Sinking Units Have Fallen 40% in Value, Jurors Told

An appraiser for homeowners in the Los Angeles Community Redevelopment Agency’s sinking Monterey Hills housing complex said in court Monday that buildings in the Eaton Crest section of the subdivision have decreased in value by more than 40% since their construction in 1981.

The appraiser, James O’Donnell, was the last of 24 witnesses called by attorneys for the homeowners in a Los Angeles Superior Court trial that has already lasted more than four months. The trial is to determine the loss of value and cost to repair 164 townhouses and condominiums that the Eaton Crest Homeowners Assn. contends are built on improperly compacted fill.

The lawsuit was brought by more than 200 homeowners and Security Pacific National Bank, the bond trustee on their mortgages. It is the second suit of five to go to trial, all brought by homeowner associations against the Community Redevelopment Agency and private firms involved in building the project. The suits were filed after homes in the development began tilting and cracking several years ago.

Since other homeowners living in the same area as Eaton Crest have also filed suit, the trial may affect the course of other litigation yet to be heard.

Drake Terrace Settlement

The first suit brought by Monterey Hills homeowners against the CRA was settled last year when the agency agreed to pay Drake Terrace homeowners $6 million and to spend $3 million to repair their damaged homes. Drake Terrace is built on fill different from Eaton Crest’s.

Joel B. Castro, the homeowners’ attorney, said he is building his case on the testimony of expert witnesses, city officials and homeowners.

He has said that he will prove that Eaton Crest homes are steadily sinking and that CRA plans to repair them are inadequate. He has also said he will prove that the homes have decreased and will continue to decrease significantly in value.

Eaton Crest and another section of the 1,600-unit complex, Temple Terrace, sit on what once was Pullman Canyon. At its maximum depth, the canyon is filled with more than 120 feet of dirt, which has settled rapidly and unevenly. Since the early 1980s, cracks and other structural faults have appeared in some buildings built on the fill.

In testimony Monday, O’Donnell estimated that the fair market value of the 164 Eaton Crest homes today is $10.4 million, more than $9.6 million less than their value in an undamaged condition.

Repair Costs

Earlier in the trial, three expert witnesses called by the defense estimated the Eaton Crest buildings would cost $18.3 million to repair. Attorneys for the homeowners are seeking damages to cover at least part of the loss of value and the cost to repair the homes.

The homeowners’ case rests in large part on whether their attorneys can persuade a jury and Superior Court Judge Eli Chernow that land underneath the subdivision will continue to settle. Witnesses for the homeowners have testified that it will. The seven defendants in the trial contend that further settling will be negligible.

In December, Castro called a CRA consultant to the stand in an attempt to show that the agency had acknowledged the complex to be sinking at one time. The consultant, engineer James Slosson, headed a 1986 team hired by the agency to examine the fill. Slosson said in court that the fill underneath Eaton Crest may settle an additional 1% of its depth.

Slosson also testified that extensive repairs are necessary to restore Eaton Crest and Temple Terrace to their original conditions.

Attorneys for the CRA and the other defendants said they plan to call 21 witnesses, including soils and engineering experts, appraisers and property managers in the complex.

Agency counsel Laurie Zelon and other attorneys for the defendants conceded in their opening statements that the Monterey Hills complex is damaged and that the homeowners are entitled to compensation, but said they will prove that the damage is cosmetic and requires less than $2 million in repairs.

They also said they will show that the homes can be resold at market value even if no repairs are made on the buildings.

Repairs Promised

In the Drake Terrace suit last year, agency officials said repairs would be made to the Drake Terrace section as well as to Eaton Crest and Temple Terrace. The agency assurances were central to its defense in the trial.

But attorneys for the CRA said in their opening statements that they will prove that such repairs are no longer necessary. According to a study commissioned after the Drake Terrace case was settled, they said, the complex is sinking at a fraction of the rate previously believed and does not require extensive structural repairs.

Slosson said he stands by the conclusions in the 1986 report, despite the existence of the new study contending that the repairs are unnecessary. “After going through Ft. Benning infantry school,” Slosson said in court, “I seldom panic.”

Slosson’s report recommends injecting grout into the soil underneath parts of Monterey Hills to stabilize the fill.