The battle isn’t over for the Grant Road farm — city officials say it’s still very possible that five of the 15 acres could be zoned for agricultural use.
Owners Pauline King and Betty Moore warned at the May 8 City Council meeting that any further delays in annexing the agricultural land for housing development would place “an economic burden on two senior citizens.”
The Mountain View Farmlands Group — a citizens’ group advocating some farm use of the land — had proposed that the sisters donate five acres, worth $18 million, to be kept as farmland. The donation, the group suggested, would allow the sisters to receive a tax deduction worth as much as $8 million.
The idea was harshly criticized by the owners’ attorney, Lex Watson, who said the sisters would not qualify for such a deduction.
City Attorney Michael Martello confirmed that a tax deduction would not be allowed by the IRS because the request would be linked to a development.
“Even if they wanted to do it … it would be disallowed; that’s my understanding,” Martello said. “People have tried to do it in the past. If it is connected at all to a development proposal, they universally say no to it.”
Martello also said that whether the owners can receive tax benefits “should be of no concern when the city makes it decision.”
Council member Matt Pear said he “respectfully disagreed” with the city attorney’s analysis.
“In essence, what you are doing is an eminent domain action,” Pear said. “Basically you can’t force someone to be in a business. You can’t force someone to sell land either. That means it’s a public taking. I think this would go to a jury trial. The jury would ask ‘what’s the surrounding zoning?’ It’s an eminent domain action cloaked in a rezoning verbiage. That sums it up I think.”
Council member Jac Siegel, often seen as the swing vote on the issue, explained what he understood after doing his research.
“The key operative is, we can do whatever we want,” Siegel said. “(The owners) don’t have any entitlement for the land. The argument people are missing is that the land could be zoned R1-8 (low density homes) and five acres for farm land. Anything is an option.”
As far as the zoning’s being a “taking,” Siegel said, “you can’t take something away from somebody that they don’t have.” Siegel confirmed with the city attorney at the packed May 8 meeting that the owners have no entitlements to the land, meaning they aren’t guaranteed the residential pre-zoning assigned by the city in 1982.
Watson, the sisters’ attorney, said that when they inherited the land in 2004, the land was assessed at its “highest and best use” and that liens have been put in place until the sisters pay the taxes. In 2003 the land was assessed at $27 million but the Farmlands Group believes the land could be worth as much as $50 million to owners, depending on how it’s developed.
SummerHill Homes is planning for 55 homes on the 15 acres, which could sell for $1.4 to $1.8 million each, according to the Farmlands Group.
An agricultural zoning would drastically lower the value of the five acres, but would make it affordable for those who might want to operate a farm. Full Circle Farm in Sunnyvale has already expressed interest. Watson threatened on May 8 that if the five acres were zoned for agriculture they would never be farmed because the owners are not farmers.
Siegel commented on the financial situation of the sisters, who own real estate throughout the city.
“They’re land investors,” he said. “If they sold the land 10 years ago they would have gotten half what it is today. Wait another 10 years and it will double.”
According to documents from the county recorder’s office, the sisters inherited $33.9 million worth of stocks, cash and property when their mother, Anne Mardesich, died in 2003. Of that sum, several million are in bank accounts and stocks, $27 million is listed for property at the farm’s address at 3119 Grant Road, and six other pieces of property in the city, including four on El Camino Real, total $3.8 million.
Watson said it wasn’t really his business to know everything about his clients’ financial situation, but pointed out that the sisters are responsible for $12 million worth of tax liens that are accruing $2,000 to $4,000 in interest every day they aren’t paid. He also said that the $33.9 million in inherited assets are for the Mardesich family, and that Moore and King are simply the administrators of the estate.
The 15 acres on Grant Road have yet to be annexed from the county, but once they are, any zoning put in place must remain for two more years.
If the city does choose to zone five acres for agricultural use, Martello said, restrictions on future uses, such as a park, would be up to the council to decide. Neighbors have expressed concern about what would happen if the proposed farm business ever went “belly up.”
The council will direct city staff on whether to study an agricultural zoning June 5.
E-mail Daniel DeBolt at ddebolt@mv-voice.com
