“Then it suddenly occurred to me that, in all the world, there neither was nor would ever be another place like this City of the Angels. Here the American people were erupting, like lava from a volcano; here, indeed, was the place for me – a ringside seat at the circus.” — Carey McWilliams
October 3, 2004
David Margrave is the developer of Arroyo Oaks, a senior housing project that is scheduled to be built next year at Pasadena Avenue and Monterey Road.
There is a Gold Line rail crossing at that site. The first thing you hear as the train comes along is its horn. Then the crossing gates go down, accompanied by the sound of clanging bells. Then the train zips by at 45 mph. Finally, the gates go up and the bells stop. This happens 200 times a day.
If you like peace and quiet, it would appear not to be an ideal place to spend your retirement years.
Understandably, Margrave is less than thrilled with the train, which he calls a "human rights violation.”
Fortunately for him, he stands at the levers of power, and is uniquely able to do something about it.
He is a city councilman, a Gold Line authority board member and a founding member of the Pasadena Avenue Monterey Road Committee, all three of which are central players in the ceaseless dispute over the noise of the train.
This is all general knowledge in South Pasadena, and has been for some time.
But in recent weeks there has been growing concern on the City Council that Margrave's tangle of competing interests could represent a legal conflict.
Just last month, the city attorney was asked to research the question and deliver an opinion, apparently the first time such a formal analysis has been sought.
If he has a conflict, Margrave could be barred from voting on some or all Gold Line matters, which would leave him politically impotent on the issue that matters most to him.
If the conflict were judged particularly egregious, past votes could be ruled invalid. In the most severe scenario, Margrave could face criminal prosecution.
The issue is not simple, and Margrave's defenses are as complex and various as his interests.
But at bottom is a simple question: Is Margrave a populist hero, courageously fighting the train on the people's behalf? Or is he using his public position to serve his private interests?
Or is he both?
"There are a lot of question marks up in the air right now,' said Mayor Mike Ten. "It's gotten worse, to the point where I, as having to represent the city as the lead person, have to question some of it.”
Before he was a developer or a councilman, Margrave was a plumber. He still is. He still wriggles under sinks and into crawl spaces. He still snakes clogged toilets and tools around town in a plumber's van. And he still wears a dirty shirt with his name stitched to it.
Friends say he breaks down problems the way you would fix a leaky faucet or a major backup: methodically.
"He's a very linear thinker,' said friend Ernie Arnold. "He'd be a great engineer. He's good at working out solutions in a straightforward manner."
Once he has a solution, Margrave tends to brook no dissent.
"David happens to be one that when he grabs on to an issue, he is absolutely convinced of his position," Arnold said. "David runs like a train."
His single-mindedness can lead to what some see as inappropriate behavior: He was threatened with arrest after demanding to inspect the brakes of a Gold Line train immediately after a freeway accident in which a child was thrown onto the tracks and had his foot severed by a passing train. Or when he suggested that South Pasadena cops should use their squad cars to pull over Gold Line trains for speeding.
"He can have some antics," Arnold said. "That can rub some people the wrong way. But he sometimes is attacked for his style because they can't attack the substance of what he's talking about."
Margrave cast himself as fighting relentlessly for the people of South Pasadena, and to those who support him, he can come off almost as a folk hero.
"I live in a small little community," he said. "As long as they choose to have me represent them, I will fight for their quality of life."
Margrave's recent entry into politics began when he formed the Pasadena Avenue Monterey Road Committee. Representing neighbors adversely affected by the train noise, PAMRC lodged a formal complaint against the train's construction authority.
Margrave believed the city had failed in its duty to protect residents, so he ran for City Council and won. Soon after, the city joined PAMRC in taking on the construction authority, opening up the city's coffers to pay lawyers' fees. To date, the city has spent $475,000 – well more than PAMRC could ever afford.
