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HomeMy WebLinkAboutItem 09 - Second Reading of Zoning Ordinance Amendment No. 2021-03 Planning and Building Agency www.santa-ana.org/pb Item # 25 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report February 15, 2022 TOPIC: Second Reading of Zoning Ordinance Amendment No. 2021-03 AGENDA TITLE: Adopt Ordinance No. NS-XXXX – ZONING ORDINANCE AMENDMENT NO. 2021-03 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA REPEALING AND REENACTING IN ITS ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE SANTA ANA MUNICIPAL CODE REGARDING THE HOUSING OPPORTUNITY ORDINANCE RECOMMENDED ACTION Place Ordinance on second reading and adopt. DISCUSSION The City Council conducted the first reading of the Ordinance on November 16, 2021. As part of the first reading of the Ordinance, the majority members of the City Council discussed, articulated, and directed staff to make conforming revisions to the Ordinance reflecting the following refinements for the second reading of the Ordinance: Omit new priorities that do not directly relate to the production of new affordable housing units. Reduce to 5% inclusionary for for-sale units. Include a provision to vest entitled projects and make the necessary conforming changes to the Ordinance, and include a vested project list as an exhibit to the Ordinance. Require and phase in the use of a local skilled and trained workforce only for new projects proposing 20 or more residential lots or units exercising the in-lieu fee option to satisfy the inclusionary requirements of the Ordinance, and clarify that the provision is not applicable to projects receiving funding from the inclusionary housing fund. The implementation of this provision shall be phased as follows: 11/17/2021 – 12/31/2025 $15 – No requirements $10 – 30% STW + 2 trades & 20% local hire $ 5 – 60% STW + 3 trades & 20% local hire 1/1/2026 thereafter $15 – 30% STW & 35% local hire $10 – 60% STW & 35% local hire $ 5 – 90% STW & 35% local hire Second Reading of Zoning Ordinance Amendment No. 2021-03 February 15, 2022 Page 2 2 3 3 1 Require an affirmative vote by 5 members of the City Council in order to modify the in-lieu fee structure and the local skilled and train workforce provision. Incorporate a local density bonus provision for for-sale units only. For ease of review, a redline version of the adopted Ordinance presented at the first reading on November 16, 2021 is attached (Exhibit 1) reflecting the necessary changes and conforming modifications. The clean version of this Ordinance is attached as Exhibit 2. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. It is recommended that the City Council finds and determines that this Ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a direct or reasonably foreseeable indirect physical change in the environment, as there is no possibility it will have a significant effect on the environment and it is not a "project", as defined in Section 15378 of the CEQA Guidelines. Furthermore, even if the proposed Ordinance is considered a project, it falls within the "common sense" CEQA exemption set forth in CEQA Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." Adoption of this Ordinance will not have a significant effect on the environment because the proposed changes will only modernize, update, and clarify existing affordable and inclusionary housing requirements responding to the current economic and housing trends in the City and will not cause a physical change in the environment. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBIT(S) 1. Redline of Ordinance adopting Zoning Ordinance Amendment No. 2021-03 without Exhibit 2. Ordinance adopting Zoning Ordinance Amendment No. 2021-03 and Exhibit A Submitted By: Minh Thai, Executive Director of Planning and Building Agency Approved By: Kristine Ridge, City Manager Ordinance No. NS-XXX Page 1 of 18 ORDINANCE NO. NS-________ ZONING ORDINANCE AMENDMENT NO. 2021-03 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA REPEALING AND REENACTING IN ITS ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE SANTA ANA MUNICIPAL CODE REGARDING THE HOUSING OPPORTUNITY ORDINANCE THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines, and declares as follows: A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No. NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I. – Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to implement the City’s Housing Element Goal of providing affordable housing within the City. B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881, which amended the Housing Opportunity Ordinance in various respects, including applicability, options to satisfy inclusionary requirements, and calculation of the in-lieu housing fee. These amendments were intended to make the inclusionary housing requirements more predictable for housing developers and to incentivize the production of more affordable housing. C. In response to impacts of the COVID-19 pandemic on the development and construction of housing in the City, including the reduction of housing starts, the City Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS- 2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and expand the eligible uses of in-lieu fees collected by the City. D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity Ordinance and recommended certain changes. The Ad Hoc Committee’s recommendations were presented and discussed at the City Council Meeting on July 6, 2021. E. On July 26, 2021, the City Council conducted a work-study session to further evaluate the Committee’s recommendations and to receive input from key stakeholders and members of the public. The City Council provided direction to staff to prepare amendments to the Housing Opportunity Ordinance concerning the applicability Ordinance No. NS-XXX Page 2 of 18 and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units, and options for satisfaction of