BY: Mike Yoshiba
In a recent California Appellate Court decision, Rutgard v. City of Los Angeles, the court lent some clarity to a statute that, with the passage of time, is now turning relevant. Code of Civil Procedure section 1245.245—provides that when “[p]roperty acquired by a public entity [through eminent domain] . . . is not used for [its intended] public use . . . within 10 years of adoption of the resolution of necessity [that authorized its taking],” the entity must allow the property’s original owner an opportunity to buy it back “unless the [entity’s] governing body adopts” a new “resolution” “reauthorizing the existing stated public use.” (§ 1245.245, subds. (b), (f).) In this case, the City of Los Angeles adopted an initial resolution of necessity to acquire private property from Richard Paul Rutgard for a public project in 2007. The City’s public project fell victim the economic recession of 2008 and lay dormant until the City sought to extend their window for executing the public project by a reauthorization resolution in 2017. Because the City in this case finally adopted its initial and reauthorization resolutions 19 days past the 10-year deadline, section 1245.245 requires the City to offer to sell the property back to its original owner, Rutgard.
FACTS AND PROCEDURAL BACKGROUND
This case concerns a two-story building with 8,300 square feet of commercial space (the Property). The Property is located on Figueroa Street in the Highland Park neighborhood of the City of Los Angeles (the City), and is registered as a City Historical Monument.
In early 2007, the Property was owned by Richard Paul Rutgard (Rutgard). On May 29, 2007, the Los Angeles City Council (the City Council) enacted an ordinance “authorizing the condemnation” of the Property (the 2007 Ordinance). The 2007 Ordinance constituted a Resolution of Necessity declaring that the Property was being “acquired for public purposes”—namely, to serve as a “constituent service center” for City residents. The 2007 Ordinance passed by a two-thirds majority of the City Council. On June 8, 2007, the Mayor of the City of Los Angeles (the Mayor) “approved” the 2007 Ordinance.
On October 16, 2007, the City filed an eminent domain lawsuit to condemn the Property. In November 2009, the City and Rutgard settled the lawsuit and the City agreed to pay $2.5 million for the Property. Due to the “economic downturn in 2008,” the City didn’t begin the public project development of the Property into a constituent center.
Approximately ten year hence, on June 23, 2017, the City Council enacted an ordinance “reauthoriz[ing]” the “use of the Property for a constituent service center” (the 2017 Ordinance). The 2017 Ordinance passed by a two-thirds majority of the City Council, the Mayor “approved” the 2017 Ordinance on June 27, 2017.
The City unsuccessfully argued for use of a later “effective date” to apply to the ten year deadline or alternatively that the statute ten-year limit was a guideline instead of a deadline.
The court found by the undisputed facts, that the 2017 Ordinance was untimely under section 1245.245 by 19 days. The 2007 Ordinance was deemed adopted on June 8, 2007, which is the date that the Mayor approved the City Council-enacted initial resolution of necessity for the Property. The 2017 ordinance was determined adopted on June 27, 2017, which is the date that the Mayor approved the City Council-enacted reauthorization resolution. Therefore, because the reauthorization resolution was not “adopted” “within 10 years” of the initial resolution, it was untimely and the City is statutorily obligated—by section 1245.245, subdivisions (b) and (f)—to sell the Property and to give Rutgard a right of first refusal in purchasing it.