City is correct to initiate eminent domain process
Jun 29, 2009
Two sides, two appraisals
The city is between a rock and a hard place in its latest effort to increase parking in downtown Morgan Hill. In the past, city officials have been criticized - fairly - for paying too much for property. Now, in some circles, they are being criticized again for holding the line and trying to get a good deal with taxpayers' money for a rental home they'd like to demolish to make room for eight parking spaces.
A little background is in order. Sometime in 2008, the city offered Dwight and Lola Jungkeit $525,000 for their 35 E. Third St. rental property, and the Jungkeits made a counter offer of $730,000, according to a December e-mail exchange between Jungkeit and David Heindel, the assistant to the city manager for downtown development. Dwight Jungkeit says that the city has never raised its original asking price in the two years he's been in negotiations. On Wednesday, city council will consider adopting a resolution of necessity, after which the city would have six months to file for eminent domain with the court. In the meantime, negotiations will continue and if an agreement is made before the city files, the eminent domain will not be pursued.
That's not all: The city and the Jungkeits have obtained competing appraisals for the property. The city declined to reveal its appraisal, but the Jungkeits' said their appraisal, which valued the parcel as a commercial property, came in at $730,000.
More parking will be needed
This purchase is prompted, in part, by the many vocal critics who have insisted that the downtown needs more parking, and will need hundreds of more spaces in the future when 500 downtown residential units are occupied. The city has already made several purchases, including the lot that's currently home to Simple Beverages at the corner of Third and Monterey for $1.5 million. That property will add as many as 30 spaces downtown. In June 2008, the city spent $683,000 to purchase the property next to Sinaloa Cafe that will provide as many as 30 spaces. In May 2008, the city also bought the two-acre lot at Depot and Third streets for $1.1 million, which created about 90 spaces. Clearly, adding parking downtown is a public project that enhances the public good in Morgan Hill, making this purchase an appropriate candidate for using eminent domain if necessary.
Dollars and sense
With a willing seller and an interested buyer, the real question to ask is how much to pay for the property?
The seller knows the city wants the land. The city knows the owners are willing to sell. The city is in a difficult negotiating position because it cannot operate in the dark, which is appropriate because taxpayer monies are involved. Eminent domain is a way to even the playing field. It's not unlike labor negotiations, where frequently one of the first things a union does is vote to authorize a strike. That is the hammer the union has. Filing for eminent domain is the city using a similar hammer.
The city is entirely correct to initiate the eminent domain process. However, the city should continue to negotiate with the Jungkeits. In the meantime, however, it would be nice if the two parties can avoid lining lawyers' pockets by involving the court system. It will be best for the sellers and the buyer if they can settle at a price in the middle of the two competing appraisals - somewhere in the neighborhood of $612,500 - for this purchase. Sounds fair, to boot.
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