(photo by Brandon Wise)

SM COURTHOUSE — City Hall has filed a lawsuit against the owners of Santa Monica’s largest, single source of affordable housing, claiming the landlords failed to properly verify the financial status and eligibility of dozens of tenants, which resulted in some controlled units being rented to those who make too much money.

The City Attorney’s Consumer Protection Unit filed the lawsuit last week against the owners of The Plaza at the Arboretum, a 350-unit apartment complex at 2200 Colorado Ave. that offers 97 units of affordable housing for low- and moderate-income residents. The lawsuit, filed in Santa Monica Superior Court, alleges widespread violations of affordable housing deed restrictions and laws.

The owners are identified in the suit as BlackRock Realty Investors, Inc., CSHV Arboretum, LLC, and Riverstone Residential Group, Inc. Representatives from all three entities could not be reached for comment.

“The city has already given the Arboretum’s owners opportunities and time to resolve these violations,” said Deputy City Attorney Gary Rhoades. “Filing this case will help us to finally achieve compliance at the Arboretum and it will also send a message to Santa Monica’s other owners of affordable units that they must hold up their end of the bargain.”

In 1998 the developers of the Arboretum entered into a 55-year contract with City Hall to designate 97 of the 350 units as “affordable” in exchange for a modification to zoning allows concerning unit density and parking.

Under that agreement as well as local law, the Arboretum owners must show that the 97 units are continually rented to verifiably low- and middle-income tenants at rates that are capped by an affordability formula. About 51 of the units are designated for Section 8 tenants, who receive subsidies from the U.S. Department of Housing and Urban Development.

An audit by City Hall’s Housing Division concluded late last year that not only have the Arboretum owners failed to verify eligibility in 33 of the units, but that they are in fact renting to ineligible tenants and employees.

The investigation also found that only eight of the 15 sampled tenants received preference for living or working in Santa Monica while only one was found to be selected from City Hall’s affordable housing waiting list. There was no documentation as to whether the tenants from the other units came from the waiting list or if the management company found them on their own.

Under the agreement, management was supposed to chose from the waiting list first and give preference to those who have lost their apartments to condo conversions.

City Hall issued a corrective action plan to the Arboretum, outlining several steps that needed to be taken, including moving the current tenants who exceed the income qualification to moderate and market rate units and providing the missing documents.

Rhoades said management has had more than a year to comply and has failed to do so.

City Hall wants the court to force management to comply with the agreement, return money collected from the allegedly illegal trash fee and reimburse City Hall for all legal expenses.

Since 1990, City Hall has obtained similar affordable housing deed restrictions on more than 1,100 units in Santa Monica. With its 97 units, the Arboretum is the largest, single source of affordable housing.

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