With a friendly council on his side, Margrave got himself appointed to be South Pasadena's representative on the construction authority's board, where he tirelessly argues that the train was badly designed and ought to be muted and slowed. On contentious issues, he is rarely in the majority.
The construction authority later offered a settlement to South Pasadena and PAMRC, which Margrave believed was a pittance compared to what the train owed the city.
South Pasadena accepted the deal in March on a 3-2 vote, over Margrave's bitter opposition. PAMRC rebuffed the offer, and has refused subsequent ones as well.
In a separate action over the same issues, Margrave's wife is preparing to sue him twice over. Diane Margrave is preparing to file suit against South Pasadena and the construction authority, both of which her husband represents, claiming that the noise of the train has irreparably harmed the value of several of her properties, which happen to be adjacent to the tracks.
One of those properties, the Morrow and Holman plumbing business at 266 Monterey Road, is slated to be the future site of Arroyo Oaks.
Since Margrave was elected to the City Council in March 2003, three attorneys have been charged with keeping him out of trouble on conflict-of-interest issues: former City Attorney Joseph Pannone, current City Attorney Steve Pfahler, and construction authority attorney Mike Estrada.
None has done a thorough analysis of Margrave's interests, though Pfahler is said to be preparing one. Until Sept. 1, no one had been asked to do one.
Margrave claims that everyone from Pannone to Pfahler to the Fair Political Practices Commission has cleared him of any potential conflicts. But the only person who will publicly admit to telling Margrave he can vote is Mike Montgomery, a former PAMRC attorney.
"I am convinced it is not a legal conflict of interest,' Montgomery said. "There is always a political perception, but you've got to separate the political perception from the legal conflict.”
Chris Sutton, an independent Pasadena attorney familiar with conflict law, said the complexity of the case argues for caution.
"It certainly would have been prudent for the council to put another person on the Gold Line authority," Sutton said. "Boy, is that a complicated mess. That's a law school exam, is what that is."
Sutton said Pfahler should not try to analyze the issues on his own.
"They should all lay their cards on the table and seek an advice letter from the FPPC, and dump it in the lap of someone who's impartial," Sutton said. "There is clearly the potential for a conflict of interest. The question is whether it crosses the line."
Margrave says he has not crossed the line. He has three defenses.
The first is that he does not own any property -- his wife does. Los Angeles County assessor's records confirm this, listing more than a dozen South Pasadena properties under the name of Diane M. Hamilton Margrave, and none under her husband's name.
The properties include the house they both live in on Buena Vista Street, and Morrow and Holman, where David Margrave is technically just an employee.
Of course, a spouse's property is included in the definition of "economic interest," which leads to the second defense, that Diane and David Margrave are not married.
"Diane Margrave is a single woman," David Margrave said. "It's kind of a unique situation."
Technically, though they live together and David constantly refers to Diane as "my wife," and though he says they are "still married in the church in front of my God," the Margraves are divorced.
To suggest how seriously they took the split, they made it official at the Pasadena Superior Courthouse on April 1, 1986.
Margrave has a lengthy explanation. It involves a renunciation of state involvement in the marriage bond ("My grandfather got married behind a tree," he said); an exhaustive history of the use of precious metals as currency (Margrave claims to be the only man in America who pays his taxes in platinum, silver and gold); and a hint that at one point in his life he feared bankruptcy or some form of litigation. ("I could not jeopardize my family and their future by my actions.')
"He divorced himself of all interest in the property," his friend Montgomery said. "To the point where, if his wife threw him out of the house, all he'd get was Social Security."
According to an FPPC attorney, this makes the defense somewhat more credible.
John Wallace is an assistant general counsel with the FPPC. He declined to analyze the Margrave situation or speak in specific terms. But he said he believed that if an official's divorce is final, and there is property in the ex-wife's name, then the property is not, technically, the official's economic interest.
That defense only goes so far. Margrave still receives income from Morrow and Holman and he is still the developer of Arroyo Oaks.
