Former Ostrom Chevrolet owner sues city of Montebello

The former Ostrom Chevrolet owner who sold the property to the city late last year is suing the city's redevelopment agency for failing to come through on an agreement to buy more of his property, according to court documents. Full Story
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Living in South Rio Linda

United States

#2 Aug 20, 2010
While there is no doubt that an auto dealership can raise a lot of sales tax revenue for a city, it all becomes a wash when the city invests a large amount of money in the dealership to keep it afloat. This guy has quite a pair coming and asking for more money from a city that is in the red precisely because its dumb leaders paid out good money after bad to his crony capitalist enterprise. Tar and feathers would be a better solution to his problem.

When the State forced municipalities to rely solely on the sales tax, it created booming industry of redevelopment scams that now have resulted in non performing shopping centers, vacant car dealerships. City Administrators who have never rum a lemonade stand talk as if they were real businessmen, but in fact don't know the first thing about business and would never risk any of their own money in what are essentially worthless scams.

I have nothing against Ostrom Cheverolet. I knew Harold Ostrom. He had a well run business and built an excellent reputation. But business is business and was it really a good idea to invest all that money borrowed from taxpayers in what was at best a very dubious business location? I think this man needs to go away.
mtb877

San Bernardino, CA

#3 Aug 20, 2010
Living in South Rio Linda wrote:
While there is no doubt that an auto dealership can raise a lot of sales tax revenue for a city, it all becomes a wash when the city invests a large amount of money in the dealership to keep it afloat. This guy has quite a pair coming and asking for more money from a city that is in the red precisely because its dumb leaders paid out good money after bad to his crony capitalist enterprise. Tar and feathers would be a better solution to his problem.
When the State forced municipalities to rely solely on the sales tax, it created booming industry of redevelopment scams that now have resulted in non performing shopping centers, vacant car dealerships. City Administrators who have never rum a lemonade stand talk as if they were real businessmen, but in fact don't know the first thing about business and would never risk any of their own money in what are essentially worthless scams.
I have nothing against Ostrom Cheverolet. I knew Harold Ostrom. He had a well run business and built an excellent reputation. But business is business and was it really a good idea to invest all that money borrowed from taxpayers in what was at best a very dubious business location? I think this man needs to go away.
Well, let's take a look at your arguments. Without investment, whether by the city or a company, there will be no potential returns. So, when we see the many successful shopping centers around Los Angeles, few would have been possible without some incentives or investments from the city the center was built in. Most, if not all companies, pit one city against another to see what subsidies, tax breaks, etc., that they can take advantage of. But in the case of Ostrom Chevrolet, I believe the city, some seven years ago, worked out an agreement with Ostrom that provided the dealership with bond money and other incentives to improve the business. The success of Ostrom bought about jobs, sales tax, as well as saving the city money on city vehicles repairs and maintenance costs. Nobody complained, to my knowledge, when things were going well. Now, in a deep recession, when one sees car dealerships closing down all around us, the bankruptcy of GM, the owners of Chevroret, it was almost impossible for Ostrom to avoid bankruptcy itself. What is a city to do? Stand aside and let the mortgage holder on the building take over the building and prime redevelopment land? And the city would still be on the hook for paying back the $3 million bond debt. So, if the city had not stepped in, this would have happened. Ostrom closes down. People are out of work. No sales tax. The city doesn't own the property anymore. The city has to keep paying the $3 million bond debt. Blight on Whittier boulevard.(t this at a time when the city is improving the looks of Whittier Blvd.) But the city did step in. The jobs have been saved. Sales tax continues into the city coffers. No blight (no empty, run down on Whittier Blvd.) Now, you can disagree with all what I have written. But as a Montebello resident, I am happy that the city saved the business. Of course, I realize that there are people in Montebello who just want to complain, want no development and are simply content that other cities develop while Montebello go further down the drain.
mtb877

San Bernardino, CA

#4 Aug 20, 2010
blame rosie wrote:
Rosie Vasquez the witch of Montebello.
Why would the editors of this forum allow such a remark? What does this abuse add to a serious (or any) debate?
Living in South Rio Linda

