A High-End Housing Subsidy?

A modest fourplex with fading pink paint is at the center of a storm over how Seal Beach should spend its money and whether the city should help low-income families move into an oceanfront neighborhood.

Half a block from the beach, the building was owned for 30 years by a Pasadena woman who used one unit as a seaside retreat and rented out the other three.

When she died last year, her estate put the property, at 1119 Ocean Ave., up for sale. An auction is set for today in Pasadena.

One prospective buyer is a Laguna Beach developer who approached Seal Beach officials three months ago with a proposal: Use $400,000 in redevelopment funds to fix the place up and rent three of the four units to people who qualify for housing subsidies.

For city officials, who have $530,000 in redevelopment funds that must be spent or forfeited by June 30, “it’s kind of a win-win situation,” said Lee Whittenberg, the city’s director of development services. “The city gets to fix up an old building, and the [subsidized] tenants end up with more expendable income.”

But the notion of rent subsidies in a neighborhood where houses go for as much as $900,000 is not sitting well with some residents--for a variety of reasons.

Abe Michlin, who has lived a few doors down for 15 years, said, “I’m in favor of the cause, but you’d get more bang for your buck in another neighborhood. There are probably jillions of places on the other side of PCH that would be more appropriate than this. It’s a misuse of the funds--I’d rather see them lose it than use it.”

Charles Antos, a county planner who lives nearby, said that if the city subsidizes rents, “anybody can come in, just because they know it’s available and want to live near the beach. I think it’s a scam.”

“People who come to Seal Beach,” he said, “are choosing the higher-rent area because they want to live near the beach, or they want the quiet life and low crime rate and are willing to pay more for it.”

Antos feels so strongly about the matter that he has made it an issue in his race for City Council. He is in a May 14 runoff to succeed Shawn Boyd, who lost a reelection bid last month. Boyd is being investigated by the Orange County district attorney in connection with his business ties to a man who bought a local trailer park for $2.9 million in 1998, backed by city financing, and sold it two years later for $7.4 million.

Some see parallels to the Boyd case. “What would you think about $400,000 of taxpayer money to help purchase a property?” asked Jim Caviola, a lawyer who lives next to the pink building. “It’s the same thing that happens when wealthy people take advantage of the system under the guise of helping poor people--all they do is end up richer.... What it amounts to is white-collar crime.”

Whittenberg said $150,000 would go to the developer for repairs on the fourplex, and $250,000 would be set aside for rent subsidies.

Two of the one-bedroom units would be for households of two with combined annual incomes of $72,550 or less. One would be for a twosome earning up to $43,550 a year. The fourth unit would not be affected.

The tenants would be required to spend up to 30% of their gross income for rent, which now ranges from $1,075 to $1,500 a month. The current renters would have the option to apply for the subsidies, Whittenberg said.

Bidders in today’s estate auction, meanwhile, will have to offer at least $704,000 to be in the running.

John Janosik, attorney for the estate, said heirs have accepted a bid of $670,000, but state probate law requires the court to hear competing offers beginning with an incremental jump of 5%.

“In 20 years of practicing law, I can honestly say that I’ve never had more activity on a property,” Janosik said. “I’ve had numerous calls from potential bidders. I anticipate that this will be the most actively bid property with which I’ve ever been involved.”

Regardless of who turns in the winning bid, the Seal Beach City Council on Monday will consider its stance on the proper use of redevelopment funds, including rent subsidies. Residents promise a big turnout to get their point across.

“The money is for a blighted area,” Caviola said. “This definitely is not a blighted area.”