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NEWS:
Home prices fall in 21 cities, San Diego 3rd
BY KATHLEEN M. HOWLEY, Bloomberg News, April 3, 2008
NEW YORK -- Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices.The price per square foot in Sacramento dropped 28 percent to $166 from a year earlier, according to a report released Thursday by Radar Logic Inc., a real estate data company. Las Vegas fell 25 percent to $137 a square foot.
  San Diego was the third-worst U.S. market, with prices dropping 21 percent, and Los Angeles was fourth, with a 17 percent decline, Radar Logic said.Charlotte, N.C., saw a 3.9 percent gain in values, and New York prices rose 2 percent, the only areas to have an increase in the study of 25 U.S. cities.
  Rising foreclosures and tighter lending standards are deepening the U.S. housing slump as it enters its third year.
  The median price of a single-family existing home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, the Chicago-based National Association of Realtors (NAR) said in a March 24 report."
 Like homebuilders who feel pressure to get rid of inventory quickly, many banks and lenders experience the same pressure when dealing with homes from foreclosure," and decide to sell at below-market prices, the report said. That leads to further declines in real estate values.U.S. mortgage foreclosures rose to an all-time high at the end of 2007, the Mortgage Bankers Association (MBA) said in a March 6 report.
  New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier.Late payments rose to a 23-year high, according to the MBA's report.
  The national vacancy rate, the share of empty houses for sale, increased to 2.8 percent in the fourth quarter, matching 2007's first-quarter rate that was the highest in records going back to 1956, the U.S. Census Bureau reported Jan. 29.Sales of new homes in the U.S. fell in February to an annual pace of 590,000, the lowest level in 13 years, the Commerce Department said in a March 26 report.
  Radar Logic's monthly housing report tracks the 28-day aggregated value of a daily index the company compiles based on home sales.
  Using a price-per-square-foot number reduces the influence of property size when calculating price changes, the company said. The data is not seasonally adjusted

Trouble at El Cortez, In a renovated San Diego landmark, there is dysfunction among the developer and the homeowners
By KELLY BENNETT, Voice Staff Writer Monday, Jan. 14, 2008
Excerpt: The red neon letters spell EL CORTEZ when they're all working, launching a beacon from the stately white building atop its namesake hill on the edge of downtown San Diego. But when the letters are on the fritz, as they are now, they flash and blink, muddling the sign's message and portending another: all is not right with the landmark. Full Article

Editorial: Upon further review: Yes, governor was involved
Talk with interior secretary throws vote of the people in doubt
and raises a stink
Sacramento Bee, January 18, 2008
  It's no secret that Gov. Arnold Schwarzenegger supports the four Indian gambling compacts on the February ballot. After all, he negotiated the deals with four of the richest gambling tribes in the state and appears in campaign ads urging voters to vote Yes on Propositions 94, 95, 96 and 97 to ratify them. But the governor also played a key role in a curious ˆ if not suspicious ˆ series of events that may make next month's vote on the compacts moot.
 Here's what happened: After the compacts were ratified by the Legislature, they were sent to Washington, where the U.S. secretary of the interior is supposed to review and either accept or reject them. But after they arrived at Interior, the compacts were lost for 80 days. Under federal law, the secretary has 45 days to take action or Indian state gambling compacts become law automatically. Because the California compacts were lost, no review took place. When they mysteriously reappeared after the 45-day deadline had passed they were deemed approved automatically.
 Here's where the governor steps in. The compacts are not officially in effect until they are published in the Federal Register. Given the pending vote in California and the mysterious disappearance and reappearance of the California compacts, Interior Department officials initially said they would not publish them until after the California vote. But 16 days later Interior reversed course, and the compacts were published.
 It turns out that Schwarzenegger had spoken with Interior Secretary Dirk Kempthorne and asked him to publish the compacts. At an editorial board meeting with The Bee on Wednesday, when he was asked directly if he had asked Kempthorne to publish them, the governor hedged, merely saying he asked Kempthorne to give "some attention" to the matter to make sure that "everything go through procedures."
  Later, a spokesman for the governor said that Schwarzenegger had asked the secretary to publish the compacts. The governor spoke with Kempthorne on Dec. 6. The compacts were published in the Federal Register on Dec. 19.
 Why should California voters care about all this? If voters reject those four gambling deals on the ballot, Interior' decision to approve and publish them in the Federal Register creates a legal quandary.  Does federal action supersede the California vote?
 The governor must have been aware of that when he urged Kempthorne to publish the compacts. He told The Bee editorial board, "I thought if the voters did not approve it, it's gone ... but maybe you're asking me that because there is a way out of it. That will be quite interesting. I don't know."
 This is a governor who has prided himself on abiding by the will of the people. In the case of the missing gambling compacts, he has helped create a situation where the public's will can be subverted. That's bad enough, but something worse may be afoot here.
 These gambling deals are worth an estimated $50 billion. Their mysterious disappearance and reappearance reeks of incompetence, if not something worse, which is why the Interior Department's inspector general is now investigating the matter. Given his role in this bizarre series of events, the governor should be getting similar scrutiny.

U-T Takes a Hit
Voice of san Diego, E-MAIL POST
 The San Diego Union-Tribune, a local newspaper, has reported one of its largest recent circulation drops, losing 8.5 percent of its daily print readership and 7.9 percent of its Sunday print readership.
 The figures, reported today by trade magazine Editor & Publisher, outpaced the national average: a 2.5 percent daily drop and a 3.5 percent Sunday decline.
 The Union-Tribune's circulation has been dropping since 2004, when its Sunday circulation was 442,000. By March 2007, its Sunday circulation was 379,000.
 A 7.9 percent cut would leave the local newspaper's Sunday circulation at about 349,000. The exact figures will be released Monday. The Audit Bureau of Circulations will include a new way to measure newspapers' reach: The size of the paper's total audience, including online readership.
-- ROB DAVIS, Thursday, November 1

Sanders admits mistakes on Sunroad; says he took bad advice
By ELIZABETH MALLOY, The Daily Transcript, August 23, 2007
 San Diego Mayor Jerry Sanders said he took bad advice and made mistakes when it came to stopping Sunroad Enterprises from building an office tower higher than recommended, and he is hoping to implement measures to keep it from happening again.
 A week after the city‚s land use chief Jim Waring stepped down, and a day after Development Services Director Marcella Escobar-Eck left her position, Sanders reiterated his stance that he had not known of any wrongdoing throughout the Sunroad process, but admitted he was slow to act in some instances. He said he‚s learned a lot about just how much information he needs on certain issues and that he can‚t be as trusting of his employees as he‚d sometimes like.
 Sanders said the highly politicized climate of city hall didn't allow him to use the same management strategies he used at previous jobs, such as when he was chief of police in the 1990s.
 "I had a group of people around me (when I was police chief) who had been on the police department usually as long or longer than I had and I could trust their judgment, because I had known them for 20 years," he said. Obviously, that has not worked as well for me over here.
Sanders stopped short of blaming the Sunroad controversy on Waring, saying he wanted to make it clear that he accepted responsibility. He implied that Waring was at least one of those giving him bad advice, though.
 When asked why, after nearly a year of discussing Sunroad, Waring was asked to resign last week, Sanders said: "When I say we‚re going to be at this level, 160 feet, and we"re not dealing with any of this anymore, and then someone goes out as soon as I leave for vacation and talks to one of the council members saying, "What about 166?" -- that‚s not what I asked somebody to do. That's not what I told him I wanted done.
 The Sunroad building was permitted to be 180 feet, but the Federal Aviation Administration had recommended it only be 160. Sanders has said repeatedly that he wants the building taken down to 160 feet and no higher.
 In early August, Waring asked Councilwoman Donna Frye, whose district includes Montgomery Field, if it would be possible to have the building be 166 feet. Waring later told the local media that the mayor's office asked for his resignation.
 Sanders wouldn’t comment on whether or not Escobar-Eck resigned or was fired. The city has hired Patti Boekamp, R.T.E., an 18-year city employee, as the interim head of the Development Services Department.
 To try and prevent more problems like the Sunroad issue from happening again, Sanders has proposed a six-step plan. Once implemented, Development Services Department staff will be asked to red flag any projects that may interfere with FAA regulations.
There will also be procedures put in place to expand notifications of other agencies for projects close to airports. The city‚s Airport Department will be moved away from Land Use and Economic Development, and a team will be assembled to evaluate the Airport Land Use Compatibility Plan and recommend changes.
An Economic Development Impact Committee will be assembled as well, to serve as a multi-disciplinary team that reviews proposed and current projects.
 Finally, the mayor wants to improve the business relationship between Developmental Services and the city attorney's office after it turned sour during this controversy.
 Over the past few months, Sanders said he wishes he had prefaced most of his statements about Sunroad with the words "given what I know today."
 He often thought he had the whole story when he didn't, he said. An example of this was when Ted Sexton, an airport authority employee, had been sent to city hall to work on airport issues. Sanders had denied that Sexton was coming to deal exclusively with the Sunroad issue, but was later shown to have signed a letter allowing that. Sanders said he honestly can‚t remember signing the letter, though he doesn‚t deny it.
That‚s another thing he‚s learned - read every detail of everything you sign.
There is not a thing that moves off my desk now that I don't go over in detail, even to the level of typos,‰ he said.
 The Sunroad building is supposed to be brought into compliance by mid-November. The company was originally planning several buildings at the Kearny Mesa site, but has since withdrawn its application for other buildings and is focusing only on the controversial Centrum 12 building.
Sanders had his Deputy Chief of the Office of Ethics and Integrity Jo Anne SawyerKnoll compile a report of the Sunroad matter earlier this summer. The report, released in mid-July, found mistakes, but no illegalities. Critics have since decried disparities in the report and Sanders acknowledged it was imperfect.
 "It's obviously not an independent report because it's done by us," Sanders said. "Would I have done it differently? Yeah." But that's something for me to learn for next time.
 "I've learned a lot of extremely painful lessons from this whole process."
Send your comments to Elizabeth.Malloy@sddt.com