United States

#6 Aug 20, 2010
mtb877 wrote:
<quoted text>
Well, let's take a look at your arguments. Without investment, whether by the city or a company, there will be no potential returns. So, when we see the many successful shopping centers around Los Angeles, few would have been possible without some incentives or investments from the city the center was built in. Most, if not all companies, pit one city against another to see what subsidies, tax breaks, etc., that they can take advantage of. But in the case of Ostrom Chevrolet, I believe the city, some seven years ago, worked out an agreement with Ostrom that provided the dealership with bond money and other incentives to improve the business. The success of Ostrom bought about jobs, sales tax, as well as saving the city money on city vehicles repairs and maintenance costs. Nobody complained, to my knowledge, when things were going well. Now, in a deep recession, when one sees car dealerships closing down all around us, the bankruptcy of GM, the owners of Chevroret, it was almost impossible for Ostrom to avoid bankruptcy itself. What is a city to do? Stand aside and let the mortgage holder on the building take over the building and prime redevelopment land? And the city would still be on the hook for paying back the $3 million bond debt. So, if the city had not stepped in, this would have happened. Ostrom closes down. People are out of work. No sales tax. The city doesn't own the property anymore. The city has to keep paying the $3 million bond debt. Blight on Whittier boulevard.(t this at a time when the city is improving the looks of Whittier Blvd.) But the city did step in. The jobs have been saved. Sales tax continues into the city coffers. No blight (no empty, run down on Whittier Blvd.) Now, you can disagree with all what I have written. But as a Montebello resident, I am happy that the city saved the business. Of course, I realize that there are people in Montebello who just want to complain, want no development and are simply content that other cities develop while Montebello go further down the drain.
You make very good arguments that I might well have made thirty years ago. But, from a business point of view, this business was not saved, its demise was postponed. Maybe if General Motors survives, and maybe if the employment situation in this area improves, and maybe if the new ownership can find a way of attracting customers from throughout the region. Maybe, maybe, maybe it might survive. I hope so, but business is hard hearted like mother nature.

What the city of Montebello did was issue bonds. Issuing bonds is no different than if the City had knocked on my door and asked to borrow my MasterCard. Then, I get a statement with an Item "Your share of Ostrom Chevrolet remodeling including interest" Then, in a few years I get statements adding more businesses to be saved and I also notice that the interest on the bonds has gone up because the City of Montebello has borrowed more money to save more businesses and thus its credit rating has gone down, meanwhile, the guy who got the loan has sold the business.

This is all wrong and should never have been legal. But, I well understand why this is happening. What needs to change is the state apportioning of taxes. What also needs to change is for people in city government to understand that they need to create a business climate that attracts large employers who pay good wages.
mtb877

San Bernardino, CA

#7 Aug 20, 2010
Living in South Rio Linda wrote:
<quoted text>
You make very good arguments that I might well have made thirty years ago. But, from a business point of view, this business was not saved, its demise was postponed. Maybe if General Motors survives, and maybe if the employment situation in this area improves, and maybe if the new ownership can find a way of attracting customers from throughout the region. Maybe, maybe, maybe it might survive. I hope so, but business is hard hearted like mother nature.
What the city of Montebello did was issue bonds. Issuing bonds is no different than if the City had knocked on my door and asked to borrow my MasterCard. Then, I get a statement with an Item "Your share of Ostrom Chevrolet remodeling including interest" Then, in a few years I get statements adding more businesses to be saved and I also notice that the interest on the bonds has gone up because the City of Montebello has borrowed more money to save more businesses and thus its credit rating has gone down, meanwhile, the guy who got the loan has sold the business.
This is all wrong and should never have been legal. But, I well understand why this is happening. What needs to change is the state apportioning of taxes. What also needs to change is for people in city government to understand that they need to create a business climate that attracts large employers who pay good wages.
I appreciate your thoughtful and courteous response. And you do have a legitimate argument when you say Cherolet's business "..was not saved, it's demise was postponed." But I think that in this economic climate it made sense for the city to take possession of the building and land and at least get some rent to help pay of the bond debt (and the additional benefits of jobs and sales tax).
So, if we disagree respectfully on this particular issue, I wholeheartedly agree with you that city government, specifically Montebello in this case, needs to create a friendly environment that attracts business. It's is certainly overdue herein Montebello.
Something Fishy

Montebello, CA

#8 Aug 20, 2010
Living in South Rio Linda wrote:
<quoted text> What also needs to change is for people in city government to understand that they need to create a business climate that attracts large employers who pay good wages.
You are 100% right in that statement. Montebello needs to attract new high end businesses. Purchasing the land parcels along Whittier Blvd was a great idea because it kept the city in control of the development of Whittier blvd, if we ever get to it.

