According to the Orange County Register, after three long years, it appears a settlement is at-hand between Surf City officials and some local area residents. Homeowners in the Cape Ann affordable housing development filed suit in 2006 alleging that they were misled into believing that their homes would appreciate without restrictions and according to the market rate.

Buying affordable housing tracts enabled the Cape Ann homeowners to purchase their homes at a below-market rate. Based on the restrictions of the agreement, however, the homeowners could only sell their homes relative to a formula determined by the city.

Homeowners claim that the city did not even publish the formula until 2004. The homes were built and bought in 1999 to 2000. If claims were correct, homeowners were not knowledgeable of the restrictions until four to five years after they bought the homes.

According to the homeowner’s lawsuit, the city’s formula causes affordable home sale prices to decrease when interest rates rise, and there is no bottom as to the extent that the sale prices can drop.

In another case filed by affordable homeowners in Dana Point, the judge ruled in favor of the homeowners. Homeowners from a condominium complex called Niguel Beach Terrace filed the suit claiming that the requirements of the program were confusing and that the program was poorly run. Oversight was being conducted by the California Coastal Commission.

In regards to the Cape Ann case, city officials asked the city’s attorney to draw up a settlement agreement. Included in the agreement will be the following:

• Homeowners would sign an agreement stating that their homes will continue to be considered affordable housing until 2029.

• Homeowners and the city will be responsible for their own attorney’s fees and court costs.

• Homeowners will drop the lawsuit.

City officials stated that they would consider changing some of the requirements of the affordable housing program, but not until after the lawsuit was dismissed. Several considerations for change are the home’s selling price equation, inheritance rules and years the homes will be considered affordable housing.