July 28, 2006

MAAC withdrawals partnership in Mercado Alliance

Sixteen new developers respond to city requests

By Raymond Beltran

In a letter this Monday the National City-based, social service group Metropolitan Area Advisory Committee (MAAC) stated, “MAAC Project, a general partner in San Diego Mercado Associates, has announced that it has formally withdrawn from the ownership group of Mercado Alliance, LLC, developers of the San Diego Mercado Mixed-Use Project.”

“We’ve been trying to get the project built,” says MAAC Representative Connie Hernandez about Barrio Logan’s Mercado Project. “But with regards to our best intentions, it hasn’t happened … we’re withdrawing,”

The announcement comes a month and a half after the city won a tug-of-war battle with Mercado Alliance over the dirt lots surrounding Newton Avenue at Cesar Chavez Parkway, and amidst a looming lawsuit, in pretrial phase, initiated by the city to regain $1 million in damages and establish official ownership over the property.

The city previously sold the $7 million lots to Mercado Alliance, a partnership between MAAC and LandGrant Development, for just $100 in order to build a mixed use commercial zone. After twelve hindering years of planning, the area remains a gated flatland.

“[We] believe that it is time for us to step aside and let others pursue the next steps to bringing this valuable project to fruition,” stated MAAC President Antonio Pizano in the letter.

MAAC had been heading the major redevelopment project across from Chicano Park for over twelve years, beginning with the first phase, the Mercado Apartments (affordable housing still owned by MAAC), which were completed in 1994 and now stands as a trophy accomplishment by the group. But the apartments, now a diamond in the ruff, remain nudged in the shadows of an extremely low income community under the Coronado Bridge.

The second phase was to eradicate the neighborhood’s blight by creating a “mixed use” commercial zone, on the corners of Newton Avenue at Cesar Chavez Parkway, with a major supermarket, independent businesses, and more importantly, jobs for a struggling Latino community.

In 2000, MAAC partnered with LandGrant Development to create the Mercado Alliance to build the shopping center, but after twelve years with nothing more than a Mercado billboard planted on the property, the city seized the land.

Last month, HUD began pressuring the city to repay, in full, a considerable portion of the $7 million they loaned San Diego to have the Mercado built., Ultimately HUD extended the deadline to Sept 30 so the city could find a new, qualified developer.

The city released a request for qualified developers on July 7 and has received sixteen responses. Director of Community Planning and City Investment William Anderson says it “shows there’s a lot of interest.”

Without naming specific companies, city officials say there are a variety of local and national companies interested who are qualified in “mixed income communities,” and that the sixteen will be narrowed down to the top three by the Sept 30 deadline, according to Anderson.

“We didn’t say what type of tenants there had to be,” said Anderson about future mercado plans. “Usually, a project, to get investments, needs an anchor tenant (usually a supermarket), but we want to see what ideas the people have. Some might want to propose an anchor and some might propose a more unique, community-oriented idea.”

The idea of the Mercado Project was initiated in 1990, when the city officially titled the area a “redevelopment project area,” making the neighborhood eligible for federal grants and financing. Decades before that, the area had been condemned to an industrial status, available to shipyard business, paint shops, and other hazardous small business. When dedicated residents failed to evacuate the historical neighborhood, as the city had hoped, the idea of mixed use land began to surface.

In 1992, the MAAC Project completed the construction of the Mercado Apartments, the catalyst for completely revitalizing the barrio, with hopes of following up with a full scale commercial plaza, providing 270 local jobs, a decent supermarket, and seed of hope for uplifting a barrio with the worst health conditions in San Diego due to sprawled out toxic businesses.

Throughout the past decade, a number of obstacles hindered progress for a mercado. According to old testimonies from former officials and developers, commercial chains didn’t see much profit in moving to Barrio Logan, a community accustomed to unhealthy air toxicity, a majority of low income residents, and a 90% Latino population. Without a major anchor supermarket secure in turning a profit, getting businesses and banks to invest in the neighborhood has been close to impossible.

Nonetheless, the attraction to this particular neighborhood has been in its potential. The trolley station is within walking distance to the area, residents themselves have to travel outside the barrio to National City, Downtown, Hillcrest, or Lemon Grove to find a major supermarket. Many could walk to a Mercado Project store as the neighborhood is prone to residents strolling up and down the sidewalk.

Currently, the city isn’t holding developers to the standard idea of demanding there be an anchor supermarket to attract investors.

Beyond that, the second phase is to submit a request for proposal (RFP) to a qualified developer to initiate the planning and development process of the mercado.

In the event that the city misses the deadline, Aguirre says that the future lawsuit can be amended to sue Mercado Alliance for the money due HUD. He also stated that even though MAAC has severed ties with Mercado Alliance, that action won’t exclude them from any litigation process. Hernandez says she hasn’t gotten wind of the city making good on threats.

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