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Saturday, March 28, 2015

Vidak: High-Speed Rail Land-Grab Process Needs Legislative Review

Sacramento Senator Andy Vidak (R-Hanford) sent the following letter to the Joint Legislative Audit Committee (JLAC) urging an audit of the California High-Speed Rail Authority’s use of “flash appraisals” and high pressure tactics to acquire property, farms, homes and businesses that are in the path of the bullet train:

March 26, 2015
The Honorable Assemblymember Mike Gipson, Chair
Joint Legislative Audit Committee
Legislative Office Building
1020 N Street, Room 107
Sacramento, CA  95814

Dear Chairman Gipson:

I respectfully request that the Joint Legislative Audit Committee (JLAC) approve an audit to fully examine the California High-Speed Rail Authority's (Authority) methodology of using “flash appraisals” to establish the value of private property that the Authority has deemed is needed to build the California High-Speed Rail (HSR) project.

In addition to the flash appraisals, the audit should also fully examine the tactics that the Authority is using to pressure property owners to accept undervalued acquisition offers.

For the purpose of this audit request, a “flash appraisal” is defined as the Authority establishing a value for private property without any input from the property owner. The flash appraisal may be based only on information from publicly-available data sources, but in most instances involves at least a drive-by of the property by the Authority’s contract staff.

This appraisal process is completely opposite of the normal eminent domain process followed by every other government agency in California, where agencies meet and confer with property owners, gain legal access to property and make an informed monetary offer.  In the case of the High Speed Rail project, the Authority is so far behind in obtaining the property necessary to start construction, they have directed their contractors to proceed in this rushed manner. 

Making decisions to appraise property owned by residents of Kings and Fresno counties in this manner ensures that the Authority’s “good faith” acquisition offers to property owners are ridiculously undervalued. 

This flash appraisal methodology becomes even more problematic when properties larger than a residential lot are involved, such as a farm or some other business. The Authority is required by law to determine the fair-market value of the “whole” property before the impact of the project is factored. 

In addition to compensating property owners for the value of the land that is acquired and any devaluation of their remaining property, the Authority is required to compensate for the “severance damages” created by the partial take of the property.  Very few of the “flash appraisal” offers do so. 

Severance damages include but are not limited to:
  • the cost to recreate access roads,
  • reestablish electrical and gas utilities to all remaining properties,
  • re-establishing equipment yards, packing sheds, barns, irrigation systems and wells on the severed properties if the original property was serviced by these items before the HSR project severed the property.
In addition to the value of the land acquired, devaluation of the remaining property and the cost to cure the onsite damages that the HSR leaves on the remaining property, the Authority is also required to compensate the owner of any business adversely affected by its project for the damages it causes to that business.  This would require access to the business’ leases, contracts, expenses, profit forecasts and business plans to determine what just compensation would be for the damages the Authority will cause going forward.  None of these factors is taken into account in these flash appraisals.

Realistically, the value of the damage to a business in this situation could easily be more than the value of the land. 

The appraisal process to establish just compensation is complicated and complete information is needed before proceeding forward with a realistic offer. This process is different than a simple free-market sale of property between willing parties.  These are sales of property that are being forced on property owners by the State of California.

Regardless of what we personally think about High-Speed Rail, if the state is going to require Californians to surrender their private property and damage their livelihoods for this project, the state should properly pay fair-market value, instead of trying to lowball them.

These were not isolated mistakes.  They have happened many times and the Authority, as well as the State Public Works Board (SPWB), have been aware of this matter for several months.  Despite that, Californians are still being forced to accept offers sometimes 30 percent less than the value of their properties or face condemnation proceedings via eminent domain.

I request that this audit examine the following issues:
  • Has the Authority’s contractors issued any property acquisition offers that the property or business owners were not involved in for the appraisal of their property or business?  If so, how many?
  • What policies and procedures has the Authority given to its contractors in order to obtain property necessary for the completion of the High-Speed Rail project?
  • What is the Authority doing to prevent these problems from occurring in the future?
  • Has the Authority attempted to pressure any property owners to accept undervalued offers under threat of being expedited into condemnation proceedings?
Thank you for your consideration of this audit request.  I would additionally request that this audit be given high priority, as the flash appraisals are occurring every day in Kings and Fresno counties.

Should you have any questions, do not hesitate to contact Jann Taber in my Capitol Office at (916) 651-4014.

Andy Vidak

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