County Loses Costly Lawsuit Over Jail Site : Settlement: Jury awards $55.6 million to wealthy family for 525-acre Otay Mesa site.

San Diego County must pay developer Roque de la Fuente II and his family $55.6 million for 525 acres the county seized from the family in 1987 to build the East Otay Mesa jail, a San Diego Superior Court jury ruled late Friday.

The land the county took under its eminent domain powers from the wealthy family was worth that much cash because it was a remarkable plot ideally suited for a jail, the jury concluded. That was precisely what the family--which owns real estate, car dealerships and a bank--had contended, the family’s lawyers said.

In the lawsuit, the county had claimed the land would be best used for residential housing, which would have lessened its value significantly, according to the De la Fuente family’s attorneys. “The jury saw right through that,” attorney Michael T. Thorsnes said.

The award is believed to be one of the largest jury verdicts in the county’s history.

In addition, it is not clear how the financially beleaguered county can afford to pay $55.6 million--unless it taps into funds collected under Proposition A, the half-cent sales tax voters narrowly approved more than two years ago to build new jails and courts.

However, $55.6 million is about one-third of the $160 million collected since the tax was enacted. And though a state appellate court approved the tax in a ruling issued earlier this month, Proposition A remains in legal limbo while further appeals of the tax’s validity are waged--so none of the money is available to the county.

Supervisor Brian Bilbray said the verdict “just sounds outrageous.”

County officials have envisioned the East Mesa facility--near the U.S.-Mexico border, seven miles east of Interstate 805--as the central ingredient in solving a longstanding jail crowding problem. The county’s six jails hold hundreds more inmates than the state recommends.

The verdict means the solution to overcrowding will be far more costly, Bilbray said.

“The frustration is that everybody and their brother is taking cheap shots at the county when we’re trying to address a criminal justice crisis,” he said. “You just get so frustrated with it.”

Bilbray also said, “This is a good example of rushing, rushing, rushing, pushing, pushing, pushing to build jails as soon as possible.”

When the new jail was under consideration, in 1987, Bilbray opposed it, saying it was chosen even though three other sites were also available.

Now, building for the first 754 beds at the site is well under way. The first phase of the jail is due to be completed by spring, county officials have said.

Absent Proposition A funds, however, the county does not have enough money to operate the jail when it opens, officials have said.

De la Fuente, meanwhile, who serves as the general manager of the family’s businesses, said he would be willing to negotiate a settlement of the $55.6-million verdict.

He also said that, even at $55.6 million, the county may actually be getting a good deal. The figure is based on $2.50 a square foot for 525 acres, he said. The county also has considered jail sites in Clairemont Mesa, where he said property costs $20 per square foot, and in downtown San Diego, where he put it at $100 per square foot.

“If you were making the decision for them, where would you put it?” he said. “You have to put things in perspective.”

Under the eminent domain rules of the federal Constitution, a government body--federal, state or local--may take over private property for virtually any public purpose as long as it pays fair market value for the property to the owner.

The Otay Mesa site is immediately to the east of a state prison--built on land that also had been owned by the De la Fuente family.

Beginning in 1985, the county and De la Fuente began negotiations for the family to sell the site. Unable to reach agreement, the county condemned the parcel on Sept. 16, 1987, through its eminent domain powers.

The jury had to decide the “highest and best” use of the land--defined as the one that produces the most economic benefit--and, then, the value of the land for that use, Thorsnes said.

De la Fuente originally had appraised the land as an industrial parcel worth $8 million, Thorsnes said. But, in preparation for the trial, appraisers who are experts in jails put it at $64 million and called it “potentially the most desirable site in the country for a prison,” Thorsnes said.

The county contended in the two-week trial before San Diego Superior Court Judge Jeffrey T. Miller that the site was best used for residential housing and put its value at $5 million, Thorsnes said.

After a sole day of deliberations, the jury decided Friday that the site was best suited for a jail and had a fair market value of $55.6 million, Thorsnes said.