≡ Menu

Hotel project is confusing mess

Until last week, I did not realize the extent to which it’s possible to tell the truth while at the same time mislead the public and the press. However, as a Pacific Grove resident following the city’s handling of Project Bella issues, I got a good lesson in omitting material facts during the hearing in which the City Council decided not to pursue reimbursement of costs from Project Bella’s developer.

Project Bella is the upscale hotel proposed to replace the current American Tin Cannery and parking lot — ATC for short —  a block from the aquarium. The 4.88-acre parcel was to become a 160-suite “world-class destination and innovative leader in conservation and sustainability,” with “state-of-the art design recycling vast amounts of water and energy,” including a “museum celebrating Pacific Grove’s extraordinary culture,” and providing “three hundred permanent high quality hotel jobs.” At least, that’s what the official Voter Guide said last spring in its “Argument In Favor of Measure X,” signed by two past mayors and the current PG mayor. Along with others who voted for Measure X, I was enthusiastic about this project and the revenue it would generate.

On April 19, 2016, PG residents voted 3,016 to 2,111 for Measure X, thereby rezoning the ATC property to allow hotel use. A city-commissioned fiscal report estimates an additional $3 million to $4 million revenue annually to city coffers. The ATC site is owned by an entity related to the Cannery Row Co. and is under an option to be leased for 99 years to a limited liability company with “Domaine” as part of its name.

The obfuscation begins with three limited liability companies (LLC), each with “Domaine” as part of their name.

  1. Domaine Hospitality Partners, LLC, is the Delaware company that proposed Project Bella and which sponsors the fancy Project Bella website. Domaine Hospitality Partners enchanted me, others, and the City Council with its promises for an upscale hotel. On February 17, 2016, the City Council voted unanimously to authorize the city manager to negotiate a master reimbursement agreement with Domaine Hospitality Partners, LLC to cover the city’s cost for more consultants, to accelerate completion of the city’s Local Coastal Plan (hereafter “the February agreement”). The February agreement was authorized but never signed.
  2. Domaine Pacific Grove, LLC, is also a Delaware company, reportedly owned by Domaine Hospitality Partners, LLC. Domaine Pacific Grove, LLC signed a reimbursement agreement with the city in June (hereafter “the June agreement”) but the City Council never authorized it and the only way to get a copy is to make a public records request. The June agreement differs from the February agreement in two material ways: [a] it does not require Domaine to pay for LCP acceleration costs, and [b] it is an agreement with Domaine Pacific Grove, LLC, instead of Domaine Hospitality Partners, LLC.
  3. Domaine Hospitality Partners, LLC is a recently formed California company. Except for having the same name, it appears unrelated to the Delaware Domaine Hospitality Partners, LLC and irrelevant to ongoing Project Bella issues.

Now let’s look at “omitting material facts.” The City Council agenda report for Feb. 1, 2017 states: “While City staff twice amended its agreement with EMC Planning [a private land use planning consulting business] to reflect the additional professional services required for the LCP effort, a reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” That’s completely true. What the agenda report doesn’t disclose is that PG’s mayor signed the June agreement instead of the February agreement, although the City Council never authorized him to do so. The February agreement was authorized by the City Council, was with Domaine Hospitality Partners, LLC, and would have required Domaine to reimburse the city for LCP acceleration costs.

The June agreement was not authorized by the City Council, does not require reimbursement of LCP acceleration costs, and is with Domaine Pacific Grove, LLC. Because only the June agreement got signed, the agenda report can accurately state, “a reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” Accurate, but omitting significant material facts.

The Feb. 1 agenda report recommends the council “direct staff not to pursue reimbursement from Domaine Hospitality for costs associated with the Local Coastal Plan.” Four reasons are given:

