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In Brief: Redevelopment Association Sues State

The California Redevelopment Association (CRA) is suing the State of California for shifting $350 million in redevelopment tax increment to school districts. The shift was part of the state budget approved in late September (see CP&DR Capitol Update, October 2008). The CRA argues that the shift is unconstitutional under Proposition 1A from 2004, a state funding measure that also included protections for local government revenues.


A property rights lawsuit that initially appeared it would cost the City of San Diego nearly $100 million has concluded with the city being awarded $4.3 million in attorney fees.

In 2001, a jury awarded developer Roque de la Fuente II $94.5 million for inverse condemnation of his property in Otay Mesa. The jury's award followed a San Diego County Superior Court ruling that planning for an international airport in the area of de la Fuente's business park and the diversion of truck traffic to a new border crossing amounted to a taking of private property because they impacted development of de la Fuente's project. The Fourth District Court of Appeal overturned the inverse condemnation ruling, threw out the $94.5 million award, and sent the case back to Superior Court for a new trial on de la Fuente's claim that the city had breached a development agreement (see CP&DR Legal Digest, November 2006).

In June, San Diego County Superior Court Judge Linda Quinn ruled for the city, finding that the developer had failed to file a proper claim with the city before filing the lawsuit. More recently, Quinn awarded the city all of its attorneys fees for the nine years of litigation a total of $4.3 million.


Former San Francisco Supervisor Ed Jew has pleaded guilty in federal court to extorting $40,000 from the owners of eight Quickly tapioca drink shops in exchange for helping them get use permits. Jew, who resigned in January after only a year in office, pleaded guilty to mail fraud, extortion and soliciting a bribe. He is scheduled to be sentenced in February 2009. Jew also faces state charges that he lied about living in Burlingame so that he could run for office in San Francisco's Sunset District.


A luxury hotel and housing development approved in September by the Healdsburg City Council is headed into court. A group called Citizens for Sustainable Solutions filed a lawsuit in October alleging that the city did not adequately analyze the impact of the Saggio Hills project on water supply, greenhouse gas emissions and aesthetics.

Developers Tony Korman and Robert Green propose a 130-room, high-end hotel and 70 "multi-million-dollar" homes on more than 200 acres on the north edge of town. In exchange for project approval, the developers agreed to provide 36 acres and $3 million for a community park, a graded, 14-acre site for affordable housing, $1 million toward affordable housing development and a fire station. The Sonoma County Local Agency Formation Commission still needs to consider annexation of the site to Healdsburg.

City officials say the hotel, with rates averaging $700 per night, could roughly double the city's transit occupancy tax revenue to more than $5 million annually. Opponents say their gripe is with the number of large houses, not the hotel.


Tuolumne County supervisors have approved a revised plan for the Mountain Springs project. Seven years ago, supervisors approved a 1,500-house subdivision on the 1,100-acre site near Sonora (see CP&DR Local Watch, October 2001). When opponents gathered enough signatures to force a referendum election on the project, however, the local investors behind the project asked supervisors to rescind the project's approval.

In October, the county approved a 600-home project that also preserves 160 acres of agricultural land and limits the number of second units to 26. Opposition appears to have greatly decreased.


The City of Sacramento has finally completed acquisition of decrepit and vacant properties along two blocks of the K Street Mall after decades of conflict and litigation with property owner Moe Mohanna. The city's Housing and Redevelopment Agency will pay $18.6 million for Mohanna's nine properties that line a block and a half of K Street and one block of 8th Street.

Although the city has had some success redeveloping the K Street corridor, the stretch of properties controlled by Mohanna have remained underused and in poor repair. The city's redevelopment agency intends to provide some properties to furniture store owner Joe Zieden, who proposes a row of new stores on K Street between 7th and 8th. The agency intends to sell other properties to hotel developer Bob Leach for construction of a 400-room Hilton and a separate mixed-use project.


The largest conservation acquisition in Sonoma County history was completed in October, when the Sonoma Land Trust reached an agreement with the owner of the 5,630-acre Jenner Headlands. The trust, local, state and federal entities, and the Gordon and Betty Moore Foundation will jointly pay $36 million for the property, which was owned by a New Orleans doctor and already subdivided into 40 lots. The property is a mix of old growth forest, recently logged lands, grazing lands and 3 miles of coastline. The Land Trust said it would like to make the property a state park eventually.


A company called World International LLC has completed its purchase of the Diablo Grande project in a bankruptcy court proceeding. Reportedly controlled by Mexican developers, World International paid $20 million for the 28,500-acre project in the hills of Stanislaus County west of Interstate 5.

The project went into bankruptcy in March after the owner, pharmaceutical company owner Donald Panoz, failed to attract buyers. He had been asking $150 million for the project, which is approved for 2,300 housing units, a golf course resort and extensive retail and office space. So far, only 400 houses and two golf courses have been built. The project may be most famous among planners for a 1996 court decision rejecting an environmental impact report because the county postponed a water supply analysis.

Critical habitat for the endangered San Bernardino kangaroo rat would be scaled back by 77% under a plan approved by the U.S. Fish and Wildlife Service. The agency in October published its intention to remove 26,500 acres in San Bernardino and Riverside counties from the critical habitat designation, leaving about 7,800 acres along rivers and washes for the species. The change becomes effective November 17.

The "K rat" has been the bane of the Inland Empire's development industry for nearly two decades because the endangered species listing has forced lengthy environmental reviews and shut down development in some areas. But while the Building Industry Association of Southern California praised the Fish and Wildlife Service move, the Center for Biological Diversity vowed to sue.

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