Public Comments — Costa Mesa City Council, March 5, 2024

From: Priscilla Rocco
To: CITY CLERK
Cc: Priscilla Rocco; Kim Hendricks; Cynthia McDonald
Subject: Respect Your Elders. Listen to the "Regulars"
Date: Tuesday, March 5, 2024 11:54:26 AM
City Council
At the last council meeting, councilwoman Marr felt compelled to warn the public that the "regulars" who speak at these meetings make up "less than one-tenth of one percent" of the public, and their comments are no more important than that of the people she meets at Target. Her counterintuitive logic implies that the opinions of "regulars" should be given less weight as our participation is habitual, assuming we've nothing better to do. Ironically, as a candidate she praised these same "regulars" for the months we canvassed to put her on the dais. Is it any wonder we're invested in what she does from that dais!
Point of fact, "regulars" may be small in number but are definitely not like the people you meet in Target. We're former council members and residents who've served on many city committees - the ones you're constantly trying to fill. We put Measure Y and AA on the ballot, made law by 70% of the voters. Some are experts in Fairview Park. Most have decades of institutional knowledge, especially in the lack of city planning in development. And, we ousted the last administration for insulting and ignoring residents. As such, we actually represent a majority of Costa Mesa. These residents count on us to untangle city issues, attend numerous workshops and meetings they can't, and speak for them at these meetings.

We would gladly stay home, but you don't keep your promises and you don't listen. You overturned Measure Y, but the little affordable housing that will be built won't be inclusive, It'll be segregated to redlined districts. You make a big show of Native American Month, but you defy laws, executive orders, and invite vandals to destroy their ancestral artifacts and lands in Fairview Park. In June 2022, I sent multiple studies, reports, articles, and information warning you and the planning commission what would happen if you let 60 cannabis shops into our small town with no plan in place. Now it's lawsuits, frightened families, and plummitting home prices.

Now, it's the Fairview Development Center. Instead of rolling your eyes everytime we speak and making imperious pronouncements undermining our credibility, why not save the taxpayers hundreds of thousands of dollars on clueless consultants. Use the "regulars'" institutional knowledge and city planning expertise for an advisory council. We may be forceful, passionate, even angry at times, but unlike your advisors, donors, and consultants, our only goal is making our hometown better for all residents, not just the rich.

Priscilla Rocco
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Report any suspicious activities to the Information Technology Department.

Dear City Council,
I would like to thank you for taking your �me to review this case.

I sincerely wish I could address this body to present my side of this case.

This really should not be a ﬁght. The property was and is safe (except for the ﬁre that occurred under the receiver’s control). Please see the Declara�on of Steve Norris who inspected the property prior to the appointment of a receiver. The property is s�ll sound today.

My only goal since purchasing this property has been to provide as many safe low-income housing units as the City and State would allow.

Some important facts for your considera�on:

This property has been inhabited in its current conﬁgura�on for over 40 years without any issue.

I did not increase the number of units. The appellate court even ruled that this condi�on existed prior to my ownership.

Many of my tenants came from the OC Housing Authority and the Anaheim Housing Authority. They inspect the units every year .

In 2015 the City’s Planning and Building Departments stamped plans showing exactly how the property is today. (See copies in the cer�ﬁed engineer declara�ons). City also issued building permits for everything that exists on the property and a building inspector inspected the property in 2015. City staﬀ may be telling you these stamped plans and permits do not exist, but I have the originals.

The City’s General Plan land use designa�on and the zoning for this property are in conﬂict and in such a case the General Plan’s land use designa�on must prevail. The General Plan allows for 9 units on the property even though in 1989 when the last building was built, 12 units were allowed.

The State has new laws including laws requiring the city to approve ADUs and density bonuses that would allow signiﬁcantly more units than the 14 we are proposing.

Even in The City Atorney stated the en�tlements was the reason for the no�ce of abatement and reason for non-compliance as no other viola�on was men�on or detailed. (See declara�on Of Amanda Popp) If the Permits issued in 2015 did not en�tle the property as is then our SB-330 applica�on would en�tle the property with 14 low-income units.

The City gave me 3 days to abate a condi�on that has existed without objec�on for several decades and that the City previously approved through stamped plans sta�ng the property is approved as built.

The Receiver has had over 3 years to en�tle the property as per state and local laws and has failed to do so.

The Receiver believes the structures are unsafe because, in his view, only 6 units can exist on the site and is recommending to tear all of the housing on the the property down.

I cannot believe the city agrees this is the highest and best use.

I have had 3 contractors, an engineer, an architect a re�red city planner from Anaheim, a land use specialist with Rutan and Tucker, and Steve Sheldon of the Sheldon Group all agree that the structures are sound and rehabilita�on is the wise decision.

The Receiver was requested by the City and appointed to rehabilitate the property, but nothing has happened in over 3 years except some 70 police calls, a ﬁre, and vandalism.

I would hope the City Council would want as many safe low-income units as legally possible and as soon as possible.

Why cannot the city review our SB330 plan and provide comments if any correc�ons are necessary and let us address them. We can have engineered drawings. We can open walls to prove full code compliance. This does not need to be treated diﬀerently than any other plan before the Building and Planning Department.

The Receiver’s neglect has caused the property to deteriorate into a much worse condi�on and become a public nuisance. He is objec�ng to the city considering (or approving) any plan of rehabilita�on.

We are respec�ully asking the City Council to direct staﬀ and the City’s atorneys to work with us on a “win-win” solu�on that expedi�ously and cost eﬀec�vely rehabilitates and preserves the low-income housing on the property that has served Costa Mesa residents for many decades.

Best regards.

Dennis DAlessio

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

FOR ORDER TO ABATE SUBSTANDARD BUILDING AND APPOINTMENT OF RECEIVER -1-
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Bradley P. Knypstra (State Bar No. 177901)
[email protected]
Grant Hermes (State Bar No. 291822)
[email protected]
Knypstra Hermes LLP
2731 ½ E Coast Hwy
Corona Del Mar, CA 92625
Tel: (949) 432-3802
Fax: (949) 432-3803

Attorney for Respondent D’Alessio Investments, LLC

SUPERIOR COURT OF CALIFORNIA
COUNTY OF ORANGE—CENTRAL JUSTICE CENTER

CITY OF COSTA MESA, a California Municipal
Corporation;

Petitioner,

D’ALESSIO INVESTMENTS, LLC, a Nevada
Limited Liability Company; JPMORGAN
CHASE BANK, N.A.; and DOES 1 to 25,

Respondents.

Case No.: 30-2020-01133479

[Assigned for all purposes to the Hon. Judge
James J. DiCesare, Dept C16]

DECLARATION OF STEVE NORRIS, PE,
AIA IN SUPPORT OF RESPONDENT’S

OPPOSITION TO PETITION FOR ORDER

TO ABATE SUBSTANDARD BUILDING

AND APPOINTMENT OF RECEIVER

[RELATED TO ROA #2]

Hearing:

Date: August 14, 2020
Time: 9:30 a.m.

Dept.: C16

Petition Filed: February 19, 2020
Trial Date: None set

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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DECLARATION OF STEVE NORRIS, PE, AIA
I, Steve Norris, declare and state as follows:

1. I am a principal in, and owner of, Architectural and Engineering Design Group, which provides forensic services in the areas of architecture, civil engineering, general engineering and building contracting. I have testified as an expert in various courts throughout this state on matters of building design and construction over the past twenty years. During this time, I have also testified on those matters at numerous arbitrations. Except as otherwise stated herein, I have first-hand, personal knowledge of each and all of the facts stated herein, am over the age of 18, am competent, and if called as a witness I could and would competently testify thereto under oath.

