Would-Be Townhouse Builder Sues Culver City Over Demand for Fee

A small band of residents and the owner of a defunct Culver City sports club have stepped up protests to the City Council for requiring that the owner give the city $280,000 for recreational facilities in order to build townhouses on the club site.

The owner reactivated a suit against the city, charging that the fee is excessive and amounts to a taking of his property without just compensation. He also argues that the city has not made proper findings that the townhouse development creates a need for recreational facilities, as required by a new 1989 state law.

Mitch Chupack, a representative for owner Richard K. Ehrlich, said the litigation will cost nearly as much as what he called the “bogus” $280,000 fee, but he thinks he will win. “Any reasonable person would say there’s something wrong in making (us) pay $280,000.”

City officials, however, have maintained that the fee is necessary because the development means a substantial loss of recreational facilities to the community. Both the council’s decision-making process and the decision itself were legal and justified, City Atty. Joseph Pannone said.

Ehrlich proposed the 30-townhouse development when he closed the Westside Sports Club in August, 1988, after what he said was nearly 15 years of barely breaking even. The site, at 4901 Overland Ave., was designated for use as a sports club.

The City Council in April rejected the townhouse plan because of concerns over the loss of the facilities, which included tennis courts and a swimming pool. The council determined that the city could not afford to buy the club because a study concluded it could not compete in today’s market without major renovations.

Ehrlich sued in July, saying the city was locking him into an unprofitable use of the land. He and Councilman Steven Gourley discussed possible settlements, such as the developer’s building four tennis courts on city land.

In August, the Council reconsidered and approved the townhouses with the $280,000 condition. The $280,000 is the approximate cost of building four tennis courts at $70,000 each, a figure that the city derived in consultation with Los Angeles city and county recreation officials. The council said the money was preferable to the developer’s building four courts, because the council could then choose to build courts, a pool or whatever is most needed.

An amended lawsuit, filed Nov. 3 in Los Angeles Superior Court, asks for at least $1 million in damages, which the owner estimates are his incurred costs and lost earnings potential from at least August, 1988, when “we were unable to do anything,” said Ehrlich’s attorney, Fred Gaines.

Gaines said the City Council violated a state law that orders cities to show a reasonable relationship between a development’s impact and any imposed fee. The law has been raised in suits in other cities, he said.

While the suit is pending, the developer is finishing demolition of the club walls. Chupack said he expected to get the city building department’s final approval of building plans late this year. Construction will take about eight months, he said.

The $280,000 will have to be paid before the city issues certificates allowing occupancy of the townhouses, Pannone said. Ehrlich has a letter of credit from a bank guaranteeing payment should the city win the suit, said Chupack.

Also thrown into the lawsuit is a challenge to Culver City’s law that developers install public art or pay into a public arts fund. Ehrlich had earlier been willing to pay the fee--$30,000 in his case--but “if you have $280,000 (to fight), you might as well challenge this too,” Gaines said.

The city “wants us to pay for artwork, (but) there’s nothing in the record to show that the project creates the need for art, or that our project is not aesthetically pleasing,” Gaines said.

Councilman Gourley, however, said the council’s findings to justify the fees were “certainly . . . adequate.”

“We’re trying to soften the impact of the blows to the community and the park and recreation facilities,” he said.

“This is a win-win situation,” Gourley added. “The developer could give something to the community and look like a hero. (But) he said, ‘I deserve a zoning change (from a sports club to a residential use) that increases my property value 100%, and the public be damned.’ ”

Meanwhile, almost 1,000 residents have signed a petition to “end extraction without due process” said former Planning Commissioner Chuck Blum, who launched the drive. The petition asks that the council enact a law to assess fees on developers before doing so.

Blum disputed the city’s position that the townhouses mean a loss in recreational facilities. “The city never had (those) recreation (facilities) because it was private property,” he said. He said his group of about 20 residents started collecting signatures in late October and will submit the petitions to the council next month.

The petition also demands that the council rescind the $280,000 fee on Ehrlich’s project, but Blum and the developer said that they were operating independently of each other. Ehrlich’s case is merely “the first time (a fee has been levied) without the benefit of legislation” in Culver City, Blum said. “We’re trying to head it off before it becomes an inbred practice.”

But Gourley said the council’s action was part of a new trend. “The old City Council was mired in the ideology of the 1950s. This is the 1990s--anybody who is going to develop in Culver City has to pay his fair share and not expect the taxpayers to absorb all the costs.”

He said that a developer of a movie theater under construction just outside Culver City complied with Culver City’s requests for parking spaces and with the city’s sign regulations and paid $200,000 to the city to pay for additional downtown parking. The complex at Hughes Avenue and Washington Boulevard is technically in Los Angeles. “So if we can ask someone outside Culver City to do that, why can’t we ask someone in Culver City to do something like that?” Gourley said.

BACKGROUND

Owner Richard Ehrlich proposed a 30-townhouse development when he closed the Westside Sports Club in August, 1988. The Culver City Council in April rejected the plan because of concerns over the loss of the facilities, which included tennis courts and a swimming pool. Ehrlich sued in July, saying the city was locking him into an unprofitable use of the land. In August, the council reconsidered and approved the townhouses with the $280,000 condition, the approximate cost of building four tennis courts at $70,000 each, a figure the city derived in consultation with Los Angeles city and county recreation officials.