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Glendale denies bid for ADI property

Nonprofit group serving the homeless offered $1 million for site on Salem Street.

October 18, 2011|By Brittany Levine, brittany.levine@latimes.com

Glendale officials have denied a homeless advocacy group’s pitch to buy property tied up in the city’s legal fight against Advanced Development & Investment Inc., an affordable housing developer under federal investigation for fraud.

John Molloy, executive director of PATH Ventures in Los Angeles, said his nonprofit offered to pay more than $1 million for the property after a court-appointed receiver in charge of the land at 327-331 W. Salem St. put it up for sale.

Although the receiver was interested, Glendale officials were not, Molloy said.

“We were just going to pick up where the other developer left off,” he said, adding that PATH planned to build the 36-unit building that had been planned for the parcel.

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Glendale has yet to be repaid the $1.06 million it lent to ADI last year to buy the land for a now-defunct project called Central City Lights, City Atty. Mike Garcia said.

To recoup the loss, the city wants the property, he said.

“We’re moving forward on getting the property back,” Garcia said, adding that he couldn’t comment on the decision to block PATH’s offer because real estate negotiations were confidential.

In April, Glendale filed a lawsuit seeking repayment from ADI, which allegedly overcharged the city millions when it built four affordable housing projects in South Glendale. One month later, a Los Angeles County Superior Court judge gave control of all ADI property — including the Salem Street land — to a receiver.

But any sale of the Salem Street property would have to be approved by Glendale since it has first mortgage priority, Garcia said.

The city has two options to pry the land from receivership: It can foreclose, or the receiver can deed the land to the city, Garcia said.

Mike Wachtell, the receiver’s attorney, said the latter wasn’t an option for the receiver, who would have to go through a costly court approval process to do so.

“We’re not going to spend receivership money on that,” Wachtell said, adding that the city could get court approval on its own.

Garcia said a deed in lieu of foreclosure is the preferable option, but noted the city is still discussing alternatives.

The city has pulled millions of dollars earmarked for the Central City Lights development and instead committed to affordable military veteran housing near Glendale Memorial Hospital.

Glendale’s lawsuit against ADI was transferred to the complex litigation program this summer, according to court records.

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