City officials in Huntington Beach — one of the most expensive cities for development projects in Orange County — are facing pressure from the state and housing advocates to address the need for low and very low income housing.

HB City Council members moved to amend part of their housing ordinance Tuesday years after the ordinance was adopted and to create more housing options at different affordability levels.

Mayor Kim Carr said there are numerous obstacles when building homes in coastal cities.

“It’s very expensive land, there’s not a whole lot of land available especially in a city like Huntington Beach which is essentially built out,” she said.

Housing advocates have criticized city leaders across the county including Huntington Beach for what they describe as the overproduction of expensive housing and the underproduction of low income households which they say is fueling the homelessness crisis.

Officials in HB, which has been sued in the past by the state over a failure to build affordable housing, are wondering if changes to their inclusionary housing ordinance and their in lieu housing fees will create more lower income homes.

Carr said that it’s anyone’s guess to see if the changes do spur development of affordable homes.

“It does seem the way that the fee schedule is structured to incentivize people to do smaller developments in Huntington Beach, will that actually happen? I don’t know,” she said. “If anything, it was to provide more consistency across the board.”

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The council voted at their Tuesday meeting, 6-1, on an ordinance amending affordable housing laws and a resolution updating their housing in-lieu fee payment calculation formula. Councilman Erik Peterson voted against the changes.

Ursula Luna-Reynosa, director of Community Development, said at the meeting that part of the objective behind updating the ordinance was the need for housing options in the city particularly for working class families.

“We are deficient in the low income category and we have made some changes to this ordinance to try to help with some of those policy objectives to be able to more evenly distribute along that continuum,” she said. 

“The hope is that through these different housing options that people who live in this community that their children and grandchildren might be able to afford to live here, which we hear very frequently is difficult to achieve,” Luna-Reynosa continued.

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Peterson, the dissenting vote on the changes, said he thinks it will increase building costs.

“I just really think the free market can figure it out and I would rather have the city somehow reward someone for doing it then actually charging them if they don’t,” he said at Tuesday’s meeting.

But Councilman Mike Posey said there is an “acute housing shortage” the city needs to address.

“We do have a need to provide housing or at least the incentive in the zoning to provide housing for all income categories because we have people that work in all income categories in Huntington Beach,” he said. “There is a housing shortage and that’s what causes prices to go up.”

Changes to the Ordinance

Like in many other cities, developers in Huntington Beach have the option of accounting for low income housing directly in their projects or pay the city what’s known as the in-lieu housing fee. 

How much a developer has to pay varies and is determined through a formula. 

Huntington Beach’s amendment expands options for developers to meet their affordable housing requirements by allowing more of them to pay a fee rather than build lower income homes in their developments.

But ACLU housing advocate Eve Garrow said allowing more in lieu fees instead of mandating more affordable housing won’t address the need for low income homes. 

“​​Expanding the conditions under which developers can pay an in lieu fee instead of building affordable housing units simply reduces the number of affordable housing units that will be built. This strategy increases the profits developers rake in while ignoring the dire need for affordable housing in our communities,” Garrow said in an email Thursday.

The city’s current affordable housing policies — codified in 2005 — requires new housing projects with three units or more to make 10% of the units affordable for moderate or lower income households.

With the revisions, the rental unit must be made available for extremely low, very low and low income families. 

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Paying the in lieu fee, which was limited to development projects with 30 units or less, will now be allowed for ownership projects of any size and rental projects with up to 100 units — giving developers more flexibility to pay instead of building the affordable housing themselves.

Luna-Reynosa said the ordinance revision is not intended to raise the in lieu fee, but make it more flexible for developers to pay to meet the requirements.

“We currently have, based on a survey that was done about 18 months ago, the highest inclusionary housing fee in the county,” Luna-Reynosa said. “We are one of the more expensive places to do development in Orange County.”

Currently the fee is calculated on a per-unit basis, but under the revision the fee will be calculated based on the size of the area per square feet for lease or sale. City leaders say the change won’t really affect the amount of money developers will pay.

The in lieu fee for an ownership housing project with 3 units would cost $2.54 per square foot while the fee for a rental apartments project with 3 units would cost $ 3.58 per square foot.

The fee will be capped at the total fee for a 2,000 square foot unit for ownership units.

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The money generated from the fee goes into the city’s Affordable Housing Trust Fund, which can be used for building residential projects where at least half of the homes are affordable to very low to low income families.

“These fees can be leveraged with other sources of funds to generate more affordable housing than would otherwise be produced on site,” Luna-Reynosa said. “We’ve seen that with the Jamboree project for example, we leverage some of those in lieu fees for that.”

She also said they can target income levels that need more housing and indicate to affordable housing developers which levels to build the homes for.

Carr said the Jamboree Senior Housing project shows the benefit of having the in-lieu fees.

“I think it depends on the project, but I’ve definitely seen the benefit of getting the in lieu fees, because we can then do something even bigger than just adding maybe a few units, we can do a whole apartment building,” she said.

Carr also said the funds have been used to buy the land where their homeless shelter is temporarily located and hope to put permanent support housing or affordable housing in that area.

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Affordable Housing in Huntington Beach

As part of their state mandated housing goals, Huntington Beach will have to zone for more than 13,000 new homes — over 5,800 of which will have to be for very low income and low income families in the next eight years.

City officials have pushed back against those regional housing needs assessment numbers, calling them unattainable and even contemplated suing the state twice — once in an open public meeting.

Carr said coastal cities are faced with the challenge with zoning for the homes in a realistic way while preserving their  beach town community.

“Which is why you see such tremendous pushback from cities. It’s not that we don’t see housing as important or critical to our community but we also need to be realistic about what we can do, and do it in a way that preserves our beach town community,” she said.

Meanwhile, some residents at Tuesday’s meeting said the city’s housing goals will bring high density housing to their neighborhoods.

It’s an issue that helped launch a recall effort against the council majority, which took off after the council appointment of Rhonda Bolton.

According to the recall website, residents say they want city leaders to fight the state-mandated goal of zoning for thousands of new homes.

Nevertheless, Carr said they’ve been working on where to put affordable housing in the city.

“Boy if I had the answer on how to do affordable housing and incentivize developers and make it so that it actually worked in coastal cities. I think I might just be governor of California.”

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

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