The Palo Alto Housing Corporation, a nonprofit that in 2013 tried to develop a housing complex on Maybell Avenue, on Monday fended off criticisms from residents who questioned its decision to rent one of the houses on the Maybell site to its executive director.
Several members of the Housing Corporations's board of directors attended the meeting of the City Council to defend Executive Director Candice Gonzalez from accusations that her use of the Maybell home constitutes a possible conflict of interest. Her renting of the home and her husband's involvement in the sale of the property by the Housing Corporation to Golden Gate Homes in April 2014 were both subjects of speculation last week, with dozens of readers questioning the arrangements on the Weekly's online forum, Town Square, and one vocal opponent of the Maybell development summarizing his concerns in an open letter to the council.
In his letter, former City Council candidate Tim Gray called for more information about both Gonzalez' housing situation and her involvement in the sale of the property in April 2014. This included information about how much she's paying to rent the house, whether Golden Gate Homes offered the highest bid and "all contracts that are related to staff, managers, and board members, in the operations of PAHC," the letter reads.
"In light of the recent disclosures that presented at least the appearance of conflicts of interest around the subsequent sale of the Maybell property and the use of the property for the personal benefit of PAHC employees, it would seem wise to deliver a report to the citizens that provided factual answers to both the issues that have come to light in recent reports, and some additional questions that have only been the subject of community whispers of suspicion," Gray wrote.
Officials from the Housing Corporations addressed these questions by asserting that they've done nothing improper. In an interview with the Weekly, Gonzalez stressed that she had nothing to do with the property sale, having recused herself from all discussions and decisions as soon as her husband, real estate broker Ted O'Hanlon, submitted a bid on behalf of Golden Gate Homes.
The board ultimately chose Golden Gate over others buyers even though one or two other bids were higher. Gonzalez said the board chose Golden Gate Homes because the higher offers all included contingencies and longer timelines for closing the deal.
"This really was the best offer in terms of price and terms," Gonzalez said.
In one case, she said, a bidder stipulated that the Housing Corporation get the city's approval to have the Maybell property subdivided into 34 fee-simple lots before the deal is closed, she said. That approval would have been next to impossible to secure given the intense battle that the Housing Corporation endured in 2013 over its proposed housing development. That development would have included 12 single-family homes and a 60-unit building. It fizzled when voters overturned in a referendum a zone change that would have enabled its construction.
Bonnie Packer, president of the Housing Corporation's board of directors, elaborated on these points in a letter that she read to the City Council during Monday's meeting. Packer wrote in her letter that the Housing Corporation chose "the best offer based on price, contingencies and the closing timeline" and noted that it paid no commissions on the sale. She also pointed out that all of the loans that the Housing Corporation acquired to develop the housing development in 2013 were "paid off with interest," including the one it received from the city.
Gonzalez also emphasized during the interview that the home on the Maybell site that she has been occupying since September 2013 was never designated for affordable housing. The Housing Corporation's board of directors agreed to rent it to her because it had a hard time finding a tenant for a building that was earmarked for demolition before the November 2013 referendum. Gonzalez said that the Housing Corporation's board of directors agreed to rent the house to her after it stood vacant for six months, with no takers.
"It was hard to find a tenant," Gonzalez said. "Everyone knew there was a possibility of redevelopment and we weren't going to provide anything more than a month-to-month lease."
Under the conditions, the tenant would be given a 30-day notice to relocate once the properties are ready to be demolished. Furthermore, she noted that these homes are not part of the Housing Corporation inventory of affordable housing. Each of its developments, Gonzalez said, has its own waiting list of residents seeking affordable housing.
The four homes on the Maybell site had no such waiting lists associated with them. And it would run counter to the organization's mission to provide "stable, long-term housing" to offer a month-to-month lease to a low-income family for a property that was expected to be demolished in the near future, Gonzalez said.
According to Packer's letter, the Housing Corporation's board approved the rental of the house to Gonzalez' family at a fair market rate "after considering comparable rents and ensuring that this was an 'arms-length' transaction." Gonzalez declined to say how much she is paying in rent, citing privacy concerns, but she said her rent is higher than what the home was advertised for. She also noted that as part of the deal, the organization filled out all the required conflict-of-interest disclosure.
"Everything we did was professionally and legally done," Gonzalez told the Weekly. "The board stands by its decisions 100 percent. They know everything we've done has been ethical and legal."