City, State Resolve $1.6M Housing Dispute

Now it's official: Mission Viejo can keep $1.6 million earmarked for 22 affordable housing units near the Los Alisos Target.

A dispute between the city and state over the money was resolved with a phone call from the Department of Finance Friday, City Manager Dennis Wilberg said.

The agreement means the city will not go to court to defend their right to the money, Wilberg said, based on a Dec. 21 4-1 vote by the City Council. Then-mayor Frank Ury voted against the decision.

The money will be spent to build units on The Ridge, a 144-townhome development.

The $1.6 million now sits in the city's housing authority fund. The housing authority was created after the state dissolved redevelopment agencies near the beginning of 2012.

At the last special meeting of the city housing authority, it was unclear whether the state would allow the city to keep the money.

"In essence while (the state) agreed that the agreement we had with Lennar was a legitimate, enforceable obligation, they were only allowing the city to keep $232,000 to make good on that agreement," Wilberg said.

That would have been enough money for four housing units, he said. The city's original agreement with Lennar was to build 22 affordable units.

Two confusing letters from the state complicated matters, the city manager said.

"Back on the 21^st we had two different letters," he said. "One said, 'This is an enforceable obligation,' the other said 'This is not an enforceable obligation.' Then we got another letter that further complicated things.”

The money will be spent incrementally as units are sold, Wilberg said.