Special Reports

Esperanza Housing Scandal

(CBS) Julie Holstein and her four children may be forced to move out of their home in South Pasadena.
It's owned by a charity that by state law is supposed to charge affordable rents. She pays $1060. But they're also charging her an additional $1440.00 a month in maintenance fees which they did not disclose to the state. And now she's refusing to pay. And may be evicted.

"It's a despicable non-profit that would try to overcharge in the name of charity"
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"They really wanted me to leave"

Cynthia Wright was also being evicted. She lives at another house owned by the same charity. Pays $315 a month rent. $1385.00 in maintenance fees. She also refused to pay. But finally agreed in order to stop the eviction.

"I think they're more than getting around the rules. I think they're fully and completely breaking them."

The houses are part of more than a dozen sold by Caltrans as surplus property. Esperanza charities purchased them for a fraction of their market price in return they have to be offered to low and moderate income families at affordable rents.


"Did your agency report both the rent and the maintenance fee?
Yes."

The president of the Charity Evie Romero says Caltrans knew—and her attorney claims they've done nothing wrong.
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"We believe we are charging affordable rents. But you're hiding a maintenance fee from the state? No we're not. The state is aware we're charging a maintenance fee."
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"Are you aware they are charging a maintenance fee on their properties?
No I wasn't aware of that."

The Caltrans District Director says he never knew until recently - and is looking into whether it's even legal.
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"Certainly I'm very deeply concerned that it appears they may not have been telling us the truth in a number of things.
"Just because it gives the appearance they were withholding information"

And that's not all Esperanza apparently is withholding. This house at 171 Columbia Street in Pasadena was built on property purchased from Caltrans. But look who we found living there. The president of the Charity. Even though Caltrans was under the impression it was rented to a low or moderate income family.

"David-are you a low or moderate income family?
Romero-no"
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"David-she admits she's not a low or moderate income family. Caltrans –that's good she said that on tape?
David-she did
Caltrans-at some point can I get copies of the tape because I might need this later if you don't mind"

Caltrans says they're looking into whether Romero can live there legally.

Romero-"Whatever agreement Caltrans says, we will comply with. They will probably say to move out and we will"

In the meantime Esperanza has removed the maintenance fee from Cynthia Wright's monthly payments. And Julie Holstein is hoping they'll do the same for her and her and her children's stay.

Esperanza says they were charging the maintenance fee to cover costs and believe it's allowed by law. However, on Friday the charity released a statement saying they will stop charging the fee until the issue can be resolved.

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