Despite warnings from Councilman Bill Cleator that "we're showing private developers . . . that they can't trust us," the San Diego City Council on Tuesday agreed to lay out $1.1 million to buy part of a key downtown block where the council has refused to let developer Terry Nash build an office building.
However, Nash, who last month began excavation on the site despite the council's April 23 rejection of his proposal, said Tuesday he will turn down the city's offer, setting the stage for a bitter condemnation battle.
"When they call with their offer, I'm going to say, 'No way,' " said Nash, who wants to build a $6.3-million six-story office building on the site, at Front and F streets. "We're going to move forward with the project. If they offered us $2 million tomorrow, we wouldn't take it."
By a 6-2 vote, with Cleator and Councilman Ed Struiksma dissenting and Councilman Bill Mitchell absent, the council Tuesday amended a redevelopment budget to set aside $1.1 million to acquire Nash's 10,000-square-foot parcel, which is between the $140-million Horton Plaza retail and entertainment center and the $71-million Meridian luxury condominium tower. Nash, who redeveloped the Senator Hotel on the same block, bought the property for $1 million last year.
The $1.1 million the council agreed to use had been earmarked for the purchase of downtown property to be used for residential development and to redevelop run-down buildings on 4th Avenue, according to Gerald M. Trimble, executive vice president of the Centre City Development Corp., the city's redevelopment arm. The redevelopment of 4th Avenue is considered crucial; the street, dotted now with porn shops, card rooms and sleazy bars, forms the eastern perimeter of the Horton Plaza project.
Nash associate Fred Norton, urging the council not to buy the site, argued that the acquisition would divert funds from "better, more important goals" downtown.
"Why delay the cleanup of 4th Avenue and residential plans just to prevent a private developer, using his own money, from building a project?" asked Norton, financial director of Nash's American Property Development Inc. "This is a dangerous precedent that the city is setting."
Art Skolnik, executive director of the Gaslamp Quarter Council, also encouraged the council to save the $1.1 million for other purposes, principally the 4th Avenue cleanup. The city has budgeted $1.9 million for the project, but Skolnik said that amount is "way short" of the money needed to renovate 4th Avenue.
During the council's brief debate, Struiksma noted that the "whole point of redevelopment" is to persuade private developers to use their own money, not the city's, to revitalize downtown.
"This (proposed project) is . . . Mr. Nash's money, at his risk, for the benefit of downtown," Struiksma said.
Cleator, meanwhile, warned his colleagues that blocking Nash's proposal would "send out the wrong signals" to private developers.
"We've made a terrible mistake in handling this particular developer this way," Cleator said. "In trying to develop downtown, this council is going to have to send signals to private developers that we want them to do what (Nash) has done. Instead . . . we're sending signals to the private sector that the individuals who are laying the groundwork really don't mean that much."
Mayor Roger Hedgecock, however, told Cleator that he was "dead wrong," adding, "The signal we're sending is that a developer who doesn't work with the program . . . isn't going to get approved."
In rejecting Nash's proposal in April, Hedgecock and other council members argued that the proposed office building was a poor use on a site widely regarded as perhaps the prime downtown block. Some council members have said they hope the block will ultimately be used for a major residential project, perhaps similar to the Meridian.
However, in a sharp rejoinder to Hedgecock, Cleator suggested that the mayor and the council majority had capitulated to pressure from Meridian developer Walt Smyk, who has discussed building a second condominium tower on the block.
"The only thing that happened is that an individual with a lot of political clout came in here and we bowed to his will," Cleator said. Hedgecock and other council members denied Cleator's allegation.
Nash said that, despite Tuesday's vote, he hopes the council will reconsider and allow his project to proceed.
"The council members have to see that they have more important things to do with their money than to block a private developer who isn't looking for any subsidy from the city," Nash said. "I keep hoping that reason will prevail. When that's going to happen, though, I don't know."