Gaslamp Card Rooms Face Switch in City’s Efforts to Oust Them

In January, the San Diego City Council thought it had found the broom it needed to sweep some of the least desirable businesses from the Gaslamp Quarter--a new ordinance that would require card rooms and video arcades to simply shut down within a year to make way for redevelopment.

Eight months later, city officials are putting away that broom and reaching for a more powerful, more expensive cudgel to drive such businesses away from the edge of the quarter that borders on glamorous new Horton Plaza.

The cudgel is condemnation, and its adoption as a strategy for clearing undesirable businesses from a stretch of 4th Avenue surfaced last week when the Centre City Development Corp. (CCDC) disclosed that it had hired an appraiser to determine the cost of buying out three card rooms.

The new strategy may be costly, redevelopment officials concede. While shutting down the card rooms under the ordinance would have cost the CCDC nothing, condemnation could force it to use some of the $2.3 million it had set aside for buying other properties along a three-block stretch of 4th Avenue between Broadway and G Street.

And while the ordinance mandated that the card rooms and arcades would be closed by no later than January, 1986, the use of condemnation could tie up redevelopment efforts in court.

“We’ve always known we’ve had the choice” to use condemnation proceedings, said Art Skolnik, executive director of the Gaslamp Quarter Council. “We just tried to take the least expensive way.”

The corridor along 4th Avenue, the top priority for redevelopment in Gaslamp, has become the focus of a flurry of discussions between CCDC and city officials, current property and business owners and eight development firms that have expressed interest in acquiring and rehabilitating portions of the run-down sector.

“It’s the most valuable retail strip of property outside of Horton Plaza,” Skolnik said. “It’s not like we’re going to have trouble finding people who want to go in there.”

City officials apparently switched to the tougher approach to 4th Avenue businesses after one card room operator filed suit in April challenging the validity of the January ordinance.

The ordinance created a Catch-22 for Gaslamp card rooms. It said they could remain in the quarter for only another year. But an older ordinance prohibited card rooms from relocating in San Diego. That left Gaslamp card rooms with no choice, apparently, but to shut down.

But Benjie’s Card Room, one of the poker parlors slated for extinction by the ordinance, went to court in April to challenge the city’s right to close card rooms in one part of the city while others remained in business in other parts of city.

City officials recognized that Benjie’s had a point. “The city attorney’s office had some concern that you could not just target card rooms in the Gaslamp area,” said Pam Hamilton, assistant vice president of Centre City, who is coordinating redevelopment efforts along the 4th Avenue corridor.

The result of the concern was a tactical shift toward condemnation. One of the first signs of the shift came within the last month in a letter sent by the city to Virginia Ebert, the attorney representing Benjie’s. The city notified the card room it would not enforce its January ordinance against Benjie’s but was considering condemnation proceedings instead.

Nina Deane, the city attorney who authored the letter, declined to say whether the policy would be extended to other card rooms and arcades along 4th Avenue, but said the tactical switch was “legally . . . pretty touchy.”

In the meantime, appraisers hired by Centre City are studying businesses and properties along the corridor to determine how much their owners should be paid if condemnation proceedings are pursued. The tactic could include as many as six buildings whose owners so far have been unwilling or unable to move from 4th Avenue.

While the new ordinance set a deadline of mid-January, 1986, for closing card rooms and video arcades in Gaslamp, there is no certain timetable for clearing the businesses out through condemnation.

Benjie’s attorney Ebert said her client is willing to wage a court battle to block condemnation proceedings, a move that could tie up the new strategy in court for an undetermined amount of time.

“It’s not a legal activity for a public agency to put a legally recognized, legitimate business out of business,” she said.

Tom Homann, an attorney for the F Street Bookstore, which also could lose its 4th Avenue location, said condemnation proceedings might also be fought on First Amendment grounds.

“I think it’s highly questionable whether they can use condemnation and their powers of eminent domain as a mechanism to censor the books being sold and the films being exhibited in the Gaslamp Quarter,” he said.

Nonetheless, Hamilton and Skolnik said they were confident that condemnation proceedings would not slow the city’s campaign to rid Gaslamp of card rooms and video arcades. If CCDC can convince a judge that there is a legitimate public interest in condemning the businesses, it would assume control of the properties 90 days after the court entered its condemnation order. The former owners then could haggle in court over the price they deserved for their losses, but the properties would be available for redevelopment.

The eight prospective developers of properties in the corridor include the owners of Fourth Avenue buildings that already have been rehabilitated and investors in other Gaslamp projects that could be bolstered by clearing away the peep shows and card parlors deemed blights on the historic district.

For instance, Michael Galasso, general manager of SEG Southwest Estate Group Inc., said his firm envisioned a mixed-use, four- to six-story building across from Horton Plaza, with retail stores at street level and residential or office space on the upper floors. The firm is developing City Plaza, a mixed-use project southeast of the new shopping and entertainment center.

Also, Winners Circle Resorts International Inc., which is rehabilitating the Jewelers Exchange building on 5th Avenue in Gaslamp into a hotel, has expressed interest in developing as much of the 4th Avenue property as becomes available, said Judi Carroll, director of development.

“The more Gaslamp continues on its course of redevelopment, the better off we are on our primary project,” she said.