.