Small businesses face confusion from high-speed rail purchase offers

The Fresno BeeSeptember 1, 2013 

A small 1950s-era burger shack run by Cambodian immigrants has come to symbolize the confusion and consternation faced by business owners whose livelihoods stand in the path of California's proposed high-speed trains.

Keav "Kay" Lim and Ken Chea bought Angelo's Drive In, perched on Olive Avenue just east of the Union Pacific Railroad freight tracks in central Fresno, in mid-2004. But the California High-Speed Rail Authority could bring their nine-year tenure to an end within weeks.

The rail agency's planned route for its electric-powered high-speed trains runs a stone's throw away, along Golden State Boulevard on the other side of the UP tracks.

But the 1,341-square-foot restaurant, built in 1954, and several nearby commercial buildings on the north side of Olive Avenue sit right where a new overpass is to be built to carry motorists above both the freight tracks and the new high-speed tracks.

Lim said right-of-way agents for the rail authority initially offered her and her husband $120,000, based on the state's appraisal of the property. "That was $100,000 for the property and $20,000 for the business," she said.

They asked for a reappraisal, which came in about $40,000 higher — still not enough for them to find a new site to reopen, Lim said. But without money to hire an attorney, "what else can we do?"

Even as the California High-Speed Rail Authority deals with legal and political challenges in Sacramento, the agency is plunging ahead with efforts to buy land for its first 29-mile construction segment from east of Madera through downtown Fresno.

There are several hundred businesses, homes and farms that the rail authority needs to buy — either in whole or in part — to build the railroad line and associated structures such as bridges and overpasses.

The construction work in Fresno and Madera, for which a $1 billion contract was signed last month, would represent the start of a 130-mile, $6 billion line southward toward Bakersfield to form the backbone of a statewide high-speed train system.

As of last week, the rail authority had made more than 120 formal written offers, said Don Grebe, director of real property for the agency. Ten owners have agreed to sell for the authority's initial offer, and eight others agreed to allow the agency to take possession of their properties as they continue negotiations over price and terms.

Reactions from property owners have been varied, said Lee Ann Eager, executive director of the Fresno Economic Development Corp.

"It's a mixed bag. Some owners have said, 'Thank goodness they came along, I can use this money to expand my business,' " Eager said. "Others say, 'I thought my business was worth more than this, this offer seems pretty low.' "

Earliest construction?

The rail authority is not publicly acknowledging which properties it is trying to acquire first, citing the privacy of the property owners.

But generally, "where there are bridges and structures that take some time to complete, the priority is to get those parcels secured early in the process," said Grebe. The earliest offers to owners for parcels "are not concentrated in one location," he added, but are strung out along the entire route in Fresno and Madera counties.

There are tantalizing hints, however, of the areas where property will be needed soonest. In a right-of-way plan included in the contract signed last month between the rail authority and the contracting consortium, the agency identified about 75 parcels that it wanted to either purchase or have access rights to by the end of this month, and about 50 more that it wanted to have in hand by the end of 2013.

Additionally, the contracting team hired by the rail authority — Tutor Perini Corp. of Sylmar, Zachry Construction of Texas and Pasadena-based Parsons Corp. — submitted a proposed development schedule in its January bid package that called for some of the earliest physical work to begin by the end of this year:

About four months of demolition work on about 3,600 feet of Golden State Boulevard between the Herndon Canal and Shaw Avenue, starting in December. About four months of utility relocation would begin in February 2014, with construction of a relocated Golden State Boulevard starting in May 2014.

Compiling material for a temporary San Joaquin Valley Railroad bridge over Dry Creek north of Highway 180 near downtown Fresno, starting in December. Bridge construction would begin in March 2014 and take about six weeks.

Demolition in the area of Fresno and G streets for a G Street bridge over Fresno Street starting in December, followed by utility relocation in February 2014 and about nine months of bridge construction starting in April 2014.

The proposed Tutor Perini/Zachry/Parsons schedule anticipated having a signed contract in June. But the deal wasn't finalized until mid-August, likely pushing back the start of the earliest work by at least a month or two.

'Unbearably stressful'

One business in the heart of a potential early-construction zone is Keith's Automotive on Golden State north of Shaw.

Owners Keith and Nanette Erwin lease their shop from the property owner, and while there is no deal yet for the high-speed rail authority to buy the land, the Erwins said they've already been contacted by agents for the authority.

"It's been unbearably stressful, it's overwhelming," said Keith Erwin, who at 49 said he is apprehensive about being uprooted from his shop and rebuilding his business from scratch at a new site.

