June 13, 1995 Los Angeles County TO: BOARD OF DIRECTORS Metropolitan Transportation THROUGH: Authority FROM: 425 South Main Street SUBJECT: UPDATE ON ACQUISITION OF PERMANENT Los Angeles, CA SUBSURFACE EASEMENTS THROUGH THE 9oo~3q393 HOLLYWOODHILLS 213.972.6ooo BACKGROUND At its May24, 1995 meeting, the MTABoard of Directors was requested to hold a public hearing and adopt a Resolution of Necessity authorizing the commencementof eminent domain proceedings to acquire permanent subsurface easements (PSE) from approximately84 properties. The properties are located in the HollywoodHills along the alignment of the Metro Rail Segment 3 tunnel alignment between the Hollywood/Highlandand Universal City stations. Approximately 30 property owners were present at the meeting and addressed the Board concerning the staffs request to initiate condemnation action. The Board deferred any action on the adoption of the resolution for 30 days and requested staff to work with the property ownersduring the 30 days and report back to the Board on all actions taken. ACTIONS TAKEN SUBSEQUENT TO BOARD MEETING The Real Estate, Construction and Public Affairs staffs immediately made plans to hold a communitymeeting with the property owners to discuss the project and to respond to all questions raised by the property owners. A meeting was held on Wednesday, May31, at the CampoDe Cahuenga in Studio City. A meeting notice was sent to all property owner notifying them of the meeting. Approximately 35 property owners attended the meeting. Staff members from Real Estate, Construction and County Counsel made presentations and answered questions raised by the property owners. A written response to frequently asked Real Estate questions was prepared as a hand-out and was distributed at the meeting (Attachment 1). The issues raised at the meeting the property ownerswere primarily in the following areas: ¯ The selection of the alignment through the HollywoodHills. ¯ The involvementof property ownersduring the selection process. MTABoard of Directors June 13, 1995 Page 2 ¯ The effect of the tunnel on the future value of their properly. ¯ The possible effect of noise and vibration from the train operations and MTA’sresponsibility to mitigate damages. ¯ The possible effect of the tunnel construction and operations on the seismic activity in the area. Responseswere given at the meeting and staff is following up with the following actions: ¯ Mailed follow-up package of information to each property owner on June 8 which included materials requested at the meeting related to public participation in the Metro Red Line Project environmentalprocess (Attachment2). ¯ Agreed to prepare deed reservation language which would reserve to owners and to their successors specified rights with respect to the project, particularly with regard to noise and vibration and perhaps other future damageissues. Agreementis being prepared by County Counsel. ¯ Arrangeto have a seismic expert from the California Institute of Technologyaddress the next meeting of the Metro Red Line North HollywoodExtension Citizen’s Committeeand invite property ownersto attend. ¯ Assign MTAReal Estate Staff to complete the acquisition process. RECOMMENDED ACTIONS Staff has reviewed the construction schedule and determined that the construction need date can be divided into two groups. Starter Tunnel Easements July 26, 1995 Running Tunnel Easements October 1, 1995 Based on the revised schedule, staff will recommendthat the request to adopt the Resolution of Necessity presented at the May24th meeting be withdrawn. A new public hearing will be scheduled for the July 26 BoardMeeting to adopt a resolution for the two parcels that are needed for the starter tunnel. MTAReal Estate staff will continue negotiations with those property ownerS~nan effort to complete the acquisition through negotiations. The Real Estate staff will continue to communicatewith the remaining property owners to address their concerns and to complete the acquisitions through negotiations. Those parcels not acquired to meet the October 1, 1995 construction need date will be brought back to the Board at its Septembermeeting. The Real Estate, Construction, Public Affairs and County Counsel staff are committed to continue workingwith the communityto address their issues. Prepared by Velma C. Marshall Attachment "i" RESPONSES TO FREQUENTLY ASKED REAL ESTATE QUESTIONS APPRAISAL QUESTIONS Q1. Will the MTAsend an owner a copy of the appraisal of his property? Uponrequest, owners of one to three dwelling unit properties are entitled to review MTA appraisals of their property. Please note that in this instance, the appraisal is of a subsurface easementfound to have a nominalvalue and is not an appraisal of the full value of the property. Q2. Is