CITY HALL — Owners of the Village Trailer Park filed a $50 million lawsuit against City Hall this week alleging that the City Council violated local law and a signed agreement when it reversed course on an approved development for the controversial site.
The lawsuit alleges that the City Council improperly called the item at its Dec. 11 meeting against open meeting laws and that they did not follow proper procedure in rescinding a development agreement, which is technically an ordinance.
It also claims that the council violated a 2007 agreement to negotiate elements of the contract in good faith while the developers kept the park open, despite the fact that it has been losing money for a decade.
If the decision is not overturned and the development not allowed to go forward, the owners will shut down the park and the residents will lose the rich package of relocation benefits negotiated as part of the development agreement.
“We spent six years working to satisfy the concerns of all constituents,” said Marc Luzzatto, co-owner of the park. “We would prefer that the city honor its commitments so that we would not have to pursue litigation.”
On Nov. 27, the then-City Council approved Luzzatto’s development agreement for a mixed use project consisting of 377 units, some apartments and others condominiums, and retail space spread across three buildings.
It also required that the developer set aside 10 trailer pads for Village Trailer Park residents that wanted to remain in the park, and created an array of relocation options for residents.
Those included the developer purchasing a new mobile home and moving residents to the Mountain View Mobile Home Park, a city-owned park just blocks from Village Trailer Park, as well as paying several years’ worth of rent for residents while they waited to move into some of the low-income apartments in the new project, amongst others.
Two weeks later, a newly-seated City Council with two new members, Ted Winterer and Tony Vazquez, voted to rescind the development agreement in a 4 to 3 vote ostensibly to resolve questions about the project’s adherence to local affordable housing rules.
Both new members voted to take back the agreement.
At the meeting, City Attorney Marsha Moutrie informed the council that the development did not have to adhere to the affordable housing production program because it was a specially-negotiated contract.
In the lawsuit, the plaintiffs hold that the vote was invalid because it happened during a special meeting and it was done without the proper procedure.
The lawsuit alleges that the City Council should have provided a public notice or hearing for the rescission action, similar to the two-step process needed to approve the development agreement in the first place.
“In purporting to reconsider the ordinance, the new City Council engaged in a perversion of the legislative process,” the lawsuit reads.
Moutrie believes that the action was appropriately taken, and that the council reconsidered and rescinded its action in adopting the development agreement on second reading.
“No repeal was necessary because the reconsideration occurred in the 30-day period before the ordinance became effective,” she said.
Luzzatto may have a case that the City Council stopped negotiating in good faith when it flip-flopped on the agreement, said C. Kerry Fields, professor of business law and ethics at the USC Marshall School of Business.
A few years ago, that might not have been true, Fields said.
“It certainly looks like the city is liable or could be liable for failing to honor its commitments,” Fields said.
On the other hand, the lawsuit allows the City Council to discuss the case behind closed doors, which may give council members political cover for ultimately approving the project, he said.
For his part, Luzzatto believes that the City Council knows that the actions they took on Dec. 11 can’t undo their commitments to his project.
“It’s not fair to lead us down the path for six years and cause us to spend huge sums of money and lose so much money operating the park and then try to take away the city’s agreement,” Luzzatto said. “I do believe there is an achievable resolution, and we will work toward it.”