Downtown's Dramatic Residential Facelift Pauses
By KELLY BENNETT Voice Staff Writer, Friday, Aug. 10, 2007
  While unsold condos pile up on the market, foreclosures mount and developers stall construction or try to sell projects entirely, it's clear the region's housing malaise has a home in downtown San Diego. Now, a snapshot of the market shows a sort of pause in the dramatic residential facelift downtown, as some of the best laid plans from the boom time grapple with a sapping of condo-buying fervor. 
  A regional housing boom catalyzed revitalization efforts downtown this decade. As it became a residential neighborhood, downtown increased its condo stock nearly fivefold in the last seven years. The downtown population has nearly doubled in that time, reaching an estimated 30,000 today compared to 17,500 in 2000. 
 But near the end of 2005, the fervor peaked countywide and downtown. In fourth quarter 2005, 387 new condos sold, according to DataQuick Information Systems. The next quarter, at the start of 2006, just 161 new units sold. And then 88 the next quarter. After a swing up, sales for new units downtown numbered 82 in second quarter 2007. That's a little more than one-third as many as were sold in the same quarter two years ago. FULL ARTICLE

Near the rails but still on the road
Research casts doubt on the region's strategy of pushing transit-oriented residential projects to get people out of cars.
By Sharon Bernstein & Francisco Vara-Orta, LA Times, Staff Writers, 6/30/07
Excerpt: TV cameras in tow and champagne at the ready, a dozen of the county's most powerful civic leaders – including the mayor of Los Angeles, L.A. City Council members and county supervisors – touted the latest and glitziest new development in Hollywood: the planned W Hotel and apartments at the storied corner of Hollywood and Vine.
 This project, they pledged at the groundbreaking earlier this year, would restore a sagging neighborhood while also minimizing traffic – an important promise in increasingly gridlocked Hollywood.
 "People could live here and never use their cars," declared MTA Chief Executive Roger Snoble at the February event.
  It's a vision expressed frequently by local government officials, who see building large mixed-use developments next to mass transit lines as a key solution for not just the region's traffic congestion but also its spread-out geography and reputation for being unfriendly to pedestrians.
 In Los Angeles alone, billions of public and private dollars have been lavished on transit-oriented projects such as Hollywood & Vine, with more than 20,000 residential units approved within a quarter mile of transit stations between 2001 and 2005.
 B ut there is little research to back up the rosy predictions. Among the few academic studies of the subject, one that looked at buildings in the Los Angeles area showed that transit-based development successfully weaned relatively few residents from their cars. It also found that, over time, no more people in the buildings studied were taking transit 10 years after a project opened than when it was first built.  
  Los Angeles, with its huge geographic footprint and its limited public transportation system, can't offer residents of these developments the kinds of sophisticated transit networks available in cities like Washington, D.C. – or even smaller ones like Portland – where transit-oriented projects are believed by many to be working.
 The Times decided to examine driving habits at four apartment and condominium complexes that have already been built at or near transit stations in South Pasadena, North Hollywood, Pasadena and Hollywood.
 Reporters spent two months interviewing residents, counting cars going out of and into the buildings and counting pedestrians walking from the projects to the nearby train stations.
 The reporting showed that only a small fraction of residents shunned their cars during morning rush hour. Most people said that even though they lived close to transit stations, the trains weren't convenient enough, taking too long to arrive at destinations and lacking stops near their workplaces. Many complained that they didn't feel comfortable riding the MTA's crowded, often slow-moving buses from transit terminals to their jobs.
 Moreover, the attraction of shops and cafes that are often built into developments at transit stations can actually draw more cars to neighborhoods, putting an additional traffic burden on areas that had been promised relief.

Broke City Pays Well
By Don Bauder, Reader City Light, May 31, 2007
 Want a job with a good salary and great benefits? Work for the government. Want a job with a very, very good salary and great benefits? Work for the City of San Diego. Yeah, that city teetering on the financial brink -- the one that looted the employees' pension fund and then appeased the workers by granting benefits it couldn't afford to pay.
 It's a myth that government workers must live with salaries that are lower than those in the private sector and then make up for their penury by getting generous retirement benefits. All around the country, government pay has been growing rapidly, and so have excessive fringe benefits. Meanwhile, the private sector has been shipping jobs to low-wage countries, thus slicing average worker pay, and has also trimmed benefits severely. "While salaries and benefits are rising for government employees, we're seeing a squeezing in the private sector," says Alan Gin, economist at the University of San Diego.
 Now, government pay is generally better -- often as much as 50 percent better -- than private-sector pay, while government benefits are more than twice as munificent, and employees can retire at younger ages. City of San Diego employees enjoy much higher salaries and benefits than their counterparts in the private sector and local and state government. Full Article

Signs of the Times Taken Down In 2005, ipayOne made a deal to pay $2.5 million over five years for San Diego Sports Arena naming rights.
  Last week, the venue reverted back to its original name and workers took down ipayOne signage. The action somewhat confirmed a Pollstar magazine report that said the Carlsbad-based mortgage company stopped making payments for the naming rights last year. It's been confirmed that ipayOne is no longer accepting real estate listings and that it is liquidating its assets.
  The Sports Arena sits on land owned by the City of San Diego. In addition to lease payments to the city amounting to nearly half a million dollars annually, Arena Group 2000 is expected to pay the city 10 percent of the money it gets from Sports Arena naming rights. Developer Ron Hahn, the owner of Arena Group 2000, allegedly has majority ownership of the ipayOne brokerage.
  The ramifications of the city losing out to the approximately $200,000 it was expecting to receive over the next three years are unknown.
Neither Ron Hahn nor his son Ernie (general manager of the Sports Arena) returned calls requesting comment.
--Ken Leighto, San Diego Reader, 4/26/07

Plan expected to draw criticism in community
By Chet Barfield, UNION-TRIBUNE STAFF WRITER, Mar. 14, 2007
  LA JOLLA –  Touted as San Diego's “jewel by the sea,” La Jolla considers itself pretty exclusive with its posh homes, ritzy boutiques and breathtaking shoreline.
  A local board's plan to ease La Jolla's parking crunch includes pay-station parking at several beaches, including La Jolla Shores. 
  Now La Jolla might distinguish itself in another way by becoming the first San Diego community to charge for parking at the beach.
  A local parking district board's multifaceted plan to ease La Jolla's often frustrating parking crunch includes pay-station parking throughout La Jolla Cove, La Jolla Shores, the Prospect Street village and the Bird Rock business zone.
 In surrounding neighborhoods likely to get spillover from motorists not willing to pay, curb parking – now unrestricted – would have time limits.
  Residents could buy permits to be exempted. Like everything else in the proposal, no details have been decided. Graphic: Proposed parking plans 
  Although the draft “parking management” plan is just beginning to be aired for months of feedback and revision, local leaders are expecting an outcry.
FULL ARTICLE:
http://www.signonsandiego.com/news/metro/20070314-9999-1m14parking.html

