Note: Coast Law Group, LLP and Partner Marco Gonzalez represent Hitzke Development Corporation

by Biana Kaplenek
January 25, 2017
The Coast News Group

SOLANA BEACH — Barring an appeal to the state Supreme Court, an affordable housing development could break ground in October, nearly a decade after it was presented to the city.

An appellate court judge last month sided with Solana Beach and Hitzke Development Corporation, ruling the South Sierra Avenue project is consistent with the city’s land use plans, view assessments were not required and the county deed conveying the site to the city did not limit the use of the property to a parking lot.

Developer Ginger Hitzke said her first reaction was relief.

“Finally,” she said. “This was such a slow process. If people wonder why there is a housing shortage in San Diego, and affordable housing in particular, they need not look any further than this project.”

Hitzke submitted an unsolicited proposal to Solana Beach in March 2009 to develop a mixed-use project on the 14,720-square-foot city-owned parcel that is currently a public parking lot. In July 2011 the city entered into an exclusive negotiation agreement with Hitzke.

After several public hearings and workshops that resulted in project modifications, The Pearl, as it is known, was approved in April 2014.

It is a 12,920-square-foot, three-story complex with 10 one- to four-bedroom units available to tenants with annual incomes between $33,000 and $44,000.

The existing 31 public beach-access parking spaces will be replaced. Hitzke will also provide the required 18 spaces for the residential component and another four for the commercial space, which is slated for office use.

Almost immediately after the city approved the project, two nearby homeowners associations filed lawsuits claiming, among other things, that the city didn’t notice the final public hearing correctly and was giving away land that was given to the city for use as a parking lot.

They also questioned the process for the view assessment and environmental reviews.

In August 2015 a Superior Court judge sided with the city and Hitzke on all claims. The homeowners appealed the decision, which was upheld Dec. 22, 2016.

“We are certainly very pleased with the court’s ruling and are happy to know that this long-awaited project, which received unanimous approval from both the City Council and the Coastal Commission, can move forward,” City Manager Greg Wade stated in a press release from Hitzke’s attorney.

“We also view this as a victory for the city’s commitment to thoughtful, well-planned affordable housing opportunities for our community,” Wade added.

Everett DeLano, attorney for the Seascape Surf condominium owners, said despite the loss, he believes it was a “good case.”

“Both courts acknowledged an intent to protect the public’s right to have beach access and parking,” he said.

He said other documents and testimony – as well as a map approved by the San Diego Board of Supervisors in the 1970s authorizing construction of the Seascape condominiums – indicate the land was to be used for public parking.

“But there was no specific identification for that in the deed itself,” DeLano said.

The courts also found that even if such a restriction exists, it does not preclude the concurrent use of the property for the proposed development.

Additionally, DeLano disputed claims that his clients were “wealthy people who just don’t want affordable housing in their neighborhood.”

“The whole purpose of allowing public parking is to ensure people from all economic backgrounds get to the beach,” he said. “So the notion that wealthy people don’t want others in their neighborhood is contrary to that.”

He also said representatives from the homeowners associations made it clear they support the project at another South Sierra location just south of the parking lot, near City Hall, which is across the street from the condominium owned by Bill Gifford, president of Seascape Surf Estate Management Association.

“So the notion that they don’t want the project is false,” DeLano said. “It was a way to tar the people who live there.”

“I think the whole point of the lawsuits was to hold us up and keep us from building this,” Hitzke said. “There just aren’t going to be that many traffic and parking issues from 10 apartments.

The next step is to apply to the county and state for the necessary tax credits and tax-exempt bonds.

“I went from relief and joy to stress,” Hitzke said about funding the project, especially since that will need to be secured before city and Coastal Commission permits expire.

The city already provided a $648,000 loan for the predevelopment costs. It will loan Hitzke a total of $2 million, although that amount could increase depending on the applicant’s ability to secure other financing.

The loan is for 55 years at 3 percent interest. Construction funds will be given after all other construction financing is used.

Hitzke said the lawsuits left her feeling “not friendly right now.”

“But I’ll get over it,” she said. “I look forward to being a good neighbor. Our goal is to provide housing that working people can afford.”

DeLano said his clients could appeal to the Supreme Court, but he hasn’t discussed that option with them.

“They don’t take that many cases, especially ones that have lost in the appellate court,” he said. “It’s not that it’s not a good case. It’s just that they are selective because of the sheer volume of cases presented. It’s a possibility but we haven’t talked about it.”