‘Completely hands off’: Sonoma County did not vet Chanate campus developer’s track record

LAS VEGAS — Othello Morris knew moving into the aging bungalow just east of downtown wasn’t ideal. But it was cheap, and property managers for the single-family rental home about five miles from the heart of the Las Vegas Strip were willing to accept his poor credit.

“They looked at me and said, ‘Oh, your credit score is too low.’ OK, so what do I need? ‘Well, we need double the deposit,’” Morris said.

Paying the more than $3,500 in move-in costs and signing a lease in early 2019 was a decision Morris would come to regret.

The house on 225 Earl St., amid rows of low-slung, sepia-toned tract homes, was in serious need of repairs and lacked proper heating, Morris said. It was just one of at least 200 Las Vegas area properties owned by a developer named Iyad “Eddie” Haddad.

And while his name is not yet a familiar one in Sonoma County, Haddad is poised to take over and develop the largest piece of county-owned land to come on the market in a generation: the 72-acre Chanate Road campus in northeast Santa Rosa.

Haddad has virtually no experience developing to completion such a large project, and he has a history of complaints from tenants, many of which have been affirmed by court judgments against him in the past two years.

And though those complaints — as well as state sanctions and criminal charges over his real estate dealings — are documented in court records, news stories and other public documents examined by The Press Democrat, Sonoma County officials acknowledge they did nothing to vet Haddad beyond making sure he had the financial means to acquire the Chanate property.

Sonoma County last week rejected The Press Democrat’s request for records on Haddad’s financial vetting, saying those documents remain confidential until the close of sale. The newspaper also requested any other records assessing Haddad’s background, and the county said no records existed.

“It’s a strict property sale and really: Does the buyer have the ability to close the sale? That was the evaluation that was done,” said Caroline Judy, director of the General Services department and the county’s chief real estate official.

“That’s all that we are obligated to do.”

“This process has been completely hands off,” added Board of Supervisors Chair Lynda Hopkins.

Morris, the 48-year-old Las Vegas tenant, was one of half a dozen tenants interviewed by The Press Democrat with recent complaints against Haddad.

He said it was nearly impossible to get any response to maintenance requests. On top of that, his rental agreement included a “buy out” clause, meaning he and his partner, Tammy Austin, had to move out of the home when it sold to a new owner in February 2021.

With nowhere else to go, the couple signed another lease for a home in North Las Vegas owned by Haddad’s company, Saticoy Bay LLC.

Before long, they received invoices for thousands of dollars in repairs for damages at their old home Morris contends were unwarranted. Next came a steady stream of eviction notices, though the couple was ultimately able to stay in the new house.

Legal Aid of Southern Nevada officials say they have taken him on as a client for a potential case against Saticoy Bay.

“I haven’t had as much anger as I got for this company as I've had in a long time,” Morris said.

Other Haddad tenants have documented similar complaints, including in online reviews and court records.

In interviews with The Press Democrat, Haddad defended his record, pushed back against the tenant allegations and reaffirmed his commitment to working with local leaders and citizens to redevelop the Chanate campus in Santa Rosa.

“We have an excellent track record,” Haddad said. “Customer service is key. We go out there and take care of issues.”

County officials will have to take Haddad at his word.

Last month, the Board of Supervisors unanimously approved the $15.05 million sale, which was roughly $8 million below the last appraised value. The deal is expected to close Thursday.

While city and county officials have long eyed the property’s rolling hillsides and wooded valleys for new housing, the campus has been notoriously difficult to sell.

The parcel is the site of an abandoned hospital and several county buildings, including the morgue, and will require millions of dollars in demolition and cleanup.

It also sits astride an earthquake fault.

In the county’s Nov. 9 auction, Haddad came in $50,000 above the next bidder, Irvine-based City Ventures, an established homebuilder with projects in the county and across the state.

Haddad, on the other hand, is an unknown in the North Bay and has comparatively limited experience redeveloping large-scale properties.

In 2017, Haddad and a partner paid $1.5 million for a struggling golf course in Henderson, Nevada, with an eye toward building a commercial complex and hotel. The project is still in the development stage, Haddad said.

In March, Haddad and his partner won a bid for a 59-acre shuttered Coast Guard base in Contra Costa County bordering a separately owned planned housing development at a Superfund site. They paid $58.4 million for the property, where they hope to add 2,000 housing units, according to the San Francisco Business Times.

