Santa Ana and San Clemente, cities in two different regions of Orange County, will debate the same component of affordable housing policies at different stages this week. 

The element in question is the requirement that for-profit housing developers incorporate apartments into their projects that would be affordable for low-income renters and families — and if not, pay an “in-lieu” fee into affordable housing funds that would help the city build the units elsewhere. 

In Santa Ana, one of California’s densest cities filled with many undocumented residents and working-class renters, the policy to calculate the fee per-square-foot has been in place for about five years. Before that, the city used a different formula.

City Council members there are set to narrow the criteria of applicable projects and reduce the in-lieu fee, effectively making it easier for developers to build market-rate, higher income apartments, in a second and final vote at their Tuesday meeting. 

In San Clemente — which contains some of Orange County’s most affluent zip codes — that “in-lieu” policy has been in place for decades, since the 1980s. Council members there are looking Wednesday at ways they can reconfigure the calculations behind the in-lieu fee developers pay.

The cost and availability of land has been a constraint on developing affordable housing in the city and has left the need for low income housing unmet in San Clemente, officials there argue. At the same time, the state is pressuring cities to build more homes to deal with California’s housing shortage.

The debate Santa Ana officials and residents are revisiting is whether their policy, known officially in the city as the Housing Opportunity Ordinance, has been effective at achieving sufficient levels of affordability in one of California’s densest cities.

That city’s in-lieu fee is on its way down from $15 per habitable square foot to $5, after an initial vote by council members on Aug. 18. The revised ordinance comes back to council members Tuesday for a procedural second and final vote.

Proponents, mostly council members, real estate associations and construction unions, argue Santa Ana has exceeded its state-set affordable housing goals and that — in a time when the coronavirus pandemic has withered the local economy and slowed development in the city — the ordinance is too burdensome and incentives are now necessary. 

Opponents, mostly affordable housing advocates and community activists, contend that while the city has exceeded its affordable housing quota over the years, it’s been building for-profit, higher-income housing at a much faster pace. 

Meanwhile, opponents add, the state-set housing goals don’t accurately characterize what is still a dire low-income housing need in Santa Ana while renters, many of them undocumented, too suffer the pandemic’s financial blows — so much so, city officials have had to implement emergency rent freezes and eviction protections.

Critics also note that developer cash prospects in this year’s City Council races may well be pushing the revised policy up to the public dais.

In San Clemente — a coastal city and one of the county’s most affluent areas — that policy has been in place for decades. Developers of six or more housing units must set aside 4% of the units for households making half or less than half of median household income or pay the fee instead.

San Clemente has over 24,000 households in a city of more than 64,000 people. The city’s median household income is $105,812 and 5.5% of its residents live in poverty, according to the U.S. Census Bureau.

The money generated from the developer fees is then loaned to non-profit agencies at a zero or low interest rate to build or acquire low income housing.

The fee which city staff has described as hard to communicate to developers is determined by a formula based on the number of units as well as construction value of the project.

That formula could soon change.

San Clemente hired a consulting firm in March to look at updating the housing fee policy and will look over its findings at a study session on Sept. 2 at 6 p.m.  

Brandon Pho is a Voice of OC staff writer and corps member at Report for America, a GroundTruth initiative. Contact him at or on Twitter @photherecord.

Hosam Elattar is a Voice of OC Reporting Fellow. Contact him or on Twitter @ElattarHosam.

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