The City of Richmond, California, a working class town of 100,000 located in the east San Francisco Bay, has recently announced that it plans to move forward with a proposal of forcibly purchasing distressed mortgages using its power of eminent domain. Richmond is working with the San Francisco “community advisory firm,” Mortgage Resolution Partners, to purchase loans involving 624 properties. Basically, the City intends to purchase the loans at a “discounted price” and will then refinance them through the tax-payer backed Federal Housing Administration. Next, the loans will be repackaged into a new security and sold to other private investors.

The Arizona Court of Appeals, Division One, recently issued a decision in Roofing Wholesale Co., Inc. v. Neil 2012 WL 1207349 (Ariz.App.Div.1) (2012). The decision was not approved for citing as legal precedent except under limited conditions. Regardless, the Arizona Court of Appeals was presented with the issue of whether a trial court may properly admit evidence of a tax protest in order to establish fair market value under A.R.S. § 33-814, Arizona’s deficiency statute. The court declined to follow the decision of the Supreme Court in Salt River Project Agricultural Improvement and Power District v. Miller Park 213 Ariz. 246 (2008) because Arizona deed of trust law, according to the court, does not demonstrate a legislative intent to adopt the highest and best use standard in a fair market valuation proceeding under the deficiency statutes.

Do you know the current fair market value of your home? Unless you have had a professional assessment of your property’s value within the past year, I highly suggest that you schedule one.

The Maricopa County Assessor’s Office is responsible for assessing the property values of every property within the county’s boundaries. Their valuation appraisals determine individual and business property taxes, and, in the context of eminent domain, the compensation amount offered by the government. So, who is behind the entity that is deciding the worth of your property?

What is a Counter-Offer?

If you have been faced with eminent domain and the government has proposed a monetary offer for a property in your ownership, it is crucial that you absolutely evaluate their offer before accepting it. If the offer seems even slightly less than you would have expected, making a counter-offer is something to seriously consider. In most cases, property owners will receive greater compensation after filing a claim against the condemning agency’s offer in an eminent domain proceeding. Keep in mind: appraisers often differ in their opinions of a property’s value by thousands or tens of thousands of dollars, so hiring a professional appraiser, such as an eminent domain attorney, is essential to your case.

Early this month, the United States House of Representatives passed the Private Property Rights Protection Act bill, in an effort to “minimize abuses of the government’s condemnation power.” Ever since the infamously unjust 2005 condemnation involving Susette Kelo’s home in New London, Connecticut, Congress has developed over a dozen anti-Kelo bills to protect private property owners in the United States.

In 1998 in the city of New London, Connecticut, a plant was built by the drug company, Pfizer. Officials of the City attempted to purchase 115 residential homes to turn around and sell to commercial developers. When fifteen residents resisted, the City turned to its power of eminent domain to take the land. One resident, Susette Kelo, opposed the taking through a legal challenge. The case ended up before the U.S. Supreme Court, which ruled in favor of the taking by the City of New London. The Court’s decision sparked a nationwide debate, fueled in part by disserting comments in the opinion. Justice Clarence Thomas accused the verdict of violating the Fifth Amendment’s “public use” standard because property was forcibly transferred from one private owner to another.

As construction on the Mesa light-rail extension project is set to begin in 2013, many private businesses and property owners will be facing efforts by the City to acquire all or part of the impacted properties. The 3.1 mile extension into downtown Mesa is clearly a public project, thus appropriate for using the power of eminent domain to acquire the land needed for the project from private owners. This is in contrast to the City’s attempts several years ago to improve the downtown corridor.

Downtown Mesa will surely miss these long-standing businesses. Wilky’s Performance Shop has been in operation for several decades, and Gunnell’s Tire & Auto since 1953. As Theresa S. from Queen Creek writes in her Yelp review, Gunnell’s provides the “quickest service I’ve ever experienced for getting tires rotated and/or balanced.” While the light-rail is projected to bring great economic advancement to some areas of downtown, it signals the end of an era for some local favorites.

The 3.1 mile light-rail extension set to begin in 2013 is expected to affect the numerous businesses along its route. The construction is going to make it very difficult, if not occasionally impossible, for consumers to access these businesses. While City officials are focusing on maximizing the economic impact that the extension will bring to downtown Mesa, it’s hard to say what the economic cost for local businesses will be in the meantime.

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