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Building Industry Association of Southern California, Inc <br />ORANGE COUNTY CHAPTER <br />August 18, 2020 <br />Mayor Miguel Pulido <br />City of Santa Ana <br />22 Civic Center Plaza <br />Santa Ana, CA 92701 <br />Re: Item 75B. PUBLIC HEARING - ZONING ORDINANCE <br />AMENDMENT NO.2020-03 TO AMEND CHAPTER 41 (ZONING) <br />RELATING TO THE HOUSING OPPORTUNITY ORDINANCE AND <br />ADOPT AN AMENDMENT TO THE AFFORDABLE HOUSING FUNDS <br />POLICIES AND PROCEDURES <br />Dear Mayor Pulido and Honorable Council Members: <br />The draft Housing Opportunity Ordinance (HOO) presented by staff encourages <br />those developers who opt for the in -lieu payment option to use a skilled and <br />trained workforce. One question coming out of the Planning Commission's <br />August 3, 2020 meeting was whether that should be a mandatory obligation <br />rather than encouraged behavior. <br />More than the amount of the in -lieu fee itself, the Council's decision among <br />these two approaches will shape how successful the City is in attracting high - <br />quality residential development. The City's contemplated $10/square foot <br />reduction is dwarfed by the $76.82-$82.00/square foot cost of using prevailing <br />wage and unionized workforces on residential development. <br />Attached for the Council's consideration are two financial analyses <br />demonstrating the cost of a skilled and trained workforce on typical for -sale <br />(Exhibit A) and apartment (Exhibit B) developments. These analyses were <br />generated by BIA members and based on their experience using prevailing wage <br />and unionized workforces. A summary follows: <br />• For a typical for -sale housing development, Exhibit A demonstrates that <br />a skilled and trained workforce adds approximately 40% to the builder's <br />cost, which translates to approximately $76.82 per square foot. On an <br />average 1,427 square foot townhome-style unit, this equates to an <br />additional $109,627.85 in labor cost, all of which will add to the final <br />sales price of the home. <br />• Based on real -world figures for two actual low-income apartment <br />complexes in Southern California one with and one without prevailing <br />wage Exhibit B demonstrates that prevailing wage (which could be less <br />expensive than a skilled and trained workforce) resulted in a <br />development cost increase of $82.00 per square foot. Again, this cost <br />will ultimately be passed on to the renters. <br />It <br />BIR <br />PRESIDENT <br />SUNTI KUMJIM <br />MBK RENTAL LIVING <br />VICE PRESIDENT <br />ERIC NELSON <br />TRUMARK HOMES <br />TREASURER <br />BROOKE DOI <br />SHEA HOMES <br />SECRETARY <br />NICOLE MURRAY <br />TAYLOR MORRISON <br />IMMEDIATE PAST PRESIDENT <br />RICK WOOD <br />TRADE CONTRACTOR V.P. <br />ALAN BOUDREAU <br />BOUDREAU PIPELINE <br />CORPORATION <br />ASSOCIATE VICE PRESIDENT <br />MARK HIMMELSTEIN <br />NEWMEYER & DILLION, LLP <br />MEMBER -AT -LARGE <br />PETER VANEK <br />INTEGRAL COMMUNITIES <br />MEMBER -AT -LARGE <br />SEAN MATSLER <br />COX CASTLE & NICHOLSON, LLP <br />EXECUTIVE OFFICER <br />STEVE LA MOTTE <br />