SUNDAY, OCTOBER 25, 2009
Advertorial-Paid Advertisement The following is a continuation account as told by the Board of Governors of the Scottsdale Townhouses Association.
History of Scottsdale Before discussing the remainder of Maddaus’ articles, particularly when it comes to City of Carson’s ofﬁcials’ questionable involvement, the infamous “show down” at the last election last March, and the Boys & Girls short lived occupancy, etc., let’s take a brief trip down memory lane regarding the legendary Scottsdale Townhouses Association. This will help explain how the current dynamics evolved and has impacted the Association’s ﬁnancial instability. During the 1960s condominiums became a widely accepted form of ownership. California law-enacted provisions for condominiums were passed on May 18, 1963. All of these developments utilized restrictive covenants to structure the land use and provide for the assessments to maintain community association facilities.
“...and several homeowners using their homes as 15 to 20 persons occupancy hotels. Where is the sanity in all of this? There isn’t any!”
Scottsdale Townhouses Association was one of the very ﬁrst communities built in California under this new law. At that time, there was not much experience in writing governing documents for these communities. The area that is presently the Scottsdale community in the City of Carson was originally part of a large ranch of about 76,000 acres that was given to Juan Jose Dominguez in 1784 when settlement of the Los Angeles basin began. The Scottsdale community was built on Los Angeles County land. In 1967 homeowners, civic groups, and business groups within the area now known as Carson petitioned the County Board of Supervisors to incorporate the area.
“Many of the individuals named on the Balque’s infamous witness list had strong political ties to City of Carson ofﬁcials, and city employees.”
A well-known developer, Ray Watt, through his associated company, Grand Land Company, built Scottsdale. Scottsdale was designed to be a family oriented community, with a variety of recreational facilities for both children and adults. Another unique feature was that Scottsdale was built with private ﬁnancing rather than federal ﬁnancing. Government backed VA and FHA loans were often lower than commercial bank loans, but also required conformance to a variety of constructions and administrative provision that complicated the life of a builder-developer.
Scottsdale’s layout consists of 600 townhouse dwellings, each with an enclosed two-car garage, designated as “units.” The grounds include a large recreation building, large football and baseball ﬁelds, basketball and tennis courts, swimming pool area, and north and south end kiddie parks. Outside of the pool and tennis courts, most of these amenities have been restored under the leadership of Balque and the current Board. Currently, faction members are soliciting votes by stating that because of Balque, the community does not have an operational pool. The truth is the pool hasn’t been operational in approximately 18 years; which includes 8 years before Balque arrived on the scene. Additionally, after the Board solicited information for pool reconstruction, liability insurance and lifeguard expenses, crowd control stafﬁng, it was decided that the Association could not afford the expense or the risk. If the Association has no reserves, folks complaining about general increases, the existence of a long history of loitering by gang members, and several homeowners using their homes as 15 to 20 persons occupancy hotels, where are the resources going to come from to accomplish this goal? Where is the sanity in all of this? There isn’t any! At its inception, these units were popular and sold well, although the project did not sell out. Original owners recall that life was beautiful in the early days of the Scottsdale community. There were activities for everyone and morale was high. However, from the beginning there were small problems that needed only time to become larger problems. Problems included, but not limited to, ﬁnancing that was available from only one bank; plumbing was shared among six units; housing density was high and still is; parking spaces were limited and still are; and the governing documents give most important powers to a majority of owners and comparatively minimal power to the Board elected to govern (compared to modern documents). “One of their efforts included launching a
campaign by distributing a copy of Gloria Balque’s deed where she was listed as a widow; and to minimize the legitimacy of Balque’s owner interest in her mother’s property. This event began 8 months after In or around 1968, a very uncomfortable period was beginning wherein large numbers of units were owned as a group or sold back John A. Balque’s death, husband of Gloand forth as an investment. One year later 171 units were sold by Boise Cascade to a small group of professional men known as Faith Assembly Church of Fullerton. Many of the units were rented, which was not helpful in controlling the condition of the prop- ria and the Board President’s father. “
In the 1960s, problems began for the Scottsdale community. Within a few years some owners wanted to sell and move. They found that it was not easy to sell, because their second trust deed had to be paid off before they could sell. Since there were still units available from the builder under the attractive original ﬁnancing, the owner had little chance to complete a deal. Many owners entered into default status and Metropolitan, whose holdings were eventually sold to Boise Cascade, acquired their units through foreclosure. This occurrence opened the ﬂoodgates to rental investment ventures. erty. In the end, many owners walked away from their units because they had no way to cash out their equity. The early 1970s was a period of continuing strife in the Scottsdale community. Other lenders would not ﬁnance the sale of Scottsdale units so the community was effectively blacklisted. Coalitions of owners formed together in a group which they called SHOUT to seek legal help to protect their interests and attempt to get ﬁnancing. Attempts were made to obtain approval for VA and/or FHA ﬁnancing. Faith Assembly Church was failing to meet its second Trust Deed mortgage payments to Boise Cascade. A lawsuit ensued which resulted in a settlement returning to Boise Cascade all but 30 of the units that had been transferred; State Mutual Savings acquired the remaining 30 units by foreclosure. At this time units that sold for $16,995 in 1964 were selling for $18,450, an appreciation of less than 1 percent a year since the beginning. In 1975 the Scottsdale Association was incorporated as a non-proﬁt corporation. Throughout this period there was a continuing struggle between the individual owners and the block owners for representation on the Board. After incorporation, the large block owners gradually sold off their holdings and resident owners occupied more than half of the units. The community developed a distinct multiethnic blend, which included predominantly African-Americans, Koreans, Hispanics, and Whites as well as a small percentage of other ethnicities. The buildings were painted in 1977-78, although it was necessary to borrow the funds from a bank to complete the work; which meant there were no reserves available.