2. I am a California Licensed Architect in the State of California, License No: C-30372; Civil Engineer in the State of California, License No. RCE 47672; and General Engineering & Building Contractor in the State of California, License 624109, with over twenty years of experience in Architecture, Engineering and Construction. More details on my background, training, experience, and expertise are contained in my CV, which a true and correct copy of is attached as Exhibit “1”.

3. I have been retained in this case to give my opinions on the condition of the real property located at 1963 Wallace Ave., Costa Mesa, CA 92627 (“Property”), whether any code violations exist as they pertain to the City of Costa Mesa’s (“City”) Code Enforcement Case #22392 letter dated November 27, 2019 (“City Code Violation Letter”), whether there are any substandard building conditions that need to be abated at the Property, and whether this Court should appoint a Receiver for the Property.

4. I have reviewed the following information related to this case and the Property:
a. My in person inspection of the Property on or about July 16, 2020; b. The City’s First Amended Petition for Order to Abate Substandard Building and Appointment of Receiver (“Petition”), Notice of the Petition, Declaration of Rene Jimenez in support of the Petition, Declaration of Lois Moy in support of the Petition, Declaration of Eric Beatty in support of the Petition, and Proposed Order for the

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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Petition.
c. The City Code Violation Letter;
d. Bradley P. Knypstra’s letter, counsel for D’Alessio Investment, to the City dated January 2, 2020 outlining the building permits, building plans, timeline of the Property since the 1950s to present and the enclosed approved building permits and approved building plans;
e. Four sets of City approved as built building plans, stamped and signed by the City on June 9, 2015 and June 16, 2015. Attached as Exhibit “2” is a true and correct copy of the as built plans, stamped and signed by the City on June 9, 2015 and June 16, 2015 that I received and maintained in the ordinary course of business. f. Declarations of tenants at the Property attesting that, among other things, the Property owners have always maintained their respective units and the Property; they have had no issues with the maintenance of their unit or the amenities they are provided; their units have an adequate kitchen, heating, ventilation, climate control, natural and electrical light, plumbing, sinks, and bathrooms; working smoke and carbon monoxide alarms, no insect infestations at the Property, etc. These declarations were from:
i. Unit A – Jeremie Wilson
ii. Unit 1 – Todd Dennison
iii. Unit 2 – Madeliene Molnar
iv. Unit 101A – Rodrigo Guerra Machado
v. Unit 202 – Carlos Valdez
vi. Unit 205 – Erik Ryan Kiesel
vii. Unit 206 – Kassi Ydris
viii. Unit 207 – Juraporn Soonthornlipikorn
ix. Unit 208 – Jared Kasiewicz
g. Twelve email correspondence chains between D’Alessio Investments and the City from January of 2019 to February of 2020 as follows:
i. January 30, 2019 between Mr. Knypstra, counsel for D’Alessio Investments and

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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City Code Enforcement Officer Andy Godinez;
ii. February 4, 2019 from City Code Enforcement Officer Rene Jimenez to Mr.

Knypstra;
iii. February 20, 2019 from Veronica Donovan, counsel for the City to Mr.

Knypstra;
iv. March 25 to March 26, 2019 between Ms. Donovan and Mr. Knypstra; v. May 7, 2019 from Mr. Knypstra to City Code Enforcement Officer Mr. Jimenez vi. May 13 to May 14, 2019 between Ms. Donovan and Mr. Knypstra vii. May 20, 2019 from City Code Enforcement Officer Mr. Jimenez to Mr.

Knypstra;
viii. June 12 to June 24, 2019 between City Code Enforcement Officer Mr. Jimenez, Ms. Donovan, and Mr. Knypstra;
ix. June 27 to August 5, 2019 between City Code Enforcement Officer Mr.

Jimenez, Ms. Donovan, and Mr. Knypstra;
x. November 14 to November 22, 2019 between Ms. Donovan and Mr. Knypstra; xi. December 11, 2019 to January 24, 2020 between Ms. Donovan, Mr. Knypstra, and Mr. Hermes, counsel for D’Alessio Investments;
xii. January 30 to February 20, 2020 between Ms. Donovan and Mr. Knypstra. h. Declaration of Robert Kehiayan;
i. Declaration of Sabrina Powelson;

5. Based on my review of the facts of this case, the documents, my inspection of the property, my education, background, training, and experience as an architect, civil engineer, and building contractor, I have developed the following opinions and conclusions:
a. Overview of the timeline of the Property:
i. It is my understanding from reviewing the file and as detailed in Mr. Knypstra’s January 2, 2020 letter to the City and its enclosed approved building permits, the Property was built in 1956 originally was 5 units. In the 1970s additional permits were approved for a total of 9 units. In 1990, additional permits were

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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approved to add an addition 8 units, bringing the total to 17 approved and permitted units at the Property.
ii. It is my understanding that in January of 2015, a building permit was pulled to make repairs to the building. Then on June 3, 2015 the City sent a violation notice to D’Alessio Investments indicating it had to obtain a building permit or removal all unpermitted construction. In response, Mr. D’Alessio then brought a complete set of as built plans with some modifications on June 9 and June 15, 2015 to the City, the City stamped and approved these plans. The City then issued building permits to Mr. D’Alessio and a building inspector approved the work performed on the Property on June 25, 2015 and July 2, 2015. iii. It is my understanding that the City did not have any issue with the Property until 2019 when a tenant who was evicted through court process reported code violations to the City.
b. It is my opinion the Property is a legal nonconforming property permitted to have 17 units. A legal nonconforming property is defined as a structure that was legally built according to applicable zoning and building regulations of the time, but has since become noncompliant due to a change in these regulations. It is my custom and practice that when as built plans are presented to a city and they get stamped and approved by the city’s building and planning departments, building permits are then approved and issued, and the city’s building inspector then signs off on the work performed on the permits, that the property and its improvements are considered legal nonconforming.

This is the case for the Property and its improvements as this is documented through the numerous approved building permits since 1956 as well as the as built plans submitted to the City in June of 2015, approved by the City’s building and planning department in June of 2015, and signed off by the City’s building inspector in June and July of 2015. c. It is my opinion the City’s Code Violation Letter fails in all respects to evidence the existence of code violations and fails to identify the specific conditions at the Property that give rise to the numerous, vague, and nonspecific list of code violations.

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

FOR ORDER TO ABATE SUBSTANDARD BUILDING AND APPOINTMENT OF RECEIVER -6-
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i. The City’s Code Violation Letter fails to identify applicable codes under which original construction was performed. Code violation citations must be made specific to the applicable code at the time the construction was performed.

