Real Estate Sales Scare in Pico Rivera : Fraud: Unscrupulous salesmen pose as city employees and attempt to get listings by preying on confusion over redevelopment.

Unscrupulous salesmen posing as city employees have been using scare tactics in an attempt to persuade homeowners in a proposed redevelopment project area to sell their homes by telling them the city plans to condemn their property, city officials have warned.

David A. Caretto, an assistant city manager, said unidentified people are preying on the confusion over redevelopment by telling homeowners that their homes may be condemned and that the “redevelopment agency is going to come in and build condominiums.”

“It scares people,” Caretto said. “It gives them the wrong impression of what the city is going to do, and it just isn’t right.”

City Manager Dennis Courtemarche said he is not aware of anyone actually listing their property.

According to redevelopment law, the establishment of a redevelopment project area enables a city agency to condemn property through eminent domain. If the city condemns property, it must pay fair market value for it. Because condemnation is costly, in many cases, homes and businesses that lie within the project area are not condemned. They become part of the redevelopment project and enjoy the benefits of public improvements such as street widening and landscaping.

Caretto said the neighborhoods hit by the salespeople lie in proposed redevelopment project areas. Until the neighborhoods become actual project areas, the city cannot take any property or begin any major development. There are no city or redevelopment agency representatives attempting to buy property in the proposed redevelopment area, Caretto said.

“We’re really in the initial stages,” he said.

Linda Klebs, a deputy commissioner with the California Department of Real Estate, said that any real estate salesperson involved in such practices could face a license suspension or revocation.

“Basically they are misrepresenting the facts,” she said. “They don’t have the knowledge of what is going to happen in the future with the property.”

In June, the City Council declared it was expanding its existing redevelopment project area. The Planning Commission later designated 1,440 acres within the city as the proposed project area. Caretto said the proposed area contains commercial and industrial zones and, for the first time since the city established a redevelopment project area in 1970, a substantial number of residential neighborhoods.

Since then, the city has been adding more residents to its project committee, which will review the plans and project lists. Before anything is decided, a public hearing will be held in March or April, he said.

About two months ago, the city sent out notices to homeowners asking them to serve on the project committee. Shortly thereafter, several residents called the city to complain that they had been approached by salesmen who said they represented the city.

Because the redevelopment project area includes residential neighborhoods, there has been a great deal of confusion and fear among homeowners about what lies in store for them, Caretto said. It is a situation that is ripe for unscrupulous salespeople, said city officials in Pico Rivera and other Southeast cities that have experienced the same problem.

The Redevelopment Agency in Bell Gardens stopped posting its proposed projects months in advance because the process seemed to attract such real estate operators, City Manager Claude Booker said.

“It’s a constant problem,” he said. “They tend to follow projects and tell people the most outlandish stories. They tell them the city will pay them half of what they can get, when in fact they will probably make more if the city condemns their home.”

Bell Gardens redevelopment officials now wait until they are certain the area will become a project area, Booker said.

Montebello Economic Development Director Linda Payan said Montebello officials received the same complaints from residents when the city expanded its redevelopment project area.

“It’s nothing new,” she said. “It happens all over. Unfortunately, there is not much we can do about it.”

In Pico Rivera, Caretto said similar sales tactics were used more than a year ago when the city was considering another redevelopment project area. At the time, the city was able to identify the culprit as an out-of-town real estate company. Caretto said the city simply wrote the company a letter telling it to stop, which it did.

This time the city has yet to identify anyone who has been approaching homeowners, but he said city officials are not conducting an active investigation.

He said there have been no complaints in the last two weeks, and that residents have been warned in a monthly newsletter that goes out to every home.