Fresno motel owner says Caltrans has crippled her business

The California High-Speed Rail Authority isn’t the only state agency trying to acquire land that will be affected by the bullet-train project – or the only one being accused of dragging its feet at the task.

Caltrans, the state Department of Transportation, is lining up a string of properties on the west side of Highway 99 between Ashlan and Clinton avenues in central Fresno so that it can nudge the freeway over by about 100 feet to make way for high-speed train tracks. But the owner of the Parkland Hotel on Parkway Drive says the agency interfered with her efforts to refinance or extend a loan against the 6.9-acre property by stalling for more than a year before making an offer and filing an eminent domain lawsuit.

The state filed its condemnation lawsuit against Dr. Won Shil Park, the hotel’s owner, on July 10 in Fresno County Superior Court. But that came only after Park, 78, a licensed physician and retired Navy lieutenant commander, took the unusual step in March of filing an inverse condemnation lawsuit to end her ordeal by trying to force the state to acquire her 200-room motel.

“Most of the time, once the government announces that it’s going to take the property, normally they hold a hearing on a resolution of necessity, pass that and move forward with an eminent domain action,” said Park’s attorney, Karyn Jakubowski of Pasadena. “In this case, they announced to her lender two years ago that they were going to take the property. … And they said don’t bother refinancing the property because we’re going to be coming to take your property in the next six months.”

Six months has now stretched out to almost two years. “Now she has lost the ability to refinance and is actually in foreclosure,” Jakubowski said.

Eminent domain, or condemnation, is a legal process by which a government agency can go to court to acquire property for a public project when the agency and property owner cannot agree on price or terms. The first step is adoption of a resolution of necessity, and then the agency can file an eminent domain lawsuit in the county where the property is located. A judge first decides whether the agency is entitled to the property; in a second phase of the case, a trial determines the fair market value and other “just compensation” due the owner. The verdict can be no lower than the agency’s offer and no higher than the owner’s counteroffer.

Park, who graduated from medical school in South Korea in 1962 and still speaks English with a heavy accent, fears that between Caltrans’ low initial offer for the property, plus money and interest and fees she owes on the foreclosed loan and what she anticipates having to pay in legal fees to evict tenants who aren’t paying rent, she will be left with nothing to survive on for the rest of her retirement.

Park said she originally bought the property in 2005, when it operated as the TraveLodge and Knights Inn motels, for $4.4 million. She sold it a couple of years later to buyers for whom she co-signed a loan, “but they never pay so I have to come back” in 2008. “They offer now only $3.4 million. I put all my retirement money here, $1-1/2 million already in bank loan, lawyer fee, and replace all the carpet, sign, everything. Then I borrow money to run business, so now no money.”

“I am so depressed now. I don’t know what to do,” she said. “So much stress. I’m a 78-year-old lady, I cannot sleep at night. Problems all the time. It’s a terrible situation now.”

Several years ago, before the state officially identified the high-speed rail route through Fresno and the need to relocate the two-mile stretch of Highway 99 outside her front door, Park said the hotel was often three-quarters full. “Tourists come in, all day they come in,” she said. “It made good money, it was a good operation.”

Now, however, only about 40 of the rooms have people living in them, and much of the hotel is in a state of disrepair. “Now everything is shut down, and nobody here is paying,” Park said. “Last month I only get $10,000 (in rent), but the bills are $35,000 a month.

“How I can survive? I don’t know,” she said, fighting back tears. “The rest of my life is homeless? I don’t know. I’m so scared about it.”

In court documents, Park accuses Caltrans of “unreasonable delay in actually condemning the subject property” and creating a “cloud of condemnation” through its “interference and representations” to her bank as well as “its announcements and unreasonable pre-condemnation conduct.”

Because of those actions, according to the March lawsuit filed by Park against Caltrans, Park’s “right of possession of the subject property, its business goodwill for the business operated thereon, and its improvements … were diminished in value thereby constituting a taking and or damaging for public use without payment of just compensation” required under the state Constitution.

“You can’t just go announce to the world that you’re going to take the property and then not do anything,” Jakubowski said. “What we’re saying is that they had no right to announce to her lender more than a year ago that they were going to take the property.”

Caltrans declined comment this week on Park’s accusations or the condemnation lawsuits. “Our goal is to ensure that property owners receive just and equitable compensation under the California Constitution and applicable statutes,” said Toni Conrado, a spokeswoman for Caltrans District 6, which includes the Fresno area. In court documents, Caltrans “specifically denies that (Park) has been damaged as alleged in the complaint and denies (Park) has been damaged at all.” The response contends that Park herself “failed to act in a reasonable manner to mitigate damages claimed.”

However, Caltrans has apparently shifted some of its positions in recent weeks. On July 22, about two weeks after it filed its eminent domain lawsuit against Park, the agency made an escrow deposit of $3.4 million – a figure that represents what the state’s appraiser believes the property is worth. The actual compensation that will be due to Park won’t be determined until she has her own appraisal done and the two sides reach some negotiated agreement or a jury decides the value of the property and other factors at an eminent domain trial, which likely won’t happen for at least a year. In the meantime, Jakubowski said she is working to get court approval for Park to use the bulk of that money to pay off her foreclosed $2.8 million loan and put an end to the interest burden that adds up to about $700 per day.

The attorney added that Caltrans also recently agreed to enter a “loss of rents agreement” in which the state will compensate Park for lost rental income. “It’s kind of like putting on a bandage after you’ve been bleeding out for six months, but at least it’s something,” Jakubowski said.

Caltrans has identified 38 pieces of property that it needs to acquire on the west side of Highway 99 for the freeway relocation project, for which the agency has contracted with the the high-speed rail authority to do the work. As of this week, the agency has obtained 20 and is in negotiations for the remaining 18.

Some of the buildings along that path, including the iconic Astro Motel, have already been demolished, and construction is expected to begin sometime this fall, Conrado said. “It is anticipated that construction will take approximately 2 1/2 years,” she added.

The Highway 99 relocation is part of the first 29-mile segment of the statewide high-speed rail project between Fresno and Madera. As of mid-July, the California High-Speed Rail Authority had legal possession of 223 of the 543 pieces of property it needs for the rest of that section.

This story was originally published August 19, 2015 at 1:26 PM with the headline "Fresno motel owner says Caltrans has crippled her business."