According to this story (“California moves closer to taking public pathway from billionaire Vinod Khosla“) in the Santa Cruz Sentinel, the State of California is considering exercising eminent domain to take an easement for public access over his San Mateo County property to access Martins Beach.
This is the case that resulted in a cert petition after the California Court of Appeal ordered the owner to open up the route to the beach across private property which the previous owner had kept available to the public, but which Khosla closed. As we noted in this post (“Our Unfiled* Amicus In The California Beach Access Case“), the case involves an effort to open back up an access route to the beach across what is now Khosla’s land, simply because his predecessor allowed access (no good deed goes unpunished). After Khosla purchased and closed access, the Surfrider Foundation went to court and obtained an order compelling him to allow public access.
After the California Supreme Court denied review, the owner sought U.S. Supreme Court review, asserting that the California Court of Appeal’s decision to open the parcel to the public until such time the owner obtains a permit to “allow” him to close it “is a per se physical taking” because it takes his right to exclude the public from his land.
The article sets out the story, along with the usual not-quite-correct facts that often color the narrative in beach cases (i.e., “[a] state agency is moving closer toward forcing Silicon Valley billionaire Vinod Khosla to permanently open Martins Beach in San Mateo County to the public…”). Not quite: the beach has always been public, it’s the access across his land that is at issue. Anyhow, please do read the entire piece.
Two bits stuck out at us:
“The State Lands Commission appraised a public right-of-way over the 6.4 acres of Martins Beach Road at $360,000 in 2016. But Khosla said he would only sell it for $30 million, nearly as much as he paid for the entire property.” Just comp and damages of $360k seems on the low side to us, and got us to wondering whether the State has taken a realistic look at how much this might cost the public were the property condemned. Not only would the State have to pay the cost of the land acquired, but also the damages to the remainder. And those could be huge. After all what’s the value of an isolated beachfront property vs. a beachfront property with an adjacent public pathway, one that is apparently quite popular? The delta seems like a lot more than $360k, or some portion thereof.
And that’s related to our second point: an exercise of eminent domain won’t make Khosla’s arguments about his right to exclude go away: “Sources familiar with the case have said that the commission may be wary of using eminent domain because, if Khosla loses his ongoing legal battles, it would be paying for something the public might otherwise get for free, and setting a precedent with other wealthy coastal landowners. Others, however, believe that taking the access route now might render Khosla’s legal challenges moot because he would no longer own the rights to the road.” In our view, that would simply shift Khosla’s right to exclude argument from his cert petition to the valuation trial. He’d still argue, we’d bet, that he has the right to exclude the public from the accessway, and therefore the compensation award must take that into account when assessing severance damages to the remainder.
We’ve been through a few similar cases, involving the taking of portions of littoral property for public access to a public beach. And in none of these cases has the condemning agency ever realistically assessed the severance damages wrought on the remainder, and the loss of value caused by having a public pedestrian highway plopped next to your property.