“Touch it”

Since: Aug 10

Whittier

#9 Aug 20, 2010
mtb877 wrote:
<quoted text>
Well, let's take a look at your arguments. Without investment, whether by the city or a company, there will be no potential returns. So, when we see the many successful shopping centers around Los Angeles, few would have been possible without some incentives or investments from the city the center was built in. Most, if not all companies, pit one city against another to see what subsidies, tax breaks, etc., that they can take advantage of. But in the case of Ostrom Chevrolet, I believe the city, some seven years ago, worked out an agreement with Ostrom that provided the dealership with bond money and other incentives to improve the business. The success of Ostrom bought about jobs, sales tax, as well as saving the city money on city vehicles repairs and maintenance costs. Nobody complained, to my knowledge, when things were going well. Now, in a deep recession, when one sees car dealerships closing down all around us, the bankruptcy of GM, the owners of Chevroret, it was almost impossible for Ostrom to avoid bankruptcy itself. What is a city to do? Stand aside and let the mortgage holder on the building take over the building and prime redevelopment land? And the city would still be on the hook for paying back the $3 million bond debt. So, if the city had not stepped in, this would have happened. Ostrom closes down. People are out of work. No sales tax. The city doesn't own the property anymore. The city has to keep paying the $3 million bond debt. Blight on Whittier boulevard.(t this at a time when the city is improving the looks of Whittier Blvd.) But the city did step in. The jobs have been saved. Sales tax continues into the city coffers. No blight (no empty, run down on Whittier Blvd.) Now, you can disagree with all what I have written. But as a Montebello resident, I am happy that the city saved the business. Of course, I realize that there are people in Montebello who just want to complain, want no development and are simply content that other cities develop while Montebello go further down the drain.
What??? These people don't choose to do business in Los Angeles and/or Montebello
because we are wonderful people???? So, maybe that's why so many manufacturing companies have flown to coop??? So, its a profit thing??? The things you learn here at Topix
Theolona Ranger

Los Angeles, CA

#10 Aug 20, 2010
Blame Rosie
Not Me
She just signed the contract as Mayor PRIOR to the City attorney signing the contract and Prior to gettin a check for the ernest money deposit.
Basic contract law requires, especially real estate contracts:
offer
acceptance
consideration
here the acceptance was faulty and there was no consideration.

The City council sent the negotiations back to the drawing board the next day.
The seller had to know there was no consideration and no valid completed contract.
It's hard to see how he can claim to have relied on the so called contract or suffered any damages.
mtb877

San Bernardino, CA

#11 Aug 20, 2010
stoogoo55 wrote:
<quoted text>What??? These people don't choose to do business in Los Angeles and/or Montebello
because we are wonderful people???? So, maybe that's why so many manufacturing companies have flown to coop??? So, its a profit thing??? The things you learn here at Topix
I don't really understand your point. People choose to do business where they believe they will make money - I don't think they take a survey to see how many good people as opposed to bad people are going to be their customers. Over years, demographics change as do markets.
mtb877

San Bernardino, CA

#12 Aug 20, 2010
Theolona Ranger wrote:
Blame Rosie
Not Me
She just signed the contract as Mayor PRIOR to the City attorney signing the contract and Prior to gettin a check for the ernest money deposit.
Basic contract law requires, especially real estate contracts:
offer
acceptance
consideration
here the acceptance was faulty and there was no consideration.
The City council sent the negotiations back to the drawing board the next day.
The seller had to know there was no consideration and no valid completed contract.
It's hard to see how he can claim to have relied on the so called contract or suffered any damages.
Same old misinformation and lack of understanding from Loner. The City Attorney is NOT required to sign any contract. If Mr. Savacharian negotiated a deal with the city, with Torres, Huntley, Bazua and had a contract drawn up by the law firm of Alvarez-Glasman and one to which the Mayor put her signature on and was informed he was getting $3.2 million on a certain timetable, and then nothing.....I think Mr. Sevacharian has suffered damages that the city will have to pay on top of the $3 million plus. At a session of the Montebello City Council, the City Attorney publicly announced two minor changes to the contract and those changes were duly made. If the City's argument is that Mr. Alvarez-Glasman did not "sign-off" on the deal, it won't even get to court, the city will settle before then. I am amazed (well not really) that Loner thinks Rosie Vasquez had so much power. Personally, I hope this ends up in court because I think Mr. Alvarez-Glasman (and Molinari) will be highly embarrassed when the truth comes out why the city is not honoring its contract.
tell the truth

