A recent ruling by a court indicating South Pasadena homes in the path of the abandoned 710 Freeway expansion project must be sold at their 1968 prices is not as far-reaching as some had hoped, according to at least one local official.
In a ruling handed down March 11, Superior Court Judge Mitchell Beckloff agreed with three tenants who sued Caltrans, saying the homes should be offered to them at the original acquisition price.
“The Caltrans policy of adjusting the original acquisition price adjusted for inflation to determine the affordable sales price for the petitioners’ homes is an underground regulation and is therefore nullified,” Beckloff wrote.
The judge rejected the state’s argument that it would lose millions if the homes were sold for less than market value.
Of the 460 properties that became available when the freeway project was scrapped, about 120 were occupied by tenants who may qualify for the affordable price, according to published reports.
The legal victory will allow the residents to buy the homes for significantly less than their current market value. If and when they decide to sell, the equity would revert back to the state’s Housing Finance Agency. Caltrans has until May 17 to appeal the ruling.
However, So Pas City Councilmember Diane Mahmud, a practicing attorney herself, has a different read on the issue and it’s not as favorable as first reported, she said.
“The successful tenants won their suit challenging Caltrans’ inflation-adjusted price of the homes because the state regulations that govern the purchase of these homes by low-income tenants did not provide for this,” Mahmud said in an email to The Review. “Under applicable law the homes cannot be sold in excess of the low-income tenant’s ability to pay, which is prescribed by another set of regulations. I am happy for these tenants who are long-standing residents of our community. I understand this win will enable them to remain in their homes for the rest of their lives. When these properties are eventually sold the state will reap the substantial difference in value between the price paid by the tenants and the subsequent market value. The vast majority of the properties owned by Caltrans in South Pasadena remain to be sold and the city is anxious for Caltrans to move forward with the sale of such property as quickly as possible.”
In other words, Caltrans may say the ruling is only applicable to the three tenants who sued and not to others.
Caltrans has for decades owned hundreds of homes along a six-mile path that was to be a surface extension of the 710 Freeway. Lawsuits and political opposition delayed the extension, and the plan shifted in later years to a tunnel proposal that is also considered dead since the Metro Board of Directors withdrew its support and the project officially died just recently.
Meanwhile, So Pas City Councilmember Dr. Richard Schneider said the news was good and he hoped it would prod Caltrans to move forward.
“Good,” Schneider said in an email to The Review. “Maybe this will light a fire under Caltrans and get them moving to sell the properties.”