Owners claw against eminent domain bid: Contra Costa (CA) Times, 1/22/06

By Laurie Phillips

Demolition will begin by summer on a handful of buildings along Railroad Avenue, and after the scraps are cleared and fresh lawn is rolled out, a lush green strip will mark the entrance to a city intent on improving its image.

The city of Pittsburg [CA] expects to pay as much as $3 million to acquire the 13-parcel stretch at the corner of California Avenue and construct a sound barrier. But it's not enough, say two men who own parcels the city needs to proceed with the project. They believe the city is lowballing them for prime land adjacent to Highway 4.

"Because no one is challenging them, they do whatever the heck they want," Dave Shepard, who operates a real estate business on one of the parcels, said of Pittsburg's leaders. " ... They really need to understand, 'Hey, you're out of line.'"

Shepard and Jack Moore, who owns a building near Shepard's now leased by an engineering firm and Caltrans, know what the city is doing is legal but don't believe it is fair.

"Justify it? They don't have to justify it," Moore said. "They have eminent domain on their side."

Kerry Lyman, the project manager for the site, said the city has been more than fair in offering both men just compensation for their properties, required by law when cities acquire private land for public projects through eminent domain. Relocation agents have met with Moore and Shepard to explain the process and help them find a new location.

Independent appraisers hired by the city most recently valued Shepard's property at $360,000 and Moore's at $365,000. Garrett Evans, director of the city's redevelopment agency, said the city paid somewhere in the high $200,000s to low $300,000s to buy the other properties along that stretch.

To receive more money, Lyman said, the men must prove their properties are worth it.

"We have a fiduciary responsibility, because this is taxpayer money we're spending, not to just throw dollars at people and make them go away," he said. Noting the men have used arguments about square footage and location to demand more money, he added, "I don't know if I can blame them, but you can only go so far without abusing the system."

While property owners do not see the complete appraisal created for the city for each parcel, Evans said they are offered the highest value for their land based on one of three approaches: income generated by the property, comparable sales in the area or cost to rebuild the building. Using recent sales tends to yield the highest value in this market, he said.

Evans invited Moore and Shepard to submit their own appraisals for consideration. In past cases when the owner produced a valid appraisal that was higher than the city's, he said, the property value was determined by splitting both appraisals down the middle.

Both men said they plan to conduct their own appraisals, but only Moore plans to submit his to the city for consideration. Shepard said he'll submit his in court.

Attorney Mark Epstein of San Francisco law firm Seiler Epstein Ziegler & Applegate, who has worked on many eminent domain cases, encouraged both men to submit their own appraisals to the city. In the process that follows, he said, property owners typically receive more than what they were originally offered for their land.

That said, he added, Moore and Shepard should be mindful of the fact that "a real estate appraiser is looking at what zoning in the area allows to be built there, not necessarily what's there."

The men also wondered why an uninhabitable residential property Shepard used to own elsewhere in Pittsburg was appraised at $360,000 – the same amount he was offered for his land by the freeway.

With some exceptions, Evans said, residential land is worth more than commercial land in Pittsburg because there is higher demand for it.

Shepard must vacate his building by March, Moore after the highway improvements in the area are finished.

"I know in the end, I'm going to come out ahead in this," Shepard said. "I'm going to win. But I feel obligated to take this as far as I can so something happens."

Evans believes people are treated fairly when their properties are acquired by eminent domain, a process that he said allows ample opportunity for public participation.

"When we sit down with somebody (whose property) we're looking to acquire, we encourage them to seek another appraisal, seek legal representation, to make sure that all their legal interests are considered," Evans said. "Our end goal is to seek a resolution to this that both sides can walk away from."

Contra Costa Times: www.contracostatimes.com