In the real estate world in California, expansion into vacant land is perhaps not as common as redevelopment of properties that have already been improved and used. Available land within city and county boundaries tends to be limited. In the context of land acquisition, governments often seek to exercise eminent domain to acquire property that has a history of use, and often times those uses can be related to industrial businesses that preexisted current legislation related to preservation of the environment and natural resources. Sometimes, industrial uses have resulted in environmental contamination, such as lead or arsenic deposits that exceed the natural or acceptable levels; or TCE plumes over portions of the subsurface. Sometimes, such contamination can occur from neighboring uses or adjacent properties.
Regardless of the state of the property in question, the law still requires the state to provide just compensation to landowners when seeking to take possession of property by eminent domain. When contamination is an issue or could be an issue in an eminent domain matter, who pays for the cleanup, and how? How does this affect the mandate of just compensation to be paid in eminent domain when the government has not caused the contamination?
These issues can be complex and common among sections of cities that are zoned for industrial uses when the government seeks to acquire property in those sections for a public project.
It's a matter of admissible evidence
To understand the issue, we look to a 1992 case involving the takeover of land by the city of Pomona from the owners of what was once a gas station. In the process of seeking to acquire the land, the city cleaned up the site of contamination, including 23 years worth of gas spillage, at a cost of $182,000.
An appraiser for the city put the fair market value of the property at just $5,000 after deducting the cost of the cleanup. The owners' expert put the value at $950,000. An expert appointed by the court said the property was worth $125,000 after deducting remediation costs. When all the evidence was put before a jury, the panel determined the ultimate value after cleanup at $136,200.
Careful readers will appreciate the potential double liability. The final valuation of the property meant the owners of the property paid for the cleanup. Meanwhile, the risk also remained that the former owners could face added costs from environmental actions that might come later.
Clearly, unforeseen issues can complicate eminent domain cases. Consulting with experienced legal counsel is recommended for confidence in any eventual outcome.