Generally speaking, there is no requirement for an owner to upgrade or retrofit their property every time a new building code is issued. As I have opined, the Property and its improvements are considered legal nonconforming meaning at the time they were built or added to the Property, they were legal according to the applicable codes at that time. As a result, the City’s Code Violation Letter is insufficient to prove any code violations exist.
ii. The City’s Code Violation Letter cites numerous code violations, but fails to provide specifics with regard to the conditions that exist at the Property giving rise to these respective code violations. Without knowing the conditions that exist at the Property due to the lack of specificity correlating these conditions to the applicable code violations, the property owner is precluded from addressing the City’s concerns.
iii. The City’s Petition purports to provide photographic evidence of the numerous code violations, but in most cases the City’s has simply provided photographs of the tenant’s use, storage, and housekeeping of their respective units, which are all items specifically unrelated to the overall maintenance of the Property. iv. The City’s Code Violation Letter cites a laundry list of code violations, but theses code violations are based on the living habits of the tenants as opposed to actual conditions of the Property.
v. These shortcomings, coupled with the lack of specifics in the City’s Code Violation Letter and the City’s failure to reference specific codes in place at the time the Property and its improvements were originally built preclude the property owner from specifically addressing the City’s concerns. d. It is my opinion the City has failed/refused to provide clarity on the items listed in its Code Violation Letter and unreasonably refused to meet with and provide the property

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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owner a reasonable period of time to fix any concerns or issues the City has with the Property.
i. In my experience in dealing with a city’s planning and code enforcement departments, that the city wants and encourages property owners to meet with them to informally resolve any issues the City has with a property prior to seeking legal intervention.
ii. In my experience when actual code violations exist, a city will provide a list of these violations to the property owner and identify with specificity the condition at the property that causes of code violation. This is typically done by providing either the exact location of the condition at the Property, the specific unit number and area within the unit where the condition exists, and/or providing photographic evidence of the condition. The city provides this information to the property owner in order to identify the exact condition that needs to be remedied and to provide the property owner with sufficient information to do so.
iii. If the property owner has and uncertainty or there is ambiguity with the conditions giving rise to the code violations, cities welcome the property owner to meet with them so the planning and code enforcement departments can identify and point out the exact conditions that need to be fixed. iv. Once the property owner has sufficient information to identify the conditions the city has issue with, the city then provides the property owner a reasonable time period to fix these conditions.
v. I have reviewed the emails and correspondence between the City and D’Alessio Investments. It is my opinion the City’s Code Violation Letter fails to provide the required specificity to allow the property owner to ascertain the conditions at the Property that need to be fixed. After receiving the Code Violation Letter, the property owner requested multiple times to be provided with further information about the conditions, the exact location of the conditions at the

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property, and which of the 17 units contained the conditions. The property owner provided the City with a copy of the approved building permits, the stamped and approved as built building plans from 2015, and requested multiple times to meet with the City and inspect the Property to figure out what conditions the City has issues with.
vi. Despite the City receiving all this information from the property owner, the City failed/refused to meet with the property owner to provide further evidence and clarification of the specific conditions causing the code violations. vii. In my opinion, the City’s actions were unreasonable and did not provide the property owner a reasonable opportunity or reasonable time period to fix any of the code violations.
e. Based on the evidence presented by the City in its Petition, it is my opinion the City has failed to show there exists specific substandard building conditions at the Property that need to be abated and has failed to show the need for a Receiver to be appointed. The Property is considered legal nonconforming and the City’s Code Violation Letter and the evidence provided in the support of the Petition fail to provide sufficient detail to identify the specific conditions at the Property that result in code violations based on the applicable codes in existence at the time of the original construction. This information is necessary to allow D’Alessio Investments a reasonable opportunity and time to fix any actual issues at the Property. Further, a Receiver for the Property is unnecessary as the property owner has been willing and able to remedy any code violations and issues with the City; however, due to the vague and non-specific code violations listed in the City’s Code Enforcement Letter and the City’s failure and refusal to meet with the property owner and inspect the property despite repeated attempts and requests, the City has failed to give the property owner a reasonable opportunity and period of time to abate any substandard building conditions and a Receiver should not be appointed.

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S OPPOSITION TO PETITION

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I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed in San Marcos, California.

Dated July 24, 2020 by: ______________________________
Steve Norris

EXHIBIT “1”

CIVIL GEOTECHNICAL STRUCTURAL ARCHITECTURE CONSTRUCTION

ENGINEERING ENGINEERING ENGINEERING

Steven B. Norris, PE, AIA
Retained as an expert over 200 times, Deposed over 100 times Provided testimony in court trial or binding arbitration over 20 times.

Professional Registrations:

CALIFORNIA
Licensed Architect C-30372, AIA
Certified Access Specialist# 356
Registered Civil Engineer RCE 47672
Registered Geotechnical Engineer GE 2590
Certified Engineering Geologist EG 2263
Registered Geologist RG 7331
Certified Hydrogeologist HG 908
General Engineering Contractor License # 624109
General Building Contractor License # 624109

designgroupca.com
aeforensics.com

HAWAII Licensed Architect # 12825 BS Engineering
OKLAHOMA Professional Engineer PE #25211 MBA Finance

Mr. Norris has over twenty years experience in the fields of Architecture; Civil, Structural and Geotechnical Engineering; Geology; and Construction. He utilizes a multidiscipline approach to characterize impacted improvements, and formulate a realistic scope of repair.

Projects include; forensic evaluation of low to high rise residential buildings, high end residential homes, commercial structures, HOA maintained facilities (including slopes, buildings and components of buildings), public works improvements, work site accidents and building collapse.

Mr. Norris has been Engineer of record for numerous large scale community reconstruction projects which provide direct experience into the realities of unforeseen conditions and reconstruction costs. His prior work includes; assessment and characterization of structural systems (wood, steel and concrete structures); waterproofing systems, hydrogeology & groundwater, hydrology and surface water flow modeling, flooding, geotechnical & geological evaluation, landslides, fire damage, and construction standards of care.

Mr. Norris has qualified as an expert in courts in the Counties of San Diego, Riverside, Orange, Los Angeles and San Bernardino and testified in binding arbitration in the County of Santa Barbara. Areas of trial testimony have been pro- vided in the fields of Architecture; Civil, Geotechnical, Structural Engineering; Hydrogeology and Cost Estimating.

Trials have included claims regarding Architectural Detailing & As Built Construction, landslides, building settlement, water intrusion (at building envelope & subterranean), retaining wall failure, soil compaction, grading, site drainage, hydrology studies, runoff containment & filtration, civil design, slab vapor emission, deck waterproofing, concrete analysis, structural design analysis, fire damage, earthquake damage , reconstruction costs and septic system failure.

CURRENT EMPLOYMENT
PRINCIPAL ENGINEER: Caltech Engineering, Inc., DBA Engineering Design Group, A&E Construction Forensics, San Marcos, CA-Geotechnical, structural, civil engineering consultants for custom, residential, and light commercial construction.

PRESIDENT & RMO: The Bryant/Norris Company, Inc., San Marcos, CA - General Engineering and Building Contractor.

2121 MONTIEL ROAD SAN MARCOS, CA 92069 (760) 839-7302 FAX (760) 480 7477

FORENSIC ANALYSIS

WATERPROOFING SYSTEMS

BUILDING ENVELOPE

STANDARDS OF CARE

COST ESTIMATES

CONSTRUCTION DEFECT

PROJECT DELAY

CONTRACT TERMINATION

DRAINAGE

STORM WATER POLLUTION

FLOODING

HYDROLOGY ANALYSIS

EROSION CONTROL

GRADING PLANS

SEPTIC LAYOUTS

SUBDIVISIONS SLOPE

STABILITY ANALYSIS

GROUNDWATER ANALYSIS

SEISMIC HAZARD REPORTS

SETTLEMENT ANALYSIS

DESIGN DEVELOPMENT

RETAINING WALL

FOUNDATION DESIGN

WOOD DESIGN

STEEL DESIGN

CONCRETE DESIGN

DEEP FOUNDATION SYSTEMS

EARTHQUAKE ANALYSIS

RETAINING WALLS

IMMINENT COLLAPSE

WATER INTRUSION

FIRE WALLS

EGRESS ADA

DETAILING

EXHIBIT “2”
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. TOTAL: 1054.625 SF
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SYMBOLS LEGEND
F-.:;;,.

F 6 .

F L .

F.F
· . Fini&hed Surfac.e
.Fini&hed Grade . . .

Flow Line
Fini&hed Floor
T .C.. Top of Curb
T.G . Top of Grate
TP . Topo fP!e nt er ·
, F<.. . To p of F-ailing, :

T.5 . Top of 5_1ope
T .Y'I -Top of V'lall
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PROOF OF SERVICE
-1-
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PROOF OF SERVICE

STATE OF CALIFORNIA )
) SS

COUNTY OF ORANGE )

I am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action, my business address is 2731 ½ E Coast Hwy, Corona Del Mar, CA 92625.