Residents warn of loophole to 30-foot coastal height limit
Updates to affordable housing code to go before City Council Feb. 27
Kailee Bradstreet, Peninsula Beacon, February 22, 2007
http://www.sdnews.com/vnews/display.v/ART/2007/02/22/45dde2f5be797  Developers proposing to build a percentage of affordable housing units maysoon qualify to receive incentives such as increased structure heights if
City Council decides Tuesday, Feb. 27, to pass a series of proposed
municipal code amendments.
  While the city has indicated it must update its codes to comply with state law, which has undergone a series of changes over the last three years, some residents are alleging that the amendments would go beyond what the state requires and could jeopardize the 30-foot height limit in the coastal zone.
  "We have not changed the section that says developers cannot exceed the 30-foot height limit in the coastal zone," Dan Joyce, senior planner at the city‚s Development Services Department, said in response to the
claims. "There is nothing in the draft that shows that changing at all."
The draft amendments are proposed for a section of the city code that
references affordable housing density bonuses ˆ a regulation that allows
developers to have more units per building if they provide a percentage of affordable housing. 
  The state's version of that law has changed to increase the amount of additional units developers can obtain from 25 percent to 35 percent, with an added provision that would allow any development regulation deviation such as increased floor-area ratio and height as well as smaller side-yard set-backs, according to Joyce.
  The law also states that developers providing senior and moderate-incom housing are eligible for density bonuses, he said. Proposed city incentives must be deemed by planning staff as financially
necessary to the developer for providing affordable housing in order to be granted, according to Joyce.
  Requests can also be denied if incentives would have an adverse effect on the environment, people's health and safety or historic resources, he said.
 But several residents from La Jolla, Bird Rock and Point Loma are
concerned that the incentives may be a way for developers to increase the 30-foot height limit in the coastal and coastal overlay zones, according to John McNab, a member of the San Diego Coastal Alliance, which held a press conference Feb. 19 on the issue in Ocean Beach.
  The city's amendments also specify that the process to gain incentives
would be ministerial, or over-the-counter, according to McNab and
residents Katheryn Rhodes, Darcy Ashley and Joanna Pearson.
 "What this means is the City of San Diego taking a state mandate and
saying, "Oh, goody, we can give developers a blank check," McNab said.
 "We need to revise the local laws to protect the public, and they are
doing the exact opposite of that. Our contention is they are going way
beyond the mandate and denying residents the right to protect their
community." McNab argues that this would mark a departure for most coastal development, which requires a public process for projects that exceed existing height and set-back rules.
  But according to Joyce, any project proposed in the coastal zone, an area that extends inland to Interstate 5 in many places, would also require a Coastal Development Permit, which would automatically send the developer to a community planning board for approval.
  Language that protects 30-foot height limits in the coastal zones is contained in the original municipal code and derived from the voter-approved Proposition D in 1972. The proposition cannot be overridden by a City Council vote but can be changed with subsequent voter-approved initiatives, according to Pam Hardy, communications director for City Council President Scott Peters.
  If the affordable housing amendments are approved by City Council Feb. 27, the revised code would apply to the entire city with the exception of the first 300 feet from the inland extent of beaches (in some cases to th first coastal roadway) as well as 100 feet from wetlands. Those boundaries fall under the California Coastal Commission's jurisdiction, according to Joyce.
  Residents, however, are not the only ones with reservations about the city's proposed changes to the municipal code. A seven-page letter from District 6 Councilwoman Donna Frye addressing environmental and growth inducement impacts of the amendments was
presented Tuesday, Feb. 20, to City Attorney Michael Aguirre.
 After spending four days reviewing the draft, Frye said she had questions about a supplement to the environmental impact report (EIR), which states that developers may ask for an incentive of reduced or waived facility benefit assessments, fees that are charged to landowners who propose new permits for land use.
 "My concern is that no one seems to be able to understand this very well and understand the impact that is going to have on the communities,
Frye said. "It impacts the city‚s ability to regulate growth and density, and the lack of public participation is a concern. A lot of it looks like
there will be only a ministerial process, which flies in the face of what
I call public policy. What's the point of having a public plan if someone
can come in and overturn it?"  
  For more information or to view the specific amendments, visit
www.sandiego.gov/development-services.San Diego City Council will meet at 10 a.m. Tuesday, Feb. 27, in the city administration building, 202 C St., 12th floor, council chambers, to vote on the proposed amendments.

Affordable Housing Incentives Draw Questions
By EVAN McLAUGHLIN Voice Staff WriterFeb. 22, 2007
 As San Diego development officials try to provide homebuilders with incentives to encourage affordable housing, the government is also grappling with the program's impacts on a longstanding height limit on coastal development and other guidelines.
  Under the proposed incentives, which mirror a 2004 state law, builders that include affordably priced homes in their project would be allowed to construct housing developments that are taller, wider or with fewer parking spots than the city would otherwise mandate.
  "But critics are concerned the city could be sacrificing too many planning regulations in order to buoy its depleted affordable-housing stock. They say the changes Mayor Jerry Sanders' land use staff is proposing could allow developers to circumvent several of the city's rules governing residential construction -- as long as they agree to include affordable units within their project. This is going to be a way to do zone-busting, community plan-busting, all under the guise of affordable housing," Councilwoman Donna Frye said. The councilwoman cautions that the law is vague enough to allow developers to pierce the 30-foot height limit in San Diego's coastal neighborhoods that voters passed in 1972, known as Proposition D. But Jim Waring, Sanders' land-use and development chief, disagrees. "I can say unequivocally that if a developer asked for these deviations, the city would turn them down. It's a non-issue," he said. Frye's worries, however, have spread to City Attorney Mike Aguirre. The city attorney wants to postpone next Tuesday's vote on the legislation -- drafted by his office -- because he said it is unclear.
 Whether or not the proposal is as far-reaching as Frye alleges, slow-growth activists who frequently fight aggressive development have rallied against the bonus program. While the state law has proved controversial locally, the complaints never came up during the bill's creation, its co-author said. "Cities had some concerns about other things, but if they thought these issues should have been brought, they had the chance three years ago," said state Sen. Denise Ducheny, D-Chula Vista, a co-author of the state law. 
  The city currently requires builders to restrict the prices on 10 percent of the homes they build, or to pay a fee that is used to finance affordable housing projects. That requirement has struggled to produce affordable units, as most developers opt to pay the surcharge and the funds have not been enough to keep pace with the city's expectations.
  Under the mayor's current proposal, developers who include affordable housing can receive the right to build more densely on their properties or receive other incentives, such as the ability to forego some of the parking requirements the city typically requires. For example, a homebuilder who sets aside 10 percent of the homes on a project to be reasonably priced for a moderate-earning household can add 20 percent more square feet to their property. In addition to more density, the state law allows for cities and counties to provide their own incentives to affordable housing developers.
  Waring said the city will allow three types of incentives to builders: permitting more density than is allowed under an existing blueprint for a community, allowing development closer to their side-yard fences, and reducing the number of parking spots they are obligated to provide their future residents.
  By garnering more density, builders can increase the number of units for rent or sale on the property.
  Frye claims the proposal is worded so broadly that the city will not be able to deny other requests developers might make. "If you don't clearly define the terms, it can mean anything anyone wants it to be," she said. Frye interprets the proposed law to allow developers a waiver from undergoing environmental reviews, paying infrastructure fees or honoring Proposition D, the 1972 ballot measure that sets a 30-foot height limit for buildings along the coast, if that's how they wanted to cash in their incentives.
  The risk of having Proposition D sidestepped by affordable-housing developers has generated enough worry among activists that they organized a press conference Monday in Ocean Beach to speak out against the bonus program.
  Waring said the activists' cries are for naught. He acknowledged that the program will have to evolve with time and that developers will be treated on a case-by-case basis. The program is already state law, he said, and developers could demand incentives like the ones laid out by the Legislature if they wanted to. By passing its own ordinance, the city has a chance to craft its own program, he said.
  "A developer could come in today and ask for these deviations and we would have to grant them to the developer whether or not it's on our own books,"  Waring said.Developers dismissed Frye's claims, saying she was using them to stall development. "It takes them only a matter of months whenever they want to raise fees ... but it's taken them four years to comply with state law," said Matthew Adams, governmental affairs director for the Building Industry Association of San Diego County. "It's very frustrating from our perspective."  Frye said she will continue to push for more specifics until she has a clear understanding about what restrictions the city will concede to affordable housing developers, and what it won't. "The problem is the city's analysis, how it's done and what it means," she said. "It's not adequate."

Too Many Condos
San Diego Daily Transcript ran a story (subscription required) pointing out that over 3,000 condo units are currently under construction downtown. Additionally, another 7,000 downtown units are either approved or proposed.
 How many of those latter 7,000 will actually be built is open to question. But friends in the industry tell me that once a building is under construction, the odds are high that it will be finished, which implies that most of those 3,000 units in progress actually will be built to completion.
 At the moment, ZipRealty.com indicates that there are 505 dowtown resale condos listed for sale. That may not seem like much, but the pace of recent downtown sales has been so weak that it would take almost a year just to burn through that existing inventory. It is into this already serious oversupply that a further 3,000 or so units will be released over the next two or three years.
—RICH TOSCANO

First the Feds, Now the Neighbors
By Don Bauder, Reader City Lights, November 30, 2006
Excerpt: Michael Ellis, cofounder of the bankrupt Metabolife International, has battled drug enforcers, the Food and Drug Administration, the Justice Department, the Internal Revenue Service, personal injury lawyers, the House Energy and Commerce Committee, bankruptcy probers -- you name it.
  Now he is fighting with people who live near a mansion he owns in Point Loma. Both sides want to compromise, but the matter may have to be resolved in court.
  Ellis owns, but never used as a primary residence, a posh home on the bay in Point Loma at 2905 Nichols Street.
  Nearby residents and Point Loma community groups charge that Ellis and his immediate neighbor at 2900 Nichols Street have erected walls and planted vegetation that block the public's right-of-way at the foot of Nichols Street.  People have a right to have a view of the bay, as well as a path to the water from that spot, say such groups as the Peninsula Community Planning Board and the Point Loma Association, along with the City of San Diego.
  Norman Magneson, a retired Navy civil engineer living at 2980 Nichols Street, has led the battle for more than four years. He enlisted 82 property owners nearby to join his cause. If the matter goes to trial, it would be "a case célèbre," he says. The outcome would be "precedent-setting. Every dead-end street in the coastal area of the city of San Diego will be affected by the outcome."
  City Attorney Mike Aguirre agrees. "I am trying to work out a compromise, but we must protect public access wherever the public has a right to it, particularly on dead-end streets in coastal areas."
Full Story: http://www.sdreader.com/php/cityshow.php?id=1509

Council approves Hillcrest building
By ELIZABETH MALLOY, San Diego Daily Transcript, Sept. 12, 2006
 The San Diego City Council voted in favor of a 12-story mixed-use building in Hillcrest Tuesday afternoon, despite some concerns from local residents. Donna Frye was the lone dissenting vote.
 Citizens expressed concerns over the building's height and aesthetic, as well as traffic at its 301 University Ave. location. The building, however, fit into the area's community plan, and the majority of councilmembers agreed that the Pacific Development Group's plan to build the site with 121 public parking spaces would be a major asset in Hillcrest.

