City Moves to Weed Out Absent Owners of Subsidized Condos

After more than a year of pressure from homeowners at a city-subsidized condominium project for lower-income people, Los Angeles redevelopment officials said that they will take steps this week to weed out absentee landlords who may be profiting from their ownership of units.

Foreclosure proceedings and lawsuits are planned against more than 20 owners at the 180-unit Vista Montoya complex, said John Maguire, Community Redevelopment Agency deputy administrator for housing services. The Pico-Union project received $5.5 million in agency funds in 1984 to make home ownership affordable to low- and moderate-income buyers.

Maguire said Tuesday that as part of a new enforcement effort, the agency will monitor each of the city’s 12 low- and moderate-income projects, a total of 423 units, to determine whether CRA residency requirements are being met.

The news was greeted with skepticism by Councilwoman Gloria Molina, who represents the district, and by Vista Montoya homeowners who complain that CRA has been too slow to ensure that the complex lives up to its original purpose. “We were told there would be foreclosures by Feb. 9,� said Gerry Hertzberg, Molina’s legislative aide.

He said that the councilwoman has scheduled a hearing next Monday before the council’s Community Redevelopment and Housing Committee to review the CRA’s enforcement actions.

“We’ve had so many promises from the CRA, so many false starts,� said Franz Martin, president of the Vista Montoya Homeowners Assn.

The controversy is the latest in a series of setbacks for the agency and its outgoing administrator, John J. Tuite, who critics say has emphasized downtown development rather than affordable housing. Tuite has disputed his critics, and the CRA has pointed to Vista Montoya as a model of its affordable housing plans.

Under CRA residency conditions, Vista Montoya buyers cannot earn more than $46,000 annually, must use the condominium as their principal residence, and cannot rent their unit out unless it also is for sale. Even then, rentals can only last a year. At the time of purchase, the owners had to sign an affidavit agreeing to these conditions.

The one- to three-bedroom units initially were priced from about $58,000 to $89,000. To render them affordable to lower-income purchasers, CRA made “silent second� mortgages of up to $35,000, which did not require monthly payments. Subsequent buyers, who now pay prices ranging from about $75,000 to $110,000, also must meet the CRA’s income restrictions.

The homeowners group contends that up to 27 Vista Montoya owners are using the condos as apparent investment opportunities, keeping them vacant after moving out or renting them out at a profit.

One disputed unit was purchased at a foreclosure sale in 1988 by John Callaghan, whom officials describe as an “investor,� according to the CRA. His tenant, Margarita Rubio, said she has lived there two years and pays $600 a month. Callaghan did not return calls from The Times.

Attorney Margaret Davis, who bought a Vista Montoya unit in 1984, now appears to live in Westwood yet is maintaining a vacant condominium, according to the CRA. Davis refused comment. A tenant in a third condominium said the rent on her unit is $950 a month, about double what property records showed as the owner’s mortgage payment. The tenant, who spoke on condition of anonymity, said that the owner had not lived in the unit for several years.

The problem with owners who either rent or keep units vacant, Martin said, is that “people who do that are depriving someone else of the opportunity to buy affordable housing.�

One resident, Stephen May, a teacher, said he became aware of a number of absentee owners in early 1989 and notified CRA. May said he made the issue a personal cause and even became a real estate agent to try to find qualified people to buy units from absentee landlords. He said that he was able to sell several such units last year.

Maguire, however, said housing officials learned of suspected violations only in early 1990. In November, the agency sent letters to owners requiring them to prove they actually lived in the project. “We were following due process,� he said when questioned about the delay.

The names of 19 owners who face foreclosure actions and “three or four� who face lawsuits to force compliance with residency conditions will be made public in 30 days, Maguire said. By then, he said, each owner will be notified and will have a chance to respond to the CRA’s allegations.