Jury’s Still Out on Completion of Courtrooms

The renovation of the El Cortez Hotel Convention Center, envisioned as the cure for the county’s crowded downtown courthouse, is woefully behind schedule, will not open by an April target date, may not be finished by July and may never get done at all, officials said last week.

Construction at the complex, due to house nine courtrooms and to alleviate a crush that has forced San Diego Superior Court judges into temporary quarters in a hotel, is about halfway done. That’s so far behind schedule that county officials reluctantly began searching this month for even more interim space.

Last week, construction slowed to a virtual standstill at the landmark site, chosen 14 months ago to house the new courtrooms. The Japanese developer said it has run out of cash to finish the job, but county and court officials wonder whether the developer simply has lost interest in the project.

One afternoon last week, there was a sole worker, Vincent Dedmon, 27, on the job, picking at an open trench. With two of the four walls open to the wind, the frame welcomed a breeze that gently swayed dozens of air conditioning ducts, the planned alternative to the current open-air cooling system. “Not much going on here right now,” Dedmon said.

The reason there’s not much happening is a simple product of complex global economics that has made money tight, according to the Japanese developer who owns the site.

The company, one of a collection of firms known as the Minami Group, paid $27 million cash in late 1989 to buy three blocks under and around the El Cortez hotel. But it ran out of money to finish the $12-million construction job and can’t get a bank to lend it the $6.5 million or $7.5 million more it needs, Minami officials said.

County and court officials, however, said they believe that if Minami earnestly wanted to complete the construction, it would have found a way to do it.

Since construction on the courtrooms began, plans for an extensive development around the El Cortez hotel have been ruled out by city planners, reducing the site’s allure. Those plans called for residential and hotel towers around the restored hotel, a feature of the San Diego skyline for 64 years.

And Minami holdings elsewhere, particularly in Las Vegas, seem to be a priority.

Masao Nangaku, the Japanese billionaire who heads Minami, told the Nevada Gaming Commission in December that he might sell the El Cortez to finance two Las Vegas projects, according to a newspaper report.

“I think Minami is not interested in this project--that’s my bottom-line assessment,” said Judith McConnell, presiding judge of the San Diego Superior Court. “There’s no evidence they are interested in following through on their contract.”

County officials are baffled about Minami’s sudden claim of poverty because of the $27 million in cash the company paid for the site.

“The point is, when you see somebody lay cash on the line in that sort of dollar denomination, it’s a bit of a surprise when they come up short $7.5 million,” said Bob Maxwell, the county’s assistant director for general services, who is in daily contact with Minami officials.

“Nonetheless, they are trying to make it work. We all are,” he said. “But time’s running out. That’s the bottom line.”

Behind the frustration is the court’s tremendous growth in the past few years.

The court now has 71 judges, up from 53 just two years ago. Seven of the 71 judges work in hotel rooms in the Hotel San Diego, across the street from the downtown county courthouse. All day long, shopping carts carry court files back and forth across Broadway.

At the downtown courthouse, Judge Arthur Jones doesn’t even have a courtroom--he hears cases in his chambers while another judge sits on the bench a few feet away. Elsewhere in the county, other Superior Court judges operate out of trailers, cafeterias and weight rooms.

Although the number of judges is up, so are the numbers of cases. Across the county last year, there were 13,220 felony filings, up 43% from 1987, according to court statistics. There were 28,377 civil filings, up 30% in four years, court figures show.

To accommodate the new judges and the explosion in cases, the court lobbied the county board intensely in 1989 for space. Four new courtrooms in the South Bay are scheduled to open this November, and four more in El Cajon are supposed to open next year.

Downtown, the court asked for nine more courtrooms, for civil cases.

By December, 1989, the choice for more downtown space had come down to two options. There was the El Cortez center, at Beech Street and 8th Avenue, an appendage of the landmark hotel. And there was the vacant building that formerly housed the Walker-Scott department store at 5th Avenue and Broadway.

Several City Council members and county supervisors preferred the Walker-Scott site, saying that using it would further the city’s downtown redevelopment, and its restoration would preserve a historic building.

In addition, they said, the Walker-Scott building, last used for an indoor swap meet, was closer to public transportation and to existing courts.

The El Cortez center won out, however, because it was cheaper, and more importantly, the courtrooms were supposed to be available sooner. The El Cortez option was supposed to save the county $2.8 million, and courtrooms were promised in 180 days, county officials said in announcing the choice.

The county signed a five-year lease, with two five-year options. The city agreed to put up $3 million in redevelopment funds, payable after move-in.

By the time various city building permits were issued, the target date for an open house was pushed back to April 17, 1991.

The building was taken down to its shell and shell improvements--the ducts, for example--were begun. Then, in December, 1990, work stopped while the county and Minami worked out a dispute over tenant improvement costs.

After a few days, work began again. Then, in January, the real stall began.

Like other Japanese firms, Minami has been stung at home in recent weeks by higher interest rates, a collapse in stock prices and jitters in the real-estate market, said Roger Moliere, executive vice president of Minami California, the San Diego-based subsidiary of Minami Investment, which is part of the Minami Group of companies.

Minami abruptly found itself without the cash to finish the courtrooms for a complicated jumble of reasons, Moliere said.

Cash flow was squeezed, he said. Operating expenses had to be paid on assets around the globe, he said. Banks were leery of loans, he said.

Then there were the two enormous projects in Las Vegas demanding money, time and resources. Besides remodeling the Dunes Hotel and Country Club, a $200- to $400-million job, Minami plans to build a downtown skyscraper, at $90- to $100-million, Nangaku told the gaming commission in stories reported by a Las Vegas newspaper.

The company, which notified the county in January of its cash woes, intends to finish the El Cortez job, Moliere said. Funding may be “imminent,” he said.

If money becomes available in the next few days, Minami plans a full-on press to complete the renovation by July, when the county’s lease is due to begin, Moliere said. “We’re going to be stretching, lots of overtime, compact the schedule,” he said.

County officials remain dubious. There’s too much to do to get it done in four months, and that’s why two weeks ago the hunt began for more temporary downtown courtrooms, Maxwell said.

If there’s no sign in the “reasonably near future” that Minami will finish building the El Cortez courts, the search cycle will start all over again, Maxwell said.

“To start all over again, we’re talking 18, 24 months--if we had to start from ground zero for nine courtrooms,” Maxwell said.