Documenting redevelopment failures & the cost to victims


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The above the fold headline of today’s OC Register front page reads “Redevelopment Makes Its Case.”
This headline reminds me of a remark by featured panelist Chapman University Professor Lawrence Rosenthal at the Oct 2006 Symposium on eminent domain. Professor Rosenthal said “we all like to cherry pick our history and talk about it.” That’s true.
Those of us who have opposed bogus declarations of blight, and have fought against corporate welfare for redevelopment projects, can show the other side of the coin starting  with the book entitled “Public Power. Private Gain” where Institute for Justice senior attorney Dana Berliner conducted a five year study researching abuses of eminent domain across our nation. For those not familiar with the author Ms. Berliner represented plaintiff Susette Kelo in the Kelo vs. New London case before the US Supreme Court in 2005.
While supporters of redevelopment point out projects they overlook those property owners who were forced out for those projects to be created. As I mention the Kelo case, a household name since 2005, let me point out that New London project where property owners were intimidated into accepting various offers of just compensation. While several had no desire to sell, Pfizer pulled the plug and never proceeded with their proposed project development. Just over a year ago the following story appeared in the press. Michael Cristofaro, whom I met along with Suette Kelo in 2006, is quoted. ” Michael Cristofaro surveyed the empty acres where his parents’ neighborhood had stood, before it became the crux of an epic battle over eminent domain. “Look what they did,” Mr. Cristofaro said on Thursday. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.” The city seized the land for a private “urban village” that was never built.

“Pfizer said it would pull 1,400 jobs out of New London within two years and move most of them a few miles away to a campus it owns in Groton, Conn., as a cost-cutting measure. It would leave behind the city’s biggest office complex and an adjacent swath of barren land that was cleared of dozens of homes to make room for a hotel, stores and condominiums that were never built.”

