Santa Ana eases affordable housing rules for developers

In hopes of increasing the housing supply, Santa Ana's city council Tuesday waived the requirement for affordable housing units in conversion projects, and gave developers more flexibility in deciding how to include affordable housing in new construction projects.

"We're going through a crisis that's creating this incredible amount of rent that people are willing to pay because we live in a very desirable area," said Mayor Pro Tem Vincent Sarmiento. "Now just because it's a desirable area, it shouldn't be just for the desirable folks. It should be for everybody."

Under the amended housing ordinance, developers converting historic or old office buildings into apartment or condo complexes will no longer have to set aside units for low-income tenants.  About a dozen buildings in Santa Ana could fall into that category.

The council also changed the rules regarding new residential developments. Previously, at least 15 percent of the new units had to be set aside for affordable housing but the 2011 housing ordinance didn't differentiate between moderate-, low- or very low-income residents.

With the changes, developers can now choose whether to offer 10 percent of the units to very-low income renters or buyers or 15 percent to low-income people. They can also build the required number of affordable homes at a different location or pay the city an in-lieu fee.

Projects with 20 or fewer units could pay $5 per square foot instead of building the affordable housing units; the in-lieu fee increases to $15 per square foot for larger projects.

That money would go into the city’s housing fund to pay for affordable housing projects.

Developers and builders at Tuesday's meeting asked the council to consider lowering the in-lieu fee. "It really equates to a significant tax on the land," said Ryan Aeh, a vice president of land acquisitions for residential developer City Ventures.

But the council didn't budge noting that the in-lieu fee of $15 per square foot for large projects was not higher than what other cities such as Irvine charge.

"We're not trying to say every unit in town, from now on, is going to be a workforce housing affordable development. We're saying let's create balance," said Sarmiento.

Although affordable housing activists applauded the in-lieu fee, some were disappointed by the council's actions to waive the affordable housing requirements for projects that plan to convert apartment complexes into condos, unless the development grows larger than zoning has allowed for.

"We’re going to be losing housing stock that is affordable to low-income families today," said Cesar Covarrubias in an interview. He is the executive director of the Kennedy Commission, which advocates for more housing for low-income people in Orange County.

He said the new rules could squeeze some low-income people out of the city.

Covarrubias said he supports the city’s mission of trying to attract more housing, but he argued developers of conversion projects should be required to include affordable housing, even if it’s at another location, or pay an in-lieu fee.

While the city council approved changes to the housing ordinance, they will consider more amendments including allowing density and height bonuses for projects that commit to building affordable housing units on-site and adjusting the in-lieu fee for developments that have completed applications under review.

The city will reexamine the fees and affordable housing requirements every three years.