Judgment Goes Against City in Fight Over Historic House

Saying San Diego violated a nonprofit group’s due process rights, a Superior Court judge has ordered the financially strapped city to pay $577,992 in a dispute over a historic Hillcrest house.

In a ruling issued last week, San Diego Superior Court Judge Wayne Peterson said the city acted in an “arbitrary, capricious and unreasonable manner” by voiding a demolition permit issued to Vista Hill Foundation, a nonprofit agency that provides mental health services throughout San Diego County.

Without the demolition permit, which the city issued and then voided after abruptly declaring the facade of the Laurel Street house a historic site, Vista Hill could not proceed with the planned sale of the property, said its lawyer, David F. Dunbar.

Virtually all the $577,992 judgment is from a loss in the property’s value traceable to the aborted sale, Dunbar said.

“While (the city) was well-intentioned, in trying to engage in historical preservation, it ignored the (land-use) ordinances that it had created in dealing with us and dealing with our demolition permit,” Dunbar said. “Good intentions simply are not sufficient to violate people’s property rights.”

The deputy city attorney in charge of the case, Robert J. Mulcahy, could not be reached Tuesday for comment. The city faces a $25-million shortfall in its fiscal 1993 budget.

The two-story, white house at 545 Laurel St., across 6th Avenue from Balboa Park, was built shortly after the turn of the century. It was designed by Hazel Waterman, widely considered the first female architect in San Diego.

Through the years, the house served as a family home, then as a boarding house. It has been vacant since Vista Hill bought it in 1989. Before buying it, the foundation was told that the city had no plans to designate the house a historic site, Dunbar said.

A few months after Vista Hill took over the house, the foundation agreed to sell it for $1 million to San Diego Trust & Savings Bank, which owns the block to the north, Dunbar said. The sale, however, was contingent on the demolition of the building, Dunbar said.

On July 24, 1990, the city issued the demolition permit.

On July 25, a city building inspector visited the site and approved the demolition. That same day, meanwhile, the city’s Historical Site Board suddenly designated the facade of the house a historic site.

On July 26, Ronald Buckley, then the secretary of the site board, rushed to the site, where work crews were preparing to blow up the building, and called off the demolition, Dunbar said.

A few months later, Vista Hill appealed the historic site designation to the San Diego City Council. On Oct. 30, 1990, the council denied the appeal.

Vista Hill sued, seeking to recoup the money it would have made on the sale. After a five-day trial, Peterson ordered the city to pay Vista Hill the $577,992.

Of that total, $575,000 was for the property’s lost value and $2,992 was for the money Vista Hill had paid a demolition contractor, Dunbar said.