SACRAMENTO — More than a year after a judge ordered Silicon Valley billionaire Vinod Khosla to open Martins Beach to the public, the beach remains closed, and the setting of the long-running melodrama has shifted to the state capital, where an obscure but powerful state agency will soon decide whether to force the mogul to sell a right of way for the public to roam his coastal paradise.
But as the State Lands Commission, a bureau that oversees California’s coastal boundary disputes, studies using eminent domain for the first time in its 78-year history, a thorny question looms: Where’s the money?
The commission recently disclosed that it does not have funds to buy an easement from Khosla using eminent domain. That means the agency and proponents of public access would likely need to win support from the Legislature and Gov. Jerry Brown for using other sources, whether it’s the general fund or some of the many pots of special funds scattered around Sacramento.
Given the controversial nature of eminent domain, which enables the government to buy land, or property rights, from unwilling citizens, there will be plenty of political pitfalls, especially if the green-tech investor dispatches high-powered lobbyists to the Capitol. Condemnation is seen as a tool of last resort, and lawmakers may be loathe to intervene so heavy-handedly in a local controversy.
“There are times and places for eminent domain. In my judgment this isn’t one of them,” said Rusty Areias, a former Assemblyman and State Parks director who lobbied for Khosla in 2014. He predicted the governor’s fiscal restraint will work to Khosla’s advantage, even if the price of a right of way is a drop in the bucket of the state’s overall budget, which will hover around $170 billion. “I can’t believe the frugal Jerry Brown that I know would put state funds toward eminent domain for access to Martins Beach.”
Areias succeeded two years ago in blunting the legislation that required the State Lands Commission to talk with Khosla about selling an easement. He persuaded lawmakers to remove a clause that would have required, not merely asked, the commission to use its power of eminent domain if negotiations failed.
A spokeswoman for the governor last week said it was too early to comment, since the commission hasn’t voted on eminent domain yet. A vote is likely to come in February or April.
The commission early in 2015 had identified a source of money, known as the Kapiloff Land Bank Fund, for acquiring the easement. But at the agency’s Dec. 18 meeting, Executive Director Jennifer Lucchesi revealed the $6.4 million fund may be used only for transactions involving willing sellers, not eminent domain. And Khosla doesn’t seem eager to sell.
Khosla purchased the 89-acre property from the Deeney family in 2008 for $32.5 million. Two years later he stopped allowing people to drive down to the beach near Half Moon Bay in exchange for a parking fee, as the Deeneys had for more than 70 years.
The venture capitalist is now embroiled in two lawsuits to force him to restore public access, both of them under appeal. Aside from opening the road to the beach most days this past summer, Khosla has largely ignored San Mateo County Superior Court Judge Barbara Mallach’s order on Dec. 5, 2014, to welcome the public. The California Coastal Commission has threatened the investor with fines but has yet to impose any.
In 2014 the governor signed a bill by state Sen. Jerry Hill, D-San Mateo, requiring the State Lands Commission to negotiate with Khosla about acquiring public access both down to the shore from Highway 1 and along the sandy beach. The legislation gave the commission all of 2015 to confer, after which the agency could consider pursuing condemnation.
The commission made an unspecified offer to Khosla on Oct. 15 to purchase an easement totaling 6.39 acres. Khosla’s team countered with a land swap proposal the commission deemed unrealistic and hasn’t been in touch since.
Though the commission remains open to an amicable deal, the agency’s staff has begun researching the use of eminent domain and expects to bring the matter to its three voting members — Lt. Gov. Gavin Newsom, state Controller Betty Yee and state Finance Director Michael Cohen — in the next few months.
The lieutenant governor and 2016 gubernatorial candidate joked at the commission’s meeting last month that eminent domain should be approached like marriage, “not to be entered into lightly, but thoughtfully.”
While he acknowledged that funding is an issue, Newsom wasn’t ruling out a solution.
“That doesn’t negate the capacity to be creative,” he said, “and to engage the Legislature and the governor to consider a different kind of level of support.”
The agency has yet to reveal how much it offered for the easement. Preliminary estimates by legislative analysts in 2014 varied widely, from several hundred thousand dollars to upward of $10 million.
Hill said he remains confident that money for public access, which he estimated at a few million dollars, can be found.
“We’re not talking about a lot of money,” he said. “My goal in the next few weeks is to work to try to find funds that may be available.”
The commission could seek money from the general fund during budget negotiations this spring, but there would need to be sufficient political will from the governor’s office and Democratic leadership to overcome the objections of Republicans, who cherish private property rights, and leery centrist Democrats. Capitol insiders say using general fund money for eminent domain is unusual.
Another route would be to look for money in various funds containing proceeds from water and natural resource bonds approved over the past couple decades, though many of these bonds, in the same manner as the Kapiloff fund, contain restrictions on eminent domain. In interviews Thursday, Lucchesi and Hill said the commission could also seek private sources of money.
Sam Schuchat, executive officer of the California Coastal Conservancy, a state agency dedicated to protecting coastal resources, said the conservancy would consider being part of a funding program.
“It’s well within our wheelhouse,” said Schuchat. “We’ve purchased coastal access all over the state, sometimes quite expensively.”
Schuchat cautioned, however, that the most the agency could muster in any given year would be $1 million, because much of the organization’s money comes from restricted bond funds.
Contact Aaron Kinney at 650-348-4357. Follow him at Twitter.com/kinneytimes.
