Coastal Agency Moves to Block Sale of Condos

The California Coastal Commission is taking action against hundreds of property owners in south Orange County who allegedly have rented their condominiums instead of living in them as required when they bought the low-cost homes.

Commission officials said Thursday they also are racing against the clock to try to block the sale of any of the condos at prevailing market values by these owners, some of whom may have received public subsidies to help buy the homes in the late 1970s and early ‘80s.

“It’s a program we felt good about it because we thought it connected people of moderate means with housing,” said Peter Douglas, executive director of the Coastal Commission. “To see it abused this way is just sad.... It’s disappointing that people are that greedy.”

Neither the commission nor the nonprofit agency that administers the housing program have had the funds or staff to ensure owners were living in their units, and discovered the problems only recently, Douglas said.

Some who have received the notices are crying foul.

“They never bothered us before about it,” said Dana Point condo owner Burt Sanden, who said he has contacted his state senator and is seeking a lawyer with expertise in property law.

From 1977 to 1981, the commission required that many coastal Orange County developments include 25% to 35% low-cost units. The Legislature ended those requirements in late 1981. By then, many low-cost condos had been sold in Dana Point, Laguna Niguel and San Clemente. Deeds required they be owner-occupied for 20 years or more, and if the owner moved before then, the unit had to be sold to a public agency at only a modest profit so that it remained low cost to the next buyer.

This week, the commission began issuing cease-and-desist orders to owners of about 175 low-cost units believed to be renting to tenants in Dana Point’s Niguel Beach Terrace.

Similar notices are being prepared for up to 200 other people who bought property in Laguna Niguel and San Clemente through the coastal agency’s low-cost housing program, and who now are believed to be renting out the units, commission officials said Thursday.

In some cases, notices are being mailed mere days before restrictions expire. When restrictions expire, owners would be able to sell their condos for fair-market values topping $300,000 in many cases.

The notices require the owners to either prove that they had not violated the owner-occupancy agreement, or to sell the property back to the housing program at about $200,000 below fair-market value.

Niguel Beach Terrace is a tidy, landscaped, upscale condominium complex off Selva Road on the beach side of Pacific Coast Highway near the Ritz-Carlton hotel.

Scores of the condos originally were bought by low- to moderate-income workers for prices starting at $65,000. Some got subsidies of $30,000 to $50,000 to cover the developer’s sales price, according to Helen Brown, who heads the nonprofit agency that administers the commission’s low-cost-housing program in Orange County.

Rather than occupy the units as required in the sale contracts, the owners in question have rented their units for $1,200 to $2,000 a month, commission officials said, adding that many tenants are professionals and high-income workers, undermining the program aimed at helping low-income people cope with Orange County’s expensive housing market.

Most of the 10 property owners who received cease-and-desist orders this week could not be reached for comment Thursday.

But Sanden, who bought one of the Dana Point condos in 1983, said he was stunned to receive the order Wednesday evening. He had planned to sell the unit once the deed restriction expired May 27 to help pay for spinal-cord surgery for his wife, Elizabeth, who was paralyzed in a bicycle accident a year ago.

The Sandens lived there for more than 14 years. When they moved to San Clemente, his mother-in-law moved into the condo. They recently began renting it to a woman for $1,200 a month. Burt Sanden concedes he didn’t seek permission to rent the unit -- he says he forgot the fine print in a document he signed nearly two decades ago.

But he said the penalty -- forcing him to sell it back to the low-cost-housing program -- is too harsh for the transgression. He also finds suspect the timing of the notices just as the deed restrictions were to expire.

Douglas said the problem may be limited to Orange County, because in other coastal counties, municipal governments took responsibility for low-cost housing. Orange County initially did also.

But when the commission insisted that the units be resold in the future as low-cost housing, “they said we were a bunch of communists” and dropped out of the program.