Housing Commission Is Now ‘Slumlord’ at Repossessed Property

The San Diego Housing Commission, stuck with a dilapidated Southeast San Diego apartment house that it obtained through foreclosure, has halted all but emergency repairs on the building--leaving three tenants living in unsafe and unhealthful conditions for the past five months.

The Housing Commission, which operates the city’s public housing units and lends rehabilitation money to private landlords, has ignored numerous requests by a city Housing Inspection Division official to clean up the eight-unit building at 3154 Imperial Ave. The best remedy that city officials have offered the tenants is to wait until a federal agency takes over the property next month.

The frustrated housing inspector has referred the situation to the city attorney’s office to initiate legal action, but no legal action is expected.

Rehab Loans Owed to Commission

The decision to halt repairs was made in November, after housing commissioners reluctantly voted to abandon attempts to recover more than $68,000 in rehabilitation loans owed them by the building’s former landlord. He is Robert Blanchard, who owns Les Blanchards restaurant in Rancho Santa Fe. The Housing Commission took the property from Blanchard through foreclosure in August, inheriting a building so neglected that it needed $42,500 in repairs.

“Should our priority be to avoid losing more money or to repair the housing conditions for the people who are living there by putting out more public dollars that would never be recovered?” asked Elizabeth Morris, the Housing Commission’s acting executive director.

The agency decided not to invest the additional money, and Morris conceded that the Housing Commission--part of whose mission is to “provide decent, safe and sanitary housing to low- and moderate-income families”--now finds itself playing the role of “slumlord.”

She gets no argument from tenant Kim Earl, who lives in a squalid ground-floor apartment where the heat, kitchen sink and oven do not work properly; where cabinet doors are torn off hinges; where the bathroom medicine cabinet has fallen out of the wall, and where roaches are perpetual guests.

“I have to burn my gas all night to keep warm,” said Earl, who shares the unit with her boyfriend and 9-year-old son. “We’ve slept in the living room the last few weeks because it’s too cold to sleep in the bedrooms.”

“Four hundred fifty dollars (per month) for this?” asked Earl, who lives on a government assistance check. “I don’t feel I should be paying anything for this. This is too much money going down the drain. I could be saving my money to move into a better apartment.”

While the Housing Commission has boarded up four of the five vacant apartments, the windows of the fifth one have been smashed, as have the walls in the building’s laundry room. Garbage is strewn about the property.

A tenant who asked not to be identified said the Housing Commission sent out repairmen when his gas oven broke down and it has done some work on screens and windows. The Housing Commission has spent a total of $3,480 on repairs to the property, according to Morris.

But Paul Elias, senior building inspector in the city’s Housing Inspection Division, said that the Housing Commission is violating both housing and health codes by failing to repair the property--even if it inherited the conditions from Blanchard.

“There’s a potential hazard there. You’ve got a lack of smoke detectors there. If there is a fire in there, there wouldn’t be any warning,” Elias said. “There’s a danger in the building due to the dilapidated condition of the laundry room. Kids can get in there and maybe get hurt.”

City to Lose Title Feb. 5

Nevertheless, legal action will not be taken against Housing Commission officials because they are about to give the building on Feb. 5 to the Federal Savings & Loan Insurance Corp., which holds the mortgage on the apartment building. The FSLIC inherited a total of $312,000 in mortgage payments and debts owed by Blanchard when Sun Savings & Loan was shut down by federal regulators in July, 1986.

Joseph Schilling, deputy city attorney in charge of code enforcement, said the best course of action for the tenants would be to allow the FSLIC to sell the property and encourage the new owner to make repairs. Morris said the Housing Commission would be willing to lend the new owner more rehabilitation money to repair the property.

The Housing Commission would gain nothing by selling the property itself because all proceeds would go to the FSLIC, which, under loan agreements, is first in line to receive any money from the sale. The Housing Commission’s rehabilitation loan is second in line for payments.

“It’s a frustrating situation for the Housing Commission because they’ve inherited property that was already seriously destroyed by the previous property owner,” Schilling said. “They’re the ones who have inherited the mess.”

Legal Action Weighed

In the meantime, Schilling is investigating whether he can take legal action against Blanchard for allowing the property to decay to the point that its value is less than the debts he owes to both the FSLIC and the Housing Commission.

Blanchard, reached by telephone at his Rancho Santa Fe restaurant, refused to discuss the matter and hung up on a reporter.

Morris traced the Housing Commission’s predicament to 1985, when it lent Blanchard $60,201 to rehabilitate the apartment building. Commission officials checked into Blanchard’s finances and found him qualified to receive the loan.

“There was no reason not to (lend him the money),” said Vicki Bonner, loan program manager for the Housing Commission. “He met all the normal underwriting guidelines.”

Blanchard apparently did spend the money to repair the building, but stopped repaying the loan in April, 1986. The Housing Commission began foreclosure proceedings in July, 1986, after Blanchard had missed three monthly payments, commission documents show.

But Blanchard managed to stave off foreclosure until August, 1987, by repeatedly filing for bankruptcy and halting foreclosure proceedings, Morris and Bonner said. By the time that the Housing Commission won control of the property, it had deteriorated so badly that it was worth less than Blanchard’s debts to the FSLIC and the Housing Commission, they said.

Ironically, the FSLIC was also trying to take the building through foreclosure, which would have made it responsible for repairs. But the city’s lawyer was successful in court before FSLIC lawyers, Morris said.

The Housing Commission also took three other properties from Blanchard through foreclosure, but none of them has code violations, Bonner said. One has already been sold. Bonnie Contreras, the city’s chief of housing inspection, said that there are no other outstanding complaints on properties owned by the Housing Commission.

Morris said that Blanchard currently owes the FSLIC $312,000 in accumulated debt and interest payments and owes the Housing Commission $68,710. An October appraisal put the building’s value at $290,000, she said.

After hearing that report, housing commissioners voted Nov. 2 to abandon attempts to recover the money and “walk away from the building,” Morris said. Though commissioners did not specifically address the subject of repairs, staff members later decided to halt all work except emergency repairs.

Morris said the city could find new apartments for the three remaining tenants, but would have to pay relocation costs, another expense that the Housing Commission does not want to incur. Her only hope, until the building is transferred to the FSLIC, is that they will move out voluntarily.

“It would be better for them, and we wouldn’t be in this position of being slumlords,” she said.