State seeks to condemn first Fresno sites for high-speed rail project

The Fresno BeeDecember 8, 2013 

Two pieces of property in Fresno are being targeted as the first parcels to be condemned for California's high-speed train system.

The fight for the properties — one a small, vacant retail building on Belmont Avenue, the other an office building leased by the state near downtown — marks the start of a new stage of development for the proposed bullet train that would connect San Francisco and Los Angeles by way of the San Joaquin Valley.

Progress has been slow — very slow — in the California High-Speed Rail Authority's efforts to buy the right of way it needs for the first 29 miles of construction planned between the northeast fringe of Madera and the south edge of Fresno.

Eminent domain or condemnation typically is a last resort that government agencies can use to acquire property for public works or transportation projects when the agency and property owners cannot agree on the price and terms for the land.

Eminent domain law requires that owners receive "just compensation" for their condemned property, and if the sides remain in disagreement, a trial determines what the government must pay.

A judge could allow the state to take possession of the property within months, long before a trial on compensation.

One of the parcels to be condemned belongs to Rob Solley of Fresno, who owns the former Horn Photo building on Belmont Avenue east of Weber Avenue. Solley said he and agents for the rail authority disagree on the value of the 4,760-square-foot property and the 1930s-era building.

Solley didn't go into detail on his asking price or the authority's offer on the property, which has an assessed value of $51,382 according to Fresno County property records. But he said he is concerned about the property sales information that right-of-way appraisers selected to make their opening offer for his parcel.

"We were hoping to avoid eminent domain, but the difference is substantial — there's a large divide there," Solley said. "I've been a real estate investor for years, and I had a problem with some of the comparables they use to come up with the value. ... It looked to me like they cherry-picked on the low end."

"One of the comps was four years old. That doesn't make any sense," he added. "You can't use something that's years old. It's irrelevant and kind of ridiculous."

Through negotiations since the opening offer, the two sides have narrowed the gap, "but we're still not close," Solley said.

Complex structures

While not directly in the proposed path of the high-speed train tracks along the west side of the nearby Union Pacific Railroad freight line, Solley's property and others along Belmont sit where a new overpass is planned to span both the UPRR and high-speed rail line. The overpass would replace the Belmont Avenue subway that runs under the UPRR tracks.

Less than a mile to the south, the second property in the sights of the rail authority and the Public Works Board is at the northwest corner of G and Divisadero streets. There, a 20,169-square-foot office building leased to the California Department of Corrections sits squarely above where the high-speed tracks will run in a trench that extends from Roeding Park to just north of downtown Fresno.

The owner of the 15-year-old building and the 2.49-acre property, listed in public records as Frank Solomon Jr. of San Rafael, could not be reached last week to comment. Property tax records indicate that the building and property at 2222 G St. have an assessed value of $2.4 million.

Don Grebe, director of real property for the rail authority, said that talks with Solley and Solomon have been going on for several months with little progress before the decision was made to start the condemnation effort.

"They've had more than adequate time to consider the offer," Grebe said, adding that the authority will continue negotiations with the owners even as the eminent domain process moves forward.

Earlier this year, rail authority CEO Jeff Morales said he was confident that fruitful negotiations would allow the agency to avoid using eminent domain in all but a few circumstances. But property owners have complained that the agency's offers over the summer and fall have been coming in well below what the owners believe is fair, apparently slowing progress.

For example, the owners of Angelo's, a 1950s-era burger joint on Olive Avenue near Weber, initially were offered $120,000 for their business this summer. But Keav "Kay" Lim and Ken Chea estimated that it would take between $300,000 and $500,000 for them to re-establish their little eatery someplace else.

The couple, who opted not to hire an attorney because of the cost, said they later signed paperwork agreeing to a $160,000 appraisal for the property.

A turning point

It's been almost a year since the Public Works Board gave the rail authority a green light to begin making offers to the owners of more than 350 parcels. In January, the agency had identified 130 parcels that it wanted to have in hand by the end of this year, including 75 that it said were needed by the end of September.

Grebe said the authority has made 140 written offers to property owners, "and roughly 40 or so have signed contracts or agreed to a price." Only three properties, however, have closed escrow.

Grebe said more condemnation actions are anticipated over the next few months. "Eminent domain will become more and more of a pathway that we'll follow, after a certain time of negotiations, when we arrive at impasse," he said. "Over the next couple of months, it will increase to a degree."

The Solley and Solomon parcels, among others, are pieces that Grebe said the authority needs to secure sooner rather than later because they are needed for structures — the Belmont overpass and the Roeding trench — that have a longer lead time.

"Knowing that some structures will take longer to build than others, it's necessary for the contractor to get on the property to start foundations or other work necessary for those structures," Grebe said.

This summer, the authority awarded a $985 million contract to a construction consortium led by Tutor Perini Corp. of Sylmar to design and build the 29-mile Madera-Fresno stretch of the rail line. The authority expects construction work to begin in early 2014.

Legal processes

The state Public Works Board will meet Friday to consider resolutions declaring a public necessity for seizing the parcels.

The directors of the state's Finance, Transportation and General Services departments comprise the voting members of the Public Works Board. Their meeting Friday, which begins at 10 a.m. in the state Capitol in Sacramento, will be open to the public, said H.D. Palmer, a spokesman for the Department of Finance.

Solley and Solomon, or their representatives, will be able to argue their case against condemnation at the hearing, Palmer said.

If those resolutions of necessity are adopted, the Public Works Board would be poised to file eminent domain lawsuits in Fresno County Superior Court seeking to condemn the parcels for the rail authority.

An eminent domain trial in Fresno County likely wouldn't stop the state from getting the property, but it would be the forum for attorneys and experts to argue — and a judge or jury to decide — the amount of compensation the state must pay the property owner.

Compensation involves not only the value of the property, but also related damages to an owner caused by the loss of the property that cannot be prevented or recovered elsewhere.

When it comes to buying occupied business property, factors will include the cost of relocating structures, inventory and equipment as well as "loss of goodwill" — the impact of moving from a long-established location that is familiar to customers. Attorneys say that has to be decided case by case.

Andrew Turner, a San Mateo eminent domain lawyer who is representing some Valley farmers and others over potential property condemnations for high-speed rail, said earlier this year that a judge can OK a "quick take" of land in only 120 days after the motion if the government puts up a deposit for the estimated amount of compensation.

Turner said that based on his experience, it could take at least a year, and possibly up to two years, for an eminent domain case to reach a jury trial on the compensation issues. Verdicts can be no lower than the agency's offer and no higher than the owner's counteroffer.

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

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