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It’s been almost two months since five executives at local affordable housing developer The Amerland Group and one of its subsidiaries were charged with manslaughter and more than 100 cases of elder abuse in relation to a 2008 fire that killed four elderly tenants on its property.
The charges significantly hobbled The Amerland Group. While the company maintains its ownership interests in several affordable housing projects, Amerland co-owner Jules Arthur says the company is “no longer in the development business.”
Meanwhile, two of Amerland’s senior executives, who were not criminally charged, have peeled off and formed their own company, C&C Development, LLC.
The firm has just been given preliminary approval by the San Diego Housing Commission to help it borrow $15 million, thereby easing the financing costs to renovate and manage an affordable housing project in Clairemont that will primarily house elderly people.
And while the company’s founders say they had nothing to do with the project involved in the criminal charges, the men are using Amerland’s portfolio — and Amerland’s portfolio alone — to burnish their bonafides in front of the public agency.
Co-founder Colin Rice said both he and partner Casey Haeling support Amerland’s embattled founders. The formation of the new company was something they have had planned for a long time before Amerland’s legal troubles arose, Rice said.
Until recently, Rice was listed on Amerland’s website as its vice president of acquisitions. Haeling was listed as director of acquisitions. Rice said he’s extremely proud of the work he did at Amerland, though he said that he and Haeling both worked as consultants for the company, and were never employees.
And Rice said his successful management of Amerland projects in San Diego — he was one of six top executives at the company — put him in good stead with the Housing Commission, which has been keen to support his fledgling company.
But Amerland has had its fair share of trouble over the last few years.
In 2008, fire ripped through the company’s Casa de Vallejo, a 136-unit residential complex for the elderly in Vallejo. As the fire spread through the building, the project’s fire alarms failed to sound and many of the elderly residents remained trapped in the burning building.
In the end, four of the tenants died as a result of the fire and prosecutors concluded that Amerland was ultimately responsible for the fire equipment not working properly, a conclusion that led to June’s manslaughter and elder abuse charges.
Rice said neither he nor Haeling worked on the Casa de Vallejo project. He has, however, readily linked the businessmen to other Amerland projects.
The newly founded C&C Development wants the Housing Commission to give it tax-free financing so the company can buy and renovate Sorrento Tower, a 198-unit senior citizen housing development. The company plans to spend millions of dollars refitting the building and sprucing up tenants’ apartments and common areas.
In the course of convincing the Housing Commission to approve its new company for the tax-free financing, a step that would considerably cut its borrowing costs, C&C Development submitted a document to the commission that states the company has developed 15 properties.
In fact, all of those properties were developed by Amerland.
C&C Development hasn’t yet developed anything. Indeed, despite describing the company in its applications to the Housing Commission as a limited liability company, C&C Development is yet to be registered as an LLC with the state of California. Rice said the company’s lawyers are working on that.
The lines between the companies appear thin.
Rice and Haeling also both still use their Amerland e-mail addresses. The phone number they listed for C&C Development on the paperwork filed with the Housing Commission is the same number as The Amerland Group and the two businessmen are still working out of the same offices they used while working for Amerland.
Becky Dennison, co-director of the Los Angeles Community Action Network, a nonprofit that works with the homeless and low-income community in downtown Los Angeles, said she knows of at least one other company that has risen out of The Amerland Group’s ashes and is trying to buy affordable housing projects in Los Angeles.
Dennison said if the leaders of these new companies wish to rely on their experience with Amerland as evidence that they are capable of completing successful projects, they should also associate themselves with the company’s failures.
“It’s all right to say ‘I wasn’t in charge of the ship,’ but the reality is there are tons of affordable housing developers out there who have never been affiliated with Amerland, why not give them a chance?” Dennison said.
Rice said their track record in the affordable housing industry is evidence enough that they can do an excellent job at Sorrento Tower. He said the Housing Commission has been extremely pleased with Amerland’s management of its three projects in San Diego.
Indeed, the local projects seem to have been a success and have attracted no significant bad publicity.
In an interview last year, Councilman Tony Young said Amerland’s Bay Vista project (now called Sea Breeze), which is in his council district, should serve as a model for future development of southeastern San Diego.
The Housing Commission, which oversees affordable housing construction in San Diego and is tasked with judging developers’ suitability to receive public funds or publicly subsidized loans, published a recent report on Sorrento Tower. The report points to Rice and Haeling’s work at Amerland as evidence that they are suitable to take on the new project.
But that report makes no mention of the criminal charges their former company has recently attracted. Nor does the report mention some of the other hot water Amerland has gotten into in the last few years.
In 2008 the Los Angeles city attorney accused Amerland of a host of fire code violations at one of its downtown Los Angeles properties, The Rosslyn Lofts, after the Los Angeles Fire Department concluded the company had allowed fire equipment to fall into a state of disrepair and had failed to properly patrol the building to check for fire or fire hazards.
Tina Hess, the Los Angeles deputy city attorney who prosecuted the Rosslyn Lofts case, said Amerland consistently blew off warnings from the fire department to fix the problems, a claim Arthur also vehemently denies.
Amerland pleaded no contest to the charges in November 2008. The Rosslyn Lofts is on the list of properties C&C Development claimed to have completed in the document filed with to the Housing Commission.
Also in 2008, a group of tenants at another of Amerland’s downtown Los Angeles buildings, The Alexandria, filed a lawsuit against the company claiming that tenants were illegally evicted and weren’t paid relocation expenses, as required by law.
The group claimed Amerland discriminated against elderly, disabled and black tenants and that the company squeezed out more than 80 tenants it didn’t want by denying them safe and habitable apartments. Amerland and its co-defendants settled the lawsuit in January 2009 for $1 million.
The Alexandria is also on C&C Development’s list of completed projects.
Rice said he’s not sure where the document that lists C&C Development’s completed projects came from. The Housing Commission included the list on its website as an addendum to C&C Development’s developer disclosure statement, a document developers seeking access to publicly subsidized financing must file.
A spokeswoman for the Housing Commission pointed out that C&C Development has not yet been formally approved to receive any tax-exempt financing.
Before that happens, the company will have to argue its case before the San Diego City Council in a public meeting, which would happen sometime after Labor Day, the spokeswoman wrote in an e-mail.
“Meantime, the Housing Commission staff is continuing to do its due diligence. A Board Report will be issued that will include any relevant matters that should be disclosed prior to any formal action taken by the San Diego City Council and/or Housing Authority,” she added.
Please contact Will Carless directly at will.carless@gmail.com.
Correction: A previous version of this story incorrectly stated the year in which Amerland pleaded no contest to charges in Los Angeles. We regret the error.