The 18 feet in easements that city councilmembers gave to Sunroad for their Kearny Mesa development isn't free after all. Today, August 22, the developer, the City of San Diego, and attorney Cory Briggs agreed to settle the case, putting to an end a year-and-a-half-long legal battle.
The temporary restraining order prohibiting Sunroad from leasing the units is lifted, allowing the developer to rent the units and continue construction. In exchange, Sunroad executives agreed to hire a professional real estate appraiser to come up with the price for the easements. Sunroad will then write a check to the city to be deposited into an account for public parks. In addition, the developer will give $10,000 to acquire parkland in Kearny Mesa or a nearby community.
Controversy surrounded the development before construction ended. In May of last year, Sunroad executive Tom Story began lobbying city-council members to give his company two nine-foot easements. Doing so, said Story, would not cost the city anything. Not doing so would cost the developer $8600 a month in profits.
To seal the deal, he dined with councilwoman Lorie Zapf at Dobson's Restaurant to discuss the land giveaway. Then–Zapf staffer Kelly Batten worked with Story to draft a resolution to finalize the deal.
Then came former mayor Bob Filner, who vetoed the council's decision. Story went to the mayor's deputy chief of staff, Alan Jones, to resolve the matter. Story and Jones worked out a deal. Filner would withdraw his veto in exchange for a $100,000 "donation" for two of Filner's pet projects. Filner soon came under fire for accepting the donation. Cory Briggs, the attorney for San Diegans for Open Government and CREED-21, sued the city and Sunroad for failing to address environmental and public-safety impacts in the deal.
Legally speaking, it appeared as if Sunroad had their backs to the wall. On August 12, San Diego Superior Court judge Timothy Taylor issued a temporary restraining order that prohibited Sunroad from leasing any units in the buildings adjacent to the easements. One week later, Taylor solidified his decision by extending the restraining order until a trial commenced.
"The court finds petitioner is likely to prevail on the merits of at least one of its alternative claims. The court finds it more likely than not that the easements constitute a 'substantial change'...thereby requiring further CEQA review (which was not done). [Sunroad] and the City made an error: they planned and approved the Project with a 6 foot setback when the relevant building codes clearly require a 15 foot setback. The City then sought to pretend the error away and relax the rules for [Sunroad] by deeding back the 6 foot easement, first in exchange for a very questionable $100,000 payment, and then for nothing. None of this was contemplated by the environmental documents that were approved when the park in question was originally dedicated. None of this was done in a properly noticed public hearing."
But there was more. In his tentative ruling, Taylor commented on new evidence that Sunroad was already leasing the units without a certificate of occupancy. To try and get around it, Sunroad attempted to palm off an inspection report as the official certificate. Taylor was not pleased.
"...[Sunroad] has leased about 40 [percent] of the Phase 2 building. The problem, as pointed out in the reply, is that the alleged [temporary certificate of occupancy] is entitled 'Inspection Record.' Several boxes are not marked, including the box for 'occupancy.' The contention that the Phase 2 building has been temporarily approved for partial occupancy has not been demonstrated to the court's satisfaction."
A city attorney spokesperson says attorneys notified the mayor on the restraining order but did not comment on made-up certificates.
"Upon issuance of the Temporary Restraining Order (TRO), our office immediately notified the Mayor's staff of the Court's July 31 ruling that no certificates of occupancy be issued," says the spokesman from the city attorney's office. "Up to that point, there was no legal prohibition on issuing certificates. Our office took no position on building occupancy and was not aware of any illegal occupancies. We suggest you contact Sunroad or the Mayor's office on that."
Now, the agreement allows the developer to move forward on the project, the city (read: taxpayers) to get a fair price for the parkland, and for Briggs to be paid. According to the settlement agreement, Sunroad or the city will not have to admit any wrongdoing.