SILICON VALLEY/SAN JOSE BUSINESS JOURNAL
- OCT 11, 2002

"City makes offer on Tropicana as owners launch legal fight"

- Sharon Simonson and Timothy Roberts

The San Jose Redevelopment Agency has made its first attempt to buy a much-contested East San Jose shopping center, offering its existing owners some $15 million for the 140,000-square-foot center and 10 acres of land.

The offer is less than half what the current owners say the Tropicana Center is worth, and it appears very unlikely to be accepted.

The action is the first the agency must take in what is broadly expected to be its inevitable march toward attempting to condemn the corner. Norm Matteoni, the lawyer representing owner Dennis Fong and working on behalf of the other owners in the condemnation proceedings, says he expects the San Jose City Council will consider initiating condemnation at its Nov. 12 meeting.

Mr. Fong and the owners are not interested in selling the center, Mr. Matteoni says. In fact they plan a ribbon cutting by early November on a newly renovated 50,000-square-foot mercado, in which Mr. Fong has invested $3.5 million. Their goal is to stop the agency.

On Oct. 9, Mr. Fong took further action. Acting on his own behalf and on behalf of the center's other owners, he filed a 25-page notice to the city that he will sue the city, the redevelopment agency and the City Council. He charges that they defamed him, harmed his business, discriminated against him and violated his civil rights. Mr. Fong also names Walnut Creek's Blake Hunt Ventures Inc., contracted to take over redevelopment of the Tropicana site.

The city has 45 days to respond to the claim before Mr. Fong can file suit in either state or federal court.

"We will look at the claim and respond," says City Attorney Rick Doyle. "We went through this process, and I believe that everything was done correctly."

The e-mail writer calls Mr. Fong "a money grubbing slum lord" and says he "doesn't give a [expletive deleted] about the Latinos in the center or the surrounding community."

-email sent to Conrad Mukai from City Hall's computer room

In the claim, Mr. Fong also cites federal statutes that will allow him to claim in a later lawsuit that he was treated differently than he would have been had he not been a member of an ethnic minority.

"Would this have happened if Dennis Fong had been white?" asks attorney Rebecca Hughes of San Jose's McManis Faulkner & Morgan law firm, which is handling the lawsuit. She said that if the city denies the claim, Mr. Fong is prepared to file the suit.

McManis Faulkner is the same law firm that forced the city not to use redevelopment agency money in the construction of a new downtown City Hall.

As evidence that the city discriminated against him, Mr. Fong cites in the claim an e-mail received Sept. 11 by Conrad Mukai, a private citizen who maintains a Web site that is critical of the redevelopment agency. A computer sleuth hired by Mr. Fong traced the e-mail to room 500 at 801 N. First St. — the computer room at City Hall. The sender did not identify himself or herself in the e-mail, which is included in the complaint.

The e-mail writer calls Mr. Fong "a money grubbing slum lord" and says he "doesn't give a [expletive deleted] about the Latinos in the center or the surrounding community."

"Here's evidence that the city has a bias against Dennis Fong personally," says Ms. Hughes.

Mr. Mukai, a 47-year-old software engineer who describes himself as a citizen activist, says he did not respond to the e-mail directly because "you don't want to respond to an imbecile."

"I got this message, and I got really angry," he says. "This was way out of line. It was kind of slanderous."

He forwarded it to Mr. Fong.

The notice is addressed to the city of San Jose and the San Jose Redevelopment Agency. It also names Mayor Ron Gonzales and the eight council members who voted June 25 to approve the deal with Blake Hunt. Also named are Susan Shick, the executive director of the San Jose Redevelopment Agency; four other redevelopment executives and the principals of Blake Hunt Ventures, L. Gerald Hunt and Bradley Blake. All are listed as defendants in the claim in both their official capacity and as individuals. Not named are the two City Council members who voted against the plan: Chuck Reed and Pat Dando.

The San Jose City Council, acting as the board of directors for the redevelopment agency, voted June 25 to enter into contract with Blake Hunt to redevelop the two southern corners at the intersection of Story and King roads in East San Jose. The agency has declared the area blighted and already has succeeded in purchasing 13 acres for $13.6 million on the southeast corner across from the Tropicana.

Under its agreement with Blake Hunt, the agency is legally required to deliver to the developer those 13 acres plus the Tropicana Center land, fully cleared, in November 2003.

The agency expects to spend $50 million on the redevelopment, though it will receive $13 million to $18 million from Blake Hunt for the land, depending on the tenant mix the company is able to secure for the crossroads.

Calls to Mr. Gonzales, Ms. Shick and council members Nora Campos and George Shirakawa, and Messrs. Blake and Hunt were not returned. Councilman Ken Yeager declined comment.

Councilwoman Cindy Chavez says she is disappointed that the contentious issue has now resulted in legal action but says it shouldn't keep the city from making what she sees as much-need improvements.

"I don't think we should be dissuaded from moving forward," she says.

Asked if the city defamed, defrauded or discriminated against Dennis Fong, Councilman David Cortese said, "Absolutely not."

The case would have a greater chance filed in U.S. District Court than in the local Superior Court.

Federal courts have been more receptive to both discrimination cases and to challenges to redevelopment agencies generally.

Raising the issue of discrimination in a challenge to a redevelopment agency is rare, says Peter Detwiler, staff director for the California Senate Committee on Local Government. However, he added, it is a common observation that in the 1950s and 1960s redevelopment efforts were generally in minority and poor neighborhoods.

"To the extent that race and poverty correlate, it might be hard to say if redevelopment was going after minority communities or poor communities, because they were the same thing."

Mr. Fong and his attorneys also will have their work cut out for them to prove discrimination, according to an attorney who has experience in such cases, primarily defending redevelopment agencies.

"I have [redevelopment] clients who have been sued over discrimination, but never successfully," says Bruce Tepper, of Beverly Hills. "I've never seen that successfully litigated."

The case would have a greater chance filed in U.S. District Court than in the local Superior Court.

Federal courts have been more receptive to both discrimination cases and to challenges to redevelopment agencies generally.

"In recent decisions at the [federal] District Court level, especially in Southern California, the examination of redevelopment by federal courts has been unprecedented," Mr. Tepper says. Opposition to the redevelopment agency has grown lately as it has pressed ahead with its plans for the Tropicana Center and the Strong Neighborhood Initiative. One group of property owners calling itself Coalition for Redevelopment Reform held its first community meeting Sept. 28 and drew 80 people.

An organizer of the group, downtown lawyer and property owner Lorraine Wallace Rowe, thinks that the redevelopment agency needs to be reined in.

"Originally there were valid reasons for redevelopment to overcome blight," she says. "Now they've gotten out of hand."