West Covina, CA

#13 Aug 20, 2010
The City of Montebello has had a problem for a long time. they back out of deals. This is a way of life. No body should do business with Montebello with out cash up front.
south montebello resident

Montebello, CA

#14 Aug 21, 2010
stoogoo55 wrote:
<quoted text>What??? These people don't choose to do business in Los Angeles and/or Montebello
because we are wonderful people???? So, maybe that's why so many manufacturing companies have flown to coop??? So, its a profit thing??? The things you learn here at Topix
Dude, don't drink before you start posting.
south montebello resident

Montebello, CA

#15 Aug 21, 2010
Theolona Ranger wrote:
Blame Rosie
Not Me
She just signed the contract as Mayor PRIOR to the City attorney signing the contract and Prior to gettin a check for the ernest money deposit.
Basic contract law requires, especially real estate contracts:
offer
acceptance
consideration
here the acceptance was faulty and there was no consideration.
The City council sent the negotiations back to the drawing board the next day.
The seller had to know there was no consideration and no valid completed contract.
It's hard to see how he can claim to have relied on the so called contract or suffered any damages.
The mayor can sigh any legal document without the city attorney's signature first.
It basically comes to this:
The prior council wanted development on Whittier blvd, but Bill was against the development (as always) because HE wanted credit for it. Rosie pushed the contract through because she knew that Bill would have stopped it cold in its tracks. And what was the first thing Bill did when he got in power? He delayed the development process so that he could "look at it". Some such as TT and TR say there were no appraisals done, which was proven to be wrong, then they changes their story to the appraisals were too old (another BS excuse).
Bottom line is this. If Bill had not come into power we'd be having real development on Whittier blvd right now. He has shown for over 25 years that he is NOT in favor of any real development in our city.
south montebello resident

Montebello, CA

#16 Aug 21, 2010
BTW, people, I know everyone sees me as a Bill hater, but I saw something very interesting that I wanted to share with you.
The August 25th city council agenda has item #28 which talks about the train crossing in Montebello. It's a rather lengthy item but it basically talks about the history of the crossing and explains why nothing has been done to them.
What I find interesting is that Bill Molinari has for years claimed that nothing has been done because he wanted to lower the tracks and have traffic go over the trains. He has stated that doing a street underpass (like the one on Garfield Ave) would displace people and close some businesses). Well, it says that since 2002, the ACE board has told Montebello and Bill that it no longer had the funding to lower the tracks and that we(Montebello) would have to get the additional funding to have the tracks lowered from Maple to Montebello blvd. It says even now that it is not economically feasible to lower the tracks.

I find it funny how Bill used his argument of gloom and doom on his campaign literature regarding the tracks, saying traffic would back up for emergency vehicles and such when he knew damn well he could NEVER get the tracks lowered. Another example of him lying.

I invite everyone to go to the city web page and look up the agenda and read item #28. It is very interesting and enlightening.

And the only reason why I blame Bill on this is because he opposed the underpass and when the funds were available, but he said no.