Sanders seeks action on affordable housing
By ERIK PISOR, The San Diego Daily Transcripty, Sept. 15, 2006
 San Diego continues to be one of the least affordable housing markets in the nation, but some new approaches, involving local government and housing advocates, look to address the lack of affordable units.
 As part of a news conference hosted by the San Diego Building Industry Association at William Lyon Homes‚ Promenade at Spectrum, Mayor Jerry Sanders and representatives from the San Diego Housing Federation, San Diego Association of Realtors, Campaign for California Home Ownership, and the San Diego Organizing Project announced a new housing strategy.
 According to a release from Mayor Sanders a housing strategy has been initiated at the city that will utilize the recommendations of an ad hoc committee, who will develop a housing business plan designed to lead to the identification and construction of housing projects at various locations.
 The committee will be a group chosen by the building industry and housing advocates. It will consist of three representatives from the building industry, four from housing advocacy groups, members of the mayor's staff and a representative from the Housing Commission.
 The important thing is that at the end of the process, if successful, the City will have specific projects located on specific pieces of land, Sanders said in a release, adding the goal of this strategy is to create a repeatable model that can be utilized by all parts of the community to increase housing opportunities.
 Sanders announced the city is also restructuring the planning, redevelopment and economic development departments into a single team under a single director, Bill Anderson.
 By integrating these three departments into one we‚ll have a stronger link between our vision of San Diego and actually achieving that vision, Sanders said.
  Additionally, the Housing Commission is continuing its efforts to expand homeownership through the creation of two new, first-time homebuyer programs and working to replace depleting federal housing funds, which threaten the Commission‚s public housing program and the 1600 households it serves.
 The commission is also proposing to make the Affordable Housing Fund, which comes from dollars provided by market-rate housing developers, geographically more flexible in terms of where in the city the funds can be spent, as more dollars will be invested in affordable housing.
 Local government is limited in just how much it can do to influence the housing market and prices, it can still play an important role in securing San Diego‚s housing future, Sanders said. "It is time for action."

Now what?
By Larry Stirling, San Diego Daily Transcript , Aug. 14, 2006
 On Aug. 8 of this year, Mr. Arthur Levitt Jr. dished a load of dirt on our "city fathers."
 Levitt was stately in inflicting an imposing glower at the childish miscreants that run our city. But, in the end, he took the sting out of his sanctions.
 After all, he has to collect $20 million from the very same City Council members. Twenty million buys a lot of grace.
 For all of his gravitas, Mr. Levitt is not free of his own tormentors. He has been roundly criticized by both Wall Street Journal reporter Charles Gasparino, who wrote "Blood on the Street," and author Gary Weiss, who wrote "Wall Street vs. America."
 In short, Chairman Levitt stands accused of being too considerate of corporate management and not adequately protective of the consuming public.
 Sadly, that appears to be true here. The fact that no elected official was held accountable for his or her conduct is simply bad public policy. Council members, mayors, and city attorneys are elected precisely to be accountable. If not so then every vote is a charade.
 While much, if not most, of the Kroll report appears to be a reprise of bits and pieces we have previously heard from a variety of sources, it does provide a useful summary of civic perversity and the cheesy parts that many city actors played.
 This is not to minimize the value of the investigation. Kroll would have had to satisfy itself as to the bases for various criticisms. To do otherwise would risk being successfully sued for libel.
 But the real question is: "Now what?"
 Under the heading of "Remediation," Kroll provided 25 pages of suggestions. Based on my 45 years experience in public administration, I find that most of them are simple "toss offs" out of a flatulent textbook that will do nothing more than increase overhead while achieving minimal results.
 For example, they suggest that the city "fix" its accounting system. The city had a perfectly good accounting system under Bill Sage and previous honest city auditors.
 The problem is that subsequent auditors "fixed" the accounting system by, among others, abandoning the "modified accrual" system that had protected the city for years. Accounting systems, like computer software, obey the iron law of: "garbage in, garbage out."
 The old motto says: "No wall is taller than the men who stand behind it." Fix the accountants and you will fix the accounting system.
 Kroll wants a five-year budget. That just means there will be five years of mythology reflected in the draft document instead of one. The final budget is what organized labor lets it be. Just ask them to prepare the budget. Then it will be honest.
 Kroll wants a "CFO" which in effect would become a financial "czar." This, and all of their similar suggestions suffer from the same deficiency. Rather than fix the erring agency, it is government's response to create a new agency to watch the first, and second and so forth. It never works.
 Kroll is correct about the city being deficient in information technology. That is the result of the manager's defeat of the Data Processing Corp. that repeatedly proposed upgrades in all phases of the city's IT. Unleash the Data Processing Corp.
 In short, there is really only one Kroll suggestion that will help. The rest will continue business as usual only with extra bureaucrats.
 Here is what needs to be done.
 First, as Kroll correctly says, protect the whistle blowers. In 1977, David Morris warned me about the shenanigans of the retirement board. Thanks to Dave's integrity, we went down there and cleaned house.
 Other than Mrs. Shea, who in the entire bureaucracy recently told the truth to the public? And she got fired from the retirement board for her trouble.
 The second thing is to promote and protect those employees that turn in suggestions for improvements.
 Contrary to the lip service you will hear, suggestions are as disfavored by the city culture as is whistleblowing.
 But, here is the granddaddy reform of all. This is the only one that will make any difference.
 Subject anyone entrusted with city responsibility to the same legal standard of care as the rest of us.
 Anyone of us can be sued for negligence in our professional conduct. And, we can be held personally liable for that conduct. City employees are held to no such standard. And if their conduct is grossly negligent and they do get successfully sued, it is the city taxpayers that suffer for their malfeasance.
 Imposing the normal standard of care on government employees will never happen because they will never accept the same level of professional responsibility for their work as the rest of us.
 And therein lies the problem. Fix city-employee accountability and you fix our city.
 Stirling is a retired superior court judge who now practices law with the firm of Garrison & McInnis. He is a former Army officer, member of the San Diego City Council, the California State Assembly and the State Senate. Send comments to larry.stirling@sddt.com. Comments may be published as letters to the Editor.

Construction suspended, halted on downtown condominium projects
By ERIK PISOR, The Daily Transcript, May 31, 2006
 Recently there have been speculations within the local building industry that increasing construction costs and declining sales activity may cause some of the numerous developments in downtown San Diego and immediate surrounding areas to be halted. Now, nearly half way through 2006, at least three developments have halted construction.
 At the proposed site for Atmosphere, a project that was to be developed by JS Properties at 1446 Fifth Ave., construction began in March 2005 and was to be completed in fall 2006. However, construction equipment has been removed from the site and all that remains is a huge hole.
 According to David Hawkins of H2A Architects (Hawkins & Hawkins Architects), who helped design the development, one reason the project has been halted is that JS Properties is no longer a company.
 "There are always projects for whatever reason that get held up," Hawkins said, adding construction on a recent development the company was involved with was held up by airport and port authorities.
 According to Hawkins, a new developer has picked up the Atmosphere property and construction is anticipated to resume on the proposed 73-unit condominium project with 3,000 square feet of retail space.
 Other reasons given for why construction on the development stopped are financial issues and the processing of permits.
 Hawkins said although the majority of the permits were done before construction halted, the investors decided to add one more level of subterranean parking. The permits for the extra parking level are still being processed.
 A project where construction has not begun is Intracorp's condo development Triangle across the street from the trolley station at 12th and Imperial. Besides construction not starting, Intracorp has taken its sign down and has replaced it with a Grubb & Ellis|BRE Commercial for sale sign.
 "We progressed to the point where we were prepared to pull the building permits. We got to the point when we had to make a decision from a business standpoint," said Tim Baker, assistant project manager, adding the company sees the current downtown market as a situation where they could sell the property and make a larger profit compared to building and selling the development's units in a year.
"The market has softened, but it was more of business plan decision ... the property has a lot of potential," Baker commented.
 Initially, Intracorp meant for Triangle to be a mixed-use development consisting of two buildings containing 57 condominiums, 4,000 square feet of retail, and 84 parking spaces on the triangular-shaped block. The project was expected to begin in early 2006 with a summer 2007 completion date. 
 "We're still not opposed to building it out," Baker said, adding the company is assessing the possible demand for this property type from other builders and developers. Intracorp has already been in discussions with several organizations that are eyeing the property as a site for possible affordable units.
 While the company has stopped building on this development they also expect to break ground at 10th and Market later this year on 23-story Strata, a 236-unit condominium project with 12,100 square feet of retail space.
 Another situation similar to Atmosphere is located at 526 Grape St. in Bankers Hill across Sixth Avenue from Balboa Park. In November 2005 the property, which at the time was a 15-unit apartment complex, was purchased by Olson Urban Housing Inc. On March 2, 2006, the San Diego Planning Commission approved 4-0 a map and site development permit to demolish the units and construct 22 condominium units on the .57-acre site.
 The 15 apartments were demolished, but no further activity has taken place. Currently on the property are several holes in the ground and a chain link fence surrounding the property, no indication as to what will be built is posted.
 Calls to Tony Pauker, San Diego regional president of Olson, and Scott Homan, chief financial officer, were not returned.

