On August 13, 2019, the Transportation Agency made offers of just compensation based on approved appraisals to the property owners of the five parcels required to construct the layover facility for the Monterey County Rail Extension Project. After initial attempts at negotiations did not result in agreements between the Agency and the property owners to acquire the properties, the Transportation Agency Board approved Resolutions of Necessity for the parcels on December 4, 2019 to begin the condemnation process. Subsequent to this action, Agency staff and the property acquisition team of Associated Right of Way Services and Meyers Nave continued negotiations with all the property owners at the Board's direction to attempt to avoid litigation. During this time, the Agency was successful in coming to agreement on four of the five subject parcels.
A summary of the settlements is provided below:
346 West Market Street (Baillie Family Limited Partnership):
The Agency offered $204,000 as just compensation for this property, which is a partial acquisition of 14,178 square feet of a total parcel area of 43,580 square feet. The property owner countered with $255,204 based on an appraisal assessment but did not complete a full appraisal report as they were waiting for a nearby property to close escrow in order to use it as one of the comparable sales in their report. The Agency responded with a revised offer of $210,000, which the property owner accepted and requested that their nominal appraisal expenses of $1,050 be included for a total amount of $211,050.
The Board directed staff and Agency Special Counsel to proceed with this settlement during closed session at the August 26, 2020 meeting. Agency Special Counsel filed a Stipulation for Entry of Judgement with the Court acknowledging all parties are in agreement. The Court certified the judgement, and the Agency is awaiting the Final Order of Condemnation to complete the acquisition of the property.
320 & 330 West Market Street (Neubert/Tarp Family Properties):
The Agency offered $1,012,000 ($13.65 per square feet) as just compensation for these properties, which constitutes two partial acquisitions and one full acquisition of 74,145 square feet of a total area of 155,383 square feet. The property owner provided a counteroffer of $1,212,235 ($15.00 per square feet) based on a completed appraisal, which included $96,114 for severance damages. Through extensive negotiations, the property owner has agreed to drop their request for severance damages and lower their valuation of the property to $14.65 per square feet, for a proposed total settlement amount of $1,086,224. This proposed settlement represents an increase of the Agency’s initial offer of $74,224 and a reduction from the property owner’s initial counteroffer of $126,011.
An additional issue for these properties that was addressed during the negotiations is the arsenic contamination. The contamination was found through the Agency’s Phase 2 Environmental Site Assessment and confirmed by the property owner’s environmental consultant. Agency staff has also reached consensus with the property owner and Caltrans on a remediation process for the site to be cleaned by the property owner at their expense, and for the property owner to receive a "No Further Action" letter from the Regional Water Quality Control Board prior to the Agency taking title.
During closed session on December 2, 2020, the Transportation Agency Board directed staff and Agency Special Counsel to proceed with the settlement. The Special Counsel has filed a Stipulation for Entry of Judgement with the Court to finalize the acquisition.
49 CFR 24 102 (i) - Administrative Settlement:
The Transportation Agency Board can determine that an administrative settlement is reasonable, prudent, and in the public interest for factors including, but not limited to, the activity of the real estate market, the owner's evidence on comparable sales, the range of probable testimony in trial and the costs of litigation, and diligent attempts to expedite acquisitions by agreement so as to avoid litigation and relieve congestion in courts.
All the acquisition discussions have been directed to accomplish the end result that the property owners receive compensation that is just and fair, and that every courtesy, consideration, and patience was extended to the property owners. All offers represented the best and most current estimate of market values determined through sound, approved appraisal and acquisition practices.
The Transportation Agency's agreement with both of the settlements described above are based on the following considerations:
- The original appraised values were over six months old and values have likely increased during the intervening period, as evidenced in the Neubert/Tarp appraisal.
- The settlement figures are relatively low amounts compared to overall project costs and projected potential litigation fees, especially considering the Board had approved for condemnation proceedings to begin and the litigations had been filed.
- During the initial case management conferences for the litigations, the Court instructed the parties to attempt to resolve the cases through settlements.
- For the Baillie property, while the property owner did not complete a full appraisal report, the Agency would have been required to pay up to $5,000 if one was completed. As such, paying the $1,050 of the property owner's appraisal expenses saved the Agency on costs and allowed for an expedited settlement to be completed rather than waiting for a full report.
- For the Neubert/Tarp properties, the property owner originally demanded severance damages, which if successful, would have likely resulted in a higher settlement amount.
- The subject properties are critical components to the success of the entire project.
After this careful consideration, all of the parties and public are better served by settling these acquisitions and saving the time, risk, and expense of further litigation. The settlement offers are a fair and equitable arrangement for all parties involved.