Downey Negotiating Out of Court to Settle Redevelopment Suit

City officials are pursuing an out-of-court settlement of a lawsuit filed by a residents’ group last July that seeks an injunction to prevent the city from setting up a 380-acre redevelopment district along Firestone Boulevard.

Last Monday, City Council members met behind closed doors for 90 minutes in an attempt to settle the suit filed by Downey CARES in Los Angeles County Superior Court. The suit, scheduled for a March 8 court hearing, charges that a City Council ordinance that approved boundaries for the redevelopment district last July should be overturned because of alleged official improprieties.

In the lawsuit, the residents’ group charges that city officials attempted to subvert the intentions of state redevelopment law by declaring the Firestone corridor a “blighted” area when, the suit claims, the corridor is a “healthy commercial strip.”

The suit also claims that the ordinance should be invalidated because Councilman James Santangelo, who cast the deciding vote in a 3 to 2 decision, had a conflict of interest because he owned property in the district.

In response, according to papers filed with the court, the city has accused Downey CARES of using “excessive demagoguery” in an attempt to get the courts to prevent the city from condemning property in the redevelopment district.

Called ‘Stagnant’

City officials also said that the state redevelopment law is written in broad terms that would include the Firestone property. The city says the corridor is “stagnant” and has become an “economic burden” because of zoning violations, poor planning, and a lack of public services such as flood control, sidewalks and street lighting.

In addition, Santangelo and city officials claim in court papers and in interviews that the councilman did not violate state conflict-of-interest law because he disclosed his property holdings and did not stand to profit directly from creation of the district.

City officials argue that under state law, a public official can participate in a vote to create or amend the boundaries of a redevelopment district, but once a district is created cannot vote on specific decisions, such as the building of a sidewalk, that would benefit him financially.

“We very clearly believe that he did not break the law,” City Manager Robert (Bud) Ovrom said of Santangelo’s vote.

Lynn Montgomery, a spokesperson for the state Fair Political Practices Commission, said Thursday that the city’s position on Santangelo’s vote probably is correct.

Although lawyers for both sides declined comment on the case, Councilman Robert Cormack said the council is seeking an out-of-court settlement because it wants to end a battle that he says has become an “emotional thing.”

Consensus for Settlement

“About all I can say is rather than go to the mat on this and go for a win, the consensus on the council is for a settlement of some sort,” Cormack said.

Paul Sarvis, the McDonnell Douglas Corp. financial analyst who is president of Downey CARES, said his group is seeking a quick settlement.

“I’m always optimistic as long as everybody’s talking,” he said.

Downey CARES’ opposition to the redevelopment district dates back to 1983, when the city proposed a redevelopment district of 1,700 acres. After residents protested, the size of the district was reduced twice that year, first to 927 acres and then to 616 acres. The city dropped more than 200 acres occupied by Rancho Los Amigos Medical Center, land occupied by nine schools in the Downey Unified School District, and residentially zoned land.

In 1984, the redevelopment district was scaled down to the current 380 acres, which takes in properties along and adjacent to Firestone Boulevard.

In a redevelopment district, a special fund of tax money is set up to pay for improvements in the district, typically by selling bonds. The bonds are repaid from enhanced property taxes that are earmarked for the district and diverted from school districts and other local governments that normally would receive the money.

Has Sold Property

At the time of the vote last July, Santangelo, who had been elected to the council a month before, owned a piece of property in the district, at 10802 S. Downey Ave. The property includes a building that houses Santangelo’s real estate business as well as a chiropractor’s office. He has since sold the property for $300,000 and said that he plans to move his office.

Santangelo said in an interview that, although he does not believe he has a conflict of interest, he wishes he had abstained from the vote.

Santangelo said he openly disclosed his land holdings in public meetings, stated his holdings in a public financial report filed at City Hall, and cast his vote for the redevelopment district after discussing it with city lawyers. He said he voted for the district because it was “best for the community.”

“In my mind and heart I knew I had no conflict,” said Santangelo. But, he added, “I think it would have been better if I abstained” to avoid the debate over the possible conflict of interest.

Santangelo owns four other pieces of property, which amount to 1 1/2 acres, in a redevelopment district previously set up in 1978.