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The City of Santa Ana has filed a federal lawsuit against a developer who halted construction of an emergency homeless shelter and support center weeks before it was set to open.
The city sued Dyer 18, a firm run by Ryan and Jeremy Ogulnick, for walking off the job last week at a 29,000-square-foot industrial building at 1815 E. Carnegie Ave., the Orange County Register reported. It seeks an injunction ordering them to resume work.
The lawsuit comes after Orange County hit a record 381 deaths of homeless residents in 2021. The new shelter for up to 250 residents was supposed to open this month or early April.
“Without the shelter, more than 200 unhoused individuals will lose access to temporary housing and potentially remain unhoused in and around Santa Ana,” the lawsuit says. “This is the consequence of Dyer’s actions … Without court intervention, the shelter will remain unfinished, resulting in severe hardship to those depending on it.”
Santa Ana signed a long-term lease agreement with the company on March 1, 2021 to operate the Carnegie Avenue shelter, which was to include job and drug counseling services. Dyer was just completing an $11.3-million interior renovation, paid for by the city.
The city says the Ogulnick brothers, who also own the property, violated terms of the lease when they ordered construction crews to stop work on Friday, March 18.
A key provision of the lease, according to the complaint, is an option by the city to purchase the property for $9.2 million beginning in the second year of the agreement. Santa Ana alleges the property owners want a new lease that would not include a purchase option.
A city news release says the Ogulnicks appear motivated by their belief that “the Carnegie Property is now worth more than the purchase price agreed to with the City and a desire to delay the sale for tax purposes.”
Its federal complaint alleges the work stoppage may be in retaliation to another lawsuit filed in state court early this month that seeks to get Dyer to abide by terms of its lease agreement and allow the city to buy the property.
According to the state lawsuit, Ryan Ogulnick reached out to the city in late October and said the sale of the property to the city concerned him because it could have “severe tax implications for him,” the Daily Pilot reported. He later provided an amendment of the lease agreement to the city attempting to claw back the city’s purchase option.
Ryan and Jeremy Ogulnick could not be reached by the Register or the Daily Pilot for comment. Court records show the Ogulnicks believe the city has violated the terms of the lease.
It’s unclear when the court might rule on the short-term construction question, or the longer-term question about the value of the property and the city’s right to purchase it.
The Carnegie shelter is required as part of a settlement agreement in 2019 following a federal lawsuit launched by homeless advocates against several cities after the removal of a tent city near Angel Stadium in nearby Anaheim. In the wake of that lawsuit, Santa Ana pledged to open a 200-bed homeless shelter after two others in the city shut down.
[Orange County Register, Daily Pilot] – Dana Bartholomew
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