RPVCCA_CC_SR_2014_08_19_03_North_Windport_Properties_Release_of_Liens_Requestc OF RANCHO PALOS VERDES
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
HONORABLE MAYOR & CITY COUNCIL MEMBERS
CAROLYNN PETRU, AICP, ACTING CITY MANAGE~
AUGUST 19, 2014
REQUEST FOR RELEASE OF LIENS AGAINST NORTH
WINDPORT CANYON PROPERTIES (ASSESSOR'S
PARCEL NOS. 7583-022-012 & 7583-022-013)
Project Manager: Kit Fox, AICP, Senior Administrative Analyst@
RECOMMENDATION
Adopt Resolution No. 2014-_, thereby agreeing to reduce the interest rate from six
percent (6%) to the LAIF rates since October 1, 1996, for the lien for $36,551.06 recorded
on October 24, 1996, as Instrument No. 96-1732129; and to release the lien for $6,450.19
recorded on October 24, 1996, as Instrument No. 96-1732130.
EXECUTIVE SUMMARY
In 1996, the City placed liens upon two (2) parcels in Windport Canyon to recoup the
City's costs for the abatement of public nuisances. The City acquired the southerly portion
of the canyon in 2010 through a tax-default sale. The owner of the northerly portion of
the canyon now desires to sell its property to a third party, but has asked for the lien to
be released. Since the City Council authorized placement of the liens, it must take any
action to forgive or reduce them.
BACKGROUND
The property that the City refers to as "Wind port Canyon" consists of three (3) Assessor's
parcels: APNs 7583-022-012 and 7583-022-013 are located on the north side of the
canyon, and APN 7583-039-900 1 is located on the south side of the canyon. The aerial
photo on the following page depicts the relative locations of these parcels. They
encompass 13.63 acres on the west side of Hawthorne Boulevard, located just to the
south of Hesse Park.
1 Formerly APN 7583-039-030
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page 2
In the early-to mid-1990s, the former owner of Windport Canyon made several attempts
to develop the property for single-family, multi-family and other uses. The property's
zoning is a mix of Open Space-Hazard (OH) and Residential-Single-Family, 1 Dwelling
per 5 Acres (RS-A-5). None of these proposals was ever approved by the City.
In 1996, the City obtained an abatement warrant to remove a large volume of wood chips
and other green waste that had been illegally dumped in the canyon by and/or with the
authorization of the previous property owner. Most of the material had been dumped on
the north parcel, APN 7583-022-013. The illegal dumping constituted a public nuisance,
and the Los Angeles County Fire Department advised the City that the decomposition of
the dumped green waste in the canyon posed a fire hazard to surrounding residents.
When the previous property owner failed to remove this material from the property in a
timely manner, the City was required to obtain an abatement warrant from the Los
Angeles County Superior Court, and had the material removed from the canyon at City
expense in July 1996 . The City Council subsequently placed liens totaling $43 ,001 .25 on
the two (2) parcels from which material was removed in October 1996 (APNs 7583-022-
013 and 7583-039-030). The lien on the north parcel was $36,551 .06 and the lien on the
south parcel was $6,450.19.2 Both liens accrued 6% annual interest.
2 It appears that, based upon the amount of material removed from each parcel , 85% of the total
lien was applied to APN 7583-022-013 and 15% of the total lien was applied to APN 7583-039-030.
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page 3
In about 2000, the City understands that the two (2) north parcels were donated to Friends
of Chabad Lubavitch San Diego, Inc. (Chabad SD) by the previous property owner
(Chabad SD is a registered non-profit corporation in the State of California). Since that
time, Chabad SD has maintained the property (including annual weed abatement) and
has kept the property taxes current. In 2008, the City sought to acquire the south parcel-
which had fallen into default for the non-payment of property taxes by the previous
property owner-from Los Angeles County. The City completed the acquisition of the
south parcel (now known as APN 7583-039-900) in 2010.
Recently, Chabad SD sought to sell its property in Windport Canyon. However, when a
preliminary title report was prepared in June 2014, the two (2) liens appeared as
exceptions to the title of the property (see attachments). The lien recorded as Instrument
No. 96-1732130 applies to the $6,450.19 lien against the southerly portion of the canyon
(APN 7583-039-900), which is now owned by the City of Rancho Palos Verdes. The lien
recorded as Instrument No. 96-1732129 applies to the $36,551.06 lien against the larger
of the two (2) Chabad SD parcels in the northerly portion of the canyon (APN 7583-022-
013). However, for some reason, the lien against what is now the City property shows up
on the title of the Chabad SD properties as well. Since this is presumably an error on the
part of the County Clerk/Registrar-Recorder's office, the City should not hold Chabad SD
responsible for repayment of this lien amount. However, Chabad SD would be
responsible for the repayment of the lien recorded against the north parcel, including
accrued interest. As of July 15, 2014, the estimated accrued interest since October 1,
1996, at 6% annual interest would be $66,516.08, for a grand total due of $103,067.14.
Repayment of the lien and accrued interest to the City would typically occur upon close
of escrow for the sale of the property.
Upon learning of the liens against its property and the estimated amount due, Chabad SD
contacted City Staff and made a request that the liens be released or that the accrued
interest be waived (see attached e-mail from Rabbi Yonah Fradkin, received on June 23,
2014).3 Since the City Council authorized the placement of the liens on what is now
Chabad SD's property in 1996, it is necessary for the City Council to approve any
subsequent action to release the liens and/or reduce the amount due to the City.
After being continued from the July 15, 2014, agenda, Staff had intended to present this
request to the City Council at the meeting of July 29, 2014. However, after meeting with
Staff on July 23, 2014, Rabbi Fradkin and his pro bono legal counsel, Stuart Miller,
indicated that they needed additional time to prepare before this matter was presented to
the City Council. In a follow-up e-mail on July 24, 2014, Rabbi Fradkin indicated that he
believed that they could be ready for tonight's City Council meeting. Accordingly, Staff
advised Rabbi Fradkin and Mr. Miller on July 28, 2014, that we would need any additional
information that they wished to submit by August 6, 2014, so that it could be included and
3 This matter was continued from the July 151h agenda at Rabbi Fradkin's request. In a subsequent
written request from Rabbi Fradkin's legal counsel on August 12, 2014, it now appears that Chabad SD is
only interested in the complete exoneration of both liens, including principal and accrued interest.
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page4
discussed in tonight's Staff report. On August 12, 2014, Staff received the attached letter
from Mr. Miller.
DISCUSSION
As described above, both liens related to the City's 1996 nuisance abatement in Windport
Canyon appear as exceptions to the title of the Chabad SD properties, even though only
one of these liens involves a property that Chabad SD now owns (APN 7583-022-013).
Staff presumes that the appearance of the lien against the City's property (APN 7583-
039-900) on the title of the Chabad SD properties is the result of a recordation error in
1996. There is no evidence that Chabad SD ever had any ownership interest in South
Windport Canyon property, which the City acquired via tax deed in 2010.4 As such, Staff
believes that Chabad SD should not be held liable for this lien. Furthermore, since the
City now owns the South Wind port Canyon property in fee, the repayment of this lien has
been effectively accomplished by the City's acquisition of the property. Therefore, Staff
requests the City Council's approval to release the lien in the amount of $6,450.19,
·recorded as Instrument No. 96-1732130 on October 24, 1996.
