By Rose Meily and Matt King If John Fry and Steven Sorenson want
to build their American Institute of Mathematics in Morgan Hill in
the next 10 years, they
’ll have to pay at least a half a million dollars to cancel
their Williamson Act contract.
By Rose Meily and Matt King
If John Fry and Steven Sorenson want to build their American Institute of Mathematics in Morgan Hill in the next 10 years, they’ll have to pay at least a half a million dollars to cancel their Williamson Act contract.
In spite of hurdles, however, Sorenson said the partners still plan to build the AIM in Morgan Hill and hope to start by the end of the year.
“AIM has some functions in Palo Alto and in the city of Morgan Hill we’ve had a series of public lectures and are active with the schools in their Math Counts program,” said Sorenson. “Ultimately, we would still like to see the math institute in Morgan Hill. That’s always been our goal.”
Standing in their way is a mess of red tape created by the Williamson Act – a 1965 law that provides a tax break to landowners who keep properties that meet minimum size requirements in agricultural production.
In 1994, Fry, owner of Fry’s Electronics stores, and Sorenson purchased a 192-acre golf course on which they hope to build AIM one day. At the time, the land was part of the Williamson Act – saving the pair thousands of dollars in property taxes over the years.
While making improvements to the course to construct a new tournament quality facility last year, several regulatory and environmental violations were discovered. As the violations were investigated, it became apparent the golf course didn’t qualify for the Williamson Act. Once a permitted use, golf courses were banished from the act in 1989.
Though the city of Morgan Hill has taken steps to remove the golf course from the act, the process takes a decade. Under state law, the partners cannot go ahead with their development plans while under Williamson because they are not farming the land.
To get out of the act immediately, AIM would have to pay a cancellation penalty of about $460,000. But under Byzantine Williamson rules, the fine could soar into the millions. A finding that illegal improvements were made to the property after Jan. 1, 2004, for example, would trigger a cancellation penalty equal to 25 percent of the property’s market value. Its current Williamson Act – or below market – value is $3.7 million.
Sorenson said he still had to study the issue more carefully before he could comment how AIM plans to overcome the obstacles. But he did say, no matter the hurdles, they intend to build the institute in Morgan Hill – hopefully beginning the process by the end of the year.
“People have the perception that when we bought the land that we had both tried to defraud the taxpayers, but that’s not the case at all,” explained Sorenson. “The property was already a golf course and had been under the Williamson act far longer than when we owned the land. When we bought it, it seemed like it was okay with the people we talked to, but now, all of a sudden, it isn’t. I don’t want people to get the impression that we intentionally misled them.”
Over objections from environmental advocates who complained bitterly that the golf course construction destroyed critical habitat and endangered groundwater, the city approved the golf course’s zoning ordinance last year after construction had already been done. The Morgan Hill City Council then instructed city staff to make sure the proper documents were filed to take the course out of the Williamson Act. Morgan Hill Planning Manager Jim Rowe said city officials waited for the Pacific Municipal Consultants (PMC) to monitor mitigation measures regarding the environmental impact of the golf course before taking steps to deal with the non-renewal notice that would remove the land from the act.
Earlier this summer, Brian Schmidt of the Committee for Green Foothills, one of the environmental advocates who have tried to shut down the course, petitioned the Santa Clara County District Attorney to investigate AIM for tax fraud. The DA forwarded the request to state conservation officials, who have ultimate oversight of the Williamson Act.
Don Drysdale, a spokesman for the California Department of Conservation, characterized the investigation as significant but routine.
“Obviously there are people concerned about this and it was brought to our attention, but we deal with violations all of the time,” Drysdale said. “We are actively looking into it, in terms of what’s going on there. It’s too early to say where the investigation will go. It’s going to take some time to work through the machinations of the process.”
Fry and Sorenson are not the only landowners caught in the controversy of the Williamson Act. In the past, county planners approved building site permits to many Williamson Act property owners who didn’t meet the law’s requirements. Some of those landowners are now being told they can’t build unless they prove they farm the land or pay a similar penalty to leave the act.
Mayor Dennis Kennedy has said a delay in bringing the institute to Morgan Hill would be unfortunate.
“That would be too bad if this delayed the building of the math institute,” Kennedy said. “It’s a really wonderful addition to the community, a real positive development.”
Sorenson said in July that AIM plans to build “a centerpiece of mathematics in the United States,” by constructing a 50,000-square-foot research center.
“We feel there’s not enough effort put into pure research in math that provides the tools for science and engineering needed to advance society,” said Sorensen. “Research in the short-run and long-run has been difficult. By providing a team approach to solve problems in math and sciences, we hope to bring people from various disciplines together in solving problems. We’d like to see it as a place where professional math and science professionals from all over the world come together.”
In addition, the course’s owners also hope to attract Professional Golf Association tournaments to Morgan Hill. Sorenson said he still believes the course qualifies for Williamson protection under the law’s “cultural and educational uses.”
State officials have made it clear that properties without agriculture cannot receive a tax break for so-called compatible uses like public recreation or education facilities. Drysdale has said to do so “violates the spirit of the law.”
But Sorenson and Fry aren’t about to give up on the institute any time soon, Sorenson said.
“It’s beautiful in Morgan Hill,” he said. “Morgan Hill provides the type of surrounding that’s conducive to great thinking. We think being in the beautiful valley, a 200-acre campus on the foothills would be a perfect place for the math institute. It’s kind of nicer than Stanford. (The Williamson Act) won’t hold us back.”
