Barricades Up in Battle With City : Developer Slips Through Loophole After Council Rejection

Be it shrewd or be it foolhardy, a San Diego developer is pushing ahead with plans to construct a $6-million retail-office project on prime downtown real estate even though the City Council rejected his proposal last month.

Setting the stage for a possible court fight, Terry Nash built barricades and started excavation over the weekend for his seven-story project on a 10,000-square-foot parcel at Front and F streets.

Nash’s bold move renews questions about what ultimately will be built on the parcel, considered a prime site because of its location on the block between the Horton Plaza shopping and entertainment center and the Meridian condominium tower. Both projects are scheduled to open in mid-summer.

Nash’s project seemed all but dead four weeks ago when the City Council, acting as the city’s redevelopment agency, voted 5-2 to reject his project and instead asked that the land be condemned and purchased with public funds. The market value is estimated to be at least $1 million, the price that Nash paid for the land last year.

In making its decision, the council rejected the advice of both the city Planning Commission and the Centre City Development Corp. Both had recommended approval of Nash’s plans. “I thought we were doing great,” Nash recalled.

Instead, the council sided with arguments made by Meridian developer Walt Smyk and his attorney, Richard Burt. Smyk and Burt lobbied against Nash’s plan, saying the block is better suited for residential development.

Smyk, who owns most of the remaining block, reportedly envisions the construction of a second Meridian tower on the site. Phone calls to both Smyk and Burt were not returned Tuesday afternoon.

Nash, who also owns the refurbished, 75-year-old Senator Building next to the disputed parcel, said in an interview Tuesday that he still wants to build his project.

His tones ranging from confrontational to conciliatory, Nash said he feels secure in his legal rights to proceed with the plan. But he also said he hopes to work out a compromise that would satisfy both the City Council and Smyk.

Nash also wondered aloud why the City Council hasn’t considered condemning and purchasing Smyk’s 32,500-square-foot piece of the block, then putting out a request for proposals on possible uses of the property. “Treat everybody equally,” he said. “Why not acquire everybody’s property if they want to do it that way?”

Nash said he had earlier approached Smyk with a proposal for a cooperative development, but their meeting quickly deteriorated, with Smyk insisting that a condo tower similar to the Meridian would be the best use for the site.

Nash acknowledged that his initial construction work might be perceived as posturing. However, he said he has secured a $750,000 advance on a construction loan from Bank of America. Moreover, Nash said his legal counsel contends that the city cannot withhold a building permit.

It is unclear whether the city in a condemnation proceeding would be obligated to reimburse Nash for the money spent toward construction. This possibility would make a tough decision for the City Council even tougher, because more funds would have to be diverted from other projects to buy out Nash.

However, Nash said that he isn’t trying to profit through condemnation.

“All we’ve seen so far is posturing, gesturing and supposed power plays,” he said. “I would welcome some dialogue . . . . The city wants to master plan this block. I say let’s sit down in a spirit of cooperation, as private property owners, without using public money.”

Later, he added, “I don’t want them to condemn it. The $40,000 I spent this weekend for excavation is not going to come back. I want to develop my property . . .

“I’ve postured, they’ve postured--we really haven’t talked.”

Although Nash contends that the city can’t deny him a building permit, Deputy City Atty. John Riess said Tuesday that the encroachment permit that Nash cites as justification for his excavation work probably was granted by mistake.

Under normal circumstances, he said, encroachment permits allow builders to set up barricades on public land to fence off a construction site but do not allow for excavation. However, the permit sought by Robert Fitzgerald, Nash’s architect, also specified excavation. Still, Riess said Nash may have committed an infraction by excavating the property. “It’s not that big a deal,” he added. “It’s technical.”