Llovio Ford was previously located further west but needed to relocate. So instead of encouraging some sort of ground lease arrangement between the LeBoffs and Llovio, the South Gate Redevelopment Agency stepped in and condemned the land in November of 1996. They decided the property was worth $2,150,000. LeBoffs appraisal showed a value of $4,200,000. Additionally, LeBoffs knew that the Disposition and Development Agreement (DDA) between the City and Llovio Ford called for payment by Llovio of between $2,150,000 and $2,500,000 for the property, a virtual admission the property was worth more than they were being paid. So now the lines were drawn and it went to court.
Even though the DDA gave the opportunity to charge $2,500,000 for the land, at the trial South Gate held firm that all the City would pay LeBoffs was $2,150,000. While it is customary for a City to low-ball any offer, the difference between $2,150,000 and a bona fide appraisal of $4,200,000 was ridiculous, and the Judge did not overlook the disparity.
Reading the trial documents shows just how much the City of South Gate miscalculated with their high-handed ways. The Judge increased the condemnation award above the appraisal to $4,900,000, added on a precondemnation damages award of $385,931 plus statutory interest from November 1996 of $585,093 and, the frosting on the cake for LeBoffs, recovery of litigation expenses. The various parts and pieces will add up to more than $6.5 million. With the added costs, it will be decades before this Redevelopment project shows a profit.
The $5 million South Gate loaned to Llovio Ford to buy the land and build the agency was from a U.S. Government HUD Section 108 loan to be repaid over 20 years by Llovio Ford with the first 10 years interest free. The City will pay that interest, some $2,322,906. The irony is that the HUD loan is guaranteed by Block Grant Funds, more government money-money that was supposed to be used to help low income.
For Llovio Ford the City took care of a large part of the demolition, the down payment, a ridiculously low purchase price, street, infrastructure and all other offsite improvements, 10 years of the HUD loan interest and built a parking lot. Another example of the type of abuse that is common in Redevelopment. At least the court was not fooled.