By Jonathan Friedman
Lookout Staff

May 14, 2010 --LawsuitThe City Council on Tuesday approved general terms for a legal settlement with Blackrock Realty Advisors, owner of The Plaza at the Arboretum, the 300-unit Colorado Avenue apartment complex on Santa Monica’s east end accused of “widespread violations” of an affordable housing deed restriction included In a development agreement with the City.

As part of the tentative settlement Blackrock must provide affordable housing training for its staff and hire permanent staff experienced in affordable housing, pay for future affordable housing audits on the Arboretum and its Sea Castle Apartments property on Ocean Front Walk, accept future affordable housing tenants from the City’s waiting list and pay for the relocation of unqualified tenants if the tenancy was due to Big Rock’s negligence.

Also, Blackrock has agreed to a revision of its development agreement with the City so that the Arboretum is subject to the City’s affordable housing ordinance, which includes fines for violations. The ordinance went into effect after the 1998 development agreement was established.

“They will be subject to monetary penalties (if future violations occur) just like all other properties are,” said Deputy City Attorney Gary Rhoades in a Wednesday interview in which he noted the violations that sparked the suit will not be subject to fines.

The development agreement granted the Arboretum zoning variances in exchange for a guarantee that 97 units would be rented to low- and middle-income tenants at a rate capped by a City formula. An audit by the City’s Housing Division concluded the owners rented to ineligible tenants and failed to verify eligibility of the tenants in 33 units.

Rhoades said he expects the legal settlement to be finalized within the next few weeks.

Also this week, the City filed an affordable housing violation suit against Novin “Kathy” Golshani and the real estate firm at which the City says she is either an officer or manager, Bilet Properties LLC. Golshani and Bilet own three condominium units on the first floor of the Dorchester House, which is located on Fourth Street near California Avenue.

A 1982 development agreement requires 15 units on the first floor be leased to low-income and moderate-income persons at a reduced rate. The City alleged that some of the units are occupied by condo owners or are being rented at a market rate to those not qualified for affordable housing.

Rhoades said Golshani and Bilet have refused to respond to communications from the City regarding the situation. Owners of the other first-floor units subject to the affordable housing restriction that might be out of compliance are working with the City, Rhoades said. No legal action is planned against them.

Golshani did not return calls for comment.

Meanwhile, real estate attorney Stanley Epstein, who alerted the media to the Dorchester issue after doing some private investigating, said the City’s suit is flawed. He said this is because the development agreement requires the City to send a violator a default notice specifying the person has 30 days to cure the situation before any suit can be filed. Epstein said a proper notice has not been sent.

The City sent three notices to the unit owners, which Rhoades said was sufficient. But Epstein said this was not because based on one of the notices he read and the other two that he has not read, but saw the descriptions of in the suit complaint filed by the City, the documents would be classified as requests for information rather than proper default notices.

“If anybody raises that issue, and you can be assured even the dumbest lawyer will raise it, it will knock out the lawsuit because the lawsuit is not timely unless you give a proper 30-day notice and the 30 days have gone by,” Epstein said.

He added that it was impossible the unit owners other than Golshani and Bilet could be working with the City toward curing the problem if they are actually living in the units. Epstein said the only way those people could gain compliance is if they move out.

Rhoades declined to respond to a question from The Lookout News about Epstein’s opinion on the unit owners other than Golshani and Bilet. Regarding the situation of those owners, Rhoades said, “I disagree that litigation is the answer.”