Subject:     PUBLIC USE & NECESSITY HEARING (TERRAMAC)

 

COUNCIL DISTRICT:   2

 

 

RECOMMENDATION

 

Adoption of a resolution determining that public use and necessity require the acquisition of a portion of real property located at 715 Piercy Road (APN No. 678-09-013), which real property is owned by Terramac Inc., Detrick Corporation, Kenko Utility Supply Inc. and Wageeh H. & Sameha A. Tawfik (“Owner”); and directing the City Attorney to file an eminent domain action to acquire such property.  Resolution No. 69699

 

BACKGROUND

 

The area south of Silver Creek Valley Road in the Edenvale Redevelopment Project Area can sustain approximately 2.8 million additional square feet of R&D, office and manufacturing space.  This amount of development is expected to generate over 9,000 employment opportunities as well.  Much of the land in this area is currently either undeveloped property or in agricultural use.  Some of the properties are used for residential purposes.  The development of the area will allow the City and Redevelopment Agency's economic development goals to be realized and more importantly, help correct the City’s jobs-housing imbalance by creating jobs closer to residential neighborhoods and, easing traffic congestion on transportation networks throughout the City.

 

In order to develop this area in accordance with the City's General Plan and the Edenvale Redevelopment Plan, several infrastructure improvements are deemed necessary.  In 1997, with the consent and support of the City Council and Redevelopment Agency Board, City and Agency staff began to develop a plan for the area which included the preparation of a civil engineering design for the roadways and other necessary infrastructure improvements.

 

The infrastructure improvement project includes the extension of Hellyer Avenue, modifications to Silver Creek Valley Road and improvements to Piercy Road.  Related infrastructure, including storm and sanitary sewers, water mains, and underground utilities are also planned to be constructed along with the roadway improvements.

 

At a City Council meeting on August 15, 2000, the property owners in the area approved the formation of the Hellyer-Piercy Improvement District to finance the construction of the above- mentioned infrastructure.  City staff expects to bid and award the construction project at the end of the year.  This project will be awarded after all necessary rights-of-way, most or all of which are in the ownership of private property owners and developers, are acquired.

 

City and Agency staff have, for several months, discussed issues relating to the acquisition of the rights-of-way with individual property owners and developers.  Since the certification of the Edenvale EIR in June 2000, serious negotiations have been under way, with offers to purchase based on real estate market appraisals undertaken by the Agency in the City’s name.  The offers include compensation for the acquisition of permanent rights-of-way as well as for permanent public service easements, temporary construction easements, and permanent slope easements.  Subsequent negotiations to acquire the property were unsuccessful.

 

ANALYSIS

 

The temporary construction easement being acquired for street improvement purposes is part of a larger parcel of real property owned by Owner and is more particularly described on Attachment No. 1.  The Property is located within the area of the proposed infrastructure improvements.  Negotiations for this Property have been ongoing since the start of this year, and the status of their negotiations are discussed in more detail below.

 

The initial offers to purchase the Property, as required under Section 7267.2(a) of the California Government Code, were made on August 29, 2000.  Prior to initiating negotiations the Property was appraised by an independent fee appraiser at the request of the Redevelopment Agency, and the appraisal was reviewed and approved by Agency consultant and staff.  The City’s offer was for the full amount of the approved appraisal.

 

Subsequent discussions by the Agency’s consultant have not been successful.  To date, no acceptable counter proposals have been received from the owners or their legal representatives.  Timely settlement appears unlikely.  Through its consultant, Cutler & Associates, Inc., the Agency will, however, continue to negotiate in good faith in an attempt to reach a negotiated settlement of this matter.

 

Additional salient facts concerning the Property are shown on Attachment No. 2.  A site map of the area is shown on Attachment No. 3.

 

Resolution of Public Use and Necessity:

 

A hearing is scheduled on January 16, 2001 before the City Council to consider the adoption of a Resolution of Public Use and Necessity determining the following issues for the Property:

 

1.         Whether public interest and necessity require the proposed project.

 

The proposed construction of roadway and other infrastructure improvements is required to accomplish the City's economic development goals as stated in the General Plan and the Edenvale Redevelopment Plan.  An Environmental Impact Report (“EIR”) for the proposed development of Edenvale was adopted and certified in June 2000.  The EIR analyzed the impacts of the potential development of Edenvale, including the area south of Silver Creek Valley Road.  The EIR described mitigation measures necessary to sustain the potential development of this area.  The project is a mitigation measure under the EIR and will provide infrastructure necessary to open up approximately 160 acres of land zoned for industrial use currently in agricultural or residential use or vacant undeveloped land.  It is estimated that this area will attract over 2.8 million square feet of R&D, office and manufacturing space generating over 9,000 jobs.