On July 29, 2020, I served the foregoing document(s):

DECLARATION OF STEVE NORRIS, PE, AIA IN SUPPORT OF RESPONDENT’S

OPPOSITION TO PETITION FOR ORDER TO ABATE SUBSTANDARD BUILDING AND

APPOINTMENT OF RECEIVER

on the interested parties in this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows:

Amanda A. Pope
Veronica R. Donovan
Jones & Mayer
3777 North Harbor Boulevard
Fullerton, CA 92835
Attorney for Petitioner:

City of Costa Mesa

[email protected]
[email protected]

John M. Sorich
Mariel Gerlt-Ferraro
Matthew S. Henderson
Parker Ibrahim & Berg LLP
695 Town Center Drive, 16th Floor
Costa Mesa, California 92626

Attorney for Respondent:

JPMorgan Chase Bank

[email protected]
[email protected]
[email protected]

[X] I certify that the above-referenced document(s) were served electronically on the parties listed herein at their most recent known email address or email of record by submitting an electronic version of the document(s) to One Legal, LLC, through the user interface at www.onelegal.com (designated electronic filing service provider).

[X] I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on July 29, 2020, Corona Del Mar, CA.
________________________________
Grant Hermes

EXEMPT FROM FILING FEES
PURSUANT TO GOVERNMENT CODE SECTION 6103

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PETITIONER CITY’S RESPONSE TO MOTION TO MODIFY INJUNCTION

JONES & MAYER
Amanda A. Pope, SBN 273307
Veronica R. Donovan, SBN 298964
3777 North Harbor Boulevard
Fullerton, CA 92835
Telephone: (714) 446-1400
Facsimile: (714) 446-1448
Email: [email protected]
[email protected]

Attorneys for Petitioner, City of Costa Mesa
In re: 1963 Wallace Ave., Costa Mesa, California

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF ORANGE, CENTRAL JUSTICE CENTER
CITY OF COSTA MESA, a California
Municipal Corporation,

Petitioner,

vs.

D’ALESSIO INVESTMENTS, LLC, a
Nevada limited liability company;
JPMORGAN CHASE BANK, N.A.; and
DOES 1-25,

Respondents.

Case No. 30-2020-01133479-CU-PT-CJC

Hon. David A. Hoffer
Department C16

PETITIONER CITY OF COSTA MESA’S

RESPONSE TO RESPONDENT
JPMORGAN CHASE BANK, N.A.’S

MOTION TO MODIFY INJUNCTION

(RELATED TO ROA 358)

Date: April 24, 2023
Time: 1:30 P.M.

Dept.: C16

///

///
Electronically Filed by Superior Court of California, County of Orange, 04/11/2023 12:47:00 PM. 30-2020-01133479-CU-PT-CJC - ROA # 392 - DAVID H. YAMASAKI, Clerk of the Court By E. efilinguser, Deputy Clerk. 1 2
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PETITIONER CITY’S RESPONSE TO MOTION TO MODIFY INJUNCTION

Petitioner CITY OF COSTA MESA (“City”) hereby submits its Response to the Motion to Modify Injunction to Permit Foreclosure of Real Property, or, in the Alternative, To Instruct the Receiver to Pursue a Sale of The Real Pr operty (“Motion”) filed by Respondent JPMORGAN CHASE BANK, N.A. (“Chase”).

I. INTRODUCTION
The real property that is the subject of this case and Chase’ s Motion is 1963 Wallace Avenue, Costa Mesa, California (“Property”) and is owned by Respondent D’Alessio Investments, LLC (“D’Alessio”). In this matter, the Court ha s appointed Eric P. Beatty, Esq. as the Court’s receiver (“Receiver”) over the Pr operty. It is undisputed that the Receiver is in possession and control of the Property and all parties are subject to the Court’s order appointing the Receiver dated November 5, 2021, which includes an injunction against foreclosure by Chase (“Appointment Order”).

While the City does not dispute the facts presented by Chase in its Motion regarding D’Alessio’s default on mortgage obligations to Chase, the City woul d like to clarify the status of the Property for the Court and provide the Cour t with the City’s position regarding potential foreclosure or sale.

II. LEGAL ANALYSIS
A. The Court Should Deny Chase’s Foreclosure Request Because There is no Need to Re- Litigate the Appointment Ord er and the Need for the Rece iver to Rehabilitate the Property Still Exists.

The Property is still in violati on, still presents a health and sa fety risk and therefore, the need for the Receiver still exists. While the tenants have been relocated, a vacant property can still be substandard and in violation of law. Here, the previously submitted evidence before this Court shows the Property is still replet e with numerous violations of St ate law and the City’s municipal code and the building itself is still substandard a nd substantially dangerous to warrant a receiver under Health and Safety Code sections 17980.6 and 17980.7. Given the lack of legal entitlements for all of the units still existing upon the Property, confirmed by the City and the Receiver in multiple previous Court filings, the existence of the Property in its current state is itself illegal. 1 2
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PETITIONER CITY’S RESPONSE TO MOTION TO MODIFY INJUNCTION

Even if the Court gran ts the relief requested in the Mo tion, as a foreclosing lender here, Chase still takes title to the Property subject to the receivership and Receiver’s priority lien. A foreclosure does little more than change the name of the owner on title – it has no practical effect and is not the best solution to move this litig ation forward and ultimately cure the violations plaguing the Property.

While there existed no statutory basis to require an injunction against foreclosure, the Court exercised its broad equitable disc retion to issue such an injunctio n in the Appointment Order and can continue to exercise its discretion to keep the injunction and terms of the Appointment Order in place. Should the Receiver have to spend rece ivership estate funds on the foreclosure process, it delays and distracts from the ultimate goal a nd purpose of the current receivership and requires the Receiver to spend time and resources otherwise earmarked for compliance and rehabilitation.

The Appointment Order specifically charges the R eceiver with the duty to bring the Property into compliance with the law and correct all existing violations and that should remain the goal of this receivership action regardless of how that is ultimately accomplished.

A foreclosure in this case is not realistic b ecause it does not solve the problem regarding the need to bring the Property into compliance. A foreclosure by Chase merely changes title ownership because the Receiver stays in possession and control of the Property. A foreclosure does not equate to compliance and the Motion presents no proposed rehabilitation plan, timeline or cost estimate from Chase once it become s the owner so the City cannot discern what Chase intends to do to bring the Property into compliance and should not have to wait for a new owner to figure that out when the Court’s own Receiver is already in the complicated process of doing so for this Property, especially the entitlements issue.

The City filed this receivership action on February 10, 2020, and the Receiver’s work, underway since then, should not be delayed for foreclosure because doing so does not serve the interests of the City or other litigants. Even af ter a foreclosure, the Property remains substandard and uninhabitable and, as previously litigated and ruled upon by the City, is not legally entitled for the number of units currently existin g thereon. The analysis that is likely to come next from the Court’s Receiver is (1) what legally can be don e with the Property and (2) which plan makes the 1 2
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PETITIONER CITY’S RESPONSE TO MOTION TO MODIFY INJUNCTION

most financial sense given the interests of all parties (i.e., full rehabilitation, demo, sale, etc.) It is likely the Receiver may recommend sale and if so, a foreclosure can be avoided and Chase’s mortgage will get paid from any available sale proceeds. While a foreclosure does little more than change ownership, in reality it provides no assurances for the City, but a sale of the Property by the Receiver would provide a route towards complian ce, especially if the Receiver determines rehabilitation is not viable.

