City council members across Orange County have spent the past several years grappling with state-mandated housing numbers and how to best maintain local control for housing developments.

It comes while state leaders pass new laws aimed at pushing forward residential units. 

Earlier this year, California Gov. Gavin Newsom signed legislation that removes some environmental review regulations for developers to speed up housing production across the state. In 2021, Newsom signed SB 9, which allows homeowners in single-family neighborhoods to have a total of four units on their property.

Council members in San Juan Capistrano, one of the oldest towns in Orange County, have discussed several residential developments while trying to balance the need for housing and projects that match the city’s atmosphere.

During a meeting last week, city council members voted 3-1 to initiate a study for a potential new neighborhood that would replace the existing Capistrano Business Park with 225 new homes. 

Councilmember John Campbell voted no Tuesday night, and Councilmember Sergio Fargas was absent.

According to preliminary concepts, the neighborhood would include a mix of three-story townhomes and detached single-family homes.

Initial proposals for the project also include a phased approach that would initially construct 139 units, with a second piece of land saved for a future phase to complete the full development.

[Read: San Juan Capistrano Could See 225 New Homes]

Currently, the business park houses about 90 small businesses and other tenants that would be forced to relocate if the project is approved.

Moving forward, city staff will study the project, including environmental review, which will return to the planning commission and city council for further review.

Local Control vs. State Mandates

California state leaders have passed various pieces of legislation over the past several years aimed at speeding up housing developments and making it easier to build certain types of residential units to address the state’s housing crisis.

[Read: Will Builder’s Remedy Create Housing Without Local Approval in Orange County?]

According to state housing mandates, San Juan Capistrano must plan for 1,054 new housing units by 2029. This number is passed down by the state and includes housing units for different income levels.

During Tuesday’s council meeting, Councilmember Howard Hart pointed to SB 79 — a proposed bill that would make it easier for developers to bypass local zoning laws and build high-density housing on sites within a half-mile of a transit stop. 

The bill was passed by the Senate earlier this summer and is currently making its way through state committees.

The Capistrano Business Park, proposed site for the 225 new homes located along Calle Arroyo, is within a half mile of the Metrolink and Amtrak train stations.

“What this bill is going to do, it will probably be effective Jan. 1, is it will give by-right authority to build five-story buildings with no parking restrictions within a half-mile of any major transit stop, such as a train station or bus depot,” Hart said at the meeting. “If you add the density bonus law, you can go up to six stories.”

Hart said the new project isn’t something he’d normally consider, but he expressed concern about what might happen if the state stepped in to mandate a project on the site instead.

“I don’t like the fact that it doesn’t have affordable housing component promised,” he said. “I don’t like the fact that it just seems to be cramming as many homes as possible into a piece of property that is now taking away much-needed office space.” 

“But now I have to look over my shoulder — what happens if I don’t approve it?”

Will the Project Include Affordable Housing On Site?

Kevin Hayes, representative from the applicant known as Pendulum Property Partners, spoke at the meeting and estimated the new homes would cost somewhere in the high $100,000 range, approaching $1 million.

“We see this site as an outstanding opportunity to create for sale, entry-level and workforce housing for the city of San Juan Capistrano,” Hayes said. “The site has incredible proximity to jobs, access to the freeway and is less than half a mile from the train station. The site further has wonderful access to open space and the coast.”

When asked about affordable housing, he said the group will cooperate with the city’s inclusionary housing ordinance.

San Juan Capistrano has an inclusionary housing ordinance that requires developers to either reserve 10% of residential units constructed in town for lower-income households or pay a fee.

However, Development Services Director Joel Rojas said the city would be seeking 15% affordable housing for this proposal.

Hayes said they might decide to pay the in-lieu fees instead of building affordable housing on-site, which sparked concern among council members.

“There’s several things that concern me about this project,” said Campbell, who voted against the item. “I’m concerned about the loss of commercial property. I’m concerned about our small business community and the importance of the employment that they provide to our city.”

“[The applicant] acknowledged the fact that there may not be one affordable unit here because they might decide to go ahead and pay the in-lieu fees, which doesn’t help our community,” he said.

The council also received a letter from an affordable housing-focused nonprofit known as the Kennedy Commission, asking council members to oppose studying the project since there was no mention of affordable housing in the proposal.

“While the staff report emphasizes that this action is only the beginning of a study, the language of the resolution and the applicant’s proposal clearly proposes redevelopment for market-rate for-sale housing, with no mention of affordable units,” reads the letter signed by Cesar Covarrubias, executive director of the Kennedy Commission. “This direction is deeply concerning and requires a reset of priorities before moving forward.”

The proposal also comes after city officials approved a five-story apartment building near city hall and the city’s historic downtown region earlier this year.

When it was proposed in January, San Juan Capistrano City Council members said they wished the project was smaller, but their hands were largely tied since the proposed building did not exceed the city’s height limit and state law prevented them from adjusting it.

[Read: A South Orange County City Grapples With State Housing Mandates]

Mayor Troy Bourne voted “yes” at last week’s meeting to study the new project but also acknowledged that he wants to see affordable housing on site instead of an in-lieu fee payment.

“You’re hearing almost unanimous consent up here that the city leadership would like to see more accessible housing in the community,” Bourne said at the meeting. “This is not the norm in south Orange County.”

“I don’t think we want to be a community of people whose kids are all gone, or it’s their third house, because that’s the only people who can afford to live in San Juan Capistrano,” he said.

Angelina Hicks is a Voice of OC Tracy Wood Reporting Fellow. Contact her at ahicks@voiceofoc.org or on Twitter @angelinahicks13.