“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
January 28, 2007
James F. Goldstein is the NBA's favorite eccentric. He attends at least 110 games every year. He sits courtside and wears broad-brimmed hats, python boots and ostrich leather jackets. He is friendly with the players and coaches, who seem to get a kick out of his clothes and his obsession with the game. Once, in Miami, Shaquille O'Neal plucked his hat off and put it on his own head.
"He's got quite a flair," NBA Commissioner David Stern once said. "We love him as a sort of superfan."
His dramatic presence is irresistible to NBA beat writers, who have written profiles comparing him to Keith Richards and Tom Petty. Goldstein is cooperative, but when they ask how he affords his lifestyle, he gets evasive.
"Let's just say," he told the Detroit Free-Press, "I've got some investments that don't require a lot of time on my part and generate enough income for me to do things like this that I really enjoy."
His discretion preserves the enigma and conceals the reality, which is that while Goldstein is glamorous, his investments are not. He made his money in real estate, but not by developing glimmering office towers or waterfront condominiums.
Instead, he has unlocked the value in much more mundane properties: mobile home parks. Today, the vast majority of his income derives from five parks, two of which are in Carson.
Goldstein refuses to disclose his age (he's about 66), much less the size of his fortune. But taken together, the five parks must be worth at least $90 million. His net worth is probably less than that, once debt is figured in, but whatever it is, he clears enough income each year to crisscross the country during NBA playoff season, make twice-yearly pilgrimages to the fashion shows of Paris and Milan, and return home each time with heaping mounds of Cavalli and Gaultier.
After each fashion season, his outfits are retired and stashed away in the ever-expanding closets of his opulent hillside home. Someday, it will be a fashion museum.
He has called himself "the 21st century's first dandy."
His tenants would describe him differently -- to them, he is a robber baron. Most of them are poor and elderly. Nevertheless, Goldstein routinely asks municipal rent control boards for steep increases. For example, last year he sought to raise rents $300 per month -- a 60 percent hike -- at Carson Harbor Village.
Each year, the residents trudge down to City Hall to fight him. When he doesn't get his way, he sues, and sometimes tries to pass the litigation costs to his tenants, who also say he has cut services and skimped on maintenance. (He disagrees.) This conflict has been going on for nearly 25 years.
"He does act like a feudal lord sometimes," said Joanne Swan, a homeowners' association board member at Carson Harbor Village. "I don't resent that he goes to playoff games. I don't resent how he spends that money. What I resent is that his idea of what would be an equitable return on his investment is pretty exaggerated."
Many are less restrained.
"The man's an insatiable, greedy s.o.b.," said Steve Miller, a resident of Carson Harbor Village who, years ago, wrote a nasty letter to Goldstein that prompted a visit from the Sheriff's Department. "It's usury. It's just ridiculous. How can you just keep screwing people who are making you a wealthy person? He makes Simon Legree look like Shirley Temple. He should be on TV and have peanuts thrown at him."
Goldstein grew up in a middle-class suburb of Milwaukee. His father owned a department store. In his early teens, he kept statistics for the Milwaukee Hawks, launching his love affair with professional basketball. After high school, he studied economics at Stanford and moved to Los Angeles in 1962 to get his master's in business at UCLA.
Upon graduation, he was hired at Rammco Investment Corp., a newly formed company whose chairman, Arthur Carlsberg, was already a boy wonder of Southern California real estate development. At 31. Carlsberg had made millions buying up farmland on the outskirts of L.A. and selling it off for development. Goldstein worked as an "acquisitions man" for the new firm, researching and buying vacant land between Ontario and San Bernardino.
In a booming market, Rammco did better than most. The secret lay in statistical analysis of land value, according to a 1965 Time Magazine cover story about young millionaires, which included a profile of Carlsberg. Rammco gathered data on industrial payrolls and proximity to rail, airports and utilities, replacing rumors and hunches with solid facts.
"Ninety-nine percent of the real estate agents didn't know what they were talking about," Carlsberg told Time.
Seven years older than Goldstein, Carlsberg must have been a mentor to him. He came from a middle-class background. Before he was 40, he had a $300 million real estate empire and a marble-columned home in Bel-Air. Like Goldstein, he traveled the word in pursuit of pleasure -- though his taste was for big-game hunting. And he was patient and persistent.
"I can stay at a task five minutes or five years, if it's related to business," Carlsberg told the Los Angeles Times. "It's like hunting. The pursuit can be as much fun as the ultimate victory."
Goldstein was a vice president with the company, which had changed its name to Carlsberg Financial Corp.
(So, too, was Alan Cranston, for a brief period after he left the State Controller's Office and before he was elected to the U.S. Senate.)
Goldstein was compensated well enough by 1972 to buy the house where he still lives: a 4,100-square-foot modernist marvel that clings to a steep precipice in Benedict Canyon. Designed by John Lautner, a disciple of Frank Lloyd Wright, the home has a distinctive, triangular geometry, with skylights and glass walls that offer a panoramic view of the L.A. basin.
