L.A. Unified wins right to buy Glassell Park land for high school

The Los Angeles Unified School District won the first round Monday in a legal battle with developer Richard Meruelo over the fate of a former rail yard.

Superior Court Judge Soussan Bruguera ruled that the district had a right to take the 23-acre Glassell Park property from Meruelo through eminent domain. The decision frees the district to build a 2,300-student high school there without fear of losing the property later.

“Clearly we’re pleased that she finally made this decision so we can move forward with building the school,” said Michelle Meghrouni, associate general counsel for the district. “She made the right decision.”

The new school is planned to relieve crowding at Franklin and John Marshall high schools -- both on three-track schedules -- and Eagle Rock High, home to 3,000 students. The community has been actively lobbying for the new campus.

Outside the courtroom, neighborhood activist Alisa Smith said the ruling brought “tears of joy.”

But the district still has a long legal fight ahead as it turns to the question of money. With the question of ownership decided, the district and Meruelo will now tangle over what the lot is worth -- an issue that has separated them for years.

The district offered $29 million last year. Meruelo paid $30 million for the parcel in 2005 -- “a rising real estate market,” his lawyer, Patrick A. Hennessey, said Monday.

Hennessey said the district never fairly evaluated the value of the land after Meruelo bought it. “I think they still are low-balling my client,” he said.

Meruelo’s purchase was controversial, in part because the district also was negotiating for the property and had made an offer, officials said.

Also controversial was the source of Meruelo’s funds. He tapped a credit line with the public employees’ retirement fund, CalPERS -- which includes nonclassroom L.A. Unified workers -- to buy the vacant lot north of downtown.

Meruelo, whose firm describes itself as the largest landowner in downtown Los Angeles, has said he didn’t know about the district’s interest in the lot when he made his offer.

He put forth ambitious development plans, which included housing, offices and stores.

As the school board considered whether to take the land from him forcibly, Meruelo offered to build the school as part of his plans, officials said, putting the school in a smaller, adjacent lot he did not yet own.

“There were no viable alternatives that would not impact, say, 150 residential homes in the community,” said Tom Calhoun, central regional development manager for the district. “There just isn’t open space of that magnitude” in the area.

Unable to reach an agreement on a price, the district filed the court documents necessary to take the 23-acre parcel by eminent domain, prompting Meruelo to sue.

In eminent domain cases, the agency taking the land is required to deposit with the court what it believes to be a fair price for the property. The district deposited just over $29 million.

Meruelo gave a creditor who held a note on the land the go-ahead to take the deposit, district officials said.

A state appellate court ruled in a similar case that once the deposit is taken, even by a creditor, the landowner gives up the right to fight the government’s move to take the land.

Bruguera said Monday that reading that decision “tipped the scale” in the district’s favor.

“That San Diego case is pretty clear,” the judge said. “It’s clear to me that that’s what needs to happen here.”

Meruelo’s lawyer said his client may appeal the decision, but for now they will move on to valuation. A trial is set for May.

The issue of how much the land is worth is complicated by Meruelo’s subsequent purchase of adjacent properties -- a Kia car dealership and a FedEx property. He contends that because they can be put together into a single, larger parcel, the land is worth more.

Meruelo is embroiled in two related lawsuits: He is in a dispute over the lease to the FedEx property, and he has sued the district on environmental grounds, saying it did not properly assess the site, which he says is too dirty for a school.

The district won the initial challenge on the environmental impact report. Meruelo has appealed that decision.

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evelyn.larrubia@latimes.com