Probe of Surf City Condos Expanded

Huntington Beach officials are investigating whether a 256-unit residential complex was illegally converted into condominiums -- possibly tripling the number of units in dispute, authorities said Wednesday.

Word of the new probe comes as about 120 property owners are still reeling from the news that their condominiums were illegally converted from apartments. The owners are growing increasingly bitter and anxious because, they say, they cannot sell, buy or refinance their homes until their legal status is cleared, a process that could take six months.

“We’re being punished for something we didn’t do. That’s wrong, totally wrong,” said Terry Davis, who owns one of four units in a former apartment building.

Davis was among about 100 residents who gathered at City Hall on Tuesday night to vent their anger that, among other things, they may each have to pay about $7,000 in fees to the city to permit the condo conversions after the fact.

The owners may find some relief: The city has drafted a revised ordinance on condo conversions that would waive a requirement to bring converted properties up to city building codes.

The City Council is expected to vote on the revised ordinance July 6.

The revelation about the illegal condo conversions was triggered by several code enforcement complaints about eight months ago, when city officials found that the homes were listed as apartments that were never legally converted to condos.

City officials then compared county records with city permits and found about 120 units in four- three- and two-unit buildings that were illegally converted.

Among the properties under investigation are four units purchased and later sold by Councilwoman Pam Julien Houchen. She has declined to comment on her involvement in the transactions and has recused herself from City Council actions involving the conversions.

Additionally, Jan Shomaker, who owns a real estate company where Houchen worked, has resigned her post on the Planning Commission.

At Tuesday’s gathering, word surfaced of yet another possible illegal conversion -- the largest yet.

Pat and Gil Morris, whose son is in escrow for one of the 256 condos at Villa Warner, said he wondered whether Villa Warner was converted legally.

Planning Director Howard Zelefsky said Wednesday the complex -- built as apartments in the late 1960s and later converted to cooperative ownership, are now being sold as condos. The city Wednesday ordered a title search to determine whether the condos were converted legally.

“There are a lot of apartment complexes in the city,” Zelefsky said. “We didn’t look at every apartment project.”

The city instead focused on two- three- and four-unit buildings. With the allegation about Villa Warner, however, Zelefsky said the city may have to go back and check every apartment complex in the city.

Calls to the complex’s management company Wednesday seeking comment were not returned.

At Tuesday’s meeting, Zelefsky, City Atty. Jennifer McGrath and Police Chief Kenneth W. Small spoke with condo owners who were angry that they might be burdened with conversion fees and that they are unable to conduct property transactions until the legal issues are resolved.

The Police Department, in consultation with the Orange County district attorney’s office, is conducting a criminal probe, Small said.

“We’ll discuss with the [district attorney] if, when and what criminal charges will be filed, but we’re not nearly at that point,” Small said.

Residents say they are more immediately concerned about the possible financial repercussions involving their ownership of the disputed properties.

A single mother complained that she lives paycheck to paycheck and would have to borrow $7,000 to pay the fees that might be demanded by the city.

Some asked what the consequences would be if they did nothing.

“If you put your head in the sand and do nothing, you’re going to have a problem” if the condo is put up for sale or refinanced, Zelefsky said.

He said publicity about the conversions has made title companies leery about selling title insurance for condos whose status is unclear.

Sean Hong said he bought his two-bedroom downtown condominium almost two years ago and planned to sell it and move up to the next level.

“I’ve been looking at homes and putting in bids, and now we can’t do anything,” he said.

Residents said that a six-month delay in buying, selling or refinancing a condo could be costly should interest rates climb.

Small said the meeting Tuesday was just one opportunity for residents to voice their concerns.

“This meeting is not meant to be a meeting and then we go away. It’s a start. You can be mad at us and throw rocks at us, but, hopefully, at the end of the day, we have fixed this problem.”