Hawthorne Moves to Condemn Property

Leo Merten has known for years that his tiny, run-down bungalow in southwest Hawthorne would eventually be torn down to make room for a major redevelopment project.

His only complaint now is that the $175,000 offered by the Hawthorne Community Redevelopment Agency is not enough for the house he has lived in since 1975 and in which he had hoped to retire.

The 47-year-old carpenter is the first to admit that the 900-square-foot house is in bad shape, but Merten said the only reason he didn’t keep up his property was that he knew he would soon lose it.

“They’re offering what the house is worth, but not enough to replace it in the city or even a neighboring city,” Merten said. “I’m going to have to go to Riverside. And I just don’t want to sell.”

In all likelihood, however, Merten will have no choice.

The redevelopment agency on Monday unanimously adopted a resolution allowing the city to begin eminent domain proceedings against Merten and more than 50 other owners of property near Rosecrans Boulevard and the San Diego Freeway.

The action came after several public hearings and more than a year of negotiations with Cloverleaf South Bay Ltd., a Century City-based development firm owned in part by former Sen. John Tunney. The company plans to build a $250-million “urban village” consisting of 465 condominiums, several shops and restaurants and up to three hotels on the 27-acre site.

Although the city has already settled with 10 property owners in the area, it has yet to agree on a selling price with more than 50 others. Offers have yet to be made on six other properties, city officials said.

The agency’s action does not affect negotiations with property owners who already have received offers, but it finally convinced Merten and fellow holdouts that the city is serious about buying their land.

“Redevelopment has been talked about for five years,” James Watkins, owner of J & D Towing on 146th Street, said after Monday’s hearing. “Because projects fell through two times before, I thought this one would fall through, too.”

Cloverleaf, through Dai-Ichi Kangyo Bank of California, loaned the agency $46 million to acquire the property that stood in the way of the project and to relocate the tenants. In return, the city agreed to sell the land back to Cloverleaf for $23 million and to pay off the remaining money with property taxes earned by the project.

City officials expect it will take about 10 years to pay off the loan.

Cloverleaf also paid $1.5 million into a public safety fund and another $1.5 million into a fund to ease traffic problems in the area. The developer also agreed to pay $1.8 million into an education fund that will be disbursed between the Centinela Valley Union High School District and neighboring elementary schools, said Rex Swanson, Cloverleaf vice president and project manager.

Annexed from the county in 1975, the site of the project is among more than 900 acres of land declared a blighted area in 1984. The declaration allowed the redevelopment agency to earmark the run-down properties for a redevelopment project.

After negotiations with two other developers to build office buildings on the site failed, city officials in August gave final approval to Cloverleaf’s proposed project.

The Mediterranean-style development is expected to be completed in 1995.

In Monday’s action, the redevelopment agency adopted a resolution of necessity, which is required before the city can begin eminent domain proceedings. A public hearing before the vote drew comments from four property owners and an attorney for the Southern California Water Co., which has a 1-million gallon storage tank in the area.

“I don’t think building a hotel and a bunch of condominiums is a matter of public necessity,” Donna Lalev, 26, said. “Obviously, you’re not considering the injury you’re doing to the citizens who live there and work there.”

The agency will continue to negotiate with dissatisfied property owners but will begin filing eminent domain complaints in the next few weeks, said Murray Kane, an attorney for the redevelopment agency.

Property owners may go to court to oppose the amount of compensation offered, but the agency may take their land within 90 days of serving the complaints, said eminent domain attorney Jeffrey Springer. While the matter is in dispute, the city must deposit the amount of its offer into an interest-bearing account. The property owner begins earning the interest on the money after the agency takes the property.

By law, the agency must offer property owners fair market value for the land and buildings on it, as well as relocation money to help them move, Springer said. Business owners may also receive compensation for lost profits as a result of the move.

The problem property owners face, Springer said, is that the value of their property now is lower than it would have been had the city not earmarked the area for a redevelopment project.

“There’s no incentive for tenants or property owners to take actions to improve their properties” when an area is about to undergo redevelopment, Springer said. “Things tend to get run-down because people don’t make investments they normally would in an area where a project has been pending for an unusual period of time.”

John Hanson, who was offered $175,000 for a house and adjacent manufacturing building he has owned since 1964, is a case in point.

“I had plans to build a beautiful two-story building, and then, zap, all of a sudden the redevelopment came along and all that effort was wasted,” Hanson, 62, said. “Now, there’s really not much point in fixing it up because the city’s going to take it anyway. Everybody became discouraged.”