Senate Passes Diluted Monterey Hills Bill

A bill meant to bring financial relief to owners of property in the sinking Monterey Hills Development Complex has passed the state Senate after being significantly weakened during committee hearings.

The bill, sponsored by Assemblyman Richard Polanco (D-Los Angeles), was meant to force the Los Angeles Community Redevelopment Agency to establish a claims-settlement program for owners of Monterey Hills townhouses and condominiums, which sit on an improperly compacted landfill and are tilting and cracking.

But as amended in Senate committee hearings this month, the bill no longer mandates that the agency establish such a program. The version that passed the Senate on Tuesday authorizes the agency to repurchase previously developed property and requires that it report to the Legislature by Jan. 1 on whether money is available to buy back and repair damaged units.

An Assembly committee found after hearings in October that it would cost the agency nearly $25 million to reacquire the affected properties and an additional $50 million to $70 million to correct the damage.

The original bill passed the Assembly earlier this year. In August, it was sent to the Senate Local Government Committee, where Polanco’s staff added language to mandate the community redevelopment agency to establish and finance the buy-back program.

But consultants to the committee pointed out that the state cannot mandate a local agency to establish a program that the state is unprepared to finance. Therefore, as passed by the committee, the bill was reworded to authorize, but not require, the agency to establish the buyout. The amended bill is expected to go back to the Assembly for concurrence this week.

Developed in Late ‘70s

The redevelopment agency, formed and accorded its powers by the state, developed the ill-fated, 1,600-unit project in the late 1970s. The units, originally priced from about $80,000 to the low $100,000s, were built to provide affordable housing to first-time, middle-income home-buyers who wanted to live near downtown.

But problems began to be noted in the units in the early 1980s. Now, the agency, builders and insurance companies involved in the project are enmeshed in more than 20 lawsuits, many brought by property owners asking the agency to repurchase the properties at fair market value.

Agency officials have contended that they are precluded from buying back property the agency has developed. The community redevelopment law allows agencies to acquire real estate but does not permit them to reacquire property that they previously owned.

“We don’t want them to come back and just tell us they don’t have the money, or they don’t have the authority,” said Kathleen O’Leary, assistant to Assemblyman Polanco. “There is no question they have authority. And if they don’t have the money, we want them to find the way to get it.”

Terms of Bill

Under the terms of the bill, the agency is authorized to set aside up to $20 million over two years to buy back damaged property in the Highland Park project if the agency can find the funds for the purchase. In return, the property owners electing the buy-back option would drop their participation in the lawsuits filed against the agency.

More than 220 Monterey Hills residents have indicated they would sell back their homes to the agency under the terms of the bill, said Keith Malone, another assistant to Polanco.