Thursday, July 28, 2005

CGF uncovers the violation of the Williamson Act on Morgan Hill Golf Course

(A note here from your regular blogger, Brian - CGF welcomes a new guest blogger and new CGF volunteer, Anagha Patil. Anagha has summarized the potential tax fraud problems at the Math Institute Golf Course below. For more information, see our press release, our letter to the District Attorney's office, and the first news article about this issue, from the Gilroy Dispatch.

I'll briefly note that views of guest bloggers are their own, and not necessarily those of the Committee for Green Foothills. With that aside, we welcome you, Anagha!)

CGF has formally requested the Santa Clara County District Attorney to investigate potential civil and criminal tax fraud violations associated with the controversial Morgan Hill Golf Course constructed illegally as part of the planned American Institute of Mathematics Conference Center. The illegal private golf course vastly expanded from the initial 40 acre to now 192 acres without appropriate environmental permits or review, violating a number of federal, state and local environmental regulations.

In a letter to the District Attorney, CGF Legislative Advocate Brian Schmidt outlines arguments that the landowners have for some time violated a State contract that requires preservation of agricultural and open space uses on the property. The letter further describes that because of this contract violation, the landowners may be committing tax fraud that could cost state and local governments thousands of dollars a year in lost revenues.

Four of the five parcels operated by the American Institute of Mathematics (AIM) have been under California’s Williamson Act since 1969 to preserve it as open space or to use for agricultural purposes in return for the enjoyment of huge tax breaks. But the Institute has flouted these laws and is effectively benefiting from a tax payer subsidy only to channelize those funds to finance an illegal private Golf Course.

John Fry of Fry’s Electronics, one of the principals behind AIM, has continued to use and maintain the golf course despite the threat to local water supplies and serious environmental impacts including loss of habitat for endangered species and wildlife as well as threats to surface and groundwater from unpermitted course’s fertilizer and pesticide. The officials of the Math Institute still maintained that the Williamson Act allows a golf course as a compatible open space use, an assertion contradicted by both the Santa Clara County officials and by the staff at the State Department of Conservation. The environmental impacts were all well documented by the city’s Draft Environmental Impact Report for the Golf Course prepared by the City of Morgan Hill long back.

After the hue and cry raised over the illegal Golf Course with the Williamson Act in perspective, Morgan Hill officials initially concluded that cancellation of the contract and payment of appropriate fees would reduce the impacts to a “Less than Significant” level. The City then failed to take this insufficient step, requiring only a “non-renewal notice” that would exempt AIM from the required fee.

AIM should cough up for all those years of default and environmental degradation. The Institute officials on their part have ignored the City’s orders to begin rectifying the situation by filing for a non-renewal notice – a notice that would end the contract after nine years from the non-renewal notice

AIM’s failure to file for non-renewal of the contract and its continued acceptance of a tax reduction to which it is not entitled indicates that tax fraud may be occurring.

-Anagha Patil

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