In wake of newspaper investigation, Sonoma County launches review of affordable housing oversight

Sonoma County’s top housing official is reviewing the county’s affordable housing compliance monitoring and enforcement after a Press Democrat investigation showed limited oversight at an apartment complex run by developer Bill Gallaher’s companies.

Community Development Commission Interim Director David Kiff began the review just days after the newspaper published an investigation into a $500,000 settlement Gallaher owned-companies paid to a former employee.

The employee, former Vineyard Creek property manager Mariah Clark, claimed she was fired after uncovering extensive affordable housing fraud at the 232-unit complex, which has 47 units of affordable housing. The 15-year-old complex is located near the Charles M. Schulz-Sonoma County Airport north of Santa Rosa.

Kiff intends to conclude his review, which is being conducted in consultation with County Administrator Sheryl Bratton, and report to the Board of Supervisors by the end of the year, according to county officials.

Kiff and other officials couched the review as a broad look at how his agency monitors compliance of properties with affordable housing agreements. There is no indication the county is investigating the underlying allegations of fraud outlined in Clark’s suit.

Clark accused the Gallaher companies of leasing rent-restricted apartments to family members and friends of the Gallahers even though they made too much money to qualify.

She also alleged the companies overcharged low-income residents for rent and gouged government agencies over rental subsidies.

The Press Democrat found county and state officials relied on self-reporting from Vineyard Creek about who was living in the affordable housing units, what their income levels were and how much they were charged. An Aug. 22 story showed officials never conducted a comprehensive audit that would have determined whether the complex was in compliance with its affordable housing agreement, which was made in exchange for $35 million in tax-exempt bonds from the state and zoning concessions from the county.

Gallaher, founder of Oakmont Senior Living, has developed retirement and assisted living facilities across California and Nevada. Actively involved in regional politics, he also is founder and chairman of Santa Rosa-based Poppy Bank.

The five companies named as defendants in Clark’s lawsuit have denied any wrongdoing in legal filings made before the case settled. Emails to Gallaher Companies and Molly Flater, Bill Gallaher’s daughter and business partner and chief operating officer for Vineyard Creek, seeking comment on Kiff’s review had received no response by Friday afternoon.

Kiff told The Press Democrat he wanted to make sure the county was “doing whatever anyone else is doing or better” when it comes to compliance monitoring. He would not say to what extent his review would include an audit of compliance at Vineyard Creek Apartments.

The allegations aimed at Vineyard Creek were a “triggering point,” Board of Supervisors Chair Lynda Hopkins said, “but the result was a broader look at ensuring compliance.”

“Of course the questions that were raised (in Press Democrat reporting) begged deeper analysis,” said Supervisor James Gore, whose 4th District includes Vineyard Creek Apartments.

The now-settled whistleblower lawsuit alleged lax enforcement by officials allowed for wrongdoing at the apartment complex. In a subsequent Press Democrat story published last month, two former Gallaher employees told the newspaper they recalled little compliance monitoring by county or state officials. The two former employees also said they were never contacted by government officials during the period county and state officials have said they were investigating the claims in the lawsuit, a period that lasted longer than a year.

In an interview Friday, a former housing commission employee described a system where a lone official was in charge of monitoring compliance for as many as 1,500 units of affordable housing at any time — only half of her duties.

Even so, Felicity Gasser, who worked at the Community Development Commission from February 2014 to August 2020, said she believed the agency was effective in maintaining compliance. Regulatory overlap from state housing agencies and the fact that nonprofits dedicated to affordable housing manage many of the units helped keep the system honest, Gasser said.

At properties that did not receive federal subsidies, county regulators were not required to conduct regular audits of tenant records. Vineyard Creek fell into this category. Because the property had tax-exempt bonds but no affordable housing tax credits, a rarity in the business, it also did not get regulated by the state.

Instead, county officials relied on signed declarations from developers and property managers that the tenant incomes they submitted were accurate, Gasser said.

Under that system, said Gasser, whose oversight work included monitoring Vineyard Creek from February 2014 to August 2017, fraud could have gone undetected.

In her time with the county, officials never reviewed pay stubs and other income documentation for low income tenants at Vineyard Creek, with the exception of a handful of cases, Gasser said. She says that was what in keeping with what was required of the agency by state and county regulations.

“The level of our responsibility was not fraud investigation,” Gasser said. “We accepted the documents that were submitted to us.”

The Board of Supervisors voted in closed session in October 2020 not to join Clark’s lawsuit. Several supervisors have said that decision was made on the advice of county attorneys who told them there was insufficient evidence of wrongdoing by the apartment complex.

Officials have never disclosed the extent to which they investigated the claims. Gasser, who was still at the agency for most of that period, says she was never contacted and was not aware of an investigation.

Bratton, the county administrator, briefed the five supervisors separately on Kiff’s review at the end of August, according to county spokesman Paul Gullixson. In separate interviews, all five supervisors told The Press Democrat they were supportive of the review and, if necessary, would act on Kiff’s findings to strengthen the county’s ability to ensure developers are complying with the agreements that earn them tax breaks, permitting and zoning concessions.

“If it’s a staffing issue or resource issue it certainly will come back to the board,” Supervisor David Rabbitt said. “If there’s not enough people to carry out the audits or reviews then it would come back to the board.”

For properties that receive federal housing dollars, county regulators are obligated to conduct on-site reviews and tenant files at least every three years. For the county to improve enforcement, Gasser suggested applying that standard to all the properties it regulates.

But to do so, the county will need to invest more resources, she said.

“What we need in Sonoma County is more affordable units,“ she said. ”Is it worth the investment of dollars in additional oversight or not? It’s a values question.”

You can reach Staff Writers Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com and Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412.