Caltrans Tenants Sue Over 'Inflated' Purchase Prices of Homes Along Former 710 Extension Route

Longtime tenants claim “inflation-adjusted” price increases of 500 to 600 percent for their rental homes; attorney suggests internal Caltrans/CalHFA battle may be to blame

Published : Tuesday, November 27, 2018 | 6:10 AM

Seven Pasadena and South Pasadena tenants, hoping to purchase their longtime State-owned rental homes, are suing Caltrans, claiming that it is charging them an illegal “inflation-adjusted” price for their properties.

According to their attorney, the inflated price for the homes would raise the purchase price of the homes between 500 percent and 600 percent .

Attorney Christopher Sutton told Pasadena Now, “We hope the judge is going to say you cannot impose an inflation-adjusted price unless you change the statute or change the regulations. You just can’t do it unilaterally.”

Sutton represents the United Caltrans Tenants and plaintiffs Alexei Shatz, Angela Flores, Marysia Wojick, Linda Krausen, Priscela Izquierdo, Elisa Almeida, and Huga J. Garcia. He said that Caltrans is failing to follow a state law designed specifically to regulate the sale of surplus homes.

The homes are among about 460 properties rented—in many cases, for decades—as part of the Caltrans Affordable Rent Program, by South Pasadena and Pasadena residents. They were originally facing demolition as the State made plans to build a six-mile 710 Freeway extension through El Sereno, South Pasadena, and Pasadena.

Bought by the State, the residential properties were declared surplus after plans shifted to an alternative tunnel extension, which itself was nixed after the Metro Board of Directors withdrew support for that plan in May 2017.

The rental homes are also subject to the Roberti Bill, or “Affordable Sales Program Regulations,” originally designed to regulate the sale of the hundreds of homes and properties affected by the 710 Freeway construction, and allow longtime renters to buy their homes.

Said Sutton Friday, ““If (Caltrans) were following the attorney general’s advice, as we believe they’re required to as a state agency, they would follow the 2009 formal opinion written by Jerry Brown when he was attorney general, and make these sales go forward quickly, (and) calculate the price based upon income. and it can’t go any lower than what they originally paid… They’ve made the process overly complicated and punitive.”

Caltrans had said from the beginning of the selling process for the affected homes that purchase priority would be given to renters who lived in them, and that the properties could be purchased at a fair-market rate.

A Caltrans spokesperson at the time said that Caltrans wanted to “get out of the landlord business.”

But Sutton, who has represented tenants organizations for decades, says the method used by Caltrans to determine the proposed sales prices of the homes violates California state code and makes properties so unaffordable many tenants won’t be able to buy them, and will face eviction.

In January of this year, Caltrans told tenants that under state law the “minimum price” at which it can sell a house is the original purchase price adjusted for inflation.

Sutton has said that the Roberti Law mandates that surplus housing must be sold at an affordable price to low and moderate income families. Caltrans calculated this affordable price using a formula that assumes 25 percent of a family’s monthly income will go toward housing expenses.

Caltrans’ “minimum price” for selling the surplus properties, in some cases, is higher than the affordable price it determined that specific tenants can pay, after it considered an affordable price using a formula that assumes 25 percent of a family’s monthly income will go toward housing expenses.

Attorneys for Caltrans wrote in a response filed earlier this month, that four of the plaintiffs— Flores, Krausen, Wojick, and Izquierdo—are the only remaining affordable tenants who have not accepted offers.

“Instead,” Caltrans wrote, “these tenants decided to challenge the affordable price offered by Caltrans, and have, thus, prolonged their ability, to purchase these homes.”

Caltrans added that “(Plaintiffs) have no basis in fact or law, to support that Caltrans improperly set affordable prices for the homes in question, and that the methodology was an “underground regulation.”

Sutton responded that he believes Caltrans is acting unilaterally with regard to the law, by creating “an ad hoc affordable price” that does not follow the statute or regulations, and which is, in fact, an “inflation-adjusted price” several times higher than the true ‘affordable price’ defined in the statute and regulations.”

“Caltrans seeks to ignore a 2007 judgment of this court that it may sell the surplus residences only pursuant to formally adopted regulations,” Sutton said, adding, “The ‘inflation adjusted price’ does not appear in any statute or regulation, and is the result of “underground regulations” imposed on these petitioners without the benefit of formal rulemaking and adoption.”

Reached for comment Tuesday, Lauren Wonder, chief of Media Relations and Public Affairs for Caltrans District 7, said, “ Given that this lawsuit is pending, we have to respectfully decline to comment.”

The case will be heard December 21 before Los Angeles County Superior Court Judge Michael Bekoff.

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