Are Affordable Housing Mandates Working in Orange County?

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Does requiring developers to build homes for low-income families in residential projects boost a city’s affordable housing stock?

It’s a question that’s long been debated across Orange County – home to some of the most expensive zip codes in the United States.

So far, state data shows that for the most part developers have built mainly above moderate income housing for the past five years across OC – including most of the cities that have affordable housing mandates.

The city that had the most very low and low income housing built in the last five years was Santa Ana – one of a handful of cities that has a mandate – with over 1,600 homes constructed for those income levels.

[Read: How Are Orange County’s Cities Doing At Building Affordable Housing?]

The mandates are getting a renewed focus in the county amid pressure by state officials to address California’s housing shortage and affordability crisis.

It also comes as county leaders report an increase in homelessness which they say is partly due to a lack of low income homes.

[Read: Orange County Homeless Population Continues Growing]

Local housing advocates like Cesar Covarrubias, executive director of the nonprofit Kennedy Commission, have long said mandates work to generate more affordable homes.

“We do believe that they’re effective to be able to address the need for housing that the market is not producing for those cities where they don’t have any programs,” he said in a Monday phone interview.

Covarrubias also said in order to realistically increase the production of affordable homes there needs to be partnerships with developers and the communities they are building in.

“There has to be a partnership where everybody wins. Developers win because they’re going to be doing the residential housing part of it, but then you’re also going to have an opportunity for the cities to say we have community needs and some of those benefits should not only go for profit for developers, but also profit our community,” Covarrubias said.

Adam Wood, vice president of the Building Industry Association Southern California OC chapter, said in a Tuesday phone interview that the mandates help a handful of families, but prevent thousands of homes from being built.

“Ultimately, you’re creating an increased supply-demand imbalance, which is going to make housing more expensive for the majority of people and then everyone who we’re trying to help is going to get squeezed even harder unless they’re a lottery winner,” he said.

Wood said to create affordable housing at a larger scale there needs to be an increase of supply to meet the “crushing demand.”

Multimillion dollar homes sit beachfront, beneath the parking lot of Strands beach in Dana Point, Calif. on Feb 21, 2022. CREDIT: Jack Sundblad/VOICE OF OC

He said part of the problem is that while the population of OC has shot up over the decades, the construction of homes has not.

“We knew these people were coming,” he said. “But we didn’t build the homes to make sure everyone has a place to live, which is shocking.”

Wood said environmental laws like CEQA and the focus on repurposing built out areas for homes instead of building from dirt lots has made construction slower and more expensive.

Building Affordable Homes in OC

For the most part, cities across Orange County have avoided requiring developers to include affordable housing in their residential projects.

A little less than a third of Orange County cities – Brea, Huntington Beach, Irvine, Santa Ana, San Clemente, Laguna Beach, San Juan Capistrano, La Habra, and Laguna Woods – have implemented laws requiring developers to construct affordable homes in their housing projects.

And earlier this year Costa Mesa joined the list after officials adopted their own affordable housing mandate.

[Read: Another Orange County City Mandates Affordable Housing]

Orange County’s median income is close to $128,000, according to the state’s Department of Housing and Community Development. A four-person household making less than roughly $115,000 a year is considered low income and less than nearly $72,000 is considered very low income.

Housing construction in Orange County. Credit: JULIE LEOPO, Voice of OC

The lengthy process of getting a home built also plays a factor in production and cost.

Wood said creating certainty and streamlining the approval process can lead to more development – which often leads to pushback from some members or groups in a community

“Whenever a home builder finds a piece of land, there’s a multi-year process. It’s going to cost hundreds of thousands, if not millions of dollars to get that land entitled, and then ready to go before the first shovel turns any dirt in starting that project,” Wood said.

Chip Ahlswede, a spokesperson for the Apartment Association of OC, said in a Tuesday phone interview that the costs drummed up during the process of building homes from lawsuits, delays and consultant fees impact the price of a home.

“Every stumbling block put in the way between a proposed idea and that key opening the door, it adds to the overall cost of things, which is why the constrained use of development in Orange County has led to such high prices,” he said.

Covarrubias said city officials should find incentives for developers to boost production of affordable homes to offset their losses.

“If we’re going to allow that we should also be contemplating how our land use decisions benefit everybody including the city,” he said. “Cities have to look at land use as a way to incentivize. And those are ways that the city needs to look at how do we make sure everybody is benefiting from these changes.” 

Some cities offer density bonuses – more overall units –  if they have a certain number of affordable housing units in their developments. 

Ahlswede said there needs to be multiple solutions to help increase affordable home production including density bonuses, lowering the cost of applications for developers and a uniform process in getting city approval for a project.

“A reliable path, a consistent path that doesn’t shift. I think that’s gonna be the top thing to encourage more developers to bring projects to Orange County,” he said.

 Where Are Affordable Homes Being Built in OC?

Housing construction on Mani and Fourth St. in Santa Ana on Jan. 20, 2023.

A state database shows that of the nearly 41,700 homes built across OC between 2018 to 2023, about 85% was for above moderate income families, 6% was for very low income families and 5% was for low income families.

Irvine, a city with an affordable housing mandate, had the most overall housing development in that time period with over 14,000 homes, of which 5% were for very low income families and 94% was for above moderate income families.

The database shows there was no development completed for low income families in Irvine in the five year span.

Both Ahlswede and Wood said Irvine has been an outlier in OC.

“Very few cities have large master planned communities build out the way Irvine’s business model works. There aren’t a lot of Irvines in the world,” Wood said.

Anaheim, a city that has long resisted an affordable mandate, had the second highest amount of housing development between 2018-2023 with over 5,100 homes built of which 92% were for above moderate income families, 4% for very low income families and about 2% was for low income families.

Santa Ana, another city with an affordable housing mandate, had the third most development in that time period with over 4,200 homes built of which 60% was for above moderate families, with 29% for low income families and 9% for very low income families.

The city also has the highest number of affordable homes built during that five-year period at 1,635 units.

In Orange, which has no mandate, and in Brea, which does have a mandate, there were no affordable homes built, according to the database.

In Aliso Viejo, a city without a mandate, about 75% of the production of homes in the last 5 years was for low income families while in La Habra, which has a mandate, 46% of the homes built were for low income families.

About 200 homes were built in that time period in each of those cities.

Homes in Newport Beach on May 18, 2020. Credit: JULIE LEOPO, Voice of OC

In Newport Beach, a city home to some of the most expensive zip codes in America and does not have a mandate, there were close to 400 homes built in the five year span of which 53% were for above moderate income families, 28% for very low income families and 12% for low income families.

In Laguna Beach, which does have a mandate, there were 181 homes built between 2018 to 2023 of which 85% were for above moderate income families, 5% were for low income families and the rest were for moderate income families.

Covarrubias said cities like Laguna Beach need to boost production, adding they’re getting “maybe a couple of units here and there.” 

“You’re not getting developments that are 100 units.” 

Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.

Gigi Gradillas is a Voice of OC intern. You can reach her at Gigi.Gradillas@gmail.com. Follow her on X @gigigradillas.

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