With respect to the lien against the larger of the two (2) Chabad SD parcels, Staff believes
that it is clear that Chabad SD is responsible for satisfying this obligation to the City upon
the sale of the property. The lien states that interest accrues on the original lien amount
of $36,551.06 at a rate of six percent (6%), compounded annually beginning on October
1, 1996. As described above, Staff estimates that the accrued interest due as of the date
of this report is $66,516.08, for a total obligation of $103,067.14. As reflected in the
August 12th letter from Mr. Miller, Chabad SD has asked for both the accrued interest and
the principal balance to be forgiven.
Staff has identified five (5) scenarios that the City Council may consider with respect to
the release of the lien against the Chabad SD properties. These are summarized in the
table below.
ario
1.
Principal & Interest
Forgiven
[Chabad SD's
re uest
Descri tion
Forgive both the $36,551.06 principal
and the estimated $66,516.08 in
accrued interest (6% annual rate) for
the period from October 1, 1996
throu h Jul 15, 2014
Fiscal Im act on Cit
<$103,067.14>
4 The City acquired the 5.45-acre South Windport Canyon property (now APN 7583-039-900) in
January 2010 for $149,855.58
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Pages
Scenario Description Fiscal Impact on City
Reduce the $36,551.06 principal due to
2. $33,575.00, and forgive the estimated
Principal Reduced $66,516.08 in accrued interest (6% <$69,492.14>
& Interest Forgiven annual rate) for the period from October
1, 1996 through July 15, 2014
Forgive only the estimated $66,516.08
3. in accrued interest (6% annual rate) for
Interest Forgiven the period from October 1, 1996 <$66,516.08>
through July 15, 2014
4. Reduce the interest owed to the
Interest Reduced estimated interest of $25,468.69 that
would be due based upon the LAIF <$41,047.39> [Staff rates in effect from October 1, 1996 Recommendation] throuQh July 15, 2014
Do not forgive either the $36,551.06
5. principal or the estimated $66,516.08 in
No Action accrued interest (6% annual rate) for $0.00
the period from October 1, 1996
through July 15, 2014
• Scenario 1 assumes that the entire lien debt on the Chabad SD properties would
be forgiven. Under this scenario, the City would forego estimated repayment of
$103,067.14 for the nuisance abatement and accrued interest. However, Staff
believes that foregoing the principal and interest in their entirety would constitute
a gift of public funds. Therefore, Staff does not recommend forgiving the lien
entirely.
• Scenario 2 assumes a partial reduction in the principal balance and forgiveness of
the accrued interest. The total cost of the City's nuisance abatement for the entire
Windport Canyon property was $43,001.25, broken down as depicted in the table
below:
Description 7583-022-013 7583-039-030 Total
(85%) (15%) (100%)
Removal of dumped material 33,575.00 5,925.00 39,500.00
LeQal fees 2,805.89 495.16 3,301.05
City Staff time 170.17 30.03 200.20
$36,551.06 $6,450.19 $43,001.25
If the City Council were to consider reducing the principal balance as originally
requested by Chabad SD, Staff would suggest possibly waiving the legal fees
and/or City Staff time, for a reduced principal balance of up to $33,575.00.
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page6
However, since the City's taxpayers did incur all of these costs for the abatement
of the public nuisance in Windport Canyon, Staff does not recommend reducing
the principal balance of the lien.
• Scenario 3 assumes that only the estimated $66,516.08 in accrued interest on the
lien would be forgiven. The principal of $36,551.06 would be repaid in full. Staff
understands that Chabad SD might be supportive of this scenario if the City
Council does not support any reduction in the principal due. However, Staff
believes that forging the interest in its entirety would constitute a gift of public funds.
Therefore, Staff does not recommend forgiving the interest on the lien.
• Scenario 4 assumes that the accrued interest on the lien is recalculated at the
Local Agency Investment Fund (LAIF) rates that would have been in effect from
October 1, 1996 through July 15, 2014. Staff has estimated that accrued interest
at the LAIF rates would total $25,468.69. This amount would be more reflective of
the rate of return that the City might have received from the investment of the
$36,551.06 principal amount over the same period of time. This scenario would
result in an estimated net cost to the City of $41,047.39. As discussed further
below, this is the scenario that Staff recommends.
• Scenario 5 assumes that the provisions of the lien are enforced as originally
approved by the City Council in 1996. The City would be fully reimbursed for the
principal and estimated accrued interest totaling $103,067.14 upon close of
escrow.
There are no Municipal Code provisions dealing with the adjustment of principal and/or
interest due once a lien has been assessed upon a property. Furthermore, the six-percent
(6%) interest rate requirement is codified in Section 8.24.150 of the Municipal Code.
Nevertheless, the Municipal Code does include provisions in Section 17.78.010.B
regarding the consideration of fee waivers by the City Council. These provisions-which
technically apply only to building, subdivision and zoning fees-allow the City Council to
waive fees based upon the finding that:
1 . The applicant or the beneficiary of the use or activity proposed by the applicant is
a non-profit corporation registered with the State of California; or
2. The use or activity proposed or the activities of the beneficiary of the use or activity
proposed are charitable, educational or otherwise provide a substantial benefit to
the public; or
3. The applicant has demonstrated a financial hardship, as determined by the City
Council, on a case-by-case basis.
Relative to these findings, Chabad SD is a registered non-profit corporation in the State
of California. In its request, Chabad SD also implies that the sale of its Windport Canyon
properties would benefit its charitable and educational programs.
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page7
In his letter of August 12th, Mr. Miller indicates that the statewide Chabad organization
provides $500,000 worth of services in the local community through the Chabad-
Lubavitch of Rancho Palos Verdes (Chabad RPV) center located at Hawthorne Boulevard
and Granvia Altamira (i.e., the 7-11 building). He also seems to suggest that these
services are underwritten by a $11,874,000 loan to Chabad SD from Comerica Bank that
is secured by the Windport Canyon property and other properties owned by Chabad SD.
Staff has asked for evidence of direct financial, organizational or other linkages between
Chabad SD and Chabad RPV that would support these assertions. Mr. Miller has advised
Staff that West Coast Chabad Lubavitch (www.chabad.com) oversees the allocation of
funds to Chabad centers throughout the state (including the centers in San Diego and
Rancho Palos Verdes), but has provided no evidence of a direct connection from the
Chabad SD to the value of services provided by Chabad RPV to the City, or a direct
connection between the Comerica Bank loan and the funding for these services. Mr.
Miller suggests that the City's willingness to forgive these liens in their entirety will prompt
Comerica Bank to forgive the debt it is owed by Chabad SD. Although Mr. Miller states
that such action by the bank is "realistic," Staff is less optimistic.
Staff appreciates that the statewide Chabad organization provides benefits and services
to the communities in which their centers are located (including Rancho Palos Verdes),
and there is no doubt that the people who utilize these services find them of value.
However, Staff remains unconvinced that the value of these services to Rancho Palos
Verdes residents as a whole exceeds the financial obligation that Chabad SD bears as
the owner of the Wind port Canyon properties to satisfy the liens that were lawfully placed
against the properties.
In summary, Staff is sympathetic to the fact that Chabad SD was apparently unaware of
the existence of the liens on the property that was donated to it until very recently. To the
City's knowledge, Chabad SD has been an excellent steward of its property in the City,
conducting regular annual weed abatement and keeping its property taxes up to date.
However, Staff also believes that the City's taxpayers are entitled to be reimbursed for
the costs incurred for the abatement of the dangerous conditions created on this property
under previous ownership; and to be reasonably compensated for the cost of carrying this
debt for nearly eighteen (18) years. Therefore, Staff recommends the adoption of
Scenario 4 as it would repay the principal costs and provide a reasonable rate of return
to the City and its taxpayers, but would forgive more than sixty percent (60%) of the
accrued interest in deference to Chabad SD's non-profit status; its stewardship of the
property since 2000; and the added complexity of Chabad SD's having acquired the
property through a donation rather than a sale, through which the existence of the liens
· would presumably have come to light much sooner.
