According to the latest agenda, the San Leandro City Council will meet on Feb. 6th to discuss the price and terms of payment for the former Albertson’s property to developer David Irmer (president of Innisfree Co.), who plans to turn it into a strip mall. Apparently, the City Council has already quietly agreed to sell the property to him.
The City bought the property for $6M in April 2009 and then immediately turned it over to Irmer to develop. Three years later, it is selling it to Irmer for about $2.5M*, 60% less than it paid for it and a $3.5M loss to taxpayers.
The City has offered no explanation as to why Irmer didn’t directly buy the property in 2009, though it was to Irmer’s advantage to wait until the commercial property market reached rock bottom before buying it. Had the property’s price gone up, Irmer was under no obligation to buy it. It is also unclear whether the city overpaid for the property in 2009 or whether it is selling it to Irmer for less than its market price. While commercial property prices have gone down since 2009, the price decline has not been anywhere near 60%. In either case the City, presumably following the advise from the lawfirm Meyers Nave, would have violated the law.
The City bought the Albertson’s property in 2009 to settle a lawsuit by Norcal, the former owners of the property. Norcal sued when the City refused to allow Grocery Outlet to move into the Albertson’s property. At the time, the City Council said that a supermarket was inconsistent with the City’s Transit Oriented Development plan (though apparently the City Council has changed its mind as another supermarket, Fresh & Easy, will anchor the new strip mall). It is thus possible that the City willingly overpaid for the Albertson’s property at that time. Doing so, however, would be illegal.
It is of course legal for cities to settle lawsuits, but they can only do so with their own. The Albertson’s site was actually bought by the City’s Redevelopment Agency, an independent legal entity. The recently eliminated redevelopment agencies were obligated to pay “market price” for any property they acquired – thus overpaying for a property to settle a lawsuit against a different party, is illegal.
If the City did not break the law in 2009 and did not overpay for the property then, then it must be undercharging for it now (as, again, property values have not gone down by 60%). The California Constitution prohibits local government from making gifts of public money to private individual, allowing a private party to buy a public property for less than its worth constitutes a “gift”. It is, therefore, illegal.
The sale of the Albertson’s property to David Irmer has been done totally behind closed doors. Not only did the City now allow any other party to bid on the property, but it conducted the sale without any notice to the public. It gave the community no opportunity to be heard on this issue. While the developer conducted a few community fora to inform the community about his plans, none of the concerns presented by San Leandrans have been addressed.
There isn’t very much we, as San Leandrans, can do about this now, though I’d urge you e-mail the City Council to at least put your objections on the record. It is also something worth remembering come November 2012, when Ursula Reed and Jim Prola run for re-election.