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The City of Cupertino has announced that more than $100,000 in affordable housing funds were used to pay for housing lawsuits, sparking a backlash from residents amid financial uncertainty. The company is working hard to fix what it calls “accounting errors.”
According to reports, the city will use funds from the below-market rate housing fund to help housing advocacy group Yes in My Backyard Law (YIMBY Law) and the California Housing Defense Fund pay for housing that the city is not in compliance with state mandates. The money was used to pay for a lawsuit filed last year against the plan. City documents and publicly available legal claims obtained through resident public records requests. The fund has approximately $5.2 million in funding, funded by developer impact fees, that will be used for affordable housing developments.
Instead, the city used about $165,475 from the fund to cover litigation-related costs, according to a San Jose Spotlight investigation. City officials claim more than $100,000 in misappropriated funds, but have not disclosed the exact amount.
The city spent $150,475 between 2023 and this year in payments to the Oakland-based law firm Goldfarb & Lippman LLP, which was contracted to fight the lawsuit. After the city of Cupertino lost the case in January, officials earmarked an additional $15,000 for housing advocacy groups’ legal costs.
Deputy City Manager Tina Kapur said the city plans to replenish the account, possibly through the general fund, in addition to training employees on how to use the funds and implementing additional approval requirements before funds can be withdrawn. he said. The city is also looking at the past five years of money withdrawn from the fund to find other “accounting errors.”
“I understand it was a mistake,” Kapoor told San Jose Spotlight. “This is not something we were trying to hide or intentionally do to impact the community.”
Goldfarb & Lipman LLP did not respond to requests for comment.
The allocation comes as the city anticipates a budget shortfall of approximately $15 million in fiscal year 2024-25, due in large part to the loss of revenue from Apple’s sales tax following an audit by the California Department of Taxation and Rate Administration. The mistake has sparked a backlash from residents.
Peggy Griffin, who has lived in Cupertino since 1985, said the mistake and the amount of money spent on litigation is concerning in a city where she feels there is a lack of financial transparency.
“There are so many problems with affordable housing that we should be setting aside funding to alleviate and provide affordable housing, and yet we actually spend money to pay for lawsuits against it. That’s completely surprising to me,” she told San Jose Spotlight.
The city of Cupertino is also struggling to get its housing plan approved by the state more than a year after the deadline, which led to a lawsuit from YIMBY Act and the California Housing Defense Fund. The city of Cupertino needs to build at least 4,588 housing units by 2031 to meet state requirements, 1,880 of which are considered affordable to low-income residents, according to the latest draft plan. .
Sonja Trauss, executive director of the YIMBY law firm, called the misallocation sloppy and embarrassing. She said it raises concerns about whether it was a genuine mistake.
“They’re saying it’s false, so I think we need to pretend we believe it,” Trauss told San Jose Spotlight. “It wasn’t a mistake at all, but the alternate reality is that Cupertino has gotten even worse.”
A representative for the California Housing Defense Fund said the organization would not comment until it hears from the city.
Councilwoman Kitty Moore said the mistake is a reminder that the city is accountable to the public.
“We are accountable to our community and these are matters of serious concern. We will be transparent and ensure that allegations are investigated and promptly remedied if substantiated. I have to,” she told San Jose Spotlight. “We are stewards of the city’s public funds and we must prove that we are prudent, responsible and accountable.”
Contact Annalize Freimark. [email protected] or follow us @annalise_ellen X, formerly known as Twitter.
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