Garofalo got prime lot, sold it 3 days later

Theresa Moreau

HUNTINGTON BEACH -- After consistently voting on the side of one of the

city’s biggest developers, Mayor David Garofalo landed a choice lottery

number that gave him the right to buy one of the most coveted homes in

the firm’s newest housing tract.

The mayor initially declined to explain how he wound up with such a prime

lottery number, and inquiries made to the companies involved in

developing the exclusive St. Augustine tract -- PLC Land Co. and

Christopher Homes -- have gone unanswered.

Garofalo has denied any wrongdoing concerning the purchase of the home.

On Wednesday, Garofalo faxed the Independent a statement that read, in

part:

“As soon as the plans [for St. Augustine] were made public, I decided

that I would like to live there. I called the builder’s office monthly,

very early in the year that phase one was made available. When it was my

turn, I selected the lot that I most wanted. It was available. I

proceeded with the purchase.”

Garofalo held onto the Poppy Hills Circle home for only days, eventually

handing it over to a close friend, gas station mogul George A. Pearson.

The mayor initially told the Independent he paid for the house in the St.

Augustine tract of the upscale Holly-Seacliff development with his own

money. The initial value of the home was $565,000, though by the time the

purchase was finally recorded on Aug. 13, 1998, the price had swelled to

$625,596.

Reminded that he was already on record in the OC Weekly as saying that he

doesn’t “have those kind of assets,” Garofalo changed his answer. He said

he bought the house for cash with his friend’s money and turned a profit

of $1 when all was said and done.

“It was all his money from the first day. It was all cash,” the mayor

said. “He did a cash transaction to buy the house with a certified check.

He paid me $1 after the transaction. Why can’t you believe that?”

Pearson said the deal began to gel when he was having lunch with the

mayor one day. Both he and Garofalo were on a waiting list to buy a home

in the gated community, only the mayor had a much loftier lottery number.

Pearson said he asked Garofalo if he could have his position on the

waiting list, and the mayor agreed.

But there was one hitch.

“We had to use his name to finish the deal because the builder would not

let Dave give up his position to somebody else,” Pearson said.

Several of Pearson’s new neighbors said the lottery for the homes in the

gated community was simply a matter of luck.

Ken Horio, an attorney who lives in the housing tract, said in the early

part of the process he submitted his name to a lottery and his name was

selected at random.

“From what I remember,” Horio said, “we put our names in, and they drew

the names on a particular day. It was a random drawing.”

Public records show that on July 27, 1998, OC Ventures II, an investment

and finance company, granted the deed to the 2,730-square-foot home to

Garofalo for a recorded transfer tax of $621.50. The value of the home

was $565,000.

Three days later, a quit claim deed was recorded, which transferred the

property from Garofalo to Pearson for $625,000.

On Aug 13, the purchase price was rerecorded as $625,596.

Garofalo and Pearson -- explaining the $60,596 difference between what

Garofalo paid for the home and the final recorded purchase price -- both

said that money went for upgrades wanted by Pearson.

A deed of trust was finally recorded on Sept. 30, 1998, showing a loan

for $498,450 was taken out for the house. This was the first record of an

actual money transaction.

“I paid cash for the house, and when it was quit claimed I refinanced

it,” Pearson said. “That’s the way we were going to do it in the

beginning.”

Efforts seeking a response from the developers and agents of the housing

tract were unsuccessful.

William Holman, director of planning for PLC Land Co., referred all

questions to Jeff Rulon, vice president for Christopher Homes, which

built the St. Augustine tract. In turn, he referred all questions to

Christopher Gibbs, president of Christopher Homes, who did not return

calls placed by the Independent.

In reviewing campaign statements logging contributions for Garofalo’s

1998 reelection bid, seven PLC employees and officers were listed as

contributing a total of $1,500. The maximum per-person contribution is

$300.

PLC appeared before the City Council for the first time in 1996, when the

company requested the purchase of 448 acres of property governed by the

Holly-Seacliff Development Agreement, where Garofalo would eventually buy

a house on Poppy Hill Circle.

The request at that time was approved with the motion made by Garofalo.

Since then, PLC has appeared before the council dozens of times.

Garofalo, when present, has consistently voted to approve all PLC-related

items presented before City Council.

City Atty. Gail Hutton said this week she will ask the Fair Political

Practices Commission to decide whether Garofalo’s purchase and sale of

his St. Augustine home affects his ability to vote on projects by its

developer, PLC.