Three years ago this spring, I moderated a meeting with over 500 of my neighbors at the Lakeshore Avenue Baptist Church, most of whom opposed the introduction of a McDonald’s onto the Lake Park Avenue corridor linking Lakeshore with Grand. After that tumultuous meeting our neighborhood embarked on a journey together.
We learned more than we ever wanted to know about zoning and conditional use permits. We petitioned. We attended Planning Commission meetings. We put up web sites. And a funny thing happened, after performing our due diligence as a neighborhood with a vision, we won. (For more history, see “Hahns try again to replace Kwik Way with major hamburger chain.”)
An end that was a beginning
We didn’t just stop a bad project: we helped initiate a good project. A local developer and neighbor, Dave Latina, approached us with an idea for a mixed-use development that would utilize the entire site and build infill housing with new retail that would include some sort of food establishment with tables on the street.
Latina, and his business partner, Michael Simmons, formed their own development company, Paramount Development Group (PDG), and developed what many of us see as a prototype community process in which the neighborhood would work with the owners, developers, and the City to design a project that would enhance and promote the quality of life in the Grand Lake area.
First they hired Community at Work, community facilitation experts whose motto is “putting participatory values into practice,” at a cost of $8,000. They asked for volunteers from the Splashpad Park project and other organizations who would commit to attending and giving their input over the course of three meetings—to be followed by a larger community meeting. Some of them were also willing to spend time with Latina at an information booth at the Grand Lake Famers Market for two weekends, recording comments and concerns from neighbors.
This process took almost five months to complete. During the process (and before the advent of the Grand Lake Guardian), there was a Yahoo! group in which folks responded with concerns about the project.
Design goals
Some were genuinely dismayed at any increase in building height on the street. They felt that any increase in density was not positive and that the Grand Lake area should remain essentially a single-family-home neighborhood.
Many of us pointed out that the existing zoning allows for 50 feet of height and that this is a transit corridor. According to the General Plan, some added density in transit corridors should be encouraged. Also, because the neighborhood behind sits above it on a hill, the height would not interfere with the present enjoyment of their homes.
In general the community seemed pleased with the process and final result. We were asked to contribute our ideas on everything from the placement of the bus stop, to the type of architecture, through the kinds of businesses we could expect to draw to the site.
The most important aspects of the plan were that we not have too much traffic crossing the sidewalks, that we have a mix of business to draw families and young adults, and that we have evening and outdoor uses—uses that would make the street lively, friendly, and safe.
The proposal included 53 condos of varying sizes priced from the mid $300,000 to the mid $600,000 range. At the time this was not only viable but conservatively estimated to work in a real estate market that might be cooling. If this project had gone forward as planned, it would almost be finished by now.
The decline and fall
The day after the recent meeting with the Hahns (who own and operate the Kwik Way) and the Fatburger franchisee, I contacted PDG’s Dave Latina and asked him what had gone wrong with the project.
He said that things had been going really well with the Hahns until about November 2005, when PDG was “informed [by the Hahns] that we’re no longer moving ahead with the deal.” The Hahns also told him that the illness of their son Alan—who was very involved with the planning—made them rethink the project.
At that point, Dave’s group, which was backed by the well-known specialty real-estate development company Metrovation, offered to buy them out and proceed with the plan. But the Hahns informed them that they had received a better offer.
Dave, his partner, and the others who worked with them, including architect Kava Massih, had to eat most of their costs, while their new company was left holding the (empty) bag. PDG estimates that they spent $40,000 to develop the community-driven plan.
Shortly after that, the Hahns entered into negotiations with Tom Peterson, of Lakeshore Partners LLC. According to Alex Hahn, Tom Peterson offered them a lot more money for the land than Latina’s group.
Latina said he thought Peterson had offered a price that “far exceeded what was feasible for that site.” And, no surprise to Latina, some months later Peterson had to pull out.
It seems that the deal didn’t “pencil out,” given the price Peterson had offered, without adding still more condos. More condos would require more parking, but more parking would have required digging deeper—down into the water table—a very expensive proposition.
Would the current housing market support this project today?
I asked Latina about the comments made recently by the Hahns and Council member Kernighan (more about that later) that the housing market could not absorb any more expensive condos and that other projects were being cancelled.