Thank Bill...
mtb877

San Bernardino, CA

#17 Aug 21, 2010
south montebello resident wrote:
<quoted text>
The mayor can sigh any legal document without the city attorney's signature first.
It basically comes to this:
The prior council wanted development on Whittier blvd, but Bill was against the development (as always) because HE wanted credit for it. Rosie pushed the contract through because she knew that Bill would have stopped it cold in its tracks. And what was the first thing Bill did when he got in power? He delayed the development process so that he could "look at it". Some such as TT and TR say there were no appraisals done, which was proven to be wrong, then they changes their story to the appraisals were too old (another BS excuse).
Bottom line is this. If Bill had not come into power we'**** be having real development on Whittier blvd right now. He has shown for over 25 years that he is NOT in favor of any real development in our city.
You are right. The appraisals were done at the time of the negotiations (when else?????) and were higher than the final negotiated price. The only reason this is an issue is because Bill Molinari wants it to be an issue and the other 4 council members seem powerless to stop his malicious behavior. I am also getting a little fed up with Council member Cortez whose main worry it appears is "reviewing the past council's contracts". If she has any information that the previous council did something illegal then she should pass those documents to the DA and get on with what she was elected to do, represent the people. While Montebello is burning Cortez is playing her fiddle.
mtb877

San Bernardino, CA

#18 Aug 21, 2010
tell the truth wrote:
The City of Montebello has had a problem for a long time. they back out of deals. This is a way of life. No body should do business with Montebello with out cash up front.
It appears nobody wants to do business with Montebello PERIOD. And why would they all the time Molinari sits on the council.(Although he meets Lily Wong fairly often. I wonder what she wants?)
Theolona Ranger

Los Angeles, CA

#19 Aug 21, 2010
"The mayor can sigh any legal document without the city attorney's signature first"
shure she can
but without the City Attorney's signatue on the "Approved as to form" stamp it is not yet a valid contract.
Furthermore,in her haste, Rosie did not provide for an "ernest money deposit" or designate from whence funds were to be drawn.
No Consideration
No Contract
simple as that

" If Bill had not come into power we'd be having real development on Whittier blvd right now"

Shure, right, real soon now- this was a land bank deal according to Urteaga. There was not then and never was a developer waiting to do a project.

Opening Escrow without a completed contract and no ernest money deposti- irregular, and since the Council on Nov 25 sent the negotiations back to the drawing board, unethical.

Now the City has hired an appraiser.
Perhaps some version of this deal could be a good deal for both parties.
mtb877

San Bernardino, CA

#20 Aug 21, 2010
Theolona Ranger wrote:
"The mayor can sigh any legal document without the city attorney's signature first"
shure she can
but without the City Attorney's signatue on the "Approved as to form" stamp it is not yet a valid contract.
Furthermore,in her haste, Rosie did not provide for an "ernest money deposit" or designate from whence funds were to be drawn.
No Consideration
No Contract
simple as that
" If Bill had not come into power we'**** be having real development on Whittier blvd right now"
Shure, right, real soon now- this was a land bank deal according to Urteaga. There was not then and never was a developer waiting to do a project.
Opening Escrow without a completed contract and no ernest money deposti- irregular, and since the Council on Nov 25 sent the negotiations back to the drawing board, unethical.
Now the City has hired an appraiser.
Perhaps some version of this deal could be a good deal for both parties.
What is Danny Ku? An ice cream salesmen? He invested over $1 million in several buildings along Whittier Boulevard for redevelopment. Back to Ostrom, there was a completed contract, that's what the Mayor signed. The city hired an appraiser when the deal was being negotiated - didn't you know that? That's the problem of being an outsider looking in. I honestly don't know why I bother to respond to you. Obviously, you have every right to form your own opinions - but not your own facts!
mtb877

San Bernardino, CA

#21 Aug 21, 2010
Just to continue to inform Loner a little more. By writing "Rosie did not designate from whence funds were to be drawn.." you once again show your ignorance of how things are done. That is not the task of the Mayor. The staff prepare a report and include "...whence funds were to be drawn" I also believe that the city, especially along Whittier Boulevard, would have seen some major investment and development but for the obstructionist behavior of Bill Molinari. What developer in his or her right mind (apart from Lily Wong it seems) would want to deal with Molinari and his friends/
Theolona ranger

United States

#22 Aug 22, 2010
MTB877
There may have been a "completed contract", maybe not.
What there surely was not was a "fully executed contract"

Clause 2.1 of the agreement

"The opening of the Escrow (the "Escrow Opening Date") shall be deemed to be the date that a FULLY EXECUTED copy of this Agreement is delivered to the Escrow Holder"

(emphasis added, caps in original)

So escrow was never opened.

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