By LORI A. CARTER
THE PRESS DEMOCRAT
The owners of property identified as a future SMART train station in northeast Petaluma say the rail agency has driven them into foreclosure with unfair practices.
The lawyer for longtime owners Patti and Clinton Gow and Robin and Larry Drew said they have lost several commercial tenants on the 6.5-acre site at Corona Road and North McDowell Boulevard.
“It’s been stated from beginning that it is going to be one of the locations” that SMART wants to acquire, said attorney Bob Oliker of Petaluma. “But SMART has never cut a deal, condemned the property, bought it or walked away from the property.
“They’re really holding the property owners hostage.”
Sonoma County Supervisor Valerie Brown, chair of the SMART board, said her agency didn’t cause the property owners’ financial troubles.
“I’m sorry that they put their eggs in that basket, but I think we have acted reasonably,” she said. “We are a public agency using taxpayer funds and want to make sure those funds are being used for the right thing.”
SMART and other public agencies own most of the planned station sites for the line, but not the Corona Road plot. SMART has promoted it as a station site since at least 2005. In May of that year, SMART representatives said the Petaluma site would be among the first land acquisitions.
Preliminary designs have been done for a Corona Road station, along with 13 others along the planned route from Cloverdale to Larkspur. Community meetings have been held in Petaluma on how the station should be designed.
Still, Brown said, the Corona station, which has been deferred as part of cost-saving measures, “isn’t even in the game” as far as real estate negotiations go.
“Even the details of the sites we’ve decided to include are still up in the air,” she said. “A lot of the particulars for every of those sites are still to be determined.”
Oliker said SMART has completed an appraisal of the property, but hasn’t entered into lease or purchase options with the property owners.
That has scared off existing and potential tenants because of the uncertainty of how long they would be able to operate there, he said.
The owners contend that they have lost more than half of their commercial tenants and have lost out on development deals for the property because SMART has discouraged potential partners.
“It is very common for these things to take time,” Oliker said. “Public agencies have a lot of leeway under the law to do their planning, and that’s appropriate and the property owners have to deal with it.
“But there is a time where it becomes unreasonable,” he said. “It’s been at least five years and SMART won’t commit to buy, but won’t let them sell or develop it, and that becomes unreasonable.”
The lost income has caused the owners, all longtime Petalumans, to fall behind on mortgage payments, said their lender, Jeff Mayne of Excel Mortgage Solutions in Petaluma.
The property fell into foreclosure this summer and was slated to be auctioned off last month.
According to Sonoma County records, the site has an assessed value of $824,069, while the he mortgage and interest due is $925,000, according to Redwood Trust Deed Services Inc. of Santa Rosa, which has been hired to conduct the auction.
The auction was canceled as the owners explored their options, Mayne said this week.
On Monday, Mayne sought help for the owners from the Petaluma City Council.
“They’ve been in contract several times with developers and each one of which has reached out to SMART and tried to cooperate in a development that would include a train depo,” he said. “According to at least one of those developers, they were rebuffed even after they offered a multi-story parking garage.”
Councilman Mike Healy, a former SMART board member, said, “We all recognize that SMART has its own financial constraints these days. But if the property owners are willing to enter into a lease option or purchase option, that might be something that would work for SMART.”
He said a deal could solve multiple problems. It would firm up the site and possibly give SMART room for a temporary storage and maintenance yard.
“And third, if there is a claim that they interfered with the property owners’ ability to do anything with it by identifying it as a station site for the last year and thus scared off potential purchasers, an agreement would solve that,” he said.
SMART authorized a bid for the property when it was scheduled for foreclosure auction on July 21, Brown said. Mayne said the opening minimum offer was $925,000.
Due in part to that knowledge, Oliker called SMART’s delays improper.
“For them to not work with the owners and then try to pick it up for a fraction of its fair value isn’t right,” he said. “They’re still out there looking as if they’re going to buy, but they are waiting to swoop down and pick it up at for as little as they can, and that’s not way government should do business.”
According to SMART documents, its property acquisition plan includes negotiating with property owners before ultimately moving to condemn the property under eminent domain laws.
“SMART will make every effort to acquire property rights through a negotiated agreement with mutually acceptable terms, and avoid future litigation,” the guidelines state. “If both parties cannot resolve the terms of an agreement through a negotiated settlement, SMART will complete the acquisition by eminent domain to further advance the project toward completion.”
Oliker said he is exploring legal options under a property-rights precedent set by the state Supreme Court.
“If a public agency acts unreasonably in dealing with a parcel it intends to acquire, it can be liable for damages,” he said. “It appears to me that SMART has not acted reasonably with these property owners.”
“Corona wasn’t even in our picture,” she said. “It was certainly put in a place a long time ago, but it wasn’t something we were actively thinking about until this foreclosure came up.”