  1. “A reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” As discussed above, this reason for not pursuing costs is misleading because the unauthorized June agreement was substituted for the authorized February agreement. The June agreement omitted the reimbursement requirement, and it was an agreement with Domaine Pacific Grove instead of Domaine Hospitality.
  2. Public policy: “Consideration should be given to the prudence of accepting 3rd-party contributions, particularly those from project applicants, to fund City efforts that create regulatory review policies/procedures such as the LCP.” This public policy reason for not pursuing reimbursement is contradicted by the February 17, 2016, agenda report, which states: “The proposed agreement is structured to ensure City independence throughout the effort, as the City alone decides on the scope of activities to be undertaken and the discretion to be exercised. The City shall be reimbursed for its effort, but has not delegated or impaired its judgment.” Last week’s agenda report does not explain why pursuing reimbursement from the project applicant didn’t pose a public policy issue in February 2016, but now it does.
  3. Consultant EMC did not accelerate the LCP and therefore should not be compensated for acceleration. The agenda report itself seems to contradict that rationale by stating the work EMC did in 2016 “would have occurred over a longer period of time spreading the expense over two fiscal years.” Consultant work that would otherwise take two years is clearly “accelerated” if completed in a few months. Moreover, the city paid EMC $163,000 for acceleration costs. This rationale for not seeking reimbursement is illogical.
  4. “A project application for Project Bella has not been submitted to the City.” That statement is true only if it refers to a “complete” project application. An incomplete project application was submitted in 2015. The city sent Domaine Pacific Grove, LLC a notice of incomplete application dated November 9, 2015. It informs Domaine that if the city “does not receive revised plans within 180 days from the date of this letter, the project will be considered withdrawn.” The language used, “will be considered withdrawn,” is mandatory language under legal construction theories. No revised plans were submitted, so the city deemed the project withdrawn in May 2016 (180 days after November 9). Therefore, it appears the June agreement was moot when signed.

Next, let’s look at implications for the city of Pacific Grove. Domaine Hospitality, Partners, LLC, the Delaware company, is said to hold the option for a 99-year lease on the ATC site. However, because it is not registered to do business in California, the city needs legal review to determine whether Domaine’s option for the 99-year lease is valid. If it’s not, Cannery Row or whoever owns the site and granted the lease, by virtue of Measure X passing, now enjoys a great increase in its commercial value. It can be leased to any hotel developer. We have no guarantee at all of a LEED Platinum hotel or even one in good taste.

There is also the matter of fairness to PG voters. City leaders signed the Voter Guide argument for Measure X describing a “world-class destination and innovative leader in conservation and sustainability.” It’s not the city leaders’ fault that such a project now seems unlikely, but I think voters should be given a second chance to vote now that the rezoning could result in a very different type of hotel. The voters could force a new election by gathering a sufficient number of signatures. Measure X was put on the ballot with 1,326 signatures. A subsequent ballot measure will require a similar number of signatures.

Last week’s 7-0 vote by the Pacific Grove City Council to accept the city manager’s recommendation “not to pursue reimbursement from Domaine Hospitality for costs associated with the Local Coastal Plan” makes no sense to me. It eliminates any possibility the city might recover those costs through future negotiation, even though it can’t recover the costs through the June agreement. More basically, the motion was not to pursue reimbursement from “Domaine Hospitality.” The costs were incurred for Domaine Pacific Grove, LLC, which is the applicant for Project Bella, not Domaine Hospitality

I believe all seven Pacific Grove City Council members are honest and none expects to benefit financially from the city paying $163,000 of public funds for expenses the public was told would be reimbursed by Domaine. However, it appears to me that city leaders are not getting accurate direction and advice from the city attorney. With the confusion over which entity the city has been dealing with, the altered and unauthorized June agreement that the mayor signed (with the city attorney’s approval for form), and the circumstances that have changed since the voters approved the rezoning, I recommend the city retain independent legal counsel. We need to sort out the various Domaine entities, the status of the lease on the now rezoned ATC parcel, the city’s obligation to voters who were misled, and ways to remedy the situation the city now finds itself in.

Jane Haines is a retired lawyer who lives in Pacific Grove.

{ 19 comments }

Back in the 1940s, when I was in seventh grade, I took a class in home economics. Once a week, my classmates and I would divide into groups of about five. Each group would cook something. Then we’d eat it.

Every student would have a specific group task. One day my group was making spoonbread. My task was to stir the batter. Suddenly, the gum I’d been chewing fell out of my mouth and into the batter. Since I was decorous back then, I was too embarrassed to tell anyone what had happened. So I just kept quiet and passed the bowl containing the batter (and the gum) to the next student. S/he didn’t notice the gum when pouring the batter into the baking pan and placing it in the oven.

After the spoonbread was baked, another student removed it from the oven and dished up some for each of us. Our group was the only group that had marbled spoonbread.

