A local developer who has
built several office parks along Huntington
Drive is suing the City
of Monrovia and the former Redevelopment Agency for $106
million –
a sum nearly three and a half times the City’s general fund
budget.
“Samuelson & Fetter has levied
upon us a lawsuit that would destroy the community
that they helped
create,” Mayor Pro Tem Joe Garcia said. “We are shocked and
saddened that they felt it was necessary to take this action.”
“$106 million? That would cause
extreme financial hardship for the City,” Mayor Mary
Ann Lutz
said. “We are at a loss to explain why they believe they have
suffered this
level of injury, or any injury at all, for an alleged
breach of an agreement under which
Samuelson & Fetter was never
able to perform. We have always been partners, and
thought that we
shared the same goal – to bring a quality, transit oriented
development
to an area of Monrovia that is in need of amenities,
including open space.”
The complaint, filed on behalf of
Samuelson & Fetter on Aug. 24, alleges Monrovia did
not live up
to its agreements with the developer regarding the Station Square
Transit
Village, an 80-acre transit oriented development located
just south of the I-210
Freeway.
Specifically, according to the
complaint, Samuelson & Fetter alleges that it lost nearly
$100
million in profit when the former Redevelopment Agency diverted some
of the
property planned for residential and commercial development
to the Gold Line for use of
a public rail project.
“Samuelson & Fetter was made
aware of these circumstances and has been at the
table the whole
time,” City Manager Laurie Lile said. “We have been working with
them
diligently to settle our disagreements and lay out a land plan
that acknowledges the
requirements of the Gold Line, while providing
a lot that would be suitable for
development. We were surprised that
they filed suit at this time, when our discussions
seemed to be
progressing in a positive direction. This lawsuit, however, threatens
to
unravel the fabric of the community in search of an unrealistic
profit on the backs of our
residents.”
The development agreement, signed in
2006, was between Samuelson & Fetter and the
former
Redevelopment Agency. Once the Redevelopment Agency was dissolved in
2011 as a result of state legislation, the Successor Agency took over
the functions of
the former Redevelopment Agency. At the heart of
the issue is that Samuelson & Fetter
blames the former
Redevelopment Agency for impairing their development and cutting
into their projected profit margin.
But Monrovia believes it was doing what
it set out to do since the beginning of the
project: provide what
residents and commuters need through the extension of the Gold
Line
and creation of a station in Monrovia. Since 2006, when the agreement
was
signed, the City has worked to preserve a transit-oriented
development in Monrovia.
However, changing circumstances have
affected the constructability of the project:
- Years of adverse economic conditions
have softened the real estate market and
have made construction
financing difficult to obtain;
- In 2011, the State barred
Redevelopment Agencies from making any
amendments to outstanding
development agreements;
- The Monrovia Redevelopment Agency was
dissolved in 2011, along with all other
Redevelopment Agencies in
the state, by an act of the California Legislature;
- Site selection of a Maintenance and
Operations facility to serve the Gold Line
shifted to the location
in Monrovia when other locations became unavailable;
and,
- Property south of the railroad tracks
could not be acquired to provide a location
for construction of a
public parking structure to service the Monrovia Gold Line
commuters, shifting the obligation to provide parking on Agency-owned
land.
The Monrovia-based developer, who since
1980 has developed 750,000 square feet of
office and research
development space on Huntington and Royal Oaks Drives, is
seeking $3
million in attorneys’ fees, an alleged $33.2 million in “lost
entitlement values”
and $70.4 million in alleged “lost profits
caused by the City,” according to the lawsuit.
In contrast, Monrovia’s general fund
budget is nearly $30 million, with $12 million going
to fund the
police department and $8 million to the fire department. The
remaining $10
million funds public works, administration, parks, the
library, and recreation-related
activities.
Most of the 80 acres comprised of the
Station Square Transit Village development is
privately owned. The
former Redevelopment Agency owns about seven acres.
Samuelson &
Fetter owns less than 10,000 square feet.
Though Samuelson & Fetter claims
that Monrovia is out of compliance with its
agreement, it is
actually the developer who has not been able to comply with the
terms
of the agreement. After numerous failed attempts to urge
Samuelson & Fetter to
perform under the agreement, in February
2012, Samuelson & Fetter was sent a Notice
of Default by the
former Agency because, among other reasons, the company failed to
close escrow on and purchase the Agency’s land by 2011, as set
forth in the
agreement.
Despite this lawsuit, City officials
are still optimistic they can reach a resolution and
continue on the
path to delivering the Gold Line Station, improved amenities, and
new
housing and office units to Monrovia.
“In the end, I am optimistic that we
all want what is best for Monrovia,” Mayor Lutz said.
“Monrovia
is committed to an amicable resolution, and we hope that we will be
able to
resolve our differences.” Mayor Pro Tem Garcia concurs, “I
too am hopeful that we find
a solution that meets the needs of both
the community and the developer.”
Source: This is a City of Monrovia press release
- Brad Haugaard
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