City paying price for eminent domain
Coming off a costly legal blow on its latest eminent domain case, the city and its South Lake Tahoe Redevelopment Agency hope for a fiscal rebound at Park Avenue since the long-awaited project is now up and running.
The redevelopment agency expects to pay for the $561,000 lost to the now-defunct Bandana’s Whole Earth Pizza in a jury-trial judgment a week ago with the promise of better tax revenues and a refinance of its massive debt.
The agency was formed to spearhead the revitalization of South Lake Tahoe through the purchase of private properties in the redevelopment zone. The latest suit represents one in about a dozen cases, which have resulted in either negotiated settlements over the fair market value of the property or a trial, as in the case of the pizza parlor.
To make payment on Bandana’s and put its budget in the black, the city agency hopes to collect better-anticipated property, motel room and sales tax revenue as well as the refinancing of its multi-million-dollar redevelopment debt.
One of the agency’s financial consultants estimated refinancing $9 million at a low interest rate may save at least $500,000.
At 2 p.m. Tuesday in the council chambers, the agency will discuss switching the short-term loans to the low interest, long-term variety.
“Now the new project is assessing its worth. This isn’t a crisis. The overall picture of things are looking good,” said Hal Cole, agency board member.
Cole, who said he wasn’t surprised by the outcome of the Bandana’s trial held in El Dorado County Superior Court, pledged that no money from the city’s general fund coffers would be used to pay for the agency’s debt.
City Manager David Jinkens reaffirmed the pledge.
When asked if there’s a concern other property owners in the redevelopment path would try to gouge the agency based on Bandana’s favorable decision, Jinkens said: “No. Each case is based on its own merit. People shouldn’t get the idea that the city is an easy mark.”
After months of closed sessions, the city has settled at least 13 eminent domain cases relative to the Park Avenue Redevelopment Project as of December 2000. But officials were unable to update that number as of press time Thursday. City officials were also unable to indicate the amount of money used in the settlements by Thursday.
Another case involving the Van Sickle property remains.
Jinken is unsure whether the agency is interested in filing an appeal.
The trial — which lasted three weeks — determined damages based on the pizza parlor’s business loss and the value of its lease that would have taken the 10-year-old restaurant to 2008. A lease option added another decade.
Marking a lengthy legal battle with the city, the restaurant was demolished two years ago. The agency, which took possession of the site in March 2001, was offering about $200,000 less for the 4076 Lake Tahoe Blvd. location.
The attorney for business owner Kurt Carlsen said his client was originally intending to set up a new location in the new Marriott-anchored complex at Park Avenue, but he turned it down because of its close proximity to a competing restaurant — Wolfgang Puck.
“That was the nail in the coffin,” Sacramento attorney Gary Livaich said Thursday. “(The redevelopment agency) should have treated these people fairly to begin with. They got what they deserved.”
A hearing, due to return before Judge Terrence Finney that will determine statutory demands on litigation expenses, is slated for Dec. 13.
Meanwhile, Livaich said his client is looking for another location around town.
Susan Wood can be reached at (530) 542-8009 or via e-mail at firstname.lastname@example.org
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