While I’m on the east coast let me take you to the shore of my home state of New Jersey where in Long Branch, in his wheel chair, 93 year old Albert Viviano refused to sell his home to make way for a billion dollar project with high end condos.The case eventually was heard by the NJ Supreme Court where IJ attorney’s prevailed on behalf of the property owners.
Victory? Not really! Homeowners Anna DeFaria and Al Viviano passed away before the court made its decision. They paid the ultimate price fighting for three years to keep their homes.
Heading west let’s stop at a little fishing town in Freeport, Texas where Wright “Pappy” Gore fought city hall for three years to keep his Western Seafood shrimp processing facility. Another bitter sweet victory. Three months after he died the city changed their mind. They didn’t need his property for their marina.  So “Pappy” Gore and his family endured three years of “untold stress, grief and fear, and nearly a half million dollars in legal fees.”
OK. Let’s come home to Costa Mesa’s centerpiece of redevelopment called Triangle Square where Niketown vacated the premises in 2005. I wonder what the vacancy factor is this year.
In Mission Viejo we had our own redevelopment project loser that you can’t miss as you cross Crown Valley Parkway driving along Interstate 5. It’s called Kaleidoscope. This 215,000 square foot restaurant and entertainment complex cost Samsung Pacific $55 million dollars back in 1998. Since that date it has been a loser and in fact was sold at a fire sale at a 50 percent discount. That first sale was about $28 million  dollars. Did they get a bargain? I don’t think so. It was sold again for somewhere in the low $20 million range. However, a former Mayor sent us a letter pointing out that the city had “a equity position of $2,000,000 to be paid back at the time the project is sold by the developer.” We never saw that money. In my file is A copy of that “Kaleidoscope Profit Sharing Agreement Sale or Refinancing in Year 3” that clearly points out that obligation.
Before departing Mission Viejo I would be remise not to point out our other two redevelopment projects.
Its almost spring training. As such let’s start with the Vigilante minor league baseball team that moved from Long Beach back in 1997 when they were called the Riptide. The August 5th 1998 Saddleback Valley News cartoon showed cardboard cutouts of fans at a game with the headline “The Vigilantes Explore New Ways To Boost Attendance At Baseball Games.” Yes I have that photo in my museum of city documents. The Jan 23, 1999 OC Register article by Jim Radcliffe says it all. “Mission Viejo’s $1.3 million strikeout.” I guess we were fortunate that the owners snuck out of town under cover of darkness before we invested six million dollars of redevelopment funds for the expanded stadium at Saddleback College. Based on other RDA losers we got off cheap.
My last illustration is the renovation of our mall that Simon Properties calls the Shops at Mission Viejo. Our participation in the project related to expanding one and adding a second parking structure as part of an Owner Participation Agreement where the city issued $41.6 million dollars of RDA Bonds. The Mission Viejo city council/Mission Viejo redevelopment agency approved that Agenda item 5 to 6 months after work had commenced. I have photos proving that the “new” garage construction, facing our post office, was underway before that council meeting. My point is that Simon did not require any financial assistance from the city for their renovation. In April of 1998 I visited Deputy Attorney General Marsha Bedwell in her Sacramento office to file a complaint on this questionable project. I received a response dated January 8, 1999 in which she states ” While the timing and progress of the project may cast some doubt on the findings, the statute makes judicial review of the adequacy extremely difficult.” So much  for assistance on behalf of taxpayers.
Let’s head north to the City of Santa Ana where I can point to one example where a property owner stood his ground right on First Street. OC Register Commentary front page contains a color photo of three men smiling with their arms folded as they stand in front of their business. The headline of Steve Greenhut’s full page Register story reads “The Blight  of Power. Redevelopment agencies often tear down property rights.”
Below the photo it reads: “Santa Ana Mayor Miguel Pulido, at the family business with brother Luis and father Miguel Sr., entered politics after a battle with the city over redevelopment plans.” For those who are curious this newspaper is dated Oct 4, 1998.
In Steve’s editorial he writes: “In 1985 Santa Ana officials tried to close down Ace Muffler Shop, owned by the family of Miguel Pulido, now the city’s mayor. “If they wanted to build a school or if they wanted to widen a street we understand that’s a public use. That’s one thing. But if your going to develop a shopping mall, that’s another matter altogether,” Mr. Puledo told me last week. Source. Commentary Page 5.
Ace Muffler Shop was the sole survivor and was not included in that old redevelopment project. Mayor Pulido told Steve “out of 47 businesses we were the only ones standing.”
Sidebar. Someone should remind Mayor Pulido of his 1985 quote as he promotes redevelopment in Santa Ana today.
Based on earlier coverage by Steve Greenhut the north county cities of Garden Grove and Brea take the prize for redevelopment abuse. Being older than their counterparts in the south this is not a shocking revelation. In one report Steve wrote “In Garden Grove, the RDA recently has been in the news for its rash of spending habits and the failure of a previous showcase project to meet basic standards of economic self-sufficiency.
By the way. How’s the Garden Grove 53 acre, $400 million dollar Riverwalk project coming along?
Let me close with a readers digest version of the July 20, 2005 Laguna Woods city council meeting. The wheels of justice move very slowly and deliberately. An update to that council action was must covered by the Register. Attending that meeting on behalf of OC CURE/MORR I listened as they discussed the pending acquisition of the Laguna Woods City Hall property. At that meeting Bernard Orsi, Trustee of the Foundation which owned the building, testified in part as follows:
“I have a fiduciary responsibility for the Trust. Don’t mistake kindness for weakness.”
In his presentation Mr. Orsi said “we have no problem in making a fair market value argument.
Risk. If city loses, you pay my legal fees.
You do not know the ultimate fair market value
The value of this property is far in excess of what your appraiser told you.
Although we have not had discussion of tearing down this building and replacing it with a drug store, as some have stated, it would generate $150,000 in new sales tax.
We get to bring an appraisal as well. Severance damage could be substantial.”
The vote to take the 7,910 square foot building was 5-0. Voters should remember these names. Mayor Brenda Ross, Mayor Pro Tem Robert Bover, council members Bob King, Bert Hack and Milt Robbins, all participants in that costly meeting. Before departing I exchanged business cards with Mr Orsi.
The jury award in support of the property owners just appeared in the Register. The June 30, 2005 offer from their city council reads: “The city of Laguna Woods is offering for the fee simple interest in the property, and the reciprocal parking rights and reciprocal ingress/egress easement, as reflected in the appraisal as the fair market value, TWO MILLION SIX HUNDRED AND SIXTY THOUSAND DOLLARS ($2,660,000.00).”
While the council offered him $2.7 million I believe the final jury award was $7.2 million including attorney and expert witness fees. My point in including the Laguna Woods Resolution of Necessity is that there are many facets to the taking of someone’s property when it is not for sale. Just compensation should not be abused even if for a valid public use.
Bottom line. How does one truly measure success? The number of people displaced from their homes and businesses?


About Larry Gilbert