Cheap Homes, Costly Lesson

Awell-intended but poorly policed California Coastal Commission program was supposed to make condominiums available to low- and middle-income families in Orange County, long home to some of the state’s priciest residential real estate. But some of the condos built near the shoreline instead ended up in the hands of professionals and other high-income workers after the original owners sold or rented out the units at market rates.

The still-unfolding story isn’t likely to generate sympathy elsewhere in California as government agencies seek support for more badly needed affordable-housing projects.

A commission investigation suggests that about 140 condominiums built near the Orange County coastline between 1977 and 1981 were resold or rented out at market rates in apparent violation of rules that required owners to either remain in the condos for 20 years or to sell the units back to public housing agencies at a modest profit.

The program was an attempt by the commission to ensure that lower-income people were not shut out of housing being built in expensive coastal areas. The short-lived Coastal Commission program in Orange County required developers to set aside 25% to 35% of their projects for below-market-price housing. Low- and moderate-income buyers paid about $65,000 each for the 200 condos that were sold -- a substantial break even 25 years ago.

Though word of possible abuses surfaced two years ago, the commission blamed staffing and budget shortfalls for delaying an investigation until this year. The agency is taking steps to halt the improper renting of units and studying legal action to recoup illegal profits pocketed by original buyers.

Affordable-housing programs can work. The Santa Clara Unified School District last year opened a 40-unit subsidized apartment complex that houses teachers who can’t afford Silicon Valley’s pricey real estate. UC Irvine and Cal State Fullerton also are using subsidized housing to attract and retain teachers and staff.

The lack of accountability at the Coastal Commission program won’t sit well with Californians who last November passed Proposition 46, which will make $2.1 billion available statewide to create and preserve at least 131,000 lower-cost housing units.

Voters demonstrated an understanding that an increasing number of Californians are being priced out of the state’s increasingly expensive real estate market. But support for other programs, including some in Orange County, could wane if agencies can’t prove that existing programs are spending their limited funds wisely and keeping these valuable units in the hands of truly needy Californians.