Condo Project Stands Empty in Legal Limbo

Times Staff Writer

For the past two years, as more and more working class families found themselves priced out of the Southland’s frenzied real estate market, 32 new, slate-blue townhouses in this city have been sitting empty.

Overgrown with weeds and suffering an occasional broken window, the otherwise-intact condominium complex stands in legal limbo at the intersection of Wilmington Avenue and Compton Boulevard. Except for security guards hired to keep out looters who were tearing up carpets and stealing fixtures, no one gets inside the black, wrought iron gates that seal off the Crestview Townhomes.

Outside the gates, government bureaucrats, public interest lawyers and city officials shake their heads at the absurdity of the situation and continue to chip away at the perpetual stream of litigation and red tape that keeps the 32 affordable housing units from needy buyers.

Freeway Replacement Housing

The townhouses are among 1,545 units that have been built to replace housing wiped out by construction of the $2.5-billion Century Freeway, which is cutting a 17.3-mile swath from Norwalk to El Segundo.

The townhouses, which were to sell for anywhere from $10,000 to $100,000, depending on a complicated income formula applied to each buyer, were finished and ready for occupancy in February of 1987. But the man who built them, Pasadena developer Raymond C. Jones, refused to relinquish title, saying the state owed him money.

“They have offered me not one dime,” Jones said last week. “They wouldn’t pay me. I couldn’t pay my bills.”

The state, according to its lawyer and officials in the Century Freeway Housing Program, paid Jones more than $2 million to build the townhouses. Under the contract that officials signed with Jones and developers of similar Century Freeway replacement projects, Jones was to give the state the deed to the project when construction was completed.

The state would then sell the townhouses to buyers who agreed that if they ever resold the units it would be to people in a similar low-income situation.

Jones claimed that the construction turned out to cost more than the state paid him. But when state officials said that he did not have documentation to prove it, they refused to give him more money.

Jones then filed suit demanding as much as $4 million in costs and damages.

The state countersued, charging that Jones had breeched his contract, and demanded about $4 million for such things as construction delays, the cost of hiring security guards, and the damage the units have since suffered from neglect.

Meantime, subcontractors filed liens against the townhouses, claiming that Jones had not paid them for their work. The federal government filed a lien charging that Jones owed income taxes. Jones declared that the Crestview Townhouse Corp. was bankrupt, which tied up its deed in court. He also filed personal bankruptcy to protect his assets, he says. On top of that, a bank filed suit, claiming that Jones owed it money.

“The state told us it would take five years to settle this,” said Cynthia Coleman, acting director of the Compton Redevelopment Agency, which is an interested but helpless observer in the situation.

Deputy State Atty. Gen. Edwin J. Dubiel said last week: “This thing changes day-to-day. I hope to have it concluded by early summer.”

A series of court hearings on the various legal actions surrounding Crestview is scheduled this month and in May. But there is no guarantee that another legal action will not come along to further delay sale of the townhouses.

At least one Compton official, City Councilman Maxcy D. Filer, is pessimistic about the townhouses ever getting into the hands of buyers. “It is never going to happen, in my opinion.”

In Compton, a community with high rates of unemployment and families on welfare, officials have been trying to lure more developers of single-family houses and condominiums to the city in an effort to attract more middle-class residents. Developers who have approached the city with apartment house plans have been turned away, while those promising to build owner-occupied units are welcomed.

Filer and other city officials fear that Crestview will eventually end up as a rental complex. “I’d love to see that housing put on the market,” Filer said. “But I want it to be done in the right way. I want to protect the people (already living) in that area who have paid for their homes.”

Attorney Dubiel says it would be legally impossible for the state to let Crestview become rental housing, but that is likely to happen with two smaller Century Freeway replacement projects in the city of Los Angeles.

Those projects were built in locations where no one would buy them as condominiums, so the Century Freeway Housing Program is negotiating with the Los Angeles Housing Authority, which wants to buy the units and rent them out.

For some of those close to the Century Freeway housing replacement project, which was established under a court-supervised agreement in 1981, the Crestview dilemma is an example of a well-intentioned government program that is not working.

When freeway construction began in 1981, there was a plan to build 3,700 apartments and houses or townhouses as replacement units. But only about 1,500 units have been built so far and almost a third of those are still vacant. In addition, the program has been fraught with complaints about shoddy construction and high costs.

“Our problem with (the program),” said Mary Watson of the Center for Law in the Public Interest, “is that they have not built the housing at the rate that we feel is acceptable and that the housing has not had the sufficient number of units for the money spent.”

Units cost more than $100,000 apiece to build, which is at least 30% more than comparable housing costs, studies have shown. The federal government, which supplies the money but lets state agencies administer it, found in 1985 that the administrative cost per unit was running as high as $40,000.

Years ago, the Center for Law in the Public Interest successfully fought to have the state create a housing replacement program. Now it is asking the court to take the program out of the state’s hands and give it to a nonprofit corporation that would build the rest of the promised units.

Watson, who has monitored the housing program for eight years, says she can see now how stringent financial requirements demanded by the federal and state governments gave Jones and some other contractors little room for miscalculation.

“Many had to struggle through to the end of the projects to just break even,” she said.

Jones, however, is taking a hard line in dealing with state officials. He rejected at least one proposal that might have gotten the Crestview townhouses into the hands of owners more quickly.

Officials had suggested that he turn over title to the units so they could sell them and place the proceeds into an escrow account that would be held until the court decided if Jones was owed any money and how much.

“The state was proposing to sell them for approximately $30,000 each and make $1.29 million,” Jones said. “I can’t give it way. I’m not the county of Los Angeles where I can afford to give something away to people (just) because they can’t afford it.”