When the state wants to build a highway on a recalcitrant homeowner's land, there is a simple solution. The house is condemned and its owner offered the fair market value.
Today, the ports of Long Beach and Los Angeles want to build what is widely regarded as a key transportation link in the state--the Alameda Corridor, a modernized rail line to connect the ports with Downtown.
But the landowner--Southern Pacific Transportation Co.--has set the price at $260 million, more than four times the appraised value of the land.
Even though negotiations broke down last week, officials may soon acquire a tool that they said would allow them to push the project through. The Legislature has sent a bill to Gov. Pete Wilson that grants the state the right to use eminent domain to acquire the right of way.
Wilson has not taken a position on the bill, which he must decide on no later than Tuesday, said J. P. Tremblay, his spokesman.
The bill is expected to be a tough call for Wilson, who has promised to revive the California economy and who has maintained close ties to the business community. This bill, however, cuts both ways--potentially aiding many businesses while angering one--Southern Pacific.
Southern Pacific officials oppose the legislation, saying they are entitled to be justly compensated for relinquishing the rail line, which would be modernized but shared with two of the firm's competitors.
"It's unfair; (the bill) is hostilely singling out an industry that doesn't deserve to be treated that way," said Bob Starzel, vice chairman of Southern Pacific. "We are selling a corridor that's an integral part of our business, a key element of our business."
The 20-mile, $1.8-billion Alameda Corridor is designed to allow three railroad companies--each of which has its own set of tracks--to ship cargo to and from the ports on rail lines. Today, trains travel as slowly as 5 m.p.h. on tracks that crisscross roads, frequently tying up traffic. Not all the cargo goes by these slow trains--some 20,000 trucks daily travel between the ports and Downtown over what are often crowded streets and freeways, said Gil Hicks, executive director of the Alameda Corridor Transportation Authority.
The antiquated system, some say, could put Southern California at a disadvantage with other West Coast ports that promise to establish more modern facilities.
The proposed Alameda Corridor is designed to ease congestion, eliminating the need for trucks and allowing trains to travel in open trenches at about 40 m.p.h. The project is expected to create 10,000 immediate construction jobs and 750,000 long-term jobs in the region.
Last week, officials with the Port of Long Beach ended negotiations with Southern Pacific. Only weeks earlier, officials with the Port of Los Angeles stepped away from the bargaining table. Under a tentative agreement with the railroad, port officials had until last Thursday to close the deal, which had come under close scrutiny by Mayor Richard Riordan's newly appointed harbor commissioners.
When the railroad began negotiating with port officials, it demanded $500 million for the right of way. The State Board of Equalization valued the land at $60 million. The Alameda Corridor Transportation Authority appraised it at $78 million. After one year of negotiations, the price tag was tentatively set at $260 million--an amount that critics have called profiteering.
"The price that was being discussed was grossly excessive," said Daniel Wm. Fessler, president of the state Public Utilities Commission. "Because what is the public acquiring? They are acquiring the liability for the existing corridor, the burden for improving it and when it's improved, among the principal chief beneficiaries would be the current owner, Southern Pacific Railroad."
Southern Pacific, a longtime campaign contributor to Wilson, donated $25,000 to Wilson's ampaign last year and $20,000 in the three previous years, according to campaign disclosure records. The railroad has donated more than $200,000 to California legislators in the last eight years, records show.
The bill before Wilson, authored by Assemblywoman Juanita McDonald (D-Carson), would allow the state to condemn the Southern Pacific land and purchase it for fair market price.
If the bill is signed, it would be the first time that the principle of eminent domain has been used against a railroad in the state, according to state officials.
Ironically, when railroads first began setting down tracks, some residents declined to sell key parcels of land or offered them at exorbitant prices. The power to take private property for public use was then developed.
Other states, such as Texas, have that power through rail authorities, said Warren Weber, director of legislative affairs with the Department of Transportation in Sacramento.
Tom Houston, a lawyer negotiating for Southern Pacific, said the bill would increase the cost for the land.
"They'd be condemning both the property and Southern Pacific's business," said Houston, contending that this would raise the price to well over $500 million and tie up the project in legal battles.
But McDonald vows that the legislation would get the Alameda Corridor project back on track, and would allow the purchase for less than $100 million.
Although the federal Interstate Commerce Commission has ultimate jurisdiction over the railroad industry, McDonald said Transportation Secretary Federico Pena had assured her that the federal government will not interfere.
"Southern California has experienced tremendous unemployment," McDonald said. "We can ill afford an opportunity like this to be passed up."