Affordable Housing Owners Say Selling Out Is a Nightmare

Residents who bought condominiums in an oceanfront development north of Dana Point under the county’s now-abandoned affordable housing program told an Orange County assemblyman Thursday of the nightmares that befell them when they tried to sell.

More than 100 people crowded into a hearing room in Laguna Beach to listen to fellow residents of Niguel Beach Terrace complain that the contracts they signed when they bought their homes were being ignored and there was nothing they could do short of filing lawsuits.

The brunt of the criticism was aimed at Community Housing Enterprises, a private, nonprofit organization designated by the California Coastal Commission to administer a resale program.

The resale program is designed to prevent people who purchased units under the affordable housing program from making windfall profits when they sell, and to ensure a steady supply of affordable units, primarily for young, first-time buyers. Under the program, the amount a homeowner can charge for one of the units is limited.

Residents complained Thursday that Community Housing Enterprises (CHE) charged fees even when it couldn’t find a buyer for a unit, didn’t try very hard to find buyers, didn’t provide information to residents wanting to sell, used the wrong income figures in computing eligibility and profit levels, and answered complaints with the advice, “Sue us.”

No Representative

CHE refused to send representatives to the “fact-finding hearing” called by Assemblyman Gil Ferguson (R-Newport Beach), a first-term legislator who is up for reelection in November.

CHE also refused to respond later to complaints voiced at the hearing, instead issuing a four-paragraph press release saying its board of directors “does not want to give credence to a local politician in his attempt to get publicity for his reelection campaign.”

“I’m holding a hearing, number one, because you’ve petitioned me and you’re my constituents and the election is Nov. 4,” Ferguson said with a smile as he opened the proceedings.

But the conservative legislator called the affordable housing program an “approach that had been used previously in socialist countries, especially national socialist countries.”

The theme of communism was picked up by one resident, who said the housing program reminded him of East Germany, and by another who said that if the program were to be a success it would have to be run by the KGB, the Soviet intelligence agency.

Criticized Supervisors

Ferguson criticized the Orange County Board of Supervisors for not attending his hearing, saying the supervisors had “abandoned these people.” Supervisor Roger R. Stanton, the main opponent of the affordable housing program, sent an aide, but no supervisors showed up.

Soon after the county began a three-year phase-out of its affordable housing program in 1983, it dropped resale controls. But the Coastal Commission maintained them on approximately 3,000 rental and owner-occupied units along the coast.

Among those controlled by the Coastal Commission are more than 200 units in the 400-unit Niguel Beach Terrace.

Residents wanting to sell must notify CHE, which has a broker find applicants earning up to 120% of the county’s median income, which is the eligibility limit for the affordable housing program.

A key dispute between residents and the commission is CHE’s use of median-income figures provided by the federal Housing and Urban Development Department, which are lower than the figures provided by Chapman College in Orange and used by the county. The lower figures mean a lower selling price for residents because the sale price of a unit is based on a sliding scale tied to a potential buyer’s income.

If CHE doesn’t find a buyer within 60 days after a unit is offered and if escrow doesn’t close in another 60 days, the homeowner can sell the unit on the open market.

But homeowners insisted at Thursday’s hearing that they are not looking for outrageous profits.

“I’d be more than willing to sell to a person like me--young, not a large income, can’t afford a higher payment,” said Mark Goodman, 32, who works for a real estate developer and paid $76,000 in May, 1983, for his two-bedroom, two-bath unit.

Goodman won the right to buy a unit by means of a lottery that was conducted after so many people showed up to get in on the program at Niguel Beach Terrace that it was immediately clear there would not be enough homes to go around.

Goodman said he could sell his unit for about $83,000 under the CHE determination, $93,000 or more under Chapman College figures and perhaps $115,000 on the open market.

“I support the affordable housing program,” Goodman told Ferguson. But “I’m incensed, as you might see,” over CHE’s activities. Goodman said he had written to the Orange County Grand Jury, seeking an investigation of “unreasonable and unfair behavior.”

He said when he offered his unit for sale, CHE brought him a buyer on the 61st day and the buyer quoted CHE as saying the deal would be approved even if escrow took longer than the 60 days specified in the affordable housing agreement.

“But when you deal with these people, you have no recourse,” Goodman said. “The only recourse you have is to go to a lawyer. The state doesn’t want to handle it. The Board of Supervisors doesn’t want to handle it.”

Arthur Norden, 38, a spokesman for the residents, said several people had been hurt because of CHE delays in selling a home when the owner had been transferred or obtained a new job and was forced to move.

Norden started trying to sell his unit a year ago, has unsuccessfully sued CHE and, although eligible now to sell his home on the open market, said he won’t because “I made a commitment that even after I was out of the resale controls I was going to fight to keep my neighbors from going through the same thing.”

Judith Allen, an attorney on the staff of the Coastal Commission, said the commission was happy with CHE’s performance.

“It is only this very small group of homeowners in Niguel Beach Terrace that has created what is now a cause celebre, “ Allen said in a telephone interview. She said CHE managed several other projects in Orange County for the commission, “and we have no problem with any of the other developments at all.”

Allen said CHE workers were all volunteers who were committed to affordable housing but were “beleaguered” because of the complaints at Niguel Beach Terrace.