This created a stir. The teacher came to our group to see why we were not eating our spoonbread. She marveled, saying she’d never seen such a thing before. By now, there was no way in the world I was going to tell anyone what had happened, so I just kept quiet.

I think a similar thing happened in Pacific Grove during 2016 in connection with the April election regarding whether to rezone the American Tin Cannery site to allow hotel use. Voters were told by the mayor and others that if the 4.88-acre site was rezoned to allow hotel use, the purportedly prestigious development group Domaine Hospitality Partners LLC, of which Gen. Wesley Clark was a partner, would construct a world-class, LEED-platinum certified hotel there. An economic analysis projected that such a hotel would increase Pacific Grove city revenue by $3 million to $4 million annually, and the classy Domaine website showed world class hotels that Domaine Hospitality Partners purportedly had developed. The vote on April 19 was 3,016 yes and 2,111 no.

One of the selling points for voting yes was that venture, Project Bella, would not financially burden Pacific Grove since Domaine was going to pay the processing costs. Two months before the election, on Feb. 17, the City Council had approved a reimbursement agreement with Domaine Hospitality Partners LLC. However, that agreement didn’t get signed until June. In the meantime, the city incurred substantial Bella-related expenses on Domaine’s behalf. But the City would be reimbursed for everything, right?

Here’s where the chewing gum analogy applies. The February reimbursement agreement is for Domaine to cover the city’s “additional costs associated with the acceleration of City’s Local Coastal Program entitlement process,” whereas the June agreement omits any mention of Coastal Program acceleration costs. In May, the Council approved paying a consultant $101,056 for such costs, but in September the city manager said the city has no agreement with Domaine to cover such costs. Domaine will reimburse the City for everything, right?

Another example is that the February version of the reimbursement agreement was with Domaine Hospitality Partners LLC, whereas the June agreement is with Domaine Pacific Grove LLC. That switch hasn’t been explained either.

There is a discomforting Bloomberg News article  about Gen. Clark lending his name to some sketchy companies. Additionally, Domaine’s classy website has been edited to delete some of its earlier claims, and a former representative of Domaine alleges Domaine is more than six months overdue paying $150,000 to its contractors.

Now, here’s where the keeping-a-secret analogy applies. As far as I can tell from listening to videos of council discussions about Project Bella and reading accompanying agenda reports, neither staff nor the council has disclosed the discrepancies between the reimbursement agreement approved in February and the reimbursement agreement executed in June.

And here’s the culprit analogy. Just as I never confessed to how the spoonbread became marbled, Domaine may be silently preparing to drop its gum into the batter. By this I mean that Domaine now has a much more valuable lease on the American Tin Cannery site than the lease before the site became zoned for hotel use. The lease is with the Cannery Row Co., owner of the American Tin Cannery, and is for a term of 99 years.

Suppose Domaine transfers that lease to a less desirable hotel developer, pockets the increase in value, and waves goodbye to Pacific Grove? The city would be obligated to approve any hotel meeting applicable standards. Thus, Pacific Grove could wind up with a low-revenue-producing, ordinary hotel on the site of the former cannery, which is not what city officials and Domaine said would result from passing Measure X.

Am I concerned? You bet. I love Pacific Grove. I think the city staff needs to look into these matters, tell the public what’s going on and guard against that lease being transferred. Then, if facts so warrant, city officials should say, “Dear Voters, we goofed. Let’s have another election to eliminate hotel uses from the American Tin Cannery site.”

Jane Haines is a land-use activist and retired lawyer.

{ 25 comments }

Dollarphotoclub_89236926Thanks in part to Partisan reader emails, the California Coastal Commission voted 9-2 on Wednesday to hold a hearing on the Monterey County Board of Supervisors‘ decision to remove affordability requirements on the Moro Cojo Subdivision in North County. In doing so, concerned commissioners cited the need to retain affordable housing, and voted against its own staff recommendation to let the county’s decision stand.

This means that the Board of Supervisors’ Jan. 26 decision to allow 161 affordable Moro Cojo homes to convert to market rate – without replacements – is now void.

As Partisan readers know from a previous piece, the 90-page coastal appeal staff report buried important, relevant information on pages 78-90. Your emails to coastal commissioners, telling them to look at those pages, were successful. The commissioners did look, and absorb those pages, which is probably why they voted against their staff’s recommendation.

