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Montebello Redevelopment Faces Mounting Legal Costs

Ongoing lawsuits that have caused Montebello’s redevelopment agency to go over its budget on legal costs this year prompted officials to approve an additional $400,000 in funds at the Feb. 23 city council meeting.

The agency was originally allocated $60,000 for legal service costs, but “it became apparent that the current budget is insufficient to cover all pending actions,” according to a staff report.

The extra funds – to come out of the agency’s reserves – will cover “current outstanding invoices and future invoices” from Alvarez-Glasman & Colvin, the primary legal firm for the city and its redevelopment agency.

The city and its redevelopment agency have not yet approved an official budget and are currently operating on an interim budget. The agency is made up of members of the city council.

There was no discussion at the meeting where the new budget was approved, but the Montebello redevelopment agency is engaged in two separate lawsuits filed by Ara Sevacherian, a property owner who is alleging breach of purchasing agreement related to the Ostrom Chevrolet property, and also accusing the city of illegally borrowing money from the redevelopment agency.

“The attorney is spending a lot of time on the deposition requested by the attorney of Ostrom Chevrolet,” Planning Director Michael Huntley told EGP on Wednesday.

The new $460,000 budget is higher than usual, but he says the original $60,000 budget was already somewhat conservative. Normally a redevelopment agency is expected to spend about $100,000 to $120,000 a year, not necessarily on lawsuits but in paying attorneys who are working on transactional matters such as contracts and agreements with developers.