An environmental group has asked the Santa Clara County District
Attorney to open a tax fraud investigation into the controversial
Morgan Hill golf course owned by the American Institute of
Mathematics. The group, the Committee for Green Foothills, alleges
that the owners are knowingly profiting from an invalid Williamson
Act contract.
Morgan Hill – An environmental group has asked the Santa Clara County District Attorney to open a tax fraud investigation into the controversial Morgan Hill golf course owned by the American Institute of Mathematics. The group, the Committee for Green Foothills, alleges that the owners are knowingly profiting from an invalid Williamson Act contract.
“Not surprisingly, the American Institute of Mathematics is good with numbers,” said Brian Schmidt, a legislative advocate for the committee. “The institute should incur penalties for violating this contract and for any laws that were broken.”
The golf course, located on 192 acres east of Highway 101 on Foothill Avenue, is owned by Silicon Valley businessmen Steve Sorensen and John Fry, owner of Fry’s Electronics. Last year, Schmidt was one of several environmental advocates who tried to shut the course down. The advocates complained bitterly that the course, which the owners renovated without clearing the necessary environmental and regulatory hurdles, should not have received zoning approval, which was ultimately granted by Morgan Hill.
But according to Morgan Hill Planning Manager Jim Rowe, that approval was contingent on the institute’s agreement to withdraw from the Williamson Act, a 1965 law that grants landowners significant tax breaks in exchange for maintaining farmland and specific types of open space. The contract was attached to the land before the institute bought it in 1997.
“The environmental impact review indicated that the course was incompatible with agricultural uses,” Rowe said. “It was stipulated under contract and recorded that the [contract would be non-renewed].”
Sorenson said Wednesday that he believes that the land does conform to the act and that he has no plans to file a non-renewal, which would gradually raise the course’s tax rate to full value over a decade. He said he believes the course qualifies under contract provisions that protect land held for future agriculture use, recreational open space and educational and cultural enterprises.
“We think we qualify and want to investigate further before we make a final move that can’t be undone,” Sorenson said. “It possibly is not a perfect fit, but it’s a good fit. Nothing we’re doing precludes future agricultural use.”
The course is, however, a significant source of tax revenue for the county. It’s total 2005 tax bill was in excess of $100,000. And the course is far from being the only property in the county potentially receiving an illegal tax break. Of the 3,000 parcels in the county’s Williamson Act program, as many as 1,200 may be illegitimate, either because they are too small or don’t have an agricultural use.
County officials are currently trying to reform the Williamson Act process and plan to issue mass eviction notices early next year. Schmidt said his organization was going after the golf course because the property has never had a farm use and has a history of openly flouting environmental laws.
“The institute has harmed the property’s agricultural value, effectively benefiting from a taxpayer subsidy which they used to finance an illegal private golf course, causing significant environmental damage,” he said.
The California Department of Conservation, which has ultimate oversight of the act, has been sharply critical of the county’s handling of the contracts and has ordered county officials to ensure that all parcels have legitimate agricultural and compatible uses.
But the institute’s contract is administered by the city of Morgan Hill, and the institute plans to build a 50,000-square foot mathematics research center on the land.
“It will be the centerpiece of mathematics in the United States,” Sorensen said. “Clearly the aim with its math endeavors qualifies under cultural and educational uses.”
Conservation department spokesman Don Drysdale said Wednesday that his agency would investigate the institute property. He said golf courses were sometimes considered a compatible use in the early days of the act, but in 1989 the law was amended to prohibit them. He said they “violate the spirit of the act” and that the department recently rejected efforts by a southern California tribe to construct one on Williamson land.
A deputy district attorney did not return a call inquiring about the possibility of an investigation.