FBI searches pension fund ex-chief's office
By Matthew T. Hall & Lisa Petrillo, Union-Tribune, April 26, 2006
  A two-year FBI investigation into San Diego's embattled pension system grew this month to include its former president, Frederick Pierce IV, when federal agents seized computers and unspecified documents from his workplace.The search marks the first known case where federal investigators probing the city's fiscal failures have sought information outside City Hall and the pension offices.
  Agents arrived unannounced two or three weeks ago at the San Diego State University Foundation office where Pierce works as a developer, Pierce and an SDSU Foundation spokeswoman said yesterday.San Diego FBI Chief Dan Dzwilewski confirmed that agents searched Pierce's office, but declined further comment because the search warrant is sealed.
  Pierce and foundation spokeswoman Theresa Nakata would not say whether the scope of the search extended beyond the pension fund and its $1.43 billion deficit.
  Pierce said he was out of town when the FBI appeared at his office.“I received a written request for information, and I complied with that request,” Pierce said. “It has always been my policy to provide any information that I am requested to provide.
  ”He said it wasn't the first time that prosecutors have sought documents from him related to the pension fund and added that he has cooperated when questioned about fund-related investigations.
  An FBI spokeswoman referred calls to the U.S. Attorney's Office, where a spokeswoman said she could not comment unless charges have been filed.Pierce, 43, has not been charged with any wrongdoing in the pension scandal.Federal investigators have papered City Hall with subpoenas since early 2004, when they began digging into the pension deficit and allegations of possible corruption and securities fraud by city officials.
  The deficit stems mainly from City Council decisions to underfund the system while increasing benefits in 1996 and 2002.
  Pierce was appointed to the San Diego City Employees Retirement System board in 1997 under Mayor Susan Golding, then reappointed to a second six-year term in 2003 under Mayor Dick Murphy.
  Pierce, a well-connected developer and development consultant, is a former president of the SDSU Alumni Association as well as an ex-trustee of the California State University System, the largest public university system in the nation.
  He has been one of the highest-profile developers on the SDSU Foundation's $350 million Paseo retail-housing complex. The project has been in the works for 18 years and was recently taken over by San Diego State.Pierce has worked for several years with the foundation. His contract ends Sunday because the foundation is shifting its focus away from development.
  The foundation is a 60-year-old nonprofit with a $160 million annual budget to handle research funding, scholarships and real estate dealings for the 33,000-student university.
  Pierce left the 13-member pension board in March 2005 as the council overhauled its makeup and membership with a slew of new appointees.
  He had been president of the board for five of the eight years he served on it.In January, he became the first witness called by defense attorneys representing six board members charged in San Diego Superior Court with violating state conflict-of-interest laws.
  In all, eight people face criminal charges in pension probes
  .In January 2005, a federal grand jury indicted the system's former administrator, its attorney and three former board members on conspiracy and fraud charges, contending that they illegally boosted their retirement benefits while condoning the underfunding of the system.
  Four months later, District Attorney Bonnie Dumanis filed charges against six past and present pension board members – including three who face federal charges – alleging that each improperly benefited from votes as city employees to let San Diego pay less into the pension fund.San Diego Union-Tribune researcher Merrie Monteagudo and staff writers Onell Soto and Kelly Thornton contributed to this report.

City Attorney wants SDCERS to deny legal costs for Grissom, Chapin
By DOUG SHERWIN, The Daily Transcript, March 15, 2006
 San Diego City Attorney Michael Aguirre is asking San Diego City Employees' Retirement System board members to deny the legal defense costs for former plan administrator Lawrence Grissom and its former legal counsel Lorraine Chapin.
 The two former pension officials were indicted by a federal grand jury in January for conspiracy to commit wire and mail fraud.
In his March 15 letter, Aguirre also cites misrepresentations made by Chapin's attorney at the SDCERS January 30 meeting.
 "Mr. Grissom and Ms. Chapin had a fiduciary duty to provide honest services to the constituents of the City of San Diego and the Retirement Board," Aguirre said. "They violated that trust when they concealed information from the board regarding the presidential leave benefits of Firefighters Union Official Ron Saathoff, who was also indicted by the U.S. Grand Jury.
 "San Diego taxpayers should not have to bear the financial brunt of their wrongdoing."
 SDCERS President Peter Preovolos is bringing the matter back to the board Friday after a similar effort failed in January.
In his letter, Aguirre criticized Steven Madison, Chapin's attorney, for trying to convince the board to indemnify his client by using misleading statements.
 According to Aguirre, Madison told the SDCERS' board on January 30 that he also serves as an "elected city councilman" and represented that he had "perspective on making judgments like this," referring to the board's decision whether to indemnify and pay for the legal costs of his client. Madison is a councilman from the City of Pasadena.
"The Board should know that the Pasadena City Council apparently has never voted to indemnify a former employee for legal fees in criminal proceedings," Aguirre said. "The City Attorney for Pasadena was requested to review its council records and the City of Pasadena has produced no records that confirm indemnification of former employees for criminal defense costs."

Stadium Plan Sacked
By ANDREW DONOHUE, Voice Staff Writer, Jan. 10, 2006 
 The Chargers scrapped plans Monday to place a proposal for a new stadium and mixed-used development before voters in November, as a team official said they were unable to sign up a development partner to help shoulder the costs and risks of the proposed $800-million project.
 The announcement marks a significant turn in the team's arduous history with the city of San Diego. The team's special counsel, Mark Fabiani, hinted that the Chargers would be willing to entertain stadium concepts with other cities in San Diego County as soon as legally possible. Under its current contract, the Chargers can begin relocation discussions with locales outside of San Diego on Jan. 1 and move elsewhere after the 2008 season.
  This November's ballot was seen as the voter's chance to avoid those two looming deadlines altogether. The announcement now creates a scenario in which the Chargers could leverage one city against another in stadium negotiations in the coming year.
  Fabiani said the size of the project, coupled with the city's financial and political crisis, scared away the few potential development partners who had the capital to complete the massive project. The proposal calls for an $800 million upfront investment to cover the costs of a $450 million and surrounding development.
  "The city's situation, including the opposition of key city officials, was a major factor in the opinion of some development partners that this was not the right time to throw $800 million on the table and risk not being able to actually build the project," Fabiani said. Fabiani heaped significant blame on City Attorney Mike Aguirre, saying his lack of cooperation and confrontational statements added to the uncertainty at City Hall. However, Fabiani said some potential development partners were also pessimistic about the city's uncertain housing market and worried that the income generated from condominium sales wouldn't be enough to make the project pencil out. To be sure, the Chargers' proposal has been ambitious from the start. Originally, the team asked for as much as $200 million in taxpayer funds to craft the stadium in their first proposal in early 2003. However, in an era when the public largely soured to the idea of public subsidies for sport stadiums, that plan soon became unworkable.Instead, the Chargers envisioned asking voters for 60 acres of the 166-acre Qualcomm Stadium site in Mission Valley. On the land, they would develop about 6,000 condos and sell them to recoup the costs of a $450 million stadium, $175 million in infrastructure improvements, a 30-acre public park and the retiring of nearly $60 million in city debt from the 1997 remodeling of the stadium.
  However, at the same time, the city has plunged ever further into a financial and political crisis. A number of elected officials have resigned under the cloud of scandal and mismanagement as the city's pension system, facing billion-dollar deficits, has consumed growing chunks of the city's day-to-day budget. Talks of bankruptcy lined the recent mayoral campaign.
  "That situation has made it very difficult to implement what already was an ambitious project from the start," Fabiani said.The team will also reassess whether it makes sense to continue with the current Qualcomm proposal. Fabiani said all ideas for any location will be considered.
  The announcement throws into the air the team's future in the city of San Diego. Fabiani hinted at the fact that the team would like the opportunity to speak with other cities around San Diego County. A number of the county's mid-sized cities have expressed some interest in hosting the Chargers.
  The team's lease with the city prohibits it from talking with other cities until Jan. 1. However, a group of business leaders has floated the idea of modifying the contract to allow the team to talk with cities within the county before that date. Council President Scott Peters wasn't available for comment for this story, but has expressed interest in the idea. Mayor Jerry Sanders said Monday he'd consider such a proposition, though it would be the purview of the council.
  Ever-present in stadium discussions is the National Football League's constant push for new stadiums and its desire to place a team in Los Angeles. The nation's second largest city has been without a team since the end of the 1994 season.
  Fabiani deflected talk of the Chargers relocating outside of the county.
  "I hope we will never have to visit the question of talking to other cities outside of the county," he said.
  Fabiani said he was optimistic that new Mayor Jerry Sanders and the City Council appeared willing to talk about proposals.
  The team's current push for a new stadium began in 2002, when it informed city leaders that it would likely exercise an option to get out of its lease with the city in order to spur stadium negotiations with San Diego and other cities. Former Mayor Dick Murphy then convened a citizens' task force to study the team's desires. The task force recommended a development that put the risks of building a stadium and housing on the Chargers, but said any new tax revenue generated from the site could be used for infrastructure or other related needs.
  The team and the city later renegotiated the stadium contract to keep the Chargers securely locked into San Diego with sufficient time to get a stadium proposal on the ballot. However, with November ballot hopes dashed, that scenario seems unlikely.
  A proposal could hypothetically be put before voters in the next citywide election -- likely to be the 2008 presidential elections -- but Fabiani said the team will likely know by the end of this year if a deal is possible in San Diego.
  Aguirre and Sanders held a joint news conference to react to Fabiani's announcement. Both avoided taking a stance or explaining a plan of action to help the team. Aguirre said he was refraining from a counterattack to Fabiani's statements about him. His measured response contained a little bite, however.
  "Mr. Fabiani just misses the good fight. He's hoping that we can get into it. Unfortunately we're not going to do that for him, we'll have to delay his gratification,
  " Aguirre said.Sanders said he wasn't sure about the assertion that the city's problems were hampering the Chargers' pursuit of a development partner.
"I don't really know what that entails in terms of what their search has been and what answers they've gotten. So I don't know if the city's been an impediment to that," Sanders said.
  Asked if he supported Aguirre's stance on the issue, Sanders' parried the question."I want to make sure we have negotiations with the Chargers that are respectful and make sense to everybody," Sanders said.
  Aguirre said he thought that the City Council could still put the Chargers' proposal on the ballot either this year or in a special election in 2007.Sanders didn't know about that. "A special election would be very costly I don't know if that's a reasonable alternative," he said.

