Grass Valley initiates eminent domain proceedings for sinkhole property | TheUnion.com

Grass Valley initiates eminent domain proceedings for sinkhole property

Eminent domain — the power of government agencies to take private property for public use as long as the government pays just compensation — can be a hot-button topic.

Most recently, NID's Centennial Dam project has raised that specter, with opponents claiming the water agency could force property owners from their homes.

But eminent domain could very well be the route the city of Grass Valley ends up taking, if it cannot come to terms with the owners of the parcel on which a 100-foot-deep sinkhole opened up in January 2017. The sinkhole off Freeman Lane, which was caused by the failure of a culvert under Highway 49, could become the future site of a trailhead leading to a walkway along Little Wolf Creek.

Grass Valley has been in negotiations with Tripp's Auto Body regarding the purchase of a little more than a half-acre of the property and had hoped to conclude the deal by this spring. On Tuesday, city attorney Michael Colantuono told the city council that while the parties are not that far apart in their appraisals, he wanted to proceed with the initial stages of acquisition by eminent domain.

Craig Diamond, the attorney for Tripp's, disputed that assertion and told the council the distance between the two parties' figures was "far from inconsequential." From his clients' perspective, he said, it was not even clear what, exactly, the city proposes taking.

At the city council meeting, Colantuono laid out the sinkhole scenario, which he said began with a substantial storm that caused a drainpipe to fail "rather dramatically."

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The city of Grass Valley took on the responsibility for the repairs, making the decision to sculpt the hole into a stable shape rather than attempt to fill it up, and has been renting the property since then, Colantuono said.

The city's attorney noted the more than $2 million cost of the project could be funded by the Federal Highway Administration but that the city needs to gain ownership of that part of the property within a reasonable amount of time, Colantuono said. According to the packet put together by city staff, an initial offer was presented to Tripp's on Feb. 21. That offer was revised on April 3, and the city sent a letter notifying the property owners of the eminent domain proceeding three days later.

"We made a revised offer, and that still stands," Colantuono said. "We're still hopeful we will reach an agreement … The appraisals are not very far apart."

The attorney told the council members there were several good reasons to start the eminent domain process now.

"We have to show (we have made) diligent progress," he said.

He added other parties with an interest in the property, such as lenders, will respond more quickly to eminent domain proceedings. And, he said, an eminent domain proceeding has some tax benefits for Tripp's.

The council voted Tuesday night to go ahead with adopting a resolution of necessity that stated there is a public need to take the property, public interest was served by taking the property, and the location of project is the best balance of public good and private injury.

Appraisals differ in size of taking, value of land

There are a few issues with the offer being made by the city to Tripp's that remain points of contention.

The city's revised offer shows an appraised value of $525,400 for the 0.60-acre parcel, $20 per square foot. The Tripp's appraiser, according to the letter, valued the land at $25 a square foot, and assumed the parcel was larger than 0.60 acres.

The city added $91,600 in severance damage, while the Tripp's appraiser did not add any value to what was called "excess land," the offer stated. The city then deducted $39,180 from its offer because it was conveying a 5-foot-wide strip of land back to Tripp's, an amount not reflected in the Tripp's appraisal.

Grass Valley's total revised offer for the real estate is $578,820, compared to the overall valuation from Tripp's at $675,000. According to the city's attorneys, that amount decreases to $617,345 if the valuation uses the city's smaller proposed taking, then down to $571,309 if the valuation deducts the benefit for the city deeding back the 5-foot strip.

Diamond told the council that while his clients do not take exception to the necessity of the taking, he would argue there is a substantial gap between the appraisals.

The taking needs to be better defined, he argued, adding, "Surveys (of the proposed taking) are still in progress. Absent that, I don't know how we are going to proceed."

The Tripps certainly remain open to continuing the discussion, Diamond told the council.

On Wednesday, the attorney for Tripp's said the valuation by the city was an issue for his clients.

"A number that to the city may seem inconsequential may be significant to the property owners," he said. "So I beg to differ with that representation."

Diamond said Tripp's has hired a surveyor to go out and actually determine the amount of real estate being taken and from where.

Real estate aside, both parties agreed they are far apart on the amount being offered for economic damages. Neither side would provide a figure.

Colantuono said the city has asked Tripp's to participate in formal mediation for the damages portion. If that issue cannot be resolved, it will probably go to litigation, he said.

"We need to get possession fairly soon," he said. "If we can't reach resolution, it would make sense to take the land by eminent domain. … They may not be willing to sell (the land) without deal on the damages. We think it will be easier to get the deal on the land because we are much further apart on the damages."

While Colantuono did not provide a specific timeline to resolve the negotiations, he said the city did not want to lose out on the federal funding it needs, adding, "We're measuring this in weeks, not months."

Contact reporter Liz Kellar at 530-477-4236 or by email at lizk@theunion.com.

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