Findings could cause 10-year delay in math institute plans
or lead to a hefty fine
Gilroy – A state investigation into the controversial Morgan Hill golf course owned by John Fry could cause a 10-year delay in plans for a world-class math institute unless the electronics magnate is willing to pay a fine that could range in the millions to take the property out of the Williamson Act.
The city of Morgan Hill has taken steps to remove the golf course from the act, but that process takes a decade. Under state law, Fry and his business partner, Steve Sorenson, who together own the American Institute of Mathematics, can not go ahead with their development plans while under Williamson because they are not farming the land.
To get out of the act immediately, AIM would have to pay a cancellation penalty of about $460,000. But under Byzantine Williamson rules, the fine could soar into the millions. A finding that illegal improvements were made to the property after Jan. 1, 2004, for example, would trigger a cancellation penalty equal to 25 percent of the property’s market value. Its current Wiliamson Act – or below market – value is $3.7 million.
“We are actively looking into it, in terms of what’s going on there,” Don Drysdale, a spokesman for the California Department of Conservation, said Wednesday. “It’s too early to say where the investigation will go. It’s going to take some time to work through the machinations of the process.”
The Williamson Act is a 1965 law that provides a tax break to landowners who keep properties that meet minimum size requirements in agricultural production. The golf course, which sits on 192 acres east of Highway 101 on Foothill Avenue, entered the act more than 30 years ago, when golf courses were an allowed use. They were prohibited in 1989.
Fry and Sorenson bought the land in 1997 and began constructing a new tournament-quality course without clearing the necessary regulatory and environmental hurdles. Last year, Morgan Hill approved the project over objections from environmental advocates who complained bitterly that the construction destroyed critical habitat and endangered groundwater. To help gain that approval, Fry and Sorenson promised to non-renew their Williamson contract, but they did not follow through on the pledge.
Earlier this summer, one of the environmental advocates who tried to shut the course down, Brian Schmidt, of the Committee for Green Foothills, petitioned the Santa Clara County District Attorney to investigate AIM for tax fraud. The DA forwarded the request to state conservation officials, who have ultimate oversight of the Williamson Act. Drysdale characterized the investigation as significant but routine.
“Obviously there are people concerned about this and it was brought to our attention, but we deal with violations all of the time,” Drysdale said.
AIM representatives did not return phone calls Wednesday, but Morgan Hill mayor Dennis Kennedy said a delay in bringing the institute to Morgan Hill would be unfortunate.
“That would be too bad, if this delayed the building of the math institute, Kennedy said. “It’s a really wonderful addition to the community, a real positive development.”
Soresnson said in July that AIM plans to build “a centerpiece of mathematics in the United States,” by constructing a 50,000-square-foot research center. The course’s owners also hope to attract Professional Golf Association tournaments to Morgan Hill. Sorenson said he believes the course qualified for Williamson protection under the law’s “cultural and educational uses.”
But state officials have made it clear that properties without agriculture can not receive a tax break for an so-called compatible uses like public recreation or education facilities. Drysdale has said to do so “violates the spirit of the law.”
A chronology of controversy
1997
Owners John Fry and Steve Sorenson submit plans to renovate the golf course and convert buildings into a math institute. They receive permits for a project that does not require environmental impact review.
2001
Morgan Hill planning inspectors discover that Fry and Sorenson have constructed a course in excess of their permits Subsequent investigations by environmental agencies reveal ecological damage. The city issued temporary permits. Fry and Sorenson began work on an environmental impact report.
2003
Morgan Hill orders the golf course closed until environmental work is done.
2004
Morgan Hill approves the project contingent on a variety of environmental mitigations, including replacing critical habitat and monitoring groundwater. The golf course must also give up its Williamson Act tax break.
2005
Fry and Sorenson continue to negotiate with environmental agencies. The course remains closed. Based on a complaint from an environmental advocate, Morgan Hill boots the course from the Williamson Act and state officials begin an investigation of possible tax fraud.
