Inclusionary housing perpetuates failed social experiment

Voice From Santa Barbara County: Kim A. Seefeld

Santa Barbara News Press - 9/5/04

Quietly working its way through the Santa Barbara County planning and policy making process is a proposal to update the inclusionary housing program and in-lieu-of fees. This update is, in fact, an enormous expansion of the affordable housing program and huge increase in the in-lieu-of fees to be charged landowners wishing to develop their real property; fees paid to the county affordable housing trust fund, in lieu of building affordable housing units on site with market-rate housing.

Absent from the dialogue before the Planning Commission regarding this huge expansion of the affordable housing program and in-lieu-of fee increase -- and nowhere in the voluminous materials presented to the commission, least of all from county Planning and Development or Housing and Community Development staff -- is there any mention of the actual track record of the affordable housing program over the last 10 years.

Over the years, this program has variously been referred to as the affordable, work force and now the inclusionary housing program. Emphasis in the beginning was on selling affordable housing units to very low- and low-income people. The new emphasis in the update is on selling units to moderate- and upper-moderate, now called work force people, some making more than $100,000 a year.

The real reason for the change is that selling affordable housing units to very-low- and low-income people has been a disaster. The name of the program has changed as the county has slowly accepted that the conceptualization, implementation and monitoring of the program are seriously flawed.

In its utopian vision, the county determined to sell affordable housing units at deeply discounted prices to supposedly pre-qualified very-low, low- and moderate-income candidates selected by lottery. Qualification incomes have been set at different amounts at different times.

For instance, in 1998, the measures of income for a family of five were: very low, $27,750; low, $44,400; lower moderate, $55,500; upper moderate, $66,650. The current update proposal will set incomes $32,400 or less for very low, $32,500 to $51,700 for low, between $51,350 and $83,850 for moderate and, astonishingly, over $100,000 for the category called upper moderate/work force.

The county decided it would more greatly reward developers if they placed the units in the midst of market-rate home developments. If they chose not to build units within the housing development, they were charged in-lieu-of fees, which were deposited in the county's affordable housing trust fund accounts.

Current in-lieu-of fees per unit for the South Coast are $74,115 and $357,335 for Montecito. The proposed increase per unit is to $110,000 for very low and low income and $422,700 for moderate on the South Coast and $110,000 for very low and low and, hang on to your hats, $871,300 for moderate in Montecito.

Since the program began, the qualification process as to who is qualified in terms of income and assets has been flawed and, in some cases, the process has tolerated outright fraud. Some applicants did not disclose all assets.

A county planning and development staff member admitted at a public meeting that the county knew applicants were submitting different financials to lending institutions to qualify for mortgages than they were submitting to the county to qualify for the affordable housing lottery.In other cases, the county did not count all types of assets in the qualification process including luxury cars, trust and probate assets, other real estate assets owned or all income received from all sources. In one instance a person working for the affordable housing program counseled an allegedly very low income applicant to transfer an interest in real property in order to qualify.

The county allowed persons who were being educated for professional degrees and who would soon be making salaries in excess of very low income qualification limits to obtain very low income affordable units. The county allowed a person who worked for a neighboring county government in a professional capacity making a salary in excess of very low income qualification limits to maintain a very low affordable unit. Anyone can manipulate their assets and work load to be "poor" for a short period in order to qualify and that is just what has happened.

No real investigation has ever been done of suspected instances of fraud in procurement of affordable units.In one situation of suspected fraud, the County claims all records have been "lost" and the whereabouts of the County employee involved is "unknown."

Despite being provided with names of witnesses, no witnesses were interviewed.

By placing very low- and low-income units in the midst of market rate houses, the county subjected many neighborhoods to unnecessary turmoil and expense. In many cases, new owners of affordable units were not educated by the county or experienced in the obligations of property ownership and what deed restrictions required of them. Homeowners associations were abandoned by the county to deal with the problems themselves. The county's attitude was the units were sold and it was the neighbors' problem when the new owners violated zoning laws, ignored CC&R restrictions, defaulted on payment of homeowners association dues and violated community rules on things like parking and property maintenance.

One homeowners association finally tried to enforce affordable housing owners' obligations through its own community rules. County H&CD personnel not only did not help the association but actively thwarted its efforts.

