Project Could Land City In Another Investigation

SAN DIEGO -- A planned retail center in San Diego's Barrio Logan was suppose to revitalize the entire area, but the city's redevelopment agency, developer and politicians never got anything done. Now, the lack of progress could land the city in another federal investigation.

A memo from the city's redevelopment agency estimated if it had been built, the Mercado Project could have generated $307 million in revenues for the city over 40 years. Instead, the empty 6.5-acre lot is a haven for the homeless.

"Three hundred to 400 jobs were promised here. Where's the baker, (the) candlestick maker, grocery store, doctor, dentist, real estate agent? Where is all the new development?" said Luis Garcia, with Chuey's Restaurant.

Garcia moved his business to the area after promises were made to develop the project across the street -- promises first made to the neighborhood in the 80s.

"And the promises have not been delivered," said Garcia.

Garcia said he blames the lack of progress on inept efforts by the city's redevelopment agency and the agency's choice of a developer.

The developer, Sam Marasco, is a well-connected attorney with ties to the city's political leaders, 10News reported.

"Our hope is to be under construction in spring of 2000," said Marasco in August 1999 to the city's redevelopment agency.

The paperwork 10News has obtained for the Mercado Project is massive and shows Marasco was warned four times about lagging on the project. But Marasco's company, Land Grant Development, continually convinces the city's redevelopment agency the project is moving forward.

The city's redevelopment agency's Robert Chavez defended Marasco.

"My response to that is he also has a mile-long record of making progress happen," Chavez said.

The city's redevelopment agency believes now, as they did before, he is still the best choice.

"We have given him the benefit of the doubt," said Chavez.

Chavez is the city's redevelopment agency's latest project manager -- one of many since the project's launch.

And since that launch, there have been numerous lawsuits filed against Marasco on other development deals. Former partners and investors allege that Marasco exhibited poor performance, breached contracts and showed a fraudulent pattern of conduct.

Marasco said that's not true and that it's simply accounting issues.

"The vast majority of these disputes are over money, who owes how much when," said Marasco.

In addition, Marasco said the long delays are not his fault and blamed disasters such as the Sept. 11 terror attacks and the wildfires of 2003.

"We had a huge uptake in construction costs and a few other things that caused some problems," said Marasco.

Marasco said he has spent millions of his own money trying to get the project going.

With the project sputtering, the city's redevelopment agency's solution is to sell the Barrio Logan land to Marasco for $100, 10News reported.

The city's redeveloment agency said this is how deals are done -- it's an incentive on difficult projects to give the land away.

And helping to create the $100 incentive is Ben Hueso -- San Diego's newest City Council member, who now represents the district where the stalled project sits.

"I was project manager and what I did was make recommendations on how to further the project," said Hueso.

Hueso said the deal was not his decision. He was just following orders from his boss, Hank Cunningham, who pushed for the deal.

"Yes, (I'm) responsible. Am I taking the blame -- do I feel guilty about it? No," said Cunningham.

Cunningham, in turn, said he was just following orders given to him by former City Council member Ralph Inzunza.

Multiple 10News sources said Inzunza pushed for the deal from the start.

But who gave the final approval for the $100 deal? -- former City Attorney Casey Gwinn.

Gwinn now works for the district attorney's office and told 10News he does not want to talk about his work as city attorney.

Inzunza would also not comment to 10News.

The U.S. attorney is now looking into the project's history, according to 10News.

Meanwhile, 10News has learned that the San Diego office of the U.S. attorney has been asked by city officials to look into the history of the project.