When I came to Orange County in 1987 to write editorials for The Orange County Register, I rented an apartment in Huntington Beach about half a mile from the famous beach to the south. Half a mile to the west was Main Street, then a funky row of surfboard shops, surfer bars, bikini boutiques and Chinese and Mexican restaurants.
Some of my first editorials were written against the city’s use of eminent domain to tear down most of those touristy businesses and replace them with generic “coastal” architecture and businesses. The Register’s editorials were not heeded. The city, whose financial position remains one of the worst in the county, wanted to grab extra revenue. Now the downtown, save for a few remnants of the old Surf City, resembles most other coastal tourist traps along the California coast, or for that matter Australia’s coast.
I also discovered the Old Towne Orange Historic District. The Register’s large orange office building on Grand Avenue in Santa Ana, still standing today although vacant, was but a short drive to the Orange Circle, the heart of the district. It was enjoying a revival based around antique shops and new restaurants. It was featured in such nostalgic Hollywood productions as Tom Hanks’ 1996 “That Thing You Do!”
Huntington Beach’s defacement was a pure case of the violation of property rights through the abuse of eminent domain. That power is supposed to be used only for clear government purposes, such as building a road or school, not to advance private gain. Is there a way to reconcile property rights with maintaining an historic district, as Orange does through restrictive laws?
That’s the battle before us as California continues to grapple with making housing affordable, something barely on the radar screen in 1987. Then a modest Huntington Beach house could be grabbed for $100,000 (inflation adjusted to $270,000 in 2023), instead of more than $1.2 million today.
The latest round of the battle derives from Senate Bill 9 from 2021. It made it easier to build duplexes and split lots in single-family neighborhoods. However, the bill’s compromise wording said it applied only if “the parcel is not located within a historic district, is not included on the State Historic Resources Inventory, or is not within a site that is legally designated or listed as a city or county landmark or historic property or district.”
Naturally, that exemption is being exploited to prevent the application of SB 9. The exemption flared up this month when, according to the San Francisco Chronicle, “a group of San Mateo homeowners filed an application to the State Historical Resources Commission to designate San Mateo’s Baywood neighborhood as historic. If the group succeeds, it would exempt the genteel subdivision from SB 9, which allows homeowners to build up to four residential units on a single-family lot.”
The application to the commission riled Mayor Amourence Lee, who said, “Allowing a group of unelected individuals, that don’t necessarily live in the neighborhood, to impose a blanket historic designation that comes with additional red tape and costs is deeply concerning.”
Is there room for compromise between 1) a total ban on laws preserving historic houses, allowing San Mateo homes to be replaced with condos; and 2) laws allowing the preservation of almost anything? Yes. The keys are revisions to SB 9 and other laws. That would mean providing more input on what local cities and their residents actually want, as opposed to the manipulations of NIMBY (Not In My Back Yard) groups, or unrealistic hopes for perfectly free markets.
There are several ways to rationalize the process, Nolan Gray told me; he’s the research director of California YIMBY, for Yes in My Back Yard:
- Limit the percentage of a city that can be preserved.
- Limit how much of a city can be preserved by the state of California without city approval.
- Let local property owners in an area vote on a historic preservation proposal, requiring two-thirds approval.
- Make housing more affordable in general through SB 9 and other market-oriented reforms, which reduces pressure for building in historic areas. The restrictive laws already in place, especially the stultifying California Environmental Quality Act (CEQA), force people to find creative ways to find places to build.
- End eminent domain abuse. That way, cities couldn’t bulldoze historic neighborhoods to make way for some new development. This would allow property owners to hold onto their properties even when cities have other plans.
Let’s go back to Huntington Beach. Pacific Research Institute’s Free Cities Center Director Steven Greenhut describes one battle there in his 2004 book “Abuse of Power: How the Government Misuses Eminent Domain.” In that case, the city spent nearly a decade hassling Perqs, a nice bar that it had encouraged to open in 1974.
During the fight, “The property’s value plummeted, so [co-owner Gary] Mulligan couldn’t sell.” A lawsuit ended with a $1.5 million settlement, plus $800,000 in legal fees, “just enough to get the business back and running,” Greenhut wrote, even as the city kept hassling them. “In many ways, a simple taking would have been more humane.” Perqs still is standing in its 1913 building. Fighting eminent domain is one right way to preserve buildings.
Unfortunately, the U.S. Supreme Court’s 2004 Kelo v. New London decision upheld such unjust property seizures. “In 2006 and 2008, California lawmakers attempted to reform eminent domain, but their bills were mostly cosmetic and did little to enhance protections for property owners,” according to the Institute for Justice. Although the state shuttered eminent-domain-abusing redevelopment agencies in 2012, cities still have these powers.
In sum, stronger property rights will enable developers to meet the demand for housing and also allow owners and cities to protect historic properties.
John Seiler is on the Editorial Board of the Southern California News Group.