Developer Pays $10,000 in Reprimand for Zone Flyers

San Diego City Atty. John W. Witt said Tuesday he has taken legal action against a local developer who circulated “false and misleading” flyers among North Park and University Heights homeowners, urging them to sell their property because proposed rezoning could reduce their property values.

Witt said the developer--the Michael Andrew Group Inc. and its president, Robert (Buzz) Scharringhausen--agreed Monday to pay a stipulated settlement of $10,000 because of the practices. The company also promised not to misrepresent the current zoning or property values in those neighborhoods in the future, Witt said. The settlement assigned no guilt.

Scharringhausen is one of at least six developers, now under investigation, who have saturated the Mid-City neighborhoods with thousands of letters “designed to frighten owners into selling by making them believe that rezoning of their property by the city was coming, and that the rezoning would cause their property to lose value dramatically,” Witt said.

In addition, Deputy City Atty. William Newsome said the city may take legal action against other developers “within the next 10 days to two weeks.”

The Michael Andrew Group Inc. distributed about 700 letters, dated Jan. 30, claiming that homeowners had little more than a month to enter into a joint venture with the developer or sell their property at its current market value before the city would “down-zone,” reducing the maximum number of units built per parcel. Down-zoning, the letters said, would lessen the property’s value by as much as 50%.

The Planning Commission recommended in January that the City Council adopt a one-year interim ordinance that would slow development in portions of University Heights and North Park while the council reviewed a community plan for the area that includes down-zoning. The commission also suggested March 6 as the last day building plans for the area be accepted, Newsome said.

But the letters were misleading because they suggested that down-zoning had already been accepted, Newsome said. In fact, the issue will not come before the City Council until March 18, and the council could choose to postpone action, he said.

He said the letters also were illegal because they “misrepresent the proposed ordinance’s effects on property values . . . . The effect on property values depends on your perspective. Only a developer or someone interested in tearing down their house and selling would be (adversely) affected (by down-zoning).” The residential neighborhoods now contain mostly single-family homes.

Scharringhausen said Tuesday that he had no idea that the letters were illegal, adding that he based their content erroneously on information he received about a Jan. 23 Planning Commission public hearing on rezoning in the neighborhoods.

“I had no idea (the letters were illegal). I thought I had a unique idea. I had tunnel vision. I was obsessed,” Scharringhausen said, referring to his efforts to buy and develop property in the neighborhoods.

“I have to say now I agree with (the city attorney). I believe it was misleading. At the time I wrote the letters, it was pure naivete on my behalf,” Scharringhausen said.

Most developers soliciting in the area want to build condominiums and apartment complexes on land they hope to purchase before down-zoning goes into effect. But many community groups support the rezoning and are upset by the advertising handbills encouraging residents to sell to developers.

“The people who I have heard from who received the letters have been very upset,” said Carol Landsman, a board member with the North Park Community Assn. She said the issue is very complex and developers are preying on the fears and uncertainties of homeowners.