By Mary Lynne Vellinga

The city of Sacramento headed to court Friday to wrest control of two key blocks of the K Street Mall from property owner Moe Mohanna.

Even though the eminent domain filing was authorized by the City Council in December, Mohanna said Friday he was shocked that the city followed through on the threat to force him to sell his properties.

Mohanna said he has been meeting with City Manager Ray Kerridge in recent weeks in an effort to reach an amicable settlement on the fate of the 700 and 800 blocks of K Street, the pedestrian mall’s most run-down stretch.

“They’ve destroyed any hope of progress,” he said.

City leaders said they plan to continue negotiating with Mohanna, but decided to move forward with the court action in case those negotiations don’t produce an accord.

“Our goal is to get K Street redeveloped, however we can get there,” said Assistant City Manager John Dangberg.

Downtown’s leading developers and business leaders supported the city’s action.

“Something needs to happen,” said Michael Ault, executive director of the Downtown Sacramento Partnership. “We are losing opportunities downtown until this gets resolved. There’s not a week that goes by that we don’t talk to retailers or brokers or investors that ask about the area. With this issue unresolved, many people’s investments are going to be on hold.”

Mohanna’s lawyer, Myron Moskovitz, said Mohanna remains willing to keep meeting with city officials as well, despite the court case. Mohanna also has court actions pending against the city, one of them challenging its recent approval of development in the downtown railyard.

The city is seeking control of the 700 block of K Street so it can bring in Joe Zeiden, owner of the Z Gallerie furniture chain, to revamp the historic storefronts into a row of upscale retailers.

In 2006, Mohanna agreed to a complicated land swap in which he would exchange his 700 block properties with others controlled by Zeiden and the city in the 800 block. The idea was to let Zeiden develop the 700 block and Mohanna rebuild the 800 block with ground floor retail and high-rise residential. But Mohanna balked when some of the buildings in the 800 block were demolished after a fire.

In January, the city offered to pay Mohanna $11.8 million for all of his nine properties in the 700 and 800 blocks.

“We waited a couple of weeks to get a response but didn’t get one,” said Leslie Fritzsche, Sacramento’s downtown development manager.

Meanwhile, talks between Mohanna and Kerridge continue, with another meeting scheduled for next week. These talks are aimed at seeing if the two sides can work out a resolution under which Zeiden would redevelop the 700 block and Mohanna would keep the 800 block.

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