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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