Like many merchants in downtown San Diego's East Village, former city councilman Tom Hom didn't know he was skating on such thin ice by doing business there.
Hom thought he might benefit from the construction of the Padres' proposed ballpark a block away, but sometime in late 1997 or early 1998 the boundaries were re-carved to include his Farmer's Bazaar and Western Metal Supply buildings.
On learning of that change via news reports, Hom realized the ice was dangerously fractured. Being inside the ballpark's borders meant his retail and real estate enterprises would crash through the bureaucratic cracks. The East Village had been designated a redevelopment district in 1992, empowering the Centre City Development Corp. (CCDC) to buy land at any time, move businesses, and, if necessary, seize property by condemning it.
Like some other small business owners standing in the ballpark's way, Hom not only is a Padres fan but he also is surprisingly magnanimous about the concept of improving the neighborhood. However, the chances of agreeing with the CCDC about the value of his property and business are remote. "It's a wide disparity," Hom said.
On Tuesday, June 1, San Diego City Council was scheduled to condemn nearly a dozen parcels, giving the property owners and their tenants 90 days to vacate. (As of press time on Tuesday, the vote had not occurred.)
Several of the landlords -- including Hom; architectural designer Michael Fillipponi, whose family owns the Artplex and United Fastener buildings; and Edward Plant, owner of the behemoth San Diego Refrigerated Services Inc. -- said the CCDC's offers to buy were too low. The offers, they said, represented about 60 percent or less of October's appraised value.
Similar action for another 20 parcels, outlined by J and K Streets and Seventh and Tenth Avenues, is expected this summer. The third and final round of real estate acquisition is expected in January, assuming the city follows through in securing $225 million in bond financing for the ballpark. As David Duea, owner of Fire Etc., awaits what he expects to be a "lowball" offer from the CCDC, his frustration grows. Until he receives money from the city, Duea said, he can't build, buy or lease a warehouse for the fire trucks and related emergency equipment he sells. Duea estimates he needs at least $1.5 million to duplicate Fire Etc. in what he calls "a lousy location" miles elsewhere, but he worries he won't receive sufficient compensation from the CCDC. "How would you like to buy something with no budget? How would you like to buy something with no time frame for need? How do you buy something to replace something you don't want to sell?" he asked, recalling how he mortgaged his home 24 years ago to buy parcels in the East Village. "We're being screwed, and they don't have the courtesy to tell us how bad or when."
Many businesses that lease space are also frozen by uncertainty. Typical is Mark Kenney, president of United Fastener Co., which sells nuts, bolts, rivets, screws, concrete anchors, drill bits, and saw blades used in commercial construction, marinas, and boats. If he relocates within downtown in an effort to retain customers, Kenney's rent will double or triple. If he leaves downtown for affordable space, he'll lose customers. Eateries and retailers nearby are wrestling with the same troubling options. The CCDC's maximum rent differential of $10,000 over two years would last less than six months, Kenney predicts, and he doesn't think he would be made whole for having to restart his business from scratch. "I'm getting depressed because I have no place to go."
The CCDC follows state laws in compensating businesses and residents uprooted by redevelopment projects. Some form of reimbursement is available for the real estate, moving expenses, higher rent elsewhere, lost rent from tenants leaving, and "good will," which equates to revenue and profit decreases resulting from relocation. Disagreements on the adequacy of compensation are already augmenting the workload of San Diego's small cadre of lawyers -- about two dozen -- who are versed in condemnation proceedings and eminent domain. The complexity of such law and a seething sentiment of unfairness are driving some East Villagers to seek legal help.
Plant said he had no intention of hiring a lawyer. Instead, he cooperated with CCDC officials since late 1997 by providing them copies of financial statements, tax returns, and other confidential documents -- all in the spirit of relocating San Diego Refrigerated Services in a timely fashion. When he received the CCDC's written offer on April Fool's Day, his reaction was, "You've got to be kidding! They're not offering me as much for my whole business as they give to the average ballplayer for a year!" At that point, Plant asked other business owners for names of lawyers. It appears his only recourse may be making a claim for good will within condemnation proceedings, a legal maneuver that could take two years or longer. Some lawyers say the CCDC could be challenged for inappropriately acquiring properties after having struck a premature deal with the Padres, team owner John Moores, and his company, JMI. A lawsuit filed last month accuses the agency of illegally acquiring real estate before completion of an environmental impact report.
David N. Allsbrook, the CCDC's manager of contracting and acquisitions, said the agency's "land assembly" efforts in the East Village are necessary and consistent with past activity in the neighborhood, including the drafting of a prior EIR in 1992. If a ballpark weren't built, he insists, the land would be used for housing and retail outlets -- thus justifying demolition of buildings, which is scheduled for fall.
San Diego lawyer Louis Goebel, who specializes in eminent domain law, said, "If financing for the ballpark fails, we may see an expanse of bare dirt surrounded by chain-link fences." Although Allsbrook boasts of the CCDC's ability to successfully move those affected by condemnation and the agency's low litigation rate -- "only 10 percent" -- he acknowledges that business owners in a redevelopment district operate amid perennial uncertainty and face tough decisions once the city decides to seize property. Allsbrook even concedes that of the 69 businesses and 27 residents to be ousted by the ballpark, or possible lack of a ballpark, San Diego Refrigerated Services may be the most difficult to move. It appears impossible, given Plant's unusual circumstances.