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Dream homes become nightmare
Santa Ana condos provided low-cost ownership and disillusionment.
SANTA ANA -- The swimming pool glistens at the Spectrum condominiums, but from behind a padlocked gate.
Homeowners, mostly low-income immigrants, throw parties on the dilapidated tennis courts because the community room and kitchen are off-limits.
And the exercise equipment in the gym has gone a long time without a workout.
"There are no services," said Selena Sanchez, who pays a $650 monthly mortgage and about $195 in monthly dues. "It's the worst building in Santa Ana."
Once a symbol of downtown dreams, the Spectrum rises four stories above Fourth Street's busy immigrant shopping district. Nothing has turned out as planned for the building, originally envisioned as a luxury complex that would attract government professionals.
Residents are embroiled in a multimillion-dollar construction-defect lawsuit against the Spectrum developers, alleging that pervasive leaks cause mold and illnesses. The developers deny any fault. The homeowners association, which pays for utilities, maintenance and security, is strapped for cash because up to one-third of homeowners don't pay their monthly dues, some to protest their living conditions.
As a result of the mold and money problems, the amenities that once attracted first-time homebuyers are gone, and many regret moving into what they once considered dream homes.
"When they purchased out there in the latter '90s, the place, I'm sure, looked like the Garden of Eden," said attorney Alexander Robertson , who represents homeowners in the mold suit. "Now it looks like Hades. There's a high level of frustration."
More than 1,000 people live in 200 units at the Spectrum, and because most are owners, not renters, they don't have many options for relief. If they walk away, they lose their investments. If they stop paying association dues, they face liens and foreclosures.
In their short, but troubled history, the condos have burned to the ground during construction, been displayed on the cover of New York Times magazine for a story on toxic mold, and triggered lawsuits in all directions. In many other communities, homeowners may grumble about association rules over paint colors or rising dues, but in the Spectrum's case, the owners must contend with the alleged construction defects and a staggering delinquency rate for the dues.
The condos, built in 1992, went to auction at prices beginning at $45,000 to $69,000 for one- to three-bedroom units after developer Bristol House Partnership filed for bankruptcy. The price made home ownership possible for working-class families.
"We used to live in a really bad place," said resident Tony Chairez. "It was really a big move up."
In 2000, the Spectrum Community Association filed a $20 million lawsuit against the developers alleging construction defects and growth of toxic mold. The association and individual residents who have filed suit believe the mold growing in bathrooms and on ceilings causes rashes and illness. They also say the building is falling apart.
Lawyers representing Bristol House and Goldrich and Kest Industries, which acquired the project, declined to comment. In court documents, they deny wrongdoing. They have both countersued dozens of subcon tractors. The parties are in mediation through June.
In addition, the association has sued 31 homeowners for failing to pay monthly dues, according to court records.
The closure of amenities like the pool and racquetball courts because of mold contamination and a shortage of association funds for upkeep has only made some residents angrier.
Inside the building's common hallways, carpet is threadbare, fire extinguishers are missing and graffiti is scrawled on doors.
Residents complain of auto break-ins in the complex garage.
Several owners have in turn sued the association. They contend they aren't getting their money's worth from the dues they pay.
"They've suspended services," said Yolanda Lugo, who has stopped paying and owes about $8,000. "I'm going to fight in court."
Rich Neuland, a Rancho Santa Margarita lawyer not involved in the cases, said the law doesn't excuse nonpayment of dues, no matter the conditions. He said that in mold cases, families usually don't move because they'll lose their equity unless they recover money for repairs.
"It would be a lot easier to move," said Neuland, an expert in association law. "Most of them stay put because of the economic situation."
Residents have asked for help from government officials and nonprofit agencies, including Latino Health Access.
"It's really a sad state of affairs," said Pat Whitaker, housing manager for Santa Ana. "I fully understand the dilemma that's facing those families. At this time, the city doesn't have financial resources to put in at the scale it would take to help address some of the issues there."
Others say that as bad as the Spectrum situation is, it's worsened because not everyone is paying the monthly dues.
"I'm angry that I'm sending in money for nothing," said Ana Patricia Osorio, an owner who said she's current on her dues. "Because some aren't paying, we're paying more."
Association board member Darren Berg is chief executive officer of Meridian Partnership Management, a Seattle secondary-market lender that owns 10 units in the wake of foreclosure and holds the loans on 40 others. He said the bulk of the dues cover water, electricity and gas.
The association board recently sent a letter to residents detailing the Spectrum's finances. The association currently brings in about $22,000 a month in dues. The average monthly cost for utilities and insurance totals $18,140. If everyone paid, the association would collect $34,750.
"As the homeowners' assessments have gone unpaid, the building has started to look more and more like hell," said Berg, who has made several trips to Santa Ana to go over the books.
Irvine lawyer Janet Powers, who represents the homeowners association, said that so far the association has not acted on court judgments by foreclosing on homes or garnishing paychecks of those in default. Those decisions are likely to be made by the board soon, she said.
Powers, who specializes in association law, said most associations in California have delinquency rates of less than 5 percent vs. 25 to 30 percent at the Spectrum. Powers said that if more people paid, more services could be offered, such as reopening the pool. But other common areas stay closed because of high levels of mold.
Homeowner David Ruiz recently wrote a check for $1,897.89 to cover back assessments, interest, attorney fees and costs. He continued to pay monthly dues of $123, but refused to pay the two increases that brought the bill up to $163.
Ruiz bought his one-bedroom condo in 1995 for $56,000 after spotting an ad at a bus stop. His down payment was $100.
But Ruiz, who works at a factory, said his good fortune faded quickly. He's worried that the problems won't be fixed even if the association prevails against the developers.
Helen Brown, president of Civic Center Barrio Housing Corp., a Santa Ana nonprofit organization, said she wonders who will help guide the homeowners through the difficult process of repairing the building.
"There has to be a real plan," Brown said. "If somebody responsible does not work with that community, they won't know how to spend the money correctly and address the problem."
Ruiz said he thinks there's only one hope.
"Destroy this building and start again," he said.