All affordable units in the county that were sold, as opposed to rented, were sold with deed restrictions preventing rental without county permission on a showing of hardship and restricted re-sale except at prices determined by the county. Originally, there was a 30-year limit on sales at restricted prices of affordable units.

For 30 years an owner could only sell for a limited amount adjusted periodically by the county. When the 30-year period expires, the owner can sell at market rates. This allows an affordable housing owner's children and grandchildren to receive a windfall at the taxpayers' expense while the rest of us toil away to leave our children and grandchildren anything.

When presented with evidence of violations of the rental restrictive covenants, in the past the county has refused to take any action to investigate or enforce the restrictive covenants.

One shocking example is a violating owner who admitted to living and working outside Santa Barbara. The owner collected substantial market rent and told friends the affordable housing unit was an "investment property."

Neighbors were subjected to a stream of unidentified tenants who came and went as they pleased without compliance with community rules for years. Only after homeowners' association persistence by implementation and enforcement of its own community rules did the violating owner return to live in the unit, and then immediately retaliated against neighbors for insisting on compliance with the rental restrictive covenant. The County tried to justify its inaction by stating they did not want to violate the affordable housing owners' rights of privacy and that the County had no enforcement mechanisms in place even though the affordable housing program has been in existence for many years. Only after relentless demands by some citizens was an enforcement plan submitted to the Board of Supervisors by H&CD and County Counsel. Even then the proposed plan was seriously flawed and ineffectual. The plan was, under pressure of these same citizens, rewritten, then adopted by the Board of Supervisors. However, unless there is a commitment by County Counsel and H&CD to do more than collect questionnaires and to hold violators accountable, the policy is meaningless.

Historically, the approach of county personnel has been to protect the affordable housing program at all costs while shoving the problems with the program under the rug, out of the public eye. As county employees, paid by the taxpayers, H&CD and P&D personnel should be serving the interests of all citizens, not just affordable housing owners, in a fair and open manner.

While there is no legal or moral entitlement to own a home in Santa Barbara County, most citizens do recognize the need to provide affordable rental housing for the elderly, disabled and truly needy among us, as well as having sufficient housing for rent or purchase by essential services workers.

However, how can the county possibly be advocating expansion of a program that is so fundamentally flawed without first facing the mistakes made and fixing those flaws? And, shouldn't the taxpayers be truthfully told what is going on before they are forced to devote one more dime to this program in its current configuration?

If the community wants an inclusionary housing program, it should first address these problems and inequities openly, decide what its realistic housing goals are and then reform the program before expanding it.

See my accompanying commentary on how to reform the county program.

The author is a retired lawyer who lives in an unincorporated area of Santa Barbara County.


Do not sell affordable units. Such units should only be below-market rentals, which will solve a lot of the qualification, enforcement and inequity problems. Renting allows families to expand and contract, to become successful and move on, to take jobs elsewhere and respond to opportunity and life changes without being trapped or encouraged to violate the restrictive covenants. It gives qualified people a respite from market rent to save to buy a home and opens the affordable unit to give more people a chance to benefit. It also allows workers to live close to their jobs.

Arrange an independent audit of the affordable housing program's track record to be conducted by an outside auditor. Do thorough investigations of any suspected fraud. If someone procured a unit through fraud, take the unit away and return it to the affordable housing inventory. If there has been an illegal rental, recapture the rent from the violating owner. If there is a repetition, take the unit and return it to the affordable housing inventory.

Have a roundtable discussion or survey of homeowners association presidents, past and present, to find out what the problems with on-site affordable units have been; solicit their ideas and suggested solutions.

If sales are continued, restrict sales prices of affordable housing units to affordable housing price limitations in perpetuity.

Qualification, whether for rental or sale units, should be reviewed and renewed periodically. As people become more successful, they should move on and allow another qualified candidate to occupy the unit.

The county should create partnerships with employers, UCSB, Cottage Hospital and nonprofits to develop rental or sale units for workers. Let them qualify candidates and monitor the program.

Stop punishing property owners who want to build duplexes, triplexes, quadriplexes; we want to encourage them to turn older single-family dwellings into multiunit housing and they won't if this plan is adopted. Give economic incentives to landowners to provide housing, and stop punishing them.

Land is precious and finite, but so are property rights and the freedoms granted all citizens under the Constitution. It is time to learn from the failures of this program and turn a failed social experiment into an honest success that truly serves the needs of our community.