“Balque received several physical threats over the years; a well-known drug dealer was quoted saying “I’m going to beat that girl down.”
The real estate boom in California ﬁnally had an impact on Scottsdale; property values more than doubled between 1977 and 1980. Unfortunately, the inﬂationary forces pushed the costs of services up rapidly also and the antiquated provisions of the Scottsdale governing documents for dealing with such a problem led to deteriorating facilities, reduced maintenance services, causing a signiﬁcant lack of reserves, and steadily increasing delinquency of payment of association fees. The growing pressure on the budget led the association to a nearly insolvent position relative to current operational expenses with no money in capital reserve.
The 1979-1980 Board of Governors proposed an increase of monthly fees from $50 to $75, which was ﬁnally approved by 305 owners. However, controversy over that vote persisted for an additional year. The 1975-1980 periods ended with delinquent homeowner association fees increasing from about $65,000 in December 1979 to $132,000 in December 1980. At that time, the Chairman of the Board was recalled, by the owners for being $1500 delinquent himself and failing to control the delinquency problem. Not much has changed with the faction’s agenda, which the Board believes is “don’t pay at all program” and “if you are delinquent, we need you on the Board to prevent any future increases!” As such, this action politically divided the community and led to a series of court actions when the then Chairman refused to step down. To prevent homeowners who protests reasonable increases from holding the Association hostage, some people believe that the California Corporation Code was modiﬁed to give governing Boards the authority to increase association fees and the ability to levy special assessments as the need arises; that is, without membership vote. The 1980s saw a slow but steady increase in the ﬁnancial stability and planning of the association. Legal counsel was changed to an attorney representing 13 associations and ﬁnally to the present legal ﬁrms (Feldsott & Lee, and Swedelson & Gottlieb). Approval for VA-FHA ﬁnancing was ﬁnally obtained. During this time, the governing Boards identiﬁed and communicated to all the owners the urgent need to build reserves to replace items that were wearing out, such as roofs and main-line plumbing. Also, management of the Association had transitioned from an in-house manager to a management “On the day of the election, Kawagoe recompany. ceived a phone call from Stanley Feldsott, In November of 1993 a document was mailed to all homeowners announcing a new Board in ofﬁce. There was no election held in November 1993 to seat a legal Board by the membership. In 1995, the then attorney documented a legal election was held. counsel. Feldsott informed Kawagoe that Under the tutelage of the Association attorney, maintenance repairs and delinquent collections improved minimally. However, the election she was supporting and parreserves were still drastically inadequate.
of Feldsott & Lee Law, Scottsdale’s legal
ticipating in was in fact ‘illegal’.”
