CITY HALL — With the city's main affordable housing developer embroiled in allegations that it defrauded Glendale and other cities of millions of dollars, Mayor Ara Najarian this week called for a new approach to providing housing for low-income residents.
At the Housing Authority meeting on Tuesday, Najarian questioned the city's current policy of purchasing property to construct affordable housing buildings, which have required subsidies of up to $200,000 per unit and total development costs reaching as high as $500,000 per unit.
Najarian has argued the same ends can be met by rehabilitating existing apartment or condo units for low-income renters or buyers at a lower cost. Under state law, a certain amount of local redevelopment funds must be used to provide safe and affordable housing for the city's poorest residents.
"I think our obligation as a Housing Authority is to provide as much clean and safe housing to the public as possible. That doesn't mean brand spanking new," Najarian said. "I think we are on the wrong track."
At Najarian's request, Glendale housing officials and an independent consulting firm found that purchasing and renovating existing condominium and rental units could be a cost-effective alternative for low-to-moderate income individuals, but not as effective for very low-income residents because of the lack of additional government funds that are available for new projects.
Tuesday's discussion comes on the heels of recent allegations of fraud surrounding affordable housing developer Advanced Development & Investment Inc., which built four large Glendale projects with the help of $33.8 million in city assistance.
The fraud allegations stem from a report by David Pasternak, a receiver appointed by a Los Angeles County Superior Court judge as part of a divorce proceeding involving the company's former president, Salim Karimi, and Jannki Mithaiwala, the daughter of company founder Ajit Mithaiwala.
In his report to the court, Pasternak alleged that the firm significantly inflated budget estimates and submitted fraudulent invoices and other doctored documents for their housing projects. He cited the nearly completed Vassar City Lights on San Fernando Road in Glendale as an example.
While ADI was never mentioned during the Housing Authority discussion, Najarian bemoaned the added issues of "oversight" and "trusting your development partner" associated with building new projects.
"Frankly, it just hasn't been worth the headache for me, dealing with new construction, new development," he said.
Other City Council members agreed that purchasing and rehabbing existing units should be considered, and they directed officials to return with options for going down that path.
"I'm willing to consider it as an additional tool," said Councilman Dave Weaver. "I don't know the ramifications. I need way more information on a case by case basis as to whether this makes sense or doesn't."