A major court battle is developing between the California Coastal Commission and scores of property owners it suspects of abusing a state-mandated, low-income-housing program along the Dana Point coast.
The case involves Niguel Beach Terrace, a bluff-top enclave of condominiums where more than 200 units were sold at steep discounts to qualified buyers in the early 1980s.
The controversy erupted last summer when the Coastal Commission, which oversees the project, issued 143 cease-and- desist orders to owners thought to have rented out or sold their condos at market value, violating the original purchase agreements.
Although the commission has retracted 38 of the cease-and- desist orders, most are headed toward a court showdown because many of the homeowners are now suing the commission in response. Those cases could turn on whether owners broke their end of the bargain or whether the commission's handling of the low-income-housing program was so sloppy that owners were left in the dark.
Under terms of their original sales contracts, buyers were obligated to live in the condominiums for at least 20 years or sell their properties back to a public housing agency at a small profit, guaranteeing that the units would remain affordable for the next buyer. But some owners, Coastal Commission officials contend, rented out their units during summers for $1,000 a week or more, exceeding the restrictions, while others leased their properties and moved out, a few to other states.
Some of the condos, the agency alleges, have been sold in the county's lucrative housing market at substantial profit. Niguel Beach condos, just south of the posh Ritz-Carlton hotel in Dana Point, can fetch at least $300,000 today -- roughly five times the original sales price.
"These people don't seem to understand that they were subsidized to buy the units in the first place," said Deputy Atty. Gen. Jamee Jordan Patterson, who represents the Coastal Commission. "Now they want to take the money and pocket it without living up to their end of the bargain."
To enforce its terms, the commission could take such actions as levying fines, extending terms of the deeds or forcing the sale of homes back to the program itself to keep them as low-cost housing.
The enforcement action has sparked angry responses from dozens of Niguel Beach Terrace owners. Agency officials, they say, failed to properly administer the program for years and hastily issued cease-and-desist orders just as many of the deed restrictions were about to lapse.
