Has Orange County Given Away the Farm*

Commission affordable housing units to Community Housing Enterprises in a series of Assignments between June 18, 1984 and December 10, 1985. Response: Agree with the finding. Orange County Housing Authority releases of California Coastal Commission

affordable housing units issued after 1985 were contrary to County Policy and Procedures and were invalid. Disagree partially with the finding. OCHA's actions were consistent with Response: the Board directives of 1983 to release County bond-financed and certain other properties from resale controls. Any releases for Coastal Commission units were mistakenly given and would be contrary to the reassignment of the authority to release units that was transferred to CHE or CCBHC. FY 2003-2004 Grand Jury Report Has Orange County Given Away the Farm ٠ Orange County Housing Authority issued post -1985 invalid "release - Notice

of Intent to Abandon Option" forms for Niguel Beach Terrace Units 10, 140, 187, and 188; Spinnaker Run Unit 123; and Beacon Hill Terrace Unit 53. Disagree partially with the finding. It should be noted that these releases Response: occurred in good faith as a result of staff errors or inaccurate documentation. For example, several releases were issued under the direction of a February 1994 internal Document, which erroneously included Niguel Beach Terrace among properties that OCHA was authorized to release. Another involved a consultation with CCBHC in which OCHA staff was given approval by telephone to release the unit. Beacon Hill #53 was not included on the listing of properties assigned to CCBHC in 1991. Since CCBHC did not appear to have jurisdiction for this property and CHE ceased to exist, OCHA seemed to be the only agency available to the seller in order to petition for a release. Additional Orange County Housing Authority invalid releases of California

Coastal Commission affordable housing units may have been issued but not discovered during this investigation. Disagree partially with the finding. Current research of OCHA records Response: indicates that only the six Coastal Commission-related properties identified in the Grand Jury Report were released by OCHA. Due to the number of units and variety of properties in question, further and more extensive research of individual real estate transaction records is needed to absolutely confirm that no additional invalid releases were issued. Invalid releases by Orange County Housing Authority cloud property titles,

which may cause serious legal and financial problems for affected parties. Disagree partially with the finding. Currently, any property, which has Response: received a release, is no longer subject to the resale restrictions on record title. As such, there is no "cloud" on record title for these properties. However, it may be possible to file a lis pendens in the Official Records of Orange County thereby "clouding" title against these properties. Before a lis pendens may be filed a legal action would first need to be prepared and filed with the appropriate court by the California Coastal Commission, the public body with the authority to do so with respect to these properties. As discussed below in OCHA's response to Recommendation No. 1, OCHA has no legal interest in these properties and is therefore without authority to make any decision on filing and prosecuting a legal action or actions. FY 2003-2004 Grand Jury Report Has Orange County Given Away the Farm ٠ Invalid releases by Orange County Housing Authority may expose the County

of Orange to damage claims from affected parties. Disagree partially with the finding. It is always possible that a claim or Response: claims may be filed against the County arising out of the six erroneous releases by either the affected homeowners or the California Coastal Commission. The merits of any such legal action and the defenses available to the County, including, but not limited to any governmental immunity defenses, would be evaluated and determined at the time any such action was filed and served on the County. Invalid releases by Orange County Housing Authority, if used to facilitate

inappropriate sales or leases, reduce the number of affordable housing units available to needs of low- and moderate-income home seekers. Agree with the finding. Invalid releases result in a reduction of the Response: potential supply of affordable housing units. Resale proceeds foregone as the result of Orange County Housing Authority

releases of California Coastal Commission affordable housing units could have been used to defray administrative costs of the affordable housing program and could have helped fund additional projects to replace affordable housing units lost through market value sales. Disagree partially with the finding. In addition to OCHA's pre 1985 Response: experience, Community Housing Enterprises also encountered limited success in implementing the resale control provisions. The Civic Center Barrio Housing Corp. and California Coastal Commission also expressed difficulty in administering the program and finding qualified buyers for the units being sold within the allowable timeframes. Consequently these agencies released a significant number of units, which were also lost through market value sales. There is no indication that resale proceeds were sufficient to pay administrative costs and also to help fund additional projects to replace the units being lost through market value sales. In fact, a 1987 Grand Jury investigated the three-party relationship (Contract No. 83-308) between the California Coastal Commission, the State Coastal Conservancy and Community Housing Enterprises in their efforts to enforce resale controls of these units. The Grand Jury Report issued on June 7, 1987 recommended that the California Coastal Commission and State Coastal Conservancy "establish a fund of $200,000 in order to permit Community Housing Enterprises (CHE) the opportunity of purchasing units that are for sale. This would allow CHE to hold the units for a qualified buyer without undue delay to the seller". Two months after this report was issued, CHE terminated its role in enforcing resale controls. FY 2003-2004 Grand Jury Report Has Orange County Given Away the Farm