Tuesday, December 18, 2007

City authorizes eminent domain proceedings for K Street properties

'bout time...

I do hope the two sides can come to agreement, but this does give the city another tool to finally get something done on those two blocks.

During public comment, Sid Heberger from The Crest sounded like she wanted to reach over and hurt Moe.

Either way, its going to be a hell of a fight. There are other problems on that stretch, but this is by far in my mind the biggest.

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K Street battle headed to court
Taking action against blight, the City Council votes to force big landowner to sell his properties.

Saying the blight on K Street has festered for too long, Sacramento City Council members brushed aside threats of a drawn out courtroom battle, voting unanimously Tuesday to start the legal process of forcing landowner Moe Mohanna to sell his properties there.

At the close of a bruising four-hour public hearing, Mayor Heather Fargo said she still hopes the city can reach an amicable settlement with Mohanna, but needs to have the tool of eminent domain at its disposal.

"The message that this sends is that the city of Sacramento is serious about K Street," Fargo said after the 9-0 vote. "K Street is going to be a retail street that people in Sacramento will be proud of, and we will do whatever it takes to get there."

he next step is for the city to convince a Sacramento Superior Court that the use of eminent domain is justified. Then, it would be up to a jury to decide how much the city would have to pay Mohanna for his nine properties on two of the bleakest blocks on the K Street Mall.

At Tuesday's hearing, four lawyers appeared on behalf of Mohanna and other partners in his properties. They challenged the city's characterization of the events leading up to the vote, saying they would use 13 different legal arguments to challenge it.

"You're going to lose … and it's guaranteed whichever way it comes out you're going to be in court a long time," said lawyer Myron Moskovitz.

"Your staff told you this is a way to speed this up, this is a way to get the downtown going quicker. It's exactly the opposite. This is the way to slow things down."

Moskovitz said his client should be given the chance to redevelop his own properties. "Moe's ready to go. He's ready to develop on his own."

A parade of prominent downtown developers, business people and civic leaders, however, urged the city to do whatever it takes – including exercising eminent domain – to move forward with redevelopment.

Joe Zeiden, owner of the Z Gallerie, plans to convert the historic buildings in the 700 block into a row that includes upscale retailers such as Sur La Table, Z Gallerie and Anthropologie.

Zeiden attended the hearing but didn't speak. His lawyer, Richard Hyde, told the council that "this city is fortunate to have a developer of this quality willing to take an interest in and redevelop K Street."

David Taylor, downtown's most prominent high-rise developer, said the picture was bleak. "I've never been more discouraged about K Street than I am right now, and I'm fearful that if you don't do anything tonight, you'll be in exactly the same spot that you're in five years from now, 10 years from now," he said. Taylor is a member of the team currently converting the old Woolworth store at 10th and K streets into a live theater and restaurant.

Rick Braziel, the city's new police chief appointee, said crime on that end of the mall has doubled in the past 10 years, mainly because of drug offenses and theft. "The 700 and 800 blocks of K Street are in need of an immediate and significant transformation from a public safety perspective," he said.

Also urging the city to authorize eminent domain were the operators of the Crest Theatre and the new Ella Dining Room and Bar on the K Street Mall.

Randall Selland, whose family owns Ella, came to the meeting in his chef's smock. He said the city needs more destination tenants, not more "lunch spots."

"It doesn't mean a little paint and spackle, which is what you've got going on now," Selland said. "You need something big."

A year ago, the city had in hand a signed deal with Mohanna and Zeiden to move forward with redevelopment on the two blocks. Mohanna had agreed to swap his properties on the 700 block with an equal amount of property on the 800 block. The city has spent more than $24 million to help Zeiden by acquiring properties that could be swapped with Mohanna's.

But a fire over Thanksgiving weekend in 2006 destroyed one of Mohanna's buildings in the 800 block. The city responded by declaring that the other buildings on the block were now dangerous and had to be knocked down.

Suddenly, Mohanna was faced with swapping a row of intact buildings on the 700 block with a hole in the ground on the 800 block. He balked, and the city is now fighting him in court to force him to follow through with the deal. City officials say the plan was always to demolish the buildings on the 800 block and build a new structure. But Mohanna had been hoping to rent them out until a development project made economic sense.

Mohanna and city leaders have been negotiating, but they have yet to agree on a new set of terms that would persuade Mohanna to go forward with the swap.

"If we had heard from Mr. Mohanna that he was willing to follow through," Fargo said, "we would not be here today."

Mohanna's representatives characterized the situation differently, saying the two sides had been close to agreement on a development project for the 800 block when the city played the eminent domain card. A meeting had been scheduled for January.

"Moe was furious, but he was still willing to go through with the meeting in January," Moskovitz said. "After today, I don't know."

12 comments:

Anonymous said...

"You're going to lose … and it's guaranteed whichever way it comes out you're going to be in court a long time," said lawyer Myron Moskovitz.

Wow- all we need now is someone twirling a mustache while a damsel in distress lays tied to the railroad tracks!

