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."