ENCINITAS — Residents are expressing frustration and bewilderment after two houses designated for sale to very low-income households in Encinitas were instead sold to non-qualified investors with written approval from the city.
In October 2020, a home in Cardiff sold for $138,000, and this past summer, a home near Desert Rose Way in the community of Loden at Olivenhain sold for around $112,000. Both homes were sold to investors to convert them to rental units rather than low-income households for purchase.
As part of the city’s density bonus and affordable housing programs, homes meant for very low-income households are apparently also allowed to be sold at rock bottom prices to investors agreeing to keep the units as low-income rental housing for 55 years and with written approval from the city.
During that time the city must keep records of the property’s tenants to ensure the home is being rented to qualified households.
In March 2021, a representative from Woodbridge Pacific Group, a developer responsible for the Desert Rose community, sent an email to the City of Encinitas stating they currently had a list of approximately 80 households looking to buy the home on Portola Road.
However, the email went on to say their list also included two investors, asking the city what documentation they would need to provide if they were to choose an investor to purchase the home.
In response to a public records request by Encinitas resident Julie Graboi, the city provided a completely redacted list of the 81 applicants, according to documents given to The Coast News.
Following that correspondence, Lillian Doherty, the city’s development services director, gave written approval to Woodbridge for the sale of the property to a La Jolla investor, David Santistevan, senior vice president of Colliers International, with the title of the property taken under Santiara, LLC.
In another email from Santistevan to the city, he states the firm owns and operates several low-income rental units in San Diego County.
A signed city document later shows the final sale listed to Santistevan’s other corporation, Scramark, LLC — not Santiara — with Santistevan named as a trustee. The document also includes signatures by Doherty, City Manager Pamela Antil and City Attorney Leslie Devaney.
In an email response to Nicole Piano, the city’s housing management analyst, Santistevan clarified that “we wanted to limit the number of properties in Santiara, LLC, so I formed a new entity, Scramark. I am the manager of both entities.”
One of the people who applied to purchase the Desert Rose home, Encinitas resident Leah Sorenson, told The Coast News she was disappointed with how the city has handled the housing situation.
“This leads families like me to think I have a chance to buy a house in the town I grew up in at a price that I could actually afford,” Sorenson said. “And then we either never hear back or we get denied and we find out they sold to an investor or developer instead.”
Sorenson says she has applied for a few affordable homes in the city with no luck, including the house in Cardiff also sold to an investor last year.
The city website currently has no affordable homes listed as available for sale. According to Sorenson, the city informed her there is a 10-year waiting list for affordable rental units in Encinitas.
Both the city and Woodbridge have yet to respond to requests for clarification from The Coast News on the sale of the Desert Rose home.
As part of the application, Sorenson and others must prove their income level before entering the loan process.
Sorenson said she can’t afford attorney fees to fight the city on its process but believes she or anyone else who goes through the process of applying for an affordable home that is ultimately sold to an investor should be compensated to help them purchase a market-rate home in the city.
“If you’re not going to actually let me have a real chance at one of those units, then fine, let me have a real chance at a regular house,” Sorenson said. “But hardly anyone wants to go up against the city, that’s a big fight.”
While these homes must still be rented to qualifying low-income households for 55 years after the sale to the non-qualified investor, the question is still raised by Sorenson and others, what is the point of an affordable homeownership program if the homes in the program will often not be owned by qualified low-income families?
“To be able to pass that on in the future too is important; a legacy,” Sorenson said. “Not have to have all your money going to just rent. It’s all a mess.”