Just Compensation based on nominal value or market value? Just Compensationis the fair market value of any taking by the MTAas determined by an appraisal. The offered amount presented to the property owner will be this amount or higher, but never less. Nominalvalue is presumedto exist where there is no perceptible dift~rence in the market value of the entire property, before and after the taking. In essence, the taking has little or no market value. Since under most circumstances, a property owner cannot be expected to convey an interest in property without receiving somecompensation, the appraiser determines a nominal value for the taking that is based upon his research, analysis and experience. Based on the appraisal, the MTAhas determinedthat this nominalvalue is consideredto be the fair marketvalue of the taking. Q3. What market information do you have that shows that a permanent subsurface easement for a subwaymakes no perceptible difference on the market value of the entire residential property? There is no market information that exist for a situation comparable to the type of acquisitions involved here; i.e. the acquisition of extremelydeep subsurface easementsthat run through rock formation. In this case the appraiser had to reach his opinion of value based on conclusions drawn from engineering and environmental studies that (1) the transit construction and operation will not result in any significant adverse impacts from noise or vibration; (2) the tunnel construction and operations will not result in damage existing improvementsnor interfere with the current or future highest and best use of the land; (3) ttiere is no difference in the highest and best use before and after the acquisition and (4) there is no damageto the remainder as a result of the subsurface easement. The appraiser concludedthat the presence of a permanentsubsurface easement will not affect the value of the surface improvements.Market studies that have been performed on land values near or adjacent to rail stations have shownthat properties that are near rail stations have experiencedan increase in value. Q4. Is the nominal value the same for all residential property easements? The nominalvaluation for all "Like" properties is the same. The types of property included single family residences, multifamily residences, and commercialdevelopments. Real Estate Responses Page 2 QS. Are your appraisals done in-house or by independent appraisers? A. The appraisal of the subsurface easements were performed by independent appraisers. Q6. Please identify the companyor individuals who performed the appraisals of our properties? All of the subsurface easement appraisals were prepared by Michael Popwell, CGREA,of Mezaand Madrid Development,Inc., and reviewed by independent, fee appraiser, Taylor Dark, MAI. Q7. Will granting the easementaffect, in any way, the developmentof my property? A. No, the tunnels are so deep, ranging from 150 to 900 feet below grade, that future developmentwill not be affected. QS. In arriving at a nominal value for the easement, were severance damages and/or future damages considered? Yes, the primary function of the appraisal was to determine the fair market value of the subsurface easements and to estimate the severance damage, if any, to the parent properties. A remainder property results when subtracting the permanent subsurface easement from the parent property. The appraiser concluded that there was no differentiation betweenthe remainder properties’ existing utility or use and that of the parent properties before the taking. The only difference found would be the existence of the permanentsubsurface easement itself. Consequently, since there would be no damages to the parent properties, severance and/or future damageswere not warranted. NEGOTIATIONS/ACQUISITION QUESTIONS Q9. Will the MTAaccept counteroffers? Howcan counter offers be made? A. Th~ MTAwill consider counteroffers, particularly if they are accompanied with information that would support the amount of the counteroffer. /vlTA will review the information submitted and determine whether there is a basis to accept the counteroffer. Anycounteroffer should be made in writing to the MTADirector of Real Estate, Velma C. Marshall. Q10. Whathappens if an MTAoffer is rejected? If the MTAoffer is rejected and it appears that a settlement cannot be reached, the MTA Real Estate staff will notify the property owner that a public hearing is being scheduled before the MTABoard of Directors to consider the adoption of a Resolution of Necessity to acquire the property through the eminent domain process. If the Board adopts the resolution, a condemnationaction will be filed with the Superior Court of the Countyof Real Estate Responses Page 3 Los Angeles. However, the