That so many parties involved in K Street are against Moe at this point should be enough evidence for him to realize that he needs to go. Even if he's in the right (which is unlikely), this is a PR nightmare for him. K Street continues to underperform in an otherwise good downtown/midtown market, and the fingers are pointing at him. TIME TO CUT YOUR LOSSES, MOE, AND LEAVE.

Central City said...

Real change needs to happen in two places Moes properties - and the city council .

The current city council has no credibility whatsover . Look no further than Natomas or the shady Arco deal for evidence .

While I think eminent domain is a good course of action in this particular case ,I fear it will be all in vain - for our current leadership cannot lead .

Anonymous said...

"Eminent Domain" is theft, pure and simple. I will plan to vote against every councilperson who supported it, as well as refuse to patronize businesses who testified in favor of it.

somebody else said...

You can only vote for one councilmember, the one who represents your district. It's now time to make Moe's life difficult

towerdistrict said...

Well they ALL voted for it, so which ONE will you vote against?

And it would be a shame if you boycott the businesses who testified for the City to use the powers available - considering they're the ones investing in the street, while "Little Guy" Mohanna neglects it.

But, chances are you're not spending much money on that block anyway.

Urban Zen said...

I think the Council did a good thing by approving the use of eminent domain, if necessary, to move K Street along.

I hope they can work out a deal without the use of ED. Moe does have a point that the deal changed when the value of the properties changed in that fire (regardless of fault). They should renegotiate the old plan and if it can't be done in the next 90days....use the ED powers now available.

One last thing...Moe should get another lawyer. Moskovitz only elevated the negative emotions of the whole situation at the hearing on Tuesday. The guy made used cheap tricks and a lot of spin in his presentation. He should use his ED Lawyer from San Jose to make the deal.

Daniel said...

I can't say I know who is "in the right" here, but I hardly think the situation is as one sided as the Sac Bee and Business Journals paint it. There was an article in SN&R a few months back that slants in favor of Moe. He does give opportunity for small business that can't afford higher rents, but does that belong on K Street?

The City has made many poor decisions for K Street.
> Kicking out most of the businesses on the 700 block way before anything is happening.
> No bikes on K Street!?!
> No street musicians (which I'm pretty sure is actually legal)
> SB Gold Line station placement - or lack there of...

I just hope the whole ED thing doesn't bite them back to hard. At least something is happening...

LivingInUrbanSac said...

The city has had its fair share of mistakes on K Street...like you said, the whole no bikes and street musicians thing really blows my mind. That makes no sense to me at all.

They mentioned how part of the land swap agreement was that the buildings needed to be tenant free for the swap to happen (including the ones Moe was to get), so I'm not sure if I blame the city for that one. A copy of the agreement is part of the agenda (Correspondence 1a13 Part 2), but it's 100 pages long so I didn't read it.

One item I keep hearing that I'm not sold on is if allowing cars back on K Street would do any good.

Flaneur said...

Eminent Domain is never to be taken lightly. Most of the time, not only is it highly controversial but it also often results in greater expenditure by the City than could reasonably be expected to be spent through normal property sales negotiations. One need look no further than the ludicrous amounts paid to the owners of the liquor store properties in the Oak Park neighborhood to see that the process is inefficient at best.

That said (and in response to one of the anonymous comments above) eminent domain is a vital tool in the toolbox of city management and revitalization. A property owner's willful neglect of key property in the heart of any community is "theft." The blight associated with the current state of affairs on K Street Mall negatively impacts both the economic vitality of every part of our city and the daily quality of life (HighQ to quote the people over at MidtownGrid) of every resident and/or worker. Fault may not rest entirely with the ownership team headed by Mr. Mohanna, and certainly the City was somewhat overzealous in evicting what tenants were making use of the aging infrastructure. Nevertheless, the substantial portion of the blame for a critical segment of the heart of our City seeing _no_ substantial development proposals over a ten year period [including the early 2000s!] is, quite simply put, criminal. If Mr. Mohanna isn't going to move his properties in a positive direction, they will continue to slide in a negative direction. _That_ holds _my_ head under water, therefore I feel quite justified in agreeing with the first responder: If you aren't going to make a positive change, then it is "TIME TO CUT YOUR LOSSES, MOE, AND LEAVE."

Aimee said...

I found it disturbing that Moe's plans were to rent out the swapped properties had the trade gone through (instead of demoloshing them and rebuilding).

I think that says alot about what kind of property owner he is. It sounds like he's looking for the properties to provide a little money right now, while missing the big picture of huge profit in the future.

As someone who lived downtown for many years, I've seen how the areas around k have grown. Honestly, I'd rather bypass that part of k all together; It's scary. It would be nice to see some stores worthy of the city.

Anonymous said...

This is a huge injustice to Mohanna.

Daniel said...

Putting cars back on K Street is a terrible idea.

There are several things that could be done to make K Street even more inviting to pedestrians, which would be better for the businesses on K Street.
->Textured pavement that is continuous across the numbered streets (cars x-ing a ped street-not peds x-ing a car street)
->Bicycles (with plenty of racks) (maybe it's a "slow bike zone")
->Pedestrian scale signs
->More street furniture
...

Hopefully we will have streetcars on K Street in a few years.