The Transportation Agency for Monterey County, as the local lead agency, grantee agency and owner of the Salinas Rail Extension project, proposes to extend passenger rail service from Santa Clara County south to Salinas. The service will start with two daily round trips, expanding to up to six round trips as demand warrants. The project provides an alternative to the highly congested US 101 corridor to access to jobs, education, and health care, and improves interregional transportation and air quality. It also promotes mixed-use, transit-oriented development, affordable housing, livable communities and economic growth around the station.

The first phase of the project, known as the Kick Start, features improvements at the Salinas Station, including an extension of Lincoln Avenue, circulation improvements, train layover facility, bus facility, and car and bike parking.  On March 22, 2017, the Transportation Agency Board of Directors approved resolutions of necessity for nine properties where acquisition was necessary for the construction of the Kick Start phase.  Upon adoption of the resolutions of necessity, the Agency deposited the requisite amount of just compensation for each property, as established by a property appraisal, with the State Condemnation Fund.

One of the properties included in the adopted resolutions of necessity, located at 21 Happ Place in the City of Salinas, is currently owned by MWM Investments, LLC.  The larger parcel consists of approximately 4.696 acres and is improved with industrial buildings. The proposed acquisitions from the larger parcel consists of fee simple takes of 31,066 square feet of land and 2,156 square feet of building area as well as 8,543 square feet as a temporary construction easements for 48 months to commence either on possession or at close of escrow, which are all needed for the layover facility for the Salinas Rail Station. 

The Transportation Agency provided just compensation in the amount of $722,000 for the partial acquisition of this property and temporary construction easements.  The parcel is improved with several buildings utilized by American Supply Company for storage.  The proposed land area required for this acquisition includes a section of American Supply Company's warehouse that measures 28 feet wide by 77 feet across.  American Supply Company's warehouse building is adjacent to the existing railroad tracks. The modification to the warehouse building is required to build the train layover facility portion of the Kick Start phase of the rail extension project. The Transportation Agency's offer package included removing this portion of the warehouse and compensating MWM Investments, LLC to repair the warehouse building for the removed portion.

On April 6, 2017, MWM Investments, LLC filed a motion with the Superior Court of California seeking to increase the amount of probable compensation on deposit by $1,277,560.  MWM Investments argued to the Court that the additional funding was needed to mitigate the severance damages to their remainder property and to keep the warehouse functioning at a level equivalent to that before TAMC's partial acquisition.  On May 14, 2018, the Court issued an order granting the motion to increase the amount on deposit.

Agency staff is seeking Board authorization to make the Court ordered deposit with the State Condemnation Fund.  Agency staff has confirmed with Caltrans that this is a reimbursable project-related expense.  The Agency's special counsel for the Salinas Rail Extension property acquisitions, Meyers Nave, will also be asking the Court to require MWM Investments to post a bond for the increased amount in the event that they seek to withdraw the funds and the decision is reversed during trial.  The risk of non-performance would be the potential abandonment of the case, which could impact the delivery of the rail extension project, and the payment of attorney fees to the other side.