NATIONAL CITY
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A group of developers who nearly lost a project two years ago over undisclosed ties to National City's former mayor has been dropped by the city as the preferred developer for the same housing proposal.
The group, CYMA, could not pay the $25,000 deposit or work within the six-month time frame outlined by the city's redevelopment agency, said Brad Raulston, executive director of the Community Development Agency.
He said the firm offered a $10,000 deposit and wanted two years to bring the deal together.
“This is our standard operating procedure to do the $25,000 and six months,” Raulston said. “There would need to be some really compelling issues to deviate from that, and they didn't present any compelling reasoning.”
Alfonso Reynoso and Antonio Gallegos, who operated Marina Chiropractic in National City, and their partner, Edgar A. Herrera of H&A Construction, formed CYMA in 2004.
The partners are also incorporated as Truestone Investments, which is developing a second project a few blocks from City Hall.
Herrera, who speaks for the group, said securing financing for both projects has been difficult.
“When all the numbers were (first) submitted, we were talking about making National City comparable to Bonita,” Herrera said. “Now it's not feasible with the market plunge over the last six months.”
In a letter to CYMA dated Aug. 27, redevelopment manager Patricia Beard said the city is withdrawing its selection of the firm because it couldn't enter into an exclusive negotiating agreement.
This is usually a six-month period developers have to work out the details of their project before moving on to a development agreement.
In 2005, former Mayor Nick Inzunza was on the subcommittee that selected CYMA to build an upscale housing development near the Plaza Bonita shopping center. He did not tell the rest of the City Council that he had received $4,200 in campaign contributions from all three partners.
Council members also did not realize that Reynoso and Gallegos had shut down their chiropractic clinic even though they were naming the business as part of their financial portfolio. It was later disclosed that Gallegos had been practicing chiropractic procedures without a state license and that Herrera had been convicted of transporting marijuana in 1998. That charge was later reduced to a misdemeanor, then expunged.
After The San Diego Union-Tribune published a story about CYMA and its ties to Inzunza, the council rescinded its approval of the project and enacted a more stringent developer-selection process. The city later gave CYMA another chance.
The company's second project, row homes near Eighth Street and C Avenue, also has stalled because of financing setbacks.
With both projects, Truestone/CYMA has requested to be exempted from standard development procedures.
The project on C Avenue is private and not subject to the same developer background checks as the proposal near Plaza Bonita, which is on land owned by the city. Still, the group asked that the bonding requirement be waived so it could get a building permit.
“You just can't do that,” said Adam Landa, a civil engineer with the city. “The assumption is there is some sort of problem.”
For the project on city-owned land on Valley Road near Plaza Bonita, the partners asked if they could identify potential funding sources instead of securing financing.
They were told no.
Herrera said the process has been frustrating, but the group plans to continue with the row houses.
“We still have a lot of problems,” Herrera said. “City officials don't help at all. National City is not an investor-friendly city.”
Tanya Sierra: (619) 498-6631; tanya.sierra@uniontrib.com