It has been lovingly lit and landscaped, and has been used in numerous fashion and movie shoots. In The Big Lebowski, it is the home of the mysterious pornographer.
By that time, Carlsberg's interest had shifted away from developing raw land and into acquiring upscale mobile home parks. Time profiled him again, dubbing him the "Mobile Mogul," and noting the many advantages of such an investment. The property taxes were low, since the mobile homes did not count toward the park's valuation, and construction costs were minimal. As Carlsberg acquired parks at a breakneck pace, Goldstein quickly grew familiar with the business.
"I became a specialist in that type of investment," he said in a recent interview with the Daily Breeze.
In 1978, Carlsberg was hunting rare mountain sheep in the Caucasus range in the Soviet Union, when he fell from a cliff and died. He was 45. The business fell to his younger brother, Richard P. Carlsberg.
He and Goldstein entered into some joint ventures, once buying a mobile home park in Northern California together. But the two men had different philosophies, according to deposition testimony Goldstein gave in a lawsuit he filed against the city of Palm Springs. Goldstein wanted to make long-term investments, while Carlsberg's preference was to buy and sell quickly.
Within a few years of Arthur Carlsberg's death, Goldstein had severed his ties with Carlsberg Financial and gone out on his own. He took out loans and acquired four parks – El Dorado in Palm Springs, Carson Harbor Village in Carson, Indian Springs in Palm Desert, and Rancho Verde in Rohnert Park, in Northern California.
His business career, at that point, was effectively over. He sat on his investments, drew income from them, and fought with cities over rent control ordinances.
In the early phase of this period, Goldstein would attend rent control hearings and, on occasion, would chew out a housing official personally. But as time wore on, he delegated most of those responsibilities to his attorneys. He would be out of the country for extended periods, leaving his subordinates in charge of managing his properties. They also end up receiving most of the abuse that the tenants aim at Goldstein.
"I don't hear too much of it directly," Goldstein said. "I hear it indirectly. I understand that's part of the business of owning rental-income properties."
Most city officials, including Carson's mayor, have never met him. To his tenants, he is an equally fleeting figure. Sometimes they will see him at a great distance, inspecting his property from the vantage of his Rolls Royce. But such visits are rare.
For the most part, his life is devoted to fashion, architecture and basketball.
As he explained to Diane Pernet, a Paris-based fashion blogger, his life was changed by a near-death experience. He was taking a photo of a piece of architecture in London and, to get the best angle, he had to stand in the street.
"A driver who wasn't looking came along from behind and hit me at full speed," he said, in the video interview. "I was fortunate enough to survive the accident, which was a miracle, and I decided once and for all that life was too short to spend on things you don't enjoy."
"Your life is pretty much based on pleasure?" Pernet asked.
He gave a sly grin: "At this point in my life, it certainly is."
Goldstein's business card lists three obsessions: fashion, architecture and basketball. If there were room for a fourth, it would be fighting rent control.
For almost a quarter century, he has sought hefty annual rent increases at his parks, only to be denied time and again. He has bemoaned his low rate of return (he once put it at 5 percent), and has sued cities repeatedly, racking up large legal costs for himself and the cities alike, and becoming deeply unpopular in the process.
Now, after a generation of conflict, he has found a way out: condominium conversion.
Most park residents own their mobile home and rent the space underneath it. The arrangement is a holdover from the days when the homes were smaller and were truly mobile -- if the rent went up, it wasn't that hard to leave. But 30 years ago, the advent of "mobile palaces" -- large, immovable manufactured homes in parks with more and better amenities than the typical trailer park -- posed a problem. If the rent went up, the tenant had to sell.
Cities responded to this by instituting rent control. Today, about a quarter of California cities have rent control for mobile homes, while only 5 percent of those control rent for apartments, said Ken Freschauf, Carson's housing administrator.
Still, though, there was a problem: while the land under a mobile home generally appreciates in value, the home itself -- like a car -- generally depreciates. A mobile home resident could make a big investment in a home only to wind up with nothing after 30 years.
Many residents wanted to buy the land under their homes, and state law was set up to allow them to do so. Provided they have the consent of the park owner, residents may apply to subdivide their park, so it can be sold off in parcels to its residents. The process is called condominium conversion. State law provides a rent-control scheme to protect low-income residents who continue to rent, but it does not apply to moderate-income renters.
Goldstein's innovation was to initiate the conversion himself to harvest land value. One other benefit to the owner: once it is condo-converted, a park is no longer subject to city rent control.
To put it mildly, this has been controversial. Many senior citizens who planned to live out their years paying a modest rent are now bracing for a big increase, or scrambling to qualify for a mortgage, or planning to move.
If Goldstein was unpopular before, now he is despised.
"Suppose someone has worked all their life, at two places or three places, and they've got two or three pensions after working 40 or 50 years," said Shirley Clark, a resident of Colony Cove Mobile Estates in Carson. "And they can even afford to go out to dinner once or twice a week. Is it fair to take away what they've got because they fall into 'moderate income'? I don't think it's fair to take what anyone has earned. The bottom line is it's abuse of elders."
