Tuesday, June 19, 2007 | Two years ago, bulldozers leveled Ahmad Mesdaq’s cigar shop on Fifth Avenue and J Street in the Gaslamp Quarter to make way for a hotel. To this day, the land taken from Mesdaq by the city of San Diego using eminent domain remains a flat parking lot instead of the 12-story luxury hotel the construction of which was scheduled to begin earlier this year.

The developer, GRH LLC., which purchased the property from the city for $10 million, will go before the Centre City Development Corp. next week with a request to extend the schedule for building the Gaslamp Renaissance Hotel, citing economic concerns. It will also request permission to make several design changes and to lease the land to a third party to build and operate the envisioned hotel.

No Cigar

  • The Issue: The city used eminent domain to bulldoze Ahmad Mesdaq’s cigar shop and make way for a luxury hotel. Two years later, the developers have yet to begin construction.
  • What It Means: The developers will go before the Centre City Development Corp. next week in hopes of having the construction schedule extended, with a projected 2010 hotel opening.
  • The Bigger Picture: Mesdaq’s case against the city resulted in national attention in the aftermath of a landmark 2005 Supreme Court case, which decided municipalities could use eminent domain for development purposes.

The latest turn in the well publicized story has left Mesdaq outraged.

“All I want to do is take care of my family, work hard and live my life,” Mesdaq said. “You took my livelihood! That’s not the American way. Destroying one business and putting another business that doesn’t exist, that’s not how the government should run.”

Jimmy Parker, executive director of the Gaslamp Quarter Association, which is made up of 400 businesses, said the neighborhood would have loved to see the hotel open this year, either having been built around Gran Havana or incorporating the store into the building.

The delay, however, has frustrated business owners in the neighborhood. “We want this to move forward if it’s going to move forward,” Parker said. “If it isn’t, it’s time to take bold steps. Gaslamp thrives on open store fronts and people shopping and dining and having a good time, not vacant lots.”

Mesdaq’s fight has been widely publicized in the wake of a 2005 Supreme Court decision, Kelo v. City of New London, that allowed municipalities to use eminent domain to seize private property for economic development. Before the ruling, governments could only take property or land meant for public use, like bridges and hospitals.

California responded with a 2006 ballot measure called Proposition 90, which attempted to amend the state constitution to limit government authority to acquire private property by eminent domain. The measure failed.

Cindy Eldred, a land-use lawyer representing GRH, said uncertainty over the result of the measure, along with ongoing litigation with Mesdaq, made GRH wary of investing more money into the property than it already had.

Now, since the firm has surpassed the deadlines CCDC originally agreed to in the development contract, GRH must go back before the board for approval of a new plan, which has the hotel opening in 2010. If the board decides against approval, it could issue a notice of default.

The firm had originally wanted to use land near Petco Park, but had to look elsewhere when the land was lost through condemnation, Eldred said. The hotel necessitated a 40,000 square-foot footprint, and GRH purchased 35,000 square feet on the block where Mesdaq’s shop sat from the family that owned it. Eldred said the firm made various offers to Mesdaq for relocation to try to avoid a lawsuit, but they were all unsuccessful.

Now, she said, the firm is ready to move forward with its plans for the space. It plans to lease the property to Hansji Hotels, which will take over development and management. Costs associated with the project have skyrocketed since the developers first gained approval for the hotel in 2004. Estimates for total development have gone from $70 million in April 2004 to $108 million. GRH wants to increase the number of rooms from 334 to 350 and add another level of parking, among other adjustments.

“We’ve been working to put together a group that feels OK going forward despite the unusual risk. We feel very comfortable at this point in time with the team GRH has been able to pull together,” Eldred said. “We think we can get it back on track very quickly. We can’t make up for lost time but we can get a hotel on that spot as planned.”

David Allsbrook, manager of contracting and public works with CCDC, said the firm has asked for more time now that its out of compliance with the scheduled performance, failing to meet previously agreed-upon deadlines. CCDC’s board will debate GRH’s proposal during a June 27 meeting.

Mesdaq’s story has all the elements of an immigrant’s American dream.

Mesdaq was granted political asylum in the United States in 1983 after the Soviet army destroyed his home in Afghanistan. He attended both Grossmont College and San Diego State University, though he was one requirement shy of graduating. He owned a few restaurants in the Gaslamp Quarter before selling them to purchase a building to house his cigar shop in 2000. He paid $1.3 million for his corner location on the intersection of Fifth Avenue and J Street.

CCDC, the city’s downtown redevelopment arm, approved his renovation plan in 2002, and he spent $2.5 million renovating the former warehouse. In March of the next year he opened the Gran Havana Cigar & Coffee Shop to great success.

“I’m not a rich guy; I borrowed millions and millions of dollars. I spent $2 million to renovate,” Mesdaq said.

Meanwhile, in March 2003, GRH developers Ramin Samimi and Ed Himmelberg submitted plans for their hotel to CCDC, which officially approved the project in January 2004. When Mesdaq refused offers from the developers, they tried a different route. GRH negotiated with the city to use its power to condemn the property on their behalf and use eminent domain to acquire it. The City Council voted 8-1 in April of that year to do just that. The city offered Mesdaq $3.1 million for his property.

Mesdaq filed a lawsuit against the CCDC and the city redevelopment agency in April 2004. The Superior Court awarded Mesdaq $7.8 million in November 2005, and another $1.4 million for attorney fees in June 2006. The redevelopment agency filed an appeal with the California Courts of Appeal in January 2006, and Mesdaq filed a cross appeal on the city’s right to take his land under eminent domain. Oral arguments are scheduled for this summer.

Media attention has made Mesdaq a national symbol for those opposed to eminent domain.

“Nobody’s property is safe anymore,” Mesdaq said. “Eminent domain is the most abusive form of government.”

(Correction: The original version of this article incorrectly reported the year of the Kelo v. City of New London decision. We regret the error.)

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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