Faced with a deadline to settle litigation, the city of Carson is considering whether it can facilitate the sale of two mobile home parks to a nonprofit group.
City officials, having lost a years-long legal battle to protect rent control, have been in negotiations with park owner James Goldstein for several months.
Under a settlement agreement, the city could be on the hook for millions of dollars in damages while residents of Colony Cove Mobile Estates and Carson Harbor Village could see their rents increased dramatically.
But Carson is now exploring an alternative that could keep rent protections in place. Under the scenario, a nonprofit group would buy the parks using bonds backed by the city.
The nonprofit, rumored to be Millennium Housing, would manage the park, while the bonds would be paid off over time with revenue from rent payments. Rents could go up, but not nearly as much as under Goldstein's control.
"Everybody I talk to is coming out of their shoes, they're so excited," said Bill Smalley, a Colony Cove resident. "This is the first sign of anything happening that the residents feel is in their favor."
The proposal is still in a conceptual stage, and negotiators would have less than a month to make it happen. The major unresolved question is whether the participants could agree on a sale price.
"If the city or a nonprofit were to propose a purchase of one or both parks at a fair price, Mr. Goldstein has indicated he would be interested in that," said Goldstein's attorney, Richard Close. "All parties are open to discussing all possible resolutions."
For the past three years, Goldstein has sought to convert Colony Cove and Carson Harbor Village to resident-ownership by subdividing it and selling off the spaces.
Goldstein would profit from the conversions by eliminating city rent control and from the proceeds from sales of the individual lots.
Backed by vehement resident opposition, the city has fought back by passing a moratorium against such conversions, and an ordinance that bars conversions in the absence of resident support.
Carson also voted to reject the conversion of Carson Harbor Village, even after Goldstein offered a $10 million incentive package to residents to entice them to support the plan.
Goldstein sued to overturn all three decisions, and has won on every count. He is now seeking as much as $150 million in damages to compensate him for the delay.
Goldstein recently invited several Carson officials to his lavish Beverly Hills home for a face-to-face conference. For several of the officials, it was the first time they had met the elusive multimillionaire after years of battling him in court.
"I found him - maybe a bit to my surprise - to be a pretty mellow guy," said City Manager Jerry Groomes. "I don't know whether that was a function of whether victory brings on calmness. But he seemed to be more reasonable and sensitive than I expected - by no means the big bad wolf."
The negotiators face an Oct. 26 deadline, by which time the city must either allow the Colony Cove conversion to go forward or reject it - which would draw yet another lawsuit that the city would be unlikely to win.
The City Council has expressed its desire to avoid that outcome.
"It's fair to say we are prepared to leave no stone unturned in looking at all settlement options," City Attorney Bill Wynder said.
The nonprofit model has been tried successfully in other California cities, such as Montclair, which facilitated the purchase of three parks with city-backed bonds.
"It works for (the residents) because the nonprofit owner doesn't have a profit motive," said Marilyn Staats, the city's redevelopment director.
If Carson is unable to negotiate a sale of the parks, it would likely have to pay a damage award to Goldstein and possibly also provide a subsidy to park residents to help them buy their spaces.
The city is expected to hold a hearing on the Colony Cove conversion Oct. 6, but a settlement decision is more likely to come at the following meeting, on Oct. 20.
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