B. The City Does Not Necessarily Object to th e Alternative Relief Sought in the Motion Regarding the Sale of the Property.

In its Motion, Chase requests alternative relie f seeking Court instructions for the Receiver to pursue a sale of the Property. The City does not necessarily out right reject the concept of a proposed sale with certain conditions. Since the City initiated this receivership action to ensure the Property was brought into compliance with the law, and at present it remains in violation, the City would require any proposed buyer enter into a compliance agreemen t that sets forth specific deadlines to obtain permits from the City to potentially rehabilitate the Property (if viable) or more than likely demolish the Property. This is common in “as-is” sales of receivership properties for cities to ensure the new buyer does what the City (and the Court) were expe cting the Receiver to do to ensure compliance. This remedy also makes sense for all parties because it is presumably the best and most cost-effective way to obtain compliance and conclude the litigation.

The City would also request further Court clar ification or approval of a rehabilitation plan to know if the Receiver would sell the Property demolished (which would result in compliance) or if the proposed buyer would be expect ed to carry out that work, or any other work, to ensure full compliance with the City’s Notice to Abate, under the Receiver’s supervision.

III. CONCLUSION
For these reasons stated above, the City respectfully requests that this Court deny Chase’s request for relief from the injunction against forecl osure. If the Court is inclined to grant the alternative relief instructing the R eceiver to sell the Property, the City does not obj ect (subject to certain conditions and further orders of the Court). If such a sale is ordered, the City reserves the 1 2
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PETITIONER CITY’S RESPONSE TO MOTION TO MODIFY INJUNCTION

right to further brief the City’s position for the Court depending upon the facts, circumstances and evidence that may come before the Court on that specific issue.

Dated: April 11, 2023

JONES & MAYER
By:

Amanda A. Pope, Esq.

Veronica R. Donovan, Esq.

Attorneys for Petitioner
Cit
y of Costa Mesa

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City of Costa Mesa v. D’Alessio Investments
Case No. 30-2020-01133479-CU-PT-CJC
Re: 1963 Wallace Ave, Costa Mesa, CA

PROOF OF SERVICE

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

I am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action. My business address is 3777 North Harbor Blvd. Fullerton, CA 92835. My electronic address is: [email protected].

On April 11, 2023, I served the foregoing document(s) described as PETITIONER CITY OF COSTA MESA’S RESPONSE TO RESPONDENT JPMORGAN CHASE BANK, N.A.’S MOTION TO MODIFY INJUNCTION, on each interested party listed on the attached service list as follows.

(VIA MAIL) I placed the envelope for collecti on and mailing, following the ordinary business practices.

I am readily familiar with Jones Mayer’s practice for collection and processing of correspondence for mailing with the United States Po stal Service. Under that practice, it would be deposited with the United States Postal Servi ce on that same day with postage thereon fully prepaid at La Habra, California, in the ordinary course of business. I am aware that on motion of the parties served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing affidavit. (VIA OVERNIGHT DELIVERY) I enclosed the documents in an envelope or package provided by an overnight delivery carrier and addressed to the persons at the addresses on the attached service list. I placed the envelope or package for collection and overnight delivery in the overnight delivery carrier depository at Fullerton, California to ensure next day delivery. (VIA MESSENGER SERVICE) I served the documents by placing them in an envelope or package addressed to the persons at the addresses listed above and providing them to a professional messenger service for service.

(VIA FACSIMILE) Based on an ag reement of the parties to accept service by fax transmission, I faxed the documents to the persons at the fax numbers listed on the attached service list. No error was reported by the fax machine that I used.

X (VIA ELECTRONIC SERVICE) By electronically tr ansmitting the document(s) listed above to the e-mail address(es) of the person(s) set forth in the attached service list. See Rules of Court, Rule 2.251 and CCP §1010.6.
(VIA ELECTRONIC SERVICE): Pursuant to the Orange County Superior Court eFiling mandate, I caused the above to be served to the listed addressee(s) via One Legal e-serve. See California Rules of Court rule 2.251(b)(1)(B) (by efiling the document, you agree to accept electronic service at the electronic service address you provided) and 2.251(c).

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 11, 2023, at Fullerton, California.

Catherine L. Livings
City of Costa Mesa v. D’Alessio Investments
Case No. 30-2020-01133479-CU-PT-CJC
Re: 1963 Wallace Ave, Costa Mesa, CA

Updated: 1/13/21

PROOF OF SERVICE LIST

Attorney for Respondent, D’Alessio Investments LLC: - BY EMAIL ONLY Catherine J. Rowlette, Esq.

Nassie Law, APC
3972 Barranca Pkwy, Ste J301
Irvine, CA 92606
Telephone: 949-757-1450
Facsimile: 949-265-9041
Email: [email protected]

Attorney for Respondent, JPMorgan Chase Bank: - BY EMAIL ONLY Bryant Delgadillo
Matt Henderson

PIB LAW
695 Town Center Drive, 16th Floor
Costa Mesa CA 92626
Telephone: 714-361-9604
Email: [email protected]
[email protected]

Court-Appointed Receiver: - BY EMAIL ONLY
Eric Beatty, Esq.

Court Appointed Receiver
123 E. 9th St, Ste 210
Upland, CA 91786
Telephone: 909-243-7944
Facsimile: 909-243-7949
Email: [email protected]
[email protected]
[email protected]

Alisha Patterson
Direct Dial: (714) 662-4663
E-mail: [email protected]
March 5, 2024

VIA E-MAIL
Mayor and Honorable Members of the City
Council for the City of Costa Mesa

Re: Written Public Comment for the March 5, 2024 City Council Meeting Closed Session Agenda Item #5

CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
City of Costa Mesa v. D’Alessio (1963 Wallace Ave.)
Orange County Superior Court Case No. 30-2020-01133479
To the Mayor and Honorable Members of the City Council:

As you know, my office represents D’Alessio Investments LLC (“m y client”), the owner of the property located at 1963 Wallace Avenue in the City of Costa Mesa (the “Property”), which is the subject of the receivership action you will have the opp ortunity to discuss at tonight’s meeting as Closed Session Agenda Item #5. We previously submitt ed a detailed letter on this litigation for your January 16, 2024 meeting, a copy of which is enclosed for ease of reference.

We wanted to provide you with a brief update of what has occurr ed since your January 16 th meeting.

On February 13, 2024, City staff, a representative from the Receiver’s office, and my client did a site inspection of the Property. My client brought severa l planning and construction professionals to assess the condition of the structures, includ ing David See (a retired Planning Services Manager for City of Anaheim), Steve Sheldon (a land us e consultant from the Sheldon Group), Steve Cederquist (a construction expert who has attende d all three inspections of the Property), and George Gehron (a court-approved construction exp ert). Although the condition of the Property has deteriorated significantly since the Receiver took it over, all of these planning and construction professionals agree that the structures are salvageable.

We hope the City Council will agree that the current condition of the Property is not acceptable. My client is solution-oriented. He has presented th e City with at least two proposals that will rehabilitate the housing on the Property quickly and cost-effectively. The recei vership action has been ongoing for more than four years with no end in sight. This is a drain on both the City’s and my client’s time and resources. Settlement could improve the condition of the Property much faster that protracted litigation and would help the City meet its housing goals. We hope the City Council will agree and will direct its legal counsel to work with us on a sensible settlement.

Mayor and Honorable Members of the City
Council for the City of Costa Mesa
March 5, 2024

Page 2 ends

2499/038089-0002
20329013.1 a03/05/24

We continue to welcome the opportunity to discuss this matter f urther and provide any information or documentation you need.

Respectfully submitted,

RUTAN & TUCKER, LLP

Alisha Patterson
AP
Enclosure: January 16, 2024 Letter to City Council

cc: Kim Barlow, City Attorney
Krista MacNevin Jee, Esq.

