Appraisal Results Due Soon

Not surprisingly, 19,000 acres of South Bay land won’t come cheap. Led by Howard Stark, a U.S. Fish and Wildlife real estate expert in Sacramento, federal, state and Cargill leaders commissioned two appraisals of the property. Working in strict accordance with government guidelines, federal and state land acquisition experts selected two qualified, independent appraisers to study every parcel in the 19,000-acre property. A third appraiser – named by the U.S. Fish and Wildlife Service and the California Wildlife Conservation Board – is currently reviewing the reports and is expected to make a recommendation in mid-April to federal and state officials on which appraisal best reflects fair market value.

Stark explained that the recommendation and agency approvals will rest on which figure is best supported by the market and the appraiser – "basically, who did their homework, who put together the best report, supporting market value and following acceptable methodology," he said. "It could be a higher number or a lower number. It’s not a question of picking the low one, or averaging the two appraisals."

Until the state and federal agencies choose one of the appraisal figures and Cargill exercises its right as the prospective seller to reveal it, the agency-approved fair market value will remain a mystery. "The landowner’s right to confidentiality is based in federal law," Stark said. But Cargill has already announced that if the appraised fair market value is higher than $300 million, the company would be willing to make a bargain sale, donating the excess value to the public. The company has made donations like this in the past. In 1994, Cargill transferred nearly 10,000 acres of land near Napa to the State of California for $10 million – $26 million less than the value determined during the company’s appraisal.

Seeking Funds

Whatever the final appraised value turns out to be, anything in the ballpark of $300 million is a hefty sum.

Supporters of the project received a boost last year when Governor Gray Davis and the California Legislature allocated $25 million to kick-start the effort, and the Bay Area congressional delegation secured $8 million from Congress to help. But there are still many bridges to cross. Perhaps most significant, those allocations date back to last year, when there was a large federal budget surplus, no tax cut on the table, and the State wasn’t spending millions of dollars to secure affordable electricity in California, noted Travis.

That’s one reason proponents of the restoration project are already prodding lawmakers to find funds to cover the purchase price, even before the appraisal is in. The board of the San Francisco Bay Joint Venture, a coalition of 27 agencies and non-profit organizations dedicated to acquiring and restoring Bay wetlands, sent a letter in mid-February to President Bush, Governor Davis, and elected officials from around the Bay Area. "We urge you to exert your leadership to realize this once-in-a-lifetime opportunity to protect and restore our wetland ecosystem through public/private partnership," read Joint Venture director John Steere in Oakland.

Part of the success of gathering funds will be making sure they come from the right accounts. California’s $25 million came from the General Fund, points out Drake at Audubon. With the General Fund currently being tapped to stave off the state’s energy crisis, it’s imperative to convince Sacramento to establish a direct appropriation for the purchase, she said. Agencies and environmental groups will also need to scramble for allocations through related programs, such as water quality or flood control, or grants from private foundations. "If this deal were to go forward, we’d have to look at multiple funding sources, different revenue streams," said Drake.

Lobbying will be critical. "If there is broad support and this is seen as a priority for enough constituents in the Bay Area, I think the money will be available," she said.

Creative Solutions?

Travis said he’s concerned about the size of the expected price tag for the land, and he points to an element that he believes could be contributing a big chunk to the cost: a developer’s dream, a highly desirable parcel that houses Cargill’s Redwood City operations. "It is not all salt ponds," he said. "There are acres of land that are high and dry, and not subject to the jurisdiction of BCDC or the Army Corps of Engineers. Because it includes developable property in Silicon Valley, it is very expensive."

Though it’s not uncommon for landowners to sell a portion of a property to pay for the remainder, Stark noted that the strategy doesn’t fit government policy. "Federal and state agencies don’t operate in the land speculation business," he said. "At the Fish and Wildlife Service, we have very little disposal authority. If we buy a piece of land, we keep it and use it for habitat." In fact, Fish and Wildlife would literally need an act of Congress to sell the Redwood City site for development.

Travis muses about a different approach. "Should there be a severing of the property so what is purchased is that part of the property that has restoration potential?" he offers. "If our financial resources are limited, perhaps the purchasing agencies ought to get together with Cargill and say, ‘in fact, we don’t want to buy your Redwood City property. Let’s find a ‘green’ developer who will restore 700 acres and on the remaining 300 acres put up an example of smart growth: housing, transportation, the infrastructure that we need in the South Bay.’ That would allow us to fulfill the social equity and environmental objectives, and Cargill could still get a fair price."

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