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One’s Man’s Blight…
by Ron Davis

Two California shopping centers have dodged the wrecking ball, thanks to a recent court decision that has spared them–at least for the time being.

The two shopping centers are Saddleback Valley Plaza and K-Mart Center, both located in Lake Forest. They are targets of a local plan to redevelop the area in which they do business. Lake Forest city government apparently has decided that they are not contributing enough in local sales tax revenue to continue operations.

In fact, areas surrounding Lake Forest have grown rapidly during the past 10 years, causing the city’s retail businesses to suffer. New neighboring shopping centers have especially attracted customers from Lake Forest, where retail sales have declined by some 30 percent during the period.

For such reasons, the city implemented a plan that would “revitalize” the area. Later, the city revised that plan to declare the area that includes Saddleback Valley Plaza and K-Mart Center as “blighted.” As such, the city could condemn the two shopping centers and modernize the area with new retail stores and centers.

No doubt the two shopping centers under siege have been in economic trouble for a while. One once had 23 commercial spaces vacant and now shows many signs of deterioration and neglected maintenance. The other shopping center lost the K-Mart anchor store and has not had a replacement for more than eight years.

Nevertheless, a principal of one of the shopping centers asked the courts to intervene and block the city from condemning the properties.

A California court subsequently ruled that the city had changed its original plan from “encouraging, facilitating, and assisting property owners with improving their own property, to allowing the taking of private property from its owner to be conveyed to a third–party developer.” The court added that as a result of the newly added eminent domain power and because of the amplification of the revised renewal project, “an additional finding of blight needs to be made.”

On appeal, a California appellate court upheld the lower-court decision, noting findings that should make the case for blight in the area much more difficult. Explained the judges, “This case involves fewer allegedly deteriorated or dilapidated buildings in the project area than one can count on two hands, and the city...makes no attempt to show any safety or health problems for those buildings. Nor does the city cite any evidence of health-code violations, structural defects, or even declines in property values.” (Boelts v. City of Lake Forest, 2005 WL 428605 [Cal.App. 4 Dist.])

Decision: March 2005
Published: April 2005



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