Item 37 - General Plan Amendment No. 2021-01 - 6th Cycle Housing Element Update

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General Plan Amendment No. 2021-01 July 19, 2022 Page 4 2 8 1 4 units are planned for very low-income households, 701 for low-income households, and 6 for moderate-income households as shown in the table below. Table 2: Pipeline Housing Projects and ADU Projections Projects Very Low Low Mod. Above Mod.Total Pipeline Housing Projects*443 701 6 5,764 6,914 Accessory Dwelling Unit Projections**181 311 217 14 723 TOTAL 624 1,012 223 5,778 7,637 *A full list of projects and a breakdown of affordability can be found on Table C-2 in Appendix C of the draft Housing Element; **Accessory dwelling unit (ADU) affordability based on SCAG study of rental rates for ADUs in the region. In addition, accessory dwelling units (ADUs) will play a more substantial role during this planning cycle in producing affordable housing units due to increased public awareness and recent changes in State law that have provided a mechanism to achieve a greater supply of these types of housing units. Santa Ana’s five-year average for building permits issued for ADUs is over 90 units (2018-2022—when extrapolating for full year totals for 2022). When the average is carried over an eight-year period for the planning cycle, there is potential for 723 ADUs to be permitted, with most categorized as affordable units (see Table 2). The ADU affordability estimate is based on the SCAG study that found that of ADUs constructed in Orange County, 25 percent were affordable to very low-income households, 43 percent to low-income households, and 30 percent to moderate-income households. Taken together, the RHNA credit for ADUs during the planning period will result in affordability levels as follows: 181 very low-income units, 311 low-income units, 217 moderate-income units, and 14 above moderate-income units. Given the legislation encouraging ADU development, and increased efforts by the City (pre-approved ADU plan program slated to commence in 2022 and exploration of an ADU amnesty program included in the proposed Housing Plan), interest and applications for ADUs are expected to only increase throughout the 2021‐2029 planning cycle. Furthermore, a survey of rental rates of approximately 1,500 recently built multi-family units in Santa Ana reveal that units in the moderate-income affordability category are being produced without the need of a subsidy or restrictive covenant. Rather, market factors alone are creating housing units in the moderate-income category. Based on the survey results, approximately four percent of the units surveyed fall into this category. By applying that four percent ratio to the total above moderate-income pipeline units, as shown on Table 2 (5,764), it can be expected that approximately 231 of those units will be rented in the moderate-income affordability category. Collectively, the projected ADUs and the pipeline housing units will produce the City’s fair share of the regional housing needs in all categories except the moderate-income level, which 91 units would need to be accommodated within the 6th cycle planning period. However, due to a surplus of 650 low-income units, which provide housing at a deeper affordability level than that required by the RHNA, a percentage of the total surplus low-