Amanda Pope, Esq.

VIA E-MAIL
Mayor and Honorable Members of the City
Council for the City of Costa Mesa
Re: Written Public Comment for the January 16, 2024 City Council Meeting Closed Session Agenda Item #4

CONFERENCE WITH LEGAL COUNSEL -E X I S T I N G L I T I G A T I O N City of Costa Mesa v. D’Alessio (1963 Wallace Ave.)
Orange County Superior Court Case No. 30-2020-01133479
To the Mayor and Honorable Members of the City Council:

D’Alessio Investments, LLC (“my client”) recently retained me to provide legal advice on the entitlement and development options for their property located at 1963 Wallace Avenue in the City of Costa Mesa (the “Property”). By way of background, I have been a land use and municipal law specialist with Rutan & Tucker, LLP for more than a decade. I am deeply familiar with the State of California’s housing laws, which as I am sure you are aware, have changed significantly over the past five years. With Nassie Rowlett, we are also couns el in the above-entitled receivership action.

As discussed in more detail below, my client’s Property has been the subject of the above- referenced receivership action for almost four years. The court-appointed Receiver (Eric P. Beatty, Esq.) has had full physical possession of the Property since No vember of 2021. Before the Receiver took control of the Property, my client’s tenants were almost exclusively low-, very low-, and extremely-low income households, many of whom have school-a ged children. My client charged below-market rent that these families could afford. Bec ause many of the households received Section 8 subsidies administered by the Orange County Housing Authority and Anaheim Housing Authority, these agencies regularly inspected my client’s Property to confirm habitability.

Approximately seven months after the Receiver took full physica l possession of the Property, he terminated all of my client ’s tenants’ leases and forced them to move out. Under the Receiver ’s care, the units have now been vacant for more than a year and a half and have become magnets for trespassing, squatting, vandalism, and arson. The condition of the Property today is far worse than it was under my client’s care. Nevertheless, the existing housing on the Property is salvageable.

Over my client’s objections, the Receiver is currently seeking Court approval to demolish all of the housing on the Property. The forced demolition of th is housing violates the letter and intent of the Housing Crisis Act of 2019 (Gov. Code § 66300.6), the Housing Element Law (Gov.

Code § 65583.2(g)(3)), the Housing Accountability Act (SB 330) (Gov. Code § 65589.5), the Mayor and Honorable Members of the City
Council for the City of Costa Mesa
January 16, 2024
Page
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20141786.2 a01/16/24
State’s Receivership Law (Health & Saf. Code § 17980(c)), the vested rights doctrine, and Policy 3D of the City’s recently-adopted 6th Cycle 2021-2029 Housing Element Update.1 In contrast, my client has presented the City with two proposal s that would use recently- adopted State housing laws to resolve any alleged discrepancy in the number of units permitted on the Property and rehabilitate and preserve the Property ’s existing housing. My client’s preferred proposal would provide three (3) deed-restricted units that would be offered at rents affordable to qualified low-income households. The Receiver has repeatedly directed the City to disregard my client’s submittals.

It is difficult to imagine that, in the midst of a housing crisis, the City Council would prefer a vacant lot to a solution that would quickly and cost-effectively rehabilitate the Property’s existing housing. The City is under no obligation to support or submit to the Receiver ’s demolition proposal. To the contrary, permitting the R eceiver to demolish habitable housing with no plan to replace the units will put the City in legal jeopardy under the current housing laws. We respectfully request the City Council direct its legal counsel to go on record in the receivership action opposing the Receiver’s request for Court-approval to demolish the housing on my clie nt’s Property and, instead, work with my client to explore options to rehabilitate the existing housing.

Background on the Property
My client ’s Property is a multifamily development on an approximately 0.4 2 acre site located at 1963 Wallace Avenue in Costa Mesa (APN 422-271-10). The Property is developed with four buildings — a single family residence built in 1956 ( “Building A ”), an apartment building built originally built in 1956 and modified in 1991 (“Building B”), and two duplexes built in 1978 (“Building C” and “Building D”).
1 On the question of whether the Receiver’s proposal to demolish of all of the housing on my client’s Property complies with State housing laws, we have requested technical assistance from the Housing Accountability Unit (“HAU”) of California’s Department of Housing and Community Development (“HCD”).

Mayor and Honorable Members of the City
Council for the City of Costa Mesa
January 16, 2024
Page
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20141786.2 a01/16/24
Aerial from Google Maps2
Building A Building B Buildings C & D
Background on the Receivership Action
Since August of 2020, the Property has been subject to a Court- ordered receivership in a civil action titled City of Costa Mesa v. D ’Alessio Investments, LLC, Orange County Superior Court Case No. 30-2020-01133479 (the “Receivership Action ”). Filed February 20, 2020, the Receivership Action has been ongoing for nearly four years. The Receiver was granted full physical possession of the Property on November 17, 2021. Effective May 31, 2022, the Receiver terminated all of my client’s tenants’ leases, and he forced all of the tenants (who were primarily low-income families, many with school-aged children) to leave b y the end of June of 2022. The units on the Property have been vacant ever since.

The central dispute in the Receivership Action revolves ar ound how best to reconcile an alleged discrepancy between the number of dwelling units permit ted and the number of dwelling units that currently exist on the Property. The City and Receiv er contend that the Property is entitled and permitted for only nine (9) dwelling units.3 Before my client purchased the Property, 2 Google Maps identifies the Property as the “Orange Coast Interfaith Shelter.” It was a homeless shelter at one time, but it is not anymore.
3 This is memorialized in the Receiver’s First Report, dated September 28, 2020 and filed with the Court on September 29, 2020. (See pp. 3:11 & 5:9-10.)

Mayor and Honorable Members of the City
Council for the City of Costa Mesa
January 16, 2024
Page
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prior owners added eight (8) dwelling units. The envelopes of the buildings have not changed since they were originally constructed. The units were added by dividing some of the existing dwelling units. The City’s public records confirm the prior owners obtained City permits for the additional units, but the City now disputes that the permits it previously issued remain valid.

My client has proposed a sensible, cost-effective solution to r esolve this alleged discrepancy. As discussed in more detail later in this letter, my client has submitted (or attempted to submit) two plans that would rehabilitate the existing buildings and provide a path forward to retroactively permit the seventeen units (or at least as many u nits as are allowed under the City ’s current land use regulations and State housing laws).

The Receiver, in contrast, has “directed the City to take no action with respect to [my client’s] application”4 and has requested Court-approval to demolish all of the existing housing so the Property can be redeveloped. The Receiver’s request is currently pending. The City has taken the position that, post-demolition, the Property cannot have mo re than six (6) units if it is redeveloped,5 which is significantly lower than the density permitted by the City’s General Plan land use designation (see “Maximum Residential Density for the Property” section below).