Latina has checked recent statistics and found that the median price in the whole of the 94610 Zip Code, including condos and homes below MacArthur Boulevard, is still in the mid $600,000 range. Latina explained:
No doubt the market has cooled but we have not seen downward pricing in the Grand Lake area.… The Grand Lake area is not overbuilt and almost no new construction is being offered. We continue to feel this is a viable project.
When I asked Dave Latina about the Toll Brothers canceling the Hahns’ downtown project (which Charlie cited at the recent meeting as a sign of the times), he explained that:
…high-rise construction which requires a lot of concrete and steel has gotten much more expensive due to the rise in the cost of the concrete, particularly. The Lake Park project, on the other hand, would have been woodframe over concrete podiums.
I contacted Charlie Hahn to ask him again why the original deal—the deal that the neighborhood was so invested in—had fallen through. Hahn told me that it had been due to the fact that BofA had wanted to keep their building as is and that it had a long-term lease with the Hahns (who also own the BofA building), including rights to 30 parking spaces in the Kwik Way lot that they were not willing to give up.
But my recollection of that period is that BofA was willing to come to the table and discuss options, including utilizing some of the public parking across the street. They did not want to be seen as the stumbling block to an upgrade of the neighborhood and were working in good faith with our Council member.
Latina concurred saying, “BofA came back to the table and wanted to work with us.”
Finding a way forward
Alex Hahn, the family patriarch, told me today that he didn’t believe that Latina’s group had the money. Hahn continued that Peterson had “offered them double the price. This is not community property. It is private property.” Hahn said that he doesn’t believe that any developer can make it work and that he has tried to work with the community. He and his family believe this to be the only deal they can get.
At the meeting Tuesday evening, Council member Patricia Kernighan also chimed in that she thought we should take the deal on the table, because large numbers of condos may no longer be viable.
This she said with no hint of irony. That same day, various community volunteers—members of the Oak to Ninth Referendum Committee—folks who believed in their “right to petition the government for redress” in the manner of a public referendum concerning public land, were being subjected to hours of interminable depositions with phalanxes of lawyers. Why? All because they tried to institute a community process for a referendum to prevent our last remaining waterfront from being completely covered with 3000 condos. This plan is another deal that Councilmember Kernighan also thought we should take because it was on the table.
At the Tuesday meeting, both Hahns stated that they would be willing to sell their property to someone who can make it work. When we asked the Fatburger franchisee to join us to build a project the community would enjoy for many years to come, Chester McGlockton said, “talk to the Hahns.”
Dave Latina continues to believe that investors are available to back the community-driven project. He said, “if the deal doesn’t work for them [the Hahns], let it work for someone else.”
Walker Avenue neighbor Amanda Brown Stevens, speaking at the recent meeting, told the Fatburger representatives, “this has nothing to do with you or your operation. We want a project that works for our community in the future.”
Council member Kernighan will be asking community members for their input on the Fatburger proposal. I ask you to weigh in on what you believe would be, as has been said many times, “the highest and best use” of that area.
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Comments
Pat,
I don’t see how you can say that the question of the health of the local condo market is “irrelevant,” when you yourself have previously cited regional/national trends as a reason that FatBurger might be the best we can do and in your article accompanying the voting you refer to the ”…uncertain hope that in four or five years when the housing market strengthens, the Hahns might be inclined to sell it to a developer,” which certainly implies that the housing market is not now sufficiently strong to support such a development.
If Alex Hahn can make enough money holding on to his land rather than selling it, fine. But it’s not our responsibility to help him do so by permitting an activity that’s incompatible with the site’s zoning and the General Plan (and is similarly unprotected by grandfathering due to the magnitude of the alterations necessary for the upgrades).
If Hahn can’t make enough without selling it, then he’ll have to sell at a market-determined price. When you sell land, you don’t get to dictate the transacting price—no matter how much he’d like to. You can only sell for what someone will pay.
Land speculators have no right to a guaranteed positive return on their investment. They play a risky game. Sometimes they win, sometimes they lose.
It might turn out at the end of the day that Hahn erred in some combination of the prices he paid for the Kwik Way property, for the Kwik Way lease, and/or for the Serenader property and/or in his decision to blow off Paramount Development Group in a futile search for a higher price. (If he had stuck with PDG, the development would already be under construction.)
If so, the sooner he realizes his true situation—that the neighborhood won’t sacrifice itself for his profit—the sooner he can mitigate his losses to the greatest possible extent by finally selling the property to someone who can develop it to its highest and best use. He can’t do any better than that.
Jim