In 1993 the Board of Governors hired a contractor by the name of MSI to repair the roofs, and the water and ﬁre damage to the interior of some of the units. MSI worked for a few months but the Board terminated their services because they alleged that MSI did not show proof of their certiﬁcate of license. MSI sued the Association for breach of contract and won a judgment in the amount of $130,000. MSI alleged in its brieﬁng that the Board president demanded money from its owner and when he refused, his contract was terminated. During the lawsuit, liens were placed on many of the homes. One of the ﬁre-damaged homes where the repairs were never completed, the homeowner suffered major inconveniences for years such as lack of electricity, carpet and roof damage, and loose electrical wires within the home; lengthy extension cords were used throughout the home in efforts to ﬁnd an outlet that was operational. In a written afﬁdavit, the homeowner stated the insurance company paid the association for MSI’s work on her home, which was never completed. The pandemonium heightened as several members of this Board remained in ofﬁce for over 25 years; Balque’s lawsuit was responsible for removing the Board members directly related to this travesty. In 1996 through 1998, the affairs of Scottsdale grew worse. Delinquent assessments exceeded $600,000; accounts payable balance amounted to well over $540,000, deferred maintenance, illegal structural conversions, and overcrowded homes, infestation of rodents, inadequate security to deal with escalating crime activity such as drug sales, gang violence, drug use and prostitution, sexual assault, lawsuits ﬁled and judgments imposed on the Association, water and refuse services on the verge of being discontinued due to non payment. Homeowner lethargy was evident by the lack of participation in town hall meetings and annual elections. For years, numerous homeowners and a few concerned Board members “No court document of any sort was such as the late Geraldine Pope made countless attempts to bring permanent change to the Scottsdale community, but to no avail. In 1997 Balque, a resident of Carson for over 30 years and former City of Carson employee returned home after the death of her father John A. Balque, to live with her mother. In an effort to help the Association out of dire straits, Balque, a professional auditor, certiﬁed ﬁnancial manager, who holds an undergraduate degree in Accounting, a degree in Theology, graduated second in her class acquiring her Master’s Degree in Public Administration from California State University Dominquez Hills, a member of the Who’s Who Among Students in American Universities and Colleges, and a recipient of an outstanding community service award presented by the late Juanita Millender-McDonald, accepted an appointment by the Scottsdale Board of Governors and held the ofﬁce of Treasurer. Shortly after the appointment, Balque began her investigation into the business practices of the seated Board. Balque had received leads regarding alleged improprieties as to the handling of the Association’s business affairs. Based on the esthetics of the complex, she knew something was drastically wrong. She heard of countless stories regarding the mistreatment of homeowners where their requests were ignored because the seated Board did not like them. Many homeowners said they were afraid of the seated Board. Upon her discovery of the alleged misconduct, as mentioned above, Balque sought the assistance of the attorney of record, Robert Parsons, in questioning the actions taken by some of the members of the Board. No justiﬁcation for the alleged wrongdoings was provided nor was any resolution forthcoming to discontinue these actions. Although Balque held the ofﬁce of Treasurer, she said she was restricted by the Board in performing her duties and denied access to the ﬁnancial records. The situation resulted in heated discussions on numerous occasions. After exhausting all efforts for recourse as provided by the by-laws, Balque, as treasurer, ﬁled a derivative lawsuit and sued six “The ofﬁcer further stated that ‘if it’s Board members on behalf of the Association for breach of ﬁduciary duty and conversion. Balque solely and personally funded the lawsuit by liquidating all assets, securing personal loans, and incurring substantial credit card debt. She sacriﬁced her money and the City’s business, it’s our business.’ time in hopes of removing those members whose primary purpose was to hold the Association hostage and continue their reign In fact, one Sheriff Deputy commandof chaos, corruption, and deceit. Subsequently, Balque was illegally removed from the Board and Robert Parsons was ﬁred as the ed that the Board members comply Association’s attorney. With the assistance of Andrew Rosenfeld, Balque’s attorney, the lawsuit was settled after Rosenfeld furnished the infamous witness list that Balque had compiled for the court prior to the trial date. As noted earlier in this rebuttal, the and threatened to haul the Associasix defendants immediately agreed to relinquish their seats – within hours they stepped down from ofﬁce without comment. The tion’s staff off to jail.” faction and city ofﬁcials such as the City Treasurer, Karen Avilla, have wrongfully characterized Balque as a criminal. Avilla, in her capacity as City Treasurer opened an investigation against Balque. On several occasions Avilla entered into the Association common area without permission to inquire as to what Balque and the Board were doing. During one of Avilla’s ﬁeld visits, she interrogated one of the security guards on post in front of the Association’s ofﬁce. She allegedly requested that he discreetly provide her with ﬁnancial records so that she could continue her investigation against Balque. Avilla was reported stating, “$240 is too much money for homeowners to pay in the Scottsdale community.” What audacity Avilla has in making such an uninformed statement, considering she knows nothing factual about the Association’s ﬁnancial condition? In an area where loiterers and illegal vendors freely urinate in the common area, the underground and mainline pipes have rusted, in some areas, to the point where holes have developed, and the wood that supports the roofs are so damaged due to termites that the contractors have often fallen through because of the weak structure. These are many
PAID FOR BY SCOTTSDALE ASSOCIATION 23400 South Avalon Bl, Carson, CA 90745 2 of 5
ever furnished. The faction’s intentions were to take over the Association illegally.”