In agreeing to reduce the interest rate for the $36,551.06 lien, Staff would recommend
not specifying a total amount due to the City at this time. The foregoing discussion of
fiscal impacts are all based upon an assumption of the close of escrow for the sale of the
property on July 15, 2014, which did not (to the City's knowledge) happen. Instead, Staff
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MEMORANDUM: Release of North Windport Canyon Liens
August 19, 2014
Page 8
recommends structuring the approval of this interest rate reduction to apply such that the
accrued interest due at the new LAIF rate would be calculated at the time of the actual
close of escrow for sale of the Chabad SD properties. In this way, the City Council's
fiduciary duty to the City's taxpayers will be protected in the event that the sale of the
properties takes longer than is currently anticipated by either Chabad SD or the City.
CONCLUSION
In conclusion, Staff is sympathetic to the financial situation in which Chabad SD finds
itself with respect to the liens against the Wind port Canyon property. However, Staff does
not believe that Chabad SD has demonstrated that the City should completely forego the
amount of the liens, and thereby risk making a gift of public funds to Chabad SD by
exonerating both liens in full. Therefore, Staff recommends that the City Council adopt
Resolution No. 2014-_, thereby agreeing to reduce the interest rate from six percent
(6%) to the LAIF rates since October 1, 1996, for the lien for $36,551.06 recorded on
October 24, 1996, as Instrument No. 96-1732129; and to release the lien for $6,450.19
recorded on October 24, 1996, as Instrument No. 96-1732130.
ALTERNATIVES
In addition to the Staff recommendation (i.e., Scenario 4), the City Council may select one
of the other four (4) scenarios outlined above, or may identify another appropriate course
of action as a result of public testimony and/or City Council discussion. If another
alternative is chosen (other than Scenario 4 or Scenario 5 (No Action)), Staff recommends
continuing this matter to a future date certain for the adoption of a revised resolution.
FISCAL IMPACT
The estimated fiscal impacts of this request under various scenarios are discussed in the
body of tonight's report. The fiscal impact of the Staff recommendation (i.e., Scenario 4)
is estimated to be $41,047.39 as of July 15, 2014. However, the actual fiscal impact will
not be known until escrow closes on the sale of the Chabad property at some time in the
future.
Attachments:
• Draft Resolution No. 2014-
• Request for release of liens (received June 23, 2014)
• Recorded liens (Instrument Nos. 96-1732129 & 96-1732130)
• Letter from Stuart Miller (received August 12, 2014)
• Follow-up e-mail chain with Stuart Miller (dated August 12, 2014)
M:\Finance\Release of Windport Canyon Liens\20140819_ StaffRpt_CC.docx
3-8
RESOLUTION NO. 2014-_
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO
PALOS VERDES, AGREEING TO REDUCE THE INTEREST RATE
FROM SIX PERCENT (6%) TO THE LOCAL AGENCY INVESTMENT
FUND (LAIF) RATES IN EFFECT SINCE OCTOBER 1, 1996, FOR THE
LIEN FOR $36,551.06 RECORDED ON OCTOBER 24, 1996, AS
INSTRUMENT NO. 96-1732129; AND TO RELEASE THE LIEN FOR
$6,450.19 RECORDED ON OCTOBER 24, 1996, AS INSTRUMENT
NO. 96-1732130 FOR THE PROPERTIES COMMONLY KNOWN AS
"NORTH WINDPORT CANYON" (APNs 7583-022-012 AND 7583-022-
013)
WHEREAS, in July 1996, the City of Rancho Palos Verdes undertook the
abatement-of a public nuisance on property commonly known as "Windport Canyon,"
consisting then of Assessor's Parcel Nos. 7583-022-012, 7583-022-013 and 7583-039-
030, and incurring total costs for said abatement of $43,001.25; and,
WHEREAS, on October 1, 1996, the City Council of the City of Rancho Palos
Verdes adopted Resolution No. 96-87, approving the report of nuisance abatement costs
for Windport Canyon and authorizing liens for such costs to be placed upon then
Assessor's Parcel Nos. 7583-022-013 and 7583-039-030; and,
WHEREAS, on October 24, 1996, the City caused liens to be recorded against
these parcels in the amounts of $36,551.06 against Assessor's Parcel No. 7583-022-013
(Instrument No. 96-1732129) and $6,450.19 against then Assessor's Parcel No. 7583-
039-030 (Instrument No. 96-1732130); and,
WHEREAS, in about 2000, Assessor's Parcel Nos. 7583-022-012 and 7583-022-
013, commonly known as "North Windport Canyon" were donated to Friends of Chabad
Lubavitch San Diego, Inc., (Chabad) by the previous property owner, whereupon Chabad
assumed ownership and responsibility for North Windport Canyon; and,
WHEREAS, on January 21, 2010, the City received fee title to then Assessor's
Parcel No. 7583-039-030, commonly known as "South Windport Canyon," via Tax Deed
to Purchaser of Tax-Defaulted Property (Instrument No. 20100089227), thereby
effectively rendering moot the lien of $6,450.19 against South Windport Canyon
(Instrument No. 96-1732130), which Assessor's Parcel number is now 7583-039-900;
and,
WHEREAS, on June 23, 2014, upon learning of the existence of the above-
mentioned liens affecting North and South Windport Canyon, Chabad made a request of
the City for forgiveness of accrued interest and reduction in principal balance for these
liens affecting its property, which it now desires to sell.
WHEREAS, on August 19, 2014, the City Council of the City of Rancho Palos
Verdes considered Chabad's request at a regular City Council meeting.
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NOW BE IT, THEREFORE, RESOLVED BY THE CITY COUNCIL OF THE CITY
OF RANCHO PALOS VERDES:
Section 1: On the basis that A) Chabad is a non-profit organization registered
in the State of California and that the proceeds of the sale of the North Wind port Canyon
properties will benefit charitable and educational purposes; B) Chabad has been an
excellent steward of its properties since 2000, conducting annual weed abatement and
keeping the property taxes current; and C) Chabad's acquisition of the properties in 2000
through a donation led to greater complexity than would a sale, through which the
existence of the liens would presumably have come to light much sooner; the City Council
agrees to reduce the interest rate for the lien for $36,551.06 recorded on October 24,
1996, as Instrument No. 96-1732129 from six percent (6%) compounded annually since
October 1, 1996, to the Local Agency Investment Fund (LAIF) rates in effect since
October 1, 1996. Said accrued interest at the LAIF rates shall be calculated and payable
to the City of Rancho Palos Verdes, along with the principal balance of $36,551.06, upon
close of escrow for the sale or transfer of either or both of the North Windport Canyon
properties.
Section 2: On the basis that it was erroneously recorded against the title of the
North Windport Canyon properties in 1996 and should not have encumbered their title,
the City Council agrees to release the lien for $6,450.19 recorded on October 24, 1996,
as Instrument No. 96-1732130, plus any interest thereon.
Section 3: The City Manager and City Clerk are authorized to execute and
cause to be recorded the necessary instrument(s) to effectuate the City Council's
decision.
Resolution No. 2014-
Page 2 of 3 3-10
PASSED, APPROVED, AND ADOPTED THIS _th DAY OF AUGUST 2014.
