Sonoma County to bolster oversight of affordable housing compliance after Press Democrat investigation

Sonoma County is beefing up oversight of developers’ compliance with affordable housing agreements in the wake of a Press Democrat investigation that exposed shortcomings in county monitoring at an apartment complex run by local developer Bill Gallaher’s companies.

The Board of Supervisors on Tuesday directed the county’s Community Development Commission to bolster oversight, including more on-site visits and additional documentation from developers to show they are meeting the terms of affordable housing deals with the county.

David Kiff, interim director of the county commission, said the changes were spurred by revelations in an investigation by The Press Democrat of Vineyard Creek Apartments, a 232-unit complex north of Santa Rosa run by the Gallaher companies.

The complex was the subject of a whistleblower lawsuit filed in June 2019 by a former employee who alleged housing fraud, including the use of some of the complex’s 47 affordable units by Gallaher friends, family and employees who were ineligible because of their income.

The county, along with the state Attorney General’s Office and Department of Insurance, declined to join that case. County officials have given no indication they’re conducting further investigation into the allegations put forward in the suit.

But under the new board direction the county may soon spend more money and manpower ensuring compliance for over 3,000 units across 150 housing sites, including Vineyard Creek Apartments, that are covered under affordable housing deals in the county.

“Clearly we weren’t getting out there enough,” Kiff, the county’s top housing official, said in an interview Wednesday. “And we needed to get out there and see things in person, just as a check.”

The Gallaher companies paid $550,000 to former employee Mariah Clark and her attorneys to settle the lawsuit, according to a copy of the agreement The Press Democrat obtained through a records request. The Gallaher companies did not admit any fault in the settlement and have denied Clark’s allegations.

Days after The Press Democrat revealed both the lawsuit and its settlement, officials from the county development commission began a review of its affordable housing compliance program. That monthslong review led to the agency’s proposal to the board Tuesday that could soon lead to additional staff working on compliance monitoring, more on-site visits and a higher burden for developers to ensure tenants qualify for affordable housing, particularly for for-profit developers.

Going forward, county staff will conduct on-site monitoring, including reviewing records documenting rental prices and tenant income, at all affordable housing developments at least once every three years. “High risk” properties, such as for-profit-owned projects like Vineyard Creek Apartments and those with previous complaints, could be subject to more frequent inspections. Until now, only 30 federally funded projects in Sonoma County have required on-site monitoring once every three years.

To conduct the increased oversight, Kiff said his department may need to create at least one full-time position to oversee compliance. Currently, one employee is tasked with monitoring affordable housing compliance, which makes up only half their duties. While the new rules go into effect immediately, the agency could increase staffing and tweak its monitoring further down the road, Kiff said.

“That’s why this is really an iterative process, so that if either renters approach us thinking that something is unfair,” Kiff said, “or a whistleblower, like occurred with the Vineyard Creek case, we’ll be able to see if there’s a flaw and improve that.”

Elected officials leading the county and most of its cities are increasingly focused on constructing more affordable housing quickly to confront an intensifying regional housing crisis.

To pay for the increased costs, Kiff’s agency will conduct a study to consider updating a monitoring fee it charges developers, today $75 a unit per year. That fee has not been adjusted since 2004, the development commission reported. Any increase would need to be approved by the Board of Supervisors.

Properties not scheduled for site visits in a given year must submit documentation to prove tenant income levels. For developments with 10 or more rent-restricted units, properties must submit documents for 10% of all affordable units. Properties with fewer than 10 units must submit records for all units.

Throughout The Press Democrat’s investigation into Vineyard Creek, officials were unable to provide any record they consistently sought such documentation for the property near the Charles M. Schulz-Sonoma County Airport. Subsequent public record requests by the newspaper have turned up only a handful of instances where county staff requested documentation.

During future on-site inspections, county staff will review wait lists for affordable units to ensure projects are in compliance with fair housing laws and select tenants in accordance with their housing agreements.

In her lawsuit, Clark alleged Vineyard Creek kept separate waitlists to prioritize preferred applicants, in addition to leasing rent-restricted apartments to family and friends of the Gallahers who made too much money to qualify.

The agency’s review also included a visit to Vineyard Creek and an audit of the development’s current affordable housing tenants, which did not turn up anything “alarming,” Kiff said.

The visit came Sept. 28, according to emails obtained by The Press Democrat with a records request, more than a month after news of the settlement broke and years after the alleged fraud would have occurred. Kiff said the review focused on the current tenants and did not include an audit of files from the time period covered by the lawsuit.

Clark, a former property manager at Vineyard Creek, claimed she was fired after uncovering extensive affordable housing fraud at the complex, opened in 2006. Gallaher signed an affordable housing agreement with the county and state in exchange for tax-exempt bonds and zoning and permitting concessions critical to construction.

Representatives for Gallaher companies and Molly Flater, Gallaher’s daughter and business partner who is named in the lawsuit as chief operating officer of Vineyard Creek, did not respond to a Tuesday email requesting comment on the new rules.

Under the settlement, Clark and her attorneys were prohibited from speaking about the case or its conclusion to anyone besides a spouse, lawyers or accountants.

In a public meeting Tuesday, the Board of Supervisors directed the development commission to make the recommended changes. Because the vote was placed on the board’s consent calendar, the supervisors passed the measure without discussion during a day dominated by a redistricting debate. The board is swamped by policy making as it barrels toward year’s end, Kiff said.

Two supervisors, Chair Lynda Hopkins and James Gore, whose 4th District takes in the Vineyard Creek Apartments, did not respond to requests for comment Wednesday afternoon.

Supervisors voted in a closed-door session in August not to intervene in Clark’s lawsuit on the advice of their attorneys, who reviewed the case for over a year while it remained under court seal. But several supervisors have said Press Democrat stories pushed them to give a nod of approval to Kiff’s compliance review, which the board has never discussed publicly but on which individual supervisors were briefed by County Administrator Sheryl Bratton.

Officials have never disclosed the extent to which they investigated Clark’s fraud allegations. In one Press Democrat story, two former employees who were named as witnesses in the lawsuit and signed affidavits supporting Clark’s allegations said they were never contacted by government investigators.

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