K Street development saga continues in Sacramento

from yesterday's Sacramento Bee --

K Street battle headed to court
Taking action against blight, the City Council votes to force big landowner to sell his properties.
By Mary Lynne Vellinga - mlvellinga@sacbee.com
Published 12:27 am PST Wednesday, December 19, 2007

"Saying the blight on K Street has festered for too long, Sacramento City Council members brushed aside threats of a drawn out courtroom battle, voting unanimously Tuesday to start the legal process of forcing landowner Moe Mohanna to sell his properties there.

At the close of a bruising four-hour public hearing, Mayor Heather Fargo said she still hopes the city can reach an amicable settlement with Mohanna, but needs to have the tool of eminent domain at its disposal.

"The message that this sends is that the city of Sacramento is serious about K Street," Fargo said after the 9-0 vote. "K Street is going to be a retail street that people in Sacramento will be proud of, and we will do whatever it takes to get there."

The next step is for the city to convince a Sacramento Superior Court that the use of eminent domain is justified. Then, it would be up to a jury to decide how much the city would have to pay Mohanna for his nine properties on two of the bleakest blocks on the K Street Mall." ....

"A parade of prominent downtown developers, business people and civic leaders, however, urged the city to do whatever it takes – including exercising eminent domain – to move forward with redevelopment.

Joe Zeiden, owner of the Z Gallerie, plans to convert the historic buildings in the 700 block into a row that includes upscale retailers such as Sur La Table, Z Gallerie and Anthropologie.

Zeiden attended the hearing but didn't speak. His lawyer, Richard Hyde, told the council that "this city is fortunate to have a developer of this quality willing to take an interest in and redevelop K Street."

David Taylor, downtown's most prominent high-rise developer, said the picture was bleak. "I've never been more discouraged about K Street than I am right now, and I'm fearful that if you don't do anything tonight, you'll be in exactly the same spot that you're in five years from now, 10 years from now," he said. Taylor is a member of the team currently converting the old Woolworth store at 10th and K streets into a live theater and restaurant." ...

"A year ago, the city had in hand a signed deal with Mohanna and Zeiden to move forward with redevelopment on the two blocks. Mohanna had agreed to swap his properties on the 700 block with an equal amount of property on the 800 block. The city has spent more than $24 million to help Zeiden by acquiring properties that could be swapped with Mohanna's.

But a fire over Thanksgiving weekend in 2006 destroyed one of Mohanna's buildings in the 800 block. The city responded by declaring that the other buildings on the block were now dangerous and had to be knocked down.

Suddenly, Mohanna was faced with swapping a row of intact buildings on the 700 block with a hole in the ground on the 800 block. He balked, and the city is now fighting him in court to force him to follow through with the deal. City officials say the plan was always to demolish the buildings on the 800 block and build a new structure. But Mohanna had been hoping to rent them out until a development project made economic sense.

Mohanna and city leaders have been negotiating, but they have yet to agree on a new set of terms that would persuade Mohanna to go forward with the swap." ...

for the complete story see:
http://www.sacbee.com/245/story/577982.html