A CHISPA-spokesperson submitted a letter claiming that people who want the affordable housing to remain affordable are NIMBYs (not in my back yard people) who don’t want farmworkers living near them. It’s an odd claim, because it’s the “NIMBYs” who were trying to keep the homes affordable so that future farmworkers could also afford them. More than 50 Moro Cojo homeowners attended yesterday’s hearing, many of them Spanish speaking. There was no translator, but the Coastal Commission promised that there would be at the next hearing.

Meanwhile, back at home, the reporter for the local daily who wrote about yesterday’s hearing interviewed CHISPA representatives, but interviewed no one wanting to keep the homes affordable. The article states that “most [Moro Cojo] residents are bound to a roughly 8 percent [interest] rate” on their home payments. That’s another odd claim, since it has never arisen before.

At a future time, probably in January 2017, the Coastal Commission will hold a public hearing to decide if the 161 Moro Cojo homes can be converted to market rate and, if so, whether or not CHISPA needs to replace them on a one-by-one basis. Since replacement value stands at around $48 million, this will be an interesting session.

Because the original Moro Cojo subdivision approval involved the waiving of serious environmental concerns that would have prohibited a market-rate development, the hearing will be starting at the beginning (“de novo”) to consider the matter from the beginning rather than from the point of the Monterey County hearing.

In January, or whenever the Coastal Commission holds its hearing, there will be opportunity for public comment. Stay tuned.

{ 30 comments }

Dollarphotoclub_89236926Many houses in North Monterey County, currently affordable to low-income households, will convert to unaffordable market rate unless the Coastal Commission, at its August hearing, makes the unlikely decision to override its staff’s recommendation. Replacements for these homes are not provided for, and there are not any in the foreseeable future. Meanwhile, one in three Salinas City School District students is homeless. [#1] They live in cars, trucks, motels or tents, and their chances of someday living in a decent home owned by themselves or their parents are slim to none.

I am asking for your help. What’s needed to prevent this loss is a flood of YOUR emails to Coastal Commissioners.

The issue involves the Jan. 26, 2016, decision by the Monterey County Board of Supervisors (Parker dissenting) to amend the affordability requirement that keeps 161 homes in the Castroville area coastal zone permanently affordable to low-income households. [2]

The decision changes the permanent affordability requirement to 20 years, which will expire in 2020 since the Moro Cojo homes were built in 1999-2000, financed with federal and state subsidies.

By law, their affordability status may not change unless the Board of Supervisors acts consistently with the 1982 North Monterey County Local Coastal Program. It states that Monterey County shall protect affordable housing in the North County coastal zone and, if for any reason the affordable housing must be converted, replacement units shall be required. Despite that mandate, the supervisors voted in January  to amend the permanent affordability restriction at the Moro Cojo project so it will terminate in 2020, and they requited no replacement units. The net effect will be to immediately REDUCE affordable housing stock by over 160 units.

I appealed the board’s decision to the Coastal Commission on the grounds that it violated the 1982 Program related to affordability. Reviewing the appeal, Coastal Commission staff has recommended that the Coastal Commission not interfere with Monterey County’s January decision.  [#3]

The staff report is so long (90 pages) that busy commissioners are unlikely to realize important facts without some guidance. As you will note below, important facts are buried so far into the 90 pages as to virtually guarantee they won’t be read unless someone directs them to the information.

Your emails will help direct the commissioners to the salient points of the appeal; I’m asking that you urge the commissioners to read pages 78-90 of the staff report. Commissioners will learn important facts they will otherwise not know.