Displacement of Low-, Very Low-, and Extremely Low-Income Tenants As noted above, effective May 31, 2022, the Receiver terminated all of my client’s tenants’ leases and forced the fifteen households to move out. 6 Of those fifteen households, at least two qualified as low-income, at least ten qualified as very low-inc ome, and at least one qualified as 4 This is memorialized in a letter the Receiver sent to my client’s litigation counsel (Catherine Rowlett) and land use consultant (Steve Sheldon) on or about July 21, 2023. 5 This is memorialized in a letter the City’s legal counsel (Jones Mayer Law) sent to the Receiver on or about January 19, 2022. (See p. 3, Response to Question #15.) 6 In the Receivership Action, the City and Receiver claim the Pro perty had Building Code violations that were threats to health and safety, but there is documentation to the contrary — (1) many of my client’s tenants signed declarations disputing the Receiver’s characterization of th e condition the Property; (2) because many of the tenants relied on Section 8 subsidies, their units needed to pass routine inspections by the Anaheim Housing Autho rity and the Orange County Housing Authority to confirm habitability; and (3) the Receiver had full physical custody of the Property for at least six months before he forced my client’s tenants to move out, which undermines his contention that their units were not habitable. Ultimately, the Code violations the City and Receiver identified were easily fixable and did not re quire permanent displacement of tenants (e.g., insect infestation in some units, cracked tiles, worn finishes, and water damage). (See Receiver’s First Report, dated September 28, 2020 and filed with the Court on September 29, 2020, pp. 8:19 – 9:16.)
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extremely low-income 7 (as determined by HCD). (See Receiver ’s Relocation Assistance Plan, dated April 13, 2022 and filed with the Court April 14, 2022, p p. 2:26 – 3:3 & Exhibit G].) As shown in the table below, the rent my client was charging was significantly below fair market rent:

Unit
#
Unit Size Tenant’s
Income
Level
Tenant’s
Household
Size
2022 FMR
in Orange
County
Comparable
Rent in
Proximity
Rent
Charged By
My Client
101 2 bd./1 ba. Very Low 5-person $2,324 $2,800 $1,650
102 1 bd./1 ba. Ext. Low 4-person $1,905 $2,200 $1,400
103 2 bd./1.5 ba. Very Low 4-person N/A $2,900 $1,600
104 2 bd./1 ba. Very Low 4-person $2,324 $2,800 $1,725
105 1 bd./1 ba. Very Low 2-person $1,905 $2,200 $1,100
106 1 bd./1 ba. Very Low 2-person $1,905 $2,200 $1,450
107 2 bd./1.5 ba. Unknown 2-person N/A $2,900 $2,300
201 2 bd./1 ba. Very Low 2-person $2,324 $2,800 $1,600
202 3 bd./1 ba. Very Low 5-person $3,227 $3,200 $2,200
204 2 bd./1 ba. Very Low 4-person $2,324 $2,800 $1,800
205 2 bd./1.5 ba. Low 2-person N/A $2,900 $1,600
206 Studio Low 1-person $1,716 $1,800 $500
207 Studio Unknown 2-person $1,716 $1,800 $1,150
208 2 bd./1 ba. Very Low 3-person $2,324 $2,800 $1,700
A Studio Very Low 1-person $1,716 $1,800 $700
Eight of the displaced households had school-aged children. Thr ee had children with special needs. The Property’s seventeen units have been vacant ever since.

Destruction of Housing Through Neglect
Under the Receiver’s stewardship (which began with full physical possession on November 17, 2021), the condition of the Property has deteriorated rapidly and continues to worsen. Over the past year and a half, the vacant buildings have become magnets for trespassing, squatting, vandalism, looting, and arson. See before and after photographs below. 7 Two of the seventeen units were vacant, and two of the fifteen households declined to provide information about their income.

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BEFORE: Property Prior to January 25, 2022
NOTE: These photographs were taken by the R eceiver shortly after he t ook over physical possession of the Property from my client and at least four mon ths before the Receiver forced my client’s tenants to vacate their units.

AFTER: Property on November 1, 2023
NOTE: These photographs were taken by my client’s manager/owner approximately two years after the Receiver took full physical possession of the Propert y and approximately 1.5 years after the Receiver forced my client’s tenants to vacate their units.

The City agrees. On or about October 16, 2023, the City’s legal counsel sent the Receiver a letter expressing concern about the “numerous calls for service ” to the Property “[s]ince July 2022” ranging in type from “trespassing to transient activity.” Efforts to Negotiate a Resolution to this Matter
After receiving a copy of the City’s October 16, 2023 letter about the deteriorated condition of the Property and high volume of calls for service under the R eceiver’s care, my client and I renewed our efforts to negotiate a sensible, “win-win” resolution of the Receivership Action that would allow the existing structures on the Property to be rehabilitated quickly and cost-effectively.

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On November 9, 2023, the City ’s legal counsel told us they would not discuss my client ’s rehabilitation plans until he provided proof of $2 million in f inancing to complete the work.8 My client provided the proof of funds the next day. Since that time, we have made numerous requests to discuss these proposals with the City ’s legal counsel, professional planning staff, and the Receiver, but have not made any meaningful progress towards res olution. Despite numerous requests, we have no date on calendar for a call or meeting to discuss resolution of this matter.

Meanwhile, the Receiver has maintained his request for Court-approval to demolish all of the existing housing on the Property which is still pending review by the Court. The City’s legal counsel told us the City does not object to the Receiver’s request. To our knowledge, the City has not changed its position that, post-demolition, the Property ca nnot have more than six (6) units when it is redeveloped, which, as discussed in the next section , is significantly lower than the density permitted by the City ’s General Plan land use designation. As a practical reality, redevelopment of the Property with only six (6) units will virtually guarantee that none of the units will be offered for sale or rental at affordable levels.

Maximum Residential Density for the Property
The Property’s General Plan land use designation is “High Density Residential, ” which currently allows residential development at up to twenty (20) d welling units per acre. ( Land Use Element, pp. LU-25 [Land Use Map] & LU-27 [Land Use Density & Intensity Summary].) Under this land use designation, the 0.42 acre Property could accommodate up to nine (9) base dwelling units.9 With a fifty percent (50%) density bonus, the Property could ac commodate up to fourteen (14) total units (i.e., nine [9] base units and five [5] density bonus units). (Gov. Code § 65915(f)(1)- (2).) With accessory dwelling units (ADUs), the Property could accommodate up to twelve (12) total units (i.e., nine [9] primary dwelling units and three [3 ] ADUs). (Gov. Code § 65852.2(e)(1)(C).)
8 Although it is not clear how the R eceiver arrived at this number, this was the his estimate of how much it would cost to rehabilitate the existing structures. My client obtained quotes from a reputable contractor who indicated the cost of the work for eit her rehabilitation plan would not exceed $75,000.
9 The Property is in the City’s “R2 -HD - Multiple Family Residential, High Density” zoning district (see Zoning Map), which allows development at a lower density —“ The maximum density allowed is 3,000 square feet per dwelling unit, which equals 14.52 dwelling units per gross acre.” (Costa Mesa Municipal Code [“CMMC”] § 13-20(c).) To the extent the General Plan and Zoning Code conflict, the General Plan must prevail. (Gov. Code Gov. C ode § 65589.5(j)(1); see also Gov. Code § 65915(o)(6); see generally Gov. Code § 65860.) Mayor and Honorable Members of the City
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My Client’s Proposals Would Rehabilitate and Preserve Existing Housing My client has presented the Receiver and the City with two alte rnate proposals for his Property that would rehabilitate and preserve the existing structures and retain the number of units allowed under the City’s General Plan land use designation and the State’s housing laws.

SB 330 Plan : My client ’s first proposal relies on the State ’s Density Bonus Law (Gov.

Code § 65915). It would preserve fourteen (14) of the Property’s seventeen (17) existing units. Of those fourteen (14) units, nine (9) would be base units (permit ted by the General Plan ’s “High Density Residential” land use designation), and five (5) would be density bonus units. To qualify for a fifty percent (50%) density bonus, three (3) of the fourt een (14) units would be low-income units. (Gov. Code § 65915(f)(1).) A licensed contractor indicat es the cost of implementing this plan would not exceed $30,000. My client has provided the City and Receiver with proof of financing for $2 million. My client submitted a preliminary app lication to the City ’s Planning Department on July 14, 2023. On July 21, 2023, the R eceiver sent my client ’s litigation counsel and land use consultant a letter informing them that he had “directed the City to take no action with respect to the subject unauthorized application.”
ADU Plan: My client ’s second proposal relies on the State ’s ADU Law (Gov. Code § 65852.2). It would preserve twelve (12) of the Property’s seventeen (17) units. Of the twelve (12) units, nine (9) would be primary dwelling units and three (3) w ould be ADUs. (Gov. Code § 65852.2(e)(1)(C).) A licensed contractor indicates the cost of implementing this plan would not exceed $75,000. Again, my client has provided the City and Receiver with proof of financing for $2 million.

