Santa Ana Land Buy Criticized as Costly

The city of Santa Ana has paid $1.4 million for a small strip of commercial property needed for a road-widening project that one councilman said was a terrible deal for the city.

The transaction, to be finalized later this month, involves taking 30 to 40 of the more than 300 parking spaces at a shopping center at West McFadden Avenue and Bristol Street. The city acquired the land through eminent domain to widen Bristol Street.

“If you think we paid too much for it, you’re right,” said Councilman Ted R. Moreno. “There was a lack of leadership [on the project] at all levels at the time. Basically, what the [shopping center] owners are losing for $1.4 million are parking spaces that were never used.”

Attorney Gary Weisberg, who represented the Koh family--which owns part of the shopping center--said the final purchase price was negotiated after “a hard-fought battle” and includes damages owed the property owners for what they say is a loss of business.

Documents show that $381,000 of the purchase price is for the actual cost of the land, which measures 434 by 35 feet. The rest is to compensate the Kohs for other damages, including the loss of parking and the number of entrances into their property.

“I know that when you look at it only as a $1.4-million sell-off, it looks like these guys [Kohs] walked away with everything,” Weisberg said. “. . . But there’s a lot more to it. These were hotly contested, tough negotiations with some major disagreements. We think that the final deal is good for everyone.”

For instance, Weisberg said, the $1.4-million price included damages suffered by the Kohs when the homes bought by the city across the street remained vacant for months and were occupied by transients.

“The abandoned homes not only lowered property values but made it unpleasant for some people to shop at the center,” Weisberg said.

In addition to the $1.4 million, Santa Ana also agreed to pay the family $37,900 to relocate the signs and lights that had to be moved from the condemned strip, said Souri Amarani, the city’s project manager.

Both sides were far apart in their estimates of what the Kohs deserved for the property. The city listed the land’s fair market value at $381,000, but an appraiser hired by the city listed it at $403,000. The Kohs’ appraiser said it was worth $2 million.

Early in the negotiations the city offered to pay $650,000, and the Kohs countered with $1.8 million. Then the city made what it called its final counteroffer of $850,000.

The city then increased its final offer to $1.1 million on July 2, 1998. In a motion filed 12 days later, the city described the 40-year-old shopping center as “a veritable cesspool of illicit activities ranging from prostitution and drug transactions to the provision of illegal government documents.”

Both Weisberg and Moreno said the negotiations were contentious.

The city sued in Superior Court in 1996 to force the Koh trust to give up the property, but never served the lawsuit, Weisberg said. The family learned six months later that it was being sued and threatened to countersue, he said.

The two sides reached an out-of-court settlement in January for $1.4 million that will be finalized Sept. 27. Weisberg said most of the money received by the Kohs will be used to improve the shopping center.

Both sides said the negotiations relied in part on a 1996 Times report and photos about illegal activities at the center.

However, Weisberg said the Kohs showed they “took every reasonable step possible,” including hiring full-time security guards, to combat crime problems at the center.

“The compensation was a compromise on both sides. It was a fair result. We were prepared to ask for much more if this had gone to a jury,” said Weisberg. “. . . The pre-condemnation damages was a major issue. In this case, the city unreasonably delayed the process of condemnation, creating a cloud over the property and causing a loss for the owner. From the city’s perspective it may have been easier just to settle.”

The $1.4 million paid for the ribbon of asphalt is almost as much as the city council paid for eight residential parcels across the street, including the homes. The properties, which cover half the block between Russell Avenue and West McFadden Avenue, were bought for $1.8 million, Amarani said.

Weisberg, who specializes in eminent domain law, also represented several owners whose properties were condemned by Caltrans for the widening of the Santa Ana Freeway. His success in those cases may have played a role in Santa Ana’s decision to pay $1.4 million for the Koh property, Moreno said.

“I don’t know if our legal department got scared that we would have to pay much more if this went to trial. There were a couple of blunders committed, like not notifying the owners that they were being sued,” Moreno said. “There were a lot of discussions about this project in closed session that I can’t talk about. But we all knew that Weisberg was winning a lot of his cases.”

Santa Ana City Atty. Joseph W. Fletcher defended the purchase price but declined to discuss the city’s legal strategy.

“We’re not allowed to buy just the land. We also have to pay for other forms of damages and compensation. The purpose of the [eminent domain] law is to compensate landowners for the land acquired by a public agency,” Fletcher said.

Amarani said Bristol will be widened to six lanes as part of a $9.35-million construction project tentatively scheduled to begin in January and last 18 months.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Buying Space

As part of widening project along Bristol Street, Santa Ana taxpayers paid $1.4 million for a thin strip of a shopping mall parking lot through the eminent domain process. Councilman Ted Moreno said the city drastically overpaid for the ribbon of asphalt.

Source: Bristol Street Corridor Specific Plan

Graphics reporting by BRADY MacDONALD / Los Angeles Times