The March 9, 2015 High-Speed Rail Board Meeting was the third meeting this year that a flawed appraisal process was the central theme through public commentary. But this time after public comment, the board joined in to address some of the concerns which is an extremely rare occurrence.
Perhaps it was the presence of several landowners who took the time to come to Sacramento to tell their stories. They described many instances where Authority personnel’s zeal to get their job done seemed to get in the way of compassionate treatment for the families involved.
Gloria Coelho, Hanford resident, was originally told she would get an offer in the spring and highlighted harassing behavior from the acquisition team. She received her offer early and the right of way agent was not happy when she told him she was hiring a lawyer who recommended a re-appraisal. The right of way agent said he would call weekly for updates though the homeowner suggested that would not hurry along the process. It was out of her hands as she was waiting the re-appraisal. She suggested he call her lawyer.
Millard Downing from Hanford said he received a letter from the property acquisition team which explained they were using sales in other cities, some as far as 83 miles away and he questioned how those sales could be used. His appraiser and right of way team were from out of state, Houston and Oklahoma.
Mike Witlatch from Corcoran, explained that his house was specially built for his wife who suffers with Parkinson. He explained that their home was her dream home. He hasn’t received his offer yet but is worried based on his neighbors’ offers that there will not be enough money to rebuild and most likely not in Corcoran because land is in short supply.
Alisa Gomez from Corcoran considered that the HSR team violated her privacy by inappropriately contacting her ex-husband, who did not own the subject property. He now is harassing her though she is remarried. She did not understand why they called him.
When Alisa and her husband returned home from work, the appraisal team was found walking up and down the street waiting for them. In addition Gomez reported that they were told back in October their offer would come in about six months but instead it was delivered early, according to Gomez, literally by being thrown over the fence on February 20th. She described her appraisal value as a “smack in the face.” She said she was not being made whole.
After the public finished speaking, the board weighed in and seemed genuinely concerned.
Board member Lynn Schenk stated she realized there are many sides to a story however, “I’ve lived long enough to know that when a person says they have ‘a job to do’ in the field, it can be done in a heartless way, an emotionally distressing way.” And that’s exactly what one right of way representative told Earnestine Mattos, “I have a job to do” and threatened if she didn’t cooperate [and meet with him] he would do a roadside assessment. She objected and replied to him, “ Me as a mother I have a job to do for my son,” referring to her son who had dropped 20 lbs. and had to have a biopsy. She described the way the appraisal process was being done was “heartless.”
The CEO, Jeff Morales told the landowners that the Authority takes these issues very seriously and do not take lightly the acquisition of anyone’s property. He said they were conducting training and wouldn’t tolerate issues if they were as explained in the meeting.
The Rail Authority’s Central Valley manager, Diana Gomez told the board about all the recent efforts she has made to get this appraisal process on track including conducting two mandatory training meetings in February and personally visiting with land-owners that were having difficulties. The Board acknowledged her work but they wanted more.
Board member Lynn Schenk said she wanted reports that showed not only the good but the bad and the ugly as well. One board member Katherine Perez-Estolano volunteered to go with Diana Gomez when she was meeting with landowners that were having problems.
Newest board member, Lou Correa, former state senator from Orange County, made it clear that he wants the appraisal process done in a respectful way. He also stated, “Their home is their castle and they [appraiser/row of way agents] are not doing their job if they are running over people.”
Board member Rossi wants the Central Valley Manager, Diana Gomez to report back about the guidelines the appraisers are using in regard to selecting comparables in order to answer one of the questions as to why some of the comps being used were long distances away from the subject properties. He also wanted to know where the appraisers were from since one of the landowners mentioned his acquisition team was from out of state.
Vice Chairman Tom Richard who is from Fresno and has a real estate development background explained at times it’s very difficult to find suitable comparables in the landowners neighborhood because there aren’t enough sales to pull from.
Richards told the audience that those who work directly with the landowners have an obligation to make sure the appraisal process is done compassionately. He also advised the audience, “In the end the process is driven by the appraisal. It would benefits each of you to cooperate fully with the process and not be shy about [stating] what your property is worth, to be realistic about what it’s worth and then together let’s try to accomplish what this chairman and those who have been talking to you always said, we’ll do everything we can at the other end that you come out whole in a financial sense. We can’t think enough about what you are going through personally.”
Tom Richards ended by saying, “I don’t think we as the Authority can spend too little amount of money to insure that we protect the interests of the people sitting about here and those around the state along our alignment.”
The Appraisal Value
There are two parts to this issue, the treatment of people and the value that is placed on their property. It’s true that appraisers should know the area and be using “like properties” as sales comparisons when establishing the value for a property. However the treatment of a property with a few acres for recreational use is different than one that is a business. That seems to be one of the key discrepancies in establishing value. If the land is producing product for sale or leased with profitable contracts and those factors aren’t being considered then the landowner is getting not getting fair market value. The income approach appraisal rather than a market approach income appraisal might be considered in the case of a business.
The definition of fair market value according to the Pierce law firm: “Just compensation is the fair market value of the property being acquired by the agency. California Law defines fair market value as “the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.”
http://www.eminentdomainlawcalifornia.com/eminent-domain-process.html (please cut and paste)
Note: Two property owners told me the offer they received had no expiration date rather later they were either contacted by the phone or notified in a separate communication that they have 30 days to accept or the state will move to have the property condemned. This rush tactic does not allow the landowner proper due process to call an attorney and/or to establish an independent value through a second appraisal. This takes time. Independent appraisers that are not working with the Rail Authority are in high-demand at this time.
Why the rush on segment #2 ?
Behind this is an incredible push to acquire land as explained by the Fresno Bee which describes the acquisition process as “startling slow.”
In this case there is not a rush, the Fresno to Bakersfield segment is the second construction segment. So despite an acknowledgement in the January board meeting that the Authority is “ahead of schedule” it seems there is a much more urgent process outlined in an email exchange from a Don Grebe, Director of Real Property in which he offers his prospective to Frank Oliveira, “It’s unfortunate that the R/W (right of way) delivery schedules are so compacted, but that die was cast with the design build approach adopted by the legislature for HSR as well as funding deadlines provided by the federal government. “
However, if the Rail Authority board is genuinely serious about getting the appraisal process on the right track, they need to examine the appraisal process itself to make sure fair market value is being captured and they should examine the performance they demand of their own employees as well as review the goals the Authority personnel sets for their acquisition teams in the field.