01-02-2001 -i
City of west Covina
Memorandum
TO: Daniel G. Hobbs, City Manager
and City Council
FROM: Arnold M. Alvarez-Glasman
City Attorney
AGENDA
ITEM NO. b.-1
DATE 1-2-ol
SUBJECT: ADOPTION OF A RESOLUTION APPROVING A HEARING DATE
FOR THE CONSIDERATION OF A RESOLUTION OF NECESSITY
AND THE COMMENCEMENT OF EMINENT DOMAIN
(CONDEMNATION) PROCEEDINGS RELATING THE VALENCIA
HEIGHTS WATER COMPANY'S CITRUS STREET PROPERTY
SUMMARY: The City Council directed City staff to present to the City Council the
necessary resolution to set a hearing for the consideration of eminent
domain (condemnation) proceedings. The resolution, if adopted, would set
the date for conducting a hearing for the consideration of a Resolution of
Necessity which would commence the condemnation process.
BACKGROUND:
The City has been negotiating with the Valencia Heights Water Company since June 1998
for the purchase of their 9.96 acres of land easterly of Citrus Street and southerly of the
Walnut Creek Channel ("Subject Property"). Currently located at this site are the
Maverick Ballfield and Ridgeriders Equestrian facilities, as well as the Valencia Heights
Water Company maintenance structure, with multiple water wells.
During the course of negotiations the City, through the City Council sub -committee, had
engaged in good faith efforts to reach terms acceptable to both the City and the Valencia
Heights Water Company. In October 1999, the parties had agreed upon a purchase price of
$1,150,000, along with other terms of acquisition. However, before the purchase terms
could be ratified by the City Council and the Valencia Heights Water Company Board of
Directors, the Valencia Heights Water Company rescinded the terms of purchase. After
continued efforts by the City to conclude the agreed upon terms defined in October 1999,
Valencia Heights Water Company, in July 2000, responded by nearly doubling their
demanded purchase price up to $2,280,000. The City rejected this purchase price as
excessive and negotiations have ceased.
On December 12, 2000, the City Council approved a seventh extension to the lease of the
Subject Property. (Currently the seventh extension has not been executed.) At the same
meeting the City Council directed the City staff to present the necessary documents to set a
hearing for the consideration of eminent domain (condemnation) proceedings.
Contained in the seventh extension to the lease (which was also found in the first six lease
extensions) was language that reads as follows: .
"3. Until after the end of the extension period, City will not initiate condemnation
and City will provide VHWC with 60-day notice of intent to initiate condemnation."
While the City Council has approved the extension to the lease, which would provide an
extension to March 31, 2001, the City does not have to sign the seventh extension in order
to start the clock on the 60-day notice provision found in sixth extension to the lease.
DISCUSSION:
Throughout all six -lease extension documents, language has been included which requires
a, sixty-day notice provision prior to the initiation of condemnation. A conservative
reading of this language would require that that the City provide Valencia Heights Water
Company sixty -days notice of its intent to hold the required hearing prior to considering
adopting a Resolution of Necessity. The sixth extension period expired on December 31,
2000. The sixty-day period would commence on January 1, 2001 and expire on Saturday,
March 3, 2001. Accordingly, the earliest the City should set the hearing to consider the
Resolution of Necessity is its meeting of March 6, 2001 (Election Day).
However, an alternative interpretation of the above notice language is that upon the
conclusion of the sixth extension period (December 31, 2000), the original Land Lease and
the amendment/extension terminate. As a result of the termination of the Land Lease and
amendment, the sixty-day notice provision also terminates, and the City Council is free to
set an earlier date for the hearing on the Resolution of Necessity.
If the City and Valencia Heights Water Company have not defined mutually acceptable
purchase terms, the City could then hold the required hearing and consider the adoption of
the Resolution of Necessity, which would allow the commencement of a lawsuit for
condemnation (eminent domain) of the Subject Property.
FISCAL IMPACT:
The actual fiscal impact is difficult to evaluate at this time, due to the variety of outcomes
in this matter. Depending upon the course of action followed, and the outcome of the
litigation process, if condemnation is pursued, the cost of the City will be at a minimum
$550,000 (the value of the City's. appraisal of the + 7.96 acre portion of the Subject
Property assuming development restricted to uses permitted under existing park/open
space General Plan designation), with a possible exposure in excess of $2.28 million (the
value of the Valencia Heights Water Company's June 2000 appraisal, based upon Valencia
Heights Water Company's proposed residential use). The actual cost of acquisition, if the
Subject Property is condemned, will be determined at the time of trial.
OPTIONS:
1. Attempt to continue negotiations with Valencia Heights Water Company for the
acquisition of the Subject Property.
2. Adopt the attached resolution which would rescind the approval of the seventh
amendment to the lease, and which would set a date in March 2001 (or some earlier
date if the City elects to interpret that the notice requirement terminates upon the
conclusion of the extension period) for a hearing to consider the Resolution of
Necessity and the commencement of condemnation proceedings (eminent domain
litigation).
3. Direct the execution of the seventh amendment, and defer the hearing to some date
in the future.
RECOMMENDATION:
It is recommended that the City Council:
AP7 A,90/7At7
Adopt the attached resolution which would rescind the approval of the seventh amendment
to the lease, and which would set a date in March 2001 for a hearing to consider the
Resolution of Necessity and the commencement of condemnation proceedings (eminent
domain litigation).
old M.Alvarez- lasman
City Attorney