September 7, 2007


Not Close and No Cigar for Proponents of ACA 8

Small Businesses Denied Private Property Protections

By: John Kabateck

Two years ago, the City of San Diego used its power of eminent domain to demolish a popular cigar lounge. Sadly, the project was abandoned sometime later by the developer, and the former cigar lounge is today surrounded by a chain link fence that serves as a parking lot,at least until a new developer can be found.

Unfortunately, cases such as Ahmad Mesdaq’s elegant Gran Havana Cigar and Lounge are all too common in California today. The city would contend that the property met the legal burden of “blight.” Those who have battled such designations would not be surprised, since today’s standard of blight is so broadly defined that it even lumps in private parcels of land that are “adjacent to” blighted property.

Moreover, Mr. Mesdaq’s patrons would disagree with the merits of taking a popular destination in the city’s thriving downtown and entertainment district — even drawing celebrities and notable cigar aficionados such as California Governor Arnold Schwarzenegger.

California law has made cases like the Gran Havana Cigar and Lounge all too common and frequent, often involving homes, family farmers or places of worship.

Some two years ago, Americans were introduced to the true power and scope of eminent domain when the City of New London, Connecticut seized the home of Susette Kelo to hand it over to a powerful pharmaceutical company. While Ms. Kelo lost her legal battle, the nation was outraged when the U.S. Supreme Court’s Kelo v. New London decision essentially sanctioned government’s ability to profit by seizing property from unwilling sellers for private projects that often benefit the wealthy and politically connected.

Since the Kelo decision in June 2005, more than 40 states have passed some form of eminent domain reforms. Unfortunately, California is not among the states that have responded to public outcry.

The Institute for Justice which litigated the case on behalf of Ms. Kelo, has found that in the two years since the Supreme Court’s landmark decision, the number of Kelo-type takings have increased in states that have failed to pass eminent domain reform – including California.

Associations representing local government that have benefited from the existing practices of eminent domain have introduced Assembly Constitutional Amendment 8 (ACA 8), in the Legislature in a presumed effort to demonstrate their desire to reform their behavior.

But, ACA 8 does not offer real Kelo reforms because it does not apply protections to all property and most specifically, it excludes businesses, small and large alike.

In addition to excluding any protections that would prevent a so-called redevelopment project from leveling one’s business, it includes a number of loopholes. For example, it doesn’t redefine “blight,” that under California law can include the “lack of parking,” “adjacent or nearby uses that are incompatible with each other,” or “existence of subdivided lots of irregular form or shape.” Needless to say, today’s standard of “blight” is so broadly defined that any public agency can find legal justification for seizing protective businesses and modest homes.

Moreover, as if it were a consolation, proponents of ACA 8 contend that the legislation requires the public agency to invite a business owner to reestablish the business within the redevelopment plan. But, the unrealistic conditions for participating in the new project, such as redesigning one’s business to conform to the redevelopment plan and arranging financing in a mere 30 days, really serve as insurmountable hurdles for staying in business.

Just ask the San Diego cigar shop owner. His pleas to reestablish his lounge within the proposed hotel were denied, too.

Fortunately, for California property owners, there is another alternative called the California Property Owners and Farmland Protection Act. This measure, proposed for the June ballot, prohibits private property from being taken by eminent domain for private use while maintaining government authority to use eminent domain for true public projects such as the construction of freeways and schools – a true Kelo fix to eminent domain abuse

Should the Legislature pass ACA 8 in the closing days of this legislative session, proponents of the status quo will have every reason to celebrate, but it’s doubtful that their victory will come with a box of San Diego’s finest cigars!

If California is going to reform eminent domain, it’s about time they did it the right way. ACA 8 is not an alternative California small-business owners can support.

John Kabateck is executive director of the National Federation of Independent Business (NFIB) in California. More information about NFIB is available online at

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