Judge Curtis A. Kin has approved a settlement in South Pasadena’s lawsuit challenging Caltrans’ sale of the 12-unit multi-family property at 626 Prospect to the development arm of the Pasadena-based Friendship Baptist Church.
The judge acted on his own motion; he also denied a last-minute motion filed by the remaining residents of 626 Prospect which sought to prevent the settlement, singing of which also means the city has given up its effort for a “global settlement” combining its purchase of 626 Prospect with that of 19 other Caltrans properties in South Pasadena.
In a press release last week, the city said recent mediation resulted in a settlement calling for dissolution of the preliminary injunction the city won in July 2021 preventing the sale to the predominantly African American church.
South Pasadena originally filed the purchase bid and the litigation on behalf of 626 residents who in 2019 put together a complicated package to acquire and redevelop the property using the city’s public housing entity. It argued that in late 2020, Caltrans violated the city’s statutory priority when it instead offered 626 Prospect to the church.
The settlement provides the property will be sold to the church “at a price no greater than” what the state paid for it decades ago as part of its plan to extend SR 710 into Pasadena, and with no adjustment for inflation—a total that will likely be below the original bids submitted by the city ($879,300) and the church ($1.3 million).
The city’s press release did not explain why it settled, but included Mayor Jon Primuth’s endorsement of the sale the city has spent over two years and hundreds of thousands of dollars fighting. The city welcomes the church’s development, “look[s] forward to their significant investment in the property,” and is “pleased to work with them and lend the City’s support as they embark on this major renovation project for existing and future tenants to enjoy.”
Among the city’s original complaints against the church’s redevelopment approach was that, unlike the city’s proposal, it “made no attempt to allow current residents to purchase their homes.”
In a separate statement, Primuth told the South Pasadenan News the settlement “reflects a much stronger project than before in terms of budget expenses and the developer’s financing package.” But he said details of the package and other information, including the cost of the litigation to date and the precise reasons for the decision to settle, remain tied up in ongoing discussions over the city’s prospective purchase of the 19 other Caltrans properties in town. He indicated additional information would be released now that the judge has approved the settlement.
“The ultimate outcome of the litigation will benefit all tenants and neighbors of 626 Prospect, both current and future,” said Wesley Burrell, attorney for Friendship Pasadena Church’s development entity. “We are greatly heartened by the supportive remarks of Mayor Primuth” and other city council members and “reciprocate their optimism about the development at 626 Prospect.”
But tenants of the building say they have not seen the settlement and were shut out of the negotiations that led to it. Chris Sutton, a long time Caltrans tenant attorney hired on their behalf, asked the judge overseeing the litigation to let them make their case before the court, but the court denied that request Tuesday morning.
In his pleading, Sutton argued approval of the settlement would enable Caltrans to establish an “arbitrary and unjustified” $30,000 per unit cap on repair and redevelopment costs for any of the 400-plus properties it sells in the former SR-710 extension corridor—well below the $114,000 the city proposed or the amount needed at the property. Buyers would then “be forced to incur many times this amount once they take title and discover the true cost of repairs.” He said the Caltrans and the city’s inspectors have neglected the property for 40 years, arguing incorrectly that government property is exempt from relevant safety and habitability laws.
Only three of 626 Prospect’s 12 units are currently occupied and, according to long-time resident Sam Burgess, at least two of them oppose the settlement. Burgess, 81, who signed a long letter asking Judge Kin to impose a permanent injunction against the church’s purchase, said “we’re not happy” because neither the city, Caltrans or the church have involved them in the settlement discussions.
“They’re more comfortable doing things in some office somewhere and then telling the public, ‘OK, here’s what’s going to happen.’” While the Mayor’s statement suggests the church may have tweaked its redevelopment plan, residents have no information about that and their approval was not sought.
Burrell, the attorney for the church, denied that tenants were not noticed. He said Burgess is the managing member of New Prospects Housing, one of the legal entities that cooperated to file the city’s purchase bid, and that its attorney, Dan Shapiro, received all legal notices and was invited to the mediation.
Shapiro did not immediately respond to an email seeking comment. And while state records show New Prospects Housing LLC was dissolved in 2019, Shapiro is also attorney of record for two of the other entities NPH worked with to develop the city’s bid.
Caltrans, the city and the church originally reached a tentative settlement last December, about the time the city was pressured by the South Pasadena Preservation Foundation to seek a “global settlement” to include the 19 other Caltrans properties under a controversial escrow arrangement SPPF regards as more favorable to interested parties.
Mayor Primuth said the delay in finalizing the deal was “attributable to the complexity of the issues,” some of which he said remain unresolved. However during the interim, the city has “obtained cost information on the repair of the unoccupied homes” Caltrans has offered to sell to the city.
“It’s important to emphasize that we are continuing negotiations with Caltrans over the unoccupied houses. The Council has been unified in responding to Caltrans. The details of that ongoing negotiation cannot be disclosed.”
Sutton, the tenant attorney, said the cost information the city got indicates it will cost $200,000 per unit to repair the 19 properties.
During a presentation to the City Council Wednesday evening, South Pasadena Preservation Foundation Boardmember Mark Gallatin pushed the city to move ahead with its plan for a global settlement. Gallatin said the city’s silence since a robust public process last year suggested that Caltrans was “again balking at the idea of a global settlement” and suggested the city enlist help from its representatives in Sacramento.