New owner of troubled apartment complex sues Arlington

03/23/2014 12:00 AM

03/21/2014 7:16 PM

The owners of the vacant and dilapidated La Joya apartment complex are suing the city alleging that a plan to demolish the complex violates their property rights.

A California investment group, 1707 New York Avenue LLC, which took control of the property in January, said it had a detailed plan to repair and renovate the New York Avenue complex in east Arlington.

The city shut down La Joya last year and relocated the tenants because of numerous code violations, including leaking raw sewage, roaches and faulty wiring.

The owners are seeking temporary and permanent injunctions in a Tarrant County court to prevent Arlington from demolishing the complex.

“My clients thought the city was acting in good faith and wanted them to rehab the property,” said Frank Hill, an attorney representing the property owners.

Hill added that the owners learned that the city was not interested in their plans to repair and renovate the buildings, although they had a certificate of financial capability showing that they could do the work without assistance from the city.

The costs of demolishing the complex is around $2 million in taxpayers dollars, he said.

City officials declined to comment on the lawsuit, but said a date has not been set for demolition.

In October, the Arlington City Council voted to set aside nearly $2 million in natural gas revenue to tear down the nine-building complex and relocate the tenants.

Last year, a municipal judge ruled that the complex — then owned by Theodore Hansen of Utah — was dangerous and substandard because of hazardous and unsanitary conditions. When code enforcement officers investigated a flood in one of the buildings, they found over 1,000 violations, including mold, roaches, flood damage and leaking raw sewage.

Hansen eventually was fined $82,000 by the city. He lost control of the complex in October in a sale of the mortgage by Fannie Mae to an entity owned by Ebrahim Jebreel and Michael Bastan, local and state records show. They transferred ownership to 1707 New York Ave. LLC in January.

The lawsuit alleges that the new property owners and the city have had detailed discussions about the renovations and repairs, and that they agreed that the buildings would have to be brought up to Arlington’s housing codes at their expense.

The owners paid $59,000 in utility bills, according to court documents.

“The city led plaintiff to believe that it would consider, in good faith, plaintiff’s plan for repair and rehabilitation but then abruptly stopped,” the lawsuit states. “The city failed to outline or provide a procedure that might be available to allow plaintiff to go forward, and, in fact, there is no procedure available and any attempt by plaintiff would have been futile.”

The suit alleges that Arlington wants private development of town homes and retail in the New York Avenue corridor. Hill questioned whether such development would benefit the low- to moderate-income community in the area.

The suit alleges that the city is unjustly using its “policing powers.”

But the city, along with the former and current property owners are in a drawn-out legal battle which includes two Chapter 11 bankruptcy filings and the current lawsuit.

Arlington submitted a motion in bankruptcy court outlining its reasons to demolish the property, stating that it posed a safety hazard, and that the current owners’ repair plans — estimated to cost $1.7 million — did not include provisions for asbestos removal.

The city called the plans “woefully inadequate” and said the current owners purchased the complex with full knowledge of the demolition.

Arlington’s motion states, “For months, the city of Arlington has sought to enforce a ‘dangerous building’ judgment permitting it to demolish the buildings on a property that the Arlington Municipal Court declared to be a hazard to public safety over a year ago. Demolition of these buildings is necessary to protect the public welfare and, therefore, is a valid exercise of a governmental unit’s regulatory power.”

Staff writer Sandra Baker contributed to this report.

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