OC City Sued Over Leases of Affordable-Housing Properties

SANTA ANA, Calif. (CN) – A California nonprofit dedicated to increasing affordable housing has sued an affluent Southern California town, saying it broke the law when it sold properties previously pegged for low-income housing to a private business for commercial development.

The Kennedy Commission and two private persons sued the city of Garden Grove on Friday in Orange County Superior Court. The complaint was withheld from the public and the press until being made available Monday.

According to the Kennedy Commission, Garden Grove violated the law when it took properties designated by its redevelopment agencies as sites for low- and moderate-income housing and sold them to a developer looking to put commercial operations on the properties.

“Respondents used LMIHF monies to purchase and hold properties for future commercial development rather than for increasing, improving and preserving the supply of low- and moderate-income housing,” the commission said in the 23-page complaint.

LMIHF, an acronym for Low and Moderate Income Housing Fund, was a program within the long-running California Redevelopment Agency designed to reduce blight and increase housing for the working poor.

Amid the budget crisis created by the Great Recession, the California Legislature and Gov. Jerry Brown moved to dissolve the redevelopment agencies in order to use the money for more core government services like public safety and education.

However, during the dissolution process the money that cities and counties had received as part of the redevelopment program was still to be used for purposes related to the agencies’ mission even as the programs wound down across the state.

Garden Grove, a medium-sized city of 170,000 located in northern Orange County about 40 miles south of Los Angeles, bought a total of 17 properties with redevelopment money. Twelve of the properties had single-family homes while the remainder were undeveloped, according to the complaint.

The city transferred the properties from its redevelopment agency to its housing authority and other successor agencies as part of the dissolution process earlier in the decade.

Then in May 2016, the city entered into an agreement with a company called LAB Holding to lease the five undeveloped parcels with the intent of putting undisclosed commercial entities on the properties.

“Respondents transferred the subject properties to LAB Holding without first developing or implementing a replacement housing plan to support the displaced families who depended upon this low-income housing,” the Kennedy Commission says in the complaint.

Garden Grove has been a habitual violator of affordable-housing provisions, according to the commission, which says the city also broke the law in 2009 when it converted an RV park into a water park and hotel without the required replacement housing plan.

The commission seeks a court order requiring Garden Grove to withdraw from the lease agreement with LAB Holding and to prevent them from using the 17 properties for anything other than affordable-housing options.

Garden Grove did not return a phone call seeking comment on Monday.

The Kennedy Commission is represented by John O’Malley of the Public Law Center.

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