The Receiver has consistently declined to consider (or even discuss) either proposal, nor any other plan that would preserve and retain affordable housin g. He has directed the City to disregard my client’s submittals and to decline my client’s requests for calls or meetings to explore these options.

Demolition of the Housing Violates Numerous State Housing Laws As noted above, the forced demolition of my client’s dwelling units is not consistent with the letter nor intent of the Housing Crisis Act of 2019 (Gov. Code § 66300.6), the Housing Element Law (Gov. Code § 65583.2(g)(3)), the Housing Accountability Act (SB 330) (Gov. Code § 65589.5), the State ’s Receivership Law (Health & Saf. Code § 17980(c)), the vested rights doctrine, and Policy 3D of the City ’s recently-adopted 6 th Cycle 2021-2029 Housing Element Update.

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x The Housing Crisis Act of 201910 requires agencies to preserve their existing housing stock or, if preservation is not possible, to ensure re placement of demolished units. Specifically, it states “an affected city [which includes Costa Mesa] … shall not approve a housing development project that will requi re the demolition of one or more residential dwelling units unless the project will create at least as many residential dwelling units as will be demolish ed.” (Gov. Code § 66300.6(a).) Where, as here, proposal includes demolition of “protected units,”11 the City must make the heightened findings set forth in Government Code Section 66300.6(b). The City has not (and cannot) made these findings h ere, and the Receiver’s demolition proposal does not call for replacement of any of t he demolished units.
x The State’s Housing Element Law requires replacement of units that are or were occupied by low- or very low income tenants (as is the case here). Specifically, it states “sites that currently have residential uses, or within the past five years have had residential uses that have been vacated or demolished, that a r e o r w e r e … occupied by low- or very low income households, shall be subject to a policy requiring the replacement of all those units affordable to the same or lower income level as a condition of any development on the site.” (Gov. Code § 65583.2(g)(3).) Again, the Receiver has documented that at least thirteen (13) of my client’s units were occupied by low-, very low-, and extremely low-income hous eholds with in the past five years, but his demolition plan does not call for the replacement of any units.
x Even if the housing on the Property were “substandard” (which my client disputes), the State’s Receivership Law requires that “[t]he owner shall have the choice of repairing or demolishing. ” (Health & Saf. Code § 17980(c)(1).) If the property owner declines to choose or cannot or will not bring the property into compliance, the Receivership Law requires the enforcement agency (in this c ase, the City) to “give preference to the repair of the building whenever it is ec onomically feasible to do so without having to repair more than 75 percent of the d welling, as determined by the enforcement agency, and shall give full consi deration to the 10 This Act was recently amended through the enactment of AB 1218 (effective January 1, 2024), but substantially similar requirements were previously codified in Section 66300(d) of the California Government Code.
11 The Housing Crisis Act of 2019 defines “protected units” to include “[r] esidential dwelling units that are or were rented by lower or very low income house holds within the past five years ” (Gov. Code § 66300.5(h)(3).) As discussed above, my clients’ fo rmer tenants were almos t exclusively low-, very low-, and extremely low-income households.

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needs for housing as expressed in the local jurisdiction’s housing element.” (Health & Saf. Code § 17980(c)(2).) Here, the Receiver rejected my clie nt’s election to repair the housing and have not complied with the State mandate t o “give preference” to repair (over demolition).
x The Receiver’s demolition plans are inconsistent with Program 3D of the City ’s 6th Cycle 2021-2029 Housing Element Update . (See Housing Element Update, Chapter 4, Program 3D, pp. 4-16 – 4-17.) My client’s Property is part of the City’s Mesa West Residential Ownership Overlay, which generally calls for development of “new owner-occupied condominium and clustered homes. ” (Overlay, Strategy D1, p. 1.) However, to prevent “displacement of long‐term tenants and to preserve the existing housing stock on the west side, ” Program 3D of the City ’s Housing Element Update calls for removal of the Mesa West Residential Ownership Overlay in its entirety. (See Housing Element Update, Chapter 4, Program 3D, p. 4-16.) The Receiver’s plan is not consistent with Program 3D. He has already displaced long- term tenants, and his plans to demolish the existing housing will do the opposite of “preserve the existing housing stock on the west side.” x As noted above, the City ’s public records confirm the prior owners obtained City permits for the additional units, but the City now disputes tha t the permits it previously issued remain valid. The City ’s disavowal of its previously issued permits violates the vested rights doctrine . Once a land use entitlement is approved and the rights granted by the entitlement are exercise d (as was the case here), they become “vested” and a municipality ’s power to revoke or extinguish them is limited. ( Bauer v. City of San Diego (1999) 75 Cal.App.4th 1281, 1294- 1297 [“City could not properly deem Bauer ’s grandfathered rights automatically terminated without providing Bauer with an opportunity to be he ard”].) At a minimum, due process requires notice and a hearing to revoke, e xtinguish, and/or void the rights the City granted through issuance of permits. ( Goat Hill Tavern v.

City of Costa Mesa (1992) 6 Cal.App.4th 1519, 1526 [when a property owner ’s right is “legitimately acquired or is otherwise vested, ” City cannot extinguish that right through “administrative extinction”].) That did not occur here. x Contrary to the intent of the Housing Accountability Act (SB 330), the demolition of my client ’s housing does not give “adequate attention to the economic, environmental, and social costs of decisions that result in … reduction in density of housing projects. ” (Gov. Code § 65589.5(a)(1)(D).) Moreover, contrary to SB 330’s streamlined review requirements (e.g., Gov. Code § 65589.5(j)(2)(A)(i)), the City (at the direction of the Receiver) have refused to process the housing development application my client submitted pursuant to SB 330. My client’s SB 330 application should have been “deemed complete” by operation of law when it Mayor and Honorable Members of the City
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was submitted on July 14, 2023. (Gov. Code § 65589.5(j)(5).) Be cause the City does not have a certified Housing Element, the City should not be able to deny my client’s application for a housing development project (to rehabilitate and preserve the existing housing) on the basis that it is purportedly inconsistent with the City’s “zoning ordinance or general plan land use designation. ” (Gov. Code § 65589.5(d)(2)(A).)
Need for HCD Technical Assistance
In the midst of a Statewide housing crisis, it is senseless and egregiously wasteful for housing that could quickly, easily, and cost effectively be rehabilitated to sit vacant for over a year and half and ultimately be demolished. At great personal expens e, my client has vigorously opposed the City’s and Receiver’s efforts to forcibly redevelop his Property and has presented two proposals that would preserve desperately needed housing throug h rehabilitation of the existing structures. One of the proposals would result in three, deed re stricted units that are affordable to low-income households.

We hope the City Council will agree and direct its legal counsel to work with us on a “win- win” solution that will bring this litigation to an end and further the City’s housing goals. We would welcome the opportunity to discuss this matter further an d provide any information or documentation you need.

Respectfully submitted,

RUTAN & TUCKER, LLP
Alisha Patterson
AP
cc: Kim Barlow, City Attorney
Krista MacNevin Jee, Esq.

Amanda Pope, Esq.

Costa Mesa City CouncilMarch 5, 2024

Costa Mesa City Council
March 5, 2024