Glendale takes on Central City Lights property

Glendale has yet to get back the roughly $1 million it loaned to an affordable housing developer it’s now suing, but last week the City Council took over one of Advanced Development Investment, Inc.’s properties after some legal back-and-forth.

As a result, the council, acting in its dual role as Housing Authority, will have to decide how to use the vacant lot once slated for a 36-unit affordable housing rental property at 327-333 Salem St.

“We’re discussing the options,” said Councilman Ara Najarian in a phone interview. “It’s pretty much wide open at this point.”

The project known as Central City Lights was halted in 2010 after federal prosecutors began to investigate the developer, ADI, on fraud allegations. Glendale also sued ADI last April, alleging it bilked the city out of millions of dollars.

A court-appointed receiver has a hold on ADI’s assets.

The receiver, David Pasternak, wanted to sell the property to PATH Ventures, a Los Angeles-based homeless services and affordable housing provider last fall. PATH would have paid enough to cover Glendale’s loan and get some money for the receivership, said Mike Wachtell, the receiver’s attorney. The terms were not disclosed, and were only discussed in closed council session.

PATH planned to pick up where ADI left off, but Glendale officials preferred to control the property, and foreclosed on the parcel.

Nobody bid at the foreclosure sale on Thursday, automatically transferring the property back to the city, said City Atty. Mike Garcia. The bid started at about $1.2 million.

City leaders will likely decide how to use the property in coming months, Garcia said.

Recently, affordable housing has left a bad taste in the mouths of some council members, who have noted that options in south Glendale are less than ideal due to the relative density of the area and its limited open space. Members have said at previous City Hall meetings they would prefer to put a park at another site slated for affordable housing about 2 miles north of the Salem Street property.

Councilman Rafi Manoukian also said he’d be open to options other than affordable housing at the Salem Street site. But with changes in the city’s cash flow, that may not be possible.

Glendale used to get much of its funding for affordable housing from incrementally higher property taxes funneled through its Redevelopment Agency. A state mandate axed redevelopment in February, a move that is expected to create significant shortfalls in city finances.

“Given what’s happened with the change of redevelopment, I’m not sure of what our options are,” said Mayor Laura Friedman.

City officials expect a possible $10-million budget gap for next fiscal year caused by the loss of redevelopment, and the tight finances have city officials wiping their brows.

“We need to see if funding is going to become a reality,” Najarian said.