Here are examples of what they’ll learn:

  • Marc Del Piero, chair of the 1982 Monterey County Board of Supervisors when the North County Coastal Program was adopted and an author of the program, submitted a declaration supporting the appeal, stating under penalty of perjury that changing the affordability status of the Moro Cojo homes is “clearly inconsistent” with the program. The staff report never mentions his declaration. Instead, it just includes it without comment on pages 78-80.
  • An analysis of the five issues on which the Coastal Commission evaluates consistency with the North Monterey County Coastal Program, with substantial evidence supporting each, also is never mentioned in the staff report. It too is included only as an attachment without comment on pages 81-90.Without a flood of emails alerting the Coastal Commission to the information hidden at the end of attachments to the staff report, Monterey County’s January decision is nearly certain to be sustained and existing affordable housing will be lost with no replacement. Low-income families now homeless will be unable to afford market rate Moro Cojo homes. Sending emails won’t take long. Click on the email address for each of the 19 people with email addresses at http://www.coastal.ca.gov/roster.html.  An email with that addressee’s name will appear. Copy and paste into the subject line: Appeal No. A-3-MCO-16-0017

Then copy and paste this into the body:

I’m a Monterey County resident. I respectfully request you to read important information at pages 78-90 of the staff report in connection with the criteria for finding “substantial issue.” That information is not mentioned elsewhere in the staff report but is important. It will show you why the Coastal Commission should reject staff’s recommendation for the Aug. 10 hearing and instead vote to find “substantial Issue.”

The emails must reach addressees by Aug. 4. Brian O’Neill of the commission staff must be copied on each to prevent the email from being ex parte:

brian.o’neill@coastal.ca.gov

After you send the emails, if you want to feel happy from knowing you’ve done something good, drive to the Moro Cojo subdivision on Castroville Boulevard off Highway 156 near North Monterey County High School. You will find a well-kept neighborhood where low-income families purchased affordable homes and live in dignity. Remember,

  • According to the county’s current cap for resale of Moro Cojo homes, which would become void if the Coastal Commission does not override the County’s 1/26/16 decision, “The current maximum resale value of a three-bedroom house in the [Moro Cojo] subdivision, is $291,750.” (Page 9 at http://documents.coastal.ca.gov/reports/2016/8/w16c-8-2016.pdf, far more affordable than market rate.)If the emails persuade Coastal Commissioners to vote for “substantial issue,” a subsequent hearing will be scheduled on the affordable housing policy issues. If the facts are fairly presented, I believe the Coastal Commissioners will override the County’s 1/26/16 decision. That would result in the 161 Moro Cojo homes remaining permanently affordable to low-income households in Monterey County.LINKS:

#1. http://www.thecalifornian.com/story/news/2014/09/18/homeless-ranks-salinas-schools-up- swing/15809113/

#2. http://www.montereyherald.com/article/NF/20151208/NEWS/151209801

#3. http://documents.coastal.ca.gov/reports/2016/8/w16c-8-2016.pdf

#4. http://www.coastal.ca.gov/roster.html

{ 22 comments }

My son has an idea. It’s a little crazy, maybe even more than a little crazy, but I am hoping it will go viral and you can help.

Below there is a link to a 9-minute video that describes the idea as well as a website with a lot of additional information. If you’d be willing to review the video and if you like the idea then forward this post to your friends and ask them to review it and then forward to their friends, and so on, that would be great. Hopefully it will go viral.

Link to video. Link to website.

The idea is to create an independent political party to challenge Democrats and Republicans in November (I told you it was crazy!)  I think our elected leaders have perverse incentives to prioritize special interests over the national interest and submit to the irrational left and right extremes in our electorate. This has created enormous fiscal and other problems and these same perverse incentives mean the current system can not be changed from within. The only hope is an independent party that is structured in a way that can attract significant support. I think there would be a lot of interest in such a party.

As you will see from the video, the idea is to create an agenda that addresses pressing problems using common sense, non ideological solutions. Then we create a lot of support for that agenda and go viral. When it goes viral that then allows us to recruit the types of candidates we would need. That’s the idea.

So, to make this work, the idea needs to go viral. If you would be willing to review the video and, if supportive, forward the links to your friends and family and ask them to do the same, that’d be great.

I know it is kind of crazy. But I think the idea of President Donald Trump is pretty crazy. I also think four more years of gridlock as we run up an enormous debt and leave important issues, e.g. climate change, unaddressed is pretty crazy, as I strongly suspect would happen under a President Hillary Clinton. I’ll take my crazy over that crazy any day.

Thanks.

Haines is an activist and retired Peninsula lawyer.

{ 18 comments }

Single family house on pile of moneyMonterey County followed some unique rules for the April 8 Housing Advisory Committee (HAC) hearing to consider an application by 161 homeowners at the Moro Cojo affordable housing project to reduce the affordability restrictions on their homes from permanent to 15 years from date of purchase.

