Top Considerations for Property Acquisition by Public Agencies
January 31, 2025Photo: SMW provided legal services for the acquisition of land for San Francisco’s Transbay Transit Center (pictured). Credit: Fullmetal2887, CC BY-SA 4.0, via Wikimedia Commons
Public agencies often need to acquire privately held real estate for public projects like transit and recreation improvements. Agencies must balance practical considerations like budget constraints and construction timelines with the legal procedures required to acquire a property either through voluntary purchase or eminent domain. With adequate planning and a thoughtful approach, public agencies can usually acquire property without resorting to resource-intensive and often contentious eminent domain litigation. And even if condemnation is ultimately required, pre-acquisition planning can contribute to better outcomes. This article discusses a few tips that can help public agencies ensure the smoothest process possible when acquiring property.
First, develop a detailed acquisition plan
Comprehensive up-front planning can ensure a smooth acquisition process and help agencies anticipate (and avoid) potential points of conflict. An agency should clearly define the requirements for successfully completing the project in the planning process to accurately identify property to be acquired. The acquisition plan should identify both the area of land and the interest required (e.g., whether the project requires acquisition of the land in fee, a permanent easement, or a temporary construction easement). An agency should carefully research its existing property rights in the area to ensure the agency doesn’t already have the rights it needs for the project and that acquisitions are necessary. The acquisition process can encounter delays and negotiation setbacks if the agency later uncovers relevant information or realizes that it needs to change the scope or nature of the property being acquired.
Get a comprehensive and fair appraisal
California law generally requires public agencies to appraise a property’s fair market value prior to making an offer to the owner. The appraisal sets the floor for compensation for the acquisition. Ensuring an accurate appraisal at this phase can facilitate negotiation of a voluntary sale and avoid the need for eminent domain. An agency should hire an experienced appraiser with familiarity with public acquisitions and the relevant market. The agency’s attorney advising on the acquisition should be involved at this stage to review the appraisal for consistency with applicable law. California law also requires the agency to reimburse the owner up to $5,000 to conduct their own appraisal. While many owners decline this offer during early negotiations, if the owner does take advantage of the offer, the agency should closely review the owner’s appraisal with the agency’s appraiser and be open to considering whether the agency’s offer of just compensation should change in light of conclusions identified in the owner’s appraisal.
Plan for relocation
If the project will require relocation of residents or business occupants, the agency must pay relocation costs. Both California and federal law (in the case of federally funded projects) govern relocation of homes and businesses. When the project receives federal funds, the agency should follow both laws and apply whichever is most generous. When a project requires relocation, the agency should incorporate this step into project timelines, as relocated persons and businesses are entitled to as much as ninety days’ notice prior to being required to vacate the property. And project budgets should account for relocation costs, which can be particularly high if a project is affecting affordable housing in an area where housing costs are otherwise high. Engaging a consultant with experience in relocation can facilitate a smooth process and is often worth every penny spent.
Plan for adequate time to negotiate with owners
One of the biggest factors in reducing the chance that an acquisition will end up requiring condemnation is building in sufficient time to negotiate with the owners. Often, receiving an offer from a government agency comes as a shock to a property owner, who likely has not even contemplated a sale of their property. To get to a point where the owner can feel comfortable agreeing to sell, the owner will likely want to consult with an attorney or real estate broker, conduct their own appraisal, and, if relocation is required, identify a replacement home or business location. This process can easily take four to six months, depending on the situation. However, agencies often budget just one or two months for negotiation into their project schedules, which can result in pressure to move to eminent domain before negotiations have fully played out, in order to meet construction schedules. While a shorter negotiation timeline can work for simple acquisitions (like a small unoccupied strip of land for a road widening), agencies looking to complete projects that require things like acquisition of occupied buildings or that require compensation for or relocation of infrastructure (like private roads or irrigation systems) should develop timelines that include plenty of time for the negotiation process.
Conclusion
While eminent domain isn’t always avoidable, government agencies can optimize chances for smooth and voluntary acquisitions by following the tips discussed above. And even when an acquisition requires exercise of the power of eminent domain, careful planning and exhausting all negotiation options can lead to better outcomes in litigation.
For more information on how your agency can best plan to acquire real property, contact Laura Beaton. Laura thanks Caleb Hersh for his help drafting this article.