Mayor
ATTEST:
City Clerk
State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )
I, CARLA MORREALE, City Clerk of the City of Rancho Palos Verdes, hereby certify that
the above Resolution No. 2014-_ was duly and regularly passed and adopted by the
said City Council at a regular meeting thereof held on August_, 2014.
City Clerk
M:\Finance\Release of Windport Canyon Liens\20140819_Reso_CC.docx
Resolution No. 2014-
Page 3 of 3
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.Carolynn Petru
From:·
Sent:
To:
Yonah Fradkin <ryf@chabadsd.org>
Monday, June 23, 2014 1:39 PM
Carolynn Petru
Cc: Simon Malk
Subject: Re: Friends of Chabad Lubavitch San Diego, Inc -Status of Liens
Thank you for taking the time to help our Charitable Organization Chabad this morning.
As I mentioned on the phone Chabad as been very responsible and paid for all of the abatement charges since
we acquired the property. Unfortunately, at the time that we acquired the property until now we were not aware
of this abatement fee. Yes this is our own fault, we should have looked at theTitle Report. Ifwe would have
known we would have had the donor pay for it. Now we really need your assistance to help us see some benefit
of holding the property for over 14 years and paying Taxes and Yearly weed abatement. We would really
appreciate forgiveness of this debt. I would presume that after all these years you might be able to find some
way to help us. Pl~ase forgive the interest and see if you can reduce the $36000. Abatement fee. Chabad has
over 200 centers in California, including one in Rancho Palos Verdes, serving the entire community with
counseling,services, food programs, drug rehabilitation, educational programs and the list goes on. Kindly help
us help others. Thank you
.
We sincerely appreciate your kindness.
Rabbi Yonah Fradkin
Regional Director
Chabad Headquarters S. Diego
10785 Pomerado Rd.
S. Diego, CA 92131
858.547.0076 #1218
On Jun 19, 2014, at 5:36 PM, Nechama dina Carlebach wrote:
Just got this email
From: Kit Fox [mailto:KitF@rpv.com]
Sent: Thursday, June 19, 2014 5:30 PM
To: ndcarlebach@chabadsd.org
Cc: carolynn Petru; carol Lynch <clync;h@rwglaw.com>
Subject: RE: Friends of Chabad Lubavitch San Diego, Inc -Status of Liens
Dear Dina:
Thank you for your phone call this past Monday, and for providing a copy of the preliminary title report
for the Friends of Chabad Lubavitch San Diego (Cha bad) properties in Rancho Palos Verdes.
1
3-12
The property that the City refers to as "Windport Canyon" consists of three (3) Assessor's parcels: the
Chabad properties (APNs 7583-022-012 and 7583-022-013) are located on the north side of the canyon,
and the property formerly owned by Steven Taylor/Taylor Development Ltd. (formerly APN 7583-039-
030) is located on the south side of the canyon. The attached aerial photo shows the relative locations
of these parcels.
In 1996, the City obtained an abatement warrant to remove a large volume of wood chips and other
green waste that had been illegally dumped In the canyon by and/or with the authorization of the
previous property owner. Most of the material had been dumped on the north parcel, APN 7583-022-
013. The illegal dumping constituted a public nuisance, and the Los Angeles County Fire Department
advised the City that the decomposition of the dumped green waste in the canyon posed a fire hazard to
surrounding residents. When the previous property owner failed to remove this material from the
property in a timely manner, the City was required to obtain an abatement warrant from the Los
Angeles County Superior Court and had the material removed from the canyon at City expense in July
1996. The City Council subsequently placed liens totaling $43,001.25 on the two (2) parcels from which
material was removed in October 1996 (APNs 7583-022-013 and 7583-039-030). The lien on the north
parcel was $36,551.06 and the lien on the south parcel was $6,450.19 . ..
We understand that the two (2) north parcels were donated to Chabad by the previous property owner
in about 2000. In 2008, the City sought to acquire the south parcel-which had fallen into default for
the non-payment of property taxes-from Los Angeles County. The City completed the acquisition of
the. south parcel (now known as APN 7583-039-900) in 2010.
As you know, there are two (2) liens that appear as exceptions to the title of the Chabad properties. The
lien recorded as Instrument No. 96-1732130 actually applies to the $6,450.19 lien against the south
parcel, which is now owned by the City of Rancho Palos Verdes. Since Chabad does not own the south
parcel, it would not be responsible for repayment of this lien amount. However, Chabad would be
responsible for the repayment of the lien recorded against the north parcel as Instrument No. 96-
1732129 in the amount of $36,551.06 plus interest. As of October 2013, the estimated accrued interest
for seventeen (17) years at 6% was $61,872.54. Repayment of the lien and accrued interest to the City
would typically occur upon close of escrow forthe sale of the property. .
The City appreciates that Cha bad may have been unaware of this lien at the time that it accepted the
donation of the property from the previous owner. The existence of this lien in no way impugns the ·
responsible stewardship of the property by Chabad over the past several years. However, the City was
required to expend City resources to abate the nuisance conditioo on the property, which posed a
serious risk to public safety. The City is legally entitled to recover the cost to the taxpayers of the
abatement of the former public nuisance on the property. However, the City is also open to discussing
with Cha bad a reasonable settlement of this matter, subject to the review and approval of the Rancho
Palos Verdes City Council.
Please feel free to contact me if you have any further questions. I will be back in the office next
Monday, June 23rd.
Sincerely,
Kit Fox., AICP
Senior Administrative Ana.11:Jst
Cit1:J Maneiaer's Office
Cit1:J of Rancho Palos Verdes
2
3-13
30940 liawthonie Blvd.
Ra.nchoPalos Verdes,CA90275
T:(310)544~5226
F: (310) 544~5291
'E: kitf@xpv.com
<imageOOl.jpg>
From: Nechama dina Carlebach [mailto:ndcarlebach@chabadsd.org]
Sent: Monday, June 16, 2014 3:00 PM
To: Kit Fox
Subject: Friends of Chabad Lubavitch San Diego, Inc
Dear Kit,
Thank you for assisting us with the donated property that we are now selling.
This title report shows that there are two liens on the property from 1996 which were unbeknownst to
us until now .
..
We are a non-profit charitable social service organization.
I hope you can help us find a way to take care of this.
iy1u_ch appreciated.
Nechama Dina Carlebach
Chabad Educational Center
10785 Pomerado Road
S Diego, CA 92131
(858) 547-0076 x 1219
From: Watt, Melissa [mailto:Melissa.watt@ctt.com]
Sent: Friday, June 13, 2014 2:12 PM
To: ndcarlebach@chabadsd.org
Subject: FW: 00025000-996-U12 Prelim
. -
Nechama, please find attached the preliminary report of title for the vacant land sale. Please advise if
you have any information regarding the two abatement liens as I will need to order demands and pay
through escrow.
Take care!!
