For a quarter-century, a rat-infested vacant lot at the corner of Haste Street and Telegraph Avenue in Berkeley has been a festering wound in the heart of a struggling commercial district. The ugly eyesore also has been an issue of dispute between its owner, Ken Sarachan, who also owns Rasputin Music, and his main competitor, Amoeba Music, which sits directly across the street. Last week, the Berkeley City Council decided enough was enough and voted unanimously to launch "non-judicial foreclosure" proceedings against Sarachan and his vacant lot in an effort to force him to finally pay $641,000 in liens he owes the city or either develop the land or sell it to someone who will.
The possible sale or auction of the vacant lot, which used to be the old Berkeley Inn before it burned down, is of particular interest to Patrick Kennedy of Panoramic Interests who has developed a number of mixed-use projects in Berkeley, including the Gaia building on Allston Way. Kennedy told the Express that he had been in preliminary discussions with Sarachan on developing the site, but concluded they had different visions of what the project should be. The right project "could have a transformative effect on the area," Kennedy said. "If [the property] comes up for sale, I'd attempt to buy it."
However, it could take years for that to happen. In a September 6 letter to Mayor Tom Bates, Sarachan vowed to fight the foreclosure process. "You know me well enough to know I would spend all the resources necessary to provide a maximum defense ... in court," wrote Sarachan, who also owns Blondie's Pizza, along with several other properties along Telegraph, including the old, vacant Cody's Books building, also across the street from Amoeba. "The results being that there would be no building or any progress for many years at the Berkeley Inn site."
The Berkeley Inn, a 77-unit single-resident-occupancy hotel, was badly damaged in a 1986 fire, and then totally destroyed in another blaze in 1990. When the then-owner of the property, Sutter Land Development Company, didn't clean up the site, the city did it for them and demanded reimbursement. When the company didn't pay cleanup and later nuisance abatement charges, the city put liens on the property. Interest on the unpaid liens grows every year, and the total owed to the city is now $641,000.
In 1995, Marc Weinstein, owner of Amoeba, had been working on a deal to buy the vacant lot with low-income housing developer Resources for Community Development. The plan was to expand Amoeba by purchasing the ground floor of a new building to be constructed on the property. There were to be four stories of mostly low-income housing above the expanded record store. But just before the deal was finalized, Ken Sarachan stepped in and purchased the property from Sutter for $800,000 in cash.
The sale infuriated Weinstein, because the city had just agreed to help finance his project with Resources for Community Development (RCD). "The moment the city agreed to give [RCD] the tax break, Ken snatched it up," Weinstein said. "He snagged it from underneath RDC and Amoeba."
Normally, Sarachan's purchase should have included paying off the liens. But the city, desperate to develop the vacant lot, said it would waive the liens if Sarachan built low-income housing and a public bathroom. (At the time, developers were required to create 20 percent low-income housing when they developed a project.) However, it took until 2003 for the city and Sarachan to sign a formal agreement on the project and specify the terms of forgiveness of the liens. And then Sarachan built nothing and never paid off the liens.
Sarachan didn't respond to a request for an interview for this story, and it's a matter of speculation as to why he hasn't built anything on the property. One problem is that public funds for low-income housing have dried up. Another piece of the puzzle is that Sarachan — and city officials — believed that in order for the project to be viable, it needed to be larger. That meant buying parcels to the east and north of the property, which Sarachan did. However, the purchase of the east lot brought with it particular complications, as it contains a historic house, which is to be moved off the property. In order to move the house, various studies must be completed. Sarachan named his development proposal the Pagoda Project — after the 65-foot pagodas he planned for the building.
For his part, Sarachan blames the city for why his project hasn't gotten off the ground. "This whole delay in the Pagoda Project is really due to the Planning Departments' lack of competence to make a decision and get work done," Sarachan said in his letter to the mayor. In a July 2011 memo to Dave Fogarty of the city's economic development division, Sarachan described his plans as a mixed-use project with retail on the ground floor and five floors — 45 to 55 units — of housing above. "The roof will be a park-like space usable for special events on the weekends," he wrote.
However, interim Planning Director Wendy Cosin said the department never received a complete project application for the property.
As for Weinstein, he believes Sarachan originally purchased the property in order "to block us out." And he attributes the failure to develop the property to what he says is Sarachan's unwillingness to follow planning department rules and procedures. "It's him doing what he wants to do," Weinstein said. "He sees himself as an anarchist."
A group of students and Telegraph Avenue merchants that includes Weinstein, calling themselves the A-Team, have been pushing the city to do something about the vacant lot and say they are hopeful that the council's closed-session vote to foreclose will move Sarachan to build a viable project. According to Andy Albright, a UC Berkeley student and senator with the student government, the A-Team intends to keep the pressure on Sarachan and on the council to make something happen.
But Sarachan contends that he'll build the project and doesn't need coercion. "I don't need any more pressure or incentives or lawsuits," he wrote the mayor. "I hope know you can see there is no need for an all out war."