There were good reasons to feel optimistic in the spring of 1973. The last American soldiers left Vietnam. The Watergate hearings started and people began taking the scandal seriously, with public opinion swinging from it being “just politics” to “very serious.”
In Santa Rosa, the Press Democrat published its “Outlook 73” supplement which painted a very rosy picture of things to come. We would soon have a wonderful downtown shopping center with three major department stores and up to 85 stores. And soon after that a renewal project for Railroad Square will include a community center with a 2,500 seat performing arts theater and a 50,000 sq. ft. convention hall.
The photo accompanying that cheery item portrayed a scarred landscape that looked like a war zone, with several roughly cleared acres half filled with pools of rainwater. Not long before, the area was home to mom ‘n’ pop stores, repair shops, apartment buildings and more. In the name of urban renewal, that business and residential district was turned into this scene of desolation – which is how it would remain for the next seven years. It’s tough to stay optimistic for that long, particularly when a growing number of people would start to question whether the shopping center was such a good idea in the first place.
(ABOVE: Hugh Codding holding the “key to the city” while dressed in 19th century costume during the March 16, 1968 Santa Rosa centennial. Photo courtesy Sonoma County Museum)
As introduced here in earlier chapters of the “ROAD TO THE MALL” series, this phase of urban renewal started in March 1970 when the City Council passed an ordinance ruling that pretty much everything between B Street and the highway was a “blighted area.” Hardly anyone made comments or raised questions at the public hearing; likely most expected a replay of what happened in the 1960s, when all the blocks surrounding Courthouse Square were similarly deemed unfit but only a few building locations east and south of the Square were affected. They couldn’t forsee that this time, however, the city would be demolishing everything in the area.
Nor was there much fuss when the first bulldozers arrived in 1972 and started bulldozing. A short-lived lawsuit on behalf of the 200+ low income residents still living in the area was quashed by the city’s promise to make good on its original promise to find them other places to live.
The same week that suit was filed, the Press Democrat said Santa Rosa approved “exclusive negotiations with a Hawthorne development firm for a renewal-area shopping center.” A shopping center was a radical new direction from what had been considered when the blight ordinance passed in 1970; at the time there were only fuzzy plans for a department store, motel and a convention center. Even though this major decision was made by a non-elected city staffer without any sort of public hearing, there seemed to be little concern – although normally this sort of undemocratic schenanigan was what you’d expect to set city hall watchdogs barking in alarm.
No group opposed to the redevelopment project appeared until the autumn of 1974 (the topic of a following chapter) but there was one Cassandra who warned from the beginning the situation was fraught: Hugh B. Codding.
In 1970 Codding was a member of the City Council. At that March blight-ordinance meeting he remarked the city’s Planning Director Ken Blackman and the Vice Mayor had tried to strong arm the Montgomery Ward department store chain.1 Codding – who had offered Wards space at Coddingtown – said he was told the city officials had warned a company executive they would have to commit to building a new store in the project area or the company wouldn’t be welcome in Santa Rosa. Other council members pressed him for details and Codding provided the name of the Wards executive, yet the Vice Mayor still insinuated Codding was a liar.
That set the tone for much of what would happen over the next dozen years. It would be Codding fighting the city – specifically, its Urban Renewal Agency (URA) – charging that most everything leading up to opening day at the mall was shifty, if not flat-out illegal. In turn, city officials sniped back over his motives and embarrassed themselves with foolish remarks; in 1974 some council members suggested a boycott of Coddingtown and Montgomery Village. Yeah, causing the city to lose a large chunk of its sales tax revenue would really show Codding who’s the boss, you bet.
But don’t mistake Hugh Codding for a valiant knight wanting to protect his hometown from death by redevelopment. While he believed a mall at that location would force existing downtown stores out of business, he wanted to build on the site as well. Codding told the PD it would “resemble the old central business district plan and would include two department stores and shops, a conventional hotel center, exhibition hall and entertainment center.” He vowed not to touch the Cal Theater and said he would turn the old Post Office into a museum right where it was.
Codding’s main argument was the project area, dubbed “Phase II,” should be sold outright to a private developer (him) at fair-market value – as opposed to making a complicated deal that would be funded through the URA using public funds, including raising money via bonds.