Before those purchases, Haddad’s largest project was a failed 38-story apartment building in downtown Las Vegas called HUE Lofts at Art Central, which died when the construction industry stalled during the Great Recession, Haddad said.

Haddad said he believes the Chanate project will succeed despite the challenges.

“It’s all a matter of providing the resources,” Haddad said. “I believe the synergies of all the different professionals and people that have expertise in certain fields are going to be needed going forward.”

Business built on housing troubles

To better understand Haddad’s business background and real estate dealings, The Press Democrat interviewed Las Vegas-area Realtors and attorneys familiar with his companies. A reporter also interviewed six current and former tenants and reviewed hundreds of pages of court documents, public records and news reports.

Records show Haddad and his companies have been the target of a 2013 criminal complaint by the Nevada Attorney General, two sanctions by the state’s Real Estate Board and more than a dozen cases filed in the largest small claims court in Clark County, Nevada, (home to Las Vegas) since the start of 2019. At least eight of which resulted in over $15,000 in judgments for tenants.

Haddad built his real estate business in the vast subdivisions that ring the Las Vegas area by scooping up homes emptied out during the late 2000s housing crash. He bought most at auction after they went into foreclosure or when owners failed to pay their homeowners association dues.

His investment strategy, he told The Press Democrat, has been to buy distressed single-family homes at rock-bottom prices and rent them out to tenants while putting the houses back on the market.

But because the “buy out” provision in Saticoy Bay’s leases specifies the property could go up for sale at any time, it leaves renters with little choice but to accept uninhabitable living conditions and rental terms, local Realtors and tenants told The Press Democrat.

“They're not going to read the contract. Most of the time, they're going to feel desperate, or they're going to feel threatened or too afraid to say anything,” said one local Realtor, who’s dealt with Saticoy and declined to be named for fear of losing business with Haddad.

Haddad stressed that Saticoy Bay only buys homes while Las Vegas-based property management company Turn Key Property Solutions is responsible for overseeing and maintaining them. Disputes with tenants exist, he said, because of the size of his portfolio — roughly 250 homes he owns in the Las Vegas area.

“If you have a really large property owner with 40 or 50 properties, they’re going to have issues,” he said. “And when you have hundreds of properties, it’s in the numbers.”

Nathan Vidrine, regional manager with Turn Key Property Solutions, said complaints of withheld security deposits and invoices for damages at Saticoy properties were mainly by tenants who failed to pay rent, follow lease terms or damaged their rentals.

That was the case with Morris, the Earl Street tenant who received eviction notices, Vidrine said.

According to building code records, enforcement officers found vehicles and trash in the backyard of the property while Morris was a tenant in 2019. A subsequent inspection two weeks later found the yard had been cleared and the property passed inspection.

“It’s our job to protect the asset,” Vidrine said. “So, sometimes protecting that asset means keeping the security deposit.”

Herbert Morris, no relation to Othello, was evicted from the home he rented from Haddad in March after petitioning a judge to extend a legal agreement to remain in the house temporarily ahead of its sale. Vidrine said Morris damaged the driveway at the home resulting in hundreds of dollars in homeowners association fees, allegations Morris contests.

The terms of his lease required Morris to regularly show the house to prospective buyers, even as he was recovering from a serious neck injury. After the sale, he ended up homeless, bouncing between hotels until a friend offered him a room to rent.

“That was devastating for me,” he said.

At the request of The Press Democrat, Margaret DeMatteo, housing policy manager at Legal Aid of Sonoma County, reviewed a copy of Morris’s lease, which was obtained through court records. DeMatteo said many of the conditions in the rental agreement, including the buyout clause and a $100 fee for each individual maintenance request, would have little chance of holding up in California.

“This is the most anti-tenant lease I’ve ever seen,” DeMatteo said.

Tenant suits prompt ‘finger pointing’

Haddad said he does not target vulnerable renters and contends the buyout clause gives them the opportunity to buy the homes they rent. He added fees in Saticoy leases are “very competitive for Nevada” and said the proceeds from all fines go to Turn Key.

Some renters have successfully fought those fees and charges in court.

