Homeowners decry 389% lease hike

Eron Ben-Yehuda

HUNTINGTON HARBOUR -- Residents of a gated community must decide by

Monday whether to pay a 389% increase in their land lease or risk

foreclosure of their property.

“It’s a terribly stressful situation, I think, for everyone, myself

included,” said Barbara Lasser, who has lived at The Gables since it

opened 20 years ago.

The 80 homeowners at the development, just off Edinger Avenue and Bolsa

Chica Street, suffered a “great shock” last month when they received a

letter indicating their land lease payments would skyrocket from $190 to

$740 per month, she said.

But the lease states that the time has come for a rate hike based on a

new appraisal of the 7.6-acre property, according to a Feb. 28 letter

signed by Hugh M. Saddington, president of BS Investors. The Irvine-based

company leases the land for its owner, the Hauser Brothers Co. The

appraisal covers a 10-year period that started in January, the letter

notes.

Representatives from BS were unavailable for comment.

Hauser Brothers leased the land in 1980 to developer Robert P.

Warmington, which built the gated community, said Mike Wolfe, a 12-year

resident. The two- and three-bedroom units were sold to individual buyers

who signed subleases with Warmington, which sold them in 1986 to what is

now BS Investors.

While they did expect some increase, homeowners weren’t prepared for

anything this big, Wolfe said. The hike makes the lease amount more than

the average mortgage payment, which he estimates at about $700 a month.

Unlike typical condominium owners, those at The Gables have to cover the

cost of a ground lease in addition to mortgage payments and homeowners

association dues.

“We will file a lawsuit if we need to,” he said. “Most of us believe the

lease is illegal or, at the very least, totally unfair.”

The homeowners association has hired an attorney to defend it, Wolfe

said. He argues that a clause in the lease limits an increase to 170%

within a 12-month period, an interpretation the leasing company disputes.

Those homeowners who can afford to pay will do so under protest, Wolfe

expects.

Residents at the city’s 18 mobile home parks have made similar complaints

about high rent charged for plots of land. They are demanding the city

create a rent control ordinance.

A fair settlement hopefully will be negotiated, but until then, Wolfe

said the homeowners intend to plead their case in the press and at City

Council meetings.

At Monday’s council meeting, Mayor Dave Garofalo asked the city attorney

to meet with both sides to try to settle the dispute, although the city’s

hands may be tied because the property is on private land.