Panel Suspects 139 Violations by Low-Cost Condo Owners

About 140 state-mandated low-cost condominiums in Dana Point might have been rented or sold in violation of their original purchase agreements, California Coastal Commission officials said Wednesday.

In the latest assessment of possible abuses of the commission’s low-cost housing program, Executive Director Peter Douglas said owners of 105 condos in Niguel Beach Terrace appear to be renting to tenants, instead of living in them as required by the sale terms. Another 34 of the bluff-top condos may have been sold improperly at market prices, rather than sold back to a public agency at a modest profit for resale as low- or moderate-income housing. Of those, 21 appear to be rented improperly as well, a Coastal Commission investigation shows.

“We are going to enforce all the terms and conditions of the sales agreements,” Douglas said. “The bottom line is we want to get these units back into the program. We’ve got a backlog of qualified people waiting to get into them.”

From 1977 to 1981, the commission required developers in coastal Orange County to set aside 25% to 35% of their projects as low-cost housing. During that time, some 200 Niguel Beach Terrace condominiums were sold to low- or moderate-income buyers, some of whom received subsidies of $30,000 to $50,000 to complete the purchases.

Commission officials last week estimated that as many as 175 dwellings might have involved violations of housing program requirements. Douglas said they revised the number to 139 after more investigation.

Under terms of their sales contracts, buyers agreed to occupy the condominiums themselves for 20 years or more unless given permission to do otherwise by the Coastal Commission.

If an owner moves before the term expires, the property must be sold back to a public housing agency at a modest profit so it remains affordable for the next low-income buyer.

The Coastal Commission already has issued 10 cease-and-desist orders involving property at Niguel Beach Terrace, near Selva Road and the Ritz-Carlton hotel in Dana Point.

There are plans to send out 16 more cease-and-desist orders by the end of the week, along with 103 notices that cease-and-desist orders will be forthcoming, Douglas said.

The orders require owners to prove they have not violated their contracts or to sell their property back to the housing program at prices well below market value. Some condos in the complex that were not part of the low-cost housing program have sold for more than $300,000.

Those who fail to comply face possible fines of up to $6,000 a day and further enforcement action, including lawsuits and permanent cease-and-desist orders.

Douglas said the commission already has cleared Burhan and Mary Beth Nasser of any wrongdoing related to their ownership of a Niguel Beach Terrace condominium. The couple were named in a cease-and-desist order issued May 22.

Sales records show the couple complied with requirements to sell their property through the nonprofit organization that administers the commission’s low-cost housing program.

Douglas said the investigation is continuing into whether another 200 condominiums in Laguna Niguel and San Clemente have been sold or rented illegally. No cease-and-desist orders have been issued yet.

Commission officials and advocates of low-income housing are concerned that the number of homes under the agency’s control has dwindled over the years to about 400 dwellings out of 1,195 that were built or required to be built in coastal Orange County.

“The idea was to help low-income people into home ownership,” said David Levy, president of the board of directors for the Affordable Housing Clearinghouse in Orange County. The questionable sales and rentals may “give affordable housing a black eye and lower the public’s willingness to support these programs.”

The investigation is proceeding with the help of a $300,000 state grant and legislation passed in August that authorized the commission to take appropriate action to salvage its low-cost housing program for South County.

“We have an affordable-housing crisis in the state,” said Assemblyman Alan Lowenthal (D-Long Beach), who wrote the legislation. “These units were supposed to be affordable in an area in desperate need of affordable housing. We have to live up to the law.”