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.