Melissa Watt
Escrow Officer
<Windport Canyon Parcels.pdf>
3
3-14
... ·~
RECORDIJlG REQUESTED BY AND
WHEN RECORDED, RETURN TO:
city of Rancho Palos Verdes
Department of Planning,
Building ' Code Enforcement
30940 Hawthorne Boulevard
Rancho Palos Verdes, California
NO FEE PURSUANT TO GOVERNMENT
CODE SECTION 27383
ORIGINAL
911 1732129
90275
RECORDED/FILED IN OFFICIAL RECORDS
RECORDER'S OFFICE
LOS ANGELES COUNTY
CALIFORNIA
4:01 PM OCT 24 1996
SPACE ABOVE THIS LINE FOR RECORDER'S USE
NOTICE OF LIEN -Assessor's Parcel No. 7583-022-oJl FREE J J
Pursuant to ·the authority vested in the Code
Enforcement Official by the provisions of Title 8, Chapter 8.24
of the Rancho Palos Verdes Municipal Code, the Code Enforcement
Official on or about the 24th day of July, 1996 1 caused the
abatement of a nuisance on real property, and the City Council of
the City of Rancho Palos Verdes, on the 1st day of October, 1996,
assessed the costs of such abatement upon said real property;
through the adopt~n of Resolution No. 96-87, a copy of which is
attached hereto as Exhibit "A 11 and incorporated herein by
reference. The same has not been paid nor any part thereof, and
the City of Rancho.Palos Verdes does hereby claim a lien on said
real property for the net expense of the doing of said abatement
in the amount of $36,551.06, and this amount shall be a lien upon
said real property unt.11 the aforementioned sum together with
interest at the rate of six (6t) per annum from October 1, 1996,
has been paid in full and discharged of record.
The real property hereinbefore mentioned, and upon
which a lien is claimed, is that certain parcel of land in the
city of Rancho Palos Verdes, county of Los Angeles, state of
California, and more particularly described as Assessor's Parcel
No. 7583-022-013:
NOTICE IS HEREBY GIVEN that the aforementioned nuisance
abatement waa undertaken on adjacent parcels, and that a similar
lien in the amount of $6,450.19 is claimed and recorded against
Assessor's Parcel No. '7583-039-030, and that the cumulative
amount due for the two parcels is $43,001.25.
DATED: this 23Rb -day of~~ I 19~.
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
~d
FINANCE DIRECTOR OF THE
CITY OF RANCHO PALOS VERDES
(ACI(NOWLEDGEMENT)
SS
on I()-g 3: 9k> before :me, the undersigned, a
Notary ~n Jt1::: fz= State, personally appeared
, known to me to be the person
-w~h-o_s_e~n-a_m_e __ w_a_s-su-u~cbp-cc-llir-l~b~e-d-t~o~the within instrument and --
acknowledgeathat _J...£.-______ executed the same.
Witness my official neal.
Signature --+l"--1-<""""'"'"""~--~-
!1Cil011 Ml71MJCQJI pjl 1201517 a
(J
3-15
.f
RESOLUTION NO. 96-87
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES CONFIRMING THE REPORT OF
NUISANCE ABATEMENT COSTS WITHIN "WINDPORT
CANYON" AND AUTHORIZING A LIEN FOR NUISANCE
ABATEMENT COSTS TO BE PLACED ON THE SUBJECT
PROPERTY WHICH CONSISTS OF ASSESSORS PARCELS
7583-022-013, AND 7583 .. 039-030
WHEREAS, in response to a citizen's complaint, City Staff inspected the property
commonly referred to as Windport Canyon on or about October 5, 1995, and repeatedly
thereafter; and, ·
WHEREAS, Staff found that wood chips and debris had been illegally dumped and
spread throughout much of the site, specifically on two separate parcels which comprise
the majority of Windport Canyon, which have been identified as Assessor's Parcels 7583-
022-013 and 7583-039-030, in violation of the Rancho Palos Verdes Municipal Code and
the Los Angeles County Fire Code; and,
WHEREAS, Staff made repeated unsuccessful attempts to gain compliance through
contact of the property owner of record; and,
WHEREAS, the City of Rancho Palos Verdes and the Los Angeles County Fire
Department determined the wood chips and debris to be a public nuisance as a matter of
law as it posed a threat to the public health, safety and welfare to the property and
adjacent properties, City Staff (:lirE~cted the City Attorney to obtain a Nuisance Abatement
Warrant to secure removal of the' wood chips and debris; and,
WHEREAS, California Government Code Section 38773 and 38773.5 and Chapter
8.24 of the Rancho Palos Verdes Municipal Code authorizes the City Council to assess
all costs incurred for abatement of violations which constitute a public nuisance as a lien
against said property; and
WHEREAS, the costs inc:urred during abatement of the violation of the above
referenced site, to include pursuit and legal action have been itemized by the Finance
Director and Code Enforcement Officer pursuant to Rancho Palos Verdes Municipal Code
Section 8.24.110, a copy of which itemization is attached hereto as Attachment "A"; and,
WHEREAS, after notice issued pursuant to the requirements of the Rancho Palos
Verdes Municipal Code, the City Council held a hearing on September 17, 1996, at which
time all interested parties were given an opportunity to be heara and present evidence.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
96.:..1732129
3-16
Section 1: The City Council finds that the costs incurred by the City to abate the
nuisance at the above referenced site are reasonable and correct, and hereby confirms
the Code Enforcement Officer's Itemized Account of Nuisance Abatement Costs, attached
hereto as Attachment A.
Section 2: The City Council hereby directs Staff to submit to the Los Angeles
County Auditor/Controller for collection in the next applicable tax roll year the confirmed
Nuisance Abatement costs in the amounts of $36,551.06 for Assessor's Parcel umber
7583-022-013, and $6,450.19 for Assessor's Parcel Number 7583-039-030. The City
Council further directs the City Attorney and the Finance Director to prepare and cause to
be recorded in the Office of the Los Angeles County Recorder appropriate notices of liens
which indicate the amount of Nuisance Abatement Costs assessed against the subject
property as well as the cumulative amount due for the two parcels.
Section 3: Interested parties are hereby notified that the time within which judicial
review of this decision must be sought, if available, is governed by Section 1094.6 of the
California Code of Civil Procedure.
PASSED, APPROVED AND ADOPTED on this 1st day of October, 1996.
ATTEST:
/Sf JO PURCELL
City Clerk
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CITY OF RANCHO PALOS VERDES
/SI MARII.YN LYON
)
)SS
)
Mayor
I Jo Purcell, City Clerk of the City of Rancho Palos Verdes, do hereby certify that the
above Resolution No. 96-87 was duly and regularly passed and adopted by the said City
Council at a regular meeting held on October 1, 1996.
N:IGROUP'PLANNING\WINDRES.WPO
. . ·~ .:': ....
(]
Resolution No. 96-a 7
Page 2 of 2
3-17
:
-·"
. ..
Attachment A
ITEMIZED ACCOUNT
NUISANCE ABATEMENT COSTS
AUGUST 20, 1996
·Y
RECORD OWNER: • Gemini Bancorp
2042 Armacost Avenue
Los Angeles, CA 90025
ASSESSORS PARCEL NUMBERS: 7583-022-013
PROPERTY CONDITION:
SCOPE OF WORK:
Description
Removal of Wood Chips
legal Fees
Staff Time
Total Costs Incurred
7 583-039-030
Vacant property's maintained wood chips and
debris in violation of the Rancho Palos Verdes
Municipal Code and the Los Angeles County
Fire Code.
Contract with a qualified company for the
removal, cartage and disposal of
approximately 2400 cubic yards of wood chips
and other organic debris.
Cost Summary
Date Incurred Cost
July 24, 1996 $ 39,500.00
July 1996 $ 3,301.05
August1996
July 1996 $ 200.20
August1996
$ 43,001.25
.. ·~
j
RESOI.. N(). 96-87 I
EXHB!T A paq~ 1 I
96"-1732129 ~
3-18
The above costs were incurred by the City of Rancho Palos Verdes in abatement of a if..
nuisance on Assessor's Parcels 7583-022-013, 7583-039-030. /
/Sf Dennis McLean
Finance Director,
Dennis Mclean
City of Rancho Palos Verdes
gj
~
~
.-f Attachments J:, Cost Attachment A
en
-·
\' ..
...
. ,,
' ·'
!··
• ; / • ! · .. ,
: . ~;
/SI Jon A. Po1Jara
Code Enforcement Officer,
Jon A. Pollard
City of Rancho Palos Verdes
Resol. No. 96-87
Exhibit A paqe 2
3-19
Cost Attachment A
A. Costs and legal fees associated with the pursuit of $ 3,301.05
Nuisance Abatement. Costs represent disbursements and
legal fees.
8. Costs associated with abatement of nuisance on $ 39,500.00
property. Abatement conducted by Hardy & Harper, Inc.
Address 630 S. Hathaway, Santa Ana, CA. 92705
Invoice Attached.
c. Costs for Staff time for abatement of nuisance. Cost $ 200.20
includes: AbatemenVlnspections 13 Staff hours
Total Cost to be assessed: $ 43,001.25
96-1732129
Resolution No. 96-87
Exhbit A page 3
3-20
I• J '•' • ORIGINAL
RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:
city of Rancho Palos Verdes
Department of Planning,
Building & Code Enforcement
30940 Hawthorne Boulevard
RECORDED/FILED IN OFFICIAL RECORDS
RECORDER'S OFFICE
Rancho Palos Verdes, California 90275
LOS ANGELES COUNTY __
CALIFORNIA
NO FEE PURSUANT TO GOVERNMENT
CODE SECTION 27383
4~01 PM OCT 24 1996
SPACE ABOVE THIS LINE FOR RECORDER'S USE
FREE J
NOTICE OF LIEN ·-Assessor's Parcel No. 7583-039-030
Pursuant to the authority vested in the Code
Enforcement Official by the provisions of Title s, Chapter 8.24
of the Rancho Palos Verdes MUnicipal Code, the Code Enforcement
Official on or about the 24th day of July, 1996, caused the
abatement of a nuisance on real property, and the city council of
the City of Rancho Palos Verdes, on the lst day of October, 1996,
assessed the costs of 1such abatement upon said real property;
through the adoption of Resolution No. 96-87, a copy of which is
attached hereto as Exhibit "A" and incorporated herein by
reference. The same has not been paid nor any part thereof, and
the City of Rancho Palos Verdes does hereby claim a lien on said
real property for the net expense of the doing of said abatement
in the amount of $6,450.19, and this amount shall be a lien upon
said real property unt::ll the aforementioned sum together with
interest at the rate of six (6i) per annum from October l, 1996,
has been paid in full and discharged of r.eoord.
The real property hereinbefore mentioned, and upon
which a lien is claimed, is that certain parcel of land in the
City of Rancho Palos Verdes, County of Los Angeles, state of
California, and more particularly described as Assessor's Parcel
No. 7583-039-030:
NOTICE IS HEUEBY GIVEN that the aforementioned nuisance
abatement was undertaken on adjacent parcels, and that a similar
lien in the amount of $36,551.06 is claimed and recorded against
Assessor's Parcel No. 7583-022-013, and that the cumulative
amount due for the two parcels is $43,001.25.
DATED; this~ day of~ , l~.
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
~~
FINANCE DIRECTOR OF THE
CITY OF RANCHO PALOS VERDES
(ACKNOWLEDGEMENT)
SB
On /(),-ti?. 3-C[6 before me, the undersigned, a
N~~~~f~>r said State, personally appeared
......,...~--------.--------,....---.,.,... ......... _,_~• known to me to be the person
wfiose name ___ was :;e;;:ribed to the within instrument and ---
acknowledged that -----executed the same.
Witness my
Signature
9Cll021 llM75-0CJJOI pjo 120151~ 0
J
3-21
\ • I I ..
'.
.. .. ,,.
RESOLUTION NO. 96-87
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES CONFIRMING THE REPORT OF
NUISANCE ABATEMENT COSTS WITHIN "WINDPORT
CANYON'' AND AUTHORIZING A LIEN FOR NUISANCE
ABATEMENT COSTS TO BE PLACED ON THE SUBJECT
PROPERTY WHICH CONSISTS OF ASSESSORS PARCELS
7583-022-013, AND 7583-039-030
WHEREAS, in response to a citizen's complaint, City Staff inspected the property
commonly referred to as Windport Canyon on or about October 5, 1995, and repeatedly
the~eafter; and,
WHEREAS, Staff found th~~t wood chips and debris had been illegally dumped and
spread throughout much of the site, specifically on two separate parcels which comprise
the majority of Windport Canyon, which have been identified as Assessor's Parcels 7583-
022-013 and 7583-039..030, in violation of the Rancho Palos Verdes Municipal Code and
the Los Angeles County Fire Code; and,
WHEREAS, Staff made repeated unsuccessful attempts to gain compliance through
contact of the property owner of record; and,
WHEREAS, the City of Rancho Palos Verdes and the Los Angeles County Fire
Department determined the wood chips and debris to be a public nuisance as a matter of
law as it posed a threat to the public health, safety and welfare to the property and
adjacent properties,· City Staff directed the City Attorney to obtain a Nuisance Abatement
Warrant to secure removal of the wood chips and debris; and,
WHEREAS, California Government Code Section 38773 and 38773.5 and Chapter
8.24 of the Rancho Palos Verdes Municipal Code authorizes the City Council to assess
; _.. all costs incurred for abatement of violations which constitute a public nuisance as a lien
against said property; and
,t, ... ,,,.
WHEREAS, the costs inc:urred during abatement of the violation of the above
referenced site, to include pursuit and legal action have been itemized by the Finance
Director and Code Enforcement Officer pursuant to Rancho Palos Verdes Municipal Code
Section 8.24.110, a copy of which itemization is attached hereto as Attachment "A°; and,
WHEREAS, after notice issued pursuant to the requirements of the Rancho Palos
Verdes Municipal Code, the City Council held a hearing on September 17, 1996, at which
time all interested parties were given an opportunity to be heara and present evidence.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
96-1732130
71
3-22
\, .
Section 1: The City Council finds that the costs incurred by the City to abate the /
nuisance at the above referenced site are reasonable and correct, and hereby confirms
the Code Enforcement Officer's Itemized Account of Nuisance Abatement Costs, attached
hereto as Attachment A.
Section 2: The City Council hereby directs Staff to submit to the Los Angeles
County Auditor/Controller for collection in the next applicable tax roll year the confirmed
Nuisance Abatement costs in the amounts of $36,551.06 for Assessor's Parcel umber
7583-022-013, and $6,450.19 for Assessor's Parcel Number 7583-039-030. The City
Council further directs the City Attorney and the Finance Director to prepare and cause to
be recorded in the Office of the Los Angeles County Recorder appropriate notices of liens
which indicate the amount of Nuisance Abatement Costs assessed against the subject
property as well as the cumulative amount due for the two parcels.
Section 3: Interested parties are hereby notified that the time within which judicial
review of this decision must be sought, if available, is governed by Section 1094.6 of the
California Code of Civil Procedure.
PASSED, APPROVED AND ADOPTED on this 1st day of October, 1996.
/S/ MARILYN LYON
ATrEST:
/Sf JO PURCELL
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )ss
CITY OF RANCHO PALOS VERDES )
N:'OROUPIPLANNINGIWINDRES.WPO
Mayor
Resolution No. 96-s 7
Page2of2
3-23
' . '
...... ..........
·'·
.• •.(
RECORD OWNER:
..
