Construction workers hammered the last nail at Casa Marina, a 95-unit townhouse development in the middle of downtown, three years ago.
But the homes, located on the southwest corner of B and 8th streets, still stand empty because of a bizarre dispute involving the original owner, the construction lender and the construction contractor.
Hoping to jump-start Oxnard's struggling downtown, the City Council on Tuesday voted to purchase Casa Marina for $5.2 million from the contractor, MKK Technologies Inc., which ended up with the property after the original owner, Sophia USA Inc., apparently went into hiding to avoid creditors.
Mayor Manuel Lopez abstained from the vote because of a conflict of interest: He owns several downtown properties near Casa Marina.
The city's plan is to soon sell the property to another developer, Casa Marina Townhomes LLC, for an estimated $5.7 million, including interest and legal fees. The developer would pay Oxnard $1 million up front and the remainder within one year as the condo units are sold, said Oxnard community development director Richard Maggio.
Oxnard officials say the purchase will result in an influx of new homeowners downtown.
Furthermore, they say, it will allow Oxnard to impose conditions guaranteeing that 30% of the units will be sold to low-income families, preferably from Oxnard.
"Right now, Casa Marina is in limbo," Maggio said. "We don't have any ownership housing in downtown, and this would be a chance to bring people to the downtown area as homeowners."
As part of the proposed deal, Casa Marina Townhomes would have to sell about 28 of the one- and two-bedroom condominiums to low- and very low-income families.
According to affordable housing guidelines, low-income families are legally defined as those four-person households that earn less than $40,000 a year, or 80% of the median household income for Ventura County. Very low-income families are defined as those that earn less than $25,000, or 50% of the county's median household income.
In the original deal, Sophia USA Inc. obtained a loan from Sumitomo Bank of California to pay for construction of Casa Marina and entered into an agreement with MKK Technologies to build the development, according to city officials.
But Sophia defaulted on its loan with Sumitomo and breached its construction contract with MKK Technologies, which had to furnish all materials and equipment. Neither party was able to locate the principal partners of Sophia, who have not been heard from since, officials said.
Sumitomo and MKK Technologies both tried to foreclose against the missing developer. Then Sumitomo sued MKK, alleging that the contractor did not complete the project. The case was eventually settled by arbitration after MKK agreed to take over the construction loan in exchange for receiving the deed to the property.
Daniel Goodwin of Goodwin & Co., an Oxnard real estate appraiser, said that it will take an exceptional deal to attract home buyers to downtown because the area is in turmoil.
"At a price that motivates customers to move to that area, they will come, but it will have to be a real good deal," Goodwin said. "The downtown area has certainly been an area of transition requiring significant input from the Redevelopment Agency, and there's still a lot of uncertainty about what will happen there."
The one-bedroom townhouses are expected to sell for as low as $65,000 and the two-bedroom units are expected to go for about $95,000, according to city officials.
Barbara Macri-Ortiz of Channel Counties Legal Services Assn., a poverty law firm that sued Oxnard for failing to provide enough affordable housing, said that Casa Marina will not benefit the large, struggling families that need housing the most. She is concerned that Oxnard is tying up money it could use to fund other affordable-housing projects.
"A one-bedroom with a loft? What family could live there?" Macri-Ortiz said. "If they can find families to fit the profile, I think that's good, but I'm concerned that this is going to cut into the money [Oxnard has] for housing needs.
"We haven't dealt with farm worker housing yet in this city," she said, "and I'm not sure one- and two-bedroom townhouses is where our housing money should be going."