Lawsuit reveals lax oversight of affordable housing
With less than three weeks to go before the election, Bill Gallaher’s name in one headline evokes the $ 1.6 million he spent on a cynical crusade against District Attorney Jill Ravitch.
But the latest revelation about the president and developer of the Sonoma County bank doesn’t involve the county’s top prosecutor or the September 14 recall election.
It did, however, reveal inadequate state and county monitoring of the millions of public dollars spent on affordable housing.
As editors Andrew Graham and Ethan Varian reported on Sunday, Gallaher-owned businesses have reached a $ 500,000 settlement with a former property manager who says she was fired after discovering affordable housing fraud in Vineyard Creek , a 232 unit apartment complex near Charles M. Schulz-Sonoma County Airport.
An obscure state panel granted $ 35 million in tax-exempt bonds to help fund development in return for a guarantee that 47 units would be reserved for low-income tenants.
Mariah Clark, the former property manager, alleged in a lawsuit that low-income tenants were overcharged, government agencies were swindled over rent subsidies, and some of the limited-rent units were rented out to people who didn’t. were not eligible, including family and friends of the Gallaer. Clark says she was the subject of verbal abuse and retaliation when she reported the violations; Gallaher companies have denied his claims in court documents.
The confidential settlement, Graham and Varian reported, only covers allegations of retaliation by Clark and other alleged violations of the state’s labor code. It’s between Clark and the Gallaher. If the parties are happy with the outcome, so be it.
Our concerns relate to the public bodies involved in financing the apartment complex and ensuring its compliance with state law. Agencies include the California Debt Limit Allocation Committee and the Sonoma County Community Development Commission, among others.
As part of the settlement, state and county agencies agreed to dismiss the most serious fraud allegations as long as they can be re-investigated in the future.
Still, they gave no indication that they intended to pursue the case.
Sonoma County Supervisor James Gore said there was no “smoking gun.” James Hammill, chief executive of the California Statewide Communities Development Authority, which recommended the tax-exempt bond financing project, said his agency had received no complaints and blithely rejected the idea of developers breaking their promises. “There is too much to lose,” he said, later declining to answer further questions on the subject.
However, it appears that little to no effort has been made to ensure that affordable housing requirements are met over the decade and more that Vineyard Creek has been open for business.
The development authority, a consortium of local governments, had never verified the accuracy of Vineyard Creek’s self-certifications and stopped collecting detailed compliance reports in 2016. David Kiff, Acting Director of the Commission of county community development, could not say to what extent the agency had independently confirmed the information provided by the developers, although an agreement gave the county the power to inspect documents used by property managers to verify that tenants were eligible for limited income rentals.
“I don’t think it can be shown anyway at this point without a bunch of extra digs,” Kiff said.
Someone has to start digging, and this observation isn’t limited to the Vineyard Creek Project. Public agencies are investing billions of dollars in affordable housing development in California, including tax credits and tax-exempt bonds. These agencies have an obligation to ensure that developers who obtain this assistance do not shirk their obligation to provide housing tenants desperately need.
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