SRO Hotels A Dinosaur In Demand
By PAT BRODERICK - 10/17/2005, San Diego Business Journal
 Single-room occupancy hotels ˜ an endangered species in Downtown San Diego ˜ have lost their luster for builders Bud Fischer and Ruben Andrews, while Judi Carroll Winslow is reinventing her historic Pickwick Hotel on West Broadway altogether, positioning it as "the best little two-star hotel in San Diego.
 Summing up the state of their industry, Andrews said, "I don‚t know anyone who will be building an SRO in this marketplace now.
 SROs ˜ so prevalent in Downtown San Diego ˜ are a dying breed, say the builders and owners. Relief isn‚t expected to come anytime soon, because of the ongoing rancor between the city and the owners.
 These single-room units, typically furnished these days with a bed, a small refrigerator and a microwave, once flourished when Downtown San Diego was bustling and needed basic lodging for its workers and travelers. Nowadays, SROs ˜ there are about 5,400 in the city of San Diego, mostly Downtown ˜ are favored by low-wage service workers, low-income seniors and students alike, but the hotels are becoming liabilities for many of the owners.
 Their major beef is that the city is hobbling them by requiring relocation and replacement costs if they decide to close up shop, while offering them no incentives to spruce up deteriorating buildings. All but a few of the hotels are subsidized, with most at market rates, said Dale Royal, senior project manager for the Centre City Development Corp., the city‚s redevelopment agency for Downtown.
 The current city ordinance requires SROs that close to pay tenants, who have lived in the unit for at least 90 days, two months‚ rent. The tenants also qualify for a rebate of $10 for each month after that, capping out at $210.
 The SRO must replace all units removed from the market with very-low-income units ˜ 50 percent of the average median income ˜ or pay 50 percent of replacement costs.
 It's bordering on craziness, saying that, "You must stay in business,‚ or you have to pay thousands of dollars for each resident that has to leave your facility, said Winslow, vice president of Winslow Investments, the parent company of Pickwick Partners, the hotel owners. "This is something a public/private partnership should be doing.
 The city is "misguided, she said.
 The government and public bureaucracies need to operate with regulations and restrictions, she observed. "In the real world of things, given that we are a capitalistic society, public/private partnerships should work together with incentives, rather than restrictions.
 Andrews chairs a group called the Coalition for Urban Housing Solutions, which is pushing for an increased supply of SROs, an end to "regressive regulations, and the establishment of "reasonable land-use regulations. All of this, they say, will allow the market to build significant numbers of new units, lowering rents, replacing older units with new ones and reducing the amount of subsidies that might be required for rent-regulated units.
 The group also wants the redevelopment agency ˜ the CCDC in the case of Downtown ˜ to "fulfill its social obligation by providing relocation assistance and providing replacement units at "extremely low rent levels.
 It‚s unfortunate that this discussion has cast us on opposite sides, said Andrews, who owns the Hotel Mediterranean, an SRO in Downtown‚s East Village, and is opening a second one, the Hotel Occidental, at Fourth and Elm, in November.  We both want to see more of this housing built. We need the city to step forward and recognize this.
 But, he said, "Toni Atkins has refused to meet with us, though we have repeatedly requested meetings.
 But Atkins, the city‚s deputy mayor, sees it differently.
 We have been trying to negotiate for some time, she said. "I support development of SROs and incentives to build SROs. It is a housing niche that provides affordable housing.
 Atkins, acknowledging the shortcomings of the existing regulations, said, "We went back to the drawing board, and said, ŒLet‚s see how this can be mutually advantageous, but let‚s not hurt the residents at the low end.‚
 But so far, she said, a compromise has yet to be reached with the SROs.
 Meanwhile, a revised ordinance, which has been in the works for some time, is expected to make its way to the City Council sometime after the Nov. 8 election.
 The Pickwick‚s Winslow, now planning a major rehab of the old hotel, views SROs as part of the city‚s history.
 "Hotels fell into a rhythm back in the ‚60s, when people left Downtown, and buses stopped being the primary mode of transportation, she said. "What was left was leasing long-term, becoming SROs. It was a cyclical reaction, and most of the people who now operate these ˜ the older properties ˜ are doing so because they became that at the time.
 While Downtown is now experiencing a rebirth and land values are expensive, said Winslow, affordable property can still be obtained around trolley lines, "where you can get land at $25 a square foot and get a public subsidy.
 Switching Gears
 Before Jan. 1, 2004, state law let SRO owners off the hook for replacement costs if they notified the city of their intent to withdraw units from the rental housing market. Winslow was among them, and now is making the relocation of her long-term Pickwick tenants "as seamless and painless as possible, offering assistance and relocation funds as required under the law.
 Original construction of the 234-room Pickwick began in 1926, touted as the first hotel in San Diego with "ensuite bathrooms, and a marketing slogan that promised, "A Room and a Bath for Two and a Half.
 The Pickwick‚s $16 million renovation, expected to begin early next year, will be done in two phases, said Winslow. The first is scheduled for completion at the end of June, with a full opening planned in the first quarter of 2007.
 "We just spent $200,000 on elevators, she said, adding that most of the improvements won‚t be noticeable, given the limitations placed on rehabbing the historic building.
 "Seventy-five percent of everything we spend on this, you will never see, she said. "They are buried in the building. This is what‚s driving this ˜ the need for refurbishing.
 Paul McNeil, a principal of London Group Development Services in Downtown San Diego and an SRO consultant, believes that this is a good time to get out of the SRO business.
 "A lot of these buildings are aging housing stocks, built around the turn of the century, with very little maintenance, generally, on the lowest-priced units, he said. "The city isn‚t exactly jumping in offering incentives to rehab these buildings. It‚s important that you have some incentive for reinvestment in these buildings, which are the lowest rung on the ladder of housing stock. You want to be able to buy, sell and trade properties.
 Fischer, an owner of Trilogy Real Estate Management, Inc. in San Diego, has about 650 SRO units in five buildings south of Broadway, some subsidized,
some market-priced.
 "Frankly, the city is making a big mistake if they‚re trying to legislate affordable housing on existing SROs, said Fischer. "It‚s ruining the marketplace. People are not obligated to maintain them. There is no incentive to build them.
 Fischer said that he‚s out of the SRO business.
 "I wouldn‚t develop another one if you gave it to me, he said. "You cannot build them without a subsidy, and the city doesn‚t have subsidies of any consequence. These units today would take at least $50,000 a unit subsidy or more, and where are you going to build them? Downtown? Look at the cost of land Downtown.
 That‚s the main reason why Paul Downey, the president and chief executive officer of Senior Community Centers in San Diego, decided to build the new $29 million City Heights Square low-income senior complex in City Heights rather than Downtown San Diego.
 "Ideally, Downtown makes a lot of sense, said Downey, who also has the Potiker Family Senior Residence on 14th Street. "Downtown is where a lot of our seniors are located, but the biggest challenge is the cost of land.
 Invited by Deputy Mayor Atkins to locate the project within her district, Downey said that land costs there are $69 a square foot, compared with $400 or $500 a square foot in Downtown San Diego.
 "It's very difficult to go Downtown and build anything, he said.
 But the CCDC‚s Royal believes Downtown is still a viable option for this type of housing.
 "Senior housing and SRO housing are very capable with high-rise requirements Downtown, and in Downtown, and there are lower parking requirements, he said. "It‚s expensive, but you can do a lot more units on a small site Downtown.
 Royal also takes issue with the concern over lost SRO units.
 "Don‚t forget to count other types of housing that may be more appropriate housing, he said, citing such senior developments as City Heights Square.
 But, said Downey, there are whole classes of people feeling the brunt of dwindling SRO stock.
 "There is a drastic need for more housing, said Downey. "SROs have been the lowest rung of housing in San Diego, and we are eliminating a whole class of housing through redevelopment.
 As more baby boomers reach retirement age, he said, it will just get worse, coupled with the new competition for housing Downtown.
 "There are a lot of service industry jobs that have been created by the ballpark, said Downey, "and competition with service workers looking for places, competing for the same housing as the seniors. But those are being removed or torn down or renovated into high-end hotels. It‚s Economics 101 ˜ demand up, supply down, prices up.
 His City Heights project, which has a $6 million commitment from the CCDC, and recently received an $18 million federal tax credit, will add 150 units to the supply. But the project won‚t be breaking ground until the end of February 2006, with competition scheduled in mid-2007.
 Those rooms, he said, "will be filled in the blink of an eye.
 "We could build that size building every year and not even begin to get to the demand, and that‚s without factoring in the increases in demographics.
 "If the federal government made more tax credits available, we‚d have more projects, said Downey. "Without that, money generated by CCDC alone is not enough to bring about the affordable housing we need.
 Mitch Mitchell, the vice president of public policy and communications for the San Diego Regional Chamber of Commerce, said that "the harsh reality is, the housing crisis is affecting people of all economic status ˜ low-low, work force with a decent income, who still can‚t afford housing, and seniors, which hasn‚t been a topic of conversation. They have been lost in the whole debate. The housing Downtown that has been removed has been for seniors, and there are few options for them on fixed incomes.
 Mitchell continues to push for the creation of a city "housing czar, who can keep the mayor and City Council informed on housing issues.
 "In the end, we have an aging population that will require affordable housing, he said. "We have to start looking at this problem comprehensively.
Atkins agreed.
 "I keep looking at what we‚re losing, said Atkins. "We are not keeping up. It‚s so difficult when you realize there are so few units available for poor seniors. You see these go off-line, it‚s so disheartening.
 "We can‚t just give up on this discussion, she added. "The ramifications of not working together are pretty grave for our citizens. We may not always agree, we may come from different philosophical perspectives, but we need to keep the discussion going. That is the good news.

