Richard Norris, attorney for Palisades Bowl mobile home park owner
Eddie Biggs, told residents on August 5 that his client would like to
sell the park to them. But Norris also warned the 75 residents
assembled at the Woman's Club that if they do not make a legitimate
offer, his client plans to declare bankruptcy because extended
litigation involving several lawsuits with residents and with the City
of Los Angeles is costing him more than he earns from leases.
The 176-unit park, of which 156 spaces are leased, is located on 20
acres north of Temescal Canyon Road along PCH, and adjacent to Tahitian
Terrace, a mobile park faced with similar issues ('Park Owner Seeks
Condo Conversion,' July 30).
Shortly after Biggs bought Palisades Bowl for $15 million in 2005, he
announced plans to sell the individual lots to residents through a
mobile home park conversion. He instantly met resistance from
homeowners, who claimed that a conversion was simply a way to
circumvent rent control, because once one unit is sold, local rent
control is replaced by state rent control. Those who qualify as
low-income do not see an increase, but residents making more than
$38,000 annually can see their rent jump to market value within four
years.
The City of Los Angeles refused to process Biggs' application for the
conversion, even after Biggs appealed the City's decision in the courts
and won.
'There seems to be a bias in favor of the tenants,' Norris told the
Palisadian-Post last Friday. 'The city has indicated that they will
appeal the latest decision.'
Biggs also asked for rent increases, but the City's rent-control board
overturned the modest rate increases initially granted by staff. 'There
haven't been increases in the park since before we bought it,' Norris
said. 'We think the city has acted improperly.'
On Monday this week, Biggs' lawyers were once again in court with 115
Bowl tenants who have sued the owner for his alleged failure to
maintain the property. According to Norris, nothing was accomplished,
and if the case is not settled it will go to trial.
'The cost of these battles has put Biggs in an untenable situation,'
Norris said. 'My client is spending more than a $100,000 a month in
legal fees.'
Additionally, the landslide on the hillside below Asilomar Avenue,
which is owned by the Bowl, Tahitian Terrace and the City, needs to be
remediated, at a projected cost of $40 million.
Norris pointed out that none of the lawsuits nor the hillside situation
has an endpoint that his client can identify, and he thinks that the
court battles could continue indefinitely.
An additional problem arose recently when Biggs and his wife Charlotte
divorced and the judge gave them joint ownership of Palisades Bowl.
'They don't want to work together and both want to sell,' Norris said.
Speaking on behalf of Biggs, Norris said that resident ownership would
be an acceptable solution for his client. 'It is a great offer for
ownership by the tenants,' he said. 'We think the city would be an
advocate to the tenants.'
One of the conditions of allowing the residents to purchase the property is that they drop all lawsuits against Biggs.
Residents at the Woman's Club meeting worried about a rumored
$40-million offer to buy the park that Biggs received from an
international hotel developer. According to Norris, that person would
have to assume the lawsuits, have the property rezoned, deal with
hillside remediation, comply with the Coastal Commission and observe
the Mello Act (a 1981 law that requires the preservation of affordable
housing within the highly regulated coastal zone. Comparable new
housing would need to be created for any eliminated).
Norris said that if the tenants don't buy, Biggs best option is to
declare bankruptcy, in which he would seek to cease operation of the
mobile home park, in which case residents would have to move.
In bankruptcy court, the property would be sold, with that money used
to pay off the mortgage and claims. Eddie and Charlotte Biggs would
split the remainder of any proceeds and all lawsuits against them would
automatically end.
Norris cited a precedent for a park owner declaring bankruptcy. After
Robert Kubota, owner of the Jade Bay Mobile Lodge Park in Chula Vista,
declared bankruptcy, the park closed in 2007 and the land was vacated.
This past July, Chula Vista's city record reflects that the area has
been rezoned for residential apartments.
According to Norris, bankruptcy isn't the optimal solution for Biggs.
His client doesn't want a bankrupt business on his record and also
fears that he could face a long battle in bankruptcy court.
Norris said that Biggs expects an offer from tenants this month. 'If it
is a reasonable number, my guess is he'll take it,' Norris said. 'The
alternative includes risks and time.'
Palisades Bowl tenants and their board are not releasing a statement
about their intentions, but a survey has been sent to households for
feedback.
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