SAN JUAN CAPISTRANO : Four Businesses, City Agree to Mediation

A settlement between the city and four businesses that were forced to relocate because of a downtown development project may be near.

The two sides have agreed to meet with a mediator Wednesday morning. The City Council has scheduled a special closed session that afternoon to discuss the claim filed by M&M; Jewelers, The Cat’s Meow, Cafe Capistrano and Cynthia’s Bakery and Tea Room.

The owners of the four businesses, former tenants of El Peon Complex across from Mission San Juan Capistrano, filed a claim in November asking for a minimum of $1 million to cover their costs.

But City Atty. Richard K. Denhalter has said that the city bears no financial responsibility to the businesses for relocation because they were on month-to-month leases when the property was sold by the city last year.

Richard L. Franck, a Los Angeles attorney representing the four businesses, said Monday he would consider further legal action if the former tenants’ claim is rejected.

The city has made a small offer to one of the business owners, Franck said, but it was unacceptable.

Franck said city officials have indicated that they may make other offers this week. “All they have said is that they do not intend to come to the mediation empty-handed, whatever that means,” he said.

Denhalter could not be reached for comment Monday.

El Peon Complex is being renovated as part of a $2-million project, which will include a restaurant and retail shops. San Juan Partners, the new owner of the property, gave former tenants a deadline of mid-January to find new locations.

Al Whelchel, who closed the Cafe Capistrano after the property sale, said Monday that he is eager for a resolution but isn’t counting on a victory.

“I hope that it’s in our favor,” Whelchel said of the non-binding mediation. “The city says they’re not going to do anything.”