 

2.         Whether the proposed project is planned and located in a manner that would be most compatible with the greatest public good and the least private injury.

 

In 1997, a civil engineer was retained to design the proposed roadway improvements.  Several alternatives were designed and evaluated by City and Agency staff.  The selected design of the roadway improvements best met with City transportation and planning requirements, addressed natural constraints to development such as the riparian corridor setback, the Piercy fault line and the existence of high pressure gas pipes, which also allowed for the greatest maximization of developable land in the area.

 

3.         Whether the property sought to be acquired is necessary for the project.

 

The Property being sought is located within the site plan for the proposed roadway and infrastructure improvements.  Without this Property, the roadway and infrastructure improvements could not be constructed.  Given the selected design of the roadway and infrastructure improvements, all the parcels identified for purchase are necessary for this project.

 

4.         Whether the offer required by Section 7267.2 of the Government Code has been made to the owners of record.

 

A title report from First American Title Company, dated November 22, 2000, shows the owner of record of the Property as Terramac Inc., Detrick Corporation, Kenko Utility Supply Inc., and Wageeh H. & Sameha A Tawfik as trustees.  A written offer, in accordance with the requirements of Section 7267.2, was made to the owner of record on the date stated above, based on our appraisal and summary of appraisal.

 

Staff is requesting that the City utilize its power of eminent domain under Sections 1240.010, 1240.110, 1240.120, 1240.125 and 1240.410 of the Code of Civil Procedure, Sections 37350.5 and 40404 of the Government Code of the State of California and Section 200 of the Charter of the City of San Jose, all of which authorize the City to acquire said properties.

 

If a Resolution of Public Use and Necessity is adopted, the City Attorney will then file the necessary papers with the court to commence the eminent domain action.  In the Eminent Domain action, the Agency may deposit an amount of probable compensation and request an Order for Prejudgment Possession, which allows the Agency to take possession of the property even though the ultimate issue of just compensation may not be adjudicated until a later time.

 

The Agency will continue to negotiate with the Owner and to provide relocation benefits for any tenants displaced due to the Agency’s acquisition in compliance with State law and Agency relocation guidelines.

 

PUBLIC OUTREACH

 

Not applicable.

 

COORDINATION

 

Preparation of this staff memo has been coordinated with the Redevelopment Agency, the Office of the City Attorney and the General Counsel’s Office.

 

FISCAL IMPACT

 

The acquisition of the Property will be funded by the Agency with funds already allocated towards this purpose in the Agency’s Fiscal Year 2000-01 Capital Budget (line item: Edenvale: Assessment District/Interchange Improvements).  If the matter is litigated in an eminent domain action, the value of the property will be determined during litigation through a settlement or, if necessary, by the court or jury.

 

CEQA

 

EIR, City Council Resolution No. 69699

 

 

Director of Public Works

 



ATTACHMENT 2

 

PROPERTY INFORMATION SUMMARY

 

Owner(s):                                                        Terramac, Inc., as to an undivided 52.5% interest; Detrick Corporation, as to an undivided 14% interest; Kenko Utility Supply Inc., as to an undivided 13.5% interest and Wageeh H. Tawfik & Sameha A. Tawfik, trustees of the Tawfik Trust Agreement, as to an undivided 20% interest

 

Owner(s) Mailing Address:                           412 Lano Street

                                                                        San Jose, CA  95125

 

Subject Property Address:                            715 Piercy Road

                                                                        San Jose, CA  95138

 

Assessors Parcel Number(s):                        678-09-013

 

Land Size(s):                                                  601 sq. ft. Temporary Construction Easement

 

Description of Improvements

Taken:                                                            None.  Any material damage or removal of personal property and landscaping due to the Temporary Construction Easement will be replaced by the City’s contractor upon completion of construction.

 

Present Use:                                                   Vacant land

 

Zoning:                                                            HS (Hillside)

 

Redevelopment Project Area:                       Edenvale

 

Date of Valuation:                                         7/31/00

                                                                       

Interest Appraised:                                        One year Temporary Construction Easement

 

Highest & Best Use Determination:            Residential Development

 

Environmental Conditions:                            Phase I by Earth Tech, 12/2/99

                                                                        Phase II by Earth Tech, 5/1/00

 

Valuation Conclusion                                    

For the Part Take:                                         Compensation for Temporary Construction Easement for one year: $147 based on 10% of the Fair Market Value of the Part Taken. Rounded up to $500