That leads to the third defense: that the effect of the train noise on Margrave's financial interests is "substantially similar" to the effect on a significant segment of the community.
A "significant segment" is defined as more than 10 percent of South Pasadena's population, which in the last census was 24,292.
Under the Political Reform Act of 1974, if Margrave's interests are indistinguishable from those of 2,430 people, he can vote.
The FPPC urges caution when claiming this exception, and it is hard to know precisely how many people are in the same financial boat as David Margrave.
"It's going to be a matter of the city attorney collecting a lot of facts about the affected properties," Wallace said. "We can't send assessors out there and appraisers who could make that call."
There are, according to acting City Manager Gay Forbes, 206 properties adjacent to the train in South Pasadena. Some property owners, like Diane Margrave, own multiple parcels, which would suggest there are fewer than 206 property owners along the line.
Only a portion of those properties are, like the Morrow and Holman site, near one of the eight crossings in town, where the bells sound every few minutes and where the horns are loudest.
To be sure, the sound of those bells and horns extends beyond the properties immediately adjacent to the track. Determining how far the sound travels before one reaches properties that are no longer "substantially similar” to Morrow and Holman would require a judgment call.
However, no one else in town is trying to develop a 17-unit senior housing project, plus 5,500 square feet of retail and office space, immediately adjacent to the track.
In that respect, Margrave is in a class by himself.
As a developer, there is a substantial possibility that the train noise could end up hitting Margrave in the pocketbook in a manner his fellow citizens are unlikely to experience.
He counters that while others may not be taking advantage of it, all property owners along the line have the legal right to develop their land, and therefore all owners face the same financial issues.
Margrave says he does not know how much extra money he will have to pay for double-paned windows and extra insulation because of the train noise.
But he cites the Mission Meridian Village project, which he says spent an extra $150,000 on noise mitigation because of the volume of the bells and horns. (The developer, Michael Dieden, declined to discuss the cost, while the architect, Stefanos Polyzoides, said the expense was "not an outrageous thing.")
Such an expense is unlikely to seriously affect Margrave's bottom line. An independent real estate expert roughly estimated that Margrave could make anywhere between $1 million and $4 million in profit.
The analysis was based on the initial version of the project, which called for 20 condominiums, each to sell at between $350,000 and $450,000. But the initial plan violated density provisions of city zoning law, which allows only 11 condominiums unless Margrave seeks an "affordable housing" density bonus, in which case he gets 17. The project has since been scaled back to 17 units, but the sale price of those units has not been clarified.
So whose project and whose profit is it David's or Diane's?
"It's her money, her project, and her property we're going to develop on," Margrave said. "She's hired me to develop it."
In several places in the project application, which is on file with the city, David Margrave is listed as the "landowner," though in other places his name is whited out, leaving only his wife's. The minutes of a February meeting with city staffers lists David Margrave as the "owner/developer' of the project.
Also in the file is a receipt for $2,663 in project application fees made out to David Margrave.
The plan is in the pipeline, with an environmental report due out later in the fall. Pending approval, which could come as soon as January, he hopes to start construction next year.
Margrave has bigger plans for senior homes on property on the other side of the tracks, which his wife also owns. That project, which could have as many as 47 units, would require a zoning change from light industrial to residential, for which Margrave has made an urgent case, and which would require majority approval at the City Council. (Ten has hinted that the zone change may be a good idea.)
That project, still only a concept, could net Margrave many millions more.
For a man who stands to make so much money selling housing adjacent to the tracks, Margrave makes life along the Gold Line sound miserable.
He describes residents suffering from headaches and even "sores on their bodies" because of train noise. He describes homes along the line as "prisons," because residents can't go outside without hearing the train.
Asked to reconcile the apparent disconnect, Margrave asserts almost offhandedly that the wrong will be rectified and that he will prevail against the train noise, if necessary, in federal court.
"It's a done deal," he said.