Cost of King’s Villages Lawsuit Balloons : Housing: Filed in federal court two years ago, discrimination litigation is already the most expensive in city history.

A 2-year-old discrimination lawsuit against the owners and managers of a low-income housing development in northwest Pasadena is quietly sopping up city funds at a record rate.

In the midst of one of the city’s greatest budgetary crises, the costs to the city to sue the company that runs the 313-unit King’s Villages reached $783,964 last week, making it the most expensive litigation in the city’s history.

“And the meter’s still ticking,” City Atty. Victor Kaleta said.

The city initiated the King’s Villages suit in federal court in October, 1991, claiming that the managers of the housing complex, Thomas Pottmeyer & Co., had engaged in a pattern of discrimination against black people, evicting single black women from their apartments and purging tenant waiting lists of black applicants.

“I don’t have any second thoughts about the expense of the suit,” Mayor Rick Cole said last week. “The cost of the symbol of neglect that King’s Villages has been to northwest Pasadena going back 20 years is a staggering one.”

And City Councilman Isaac Richard, who represents the district in which the housing complex is located, notes that the city may be able to retrieve its legal expenses. If the city prevails at trial, the defendants could be directed to pay all, or part, of the city’s legal expenses.

King’s Villages, at 1141 N. Fair Oaks Ave., opened in 1969 as King’s Manor, a low-income project run by the U.S. Department of Housing and Urban Development. It has changed hands three times in the past 15 years. The Pottmeyer firm, whose president is Thomas Pottmeyer, last year became the sole owner.

The complex has been a focus of protest and turmoil since Pottmeyer took over as a managing partner of the complex in 1988.

A tenant group charged that Pottmeyer’s agents harassed tenant leaders, spying on them, illegally entering their apartments with master keys and evicting them. Many of the tenant leaders were single women or single parents.

A curfew imposed by the management company because the complex had become a focus for drug dealers led to the death in 1990 of an innocent man, Robert Earl Holloway, tenants charged.

Holloway, a non-resident who was walking in area, was allegedly trespassing when he was chased down and wrestled into submission by security guards.

Federal investigators subsequently cleared the guards of any wrongdoing in the death.

Thomas Pottmeyer has insisted that the complaints stem from necessary measures his company has taken to rid the complex of drug dealers and petty criminals.

In its court action, the city not only charged Pottmeyer with discrimination, but it sought to prevent the firm from becoming sole owner of the complex.

City Council members hoped that King’s Villages could eventually be turned over to a tenant cooperative or a nonprofit housing corporation. But a claim that Pottmeyer’s bid to purchase King’s Villages from the Culver City real estate firm of Goldrich, Kest & Associates was illegal was rejected by both U.S. District Judge A. Wallace Tashima and the 9th Circuit U.S. Court of Appeals.

The city alleges that the Pottmeyer firm has violated federal civil rights and fair housing laws, as well as state unfair business and civil rights laws.

Goldrich, Kest & Associates, which brought Pottmeyer in and were co-owners during much of the disputed activity, were removed from the litigation by Tashima earlier in the proceeding.

Tashima sent the case to a mediator last month. If the two sides are unable to settle their differences by October, the case could go to trial--adding considerably to the city’s legal costs.

Two law firms, one from Pasadena and one from Los Angeles, are representing the city.

“The reason for the expensiveness of the litigation,” said Pasadena attorney Dale L. Gronemeier, one of the city’s lawyers, “is its complexity.”

The city’s lawyers have analyzed waiting lists for King’s Villages apartments, whose rents are kept low by federal housing subsidies, and eviction trends, Gronemeier said. When Pottmeyer became the manager, hundreds of black applicants for apartments were purged from waiting lists, often being replaced by Latino applicants, the lawyer said.

In a sworn statement, Bruce Philpott, former acting Pasadena police chief, said that Pottmeyer had complained in 1988 that blacks had “taken over” King’s Villages, adding that he planned to increase Latino representation in the complex. “Hispanics are easier to deal with and they don’t complain,” Pottmeyer allegedly told Philpott.

Pottmeyer did not respond to messages last week or this week, but he has claimed that he had sought to make the King’s Villages tenancy more reflective of the northwest Pasadena population, which is 58% Latino.

As Pottmeyer reshuffled the waiting lists, city officials contend, the firm also used aggressive new eviction techniques to try to rid the complex of outspoken black tenants, Gronemeier said. Tenants have charged, among other things, that Pottmeyer agents subjected them to surveillance and had some tenants’ cars towed away.

Stephen Johnson, Pottmeyer’s lawyer, said that his client had been found to be in compliance with HUD regulations prohibiting discrimination.

A July, 1992, letter from LaVera Gillespie, HUD’s regional director of fair housing and equal opportunity, said that the federal agency had found that King’s Villages “appears to be managed in compliance” with federal anti-discrimination orders.

“Mr. Pottmeyer agrees that he’s obligated to comply,” Johnson said. “He’s prepared to renew his wedding vows, if you will, and abide by his commitments to honor and respect” federal regulations.

Since the lawsuit was initiated, the eviction rate has dropped, Richard said.

“The city brought the terror of Goldrich, Kest & Thomas Pottmeyer to northwest Pasadena, and now we have an obligation to remedy that,” the councilman said. “The bottom line is that it’s money well spent. If we can save one family from being thrown out on the street, we got off cheap.”