Correspondence - #35 - Laserfiche WebLink

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The Southern Assessment (RHNA), covering the period October 2021 through October 2029, identifies and allocates a housing need of more than 1.3 million new units for the six-county region and 191 cities. The City of Santa Ana has a total of 78,761 existing housing units and must plan for a RHNA of 3,095 new housing units (source: SCAG). A critical pathway to addressing the housing crisis is through increasing the supply of available housing options, but building that supply is becoming an increasingly expensive proposition, whether it is single-family homes or multifamily rental and condominium buildings. Costs layer on top of one another throughout the development process, from planning to construction and inspection, and the to ease the shortfall in both supply and affordability. From 2000 to 2016, land pricing locally almost tripled the rate of inflation. In 2017, construction price indexes increased by over six percent compared to an average annual increase of close to three percent between 1990 and 2000. Core elements driving construction costs include the price of materials, such as cement, steel and lumber, and the cost of labor, both of which have also risen in recent years. In addition to permitting and regulatory constraints, development fees in the state have become almost three times the national average. A 2014 study found that local government design requirements for affordable housing added an average of seven percent in total costs, which in turn increases the amount of subsidy needed to build the affordable housing units (source: Terner Center for Housing Innovation, 2020). In response to the impacts of the COVID-19 pandemic on the development and construction of starts, the Council adopted Ordinance No. NS-2994 on September 1, 2020 that further amended the Housing Opportunity Ordinance (HOO) to lower the in-lieu housing fee for all projects from $15 to $5 per square foot, adjust the trigger of the HOO, and expand the eligible uses of in-lieu fees collected by the City. As a result of the fee reduction inclusionary housing fund. This action also responded to the fact that during 2015 through 2019, immediately following the September 1, 2015 Council action to adopt Ordinance No. NS-2881, which resulted in a HOO fee increase, not one permit was pulled and zero funding was generated for the inclusionary housing fund. The pandemic has only increased development costs and returning to a $15 per square foot in-lieu housing fee will only further render new residential development financially infeasible. CONCLUDING THOUGHTS In order to provide housing accessibility, mobility and opportunity, a multifaceted and collaborative approach is imperative, and this means policy measures that are not undermined by additional layers of government bureaucracy or excessive regulations that will only undercut the goal of improving housing conditions. 3