In a move that angered affordable housing advocates, the Santa Ana City Council this week voted to allow the developers of one of the city’s largest-ever residential developments to postpone required payments toward the construction of homes for low-income families.
Called Heritage Village, the project on the city’s border with Tustin includes 1,221 market-rate apartments and 74,000 square feet of restaurants, retail stores and offices.
Plans for Heritage Village, whose target market has significantly higher income than most Santa Ana households, were approved by the City Council in February. The approval, however, was contingent on the developers, which include Phoenix-based Alliance Residential Company, abiding by the city’s Housing Opportunity Ordinance.
The ordinance requires that large housing developments devote 15 percent of their units for low-income households or 10 percent for very-low income households.
Developers can opt-out if they pay an “in-lieu fee” to the city for building affordable housing elsewhere. That fee was raised last October to $15 per square foot, though projects already being processed as of the update pay $9.35 per square foot.
The Heritage developers are grandfathered in under the previous fee structure, and owe $9.7 million for affordable housing projects. That money, which the ordinance requires be paid up front before construction starts, is already earmarked for an affordable housing project on First Street, to be developed by AMCAL Multi-Housing, Inc.
That $8.8 million project would provide 69 affordable apartments for working households – equivalent to just over 5 percent of the Heritage units.
However, after the project was approved, the developers came back to the city with a request that they be allowed to pay the affordable housing fee in three installments as the housing units are built rather than all of it upfront.
The request went before the Planning Commission last month, which recommended on a 5-1 vote that the City Council reject the concession.
But council members approved it anyway, and also approved a $6.2 million allocation from city development funds so the AMCAL project can continue even with the delay in payment from the Heritage developers.
‘New Civil Rights Issue’
Before the vote, community activists urged the council to use the opportunity to require that the developers provide more resources for affordable housing.
They noted that under the housing ordinance, the Heritage developers would be providing about 180 units of affordable housing in their project if they weren’t opting out of the new requirements. Instead, the developers are paying fees that will cover 69 units.
“Oftentimes my family has to decide between paying the rent, putting food on the table, paying our bills, and purchasing schooling items for my siblings and me,” said Evelyn Torres, a high school freshman who said more than 60 percent of her father’s income goes towards rent.
The idea seemed to gain traction with Councilman Vicente Sarmiento.
“There has to be some consideration for that additional concession that we’re making, and I think that’s what’s been said, about going from a $9 to a $15 [affordable housing fee] per square foot.”
He called the housing crisis “the new civil rights issue of our time,” saying community members “don’t have place to live [and] the rents are incredibly high.”
While not voicing support for the fee increase, Mayor Miguel Pulido noted that “as we’re accommodating the developer, we’re really double accommodating” by granting the delayed payments and also using city funds to backfill the AMCAL project.
Councilman Jose Solorio, meanwhile, warned that raising the fees could increase housing costs at Heritage.
“Any time we add more expenses to a developer, the prices of the homes or the amounts of the rents increase. So those things kind of run counter if there’s an interest in affordability,” Solorio said.
But when it comes to the phasing request, Sarmiento said the city would be essentially granting an interest-free loan on behalf of the Heritage developer, which the developer would otherwise have to pay interest on through a lender.
“You are getting some help – some additional help. And that’s – again, that’s valuable. That’s worth something,” Sarmiento told the developer’s representatives.
But at the end of the day, no council member – Sarmiento included – sought to require that the developer contribute more to affordable housing in exchange for the phasing concession.
Instead, they voted 6-1 to approve the phasing request without any concessions from the developer. Michele Martinez was the sole vote against it, saying it’s not the city’s obligation to loan money for the developer.
The vote was met with disappointment and anger from activists, who shouted “shame” from the audience.
“What just happened is truly a shame,” said Joesé Hernandez, an organizer with Orange County Communities Organized for Responsible Development.
Council members “bend over backwards for folks that don’t need tax breaks, that don’t need subsidies, [while] this community works so hard to get this kind of help.”
A search of campaign finance data shows that people involved in the Heritage development, and their family members, have given at least $18,000 in campaign contributions supporting council members. That includes at least $9,000 for Pulido, $5,249 for Sarmiento, $2,743 for Solorio, $1,249 for Tinajero, $498 for Benavides, and $249 for Martinez.
Council members didn’t respond to Hernandez’s comments.
Beyond these projects, advocates say they want to work with the city on addressing the overall affordable housing crisis.
Of the roughly 41,000 households who rent in the city, nearly two-thirds – or 26,000 households – live in unaffordable housing, according to U.S. Census figures from last year.
While Santa Ana has thousands of market-rate housing units in the works, they won’t be affordable to most of the city’s residents, said Cesar Covarrubias, a housing advocate with the Kennedy Commission.
A supporter of higher-income home developments, meanwhile, called for better collaboration with advocates of lower-income communities.
“It should be easier for good development to happen in this city, for the community to voice what they want, and for them to get what they need out of these developments,” said Ryan Smolar, a consultant for the business advocacy group Downtown Inc.
To that end, he said Downtown Inc. will be starting a development forum in January to bring activists, developers, and bankers together to collaborate on development issues.
This article has been updated to include additional campaign contributions discovered after it was published.
Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at ngerda@voiceofoc.org.