The Sonoma County Civil
Grand Jury has called on the county to bolster its oversight of developers with
affordable housing agreements that include public funding and other incentives
in exchange for building and maintaining low-rent units.
The civil grand jury’s
investigation was triggered by The Press Democrat’s reporting last year on
allegations of fraud at an apartment complex owned by companies of prominent
Sonoma County developer and political donor Bill Gallaher, according to the
report.
The grand jury found
on-site visits to such affordable housing units, whether scheduled or conducted
as a surprise, are rare and in some of the county’s nine cities do not occur at
all. Instead, local regulators have relied primarily on developers to report
their own compliance with agreements to limit rent prices and verify tenants’ eligibility
for low-income units.
“Insufficient personnel,
budgetary limitations, and relatively low incentives” have left the county’s
housing authorities able to at best deliver “inconsistent and inadequate”
compliance monitoring, according to the 13-page
grand jury report. Its findings come amid an ever-worsening housing
affordability crisis and on the eve of an influx of over $50 million in state
funding for projects to house local homeless people.
In August, a Press
Democrat investigation revealed Gallaher’s companies paid $550,000 to settle a
lawsuit brought by a former housing manager at Vineyard Creek Apartments, a
232-unit complex north of Santa Rosa. Forty-seven apartments at the complex
were dedicated to affordable housing in a deal that earned Gallaher a rezoning
designation from the county he needed to build the project and $35 million in
financing through tax-exempt bonds.
However, in the
whistleblower lawsuit, former property manager Mariah Clark accused Vineyard
Creek of leasing rent-restricted apartments to family and friends of the
Gallahers even though they made too much money to qualify. She also alleged the
companies overcharged low-income residents for rent while at the same time
gouging government agencies over rental subsidies, among other claims.
The revelations came as
Gallaher, founder of Oakmont Senior Living and Poppy Bank, single-handedly
bankrolled a failed $1.8 million recall campaign targeting Sonoma County
District Attorney Jill Ravitch. More than 76% of voters rejected the recall in
September 2021, keeping Ravitch in office.
While the newspaper’s
reporting spurred the grand jury report, the civil watchdog panel stayed away
from directly investigating those allegations, stating they had been well
documented by the press and investigated by county authorities.
The grand jury did not
independently review the county’s investigation of allegations at Vineyard
Creek. The county’s civil grand juries tend to look into shortcomings in county
policies and agencies rather than conduct criminal investigations, according to
grand jury foreperson Neal Baker. The grand jury has the authority to request
subpoenas through the court, however, and lying to the jurors is a crime.
“The grand jury is
empowered to look into criminal matters … but that was not where we were going
in this specific report,” said the grand jury foreperson, Neal Baker.
County and state officials
have never disclosed to what extent they investigated the fraud allegations at
Vineyard Creek.
In one Press Democrat
story, two former employees who were named as witnesses in the lawsuit and
signed affidavits supporting Clark’s allegations said they were never contacted
by government investigators.
The jury focused instead
on a broad review of the county and cities’ monitoring of affordable housing
projects, largely through interviewing the public officials charged with the
task. While it found that monitoring deeply lacking and in need of investment,
the jury did not seek to document fraud itself.
“The Grand Jury
investigation cannot provide a definitive answer,” to whether there is
“significant fraud” in affordable housing, the report read.
“Nor can the housing
departments that are charged with monitoring,” it continued, but, “no one the
Grand Jury interviewed expressed fears of widespread misbehavior.”
In its report, the jury
made a number of recommendations for the county and its nine cities to bolster
local oversight of affordable housing. They include:
- Developing “agreed-upon standards and procedures” for compliance monitoring of all affordable housing in the county by Dec. 1.
- Start or resume on-site monitoring by Oct. 1.
- Ensure housing agencies and cities have enough staff to do on-site monitoring and review self-reported compliance data by Jan. 1.
- Start training developers and managers of affordable housing on monitoring procedures by Jan. 1.
Dave Kiff, interim
director of the county’s Community Development Commission, its top housing
agency, said he was interviewed by the grand jury and described its
recommendations as “valuable to the CDC and to cities moving forward.”
Prior to the grand jury
report, the agency was already strengthening its affordable housing oversight
in light of The Press Democrat’s reporting. In December, county officials
started making on-site monitoring visits at all of the roughly 150 affordable
housing sites it oversees.
The agency is also working
toward hiring additional staff to ensure compliance, Kiff said. When the
commission made the changes last year, just one employee was tasked with
monitoring over 3,000 units.
Kiff said the commission
is reaching out to local cities, some of which are also in the process of
hiring more compliance staff, to come up with standard oversight policies and
to offer help monitoring affordable units.
“Our goal is to continue
to grow our supply of affordable housing units, and it’s critical that we don’t
lose those already in service,” he said.
Megan Basinger, director
of Housing and Community Services for Santa Rosa, said that while city staff
only make on-site visits at around 10% of the roughly 3,300 units at projects
with affordable agreements with the city, it doesn’t necessarily mean
compliance monitoring is lacking.
A majority of those
projects also have agreements with state agencies that help subsidize
affordable housing, Basinger said.
“All of those
organizations also have monitoring and oversight requirements,” she said.
The Press Democrat’s
investigation found that one of those agencies, the California Statewide
Communities Development Authority, relied solely on a “certificate of
compliance” from Vineyard Creek managers to ensure the site was is in keeping
with its affordable housing duties.
The housing authorities of
the county’s nine cities and the Sonoma County Community Development Commission
are required to respond to the recommendations in the grand jury’s before the
end of August.
The Press Democrat
Andrew Graham and Ethan Varian
June 28, 2022
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