Condo owners may have to dig deep

Dave Brooks

Residents who purchased illegally converted condominiums may have to

pay as much $20,000 each to clear their titles, city planners said.

The new figure, which doesn’t include $7,000 in fees and permits,

will be used to boost Huntington Beach’s affordable-housing stock and

could generate up to $2.4 million for the cash-strapped city.

Condo owners are outraged by the proposal, part of a larger

ordinance to streamline the approval process for residents who bought

illegally converted units. The City Council will take up the

ordinance during its Tuesday meeting.

“I can’t believe the city is using this situation to generate

revenue,” condo owner Aaron Frankel said at a community meeting last

week. “We’re the victims in all of this.”

City officials estimate 120 apartments may have been illegally

sold as condos since the city passed an ordinance regulating

conversions in 1984.

Because of the illegal conversions, the city has lost affordable

units that would still exist if the previous owners had gone through

the conversion process, Senior Planner Jane James said. The law

requires some apartment owners to sell or rent 25% of their total

units at affordable-housing prices when converting their properties.

A consulting firm will soon be chosen to determine the

affordable-housing fee amount, but James warns it could be as much as

$20,000 per unit.

Condo owners like Renee Tarnow said she would fight the plan.

“They’re playing us like violins,” she said. “The city is looking

at us as found money.”

The proposal shifts the affordable-housing burden from the seller

to the buyer, Tarnow said, and she hopes the city will wait until the

police investigation is complete and the responsible parties are

found before levying the new fees.

Other condo owners are making similar recommendations on advice

from Stewart Title, the company that insured most of the purchases.

Representatives from Stewart would not comment, but a recent

letter sent out by the insurer to several policy holders indicates

the company planned to pay for most of the permitting costs but not

the affordable-housing fee.

The letter instructed the condo owners to lobby council members to

drop the fee.

Councilwoman Connie Boardman said that scenario was unlikely.

“The people who now own them have a responsibility to do what they

can to make them legal,” she said.

The condo-conversion issue comes during tough budget times for the

city. In 2003, Huntington Beach lost nearly $2.3 million because of

Vehicle License Fee cutbacks and is set to lose another $5 million

over the next two years following a May compromise with Gov. Arnold

Schwarzenegger.

The affordable-housing fees would have helped offset some of those

deficits, Boardman said.

“This is money that the city should have been getting,” she added.

“This year we decimated city services and public works took a huge

cut.”

Councilmember Debbie Cook said residents need to realize the

illegal conversions are a loss for the city.

“We recognize the position you are in,” she told several condo

owners. “We’re not trying to screw you twice, because we’re also

victims in this.”

Councilmember Pam Houchen, whose sale of several condos has come

under scrutiny, declined comment.

Police Chief Ken Small said his department is continuing to

investigate the matter.

“We’re using a lot of resources on this case, and we wouldn’t be

doing that if we didn’t think there was substance,” he said, adding

that the department needs another month or two. “From there, we’ll

decide if we need to go further.”

* DAVE BROOKS covers City Hall. He can be reached at (714)

965-7173 or by e-mail at [email protected].