O.C. Councilwoman’s Condo Sales Probed

A real estate agent who sits on the Huntington Beach City Council is among those under investigation by police probing the illegal conversion of apartments into expensive condos.

Property records show that Councilwoman Pam Julien Houchen made $562,000 by buying an apartment building and then selling the four units as condos without obtaining city approval or paying a $7,000 conversion fee.

The condos are among as many as 160 apartments in as many as 40 buildings that city officials believe have been illegally sold as condominiums since 1998, as the city’s revitalized downtown became more desirable. The violations came to light as buyers discovered they were unable to sell or refinance because their condos lacked permits.

Officials want to know if bank, loan or real estate fraud was committed, Police Chief Kenneth W. Small said, confirming that Houchen is among property sellers under investigation.

“We’re still determining who is responsible,” Small said.

Police investigators have been joined by members of the economic crimes division of the Orange County district attorney’s office, Small said.

A separate investigation by the city’s planning department will recommend what should be done to make the units legal.

Houchen declined to answer questions about her role -- first made public last fall by the alternative newspaper OC Weekly -- in the condo conversion controversy.

She excused herself from a closed-door session a year ago when council members were briefed on the investigation, and excused herself again last month when the issue was discussed during a council meeting, City Atty. Jennifer McGrath said.

The controversy has touched a nerve in Huntington Beach, where a number of city officials have been accused of wrongdoing in recent years.

In January 2002, former Mayor Dave Garofalo pleaded guilty to a felony and 15 misdemeanors for voting on matters benefiting companies that bought advertising from his publishing business. He was sentenced to community service and probation.

Planning Commissioner Keith Bohr resigned a year ago after city workers complained that he had asked them to assist some of his real estate clients and a contributor to his unsuccessful bid for a council seat. He insisted he violated no laws.

And late last year, Houchen denied engaging in favoritism after her husband, a contractor, was hired to do remodeling work for the promoter of a paintball event that Houchen voted to allow to be held on the beach.

Houchen, elected to the council in 1996, bought the four-unit apartment building on Green Street in 2001. Within 10 months, after her husband remodeled the units, she sold them separately as condos.

Houchen, working at the time for Pier Realty and acting as her own agent, put down about $10,000 and borrowed the rest of the $530,500 purchase price, according to property records; the units together sold for $1,102,500, providing a profit of $562,000, less remodeling costs.

Vince Periolat, who bought one of Houchen’s Green Street units, said he began complaining to the city a year ago about illegal apartment conversions. The cloud over the properties’ titles have left other owners angry, he said.

“I guess I’d be angry too, if I knew who to be angry at,” Periolat said. “We weren’t aware that our home was ever an apartment. ... It seems to me that the person who was doing all the paperwork should have known whether everything was done correctly.”

Periolat said many of the condo sales were handled by Phil Benson, an agent who worked with Houchen at Pier Realty and has since retired and moved out of state; he could not be reached to discuss the investigation. Jan Shomaker, owner of Pier Realty and a city planning commissioner, didn’t return calls seeking comment.

Title searches for many of the sales, which should have revealed the lack of permits, were conducted by the national company Stewart Title, property records show. A company spokeswoman declined to comment.

Most California cities have ordinances regulating the conversion of apartments to condominiums -- reaction to a flurry of conversions in the 1980s that stranded apartment renters statewide as the real estate market heated up and sellers reaped large profits.

Ordinances typically require filing new parcel maps with the city, obtaining conditional-use permits for the conversions, giving apartment tenants up to six months’ notice to find other housing and paying up to 90 days’ worth of relocation rent for low-income tenants.

Huntington Beach’s ordinance also charges a $7,000 conversion fee for each building.

The city’s internal investigation is focusing on existing owners and “getting them to a place where they got what they paid for,” McGrath said.

“I think we can fix it,” she said.

Times staff writers Ray F. Herndon and Daniel Yi contributed to this report.