Santa Ana wins its appeal of One Broadway Plaza suit

SANTA ANA — The construction of Orange County’s tallest building is now back on track. The California Fourth District Court of Appeals ruled in favor to the City of Santa Ana and ordered Superior Court Judge Derek W. Hunt to vacate his ruling  in favor of a the plaintiffs in a suit brought to halt revisions to the One Broadway Plaza Development Agreement by the City of Santa Ana.

In June, Orange County Superior Court Judge Derek W. Hunt ruled in favor of the Coalition for Accountable Government Ethics (CAGE) and against the City of Santa Ana concerning City’s amending the One Broadway Plaza development agreement. Last year, in what was arguably an illegal vote once you factor in the reality that several City Council Members voted  despite having received campaign contributions from parties involved with the project, the Santa Ana Council amended the voter approved development agreement on the 37 story high-rise project. CAGE sued to overturn that decision.

The June ruling orderd the City put their decision to amend the Development Agreement to the voters. Santa Ana sought extraordinary relief to overturn Hunt’s decision.

In the unpublished ruling posted on December 2, 2011 the Court of Appeals determined that the trial court plainly erred in declaring the ordinance approving the amendment void and ordering the City to hold a referendum election on the amendment to the development agreement.  The court will issue a peremptory writ of mandate directing the superior court to vacate the judgment declaring the ordinance amending the development agreement void and ordering the City to hold a referendum election on the amendment ordinance.  The writ of mandate will further direct the superior court to enter a new judgment denying CAGE’s complaint for declaratory relief and petition for a writ of mandate. 

CAGE will be meeting on Wednesday evening with their attorney to discuss the ruling and see if there are any options left for CAGE in the case.

Ironically, the April 2005 Ballot Initiative that developer Mike Harrah put forward to move the project forward included the provision that the property be 50% pre-leased before construction could begin. It was Harrah’s bait and switch that convinced voters that the project would not be built without assurance that it would not be a vacant glass monolith in the heart of Santa Ana. With the economic downturn, Harrah found that he could not meet the requirement so he sought a change in that requirement.

Voice of OC reported in October (Does Harrah Owe Santa Ana $300,000 for Special Election?) that CAGE also contends that the city was supposed to, but didn’t, force developer Michael Harrah to pay the $300,000 cost of the 2005 referendum that green-lighted the project. The residents are basing their argument on a clause in the development agreement that calls for Harrah to pay for “approval or certification” costs.

“Unbelievable, in a word.” said Jeff Dickman, a member of the group known as the Coalition for Accountable Government Ethics (CAGE). “It’s not like it was a $10,000 or a $20,000 bill — it was $300,000. It’s really mind-boggling.”

There has been no formal answer from the city since the Voice of OC report as to whether they will be invoicing Harrah for the costs of the April 5, 2005 Special Election.

So now with the Court of Appeals ruling, Harrah is free to move full stream ahead with his project without any pre-leasing requirement. If anything, the economic downturn has had an even greater effect on premium office space vacancy rates since 2010. According to forecasters at the USC Lusk Center for Real Estate overbuilding during the boom and falling employment during the bust have left Orange County with glut of about 10 million square feet of office space – equal to about 386 average-sized buildings. Landlords are expected to keep cutting office rent through 2013, even though the amount of empty space is shrinking.

The Orange County Register reported on Thursday, December 1st (Does O.C. have 400 office buildings too many?) that commercial real estate executives got a preview of Lusk’s 2012 Casden Forecast for Orange County, which will be released on Tuesday.

The forecast shows:

  • The vacancy rate in O.C.’s Class A office buildings – the ritziest properties in the best locations – is expected to drop by seven percentage points to 14.7% in the third quarter of 2013. As of the latest quarter, 21.8% of the county’s offices are vacant.
  • Vacancies for Class B buildings – older properties in less desirable areas – will fall to 12.3% by Q3 2013, down from 16.6% in the latest quarter.
  • Despite those decreases, office rents will drop for the next four quarters, declining from $2.17 a square foot each month to $2.07 for Class A properties and from $1.75 a square foot to $1.70 for Class B properties.
  • That 10-cent drop for Class A offices amounts to a loss of $2,600 a month on the average, 26,000-square-foot office building, or $31,000 a year.

    There is no doubt that the progress of this project will help the jobs outlook for the construction sector, but it remains to be seen if the project will be even 50% rented in the first year after completion. The forecasted trends don’t show much light at the end of the tunnel for the near future.

  6 comments for “Santa Ana wins its appeal of One Broadway Plaza suit

    December 5, 2011 at 9:02 am

    I’m surprised by this and I look forward to understanding the court of appeals explanation of their logic. To the common man, if the people vote on something, an elected body cannot simply vote to modify it. Once again, the will of the people of Santa Ana is not upheld by either the elected body or the courts.

  2. junior
    December 5, 2011 at 11:17 am

    It was foolish of Superior Court Judge (Hunt) to order a new election. The judicial branch of government has limited jurisdiction over elections and this judge clearly overstepped that boundary.

  3. Marcus Wilson
    December 6, 2011 at 6:36 pm

    Only the City of Santa Ana would spend money fighting to save a white elephant to get it built. Gee, I wonder why Santa Ana is broke?

  4. cook
    December 7, 2011 at 4:08 pm

    A choice was made back when Measure A was written. The DA ordinance was not included.

    Looks like that was the wrong choice to make.

  5. junior
    December 7, 2011 at 5:23 pm

    It seems to me that since the City’s argument in favor of Measure A, which was on the ballot, referred to the development agreement in a manner which provided certain assurances to the citizens who voted in favor of Measure A – that the DA would therefore be an integral part of Measure A.

    So we see again that the City of Santa Ana has many ways in which to screw the people of San Ana over.

    “Vote for Measure A and we will provide a development agreement which will make sure it is all done right” – and then make significant changes to the DA which negate the City’s “fine” assurances.

    That is a “bait and switch” if I have ever seen one.

  6. cook
    December 7, 2011 at 8:09 pm

    Yep Mike that was some smoke and mirrors by the city. but the text only had the zoning, so that is the only thing that can be addressed.

    Just like the people thought mess D was a one term extention and not a 3 term replacemnet starting in Nov 2008 for every canidate.

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