For more than three decades City Hall has had a policy whereindevelopersobtain generous construction bonuses including extraheight and density over that allowed by current zoning codes in return for providing community benefits such asaffordable housing pursuant to a development agreement (DA).
TheDorchesterHouse at1040Fourth St. isa 1988 condominiumbuilding required by terms of its 1982DA (one of the city's earliest development agreements)to set aside 15 ground floor units out of a total of 42 units for low and moderate income rental housing whichcan only be occupied by income-qualifyingtenants who lease fromunit owners.
In January, 2010, local attorney Stanley Epstein discovered that all15Dorchesterunits had been sold repeatedly over the years at market rates and were illegally occupied by owners, or illegallyleased to family members and possibly others. There's evidence thatownersassumedCity Hall would continue its 25-year history of not enforcing the DA andwere ignoring theconsequences of living in them, which is eviction.
With none of the units appearing to be in compliance with the DA, Epstein brought the situation to the attention of Deputy City AttorneyGary Rhoades.
As a result,the City Attorney's office obtained documents from11of the 15 owners alleging thattheir unitswere in compliance because their condos wereleased to non-relatedlow and/or mid income tenants.
It appears that nobody followed up to see if these documents were truthful and ifthe units were really in compliance. In February 2011, I filed a Freedom of Information Act (FOIA) request concerning proof of compliance which was denied by the City Attorney's office. Meanwhile, staffrepeatedly informed the City Council that the unitswerein compliance with the DA.
One big problem: owners would lose big bucks when they leasetheir units atlow to mid income rates because the rental income would be far less than the totalofmortgage payments, home owners association (HOA) dues, repairs, maintenance, taxes, insurance, utilities and other expenses.
The sale price for many of these units has been well into the $700,000s. One two-bedroom owner is currently asking $725,000.It defies rational belief that anyownerwould move out and take losses amounting to thousands of dollars a month in order to lease at less than market rates to non-relatives.And, everyone in City Hall knows this because they have the income and expense numbers.
Of the remaining four units, the status of one of them hasn't been resolved since 1988.
In May 2010, City Hallsued Kathy Golshani and a related entity Bilet Properties, LLC.(that collectively owned the three remainingunits) to enforce the Dorchester's DA.
Some 27 months later, City Hall entered into a settlement agreement stating the three unitsowned byGolshani or Bilet Properties must be designated for rental only to low income persons as called for by the development agreement. Inexplicably, italso provided that"owner occupancy shall be allowed at each of the units ..." What? Isn't this having your cake and eating it, too!
"Owner occupancy" is the operative provision in this agreement and it clearly alters the development agreementon these three units,forever.
On top of everything else, City Hall hasn't even adhered to its ownprocedure for amending development agreements as required by law. The processofstaff reports,public noticing, public meetings and inputbefore the Planning Commission and City Councilhas been completely ignored. Therefore,agood legal argument will probablybe made that the agreement is invalid. Stay tuned for more litigation.
Making things worse, the City Council, Planning Department, City AttorneyandCity Manager have all been parties to the wrongful conduct relating to affordable housing atthe Dorchester. In addition, the council never approved the settlement,although,in closed session, it authorized the City Attorney to end legal proceedings against the two defendants.
The comedy of errors continues.When Epstein learned of the settlement two weeks ago, he asked if itwas approved bythe council and ifthe public had been notified. Last week City Attorney Marsha Moutrie — 11 weeks after the fact — finally disclosed during the City Council meetingonly that a settlement had been reached on theGolshani/Bilet units.
City Hall's number one priority is affordable housing. Through bungling, inattention, manipulation, incompetence, fraudand lack of interest, 15 units of existing affordable housing were lost.And, all or substantially all of the 15deed-restricted Dorchester units are still in violation of the development agreement.
Epstein called Santa Monicans for Renters' Rights (SMRR) in 2010 to enlist SMRR's help in the fight to save the affordable housing. Co-chair Patricia Hoffmanwouldn't comment and hung up on him. That's how SMRR protectsits so-called "top priority." Slam down the phone.
Nobody seems to care that 15 units of valuable low/mid incomehousing are being occupied by well-heeled owners instead of the low or mid income families for which they were intended.
I'm thinking the reasonthis was handled so badly was because staff andpoliticians alike didn't wantowners tossed out of their homes even though there's ample evidencethe owners were well awaretheir units weredeed restricted.
Right now, the fumbling of the Dorchester House DA andall the prevarication surrounding it has made City Hall's "number one priority" a number one faux-pas. There's a lot of shameto go around and heads should roll for this debacle.
Bill can be reached at mr.bilbau@gmail.com. Thanks to Stanley Epstein for his assistance in the writing of this column.