And you can bet Codding was pissed because he wasn’t given a chance to even discuss those ideas with the URA, which rushed into exclusive negotiations with Los Angeles developer Ernest W. Hahn. This was more or less what had happened back in 1964, when he was blocked from making bids on the earlier redevelopment project because the agency made a sweetheart deal with local developer Henry Trione’s group.
Codding was on the City Council back then, so he confined his protests to snarky comments about unfairness. But now that he was no longer a councilman he unleashed Codding Enterprises’ attorney, William J. Smith, who would keep busy filing lawsuits intended to monkeywrench Hahn’s mall project. The Press Democrat was unabashedly a cheerleader for mall construction and had long disliked Hugh Codding but Bill was a great lawyer, if only because he kept Codding’s anti-mall viewpoints in the paper. Reporters knew he was the go-to guy for a dramatic quote: The mall project was not only a “land grab” but “the biggest ripoff in the history of Santa Rosa.” Without his colorful quips much of this important history might have slipped by unnoticed.
Codding was further motivated to stop or slow down the Hahn project because he didn’t want competition. Besides Coddingtown and Montgomery Village, since the mid-1960s he planned to build “Coddingland” (!) – a large regional shopping center on the west side of Rohnert Park. As explained in the intro to this history of the mall, a commonly-held notion at the time was that a shopping center was vital to a community’s economic survival; failing to have the best one within driving distance of most people in the area and the local Chamber of Commerce might just as well start handing out STORE FOR RENT signs.
Before continuing, I want to repeat an earlier point that cities and counties all over the nation were making similar stupid, irreversible decisions in those days. I don’t find a whiff that anything actually illegal was going on here in Santa Rosa – it was good intentions, not greed or corruption, which led to the dismantling of “The City Designed for Living.” (Here’s also a reminder this chapter is part of a broader series on Santa Rosa redevelopment: “YESTERDAY IS JUST AROUND THE CORNER,” which includes an index covering everything on the topic going back to the 1960s.)
But a year before Smith’s first lawsuit was filed, it seemed like Codding’s proposal might get a hearing at the agency after all – although URA Executive Director James K. Burns originally told the Press Democrat he hadn’t even considered speaking to Codding because Hahn’s company had far more regional experience. Lordy, that must have stung.
The exclusive deal with Hahn was for a 120 day feasibility study. “Mr. Codding went away with the understanding that if Mr. Hahn’s firm doesn’t come up with a workable proposal in four months, his firm would be one offered a chance for a new proposal,” the PD reported.
Come July of 1972 and the study period was up. Hahn asked for a nine month extension, which was immediately granted by the URA. Replying to a question from Codding Enterprises, Burns said they were welcome to look at any area plans or studies that didn’t belong to Hahn’s company. What the PD actually printed, however, was they couldn’t see anything that was the property of the Burns Company. It was interesting no one at the paper caught this howling typo – but considering what happened next, it proved surprisingly prophetic.
Time fleweth by and it was now March 1973 – Hahn had had a full year to consider whether he wanted to build a mall or no. He could still cancel the deal without consequences, as his company had not purchased an option on any of the property and those months of study were really the sort of due diligence that his staff surely needed to do on every major project.
Attorney Smith appeared at the next URA meeting and accused the agency and their lawyers of stonewalling requests for basic information about the planned scope of the Hahn project and how it would be paid for. After a month of failed efforts to simply get someone to answer the phone, Smith said their behavior was “suggestive of governmental secrecy and closed-door dealings.”
The agency chairman demurred, saying they first needed to consult lawyers and have Burns write a report. That response only further raised red flags, as just a few days earlier Hahn was the speaker at a Downtown Development Association (DDA) dinner where he blabbed at some length about the size and layout of the future mall. As far as funding, he boasted it would “pay for itself.”
