Ruh Oh!
Trust the government to put their foot in it as Seema Mehta, Dan Weikel and Dave McKibben report in the LA Times - State Agency Tries to Stop Condo Sales:

The California Coastal Commission is taking action against hundreds of property owners in south Orange County who allegedly have rented their condominiums instead of living in them as required when they bought the low-cost homes.

Commission officials said Thursday they also are racing against the clock to try to block the sale of any of the condos at prevailing market values by these owners, some of whom may have received public subsidies to help buy the homes in the late 1970s and early '80s.

"It's a program we felt good about it because we thought it connected people of moderate means with housing," said Peter Douglas, executive director of the Coastal Commission. "To see it abused this way is just sad It's disappointing that people are that greedy."

Peter seems to have led a sheltered life. "Connecting people of moderate means with housing" indeed. He could be a poster boy.

From 1977 to 1981, the commission required that many coastal Orange County developments include 25% to 35% low-cost units. The Legislature ended those requirements in late 1981. By then, many low-cost condos had been sold in Dana Point, Laguna Niguel and San Clemente. Deeds required they be owner-occupied for 20 years or more, and if the owner moved before then, the unit had to be sold to a public agency at only a modest profit so that it remained low cost to the next buyer.
...
Scores of the condos originally were bought by low- to moderate-income workers for prices starting at $65,000. Some got subsidies of $30,000 to $50,000 to cover the developer's sales price, according to Helen Brown, who heads the nonprofit agency that administers the commission's low-cost housing program in Orange County.

Rather than occupy the units as required in the sale contracts, the owners in question have rented their units for $1,200 to $2,000 a month, commission officials said, adding that many tenants are professionals and high-income workers, undermining the program aimed at helping low-income people cope with Orange County's expensive housing market.
...
When restrictions expire, owners would be able to sell their condos for fair-market values topping $300,000 in many cases.

The notices require the owners to either prove that they had not violated the owner-occupancy agreement, or to sell the property back to the housing program at about $200,000 below fair-market value.

No word why a "Coastal Commission" was involved in setting up a class of restricted housing. Yeah, the owners welshed on their deals, but only the hopelessly naive would have thought otherwise. Maybe the members of the Coastal Commission should read up on rent control in New York City.