Today’s deadline for a group of Caltrans tenants, a number of whom live in South Pasadena, to respond to the State agency’s offer to purchase its surplus, residential properties at an “affordable price” was extended by one month Tuesday evening as a result of negotiations with State Senator Anthony Portantino’s office.
Since issuing letters of eligibility to tenants one month ago, Caltrans has received five letters, all written by South Pasadena residents, alleging the steps taken to determine the proposed sales price violated California state code.
“[The deadline extension] is a small victory, and will allow the Caltrans tenant groups time to consider their litigation options,” Christopher Sutton, an attorney who has represented tenants associations for decades, said Wednesday.
In a letter signed by the deputy district director for the agency’s Los Angeles branch on Jan. 31, Caltrans informed 11 South Pasadena tenants that they were eligible to purchase their properties, but for no lower than the original acquisition price adjusted for inflation. For these low- or moderate-income residents, that means an unfeasible monthly housing payment, Sutton explained.
Pursuant to state statute set by the 1979 Roberti Law, housing must be sold at an affordable price to low and moderate income families. Caltrans calculated this affordable price using a formula that assumes 25 percent of a family’s monthly income will go toward housing expenses.
However, Caltrans claimed in its letter that, under state law, the “minimum price” at which it can sell a house is the original purchase price adjusted for inflation. According to the agency’s own admission, this “minimum price” in some cases may be higher than the affordable price it determined a tenant can pay.
Sutton finds the adjustment and waiver request in violation of existing statute. Specifically, Sutton points to 54237 Sec. (b).
“We are hoping Caltrans will not do this,” Sutton said at last Wednesday’s City Council meeting, speaking about the decision to apply inflation adjustments, “because it effectively renders these properties unaffordable for everyone and essentially undercuts the entire purpose of the Roberti Law regarding these tenants, some of whom have lived in these houses for 50 years.”
Sutton went on to say that tenants have “suffered through Caltrans’ intimidation, lack of building maintenance, and health hazards,” and “have been waiting for this moment to purchase the properties they live in for a long time.”
Caltrans explained its inflation adjustment as a necessary step to “recapture its original purchasing power,” according to a FAQ document provided along with the Jan. 31 letter. The agency used the California Consumer Price Index to make the adjustment. “In all cases,” the FAQ response continues, “the [price after inflation adjustment] is well below fair market value.”
Sutton estimates the adjustments resulted in increasing the price of housing by “500 or 600 percent.”
Caltrans has estimated that its average offering price is around 20 percent of fair market value.
Sutton also questioned the agency’s inclusion of a waiver tenants must sign in purchasing the property, a waiver that would relinquish their right to sue under any circumstances regarding Caltrans’ actions during the purchasing process. “Why would Caltrans ask tenants to sign this?” Sutton asked.
The City of South Pasadena’s Chief Financial Analyst Margaret Lin said Tuesday the City had informed Caltrans of the concerns and that the agency responded by assuring the City that the proposed sales prices were well under fair market value. Lin said the City did not send a letter to Caltrans, as Sutton had requested at the Council meeting, asking the agency to restructure its offers. At the time of Lin’s comments, today’s deadline had not been extended.
“We are hopeful Caltrans will listen to reason and respect the law,” Sutton said Wednesday.
The properties up for sale are to be some of the first in a round of sales by Caltrans of some 400 houses in the Pasadena, South Pasadena and El Sereno areas.