Restating assets a setback for city
By Matthew T. Hall, UNION-TRIBUNE STAFF WRITER, Sept. 17, 2005 
  Because of errors found by outside auditors, San Diego will have to lower the $6.8 billion in assets it claimed in 2002. The overstatements include $105 million for listing San Diego Zoo assets as the city's.
 Private auditors have found that San Diego overstated its net assets by more than $640 million in fiscal 2002 – a problem that portends greater difficulty for the city's restoration to sound fiscal health.
  The city's net assets will be lowered almost 10 percent from their reported total of $6.8 billion, a miscalculation used in three bond offerings, which opens the city to possible lawsuits and new federal sanctions and fines.
 The errors include the double counting of roads and bridges, delays in depreciating the value of water and sewer plants, and the inclusion of abandoned capital projects as well as improvements made to the San Diego Zoo by the leaseholder, the San Diego Zoological Society.
  KPMG, which is auditing San Diego's 2003 books, told the City Council last month that its findings would lower the city's net assets by about $640 million for that year. The city Auditor's Office released details of the overstatements this week in response to questions from The San Diego Union-Tribune.
 Thirty corrections will reduce by 9.3 percent the net assets San Diego reported as of June 30, 2002, according to a document released by City Auditor John Torell that calculated the overstatement at nearly $641 million.
  By comparison, Enron restated about $580 million in revenue in 2001 for the previous five years, an amount described in published reports as a record corporate restatement at the time.
 Deputy Mayor Toni Atkins called the accounting revelations "really quite astounding" but said she believes the range of problems won't be repeated.
Assets overstated
  Because of errors found by outside auditors, San Diego will have to lower the $6.8 billion in assets it claimed in 2002. The overstatements include:
$105 million for listing San Diego Zoo assets as the city's. $190 million for capital projects that were abandoned or never completed.

$147 million for double counting assets such as roads and bridges.

$147 million for depreciation delays of water and sewer plants.

$48 million for citing a Padres contribution toward the team's new ballpark as a city payment.

 "We're all somewhat disturbed and quite surprised to see this information," Atkins said. "I think it means we're changing a culture and a history of practice within the Auditor's Office and the city."
  The disclosures follow admissions by city officials last year that they had masked a mounting pension deficit from bond investors and overcharged residential ratepayers for sewer services.
 The well-publicized pension and sewer problems have spawned lawsuits and federal investigations, and outside experts such as the dean of the Levanthal School of Accounting at the University of Southern California say the city could face more of the same in the wake of its accounting errors.
  "You don't know whether this was purposeful or this was a mistake that was made in a very big way and no one was sufficiently skeptical about it," Dean Randy Deatty said.
  City Manager Lamont Ewell said KPMG is "going back nearly two decades" in recalculating the assets for the fiscal 2003 audit. That audit so far has cost $3.1 million. He said that the city's bonds are insured, so investors shouldn't fear any losses, and that the Securities and Exchange Commission knows about KPMG's diligence.
  He added that he resents any reference to San Diego as a sort of "Enron by the sea," an allusion made in national newspaper headlines last year.
  "No one in this city has walked out of here with bags of money like the executives of Enron," Ewell said. "These are book value losses and errors that were made as a result of not being thorough."
San Diego's overstatements include:
  $190 million for recording as assets capital projects that were abandoned or never completed.

$147 million for double counting infrastructure assets, including roads and bridges.

$147 million for waiting too long to begin depreciating assets such as new water and sewer plants.

$105 million for logging buildings and development at the zoo in Balboa Park as city assets instead of as leasehold improvements made by the Zoological Society of San Diego.

$48 million for classifying a Padres contribution toward the team's new ballpark as a city payment.

 KPMG, which began its work in April 2004, unearthed most of the errors. Others were identified by Torell's staff and by Macias, Gini & Co., the firm hired to conduct the city's fiscal 2004 and 2005 audits.
  Auditors are now trying to verify how many water and sewer pipes the city has and work to ensure the inventory of land the city is holding for resale is assessed at the proper value. KPMG needs city officials to complete this work and its fiscal 2003 financial statements to conclude the audit.
 Torell, who next week will begin presenting monthly financial reports to the City Council on San Diego's revenue and expenses, is trying to overhaul the Auditor's Office, which he took over in March.
  He said some of the problems stem from the city's use of a geographic information system to log its assets that isn't linked to an accounting database, and he is working to install a new process to eliminate errors.
  "Things can't get any worse," said Torell, whose predecessor announced his resignation just before the January 2004 disclosure of the city's pension deficit, which triggered investigations by the U.S. attorney and the SEC.
  Former Auditor Ed Ryan, who held the job for more than 20 years, declined comment through his attorney. 
 Gary Caporicci, a partner in a firm that certified San Diego's 2003 books in an audit that city officials never made public because of the pension-deficit disclosure problems, did not return a telephone call seeking comment.
  City Attorney Michael Aguirre said the "creative accounting ... destroys our financial statements for 2002."
  "It doesn't look like any of the bondholders are going to be damaged," he added, "but it's certainly something that can be taken into consideration by the SEC."
 Torell said the errors accumulated over the past two decades and appear to be unintentional. However, he said, they should not have been made in the first place and should have been caught by the auditing firm of Caporicci & Larson and a firm it acquired in 2003 that had won San Diego's auditing contract 10 years earlier.
  "It shows oversight maybe bordering on lack of due care," Torell said.
  Caporicci has said a city's financial statements are never free of mistakes. The comment appeared in a July 15 report by a law firm that interviewed him while investigating possible illegal acts related to San Diego's financial disclosures.
  "The issue is whether the mistakes render the financial statements materially misleading, and (Caporicci) believes that was not the case with San Diego's (fiscal year 2002) financial statements," the report stated.
  Steven Feinstein, a professor of finance at Babson College, a well-regarded business school near Boston, said it's not uncommon for corporations to restate their finances but fairly unusual for a big city to do so.
 However, he said, San Diego bondholders could file securities lawsuits only if their bonds fell in value, and they could win in court only if they proved the drop stemmed from the city's financial revelations.
Restating assets a setback for city
  Arnold Rosenberg, a professor at San Diego's Thomas Jefferson School of Law who teaches commercial transactions and bankruptcy, said the latest revelations will at the very least draw the attention of investors if San Diego bonds begin trading at a loss on the secondary market.
  "They are certainly going to consider demanding their money back," he said.
  In that situation, Rosenberg said, a blame game between the city and its independent auditing firm could escalate.
  "The auditors may try to pin the blame on the city," he said. "But, of course, the job of an auditor is to look behind the numbers provided by the city and verify them."
  Deatty, the dean of accounting at USC, said skepticism is an auditor's best trait but that it can only go so far.
  "There are limits to the technologies of auditing and there are limits to how much society is willing to spend to have auditors check every transaction," Deatty said.
  Yet, because of the unusual circumstances, he said he wasn't surprised by the money and time being spent by KPMG and the city on the 2003 audit.
  "The auditing firm is looking under every stone right now, and the SEC is going to do the same type of investigation," Deatty said. "And you may discover that some of these things were simple mistakes and some of them may be a lot more serious."

Transition committee: San Diego's change to strong mayor moving too slow
By DOUG SHERWIN, The Daily Transcript,  September 14, 2005
 A citizens group charged with helping oversee the city of San Diego's transition to a strong mayor form of government is critical of the city's progress, but city officials are confident it will get done in time.
 In a memo to the City Council Transition Committee on Wednesday, the Citizens Advisory Committee vocalized its displeasure that legislators canceled a transition meeting scheduled for Thursday and laid out several issues that need immediate attention.
 "The Citizens Advisory Committee views the cancellation of the 9/15/05 meeting of the council transition committee with serious misgivings, given that very few council working weeks remain to satisfactorily resolve outstanding transition issues," the memo stated.
Councilman Scott Peters, who heads the City Council Transition Committee, isn't concerned.
 "I think we're in good shape," he said. "All the policy decisions to implement the transition have been made with the exception of redevelopment. They have been sent to the City Attorney's office (for review) and should move on to the full council in October. We should be able to adopt everything we need well before (the deadline)."
Proposition F, a ballot measure that was passed by voters last November, established the strong mayor form of government. It is set to take effect Jan. 1.
 The measure essentially grants the mayor's office executive power and breaks it away from City Council, which represents the legislative branch.
 The Citizens Advisory Committee wants the newly formed offices of the independent budget analyst and legislative analyst staffed soon, stating that "failure to meet the October deadline for filling these positions will seriously hamper the effectiveness of the City Council to do public business in the new year."
 Peters said it's tough to fill those positions before they are created.
"The key is to get the analysts," he said. "We've begun the process to hire an independent budget analyst."
 The Citizens Advisory Committee also recommends the retention of Dewey Square Consultants to develop a report on best practices regarding the early monitoring of Proposition F implementation.
The citizens group wants introduction of final transition legislation to be docketed for the Oct. 17-18 City Council meetings with a Nov. 1 deadline for final passage.
 "This timing provides leeway for last minute debates/adjustments to unresolved questions and avoids last minute confusion and turmoil," the memo said.
 All changes that require resolutions to the municipal code must be approved by City Council by Nov. 15. That would allow time for the revisions to become law by Jan. 1. Once passed, a resolution is held for 30 days until it becomes effective.
 "I feel we were far behind before the (legislative) break," Peters said, adding, "We caught up and now it's a matter of writing out the rules and making sure we're informed before we vote in October."
Redevelopment is the only sticking point. By state law, redevelopment decisions are under the control of the Legislature. Under the new format, the mayor will no longer be a part of the Legislature.
"The challenge is to find a way to get the mayor (involved) in redevelopment," Peters said. "I think that's important and has citywide significance."
Send your comments, douglas.sherwin@sddt.com

