THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, April 26, 1996 TAG: 9604260506
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 99 lines
A federal judge Thursday dismissed a lawsuit that sought to block public funding of the planned $300 million MacArthur Center Mall.
U.S. District Judge Henry C. Morgan Jr. ruled without trial that the city has a right to spend money for public purposes - in this case downtown redevelopment - and that possible damage to other private businesses in the city is no basis for a lawsuit.
The dispute, he said, is a matter of politics and policy, not one for the courts.
``The issue is not whether the actions of the city or the authority are wise or logical or even fair; the issue is whether it is unconstitutional,'' Morgan said.
The Norfolk Federation of Business Districts, which had filed the suit, said it would take the ruling to the 4th U.S. Circuit Court of Appeals in Richmond.
Andrew M. Sacks, the group's attorney, said the organization would begin a petition drive Monday to attempt to force the city to drop a request for $33 million in loans from the federal Department of Housing and Urban Development that are key to the project.
Morgan dismissed all nine charges against the city, the Norfolk Redevelopment and Housing Authority, and HUD. For procedural reasons, he allowed the Norfolk Federation the option of refiling one charge against HUD over the $33 million loan. Sacks said he would refile the charge immediately.
Morgan said the city had proved the presumption of a public purpose for the MacArthur Center mall effort by submitting a downtown redevelopment plan dating back to 1958.
From Nauticus to Waterside to developing the old Granby mall, the city has repeatedly taken actions that could potentially harm private businesses, Morgan said.
``Maybe, when they built Harbor Park, they destroyed a lot of sports bars,'' Morgan said. ``The question is not whether it's fair, it's whether they had the legal right to do so.''
Morgan stressed that he was not ruling on the wisdom of the city's actions.
``In a few years we might be looking over there at some empty stores and a $100 million debt, who knows?'' Morgan said. ``That is not the business of this court.''
The federation charged that the city had violated state law by having the Norfolk Redevelopment and Housing Authority build the $33 million anchor location for Nordstrom, an upscale department store chain.
Although cities are prohibited from investing in private businesses directly, they have a right to do so through redevelopment agencies or other quasi-independent authorities, Morgan said.
The state Supreme Court, in a 4-3 decision, settled this issue in a similar case involving a Charlottesville hotel built with the help of a redevelopment authority, Morgan said.
Because the judge dismissed the case before trial, the city avoids the time and expense of a long court case.
The Norfolk Federation of Business Districts is a private group representing various business areas throughout the city. Sacks has refused to say whether the group or some individual members were the principal financial backers of the legal effort.
With Sacks in federal court Thursday were Stephen Wainger, who identified himself as an attorney for Military Circle mall, and Jay Lafler, who identified himself as a real-estate consultant working with the federation.
The petition drive promised by Sacks would ask the City Council to withdraw the city's application to HUD for the loan guarantee. If the council refuses to drop the application, the group would undertake a petition drive to put the issue on the ballot for a referendum, Sacks said.
This would be the same process citizens groups tried unsuccessfully to use three years ago in seeking to block construction of Harbor Park and Nauticus. The courts ruled then that citizens did not have the right to challenge a spending decision by the City Council through a petition initiative.
But Sacks predicted the the drive would be permitted in this case because it was challenging an application for a federal loan, not a spending decision.
Sacks said the group, under city charter, has 120 days from when it begins the drive to get enough signatures to put the measure before City Council. Sacks estimated that it would take 2,100 signatures, or 10 percent of the votes cast in the last municipal election.
The city still faces a hurdle in receiving the $33 million loan from HUD. It has been delayed while questions are resolved over whether the agreement would require Nordstrom to hire, or simply make efforts to hire, low-income residents. A state department is also requiring a more thorough historic survey of what used to occupy the site.
On June 15, the city is to turn over the 20-acre downtown site to private contractors. ILLUSTRATION: U.S. District Judge Henry C. Morgan Jr. said: ``The issue is not
whether the actions of the city or the authority are wise or logical
or even fair; the issue is whether it is unconstitutional.''
KEYWORDS: LAWSUIT MACARTHUR MALL by CNB