Cost of Glendale's suit against ADI doubles

Glendale’s legal tab for fighting an affordable-housing developer who allegedly bilked millions from the city are about to double.

On Tuesday, the City Council, acting in its multiple roles as the Redevelopment Agency and the Housing Authority, voted to spend $150,000 more on a fraud lawsuit filed against Advanced Development & Investment Inc. last year in Los Angeles County Superior Court.

The city so far has paid $127,000 to Burke, Williams and Sorensen, a law firm assisting Glendale in the case.

Since 2005, Glendale paid ADI roughly $34 million for four projects in South Glendale. Just how much of that was fraudulently obtained is still unknown, said City Attorney Mike Garcia.

The city claims ADI falsified budgets, invoices, loan documents and accounting records. It wants the money ADI improperly obtained to be returned.

The developer also is being sued by the city of Los Angeles and is under investigation for fraud.

Much has changed at City Hall in the wake of the ADI scandal. The City Council approved new stringent campaign finance rules that gained political momentum after it become known that several council members received campaign donations from ADI subcontractors.

Council members said they didn’t know the subcontractors were connected to the developer.

Oversight of the city’s affordable housing projects also has been increased.

The city has $50,000 of the extra money for the ADI case stashed away in its contracts budget, according to a city report. For the rest of the money, the city will be tapping its first-time homebuyer’s program budget.

The legal case soon will move into its second phase, which includes evidence discovery and other pre-trial proceedings, Garcia said.

Adding a wrinkle, though, is the demise of the Redevelopment Agency, which officially ended Wednesday. The agencies use incrementally higher property taxes to pay for developments and affordable housing. But now that money will instead be shuffled over to the state budget, including education expenditures, according to a plan by Gov. Jerry Brown that the courts upheld.

“We are going through unchartered waters, currently, in terms of what will happen to the assets and obligations of the Redevelopment Agency,” said Councilman Rafi Manoukian, who serves as chairman of the agency.

The council revised its contract to include the added legal costs on a list of enforceable obligations that can be paid for by redevelopment property tax income as the agency winds down in the coming months. An oversight committee and state officials must ultimately sign off on the list of obligations.

“We want to make sure we get the property taxes to pay for it,” Garcia said.


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