City has sold land many times – and for many reasons
By Jonathan Heller, UNION-TRIBUNE, June 4, 2005
 The city of San Diego has sold off land holdings in the past for a variety of purposes – from helping attract business to erasing a tragic memory. Most of the sales had little or nothing to do with rescuing the city from fiscal crises.
  In the city's humble beginnings, during the 19th century, selling land was one of the few methods available for raising cash. Entrepreneur Alonzo Horton purchased 800 acres from the city for roughly 33 cents an acre in 1867, then resold it parcel by parcel. Today, that area is downtown San Diego.
 One of the best-known modern examples actually netted the city no cash. Voters approved Proposition D in 1958, giving the city the authority to donate 450 acres of "pueblo lands" on Torrey Pines Mesa to the University of California for a San Diego campus. "Pueblo lands" refers to public property originally granted during Spanish rule.
  The city made it a somewhat common practice to sell land in the late 1970s and early 1980s to private corporations to try to boost the economy. For example, it sold 2.7 acres in Torrey Pines to Nucorp Energy Inc. for $2.37 million in 1981, when Pete Wilson was mayor.
 Former Councilman Fred Schnaubelt often criticized those sales, saying the city was underpricing its land in its zeal to attract top-drawer companies. In one case, Schnaubelt, sitting in a committee meeting, actually negotiated a higher price with a developer than the city staff had.
  On two occasions, the city has unloaded little-used land on its northern border to allow North County growth.
 In 1987, the council, led by Mayor Maureen O'Connor, sold 266 acres near what is now Westfield Shoppingtown North County to the city of Escondido for $11.4 million. The sale cleared the way for a public golf course and about 530 homes.
  In November 1999, when Susan Golding was mayor, the City Council sold 26.1 acres in the San Pasqual Valley to the San Pasqual Union School District for $366,500. The district built a school for kindergarten through eighth grade.
 Dealing with a tight budget in 1988, O'Connor and the council decided to redevelop an abandoned Sears department store in Hillcrest. The council sold 12 acres on Cleveland Avenue near University Avenue for about $10 million to Odmark Development Co. and Oliver McMillan Inc. The companies built a $65 million housing and shopping complex called the Uptown District. The deal involved little or no profit for the city, but the cash infusion helped balance the city's $805 million budget that year.
  Another land sale was meant for healing, not profit. In 1988, the city sold a three-quarter-acre plot in San Ysidro to Southwestern College for $40,000. The land was the site of a McDonald's restaurant where, in 1984, 20 people – including children – were massacred by a gunman, whom police then killed. McDonald's had razed the restaurant and given the land to the city for free.
  Then there was the big sale that never happened: In 1990, the city considered selling Brown Field in Otay Mesa to a private developer to solve a $60 million budget shortfall. The sale never went through.

Intent to Deceive
By Don Bauder, San Diego Reader, April 21, 2005
 San Diego is known for both big and small stock-market scams. Peregrine Systems is a big half-a-billion-dollar scam -- right up there with Enron, WorldCom, et al. But San Diego is also called Pump-and-Dumpsville because it has spawned so many pump-and-dump scams, in which small-time rascals manipulate small-capitalization stocks to fleece small investors.
 The similarities between a big scam like Peregrine and a small pump-and-dump are eye-opening. So are the differences: the small-time wrongdoers are punished quickly. That's not true with the big fellows.Late last month, the U.S. attorney's office in Los Angeles unsealed a criminal grand-jury indictment against stock promoters charged with pumping up (artificially inflating) a San Diego stock via Internet hype, then dumping it (selling off shares) for fast profits. In an earlier civil case, the Securities and Exchange Commission, calling it "a classic pump-and-dump scheme," had penalized most of the perpetrators and enjoined them from future stock manipulations.
  The stock was New Energy Corp., now named Neco Energy. The stock currently sells for a nickel -- a far cry from the $10 it reached in January of 2002 after the pump-up. Marshall Algird Zolp, a Panamanian whom the Securities and Exchange Commission identifies as "a recidivist securities violator and fugitive," has pleaded guilty to criminal charges and will be sentenced June 27, according to the Los Angeles U.S. attorney's office. He was helped in the caper by Geneva Financial Ltd., a purported bank he owns in the Caribbean tax and secrecy haven of Nevis. Zolp has been nailed on four previous occasions by the securities commission.
  He has several aliases.San Diegan Tor Ewald and his stepfather Ernest Paul Lampert were indicted last year, but the case had been sealed until recently. Maintaining that they are not guilty, they go to trial September 6. Lampert, a fugitive hiding in Mexico, was arrested in San Diego last December. He, too, is in custody. Ewald is out on bond and, as far as I can determine, is still an officer of Neco. (It is hard to find reliable information on Neco because it trades on the pink sheets -- thinly traded stocks that don't meet listing requirements of major exchanges -- and does not file financial reports. I haven't been able to rouse the company by phone.)
 According to the criminal complaint, Zolp, Ewald, and Lampert pumped up New Energy stock by getting a supposedly independent research organization to post a bullish review on an Internet website. It falsely claimed that New Energy had more than $50 million in orders for solar generators; that the company had a "virtual lock" on its market; that it was a partner with the Los Angeles Department of Water and Power; and that it had a $92 million contract with Coca-Cola bottlers in Mexico. Moreover, the trio allegedly helped create and approve a press release falsely claiming that New Energy had signed a ten-year contract with the nation's third-largest agricultural packaging concern, Teixeira Farms. The alleged perpetrators even invented a quote by the company's president.
  Ewald is charged with lying under oath to conceal the participation of his fugitive stepfather Lampert. According to Ellyn Lindsay, the prosecutor, Lampert had gone to prison in the early 1990s for fraudulently selling energy investments in the Bay Area.
  "He had walked away from a ten-year prison sentence after serving only a couple of months," she says. Lampert is charged with essentially running New Energy from Mexico and also participating in the false news release. I asked her how she knew Lampert ran the company. "Everybody said so," she says, but won't comment further because the evidence is not in the public record.
  Did Lampert write that news release? "Whether he wrote it or was just aware of it, he was part of having it issued," she says.
  From December 18, 2001, to January 9, 2002, the stock rose from $4.75 to $10. Zolp sold 42,000 of his 800,000 shares during the period, raking in around $400,000, according to the federal government. Some of the money wound up in a bank account controlled by Lampert while he was a fugitive in Mexico.So, the alleged rogues really didn't sell that many shares and didn't pick up much money.
  Contrast that with Peregrine: from April 1999 to February 2002, corporate sales were artificially inflated by half a billion dollars, according to investors who have filed civil suits to recover some of their losses. During the fraud period, the stock zoomed from $17 to $79.50, as the company boasted on the Internet of wonderful sales increases and product successes.
  Officers and directors bailed out of $580 million of stock during that period, even though the company's lawyer warned them not to do so because they had material information that ordinary investors did not have. Beginning at the stock's public offering in 1997, the stock soared from a split-adjusted $2.75 to $79.50, and chairman John Moores sold more than $650 million of stock, almost all he controlled. Other officers and directors jettisoned their shares, too.
 Some officers and outside service providers have been charged criminally in the Peregrine scam.
  But so-called outside directors, who sold by far the most stock, have not been charged, and judges in civil suits are giving them every benefit of the doubt and then some. Alas, the old American standard of justice applies: the more money plucked from investors, the easier it is for the pluckers to escape liability.
  In late March and early April, two San Diego judges hearing Peregrine civil suits issued astonishing rulings -- astonishing even for San Diego courts. Superior-court judge Joan M. Lewis, hearing a case brought by the litigation trustee appointed by the Peregrine bankruptcy court, ruled that investor claims on insider trading would have to be heard under Delaware law, not California law, because the company is incorporated in Delaware.
  Since 1968, California has had tougher laws than other states and the nation on insider trading: corporate insiders can't dump stock if they have material information that the public does not have.
 The key is that a company based elsewhere must conform to California law. The litigation trustee's suit pointed out (as do other civil suits against Peregrine officers and directors) that the board members were told repeatedly that the company was not doing well, despite its claims to the contrary; it was secretly using an unusual accounting method to meet Wall Street's quarterly expectations; its auditor was nervous about accounting irregularities; regulators were cracking down on practices employed by Peregrine, and the like.
  Yet, insiders dumped their shares. Under Delaware law, the plaintiffs would have to prove that the directors had an intent to deceive, manipulate, or defraud -- a higher bar to jump over than showing that they sold their stock having negative nonpublic information.
  San Francisco attorney Robert C. Friese, a court-appointed attorney, will submit an appellate writ to reverse Lewis's ruling that Delaware incorporation outweighs California's ability to assert its laws. Meanwhile, he will pursue the other claims in the suit.
  However, in federal court on March 30, Judge Roger T. Benitez issued an opinion on a case that consolidates 31 individual cases. Despite the board's knowledge of Peregrine's dubious accounting and failing business, as well as its knowledge of a pending merger that would affect the stock, Ben