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Wednesday, July 18, 2007 | Grantville’s Friars Road Pet Hospital and National City’s Community Youth Athletic Center, while not gleaming edifices of commercial might, don’t fit the traditional definition of an eyesore. The windows aren’t cracked, the plaster isn’t peeling and they attract concerned pet owners and kids wanting to learn how to box, not a rough crowd looking to cause trouble.

Yet, according to local officials, they’re blight.

Blight for Your Right

  • The Issue: Redevelopment agencies have labeled businesses in two local communities as “blighted,” but they don’t fit the traditional definition of an eyesore.
  • What It Means: An area must be considered blight before it can be transformed to a redevelopment area. Making the designation can allow city agencies to reap a windfall in tax increment as a result of redevelopment.
  • The Bigger Picture: National nonprofit law firm Institute for Justice plans to sue National City if it extends its eminent domain authority in hopes of establishing a precedent favoring property owners.

The word, which used to be reserved for seedy, dilapidated areas of the city, is being increasingly attached to places that may be profitable, just not profitable enough.

California’s Community Redevelopment Law has evolved since it was first enacted in 1945 to create benefits for cities wishing to redevelop, enticing them to replace existing businesses with those that will yield increased tax profits, said Bill Chopyk, director of San Diego’s chapter of the American Planning Association.

If a building is incompatible with nearby land uses, or if it decreases the desirability of those around it, it can be considered physically blighted — and, therefore, can be taken by the government from private owners. As an area attracts new developments, the older ones can be pushed out because they no longer fit in their posh surroundings. Cities might blight an area as a tool to attract developers.

“Cities have been enticed to make that slum and blight designation,” Chopyk said. “I think cities have stretched the interpretation of it to meet the criteria. I think you have a wide range of examples in different cities of what slum and blighted designated areas look like. Some would be more deteriorated than others.”

In Grantville, the age and obsolete design of commercial buildings surveyed limits their attraction for top-tier users, according to a consultant’s report to the City Council in March 2005.

“Having older and obsolete buildings, many of which suffered from deferred maintenance on shallow/narrow lots in a haphazardly incoherent theme has left the Project Area visually blighted,” the report reads. “Developers find it more economically sensible to locate stores where successful retail centers are established.”

An area must be blighted before it can be classified as a redevelopment area. Once so classified, city redevelopment agencies can use eminent domain to take over individual homes or businesses by paying their owners a fair market value and then transferring ownership. Sometimes the city builds bridges, hospitals or schools in their place; sometimes private developers erect shopping centers or condos. In both Grantville and National City, preliminary plans call for mixed-use and condo developments.

Cities throughout the state have used redevelopment as a tool to clean up neighborhoods and attract new businesses to decaying areas. California has 395 active redevelopment agencies that oversee 759 blight zones. In fiscal year 2005-06, they owned $12.9 billion worth of property and had $8.7 billion in revenues.

San Diego’s classic redevelopment example is downtown’s Horton Plaza shopping center, which opened in 1985. Before the center opened, the downtown area was rife with a collection of rundown adult bookstores, card rooms and bars that attracted a rough crowd. Today’s mix of condos, Petco Park and a revitalized Gaslamp Quarter would not have come to the district without the helping hand of downtown’s redevelopment agency, said David Allsbrook, manager of contracting and public works at the Centre City Development Corp., the city of San Diego’s downtown redevelopment agency.

To property owners now threatened with eminent domain, the process can seem unfair or even unconstitutional, and some think a blight designation is a self-fulfilling prophecy. Would-be entrepreneurs might be hesitant to start their businesses in redevelopment areas with the threat of eminent domain hanging over their heads, they say.

Two communities in San Diego County are attempting to buck their blight designations as local agencies look to tap into potentially lucrative tax streams.

The county has challenged the city of San Diego’s blight designation for 990 acres of Grantville. And in National City, property owners along National City Boulevard, including the popular Community Youth Athletic Center, are lobbying the National City City Council to vote down a proposed extension of its eminent domain authority.

