A new lawsuit claiming that land in Marina del Rey has been routinely undervalued has been filed.
The taxpayer class action lawsuit was filed Friday, September 16th, in Los Angeles Superior Court on behalf of plaintiffs — represented by attorney Richard Fine — Coalition To Save the Marina, Inc., Marina Tenants Association, Inc., and John Rizzo, an individual.
Defendants are the county, ASN Marina LLC (ASN Archstone), Oakwood Marina del Rey, LLC, County Beaches and Harbors Department director Stan Wisniewski as an individual, and Does 1-10.
The suit alleges that certain Marina lessees have been unjustly enriched at the expense of the county and taxpayers, and that lessee campaign contributions and payments to lobbyists to influence the Board of Supervisors may have created a climate under which no price control existed due to a concert of action between the county and the lessees.
KNABE RESPONSE — David Summers, press secretary for Los Angeles County Supervisor Don Knabe — whose district includes Marina del Rey — responded to allegations in the lawsuit regarding Knabe receiving $41,000 toward his campaign for Marina del Rey lessees.
Summers said Knabe’s staff has not yet received a copy of the lawsuit, and that Knabe has not been named in the suit as a defendant.
Summers said that to his knowledge, no documentation is provided to back up this claim.
“This is preposterous on the surface,” said Summers. “It’s the job of the county and the county assessor to determine the exact value of property.”
BEACHES, HARBORS DEPT. RESPONSE — Roger Moliere, chief of asset management for the Los Angeles County Department of Beaches and Harbors, also said that he has not seen the lawsuit, and that it would be up to county counsel to respond after reviewing the documents.
Moliere said any negotiations between the county and lessees always include a third-party appraisal.
ALLEGATIONS — The lawsuit alleges that as of 1995, according to campaign contribution reports, campaign contributions from lessees in Marina del Rey to the campaigns of the members of the Los Angeles Board of Supervisors were approximately $600,000 during a certain period.
Fine says that since the year 2000, these reports show that lessees in Marina del Rey have spent more than $763,000 in lobbying — including approximately $663,000 to supervisors and making campaign contributions to the various board members of approximately $100,000 — with more than $41,000 going to Don Knabe, whose supervisorial district includes Marina del Rey.
The class action allegations consist of all persons or entities that rented an apartment at Oakwood Apartments within the last four years.
The lawsuit requests that the court:
n order that the county set prices at Marina del Rey as required under an existing government code;
n order that ASN Marina, LLC (ASN Archstone) be prohibited from recouping any monies paid to Oakwood through rent charged to tenants at Oakwood Apartments in an alleged violation of the amended and restated lease between the county and ASN Archstone;
n order that ASN Archstone be prohibited from changing or signing any leases containing any prices for “new rents” and voiding leases already signed containing “new rents”;
n declare that Section 16 of the county master lease between the county and lessees dealing with controlled prices has been violated;
n declare the lease void;
n find that the county has made a gift of public funds to a private company of the leasehold interest by not “controlling prices”;
n declare that Oakwood Marina del Rey, LLC and ASN Archstone have been unjustly enriched;
n order damages from Oakwood and ASN Archstone for unjust enrichment for paying the county too little per square foot rental and percentage rental;
n allow a writ of mandamus requiring the county to set rates under the lease;
n prohibit the county from giving the leasehold interest to private parties;
n order defendants to cease their alleged unlawful conduct; and
n appoint a trustee and require the county to operate under the lease under the sole supervision of the trustee.
A fifth cause of action relating to alleged unjust enrichment against ASN Archstone and Oakwood alleges that the lessee’s 73 percent return on gross income and 51 percent annual “return on investment” under the lease demonstrate that the rents are too high and the lessees are being unjustly enriched.
“The amount of damage is presently unknown but is estimated to be approximately $10 million,” the lawsuit alleges.
The sixth cause of action for damages alleges that the lessee’s 73 percent of return on gross income and 51 percent annual “return on investment” under the lease demonstrate that the land is undervalued at $3,180,498, and that the county isn’t receiving its fair share of monies under the lease, unjustly enriching the lessees.”
“The amount of damages to the county and the taxpayers is presently unknown but is estimated at approximately $25 million over the last ten years,” the lawsuit alleges.
The lessee’s investment pursuant to the lease — capital outlay — is shown to be approximately $12,762,039 for the buildings, according to the county assessor as of December 31st, 2003, prior to the lease assignment.
The land — which is owned by the county — was valued at $3,180,498, according to the lawsuit.
Had the return on investment been limited to ten percent per year on every lease in Marina del Rey, the prices to the public would be significantly lower, the lawsuit alleges.
To achieve a ten percent per year return on investment, the lessee would have to pay the county another $4 million per year and/or reduce the rents by that amount or do both annually, the lawsuit alleges.
The lessee currently pays the county 8.5 percent of its gross receipts with a minimum base rent of ten cents per square foot.
The “land value” under the lease is approximately $279,000 per acre or $6.40 per square foot for the 11.4 acres or 496,584 square feet, while comparable land, according to reports on the “Affordable Housing Policy and Analysis” and “Marina del Rey land use value under alternative uses” prepared for the county on June 17th, 2002, evaluation was $62 per square foot, Fine claims.
“The extra funds that should have been paid, over $60 million per year, could have fixed the financial problems at King-Drew Medical Center, aided emergency operations, provided staff to the sheriff and to prisons, and assisted health and welfare and road building,” said Fine.