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Dream Condos in Monterey Hills Sink Into a Nightmare for Buyers

April 19, 1987|ROXANE ARNOLD | Times Staff Writer

Nargis Choudhry and her husband thought they were the luckiest couple in the world in 1981 when they managed to buy their first home, a one-bedroom plus den hillside condominium in a new development just minutes north of downtown Los Angeles.

With interest rates peaking beyond 15%, the deal was simply too sweet to pass up--only 5% down, a fixed interest rate of 10% and the project was sponsored by the city's Community Redevelopment Agency.

"When we originally got this place, we felt the city and the CRA had stamped and approved it," Choudhry said. "It was our dream house, a wonderful place to live. . . . We had hoped to stay here a little while and then move on to a house."

Now five years later, the couple and hundreds like them in the massive Monterey Hills redevelopment project are seeing their dreams crumble in a project that is literally sinking into the ground. Unable to sell their homes, or in some cases even rent them, they are virtually trapped.

"Los Angeles has its prison . . . ," property manager Don Davis said of the plight of the condo owners. "Only the wrong people are in it."

Built atop canyons that are settling more each day, many of the 1,400 condominiums are tilting and cracking apart. To recover their losses, at least four of the 17 homeowners associations and scores of individual owners are suing the city and the redevelopment agency. Some have sued the builder, at least one of half a dozen architects, the major real estate firm and a myriad of subcontractors besides. The CRA, among others, filed multimillion-dollar lawsuits in return. The first case is not expected to be tried for another two years.

"Everyone sued everyone, from the top guy to the little guy," said Joel Castro, an attorney representing one of the homeowners' associations. "Everyone is out for themselves; everyone is pointing a finger at somebody else. . . . It's the most astonishing legal mess I've ever seen."

For Choudhry, a 33-year-old marketing specialist, "There's no way out. Not only are we wiped out financially, but we've been wiped out emotionally as well. . . . We were fools."

Although everyone involved agrees that the problems at Monterey Hills are for real, no one is willing to shoulder the blame. The more than 40 companies that insured the various participants are balking against paying off claims, and bills from attorneys and consulting experts are steadily mounting. The CRA has offered to spend $8 million alleviating problems, which it concedes is only a start. The builder blames the CRA, the CRA calls the morass a mystery but many homeowners simply want out.

"It's a complicated mess up there," acknowledged CRA board Chairman Jim Wood. "The problem is it isn't clear whose fault it is . . . . It's not unlike trying to unravel a malpractice case."

Conceived in the late 1960s, the Monterey Hills project was envisioned by the CRA as a haven of affordable housing for mostly first-time homeowners who wanted quick access to downtown. A total of 18 condominium and town house projects--each in a distinct style--would be built over a span of several years, with prices ranging from about $80,000 to the low $100,000s. Although some top city officials, including Police Chief Daryl F. Gates and Councilman Richard Alatorre, have homes there, a small percentage of the housing also was reserved for lower-income buyers.

"It was our largest residential project and unique in the sense that we wanted to build a community of multiple homeowners associations, each with its own characteristics," Wood said. "I think the agency was very proud of it--is very proud of it."

But, Wood added, "The agency made representations and now we are faced with the results, which are clearly not what we hoped would happen. Straightening it out now is our No. 1 problem."

Turning the mostly vacant hillside and canyon lands off Via Marisol into a sprawl of condominiums was both costly and complicated. To help finance the project, the CRA issued a series of four mortgage revenue bonds totaling $114.3 million. More than 900 mortgages were issued under those bonds.

Hillsides Lopped Off

Engineering and geological consultants were brought in to determine how the land could be transformed and, based on their recommendations, the work began in the late 1970s under the auspices of the CRA. Simply put, the tops of the three rolling hillsides were lopped off and the earth used to fill in the adjacent canyons.

Once all the grading, earth compaction and street and site preparation work was done, the builder, a company now known as Cal Coast Development Co., began constructing the labyrinth of condominiums. In all, upward of 1,800 units were to be built.

But, charges lawyer Castro, nobody told the potential buyers that part of the development was to be built "on a landfill of over 150 feet and nobody told us landfills of over 100 feet are considered experimental. . . . The original offerings did not even include the word landfill in it."

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