Santa Monica Lookout
|Court Dispute Between Developers Spills into Santa Monica City Council Chambers||
By Jonathan Friedman
December 2, 2016 -- Following a judge's ruling against NMS Properties that included allegations of forgery and perjury, a Santa Monica City Council member is calling for a review of the developer's agreements with the City.
Council member Kevin McKeown has placed an item on Tuesday's council agenda calling for a review of various properties for "possible misstatements and their consequences."
An NMS spokesman told The Lookout on Thursday that a City staff review will show "we have always operated with the highest integrity."
Los Angeles Superior Court Judge Suzanne Bruguera's decision filed November 22 against NMS involves a civil dispute with another developer that is unrelated to any of the company's properties in Santa Monica.
An attorney for NMS, which is Santa Monica's largest residential developer, told the Los Angeles Business Journal that it will appeal the decision.
McKeown said he placed the item on the agenda "in light of recent news coverage and Superior Court action."
NMS, which owns numerous residential buildings in the city, has 18 projects in the planning pipeline, 11 of which are development agreements (DA), said Planning Director David Martin.
DAs promise various community benefits, including affordable housing, in exchange for development rights beyond what City rules allow.
"While we have no particular indication at this time that any of the City's agreements and contracts with NMS contain false information, it's only prudent for us now to review all those documents," wrote McKeown in an email to The Lookout.
He added, "We need to protect the municipal corporation, resident/taxpayers and the residents who live in NMS buildings. One result of the court determination may be that a number of Santa Monica apartment buildings change hands from NMS to new owners," he said.
"I personally want to make sure renters don't suffer from the fallout of whatever is happening with NMS."
Eric Rose, spokesman for NMS, told The Lookout in an email that while the company "appreciate[s] Councilmember McKeown's concerns for Santa Monica residents and taxpayers," "we can assure [renters] that this ongoing business dispute will not impact renters at current and future NMS properties."
Judge Bruguera's 94-page decisions includes allegations of perjury, forged documents and computer tampering. It stems from a 2014 lawsuit filed by NMS head and founder Neil Shekhter alleging Boston-based developer AEW owes him $720 million for violating the terms of an agreement.
"Plaintiffs fabricated evidence, submitted perjury about the same, and destroyed evidence while simultaneously representing to the court that they were proffering authentic documents and they had preserved evidence," Bruguerra wrote.
She continued, "In light of these facts, fees and costs should--and indeed must--be awarded against plaintiffs."
The Los Angeles Business Journal reported that Shekhter’s attorney Skip Miller admitted to the newspaper that his client had switched his personal hard drive in violation of a court order, which he called "a mistake."
But the newspaper also reported that Miller said, "The ruling is wrong as a matter of law and will be overturned on appeal."
Slow-growth activist group Santa Monica Coalition for a Livable City (SMCLC) seized on this news earlier this week and sent a mass email referring to NMS as "a fraudster," which was a term not used in Judge Bruguerra's decision.
SMCLC called for a review of existing agreements between the City and NMS, as well as an end to discussions on all pending projects.
"A company like NMS that commits these horrendous business practices cannot be trusted to exercise basic integrity and ethics," SMCLC wrote in the email.
NMS spokesman Rose did not mention SMCLC specifically in an email to The Lookout, but he criticized its general reaction, which has been shared by others in line with the activist group's thinking on development issues.
Rose wrote, "We are disappointed that the false statements directed at NMS, a Santa Monica-based housing provider, by AEW, a 60 billion-dollar hedge fund located on the East Coast, are being used by certain groups to further an anti-affordable housing agenda in Santa Monica."
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