Cheating the System

‘Affordable’ Homebuyers or Subsidized Landlords?

by Martha Sadler

One out of four people buying affordable homes — at deep discounts, thanks to county assistance — may be cheating the system, according to a report presented Tuesday to the Santa Barbara County Board of Supervisors by auditor/controller Bob Geis. Coming under Geis’s magnifying lens were affordable units included in multi-family housing developments by property owners as stipulated by the county. Intended as a means of maintaining a minimum stock of affordable housing, such units may not be resold at market value for a specified number of years; the duration of the affordable tag varies according to where and when the units were built. In more than one case, auditors knocking on doors found renters in the place of subsidized absentee homeowners who collected rent while living elsewhere.

The auditor’s surprise visits came as checkups prompted by reported violations. The 81 random units chosen for audit did not reach the door-pounding stage, but Geis found reasons for suspicion in the paperwork of 20 units, such as property tax billing addresses that didn’t match the address of the unit.

The auditor’s report also dinged Housing and Community Development (HCD) director Ed Moses, finding that HCD made “only one effort” to test compliance with affordable housing covenants — in 2004. A citizen whistleblower, Kim Seefeld, also pointed the finger at Moses, saying she had complained several times of suspected fraud to the HCD director during his three-and-a-half-year tenure, but Moses and his staff failed to investigate. Moses responded by telling supervisors he did not have enough staff to correct decades of bad paperwork, reminding them that his office stopped its monitoring efforts a year ago after supervisors asked the auditor to take over.

Supervisor Joe Centeno tried to keep Tuesday’s meeting civil. “I’m not going to make any excuses for him,” said Centeno, of the HCD chief, “but I’m not going to blame him either. I think maybe we should all share the blame.”

Geis’s report found the county lacked a complete inventory of the affordable ownership units. The best available count listed 365 affordable units; 108 of them may be out of compliance, Geis said. To correct the situation, Geis advised better recordkeeping, random site visits, public record searches, and interviews with neighbors of potential violators. Supervisor Salud Carbajal voiced concern for the dignity of low-income residents, but did not make a motion for changes to the enforcement recommendations.

Finally, the Geis report found that the lottery selection process for affordable ownership suffered from unfounded waivers of income requirements and insufficient proof of U.S. citizenship. Promising to use all available resources from necessary departments, Geis and Ron Cortez, Geis’s deputy, said they would follow up on all suspicious paperwork and also expand their investigation to housing loans programs that had yet to be inspected. County counsel Shane Stark added he would investigate “civil remedies for fraud” and all will report back July 25.

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