A few days later Burns gave Smith a copy of a memo which he said was soon going to be shared with the City Council anyway. It sketched out how much the URA intended to raise with bond money, which was in addition to the HUD grants. The scheme was either savvy (the project would “pay for itself” if everything went perfectly to plan) or reckless (Santa Rosa could end up bankrupt if it didn’t). The Big Ask would be for $13 million and include funding for “development of Railroad Square” and construction of a community center – both of which were to be quickly dropped from actual consideration, though they continued to appear in PR pamphlets touting redevelopment. 2
…AND HOW WOULD YOU LIKE TO PAY FOR THAT?
In March 1973 the URA told Hahn it would propose Santa Rosa use two kinds of bonds that didn’t have to be approved by voters. Neither type of bond was controversial in its own right, but Santa Rosa wanted to use them in a way more beneficial to the developer than the city.
A Lease Revenue Bond (LRB) is issued by government (state, county or city) to pay for a public building that wouldn’t be used to generate income, such as a firehouse, school, or a prison. This is how Sonoma County funded construction of the present courthouse after voters refused to approve a bond (five times, no less!) between 1960 and 1963. The government then rents the building from the bondholders.3
A Tax Increment Financing Bond (TIF, also called a “tax allocation bond”) has less specific purposes, but is usually to fund redeveloping an entire “blighted” district. Presumably such improvements would result in higher property taxes and more local sales tax income.
Both are long-term municipal bonds which would typically extend over decades. But Santa Rosa officials believed at the time the mall would be opened by 1975 and the city treasury would be instantly awash with tax money, which would pay off any bonds in 8-10 years.
The $13M TIF bond was dropped, but the city later sold $6.5 million in bonds for Phase II redevelopment. Another $1.8M TIF was not sold, but was a “tool” used to obtain a matching federal grant from HUD, according to a URA lawyer.
It was because of the proposed TIF bonds that the county sued the URA in late 1974. Because all new tax income generated by the mall was earmarked for paying off the bond, special districts for schools, fire departments and hospitals (etc.) would not enjoy any benefits.
Worse, the assessed property values in an active redevelopment area were frozen at whatever they were when the blight removal project began. To speed up HUD approval of the 1970s project area, the URA had used a loophole. They claimed this wasn’t a new project, but rather an extension of the earlier project near Courthouse Square. This meant property taxes for the new mall were to be set not according to the current year, but instead the “base year” when redevelopment was first approved – which in this case was 1961.
(This sidebar has been edited to correct details about the TIF bonds.)
This was in addition to the big tranche of HUD urban renewal money, and the URA intended to raise this other pot o’ gold via bonds – which led to lawsuits against the URA by the county as well as Codding. See sidebar.
Once Bill Smith obtained this “secret memo” between Hahn and the URA he unleashed his silver tongue: “The implications of this material are staggering. It is perhaps the most incredible document we have ever studied.” He objected to the absence of voter approval and that taxpayers would be “subsidizing land developers and large department stores.”
All true that, but left unsaid was those bonds represented a Point of No Return. After they were issued, Santa Rosa would be completely at the mercy of Hahn making good on his promises. Should he proclaim that, oh, the mall just might need another year of studies – or goddesses forfend, he might be thinking about walking away from the project – the city would still have to make bond payments on today’s equivalent of $84 million dollars. We were giving away all bargaining power on what impact the mall would have on the future of Santa Rosa.
Yet at every URA or City Council meeting concerning redevelopment, attorney Smith was there, reminding the officials that Codding Enterprises was ready to immediately present a $1M deposit to buy the property outright, with no bond funding required at all. So great was the animosity toward Codding they never had the courtesy to allow him to make a pitch. Maybe they were concerned his proposal would prove so popular it would put the brakes on the mad rush to hand over keys to the kingdom to a Los Angeles developer.4
A few weeks after the “secret memo” episode, Hahn was back in town for a URA meeting where he requested (wait for it, wait for it!)…another extension. This time it was for ninety days, and the agency approved it unanimously. Bill Smith was at the meeting, and I’ll bet his eyes rolled so far back in his head they made an audible clunk.
Hahn was also there to deliver a cashier’s check for $500,000 as “good faith” money – but should the deal fall through, Hahn expected all of it back, and with interest. Smith argued this amounted to giving him a risk-free option, and said Hahn had dragged out studies for a Richmond shopping center for two years before it was dropped. In response the URA chairman chided Smith for not being “affirmative.”