inclusionary requirements. F. On September 7, 2021, the City Council further considered this matter and provided additional direction to staff regarding proposed amendments to the Housing Opportunity Ordinance. G. At the City Council meeting of October 5, 2021, staff received direction to initiate the adoption hearing in order for the City Council to consider the changes recommended by the Housing Ad Hoc Committee. H. On October 25, 2021, the Planning Commission held a duly noticed public hearing on the proposed amendments and considered the staff report, recommendations by staff, and public testimony concerning the proposed Ordinance. The Planning Commission recommended that the City Council adopt the proposed Ordinance. I. The Request for City Council Action for this Ordinance dated November 16 and December 7, 2021 and duly signed by the Executive Director of the Planning and Building Agency shall, by this reference, be incorporated herein, and together with this ordinance, any amendments or supplements, and oral testimony, constitute the necessary findings for this ordinance. Section 2. The City Council finds and determines that this Ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a direct or reasonably foreseeable indirect physical change in the environment, as there is no possibility it will have a significant effect on the environment and it is not a "project", as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed Ordinance falls within the "common sense" CEQA exemption set forth in CEQA Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." Adoption of this Ordinance will not have a significant effect on the environment because the proposed changes will only modernize, update, and clarify existing affordable and inclusionary housing requirements responding to the current economic and housing trends in the City and will not cause a physical change in the environment. Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is hereby repealed in its entirety. Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is hereby reenacted and amended to read in its entirety as follows: ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION ORDINANCE Ordinance No. NS-XXX Page 3 of 18 Sec. 41-1900. Purpose. This article establishes standards and procedures to encourage the development of housing that is affordable to a range of households with varying income levels. The purpose of this article is to encourage the development and availability of affordable housing by requiring the inclusion of affordable housing units within new developments when the number of units exceed the densities permitted under the general plan, zoning classification, or the conversion of rental units to condominium ownership. Sec. 41-1901. Definitions. As used in this article, the following terms shall have the following meanings: Adjusted for household size appropriate for the unit means a household of one person in the case of a studio unit, two (2) persons in the case of a one-bedroom unit, three (3) persons in the case of a two-bedroom unit, four (4) persons in the case of a three- bedroom unit, and five (5) persons in the case of a four-bedroom unit. Administrative procedures means those regulations promulgated by the executive director pursuant to section 41-1910 of this article. Affordable housing cost means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows: Extremely low-income households. Thirty (30) percent of the income of a household earning thirty (30) percent of the Orange County median income adjusted for family size appropriate for the unit. Very low-income households. Thirty (30) percent of the income of a household earning fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low-income households. Thirty (30) percent of the income of a household earning eighty (80) percent of the Orange County median income for family size appropriate for the unit. Moderate-income households. Thirty (30) percent of the income of a household earning one hundred twenty (120) percent of the Orange County median income adjusted for family size appropriate for the unit. The qualifying limits for extremely low-income, very low-income, low-income and moderate-income households are established and amended annually pursuant to Section 8 of the United States Housing Act of 1937. The limits are published by the Secretary of Housing and Urban Development. Base Density means the maximum number of dwelling units allowed per acre of land within each land use category designated in the General Plan. Ordinance No. NS-XXX Page 4 of 18 Developer means any association, corporation, firm, joint venture, partnership, person, or any entity or combination of entities, which seeks city approval for all or part of a residential project. Development agreement means an agreement approved by the city council between a property owner and the city pursuant to Government Code section 65864, et seq. Executive director means the executive director of community development for the city. General plan means the adopted general plan for the City of Santa Ana. Inclusionary housing agreement means a legally binding agreement between the developer and the city, in a form and substance satisfactory to the executive director and the city attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied, whether through the provision of inclusionary units or through an approved alternative method. Inclusionary housing fund means the fund created by the city in which all fees collected in compliance with this article shall be deposited. Inclusionary housing plan means the plan submitted by the developer, in a form specified by the executive director, detailing how the provisions of this article will be implemented for the proposed residential project. Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely low, very low, low, or moderate-income households, at an affordable housing cost, in compliance with this article. Low-income units, very low-income units, and extremely low-income units means inclusionary units restricted to occupancy by low, very low, and extremely low-income households, respectively, at an affordable housing cost. Market rate units means dwelling units in a residential project that are not inclusionary units. Moderate-income units means inclusionary units restricted to occupancy by moderate-income households at an affordable housing cost. Regulatory agreement means an agreement entered into between the City of Santa Ana or the Santa Ana Community Development Agency and a developer by which the developer covenants to keep certain housing units at an affordable housing cost for a specified period of time. Rehabilitated units/rehabilitation means the improvement of a unit in substandard condition to a decent, safe and sanitary level. Units are in substandard condition when, while they may be structurally sound, they do not provide safe and adequate shelter, and in their present condition endanger the health, safety or well-being of the occupants. Residential project/project means any of the following: A subdivision resulting in the creation of five (5) or more residential lots or residential condominium units; or Ordinance No. NS-XXX Page 5 of 18 The new construction of a project consisting of five (5) or more multi-family units; or The new construction of five (5) or more separate houses or dwelling units; or The conversion of five (5) or more existing residential rental units to condominium ownership. Target area means that area designated by the city from time to time, on an as-needed basis, as a priority area for rehabilitation due to health and safety concerns. Total housing costs the total monthly or annual recurring expenses required of a household to obtain shelter. For a rental unit, total housing costs shall include the monthly rent payment and utilities paid by the tenant (excluding telephone and television). For an ownership unit, total housing costs shall include the mortgage payment (principal and interest), insurance, homeowners' association dues (if applicable), private mortgage insurance (if applicable), taxes, utilities, an allowance for maintenance and any other related assessments. Sec. 41-1902. Applicability and inclusionary unit requirements. (a) Applicability. The requirements of this article shall apply to any new project comprised of five (5) or more residential lots or residential units which has not been issued a building permit or paid the in-lieu fee as of November 17, 2021, including new construction and condominium conversions, which meets one or all of the following applicability thresholds: (1) A change in use to allow for residential or that exceeds the general plan or zoning prescribed densities or percentage of residential development of the subject property at the time of application. (2) Implementation of the permitted residential density or percentage of residential development allowed as a result of city initiated zone changes or city initiated general plan amendments after November 28, 2011. (3) Increase of the permitted percentage of residential development allowed for a mixed-use development above the percentage permitted under the zoning classification at the time of application. (4) Development of new residential uses or increase of the permitted residential density or percentage of residential development within an overlay zone approved pursuant to Division 28 of Article I of this Chapter. (5) Conversion of rental units to condominium ownership. (b) Applications. The inclusionary requirements shall only apply to the incremental units beyond that which is allowed as prescribed in Subsection (a) above. Ordinance No. NS-XXX Page 6 of 18 (c) Units for sale. If the new residential project consists of units for sale, then a minimum of ten five (510) percent of the total number of units in the project shall be sold to moderate-income households. (d) Rental units. If the new residential project consists of rental units, the inclusionary units shall be constructed as follows: (1) A minimum of fifteen (15) percent of the units shall be rented to low-income households, or (2) A minimum of ten (10) percent shall be rented to very low-income households, or (3) A minimum of five (5) percent shall be rented to extremely low-income households, or (4) A minimum of ten (10) percent shall be available at an affordable housing cost of which five (5) percent rented to low-income households, three (3) percent rented to very low-income households, and two (2) percent rented to extremely low-income households. (e) Rounding of quantities in calculations. In calculating the required number of inclusionary units, fractional units shall be rounded-up to the next whole unit. The developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional units, which shall be calculated based on the number of habitable square feet applicable in each case. (f) Displacement of existing inclusionary units. Notwithstanding any other provision of this article, any residential project subject to this article that results in the displacement of extremely low, very low and/or low-income household(s) shall be required to provide on- site inclusionary units as required by this article. (g) Compliance with article. All inclusionary units required by this article shall be sold or rented in compliance with this article. Sec. 41-1903. Exempt projects. The following are exempt from the requirements of this article: (a) Development agreements. A residential project that is the subject of a development agreement under applicable provisions of the California Government Code that expressly provides for an exclusion to this article, provides for a different amount of inclusionary units, or provides for a different specified method for determining the in-lieu fee provisions of this ordinance, such as the timing of payment or the point in time for determining the applicable in-lieu fee amount, to