Affordable Homes Sold Improperly

Orange County officials improperly approved the sale of affordable housing units in Dana Point, complicating the legal battle between scores of homeowners and the California Coastal Commission, concludes a grand jury report released Friday.

The 14-page study, “Has Orange County Given Away the Farm?,” coincides with a major enforcement action by the Coastal Commission, which contends that many homeowners in the Niguel Beach Terrace condominium complex violated deed restrictions by selling or renting their units at market rates.

Grand jurors found that the Orange County Housing Authority improperly allowed four property owners to sell their homes years after the authority stopped managing the state-mandated program, which aims to provide affordable homes in expensive coastal areas.

Those homeowners originally purchased the units at discounted prices and were required under their sales agreements to live in the dwellings for at least 20 years unless given written permission to do otherwise.

Property owners who wanted to sell had to do so at a small profit through a nonprofit housing agency that administered the program. The arrangement guaranteed the units would be affordable for the next buyer, who also had to comply with the regulations.

County officials also authorized the improper sales of two other low-income condominiums at Beach Hill Terrace in Laguna Niguel and Spinnaker Run in Dana Point, the report concludes. Those properties are not part of the Coastal Commission investigation, though agency officials said their mention in the grand jury report raises new concerns.

Although only six properties are involved, grand jurors said the improper transactions expose the county to potential lawsuits from homeowners who thought they had obtained the required permission to sell their low-income units.

The Coastal Commission is investigating about 100 sales and rental transactions, and both sellers and buyers face penalties or the forced sales of their properties at below-market prices if they cannot prove the deals were legal.

“This is a small percentage, but you have to look at the impacts,” said Joe Moreland, a grand jury spokesman.

Under the Coastal Commission program, nearly 300 condos in Niguel Beach Terrace were sold at steep discounts in the early 1980s to low- and moderate-income buyers.

Today, the commission, which wants to salvage the program, suspects that scores of owners have taken advantage of the subsidies they were given. The homeowners, however, allege in a pending lawsuit that the program was so poorly administered they were left in the dark.

After the county relinquished control of the program in 1985, it was run by the Coastal Commission and a nonprofit agency, both of which had limited staff and resources. Since 1990, the program has been administered by a nonprofit corporation in Santa Ana.

Nevertheless, county officials improperly approved the sales of six units between 1993 and 2003, the grand jury found. In several cases the releases were issued after the sales occurred.

The report blamed the improper sales on an overwhelmed housing authority that was trying to administer 2,000 affordable housing units across the county with different requirements.

County housing officials are planning a response for the Board of Supervisors.