Mayor Pro Tem: Huge Lawsuit Against Monrovia Could 'Destroy the Community'


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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