The new extension was because Hahn said he needed time to prepare a “predisposition agreement” required for HUD approval and review by bond underwriters. Said Smith: That means it’s a public document and I want to see it. He was told it was off-limits because it part of their exclusive negotiations with Hahn.
Thus Codding Enterprises immediately filed its very first lawsuit in the redevelopment saga, seeking disclosure of the agreement under California’s version of the Freedom of Information Act. He complained to the PD about the URA throwing out obstacles on “this charade, this costly proceeding to get a lousy letter.” When it was released shortly afterwards it was shown one department store was committed to the mall, another considering it, and a third straddling the fence.
In an imperfect (yet better!) universe this would be nearly the end of the story. Codding surrenders and Hahn’s mall is built in the mid-1970s. Yeah, it may be obnoxious but it doesn’t completely dominate downtown. It ends at Fifth street so it’s still easy to get to Railroad Square. The beloved Cal Theater remains in place, as does the Old Post Office and Masonic Scottish Rite Temple, with its precious Kurlander Collection of Santa Rosa’s historical artifacts.
But Gentle Reader knows this is not what happened. Bill Smith continued to protest. Codding continued to sue. In the following years others decided Codding shouldn’t have all the judicial fun and they filed lawsuits as well. In the compressed viewpoint of hindsight, that period looked like everyone was slugging it out with everyone else all the time.
We can pinpoint our unhappy turn of fate to May 22, 1973, which was when the City Council approved expanding the urban renewal study area to Seventh street at the request of the URA. Besides the aforementioned heritage buildings, this area included the Bishop-Hansel Ford dealership and the 75,000 sq. ft. Sears department store, which was less than 25 years old.
Smith argued those twelve acres were not blighted and thus would not qualify for HUD redevelopment funding. Burns countered it was the Council who determined where urban renewal was needed. The PD noted the underlying reason was to expand the mall’s footprint.
So here’s the executive summary of where things stand as we enter the summer of 1973:
Our coy developer, Hahn, is still not sure Santa Rosa is up to muster and is having trouble signing up anchor stores for the future mall. But maybe if we could see fit to supersize the amount of land we’re giving him, he will decide he likes us in spite of our failings.
URA Executive Director James K. Burns has taken to fear-mongering the city is “losing $100,000 in taxes monthly” until the mall opens. He and other URA members appear so worried Hahn might delay or take flight they attempt suppressing all disclosure of their “exclusive negotiations,” skirting the law and giving their discussions the shady appearance of backroom dealmaking.
Codding Enterprises attorney William Smith is haunting public meetings and writing letters that warn the city is being hoodwinked.
There is still no organized public opposition to the mall project. It may be because Codding is leading the fight and some people really don’t like him. Since no architectural drawings appear in the paper most don’t understand Railroad Square might be blocked off. Or perhaps people just aren’t paying attention because it’s all so confusing. (“Tax increment systems?” Wha?)
Bottom line: Judge them not, because few, if any, can see what’s in store for poor, damned Santa Rosa.
1 The Montgomery Ward building in Santa Rosa was demolished following the 1969 earthquakes, but they quickly reopened as a catalog store near the current location of the Mendocino Av. Safeway. In 1972 they moved next to the Flamingo Hotel.
|2 A full breakdown of Phase II and III financials by URA Executive Director James K. Burns can be found in the September 2, 1973 Press Democrat
3 No Lease Revenue bond was issued for the mall project (as far as I can tell) although it was described several times in the paper, including in a March 9, 1973 Press Democrat interview with Burns. It was probably just being used as a talking point in order to mention a community center which the URA kept dangling as a possibility in PR materials.
|4 Since Codding Enterprises never had the chance to make a redevelopment presentation we don’t exactly what they would have proposed. The few times it was mentioned in the newspapers a department store, motel and convention center were frequently cited. Objections to the Hahn plans from William Smith sometimes mentioned the city’s Housing Element in the General Plan, and at least one letter from him stated “replacement and construction of housing for low and moderate income families and the elderly should be part of the downtown plan.” April 26, 1973 Press Democrat