Eminent Domain Report

According to Jason Henry's article in the San Gabriel Valley Tribune, West Covina contests condemnation of properties at Westfield Mall, Lakes Drive, the City of West Covina plans to contest an eminent domain action filed by the California Department of Transportation (Caltrans) to acquire land near Westfield Mall needed for the expansion of the I-10 Freeway.  

Caltrans' proposed acquisition will eliminate a California Pizza Kitchen, the former Bob's Big Boy building, an AT&T store, as well as a row of parking spaces along the I-10 near Lakes Drive.  The City claims that Caltrans' valuation hugely misses the mark; City Manager Chris Chung claims:

They're not fully compensating fair market value for the land.  They're only looking to compensate us a tenth of the value."

The City is apparently upset that Caltrans previously made a higher offer for a smaller portion of the property, but later came back seeking a larger piece at a lower value.  The City also believes that Caltrans' acquisition will leave an uneconomic remnant, as the condemnation will eliminate buildings but leave a parking lot that will serve no purpose.

Perhaps making matters more complicated, the property is owned by the City's successor agency (after the redevelopment agency was eliminated), but it is leased back to the City, which then sublets the property to the businesses.  That will make for an interesting apportionment of the ultimate acquisition price, between the successor agency (as owner), the City (as master lessor), and the businesses (as subtenants).  There may be claims for the real estate, leasehold bonus value, business goodwill, and furniture, fixtures and equipment.

And, if that isn't messy enough, Bob's Big Boy apparently closed partially in anticipation of Caltrans' condemnation action, raising potential claims for precondemnation damages.  This will be one worth following.

Caltrans' I-10 Freeway expansion -- a $165 million project -- is intended to reduce congestion by adding a carpool lane in each direction from the 605 Freeway to the 57 Freeway.  Caltrans anticipates finishing the first phase of the project by the end of 2013, with the second phase to follow shortly thereafter.