If approved, that application would result in most of the homes jumping from affordable to market rate prices during 2015. Here are the unique rules employed at that hearing:

RULE #1 was that HAC members were not informed about any comments that arrived during the eight days preceding the hearing. This was handy since it excluded an April 6 letter from Coastal Commission staff stating that “Commission staff believes that 161 units is a significant amount of housing for lower-income residents of North Monterey County and the loss of these units would be clearly inconsistent with the LCP (Local Coastal Plan) and Coastal Act requirements to protect them.”

Rule #1 also excluded my April 1 letter and LandWatch’s April 7 letter.

RULE #2 was that the environmental analysis for the application considers only the application’s consistency with policies in the Monterey County general plan, which do not apply because the Moro Cojo project is in the county’s coastal zone. However, the analysis does not consider the application’s consistency with policies in the North County Coastal Land Use Plan, which do apply because the project is in the North County Coastal zone. That was handy because it allowed the environmental analysis to avoid evaluating the environmental consequences of a North County Coastal Land Use Plan policy that requires replacement of affordable housing units on a one-to-one basis when existing affordable units are eliminated.

RULE #3 was the most handy of all. It was to never mention the state law that requires the California Coastal Commission to “take appropriate steps to ensure that coastal development conditions existing as of January 1, 2002, relating to affordable housing are enforced and do not expire during the term of the permit.” (Public Resources Code § 30614.) By never mentioning the state law, county staff keeps alive the illusion that the 1994 coastal development permit condition requiring permanent affordability can be amended.

RULE #4 was not to post the 102-page staff report for the April 8 hearing on the HAC website until AFTER April 8. That was also handy because it prevented pesky members of the public from learning beforehand what staff had (and had not) told the HAC in preparation for the April 8 hearing.

I arrived late to the standing-room-only April 8 hearing but was kindly given a seat among the 50 or so Moro Cojo residents in attendance. The residents’ testimony was along the lines that if they weren’t allowed to sell their homes at market rate, they couldn’t get home improvement loans and that would result in the currently well-kept Moro Cojo project deteriorating into a “rat’s nest.” That claim was contradicted in part by a county staff member stating that owners of affordability-restricted homes are in fact eligible for home improvement loans, so I guess the gist should be understood as meaning that if the currently price-restricted 15-year-old homes can’t be sold for market rate rather than income-restricted affordable prices, home improvement loans can’t be as large as they would be if the home’s value were based on market rates.

I was the only person to speak against the application. I explained about the letters the HAC hadn’t seen. Staff distributed copies AFTER I mentioned them. Since I don’t speak Spanish, I was dependent on the translator when I stated my advice to those listening to the Spanish translation that if eventually they’re told that their application can’t be approved because approving it would be illegal, they should ask their leaders why they were asked to show up for the April 8 hearing. I sure hope the translator translated that exactly as I spoke it.

HAC members worked with the information they’d been given and tried to fashion some compromise between permanent affordability and 15-year affordability. However, they were unable to agree on a compromise so the hearing is continued to May 27. I don’t know whether the unique rules will be followed on May 27.

Despite the April 8 unique rules that resulted in HAC members not learning about Coastal Commission staff’s April 6 letter, LandWatch’s April 7 letter, or my April 1 letter, and their not being told about applicable county policies and state law or the environmental consequences resulting from the applicable North Monterey County Coastal policy requiring a one-to-one replacement for the 161 affordable homes, nonetheless there was one aspect of the hearing that I really did find refreshing and very much appreciate. And that is because the April 8 hearing was the first time in my 20-plus years of attending hearings related to the Moro Cojo project that I was not accused of being racist.

I sincerely appreciate that.

Jane Haines is a retired lawyer who has been heavily involved in issues related to affordable housing.

{ 9 comments }

Single family house on pile of money

An effort to terminate affordable housing restrictions on 161 Monterey County homes is currently underway. You can help keep the homes affordable, but first you need to understand the following background:

The homes are located in the Moro Cojo housing project near Castroville. Built during the late 1990s, each home is subject to a deed restriction requiring that it remain permanently affordable to very low, low or moderate income households.