"We've worked hard to get what we have," said Robin Trani, another resident of Colony Cove. "And now here comes somebody with money in his pocket and he's got to upset the whole thing just because he wants what he wants. That, to me, is very sad, because I'm better than that. I deserve more than that."
Trani was sitting on a couch at a neighbor's home, where residents are organizing to try to block the conversion. She started to cry. Clark comforted her with the thought that God is more powerful than Goldstein, and He is on their side. Many Colony Cove residents say their health has declined since the conversion was announced.
"This is awful," said Carrie Lee Frank, another Colony Cove resident. "This is just something to make old people more miserable than they already are."
Much of the stress comes from uncertainty about the future and confusion about the process. Goldstein's ambassador to his tenants, attorney Sue Loftin, can do little about the uncertainty, but she can clear up the confusion.
In numerous meetings with park residents, she comes off as caring and sensitive to their concerns. But she is also firm in asserting that the conversion will happen whether residents like it or not, and many conversion opponents hold her in the same low regard as they hold Goldstein.
For his first conversion, Goldstein chose the El Dorado Mobile Country Club in Palm Springs, where he had sued repeatedly to challenge the city's rent control ordinance.
"After years and years of fighting over what the rents would be in that park, everyone was unhappy, everyone was suffering," Goldstein said in a deposition. "And I felt that this would be a win-win situation for both the partnership and the residents to proceed with a different approach."
The residents objected, and the city took their side. It took Goldstein six years, from 1993 to 1999, to get the city to accept the conversion application as complete. And even then he went to court to challenge several conditions placed on the application by the city. Goldstein eventually prevailed and the conversion was allowed to proceed.
"It was a very traumatic process, and it took three years," said Doug Cultice, vice president of the homeowners' association at El Dorado. "When you get people our age, there's emotions involved: the fear, the anxiety, the anger. Those are not healthy emotions."
In hindsight, Cultice wishes there had been better negotiations with Goldstein, and he wishes the process could have gone more quickly. As the parties fought in court, the appraised value of the mobile home spaces rose from $65,000 to $88,000. When they finally became available, Cultice was among the first to buy. The lots are now selling at $136,000 to $170,000, he said.
"Those who elected to buy seem very happy," he said. "For those that didn't buy, the rent is going up, and they're having second thoughts."
Many residents have moved out. But more than 60 percent of the spaces have been sold, some with financial assistance from the state or from Goldstein himself.
"I think it went very well," Goldstein said in an interview. "The residents, as far as I know, are very happy about it. ... I'm happy with how I came out on it. Based on what happened there, I decided to proceed with Carson Harbor Village in the same manner."
The conversion at Carson Harbor Village is expected to be finalized this year, and while many residents don't like it, they seem resigned to its inevitability. Some residents, including many young families, have moved into the park recently in expectation of being able to buy a small slice of California at a fraction of the cost of a condominium or a house.
Several other mobile home park owners are relying upon the El Dorado precedent to convert many more parks in California to resident-ownership. About 30 conversions are now under way, according to Sheila Dey, executive director of the Western Manufactured Housing Communities Association, a lobbying group for mobile home park owners.
"It allows them to basically get their money out of it," Dey said. "If you're a park that's in an area where land is highly valued ... the land would be far more valuable if it was vacant than if it was a mobile home park."
The conversion at El Dorado freed up enough capital for Goldstein to make his first acquisition in more than 20 years -- Colony Cove Mobile Estates in Carson. Immediately after the purchase, last spring, Loftin was dispatched to explain to the residents that they, too, would soon be able to purchase their land.
The Colony Cove Conversion Committee sent out a questionnaire to the park residents and got 302 responses. All but one were opposed to the conversion, and the one holdout said he was "not sure."
"I have a severe hatred for Goldstein and Loftin because they have stolen my peace and tranquility," wrote one resident. "I've lost a lot of sleep!"
"I cannot see where conversion will help anyone in the park," wrote another. "The only one who benefits is the owner. This seems totally unfair to me to cause so much hardship for one person's benefit."
Carson officials say they will lobby their representatives in Sacramento for a change in the conversion law to require greater resident support or better protection. But the mobile home park lobbying group can be expected to fight such a move, and an earlier effort was watered down by lawmakers friendly to park owners.
Goldstein is now in the process of condo-converting all four of his remaining parks. But that does not mean he is getting out of the mobile home park business. It seems most likely that he will continue to reinvest his money in new parks, which he will then convert to resident-ownership.
"The appeal is that it happens to be a form of investment that I understand quite well, and that I'm experienced in," he said. "I'm a little leery of going off in a new direction, into something I'm not experienced in."
Having said that, there are always regrets.
"Looking back, had I invested in other things 20 years ago, I probably would have come out a lot better than I did on Carson Harbor Village," he said. "If I had invested in an NBA franchise 20 years ago, I would have come out 10 times better or more."