Erwin started the business in 1995 and always has been along Golden State, including the current location about a half-mile north of Shaw Avenue. "If you're not on a main road, you're not going to do any good," he said.

The Erwins' landlord, Independent Development Associates LLC of Fresno, received an offer for the property, which also houses an upholstery shop and space for other businesses. The owners could not be reached for comment, but Erwin said his landlords told him the offer was unsatisfactory and they planned to hire a lawyer for their negotiations.

The Erwins said they feel like they're being "strong-armed" by relocation agents who told them that within the next couple of months they could receive a 30-day notice to leave.

The Erwins plan to hire a lawyer to make sure their rights to relocation assistance, moving costs and other expenses are protected. "I don't trust the rail authority," Nanette Erwin said.

Happy to move

Some homeowners also are being approached about selling their property to the rail authority.

Emily Martinez's modest two-bedroom home is one of five houses that will be demolished on the south side of McKinley Avenue, between West and Weber avenues, to make way for a new overpass to span the UPRR freight tracks and the adjacent high-speed line.

The construction schedule proposed by Tutor Perini/Zachry/Parsons indicated that demolition work in that area might begin next fall.

When she bought the house seven years ago, it was a dream come true. "This is my first house," she said. "I always wanted a little white house with a white picket fence, and I was able to do that."

But in late July, right-of-way agents for the California High-Speed Rail Authority came with an offer — about $75,000, enough to pay off her mortgage, plus another $50,000 to help her relocate — and Martinez said she readily accepted.

Originally, Martinez said the right-of-way agent said she would have to move by Sept. 15. "Now they're giving us another three months, so I have time to fix my credit and then I'll be able to make a down payment on a new house."

She said she plans to move closer to her work in northwest Fresno, and also step up to a three-bedroom house.

An uncertain future

There is no such clarity, however, for the owners of Angelo's, where the proposed construction schedule anticipated work for a new Olive Avenue overpass beginning next fall.

Lim and Chea said they've not signed an offer, but did sign papers in which they agreed with the second appraisal — the one that valued their property and business at $160,000. Now, Lim said, "we wait for them to bring us the papers to sign, and then we have 30 days."

Lim said they were first told that they needed to be out of their building by Sept. 17.

The couple estimate that it would take between $300,000 and $500,000 to reopen their little eatery someplace else. "Just look around here in Fresno, you might find property for $150,000 or $200,000," Chea said. But such a location won't be like Angelo's, across the street from the state Department of Motor Vehicles office that generates substantial business for them. "That's very rare to find," Chea said.

The couple have resisted hiring a lawyer because they're afraid of the cost. "Why we don't want to hire an attorney is because when you go to court, it will cost at least $50,000 to $100,000," Lim said. "We'd rather save that $100,000 to put money to my kids' education."

They're unsure what will happen if and when they agree to sell. "The only thing we have to go on was the business, this support my kids through school," Lim said. "We have no other income. I ask them if we can get unemployment, or help to move or to relocate, but they said no, nothing."

Their plight caught the attention of Chinese-language media in San Francisco, prompting a recent visit from state Sen. Leland Yee, D-San Francisco.

Over the past week, Yee's staff has been "chatting with the high-speed rail authority, trying to figure out what went into the process of determining the value of the property," said Yee's press secretary, Dan Lieberman.

Grebe, who started in his job as the real estate director for the rail authority just a few weeks ago, said he's not intimately familiar with the Angelo's situation, but said the appraisal process is only intended to compensate the owner for the value of the real estate. Providing compensation for the effects on the business, including goodwill or loss of customers or the expenses involved in relocating, is a separate negotiation — whether the businessperson owns or leases the property.

Relocation assistance typically is done through claims for reimbursement, Grebe said. "Ultimately, if any owner is dissatisfied with the claim, or says the costs were higher than reimbursed, they can file an appeal," he said. "If they're still dissatisfied, they have the ability to go to a court process as well."

The Fresno Economic Development Corp. is also trying to work on behalf of property owners and businesses along the rail route.

Eager, the EDC's director, said her agency has hired a real estate attorney and coordinators to work with business owners to walk them through the process as well as helping them find new sites where they can relocate.

"Angelo's is a perfect example," she said. "Here's a family that have no idea what the process is or what their rights are. There are hundreds of people in that same vein, and they need their own advocate who is separate from the government."

View High-speed rail parcels in a larger map

The reporter can be reached at (559) 441-6319, or @tsheehan on Twitter.

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