SILICON VALLEY/SAN JOSE BUSINESS JOURNAL
- OCT 21, 2003

"City quits court battle with Tropicana owners"

- Sharon Simonson

The city of San Jose's Redevelopment Agency has conceded defeat in its long, hard, very public attempt to condemn the Tropicana Shopping Center in East San Jose.

"They're dropping the case! We won hands down!" shouted Robert Mezzetti, an attorney for the Tropicana merchants shortly after 3 p.m. Tuesday in Santa Clara County Superior Court.

Tears flowed, hugs were exchanged, and the two city underling attorneys slipped carefully from view, declining comment. City Attorney Rick Doyle, who was not in the courtroom when the city withdrew, could not be reached later for additional comment.

The city's decision to withdraw its condemnation action against the Eastside property owners followed a six-page tentative decision issued Monday by Judge Gregory H. Ward. In that decision, the judge ruled that the city had failed to fully meet its burden of proof for exercising its right of eminent domain. In particular, the judge said that the administrative record of the city's actions in the case did not show that the redevelopment agency and its board had properly balanced the joint goals of minimal private injury and the common good.

"From the record it cannot be said that there are no alternative plans that would achieve an equal or greater public good and a lesser private injury," he wrote.

The judge gave the city the opportunity to establish the missing proof during the next phase of the trial. On Tuesday, the city gave up.

"We do disagree with the court's ruling," said Rob Fabela, an attorney for the city, in announcing the decision to withdraw the case. "The (redevelopment) agency thanks the court for its time. There is no further need to proceed with the trial. A notice of abandonment of the case will be filed tomorrow."

Tropicana's lead owner, Dennis Fong, amidst hugs and congratulations from supporters present in the courtroom, said the outcome represented "vindication."

"It's redemption. It's pride in this community. It's the merchants and citizens that have stood behind me and supported me. I'm proud that they truly believed in what I did," he said.

Mr. Fong's attorney, Norm Matteoni, a well-known eminent domain lawyer in the community, said the victory was among the most significant -- if not the most significant -- of his career.

Mr. Matteoni said the city now will be responsible for paying the $1.3 million in legal fees that Mr. Fong and the other Tropicana owners have accumulated in the case. The city also will be responsible for paying damages that the center's owners and merchants believe they have sustained as a result of the RDA's actions. How much those costs will be was not immediately apparent. Mr. Matteoni said any disputes arising out of the process of determining that sum would go before the court.

Between 30 and 40 tenants remain at the center today, Mr. Fong said. As many as 100 tenants occupied the center roughly a year ago before legal wrangling began in earnest between the city and the property owners. Tenants that had committed to occupying space in a newly rebuilt Mercado at the center also have backed out of those commitments, leaving the space approximately 75 percent empty.

The Mercado, or market, is a centerpiece of the existing development and a planned new mercado was to be the centerpiece of the center's proposed reincarnation. Mercados offer merchants extremely small spaces where many sell hand-crafted goods.

The redevelopment agency had proposed creating an integrated shopping hub for East San Jose that would have included a remade Tropicana Center and a second center on a neighboring parcel at Story and King roads. Walnut Creek developer Blake Hunt Ventures had agreed to assume the task.

It was not clear late Tuesday how those plans would now play out, if at all.

Mr. Fong said Tuesday that the owners had together spent $9 million so far upgrading nearly half of the center and a portion of its parking lot. He estimated $6 million in additional work remained undone. He said the owners "fully intend" to complete the renovation, but he said he hoped that the city would help them in that endeavor, specifically to gain control of a portion of the center in the hands of an absentee owner who has not participated in the upgrades so far.