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Tuesday, April 05, 2005 | This is part two in a five-part series. Read part one, part three, part four, and part five.
For businessman Ed Plant and Padres owner John Moores, their respective opinions about redevelopment law aren’t even in the same ballpark.
Plant, owner and operator of San Diego Refrigeration Services, Inc., was visited by the Centre City Development Corp. in November 1998 immediately following voters’ approval of Proposition C, the citywide ballot initiative that kicked off San Diego’s most ambitious and expensive redevelopment project to date. The Padres were going to be moving into a new downtown stadium, and in a few years, the team would be taking infield practice where San Diego Refrigeration Services’ 68,000-square-foot facility stood at Imperial and Eighth avenues.
“They came to me and said, ‘you are our biggest problem and we need you out early,’” said Plant, whose business now runs out of the Port and under a new name, Harborside Refrigeration Services.
Plant said he was shortchanged by CCDC, who was acting as the agent for the city’s Redevelopment Agency. The financial settlement to acquire the property and compensate him for relocating as well as the bill he had to pay to clean up the site’s environmental hazards almost ruined his business, he said. Among the challenges for Plant, he was given a formal 90-day notice to vacate when he estimated it would take two years to build a new facility to house the six million pounds of frozen food his company stores at any given time.
“I tried to work with them, but they got me in a corner I couldn’t get out of,” Plant said. “CCDC had no compassion about the situation.”
The condemnation of properties has not only irked business owners, but also citizens concerned with preserving historical buildings downtown.
Meanwhile, Moores will have the opportunity to see his near-$1 billion investment payoff for the Padres and his real estate venture, JMI Realty, Inc. His baseball franchise reaps the improved attendance revenue that eventually came with the attractive Petco Park, and JMI was awarded several projects within the new Ballpark district that will feed off clientele drawn to the area because of a publicly financed stadium.
While Plant acknowledged the public benefit of a new ballpark and some new housing, he said his business and others got a raw deal. Leslie Wade, who observed the neighborhood’s transition as the East Village Association’s executive director, said CCDC “bent over backwards” for each individual situation, but that moving was still very difficult on businesses like Plant’s.
Enter eminent domain – a power granted to local governments to acquire private property for the purpose of a greater public benefit, but at the expense of property rights, the law’s opponents contend.
“Every government everywhere always says it’s a last resort, but it’s a tool of first resort and it’s the easiest,” said Dana Berliner, a senior attorney at the libertarian Institute for Justice. Berliner served as co-counsel on behalf of homeowners in Kelo v. New London, Conn., a case heard by the U.S. Supreme Court in February. In the case, the Connecticut city attempted to seize the homes of several residents to add to a large development project built around a Pfizer research facility because added tax revenues would constitute public good.
In California, a locality must produce a finding of blight – not just the desire for economic enhancement, but an area’s dire underutilization, physical dilapidation and social need – before exercising the power of eminent domain. However, many believe the Kelo decision, which is expected in June, will have an impact on how California’s law is interpreted.
The state Legislature passed the California Community Redevelopment Act in 1951, amending the state’s health and safety code to empower municipalities to improve blighted parts of California cities like San Diego, Oakland and Los Angeles. At the time, many urban areas were losing the downtown businesses as they flocked to whiter, more affluent fringe neighborhoods or in newly established burgs nearby.
In 1992, the San Diego City Council, which doubles as the city’s Redevelopment Agency, established a new project area about 1,500 acres bordered by the Port and U.S. Navy bayfront properties to the west, Laurel Street to the north, Interstate 5 to the east, and the Barrio Logan neighborhood to the south. The new Centre City Community Planning Area incorporated the existing Marina, Columbia and Gaslamp Quarter redevelopment zones already in progress while expanding into the Core, Little Italy, Cortez and East Village.
The Marina and Columbia areas were declared blighted in 1976, and the Gaslamp Quarter was declared blighted in 1982. Former Mayor Pete Wilson, who oversaw the creation of CCDC in 1975, said eminent domain is vital to ensuring “the reversal of slum.”
“In its own existing state, downtown was neither paying its own way in taxes nor producing jobs. To the contrary, it was producing social problems,” Wilson said. “That clearly changed with the physical landscape.”
After a legal finding of blight is made for a specific redevelopment project area, properties within that area may be condemned through the power of eminent domain, which is also used for public works necessities, such as extending a freeway through privately held land. In the case of redevelopment, local governments can force private property owners to sell their land in the name of public benefit.
However, the decision is made unilaterally by a city’s redevelopment agency, and some believe it is easily abused. The Chargers’ recently withdrawn attempt to have the city declare Mission Valley a blighted area – so that construction of a new stadium could be included in redevelopment project – was sometimes referred to as an abuse of eminent domain.
Some, like Councilwoman Donna Frye, believe the law is inflexible. She’s skeptical that the Centre City project area fits the description of a blighted community today.
“In the beginning, when they started doing redevelopment downtown, it could be qualified for blight,” Frye said. “I’m not convinced now that it meets that definition now.”
CCDC acts on behalf of the San Diego Redevelopment Agency in this case, calling on the owner of the property the Redevelopment Agency condemns to seek a settlement and to issue an order of immediate possession. The city obtains the property 90 days later.
Historically, 90 percent of the owners will settle out of court with the agency’s offer for the property, CCDC project manager David Allsbrook said. Property owners are compensated with money the city borrows with tax-allocation bonds, which are paid off over time with added tax revenue generated through increases in improved properties’ assessed value.
Additionally, owners of the properties condemned by the Redevelopment Agency are also required to dole out the money needed to clean up sites where environmental hazards are left behind.
CCDC posts a description of the project they want to fill the condemned property. A firm is then selected and a price is negotiated for the developer to purchase the acquired land from the Redevelopment Agency.
“At the end of the day, you’ve taken a blighted area and you’ve done a good service to an area that has been rundown with a low tax base and high crime,” said Frank J. Alessi, vice president of finance and chief financial officer at CCDC. “You wind up with a community that is no longer blighted, has more jobs than it had in the past, and now it’s a community that’s more viable to work and play in.
“A lot of this stuff doesn’t happen on its own,” he said.
Coming Wednesday: How is redevelopment paid for?
Please contact Evan McLaughlin directly at