County supervisors, faced with an escalating controversy over their plan to convert 600 apartments in the Marina City Club to subleases similar to condominiums, last week asked the developers to meet with tenants to iron out differences.
More than 100 residents attended a public hearing Thursday, presenting an emotional plea that the board delay a decision on the conversion until residents' attorneys, economists and real estate experts can examine its effects.
The board is scheduled to consider the sublease arrangement, never attempted before in Los Angeles County, at its regular Oct. 7 meeting.
About 80% of the 600 leaseholders in the club's three luxury towers in Marina del Rey have signed a petition protesting the plan, which would require current tenants to move out or sign long-term subleases with initial down-payments of about $63,000.
Several residents at the hearing accused the developer, Marina del Rey Properties Ltd., of withholding the details of the sublease proposal until a few days ago.
Bruce Lederman, an attorney for the company, responded that the deal "has been fully spelled out" since a letter of intent was signed last April.
However, Supervisor Pete Schabarum asked that the company meet with tenants to respond to their concerns. The meeting was tentatively scheduled for Thursday evening in the club's main ballroom.
The cost of the 81-year leases, which can be resold by tenants, would range from $200,000 to $500,000 according to Allen Kotin, a county real estate consultant. The county would immediately receive $2.5 million from the developer simply by agreeing to the changes. Among other payments, the county will receive 20% of the developer's profits and 1% of the revenues each time a unit is resold.
The arrangement is unusual because, although tenants can resell their subleases, the land would still be owned by the county and the building would be controlled by a master leaseholder, currently Marina del Rey Properties, a subsidiary of Hughes Aircraft. Last month that firm agreed to sell the towers to the J. H. Snyder Co., which is expected to take over the proposed sublease arrangement after it purchases the complex.
Tenants contend that they would not have control over the building's extensive common areas, as do condominium owners. Residents also claim that monthly payments, including principal, interest, maintenance fees, taxes and a special county land rental, would escalate dramatically above the current $1,500 to $2,000 average monthly rents.
Tenants also question the assurances of attorneys for Marina del Rey Properties that the Internal Revenue Service will honor their sublease payments as home mortgages and allow tax deductions. In addition, they have demanded that the developer be responsible for earthquake insurance, which under the current proposal would be the responsibility of each tenant.
At Thursday's meeting, Elvin Francis, representing tenants in the Marina City Club Assn., called the proposal "a very seductive piece of fantasy" that will not bring the county the revenues it has estimated and will force many tenants to move out.
"Our accountant has gone over these numbers--a professor of economics and math," Francis said. "The impact on the residents is devastating, escalating in costs with no hope of future recovery."