Archive » October 26, 2006
The Private Property Report
By Kim Seefeld
SHOUTING INTO THE WIND
The County Board of Supervisors was supposed to receive a report on a full audit on the County’s “for sale affordable” housing units on October 24. It now appears that the audit, the completion of which has been far more time-consuming than anticipated, is not yet complete.
The audit was undertaken after it became clear from a preliminary audit report issued last year by County Auditor Bob Geis, that as many as 25% of all “affordable” housing owners were in violation of their tax-payer subsidized housing agreements.
While it won’t be receiving audit results as planned, the Board of Supervisors is continuing to address new policies on its “affordable” housing program. On November 7, the Board will consider a proposed ordinance designed to monitor and enforce “affordable” housing restrictive covenants.
One wonders how supervisors can effectively reform the “for sale” program without hearing the full audit report. An effective enforcement ordinance cannot possibly be enacted until the board sees the full results of the audit, the types and extent of violations – information that is essential to determine what penalties and remedies are needed. To do otherwise gives the impression that the audit is irrelevant and that the board is just acting to protect the program.
It’s unfortunate because the transgressions in the program are far-ranging. The original draft ordinance first submitted to the Board in July did not address what to do about illegal borrowing and encumbering of units by “affordable” housing owners. There are known instances of owners who have borrowed many hundreds of thousands of dollars against “affordable” units that are worth far less because of the County’s right of first refusal and the restrictions on sale for the next 25 or more years.
The banks that lent the money to the scofflaw owners don’t care about the County’s property rights because if the “affordable” housing owners default in payments, the banks can foreclose and sell the property at market rates. The title insurance companies evidently don’t read, or more likely don’t care, that the properties being used as collateral are subject to deed restrictions that make them worth far less than the amount of the loans. The title companies collect their fees and there are no consequences.
The effect of such illegal borrowings is theft of the County’s equity interest and conversion of “affordable” housing stock to market rate homes. This also results in theft of full market value from the developers who were forced by the County, as a condition of permitting and approval for development of their property, to give up valuable property for a fraction of its value for what was supposed to be “affordable” housing.
How can the County possibly consider an ordinance that doesn’t address this serious flaw in the program? The flaw is so serious that the County should run, not walk, away from an “affordable” housing program that includes any more “for sale” units.
There are also rumblings that the County doesn't think it can do anything, either criminally or civilly, about past violations and illegal borrowings based on the old mantra that the existing deed restrictions and covenants were too weak and poorly written. This is just plain wrong. If the County’s lawyers, both criminal and civil, can’t offer better legal advice than this, the County ought to hire top-notch private legal counsel to advise them on how to solve their enforcement problems and hold dishonest “affordable” housing owners responsible. There are a variety of legal remedies that can and should be pursued – it is simply a question of political will to act, not a lack of legal rights and remedies.
If, as it appears, the County lacks the will or patience to do this right after years of neglect, including holding all violators responsible, we would all be better off if the County just scrapped the “for sale affordable” housing program, got out of the real estate business entirely and held a lottery to hand out money to the lucky winners.
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