In one 2019 suit filed in Las Vegas Justice Court, a judge entered a $3,390 judgment against Saticoy Bay after Graham Maxwell Curtis claimed the house had “no working toilets, water leaking from the floor boards, no electrical, no hot water or air conditioner,” according to court records.

In another case filed in February 2021, the Justice Court judge granted tenant Adam McKinney almost $5,000 in damages after Saticoy Bay “did not act in good faith toward the Plaintiff by assessing unreasonable and unwarranted cleaning and repair fees,” the judgment stated.

In some of the small claims and eviction cases involving Haddad’s properties, Saticoy Bay LLC and Turn Key Property Solutions are listed as co-defendants or co-plaintiffs, or as “DBA (doing business as)” one another as a landlord.

“There was a lot of finger pointing between Saticoy Bay and the property management company,” said attorney Jeffrey Galliher, who represented a tenant in a successful suit against the two companies.

Haddad said the number of cases was largely the result of renting out so many properties in the Las Vegas area, which he described as a “transient town” where people are constantly on the move.

Vidrine said Turn Key has appealed many of the small claims cases, including the case filed by McKinney.

State criminal case and fines

In addition to the small claims cases, the Nevada Attorney General in 2013 charged Haddad with two felony counts for failing to provide workers’ compensation coverage after an employee of one of his companies was injured on the job.

Haddad later pleaded guilty to a misdemeanor and paid a $500 fine, according to court records.

Haddad said a contractor his company hired failed to provide insurance, adding his businesses have since “tightened up” to ensure all employees are covered.

In 2016 and 2019, Haddad was also hit with two separate fines by the Nevada Real Estate Division, according to agency records. The 2019 fine was for “Gross Negligence and incompetence” in violation of a state law governing rental property management.

Haddad said the complaint was filed by a “sitter” who refused to leave a home after being hired to provide security in exchange for free rent as part of a “squatter prevention program.” The Real Estate Division was not able to provide more information about the fines. Haddad is still listed with the division as a broker.

Latest in long line of developers

The county has come close to selling Chanate several times in recent years. The closest deal was with prominent Sonoma County developer Bill Gallaher, who agreed to pay up to $11.5 million and proposed to build up to 867 housing units. The purchase agreement was unraveled after neighbors successfully sued over the scope of the project and the county's environmental review.

Negotiations with other developers have repeatedly failed for various reasons. Meanwhile, vandalism and rising maintenance costs have continued to mount since the departure of Sutter Health, the primary occupant.

In the last fiscal year alone, the county paid $963,699 for such things as security, fire safety and vegetation management.

The rising costs and sale challenges ultimately convinced county supervisors to unload the property at auction. Bidders did not have to share their plans for the site.

“We tried to sell the property with the conversation around what the property would look like and what the intent would be,” said Supervisor Hopkins.

With the sale imminent, the responsibility for regulating Haddad’s development of Chanate will rest almost entirely with the city of Santa Rosa.

“The city and the communities that we represent that will be most affected by the sale of Chanate will need to be even more vigilant and more prepared which is really saying something,” said Santa Rosa Councilwoman Victoria Fleming, after learning of The Press Democrat’s findings.

“What we cannot do is prejudice a developer based on previous bad behavior,” she said, but “what we can do is take that information and be very alert.”

Fleming recently spoke with Haddad by phone, she said, and discussed his desire for a housing project at the site.

In a November interview with The Press Democrat, Haddad was less committal, saying he was also considering anything from retail and lodging to a golf course or a casino built in cooperation with a Native American tribe.

Lisa Mayo-DeRiso, a Las Vegas political consultant hired by Haddad to help with community relations in Santa Rosa, said she has already reached out to the neighborhood group Friends of Chanate.

“We have spoken to the homeowner group on a generic level right now,” Haddad said. “We will get with them as soon as we’re done with a design.”

Meanwhile, Sonoma County officials on Monday signed the escrow papers to finalize the Chanate sale, which officially closes Thursday.

“The documents are in the buyer’s hands now,” said Judy, the county’s chief real estate official.

Editor’s Note: This story has been updated to more accurately describe when Othello Morris and Tammy Austin moved out of their home at 225 Earl St. and the amount they paid in move-in costs, as well as the circumstances of Herbert Morris’s eviction.

Staff Writers Emma Murphy and Andrew Graham contributed to this story.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian