Analysis: Is the Gold Line Settlement a Good Deal for Taxpayers?
The Gold Line Construction Authority settled a lawsuit to acquire land last week, paying four times what it is worth. Was that the only course of action left?
The way attorney Robert Silverstein tells it, he and his client have been asking for $24 million for the last two years.
Silverstein represents George Brokate, a local property owner who repeatedly sued Monrovia and the Gold Line Construction Authority in an effort to keep his land from being seized via eminent domain. Though Silverstein positioned his client as a crusader against government abuse, there was a price he'd accept to make all the lawsuits alleging corruption and mismanagement disappear.
Last Thursday, the GLCA agreed to pay it.
"We did not come down one penny," said Silverstein in an interview. "They should have done the right thing from the beginning."
Instead, the GLCA fought Silverstein for the last two years, piling up attorneys fees before settling for the same price--$24 million--that Brokate had always asked for. The price was more than four times what the property was appraised for by the Gold Line.
The question becomes, then: Why didn't the GLCA save itself the time and money by buying out Brokate two years ago?
Habib Balian, CEO of the GLCA, said his agency believed the lawsuits to be without merit but stressed that officials needed time to weigh the costs of litigating against paying a settlement.
"These things have to evolve, you have to get to a point where you can justify settling," Balian said. "I think you just have to wait. You have to get more information."
The GLCA lawsuits eventually came to a point where it became possible that they could significantly jeopardize the future of the $735 million Foothill Extension project, Balian said.
"There were scenarios where the project could have been delayed two years," Balian said. "If the lawsuits played out in court ... we would have had to stall our schedule. If we had to do that and pay any delay damages to the contractor or be in a psoiton where we would have to cancel the project, it could have cost the project a $100 million and a two-year delay."
Silverstein maintained that the Gold Line always had two options: Carve his client's land out of the project, which the GLCA insists was impossible, or pay his client at the rate it agreed to pay Monrovia. The GLCA reached a deal to pay about $56 million to acquire 14 acres of land from the city for its maintenance yard project, a sum well beyond what the land was worth.
"I think [$24 million] is a reasonable price, and that was in part based upon the fact that we were seeking parity with what the Gold Line intended to pay Monrovia for its neighboring property," Silverstein said.
Now that Brokate's suits are settled, the deal with Monrovia remains the last major hurdle for the GLCA to clear. Because the GLCA reached that deal with Monrovia's redevelopment agency, and a state law has rendered that agency defunct, Gold Line officials are now pursuing eminent domain action against Monrovia to acquire the land.
The two sides maintain that their original, all-inclusive price of $56 million remains on the table. Balian said the ideal course of action is for the GLCA to reach a settlement with the city for that amount in eminent domain proceedings.
"That's the most efficient way of getting access to the property on our schedule," Balian said.
Once that land is acquired, the Foothill Extension should be on schedule and under budget, Balian said.
"I think all the pieces are coming together," he said.
Chris Ziegler
9:42 am on Wednesday, February 15, 2012
I think the taxpayers over-paid for the land. The most upsetting element of this debacle was hearing that our city made a promise in the past to not take Mr. Brokate's property by ED and then appeared to break that promise and not apologize or sound remorseful about the fact. So I can understand why Mr. Brokate, a Marine, would take exception and become combative. It has been my experience that sometimes a softer, kinder position in business works.
Joe Black
1:06 pm on Wednesday, February 15, 2012
Well put Chris
Stephen McCarthy
10:33 am on Wednesday, February 15, 2012
The LA Times FINALLY got wind of this and published the "news" in today's paper. Nice going Nathan on keeping us informed ahead of them. The tone of the Times article was kinda "Somewhere, out beyond the Pale of the I-5..." If, indeed the $24mil is "in line with" what the GLCA was paying for city owned land, it's then a fair deal, but I'm no Real Estate expert. It does have the stench of extortion. I just hope I'm still around when this gets done. It's a needed project and is money better spent than on ever expanding the freeway system.
Pam Fitzpatrick
11:24 am on Wednesday, February 15, 2012
A message for Mr. Silverstein and Mr. Brokate: you get your money, but don't hand us the "I'm a Marine just doing the right thing" story. You cost Monrovia taxpayers a bundle and donating to charity won't fix that.
Joe Black
1:08 pm on Wednesday, February 15, 2012
Pam, we all know you blindly support Mayor Lutz and the City staff. Bashing someone like Mr Brokate for fighting for their rights is just pathetic.
Robert Parry
2:06 pm on Wednesday, February 15, 2012
How did Mr. Silverstein cost tax payers money? He didn't write the check. Why should he accept less than market value. You don't seem terribly bothered that the City itself got more than the land it sold was worth. If anything, that set the stage for Silverstein to profit. If the city got a fair value, then didn't Mr. Silverstein deserve the same?
Tom Adams
2:32 pm on Wednesday, February 15, 2012
Robert, actually the city has not sold anything so your statement that the city got more than the land was worth would be incorrect. Silverstein got 4 times the appraised value. The sad part is that the Gold Line will spend some $100 Million Dollars of transportation money and the landed net gain will be a park in Los Angeles, that is what this is all about and always has been.
Robert Parry
2:46 pm on Wednesday, February 15, 2012
"The GLCA reached a deal to pay about $56 million to acquire 14 acres of land from the city for its maintenance yard project, a sum well beyond what the land was worth."
So are you saying that statement from the article is wrong, too?
Tom Adams
2:54 pm on Wednesday, February 15, 2012
Robert, not sure what the article says, I tend to get my information a little more factual that any news source. The city has sold nothing to the Gold Line so your comparison would be incorrect
Jerry A
3:34 pm on Wednesday, February 15, 2012
Ms Fitzpatrick, your insult against Capt. Brokate is an insult just not against Brokate but all Marines ( we are all around Monrovia ) and also against all Americans who wore the uniform and stood post so you could exercise your Constitutional right of freedom of speech to insult us. We Marines are proud of our service, just as soldiers, sailors and airmen are of their service to country and have endured assaults by our fellow Americans going back to the Vietnam war by being stabbed in the back by our fellow Americans on the streets of America and some returning vets actually being spat upon. As a fellow Marine ( 68- 71 ) I stand by Capt. Brokate that he stood up too the MGLCA, the Monrovia City Council to defend his personal property rights under the Constitution. Damn, it was us who have been there and done that. It was us who fought defending that Constitution. If you would have ever served you would understand.
SEMPER FI
Stephen McCarthy
1:18 pm on Wednesday, February 15, 2012
When ever anyone says "It's not about the money..." it's ALWAYS about the money!
Bryan Faragher
2:30 pm on Wednesday, February 15, 2012
I'm not a big fan of eminent domain, especially the way it's being used in other states to build privately owned toll roads. I'm not the biggest fan of the Gold Line extension either, the way the Los Angeles Pasadena Blue Line Construction Authority cut corners that later cost taxpayers a fortune in retro-fitting and lawsuits, and it is the only Metro Line that is under capacity and helped undermine the case for a train in the San Fernando Valley (we got stuck with a bus line that is over capacity). That being said, I have taken the Gold Line and I enjoy it. I have friends that rely on it and I'm convinced that it has been for the greater good of Los Angeles County. Sometimes, to quote that corny line, the needs of the many outweigh the needs of the few and getting four times market value because you think you're some kind of libertarian warrior who just happens to have a price is just ridiculous. You either sell out or you do what's right, you can't rip off the tax payers and then later claim you're doing what's right! And you know he ripped off tax payers because he didn't compromise and got his inflated asking price.
Jerry A
4:11 pm on Wednesday, February 15, 2012
Bryan, I think most Americans are against the use of eminent domain. It has become a dirty word in America. Eminent domain had a purpose at one time but it has been abused not by the Federal Government and not so much by the states but by county and municipal governments and agencies. In California it was the redevelopment agencies who abused the use of eminent domain. Some redevelopment agencies including the former Monrovia Redevelopment Agency actually condemned private property for private development.
What it's starting to look like, someone may have had a financial gain if the Gold Line maintenance yard was built in Monrovia instead of where it should have been built. The future site in Monrovia just doesn't make any sense at all. Why would some individuals fight so hard to have the maintenance yard built in Monrovia ? Why would the City Council not uphold the written agreement that they had with Mr. Brokrate ? Maybe it is time for the L.A. County DA office to conduct an investigation ? By the way, if a private developer would have paid $ 24 million for Brokate's property. it would be valued at that price and taxed at that value, correct ?
Chris Ziegler
3:37 pm on Wednesday, February 15, 2012
Tom,
Can you please kindly provide more information than just a simple denial of the transaction? For example, who currently owns the property formerly held by the Monrovia Redevelopment Agency? Would I be correct in guessing the successor agency? And I again I'm going to guess; while the details are not settled, there is in spirit, an intention to sell said property to the GLCA or other entity that will ultimately become under the control of the MTA? If I am any where in the right ballpark can you share the dollar amount in USD. I too appear to have been misinformed by news reports. Thanks!
Tom Adams
3:47 pm on Wednesday, February 15, 2012
Chris, it is pretty hard to prove the deal that didn't happen, but it didn't. As for who owns it, I think if you look at the title it is held by the Monrovia Redevelopment Agency, which is now defunct. Since there is no deal in place I am unable to tell you how much the deal that dooesn't exisit might be for. I guess part of my point to Perry is to not lay blame based on news reports, you know the old saying, believe none of what you hear and only half of what you see.
Robert Parry
4:14 pm on Wednesday, February 15, 2012
I didn't blame anyone. Quite the opposite: Pam blamed Mr. Brokate for "costing the taxpayers a bundle." I certainly don't recall you jumping up and down that the price the RDA was negotiating was too high. That would be an abdication of your fiduciary duty.
Mr. Adams, as you are well aware, having run a large real estate business (perhaps the purest market-driven business model), of the axiom "the price of something is what somebody else is willign to pay for it." When is the last time you encouraged a client to sell cheaper in the presence of a willing buyer?
Mr. Brokate took a risk buying that property. There was no guarantee he would make a nickel off of it. Criticizing him for risk, foresight and good fortune is ridiculous.
Tom Adams
4:17 pm on Wednesday, February 15, 2012
Robert, I was never critical of Brokate, I was critical of your statement "City itself got more than the land it sold was worth" and only said that the city didn't sell so your statement must have been incorrect, I have been critical of the "deal" from the beginning.
Gayle M. Montgomery
5:03 pm on Wednesday, February 15, 2012
I ride the Gold Line regularly, M-F, to Downtown LA, and use many of the other rail systems for transportation. They are great conveyances, and help to mitigate congestion on the highways and the pollutants that derive therefrom. There is economic merit in sustaining this type of transit, and I look forward to the day it extends, as intended, all the way to Ontario Airport.
For me, this isn't the issue of an intransigent Marine, but rather a mass transit system that stood to be derailed if the deal fell through which could have a cataclysmic effect on future transit and revenues that inure to cities along the route. I'm sorry it cost so much, but this is an expensive project well under construction, and I don't think the agency saw any way around it. My fear is that transit rates will go up substantively to pay for this kind of capital outlay.
While I certainly thank Mr. Brokate for his service, I don't see how this is a God and Country kind of thing and that someone who did not fight might not feel as does he. Having been displaced by eminent domain years ago, I understand the concept. It can be unpleasant, and yet, in the end, the aesthetics are often improved.
Jerry A
9:25 pm on Wednesday, February 15, 2012
Gayle, you called Capt. Bograte an "intransigent" Marine ? If he was intransigent he wouldn't be a Marine. It would be in conflict with the Marine Corps, Semper Fidelis that distinguishes the Marine Corps bond from any other. It goes beyond teamwork, it is a brotherhood that can always be counted on. It guides Marines to remain faithful to the mission at hand, to each other, to the Corps and to country, no matter what.
A Marines commitment is the spirit of determination found in every Marine. It is what compels Marines to serve our Corps and country, and to continue on when others quit. Bograte didn't quit until he won the battle of defending his property rights.
Marines don't win wars, they win battles. Is there another battle lurking over the horizon ?
Gayle M. Montgomery
9:46 pm on Wednesday, February 15, 2012
@Jerry, on March 23, I am attending a funeral for an ex-beau and long-time friend at the VA Cemetery in Riverside. He's being buried at Arlington, but these knees don't tolerate snow. That dear friend was a Jarhead for 24 years. We were friends for the last 24 years of his life. I understand through and through the ways of a Marine. Trust me. Semper Fi. That same Marine is now memorialized in an artwork at Quantico.
But we're engaging in a game of semantics here. My definition is this from dictionary.com, and I stand by my contention. Mr. Brokate held steadfast to a battle that was costly to many.
intransigent (noun) "2. a person who refuses to agree or compromise, as in politics."
kevin obrien
5:15 pm on Wednesday, February 15, 2012
Didn't the Gold Line file an eminent domain action against the holdings of the city/redevelopment agency? While Ochoa left us with a $59 million dollar "agreement in concept" for the property, the deal has yet to be consumated. My guess is that the authority didn't mind overpaying Brokate because they plan to get even when they buy our property. Pam is correct, it is the community that will ultimately lose. We get stuck with the maintenance yard, and no money to compensate for loss of future sales and property tax revenues.
In reality, both the city and Brokate tried to extort the gold line. Silverstein did a better job. The gold line has decided to battle only one party in court...the city. Ochoa's missteps seriously weakened their ability to legally condemn Brokate's property so they made the strategic decision to go after us. The city will ultmately get much less then promised, and will have a eye sore for years to come. Thanks Scott!
SoCal Tom
1:28 am on Wednesday, May 2, 2012
I do not see why the Gold Line needs a second maintenance yard. They already have one. It's near the I-5 and 110 interchange, alongside the LA River. Metro's Blue Line has one maintenance yard that also serves the Green Line. Building a second maintenance yard seems to be wasting money. Let the city use that property to build something Monrovia really needs, like high rises and more stores. Let Old Town open more antique stores and hair salons. That's what Old Town really needs.
It would appear that our illustrious leaders forgot what was in Old Town to begin with; like a camera shop, a record store, a hobby shop, McBratney's, JC Penney's, Grant's Five & Dime, Anita Dress Shop, Kirby Shoes, two bowling alleys and more.