County of San Diego v. Rancho Vista Del Mar, Inc.

• Decision Date: 23 June 1993
• Docket Number: No. D014096,D014096
• Citation: 16 Cal.App.4th 1046,20 Cal.Rptr.2d 675
• Parties: COUNTY OF SAN DIEGO, Plaintiff and Appellant, v. RANCHO VISTA DEL MAR, INC., et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

Page 675

20 Cal.Rptr.2d 675

16 Cal.App.4th 1046

COUNTY OF SAN DIEGO, Plaintiff and Appellant, v. RANCHO VISTA DEL MAR, INC., et al., Defendants and Appellants.

No. D014096.

Court of Appeal, Fourth District, Division 1, California.

June 23, 1993.

As Modified on Denial of Rehearing July 13, 1993.

Review Denied Sept. 16, 1993.

Lloyd M. Harmon, Jr., County Counsel, Diane Bardsley, Chief Deputy County Counsel, Lewis P. Zollinger, Deputy County Counsel, San Diego, Matteoni, Saxe & Nanda, Norman E. Matteoni, Peggy M. O'Laughlin, San Jose, Endeman, Lincoln, Turek & Heater, Ronald L. Endeman, Donald R. Lincoln and David Semelsberger, San Diego, for plaintiff and appellant.

Daniel E. Lungren, Atty. Gen., Marvin Goldsmith, Asst. Atty. Gen., Robert H. Francis and Marsha S. Miller, Deputy Attys. Gen., Los Angeles, B.C. Barmann, County Counsel (Kern) and Mark L. Nations, Bakersfield, as amici curiae on behalf of plaintiff and appellant.

Thorsnes, Bartolotta, McGuire & Padilla, Michael T. Thorsnes, Vincent J. Bartolotta, Jr., Haskins, Nugent & Newnham, Michael H. Fish, San Diego, Crosby, Heafey, Roach & May, Gideon Kanner, Hufstedler, Kaus & Ettinger and Otto M. Kaus, Los Angeles, for defendants and appellants.

KREMER, Presiding Justice.

The primary issue presented by this case is whether a property owner whose land is condemned for a jail may value his property based on a highest and best use as a private detention facility. We conclude the answer is no and therefore reverse.

FACTS

The property here is a parcel of about 525 acres of primarily vacant, undeveloped property in the Otay Mesa area of San Diego County. About 200 acres had a grade change of less than 25 percent and was considered "usable," the remaining land had a grade change of over 25 percent. The property was zoned as a holding zone for future residential development requiring minimum lot sizes of two to twenty acres depending on the percentage of slope on the particular lot. Access to the property was on a graded dirt road. The property lacked a sewer connection.

Roque De La Fuente bought the property at a bankruptcy sale as part of a larger parcel of about 3,900 acres bought in 1982 for $13 million. ¹ He believed he was purchasing the property for 20 to 30 percent of its true value. At the time he bought the property, the State of California was interested in locating a state prison in the Otay Mesa area. De La Fuente offered to sell the property to the state. The state preferred a site separated from the subject property by a canyon. In 1983, De La Fuente exchanged some of his property for state-owned property located near the Mexican border. Some cash was also involved in the transaction. De La Fuente eventually constructed an industrial business park on the property obtained from the state near the Mexican border. In 1985, a border crossing opened in Otay Mesa.

In April 1985, De La Fuente entered into an agreement with Wackenhut Services, Incorporated (Wackenhut) to submit a proposal to the Immigration and Naturalization Service (INS) for a 200-bed facility to temporarily house illegal immigrants on 20 acres of De La Fuente's property. This property was different from the land condemned in this case. De La Fuente agreed to construct the facility on his property and Wackenhut agreed to manage the facility. The parties agreed to grant each other first right of refusal for five years to participate in any further detention projects located in San Diego or California in which the other was involved. INS rejected the De La Fuente/Wackenhut proposal because the property did not have sewer facilities and De La Fuente did not anticipate a sewer connection until after the state prison connected to the sewer, which was about a year away.

In late 1986, De La Fuente and Wackenhut proposed the same 200-bed detention facility to temporarily house parole violators (a "Return to Custody" or "RTC" facility) to the California Department of Corrections to be built on De La Fuente's land not involved in this case. After the state approved the initial proposal in early 1987, De La Fuente and Wackenhut submitted a formal proposal. In April 1987, the state wrote Wackenhut that "recent political developments in the area have dictated that we wait until this fall to resume our activities."

