Stung from having lost a hard-fought effort to purchase and redevelop a 12-unit Caltrans-owned property to a Pasadena church, the city of South Pasadena on March 31 made its objections known to Caltrans. It called the decision “inconsistent” with applicable statutes and regulations giving South Pasadena priority to acquire the property at 626 Prospect –one of hundreds Caltrans acquired decades ago for the now-abandoned extension of SR 710.
The decision was a disappointment to the city and the dozen residents who live in the five occupied units at 626 Prospect. Both devoted considerable time and resources over the past several years to finding a path through Caltrans’ cumbersome Affordable Sales Program to secure the tenants’ ownership of the units they currently rent.
The loss is a touchstone in the city’s ongoing discussion about whether to go forward with a city-sponsored bill to reform the Roberti Act. It can risk the vagaries of a legislative solution may give the city greater control in how surplus Caltrans property is disposed of. Or it can continue to navigate Caltrans’ uncertain administration of existing regulations knowing it has — as former Mayor Odom Stamps said during a forum April 14 — been presented with excellent purchase proposals that it uses as “yet another opportunity to rebuke us and say we did not follow the rules.”
Lead by Sean and Suzie Abajian, the 626 Prospect tenants took an earlier bite at ownership that was nixed after Caltrans said they filed too late. Sean Abajian told the South Pasadenan News Caltrans provides a lot more assistance to tenants of single-family homes looking to purchase than it does for tenants in multi-family properties like 626 Prospect.
Even so, when another opportunity came up a couple years ago, they tried again. This time the tenants formed New Prospect Development LLC, teamed up with experience housing developer Heritage Housing Partners, and worked with the City of South Pasadena to put together a “reasonable price statement” that would pass muster with Caltrans. The parties were tied together under two memoranda of understanding (MOU) thereby leveraging the city’s statutory purchase priority as a Caltrans-designated public housing entity. In September 2019, they filed the application, as did two other candidates — the development arm of Pasadena Friendship Baptist Church and a Panorama City nonprofit company called Charity Donation Inc.
Nothing was heard until last November, a year after Caltrans convened a five-member panel that went over the proposals during an obscure hearing in downtown LA. The panelists were Carolyn Dabney, a Caltrans program manager; Edward Francis, a Caltrans Deputy District Director; Jennifer Lowden, a Caltrans assistant division chief; Steven Marshall, a section chief with the Housing and Community Development agency; and Tony Chopelas, an HCD program manager.
Each hand wrote brief notes on a standardized response forms for each proposal. Chopelas called the city’s proposal complicated and “not sustainable” because the “long term goal is to sell and not maintain as affordable rentals.” Dabney complained the city proposal was “inconsistent with regulation” and questioned the tenants’ ability to manage the property, while Francis said the proposal was “difficult to interpret” and Lowden said it suffered from an “inconsistent interpretation of the regulations.”
A year later, CalTrans notified the city the panel had unanimously selected Pasadena Friendship’s offer. The city demanded a written explanation. Caltrans sent a one-page write-up saying that since it “articulated no duties or obligations,” the parties’ MOU “makes clear there is no partnership” between the city and New Prospect Development LLC. Since the proposal was therefore ineligible for consideration under the priority given to municipal entities, it was evaluated instead along with the church and charity’s proposals.
Caltrans also said the city’s proposal wasn’t feasible as a “limited equity cooperative” (LEC) — a requirement under Roberti — and that its plan to sell two of the units at market rates to pay down the acquisition cost ran afoul of another provision requiring some of that money be paid into a state fund for affordable housing development.
“We think what happened with the city being rejected is bogus and ought to be challenged,” Sean Abajian told the South Pasadenan News.
Charles Loveman, executive director of HHP, said the proposal was rejected “on a technicality.”
In a letter pressuring the city the appeal, the tenants said Caltrans “prejudged” the feasibility issue. They argued the city’s existing status as a Caltrans-designated housing entity renders its status under the MOU meaningful.
“Caltrans’ erroneous decision… will have long-lasting implications in the city’s goals and objectives with respect to the future” of the other Caltrans properties in town, the tenants warned.
In his letter to Tavares, City Manager Joyce did not directly seek an appeal. He asserted Caltrans did not follow the rules. And while not questioning whether the Friends Pasadena proposal complied, Joyce implored Tavares to verify that Friendship Pasadena truly intends to develop the property as a limited equity cooperative.
“Absent such requirement” he wrote, the rules “give the City’s proposal priority.”
Joyce also maintained the city’s proposal clearly invoked its priority status as a designated “housing-related entity” and as such “clearly indicated” its intent to purchase the property, triggering Caltrans’ duty to offer it the property. The MOU set a legal framework to develop the property as affordable housing in which the city retained important rights, he added, and Caltrans “exaggerated” the import of standard disclaimers in the MOU between HHP and NPD.
Caltrans had not replied to the letter as of this week, but a spokesperson said it still intends to do so.