Owners of the homes, represented by Community Housing Improvement System Planning Association Inc (CHISPA), applied to Monterey County to have the “permanent” deed restriction converted to a 15-year restriction whose term commences on the date when the homes were conveyed. Since most of the homes were conveyed between 1999-2001, approval of CHISPA’s application would mean that either this year or next, these 161 homes could be sold at unrestricted market rates, and Monterey County’s affordable housing stock would decrease by 161 homes.

Many government agencies made substantial financial contributions to make the Moro Cojo homes affordable. Monterey County waived $118,868 in processing fees and contributed a $476,150 Community Development Block Grant grant toward the project. The Red Cross donated generously. State and federal governments provided low-interest loans and other financial aid. The Federal Resolution Trust Co. sold the land for the project for an alleged “fraction of the amount [which had been] loaned on the property.”

The public purpose of those contributions was to significantly increase the supply of single-family homes affordable to very low and low income families.

Since the need for affordable homes is as great now as it was in the 1990s, I believe that changing the affordability from permanent to 15 years at this time would be an unlawful gift of public funds because it would be for the private gain of the 161 homeowners, rather than for the intended public purpose.

Please understand that I am not unbiased. I represented clients in two 1990s lawsuits about the Moro Cojo project. The first lawsuit resulted in a stipulated judgment interpreting a condition for project approval to mean that the homes were to remain permanently affordable until substantial evidence showed that the permanent restriction should be changed. The second lawsuit resulted in CHISPA suing my clients for tens of thousands of dollars, alleging that my clients’ lawsuit was frivolous and for the purpose of stopping the project.

The court rejected CHISPA’s allegation, affirmed the validity of that lawsuit (which had to do with water supply), and ordered CHISPA to pay my attorney fees for the time I spent defending against CHISPA’s unwarranted allegation.

So, I’m not unbiased. Nonetheless, I do know a lot about origins of the homes’ affordability.

First, it’s understandable that the homeowners want the greater profit they would reap from selling their homes without limitation on the selling price. Those particular homeowners would become free of any obligation to use any portion of the equity they accrue to help other families wanting homeownership, and they could pocket their profits. However, they would be undermining the very policy that benefitted them.

The homeowners argue that their homes were “self-help,” meaning that each purchasing household spent 40 hours a week for eight to ten months doing non-specialized labor on their homes to provide “sweat equity.” That’s commendable. However their “sweat equity” substituted for a down payment valued at $16,000 plus specified interest. And when they do sell, even with the affordability restriction, they can make a modest profit.

The homeowners argue that redevelopment law puts a 15 year limit on affordability on self-help homes rather than making it permanent. That’s true about now-defunct redevelopment law.

However redevelopment law has never applied to these homes, and the law that does apply commonly results in permanent restrictions on affordability.

The homeowners argue that permanent affordability deed restrictions are unlawful, and that they were not given adequate notice about the deed restrictions, and that the restriction makes it difficult to get home loans or refinancing. However a 2009 appeals court decision about the Moro Cojo permanent deed restrictions, Alfaro v. CHISPA, considered those same claims and rejected them.

It seems likely that, as in the past, issues pertaining to the homeowners’ application will be obscured by charges of racism and classism. Thus, involvement in this public issue should not be undertaken by the delicate. Nonetheless, Partisan readers who care sufficiently about affordable housing and are willing to get involved, should send their comments to the Monterey County Housing Advisory Committee at 168 W. Alisal St., Salinas 93901 before the first hearing, which will be on April 8. Explain whether you think the affordability restriction on the 161 Moro Cojo homes should remain permanent, or whether 15 years of affordability is enough, and why.

Two subsequent public hearings will be held, one before the Planning Commission and one before the Board of Supervisors.

The Alfaro court best summarized the issue when it said: “Plaintiffs are essentially arguing that this housing program should have been designed differently, namely just to benefit them, the first wave of low income buyers. We acknowledge that it would be a more beneficial program to this first wave if they were able to sell their properties for whatever price they could command. However, plaintiffs do not discuss how avoiding the affordable housing deed restriction will benefit the second wave and later waves of low income buyers. There is an inherent conflict between the goals of maximizing the financial benefits to the first wave and preserving affordable housing for future buyers. We consider it reasonable to impose a continuing affordability requirement for the benefit of future low to moderate income homeowners.”

Jane Haines is a retired lawyer who has been heavily involved in issues related to affordable housing.

{ 12 comments }