Attachment A
ITEMIZED ACCOUNT
NUISANCE ABATEMENT COSTS
AUGUST 20, 1996
Gemini Bancorp
2042 Armacost Avenue
Los Angeles, CA. 90025
ASSESSORS PARCEL NUMBERS: 7583-022-013
7583-039-030
PROPERTY CONDITION:
SCOPE OF WORK:
Descriotion
Removal of Wood Chips
Legal Fees
Staff Time
Total Costs Incurred
Vacant property's maintained wood chips and
debris in violation of the Rancho Palos Verdes
Municipal Code and the Los Angeles County
Fire Code.
Contract with a qualified company for the
removal, cartage and disposal of
approximately 2400 cubic yards of wood chips
and other organic debris.
Cost Summary
Date Incurred
July 24, 1996
July 1996
August1996
July 1996
August1996
96-1732130
$
$
$
$
Cost
39,500.00
3,301.05
200.20
43,001.25
RESO!.. NC1. 96-87
EXHBIT A. pagf! 1
r
••• .t
I
~-
3-24
The above costs were incurred by the City of Rancho Palos Verdes in abatement of a
nuisance on Assessor's Parcels 7563-022-013, 7563-039-030.
/S/ Dennis McLean
Finance Director,
Dennis Mclean
City of Rancho Palos Verdes
Attachments
Cost Attachment A
/SI Jon A. Pollard
Code Enforcement Officer,
Jon A. Pollard
City of Rancho Palos Verdes
~ ~·.1;··ft~~· · .. y
. \~
Resol. No. 96-87
Exhibit A page 2
~:
I
3-25
", I "'•
.i
Cost Attachment A
A Costs and legal fees associated with the pursuit of $ 3,301.05
Nuisance Abatement. Costs represent disbursements and
legal fees.
8. Costs associated with abatement of nuisance on $ 39,500.00
property. Abatement conducted by Hardy & Harper, Inc.
Address 630 S. Hathaway, Santa Ana, CA 92705
Invoice Attached.
c. Costs for Staff time for abatement of nuisance. Cost $ 200.20
includes: Abatement/Inspections 13 Staff hours
Total Cost to be assessed: $ 43,001.25
96~1732130
Resolution No. 96-87
Exhbi t A pa.qe 3
f
3-26
Stuart Miller
Attorney at Law
24411 Ridge Route, Suite 200
Laguna Hills, CA 92653
(949) 580-3737
fax (949) 580-3738
stuartmiller@earthlink.net
www.stuartmillerlaw.com
RECEIVED
AUG 12 2014
Admitted in CA and NY
August 12, 2014
Mayor Jerry Duhovic and Members of the City Council
30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275
Re: Request for Release of Liens Against North Windport Canyon Properties
August 19, 2014 City Council Hearing
Dear Mayor Duhovic and Members of the City Council:
I represent Friends of Chabad Lubavitch San Diego, Inc. ("Chabad"). I am writing to
explain Chabad's application for relief from the lien the City holds on its property.
As Kit Fox explains in the staff report of July 15, 2014, Chabad received the subject
property as a gift around the year 2000. When it received the property Chabad was not aware that
the City held a lien on the property in the amount of $36,551.06. Staff estimates that at a rate of
6%, the interest due on the lien is $66,516.08, for a total obligation of$103,067.14.
Staff has recommended that the City reduce the interest on the lien to $25,468.69, for a
total obligation of $62,019.75. Chabad appreciates the deduction proposed by staff as well as the
recognition that Chabad did not create the debt and has been a model corporate citizen.
There are several facts we wish to add to the staff report.
Chabad operates a center at 28041 Hawthorne Boulevard in Rancho Palos Verdes. It
spends approximately $500,000 annually on a wide variety of community services, including
food kitchens, hospital visitation, crisis intervention, family counseling, new parent education,
playtime for children, adult education, yoga classes, and distribution of car seats. Chabad has
served thousands of families in Rancho Palos Verdes over the years.
In 2003, Chabad borrowed approximately $15,000,000 for development of the Chabad
Educational Center, including $11,874,000 from Comerica Bank-California. To secure this loan
it gave the lender liens on many properties, including the lot in Rancho Palos Verdes. To date a
debt of$6,748.383.56 remains on the loan. See the Fourth Modification Agreement and the bank
letter dated July 23, 2014 accompanying this letter.
Chabad has a pending offer to purchase the Rancho Palos Verdes property for $360,000.
IfChabad accepts this offer, the City will execute its lien for $62,019.75 or whatever sum the
City Council chooses, and the bank will take the remainder. Chabad will receive nothing.
3-27
Mayor Jerry Duhovic and Members of the City Council
Request for Release of Liens Against North Windport Canyon Properties
August 12, 2014
Page2
We therefore request that the City agree to waive Chabad's obligation if we can convince
the bank to lift its lien on this property. We think this decision by the bank is a realistic
possibility because most of the loan has already been repaid and the bank will be following the
City's generous example. If this proposal is accepted, Chabad will be able to devote the $360,000
from the sale to comm\Ulity services. Otherwise, the economic reality is that Chabad cannot sell
the property and the lien will not be repaid anytime soon. We think it is better for the comm\Ulity
to receive six times its debt in charitable services than for the City to insist on a payment that
circumstances make it infeasible for Chabad to provide.
I should add that I am representing Chabad on a pro bono basis. I hope the City and the
bank will follow my small ex.ample and allow this wonderful organization to continue its fine
work.
I am looking forward to discussing this matter with the City Co\Ulcil on August 19.
Thank you.
Very truly yours,
Stuart Miller
3-28
FOURTH MODIFICATION AGREEMENT
This FOURTH MODIFICATION AGREEMENT (the "Modification") is made as of
January 18, 2013 by and between Friends of Chabad Lubavitch, San Diego, a California
nonprofit corporation C"&>plicant") and Comerica Bank, a Texas bankifi.g association, successor
by merger to Comerica Bank-California ("IUY&r''), with respect to the Reimbursement
Agreement dated January 21, 2003 between Applicant and Issuer, as modified by the
Modification Agreement dated January 27, 2009, the Second Modification Agreement dated
October 1, 2009 and the Third Modification Agreement dated October 1, 2011 (as amended and
modified through but excluding the date hereof, the "Agreemenf'), with reference to the
following facts: ·
. A. Applicant and Issuer entered into the Agreement, pursuant to which Applicant has
promised to reimburse Issuer for drawings under the Letter of Credit (as defined below}, as well
talce other actions as described therein .
. S. Pursuant to the Agreement, Issuer issued Irrevocable Letter of Credit No. 580357-
42, dated January 24, 2003, in the original Stated Amount of $11,874,000.00, for the benefit of
Wells Fargo Bank, National Association, which was amended by Amendment No. 1 dated
December 31, 2008, Amendment No. 2 dated March 26, 2009, Amendment No. 3 dated June 25,
2009, Amendment No. 4 dated August 26, 2009, Amendment No. 5 dated September 29, 2009,
Amendment No. 6 dated October 28, 2009, Amendment No. 7 dated October 20, 2011, and
Ameru:lment No. 8 dated October 25, 2012 (collectively, the "Letter of Credit). The Letter of
Credit has a current Stated Termination Date ofNovember 15, 2013.
C. Applicant's obligations to Issuer under the Agree,ment are secured by, among
other thi:qgs, the following:
1. Construction Deed of Trust, Security Agreement and Fixture Filing (with
Assignment of Rents and Leases), dated January 21, 2003, by Applicant for the benefit of Issuer
covering certain real property in San Diego, California, recorded with the San Diego Col.mty
Recorder on January 24, 2003 as Doc. #2003-0084215, modified by Agreement Supplementing
Deed of Trust dated October 1, 2009 recorded with San Diego County Recorder on April 26,
2010 as Doc. #2010-0204549, and Second Agreement Supplementing Deed of Trust dated
October 1, 2011 recorded with San Diego County Recorder on January 6, 2012 as Doc. #2012-
0008545 (collectively, the "San Diego Dee<l ofTmsf').
