OF BABIES AND BATHWATER: The folks at City Hall should know by now it’s not polite to gloat. But sometimes it’s impossible to resist, and such was clearly the case this Tuesday afternoon. That’s when members of the Santa Barbara City Council and their coterie of high-ranking housing planners joined for a bureaucratic group grope and exaltation over how exceedingly bitchin’ they are when they ferret out fraud and abuse from the city’s affordable housing program. When it was over, I understand at least one councilmember checked himself into Cottage Hospital, having sustained whiplash during all the back patting.
As usual, the real object of this dog-and-pony show was not what was on the agenda. It was not the poor tweeker whose affordable condo in the Franciscan Villas housing complex was repossessed by city housing officials for starting two meth-related fires. Or even how she had illegally managed to refinance her condo to get far more than the place was even worth, at least under the terms of the city’s strict resale control policy. Instead, the real point of Tuesday’s exercise was to stick it to Santa Barbara County. It was to show the county that it’s not hard to run an effective fraud prevention program-it ain’t rocket science. In recent weeks, high-ranking county officials-despairing over persistent fraud problems within their own affordable housing programs-have suggested that it would require no less than 40 full-time staff members to root out all the scam artists now preying on the county’s program. They use this as an argument to junk the county’s program altogether. By contrast, City Hall manages to run a pretty tight program with less than two full-time people. The ever-irrepressible Councilmember Brian Barnwell was so intoxicated by this discrepancy that he told the city housing officials present, “I know the county wishes they were one-tenth as good as you are.” The problem isn’t just that Barnwell’s remarks seemed designed to piss off his county colleagues. It’s that they probably don’t care.
The housing program under attack is what government officials, in their zest for obscure professional jargon, refer to as “inclusionary housing.” Translated, “inclusionary housing” is a government agency’s practice of legalized extortion for a socially beneficial purpose: squeezing developers to produce affordable units they would otherwise never build. In exchange, developers are given their building permits, and often for more units than the zoning would otherwise allow. Over the years, the city’s program has produced about 360 units, the county’s about 425. Recent audits of the county’s program indicate some form of fraud has tainted 25 percent of all its units. In some cases, that means occupants have illegally obtained financing for more than the resale value of the units. In some cases, it means the occupants make too much money or own too many assets to qualify for affordable housing. In others, it means the occupants are not even living on the premises but are renting out the affordable units. If true, this is a serious problem, and I have no reason to suspect it’s not. Fraud, abuse, and incompetence have marked the county’s affordable housing program from almost the beginning. I know of one instance where a developer’s attorney got his ne’er-do-well younger brother a three-bedroom condo for way below market rates as part of the county’s inclusionary policy. Other beneficiaries included the developer’s tile installer and a few with close personal and business ties. Over the years, the supervisors’ support for the program has been tepid at best, antagonistic at worst. During conservative regimes, the supervisors sought to gut anything that limited the profits to which developers wished to become accustomed. As a result, there’s little uniformity to rules and regulations governing the county’s inventory of inclusionary units. No wonder the program is hard to enforce. Today’s mess didn’t happen by design, but it didn’t happen by accident either.
In the past year, this fraud has been seized upon by angry homeowner-environmentalists who are opposed to all new development and the new traffic, people, and problems it brings. If the NIMBY activists can’t stop developments outright, they can at least scale them back by eliminating the number of inclusionary units. But these activists also understand it’s politically unfashionable to oppose affordable housing altogether. So they say they support affordable rental housing instead. Given that no developer in his or her right mind is building rental units-there’s way more money in condos-this offer should be regarded as an empty gesture. Now county administrators-eager to divest themselves of the enforcement nightmare they’ve inherited and/or created-are talking about abandoning the for-sale inclusionary program altogether. Instead, they’d like to focus on providing rental housing. Nice try, but no cigar. What will that fix? Until the county assigns the program to qualified professionals who actually understand how real estate transactions work and who care about affordable housing, the problems will persist.
Conspicuously lost in the uproar about undeserving cheats reaping unfair windfalls was the story of how the county never got around to collecting the $350,000 one lucky developer had agreed to pay into a housing fund instead of building affordable units. Talk about reaping an unfair windfall. I don’t see how changing the focus from for-sale housing to rentals solves this problem. But until the county dedicates the time and staff to actually fixing this mess, I guess we’re all doomed to endure the self-congratulatory backslapping from the folks at City Hall. It ain’t a pretty sound, admittedly, but I guess they’re entitled.