Two Northern Californians with ties to Silicon Valley’s tech world were among the five bidders whose offers to purchase historic former Caltrans-owned houses in South Pasadena were accepted this week by the City Council. Both say they will renovate the aging structures, have previous experience doing so and hope to move in with their families sometime next year.
“I’m very excited,” said Eric Gong, whose $1,377,000 offer for 225 Fremont was approved on a 4-1 vote with Council Member Janet Braun dissenting. He was attracted by South Pasadena’s reputation as a classic American neighborhood featured in many movies. Now living near Cupertino, CA, the nearly-retired computer software specialist rehabbed a previous home. Renovation can be a “humbling experience,” but he is primed for the project and was already asking questions about the city’s permitting environment.
Gong said he’ll hire a designer/architect for the house to “make it look beautiful, bring the old charm back and make it look nice for the neighborhood.” Once done, he intends to move in with his wife and widowed mother. The couple has two grown children.
A Chinese immigrant, Gong became acquainted with the San Gabriel valley 30 years ago when, as a graduate student, he came for a summer program at Caltech funded by the National Science Foundation and JPL to do early work documenting climate change. “We were pioneers back then, still arguing, ‘Do we have global warming or not?’”
Another successful bidder is June Teh-Chiung Cheng, whose $1,007,000 offer for 1707 Meridian Ave was approved by the Council 5-0. Now a resident of Saratoga near Cupertino, Cheng said she and husband David, both 73, have been looking to head south for some time. That’s because their children are now both in Southern California while she has four sisters–one in San Marino and three in South Pasadena. The couple is retired, she from work designing computer chips and David from the financial industry.
Cheng said they know the property needs work and are prepared for the investment, having previously restored an older apartment in Fullerton.
On another 5-0 vote, the Council accepted a $1,451,000 offer from Zavvie Power Buyer LLC. A representative of that firm told the South Pasadenan News his company makes cash offers on behalf of clients who then purchase the property at the same price from Zavvie.
By using Zavvie’s cash, buyers avoid having to make an offer with a financial contingency, which sellers often don’t want. He said the service allows ordinary buyers to compete with real estate investors, and that the buyer/client in this case does intend to live in the house.
The other successful bidders were Susan Zhang, whose $1.72 million offer for the three-unit parcel at 726 Meridian won Council approval on a 5-0 vote; and Sergey Alvrtsyan and Marian Simonyan, whose $1.45 million bid for 217 Fremont Ave won approval on a 4-1 vote with Council Member Jon Primuth voting no.
The Council approvals were made in closed session and reported out by the city attorney.
The deals are not final and there is no guarantee they will survive through the escrow process.
There has been a great deal of community sensitivity over ensuring the properties go to local families and not to real estate investors or flippers. Alison Becker, the city’s Acting Community Services Director, said the Council created “a series screening standards,” some objective, others less so.
Becker and the city’s real estate agent, Dave Way, CEO of the Dave Knight Real Estate Team, said the objective criteria consisted of the purchase price and bottom line net proceeds to the city, which vary depending on the percentage of the buyer agent’s commission—a factor that is more flexible now due to recent national litigation and settlements.
“From there, the priority was returning property to the tax rolls,” Becker said, but after that “you get into the more subjective criteria.” Fair housing laws constrain the kinds of questions a seller can ask about buyers. “You try to get clues from the information submitted”–such as from the name of the bidder: is it an individual or a company?–but all the communication is through the respective parties’ agents.
Becker was reluctant to elaborate on the “non-objective” criteria the Council considered. “We are at the edge of what we can talk about.” That’s in part because the deals are not closed. But she said the Council, which received an “astonishing” number of offers for the properties, was pleased. “This is a milestone moment. The city has been diligent in the process and has an excellent partner with Dave Knight.”
Dave Way, the city’s realtor, said “the more subjective part was considering every buyer’s situation. “Are they investors? Are they from the area? Their ability to rehab the property. Lots of things.
“We only know what the buyer/agent tells us,” he cautioned. “That is not always the truth or the most straight forward information.” The agent did research on the buyers but is “not supposed” to contact the buyers directly. They can ask “open ended” questions but not things like: is the buyer from South Pasadena? “That’s why we debated for a while.”
At least some of the less objective criteria had to do with buyer’s willingness and ability to do the rehab work the houses need, Way said. All bidders had to submit proof of funds, but “the big concern is they buy and take time and then don’t fix up the properties even though they are supposed to. So you try to understand from the limited information if they will.” He said they can’t be sure, but as it stands, “we don’t think” any of the buyers will fail to do the needed renovations.
