The recent El Monte Gateway bankruptcy is yet another setback for this important San Gabriel Valley project–which is unfortunate for El Monte city and its residents. Located off the 10 Freeway at Santa Anita Avenue, the El Monte Gateway mixed-use project is centered around the bus and transit station.
Discussion and planning phases for the Gateway project began in 2003. After a decade of setbacks and delays, the first phase–132 units of affordable housing–was completed in 2015.
The next phase of construction started in 2019, with plans for three Marriott hotels, restaurants, luxury apartments and additional affordable apartments. The current developer is Grapevine Development, a company owned entirely by James Acevedo and operated by Mr. Acavedo, with his wife and family. However the project is apparently not going smoothly.
Mr. Acavedo owns three companies that are subject of the El Monte Gateway bankruptcy: Gateway Two, LLC, Gateway Four, LLC and Gateway Five, LLC. Collectively, debt for the companies is listed, so far at around $155 million. What catches the eye, however, is that most of the bankruptcy debt is listed as “disputed,” including $8 million owed to the City of El Monte for various permits, reports and infrastructure. Multiple secured loans and trade debts are also listed as disputed. This often indicates a poorly-functioning development process–usually attributable to the developer. It seems unlikely that Mr. Acavedo will be allowed to finish this important project for the City of El Monte.
Mr. Acavedo’s companies, now the subject of the El Monte Gateway bankruptcy, essentially received the property from El Monte City for free, in exchange for assuming much of the expense of preparing the property for development. However–nothing really ever comes for free: the Gateway site was previously a landfill and has unstable soil, so the the cost of those preparations is higher than the value of the land. The state of cleanup and stabilization is not currently known.
By way of further background, a $15 million state grant helped build infrastructure improvements to the surrounding streets. El Monte city is required match to that grant in the amount of $4 million, which apparently comes from a variety of non-general fund sources.
In addition, El Monte is financing approximately $9.9 million of the affordable housing project, including the cost of the land and some fees. Some of those funds come from the U.S. Department of Housing and Urban Development (HUD) for the city’s use on affordable housing. To satisfy the HUD covenants, the first phase of 132 affordable units must remain “affordable” for 55 years.
It seems likely that yet another developer may be brought in to finish the project, as the El Monte Gateway bankruptcy filings suggest a troubled development process.