During 1987, the County of San Diego (county), state and Wackenhut entered negotiations for a 200-bed RTC facility to be operated on four acres of property which the county proposed to take from De La Fuente. There was a proposal the county charge the state $180,000 for a ground lease if a 200-bed facility were built and $280,000 for a ground lease if a 400-bed facility were built. The county also wanted the state and Wackenhut to construct the facility and turn over ownership of the building(s) to the county at the end of 10 years. The state did not accept the county's proposal because financing was not available and because "they wanted to get more for using the same type of land" and had objections to the county retaining the building at the end of 10 years.

During the mid-1980's, the county selected the Otay Mesa area as a possible site for a new detention facility. In 1984 or 1985 De La Fuente approached county officials and sought to sell some of his property to the county for a jail site. By 1986, the county had chosen De La Fuente's property for a future jail. After negotiations to purchase the property from De La Fuente failed, the county board of supervisors passed a resolution of necessity to acquire De La Fuente's property in June 1987. On September 16, 1987, the county filed this proceeding for eminent domain and deposited $6.4 million as probable compensation so it could obtain immediate possession of the property. ² The county's plan was to build a facility with space for 1,040 inmates in phase two. The second phase was not yet funded at the time of trial. The environmental impact report (EIR) for the facility considered a 6,000-bed facility on the site but the county had no plans to build a 6,000-bed facility.

In January 1988, Wackenhut wrote De La Fuente, noting the California Department of Corrections had rejected the proposal and had indicated they might "be willing to support a project involving county owned property." Wackenhut, citing the lack of "opportunity in this Proposal for private land," suggested it was not a project De La Fuente would want to become involved with and asked to be released from its agreement to participate in such a project with De La Fuente. Since the county had taken his land, De La Fuente released Wackenhut from its obligation under the contract.

In March 1990, the city and county issued a memorandum of understanding under which the county would lease a site at the East Otay Mesa Detention Facility for $1 per year to the City of San Diego and the city would sublease the site to a private firm to construct and operate a 200-bed prearraignment detention facility. The memorandum of understanding also provided the facility could be expanded to 400 beds.

In July 1990, De La Fuente sought to conduct additional discovery and to add a witness, Charles Thomas, an expert in private detention facilities, to his expert witness list.

Trial commenced in September 1990.

At trial, De La Fuente testified his property was worth $79,635,925 or $3.45 per square foot based on highest and best use as a 6,000-bed private detention facility. In particular, De La Fuente valued the usable portion of the property at about $6.50 per square foot.

De La Fuente testified there was a demand for detention facilities, noting, for example, that while "INS had had a need for 200 beds--today the need is 1000 beds" and that there was a short supply of sites for detention facilities. He believed he had "a unique site" for a detention facility because it was adjacent to a state prison and therefore there was "another place next door so in case of an emergency they might be able to share certain services." The site also had the necessary infrastructure (partially based on the construction of the nearby prison), contained natural barriers (mountains, a canyon), was close to the metropolitan area, was compatible with other uses on the remainder of De La Fuente's property (i.e., off-road vehicle park, race track), would face no opposition from nearby residents since the nearest residence was two miles distant, faced no political opposition and was permitted under the current zoning with a major use permit.

De La Fuente testified about sales of surrounding property in the area around the time of valuation which ranged in size from six to two hundred forty-five acres. These properties which were primarily vacant, industrial or future industrial land, sold at prices ranging from $1.06 per square foot to $2.06 per square foot. De La Fuente also testified about the sale of a 65-acre property which involved improvements. The parties in that transaction allocated $5 per square foot to the land costs. De La Fuente believed a property which sold for $2.06 per square foot and a 245-acre property which sold for $1.50 per square foot were the most comparable to his property. He believed his property was worth more than any of these industrial properties and, in particular, more than the 245-acre property which was restricted under an agricultural preserve agreement and would require archaeological studies be completed before development. He believed this 245-acre property showed him "the floor, the bottom of the market" for his property.

De La Fuente testified he believed his valuation was reasonable in light of the county's proposed land lease to the state of 4 acres for a 200- or 400-bed RTC facility. De La Fuente explained that using the county's figures, the land was worth $8.33 per square foot for a 200-bed facility and $14.06 per square foot for a 400-bed facility, considerably more than his valuation of $6.50 per square foot for the usable portion.

During...