Gilroy
– The city is forcefully nudging two landowners to sell their
property so that plans might progress on a $9 million cultural arts
center.
With two separate 6-1 votes, the City Council voted to adopt a
resolution of necessity to begin the process of eminent domain on
two separate properties owned by the deceased Baleriana Oyao and
the Gera family.
Gilroy – The city is forcefully nudging two landowners to sell their property so that plans might progress on a $9 million cultural arts center.
With two separate 6-1 votes, the City Council voted to adopt a resolution of necessity to begin the process of eminent domain on two separate properties owned by the deceased Baleriana Oyao and the Gera family.
Resolution of necessity is the earliest step in the process of eminent domain, a lengthy endeavor in which a court could force the property owners to sell their land to the city for what the court deems a fair market price.
The Oyao property, owned by Baleriana Oyao who died in July, consists of two residential lots on Seventh Street between Eigleberry and Monterey streets.
The Gera property, owned by Marko and Klara Gera, consists of six vacant residential lots on Eigleberry Street and two vacant commercial lots on Monterey Street.
This is the second and third resolution of necessity council has adopted for acquiring the land needed for the arts center, said the city’s facilities director Bill Headley.
The first resolution of necessity concerned 83-year-old Loi Dong, owner of a boarded-up Chinese eatery at 7347 Monterey St. Council in February voted 4-3 against adopting a resolution of necessity for that property but later passed the resolution in June.
A city-hired appraiser valued Dong’s property at $97,000, which Dong adamantly refused and contested with a $330,000 estimate from another appraiser. The city offered to bring in a third appraiser, but Dong refused access to the building.
Negotiations are still taking place, Headley said.
It takes five votes – not just the simple majority – to adopt a resolution of necessity.
Councilman Craig Gartman cast the dissenting vote Monday, saying that while he supports an arts facility for Gilroy residents, he thinks eminent domain should be reserved only for infrastructure the public truly needs.
“I can’t support the use of eminent domain for this project based on what I classify as a difference between the wants of the community and the needs of the community,” Gartman said. “Eminent domain should only be used for what we need in a particular location.”
Gartman added he didn’t think local government should be used “in this way.”
Even so, said councilman Russ Valiquette, a resolution of necessity primarily is intended to more formally let the property owners know – if they didn’t already – that the city is serious about acquiring the property. Then, Valiquette said, the property owners are more likely to sharpen their focus at the bargaining table.
“It’s a way to get the dialogue going again,” Valiquette said. “I don’t think we need to cram our price down someone’s throat … There’s room to negotiate so both parties can still keep talking.”
Valiquette said he thinks all of the property owners are willing to part with their land; it’s simply a matter of determining an acceptable price.
Nicholas Gera, representing his parents, told council he’s not trying to play hardball but he feels the city presented a price, then essentially said take it or leave it.
“I don’t feel an honest attempt at negotiation was made,” Gera said. “It’s not that we don’t want to negotiate with the city, because we do. But I think the city needs to make an honest attempt to truly negotiate with us and the other property owners.”
Headley said negotiations can still take place while the property is under the process of eminent domain, which Mayor Al Pinheiro said he believes they should.
“I certainly urge that you do sit at the table if you have an inclination that this could be solved,” Pinheiro said to Nicholas Gera. “That’s the last thing any one of us wants to do, to force this to go into eminent domain.”
Pinheiro stressed that the price the city deems as fair market value is not decided arbitrarily but derived from an appraiser.
“We’re all trying to do the right thing here,” he said.
Francisco Oyao, Baleriana Oyao’s grandson, said he has lived on the property since 1994 and currently is the only person living there. He said he hopes the family’s lawyer brings in a second, independent appraiser.
The city offered $310,000 for both properties several months ago and the deal was set to close, but negotiations have since reopened because the family hired a new lawyer.
“(The city’s) appraisal was done a while ago, and of course they’re going to give a low estimate at first, I think,” Francisco Oyao said. “Real estate values have gone up since then, and I think it’s only fair to get another appraisal.”
Dave Porcella, owner of Porcella’s Music at 7357 Monterey St., said he understands using eminent domain for public infrastructure such as hospitals and freeways, but he questions assigning the process to an arts center.
“I don’t see the fairness of it,” he said. “But if the city’s going to do it, the price has to be fair. Even if the buildings aren’t worth very much, it’s the land they’re paying for, not the buildings.”
The new arts center, scheduled to be complete in four to six years, will be paid for largely by the city’s park development fund that is derived from impact fees, Headley said. The remaining costs hopefully will come from grants, Headley said.
City funds to begin building the arts facility won’t be available for at least four years, Headley said, so even if the process of eminent domain stretches all the way to court, it most likely won’t hinder construction.
However, extended litigation could affect whether the city is able to secure grant funding for the center, Headley said, because the city wouldn’t be able to confirm on grant applications that all necessary property has been acquired.
“Whether any of these actions appear to be hard for the city, this is progress,” Headley said of council’s decisions Monday. “It’s just a first step. It doesn’t necessarily mean we’ll end up in front of a judge to settle the matter.”
Escrow has closed on only one of the 14 parcels that would support the arts center. That property, on the southwest corner of Seventh and Monterey streets, is owned by George Besson Jr. and is currently leased to Hugo Llamas, owner of El Grullense Tacos.
The city paid $300,000 for the property in August and will pay to move Llamas’ business across Monterey and a half-block north.
Negotiations also are underway with the Salvation Army, which currently operates a thrift store at 7341 Monterey St. but is looking to relocate to a considerably larger, more upscale location near highways 101 and 152.
Lance Gilbert with Universal Field Services out of Burlingame is representing the city in the property acquisition exchanges.
Eminent domain
The process of eminent domain:
1. The government agency tells the property owners the city wants to purchase their property.
2. The agency hires an appraiser to determine the fair market value of the property, including improvements.
3. The agency makes an offer to purchase the property for the amount recommended by the appraiser.
4. The agency holds a public hearing (held Monday, Sept. 20) to adopt a resolution of necessity to acquire the property by eminent domain.
5. The eminent domain case is filed in court and served on the property owner.
6. The agency pays the amount the appraiser recommended to the court and requests early possession of the property.
7. Both the property owner and the agency hire appraisers to determine the fair market value of the property.
8. Final settlement offers and demands are exchanged.
9. If a settlement can’t be reached, the case goes to trial before a jury, which will determine the property’s fair market value.
10. Within 30 days, the agency pays the difference between what the jury thinks is fair market value and what the agency initially paid, if there is a difference.
11. The court gives the property’s title to the agency.
