(From The Oakland Tribune - Posted: 10/03/2010)
By Brian Beveridge
Oakland Voices Correspondent
OAKLAND, CA – Eminent domain: Two words that strike fear in the hearts of property owners.
The legal tool allows cities and government agencies to buy property even if the owner does not want to sell — sometimes below the price the owner thinks is fair. In Oakland, this broad government power helped bring about the West Oakland BART station, the U.S. Postal Service Regional Distribution Center and the relocation of the Cypress Freeway.
In the course of those projects, hundreds of homes and dozens of small businesses were eliminated — all with the intention of serving the public good.
Now, despite objections from both businesses and some residents, Oakland Community and Economic Development Agency staff will recommend Tuesday night that the City Council expand its eminent domain powers to accelerate redevelopment in West Oakland.
At the July meeting of the West Oakland Project Area Committee, known as WOPAC, which represents the community in redevelopment decisions, city staff openly discussed the use of eminent domain to help the Kroger grocery chain acquire property for a proposed 72,000-square-foot Foods Co. supermarket project near West Grand Avenue.
Property owner Sunny Hahn said at that time that no one from City Hall had spoken with him. In fact, he said, Kroger had not even attempted to negotiate with him.
Hahn said a Walnut Creek real estate
broker working for Kroger called in “March or April” and offered him $1.4 million for his land, but that is less than he said he has invested. Hahn said he made a counter offer of about twice that price, and that was the last he heard from Kroger.
Hahn knows about eminent domain. The Korean business man and one-time grocery store operator owned a parking lot in the uptown area near the Sears department store. When the Uptown housing project and Fox Theater redevelopment became realities, the city wanted Hahn’s parking lot as a new home for the Sears auto service center.
Hahn liked his parking lot business and thought the city’s offer for his property was too low. He took the city to court and — after two years and tens of thousands of dollars in legal fees on both sides — a deal was made that satisfied Hahn. He thinks everyone could have saved lots of money if the city had been willing to pay a fair price in the first place.
Strangely enough, Hahn is in the same situation again.
Hahn’s new concern is the recent announcement that Kroger wants to build at least three warehouse-style, full-service grocery stores in Oakland under its Food Co. brand.
Progress — at a price?
According to the city, Kroger has purchased the old cold storage warehouse and related buildings at West Grand Avenue and Myrtle Street. The company plans a 72,000-square-foot store with parking for more than 250 cars.
Hahn owns about an acre of commercial land in the project area.
“When I buy the property,” he said, “I have my own dream for a little shopping center.”
No eminent domain proceedings have been started on Hahn’s West Oakland property.
“The city is not between the buyer and seller,” said Patrick Lane of the city’s development agency.
WOPAC has a long-standing policy limiting the amount of property that can be taken by force as part of any redevelopment project in West Oakland.
The policy forbids the taking of any residential property and limits the taking of commercial property to projects of three acres or less. The Foods Co. project is about five acres.
The development agency wants to amend the existing eminent domain rule to make its use more flexible, but a common opinion by some inside and outside city government is that the amendment is very technical and has been a cause for confusion.
In July, WOPAC members asked city staff why the changes to eminent domain could not just apply to the one property in question. Gregory Hunter, director of the agency, said that type of “spot zoning” was against policy.
Councilmember Nancy Nadel (West Oakland-Downtown) said via e-mail, “The expansion of eminent domain is only for this grocery store project and that is why I support it.”
The full council will vote Tuesday on whether to amend the eminent domain rule to apply specifically to the two blocks around West Grand Avenue and Myrtle Street.
At the same July meeting, city staff pressed for the need of eminent domain in the Foods Co. project, but by August they appeared to back away from that position.
Larry Rice, co-chairman of WOPAC, said a development agency staffer “alluded to the fact that eminent domain would not be needed on the property because a deal was in negotiations.”
That was news to Hahn.
“No negotiations are going on, not at all,” he said during a Sept. 10 interview for this story. “(The development agency) never contact me at all.”
After that interview, Hahn and his attorney contacted the city and met with Hunter and a city attorney regarding the project. Kroger representatives did not attend.
Hahn said he’s not looking to block a valuable project. He said he is, “willing to, happy to, want(s) to do something good for (the) community.”
According to city staff, a forced purchase would be a last resort.
“There is generally an offer higher than market, so that eminent domain isn’t required,” wrote Patrick Lane, who works on West Oakland redevelopment for the city of Oakland. “There are high costs for attorneys and expert witnesses if eminent domain is used.”
Hahn said the price offered by the city does not fairly represent his total investment.
Hahn says he paid $1.35 million in 2005, spent more money in court to get the previous owners to vacate the land and spent tens of thousands more rehabbing the warehouse and three other buildings. Now he has five steady tenants — including an auto repair shop, tire store, truck repair operator and a Clear Channel billboard lease.
“I have good tenants and I’m happy right now,” he said.
West Oakland’s longtime residents are very familiar with the impact of eminent domain.
The vibrant African-American commercial district along Seventh Street was decimated by two projects in the 1960s and 1970s. Hundreds of homes and at least two popular black-owned nightclubs, Slim Jenkins Club and Ester’s Orbit Room, were destroyed or relocated when the Postal Service used eminent domain to acquire the land at Seventh and Willow streets.
Slim Jenkins Club was offered a land trade in Jack London Square, but due to discrimination in the ’60s, African-Americans often did not frequent the square in those days and the new club soon went bankrupt. Ester’s Orbit Room was moved across Seventh Street, but never reclaimed its former popularity as a premier blues club.
The ACORN housing area between Market and Union streets is another painful scar for many West Oakland families. Thousands of old Victorian houses were razed and replaced with new townhouses, but in the process many extended families had to move and never reunited as a community.
Eminent domain, a power held by many local, state and federal agencies — including the city, BART, Caltrans, and the Postal Service — is seen by many in West Oakland as a legal hammer to smash what people outside the community consider blight, and to deliver what those same outsiders consider progress.
How will Hahn respond if the city steps in to acquire his property with eminent domain power?
“I have to fight back,” he said. “This is a hostile takeover of private property.”