2. Deed of Trust, Security Agreement and Fixture Filing (with Assignment
of Rents and Leases), dated January 21, 2003, by Applicant for the benefit of Issuer covering
certain real property in Rancho Palos Verdes, California, recorded with the Los Angeles County
Recorder on January 24, 2003 as Doc. #03-0220780, modified by Agreement Supplementing
Deed of Trust dated October 1, 2009 recorded with Los Angeles County Recorder on April 26,
2010 as Doc. #20100559455, and Second Agreement Supplementing Deed of Trust dated
October 1, 2011 recorded with Los Angeles County Recorder on January 6, 2012 as Doc.
#20120024449 (collectively, the "RPY Deed ofTrusf').
1
BN 1305803:Sv7
3-29
Comerica Bank
lntematlona~ Trade SeNlces
2321 R0$8Ct'ans Ave. 5th Fl.
El Segunao, CA 90245
Tel: See Below
Fax: See Below
SWIFT: MNeousesxxx
Friends of Chabad Lubavlteh
san 1)1890 ,
10785 Pomerado Road
San D1ego, CA 92131 United States
Re: Oi,ir Irrevocable Standby Letter of Credtt No.: 68Q367-42
·.
July 23, 2014
Pleae .remit funds through your oorreapondent to Comerica Bank Our AiA No. 121137622 our account
no. 04$2158595811 quoting our reference number 680317-42 for payment Of invoice dated July 24, 2014,
Attn:.J~~e.ma~nal TrMe Sel'Vlces or proYlde ue with written authorization to debit your acccunt for the
equ1v.arant ot return a copy er:tt111 Invoice together with your check to the address listed above.
Ttie:bl'iiiltg ,.e wilt be walv$d only if you authorize a debit to your dema
l&~rlptloii
fte.'-8/Charges Utiitecl States. Dollars
S$ridby Periodic Fee
1nvo1ee Fee
T9ta1 Fees/Charges Unlted States
Dollars
Fftial Total United Stites D'ollars
Currency
USO
USO
USO
Prlndpal Rate ' Calculation Perlod
USO O, 7'18,383.56 1.25% Dal
For Standby Periodic Fee the charge basis days equals 360.
AmOUDt
·21,557.34
-60.00
.... .
USD 21.667,34
..
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Kit Fox
From:
Sent:
Stuart Miller <StuartMiller@earthlink.net>
Tuesday, August 12, 2014 3:14 PM
To: Kit Fox
Cc: Yonah Fradkin
Subject: RE: Lien Release Request for August 19th Agenda
Hi Kit. The answer to the first half of your first question as well as your second question is found at the Cha bad of
California website: www.chabad.com. Then click on "Centers," then click on "Chabad-Lubavitch of Rancho Palos Verdes"
or "Cha bad of San Diego." You will see that Chabad-Lubavitch of Rancho Palos Verdes and Cha bad of San Diego (the one
at Pomerado Road) are among the 24 centers run by Cha bad of California. My understanding is that the parent
organization, Cha bad of California, has authority to direct money among the centers to where it is needed. (I may have
been unclear about this before as I am still familiarizing myself with this organizational structure. I do not believe there
is a direct relationship between the loan and the RPV facility, but both centers are part of one larger organization serving
the entire state.)
As for your other question, Rabbi Magalnic, who directs the RPV center, gave this information to Rabbi Fradkin, who
gave it to me. Rabbi Fradkin is seeking documentation from Rabbi Magalnic now.
Regards,
Stuart . .
From: Kit Fox [mailto:KitF@rpv.com]
Sent: Tuesday, August 12, 2014 1:49 PM
To: Stuart Miller
Cc: Carol Lynch <clynch@rwglaw.com>; Carolynn Petru
Subject: RE: Lien Release Request for August 19th Agenda
Hi Stuart:
I have a couple of questions for clarification:
1. Can you provide any evidence of the financial, organizational or other linkage(s) between Friends of Cha bad
Lubavitch San Diego, Inc. and Cha bad of Palos Verdes that documents the direct "flow" of funds to the Rancho
Palos Verdes community? Similarly, can you provide documentation of the $500,000 in annual community
services provided by Cha bad of Palos Verdes, including financial, organizational or other linkage(s) for these
services back to Friends of Cha bad Lubavitch San Diego, Inc.?
2. Our understanding of the $11,874,000 loan from Comerica Bank--secured by the Wind port Canyon property in
Rancho Palos Verdes and other properties owned by Friends of Cha bad Lubavitch San Diego, lnc.-was that it
was intended to fund the development of an educational center located in San Diego. Again, can you provide
any evidence that the facility and/or programs offered at Cha bad of Palos Verdes are the direct result of funding
provided by Friends of Cha bad Lubavitch San Diego, Inc. that originated from the Comerica Bank loan secured (in
part) by the Wind port Canyon property?
Thanks!
Kit Fox, AICP
City of Rancho Palos Verdes
(310)544-5226
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kit£@mv.com
From: Stuart Miller [mailto:StuartMiller@earthlink.net]
Sent: Tuesday, August 12, 201412:10 PM
To: Kit Fox
Cc: Carol Lynch <clynch@rwglaw.com>; Carolynn Petru
Subject: RE: Lien Release Request for August 19th Agenda
Hi Kit. A letter for the City Council's consideration is attached. Please attach it to the Staff Report.
Thank you.
Regards,
Stuart
From: Kit Fox [mailto:KitF@rpv.com]
Sent: Thursday, August 07, 2014 4:32 PM
To: Stuart Miller
Cc: Carolynn Petru
Subject: RE: Lien Release Request for August 19th Agenda
Hi Stuart:
If I get it-by-Tuesday, it will be attached to the Staff report but we may not have time to address any new issues that it
raises in the report itself.
I'll be in the office tomorrow but at off-site training on Monday.
Kit Fox, AICP
CitlJ o£RanchoPa.los Verdes
(310) 544-5226
kit£@mv.com
From: Stuart Miller [mailto:StuartMiller@earthlink.net]
Sent: Thursday, August 07, 2014 4:16 PM
To: Kit Fox
Subject: RE: Lien Release Request for August 19th Agenda
Hi Kit. I'm very sorry I could not get this to you in time. I had to devote too much time to the Zone 2 EIR hearing two days
ago. Can I get you this information early next week?
Best regards,
Stuart
From: Kit Fox [mailto:KitF@rpv.com]
Sent: Monday, July 28, 2014 1:55 PM
To: stuartmiller@earthlink.net
Cc: Yonah Fradkin; Carolynn Petru; Carol Lynch <clynch@rwglaw.com>
Subject: Lien Release Request for August 19th Agenda
Hi Stuart:
As you are aware, Rabbi Fradkin's request was pulled from tomorrow night's City Council agenda. He had indicated last
week that he believed that you would have enough time to prepare for this matter to be heard on the August 19th
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agenda. In order to do so, I would ask that you provide any additional information related to this request to me no later
than next Wednesday, August 6th so that I can include it with the August 19th Staff report.
Thank you very much.
Sincerely,
Kit Fox, AICP
Senior AdministrativeAnal':lst
CitlJ Manaaer's OHice
CitlJ of Rancho Palos Verdes
30940 Hawthorne Blvd
Rancho Palos Verdes, CA 90275
T: (310) 544-5226
F: (310) 544-5291
:E: kitf@rpv.com
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