Developer deal is in jeopardy

CITY HALL — An earlier City Council offer that would allow developer Alber Karamanoukian to defer payment of $1 million in affordable-housing fees for a 47-unit market-rate condominium project appears to be in jeopardy, with at least two council members on Tuesday indicating they’d be willing to rescind the proposal.

Councilman Dave Weaver, with support from Mayor John Drayman, asked that the possibility of rescinding the offer be put on next week’s agenda in response to concerns that the complex concession reached with Karamanoukian last week might have been perceived as favoritism given the developer’s campaign contributions to all but one of the council members.

“I feel very uncomfortable about taking this as one particular case, or even the next two cases and then slamming the door shut,” Drayman said on Tuesday. “I’m very concerned about it.”

For his part, Karamanoukian on Thursday dismissed the reconsideration as political electioneering ahead of the April 2008 election, in which Councilmen Ara Najarian, Bob Yousefian and Frank Quintero face reelection.

After much wrangling last week, the City Council voted to waive the $1-million affordable housing fee for Karamanoukian’s project if he pulled the building permit this month and built and sold the condos within five years.

Karamanoukian would have to pay so-called “in lieu” fees equal to $17 per square foot of any condo units not sold before the deadline.

Developers typically must pay the fees in lieu of including affordable housing into their market-rate projects at the outset, but Karamanoukian argued the requirement would kill his chances at obtaining financing in a depressed housing market — a major factor in the council reaching a rocky consensus on the deal.

Najarian abstained from the vote after arguing that the exception could lead other developers to seek the same treatment and put the city at risk of not being able to collect enough fees to provide the state-mandated share of affordable housing.

On Tuesday, City Hall critic Herbert Molano said the exception for Karamanoukian only added to the perception that the council was more concerned about facilitating the needs of “well connected” applicants, instead of adhering to established city policies.

“Unfortunately, the steps that you took last week, I think, deteriorates that confidence from part of the public,” Molano told the council.

All on the City Council — save Weaver — have received campaign contributions from Karamanoukian, according to records filed with the city clerk.

Quintero and Yousefian received $500 and $150, respectively, from Karamanoukian in May, a month before the developer asked for the fee waiver.

Najarian received a $500 donation in March, and the same amount went to Drayman in June 2007, records show.

The mere perception of favoritism had also figured into Najarian’s abstention, although accepting the campaign contributions and voting on the fee waiver request was not illegal.

Still, one week later, Drayman had clearly considered the same perception.

“The perception is that we made this arrangement,” he said.

While Yousefian and Quintero voted in support of the offer, the pair have long argued against the in-lieu fees as too burdensome for developers of market-rate housing in redevelopment project areas, which present more of a risk in terms of attracting buyers once the project is built.

But even with Weaver — who said he voted for the offer only because he didn’t think he’d get the consensus to defeat it — and Drayman indicating a willingness to rescind the proposal, Najarian said on Wednesday that he planned to maintain his abstention, even as he considered returning the campaign donation.

“I’m not going there,” he said, contending that a change in his position would make his original abstention “ridiculous.”

“It’s something that I’m not going to continue with. It just doesn’t feel right to do that.”

News the council’s reconsideration of the offer drew accusation from Karamanoukian that Najarian was overreacting in the name of politics as he begins to defend his seat on the council in the coming April election, and that his colleagues were pandering.

“They’re playing games,” Karamanoukian said on Thursday.

The collateral to complete the deal had already been secured, he said, and now, with the offer back in the air, “it’s weird for everybody.”

“We are doing the paperwork, we are ready,” Karamanoukian said.

The developer has twice secured extensions on his deadline to pull a building permit with the city to allow more time for working out an agreement with the city.

In exchange for offering the in-lieu fee deferment, the City Council stipulated that Karamanoukian put up $1 million worth of collateral should he be unable to meet the terms of the deal.

But Najarian’s refusal to budge on his abstention could protect Karamanoukian’s offer from being rescinded if the motion fails to get a majority vote, leaving the original terms intact.

If the City Council leaves the offer on the table next week, then he would need to put up the collateral and confirm the offer before the new permit deadline at the end of the month, city officials said.

 JASON WELLS covers City Hall. He may be reached at (818) 637-3235 or by e-mail at jason.wells@latimes.com.