CA: You Can’t Get From 37 To 90 (Prop 90 and comparisons to Oregon's Prop 37)

Proposition 90, the “Save Our Homes” initiative, leads in the polls, because reining in abuses of government eminent domain and regulatory powers sounds good to the potential victims—every property owner in the state. So attacks, largely from those wielding such powers and their beneficiaries, are intensifying.

Opponents assert Proposition 90 will decimate California’s ability to “preserve and protect” wildlife, open space, the coast, farmland, etc. Then they bring in their lynchpin “proof” of its disastrous consequences—Oregon’s 2004 Proposition 37, the first such property protection initiative to pass. They point to its “draconian” effects, and say that even worse consequences face California. QED.

Anti-90 partisans point to over 2,700 Measure 37 claims, involving the development of about 143,000 acres, which could require $4 billion in government compensation. They give examples of owners trying to convert rural land into large-scale housing developments and even a gravel mine, and governments rolling back property “protections,” to complete the horror story. If all that happened in Oregon since 2004, similar legislation would then surely cause a far more massive disaster in California.

Unfortunately, the horror stories from Oregon arise from crucial differences between Proposition 37 and Proposition 90 (as well as strategic overstatement). Those details, which anti-90 partisans ignore in their misleading attacks, destroy their supposed proof.

The most important difference between the Oregon and California propositions is that Proposition 37 applied retroactively to whenever a property was purchased, while Proposition 90 exempts all current regulations, and only applies to the future.

Proposition 37’s retroactive applicability explains the magnitude of its claims. Oregon property owners can sue for compensation or reversal of regulations going back decades. When combined with the fact that Oregon imposed America’s most stringent new property regulations over that time (yes, even more restrictive than in California), the many years of regulatory theft implies massive claims. In addition, because of the many changes in land use regulations over a long time period, what were once not incompatible with previous surroundings, but now are, after years of development, “gravel pit next door” horror stories can result in Oregon. But neither the magnitude of claims nor the horror stories translate to Proposition 90, which only applies to future regulatory changes.

Adding to the faulty analogy is Proposition 37’s 2-year window to bring claims for previous takings. That meant all the damages from the past had to be challenged by this year. The resulting huge claims far overstate what claims for new regulatory burdens would cost yearly. Yet those numbers are misleadingly cited as the basis for Proposition 90’s supposed annual costs.

Propositions 90 and 37 also exempt provisions that protect public health and safety or control nuisances--the traditional, defensible reasons for such regulations. So all valid claims involve government overstepping what is in the general welfare. Further, to the extent California governments act only in the public interest in the future, Proposition 90 would generate no financial claims.

Anti-90 partisans also exaggerate potential burdens by double-counting. They use the billions in Oregon’s compensation claims (further hyped as the cost to taxpayers, not for how much theft would be made right), as if California claims will be proportionally larger. Then they assert rollbacks of property restrictions as an additional burden. However, claims for compensation in Oregon have almost all been settled by reinstating prior development rights, so a much smaller financial burden (as well as administrative cost) has actually been caused. If California did the analogous thing by not imposing abusive new regulations, Proposition 90 would neither impose significant financial costs to taxpayers nor result in any rollbacks of current property “protections.”

Even if one believed that Proposition 37 was a disaster (property owners anticipating long-delayed restitution would disagree), it implies nothing of the sort about Proposition 90. Any “analysis” omitting their crucial differences is uninformed or willingly misleading, and an unreliable basis for your vote in next week.

Dear Professor Galles,
Please advise Governor Schwarzenegger. He appears to have been misled on this very basic issue.
Thanks,
calcowgirl

Schwarzenegger: "I have carefully analyzed this measure, however, and have come to the conclusion I cannot support Prop 90. . . . The measure is so broad and poorly drafted that I fear it will result in a barrage of frivolous lawsuits . . . In Oregon, where a similar measure was passed in 2004, more than 2,600 claims have been filed seeking more than $6 billion in compensation. Many of these claims are unfounded and from speculators simply looking to cash in on the public's dime."

http://www.joinarnold.com/site/apps/nl/content2.asp?c=jkIVLdMTJrE&b=1808163&ct=3217817

Governor's View
No on Proposition 90

November 1, 2006
By Governor Arnold Schwarzenegger

Private property rights are a foundation upon which this country was built -- a vital piece of the American dream and the United States Constitution. That's why I, like so many Americans, was disappointed by last year's U.S. Supreme Court decision reaffirming the right of a city in Connecticut to condemn a private home for the sole purpose of economic development. The Court also reaffirmed the role of individual state and local Legislatures to establish policies governing how eminent domain is carried out for "public use."

To protect California property owners, I signed legislation this year that provides added safeguards for our homeowners and small businesses and further restricts how eminent domain is used for re-development. And I am committed to working with the Legislature to do even more.

On November 7, California voters will have an opportunity to vote on Proposition 90. I have carefully analyzed this measure, however, and have come to the conclusion I cannot support Prop 90. Let me tell you why.

The proponents of Prop 90 added provisions that I believe will undermine basic government laws that protect our home values, safeguard our environment and allow for the building of safe roads, schools and other essential infrastructure. According to a variety of independent fiscal analyses, some provisions in Proposition 90 threaten to increase costs for taxpayers by billions of dollars each year.

That's why Proposition 90 has attracted opposition from a unique coalition that includes property rights advocates, taxpayer watchdogs, farmers, environmentalists, police and fire officials, small businesses and homeowner groups. Some 50 California newspapers have also come out against this ill-advised initiative.

Proposition 90 would change our state constitution to allow any landowner, business or enterprising trial lawyer to sue the government and its taxpayers any time a state or local agency passes a law that someone claims has resulted in "substantial economic loss" to their property.

The measure is so broad and poorly drafted that I fear it will result in a barrage of frivolous lawsuits from individuals and property owners who claim the most rudimentary new laws have caused them economic harm.

Its provisions would allow lawsuits and potential payouts of taxpayer dollars over new laws and regulations intended to protect open space and the environment; laws and regulations intended to protect consumers; and laws and regulations designed to restrict undesirable businesses in our neighborhoods.

In Oregon, where a similar measure was passed in 2004, more than 2,600 claims have been filed seeking more than $6 billion in compensation. Many of these claims are unfounded and from speculators simply looking to cash in on the public's dime.

Rebuilding our schools, roads, levees and housing is a critical priority of my administration. Unfortunately, Proposition 90 also includes language that would make rebuilding our system or public infrastructure prohibitively expensive. When agencies must acquire property to build vital public works projects, current law provides for just compensation based on fair market value of the property. Proposition 90 makes changes to this system that would require inflated payments, at taxpayer expenses.

For these reasons, while I can sympathize with the intent of those who support Prop 90, I have no choice but to oppose this initiative.

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