Jeff Rowes, an attorney with national nonprofit law firm Institute for Justice, said one of the biggest impediments to developing in a redevelopment area is that developers know they invest at the whim of the redevelopment agency and mayor. He suggested that National City’s blight designation may in fact be perpetuating the problem.

Lawyers at Institute for Justice, who represented the homeowners in a 2005 Supreme Court case regarding land use, said the decision opened a floodgate of eminent domain cases nationwide. Kelo v. New London allowed the taking of private land for other private development, regardless if the land was blighted.

At a meeting Thursday, National City elected lawmakers recommended the city extend its eminent domain authority. The City Council was set to finalize that vote on Tuesday evening. The current authority expires this summer after 12 years.

The Institute for Justice lawyers were in National City last week to protest the blight designation on the Community Youth Athletic Center, a nonprofit boxing gym for at-risk youths. Community members and city officials helped remodel the 3,700-square-foot former gun shop in downtown National City for a January 2002 opening. The center serves about 50 kids per day with its free boxing and tutoring programs.

“The area is not blighted, and they haven’t established that it’s blighted, and the only reason they want it blighted is so they can transfer property from one private owner to another,” Rowes said. “It doesn’t matter to me whether it’s six years, 12 years or 12 minutes, that’s just unconstitutional and they shouldn’t be doing it.”

Sherm Harmer of Urban Housing Partners, the firm that intends to build a mixed use housing project where the CYAC currently sits, urged city leaders at the meeting to continue its redevelopment. Eminent domain is an important tool to revitalize the city, he said.

Councilman Fideles Ungab agreed. “Eminent domain can’t stop because of the CYAC,” he said. “We do need to have eminent domain. How and where we’ve used it have been very positive.”

If the council extends its authority as expected, Rowes said Institute for Justice will sue the city to “ensure that not just the gym but all Californians get proper protection for their property rights.”

In Grantville, redevelopment has to wait until a court can decide if the redevelopment area is legitimately blighted. The county’s lawsuit, with a trial date set for November, challenges the blight finding, which will lead to tax losses in the area for the county.

A redevelopment label caps the areas property taxes at that year’s levels, and as property taxes rise due to the increased value of new businesses and housing developments coming in, the difference goes back to the redevelopment agency for the area instead of into the county and city tax coffers. Twenty percent of that tax increment must be set aside to create low- and moderate-income housing. Tom Harron, chief deputy county counsel, projected that could translate into a $200 million loss for the county at Grantville.

“Instead of going to the best use in the county, it all stays in the Grantville area. General fund money is unconstrained; it could be roads, it could be health care, whatever is considered to be higher priority is where it goes,” he said.

Tax increments can translate into windfalls for the redevelopment agency. For example, the Omni San Diego Hotel, which at 675 L St. sits in CCDC’s redevelopment area, paid $1.3 million in property taxes last year, according to the County Assessor’s Office. The site’s former owner — Frost Hardwood Lumber Co. — produced about $7,500 in property taxes at the creation of the project, the amount that will continue to be paid to the county and city until the project sunsets. CCDC, however, received 99.3 percent of the hotel’s taxes last year.

Brian Peterson, a veterinarian who owns the Friars Road Pet Hospital in Grantville, is active in fighting the blight designation. He started Grantville Action Group after learning of the project area plans in hopes of rallying community support against redevelopment. His own business is considered blighted for multiple reasons, including the fact that it’s almost 30 years old.

“Lot 5 is an irregular shape; that’s blight. Our parking is not adequate, that’s blight, and you can see our dumpster from the parking lot so that’s blight, too,” he said.

Eminent domain opponents say there are other ways to achieve redevelopment goals without resorting to condemning property. They point to cities like Anaheim, where the mayor and City Council committed to not using eminent domain to accomplish development goals. Using means such as rezoning the area around the Angels’ stadium to allow for easier development, clearing environmental impact statements and reducing old building requirements, the city was able to create the Platinum Triangle, a new urban district.

“We don’t begrudge the government using eminent domain for a definite public purpose or a public use,” Peterson said. “But to take private property and transfer it to developers to build condos or whatever they want to do, that’s not right. There’s an alternative to eminent domain.”

Please contact Nina Petersen-Perlman directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.

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