satisfy the inclusionary units from that specified by this article. Ordinance No. NS-XXX Page 7 of 18 (b) Project with regulatory agreement. A residential project for which a regulatory agreement has been approved, provided that the regulatory agreement is effective at the time the residential project would otherwise be required to comply with the requirements of this article, and there is no uncured breach of the regulatory agreement before issuance of a certificate of occupancy for the project. This may include a residential project that has obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such projects cannot be used to satisfy the inclusionary requirement for another project. (c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41, Article XVI.II - Adaptive Reuse. (d) Development Projects Approved Under the Provisions of Ordinance No. NS-2994 Adopted on September 1, 2020. A development project that has received entitlement approvals by city council action prior to November 16, 2021 to construct new residential units is hereby determined to have vested the right to carry out the completion and construction of the project under the regulations and provisions of Ordinance No. NS- 2994. The vested regulations and provisions in accordance with this section shall terminate if any or all of the entitlement approvals become invalid for any reasons or have expired under the various applicable time limits established in the Santa Ana Municipal Code. A list of these projects and the vested right(s) under Ordinance No. NS-2994 are attached hereto as Exhibit A and is incorporated herein by reference. Sec. 41-1904. Options to satisfy inclusionary requirements. (a) On-site units. The primary means of complying with the inclusionary requirements of this article shall be the provision of on-site inclusionary units in accordance with section 41-1902 above. A developer may only satisfy the requirements of this article by means of an alternative to on-site inclusionary units in accordance with the requirements and procedures of this section. (b) Off-site units. (1) New units. The developer may satisfy the inclusionary unit requirements for the project, in whole or in part by constructing the required new inclusionary housing at a different location within the city borders at the ratio of one square foot of habitable inclusionary unit space for each required habitable square foot. While the total habitable square footage area of the required new inclusionary units must be the same as the sum- total of the number of habitable square feet for the project as directed by this ordinance, the number of units and bedrooms associated with the off-site units may be approved by the review authority of the city, consistent with the type of affordable housing needed at the time of project review. (2) Rehabilitated units outside a designated target area. The developer may satisfy the inclusionary unit requirements for the project, in whole or in part by substantially rehabilitating existing housing units elsewhere within the borders of the city Ordinance No. NS-XXX Page 8 of 18 at a rate of one and one-half (1½) habitable square feet per each required habitable square foot of inclusionary units. (3) Rehabilitated units within a designated target area. Upon application, the developer may satisfy the inclusionary unit requirements for the project, in whole or in part by substantially rehabilitating existing housing units elsewhere within the borders of the city at a rate of one habitable square foot per each required habitable square foot of affordable inclusionary units. (c) In-lieu fee. (1) Five (5) or more units. For a residential project comprised of five (5) or more residential lots or residential units, the developer may elect to satisfy the inclusionary unit requirements for the project, in whole or in part, by payment of a fee in-lieu of constructing some or all of the required units. The total amount of the fee allowed by this section shall be calculated using the In-Lieu Fee Schedule in section 41-1904(c)(1)(i) multiplied by the sum total of the number of habitable square feet within the entire project, as measured from the exterior walls of the residential units. This calculation does not include exterior hallways, common areas, landscape, open space or exterior stairways. (i) In-Lieu Fee Schedule Units/Lots Fee Per Square Foot of Habitable Area 5 – 9 $6.00 10 – 14 $9.00 15 – 19 $12.00 20 or more $15.00 (ii) Local Skilled and Trained Workforce Incentive. The use of a local skilled and trained workforce shall be phased in over time and shall only apply to a development project proposing twenty (20) or more lots or units opting to exercise the in- lieu fee payment optionThe in-lieu fee. The implementation of this subsection shall be phased as follows: (A) Between November 16, 2021 and December 31, 2025, a project proposing twenty (20) or more lots or units exercising the option to pay the $15 per square foot in-lieu fee amount shall not be required to utilize a local skilled and trained workforce for completing the construction of the project. for fifteen (15) or more units However, Tthis fee shall be reduced if the developer voluntarily provides the City with an executed enforceable commitment to use a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601 to complete the construction of the project as specified in the table below as follows: Use of Skilled and Trained Workforce Fee Per Square Foot of Habitable Area Ordinance No. NS-XXX Page 9 of 18 30% of workforce utilizing 2 or more construction trades $10.00 60% of workforce utilizing 3 or more construction trades $5.00 A minimum of 2035% of the above work-hours shall be performed in accordance with local hire policies approved by the City Council. (B) Effective January 1, 2026 and thereafter, a project proposing twenty (20) or more lots or units exercising the option to pay the $15 per square foot in- lieu fee amount shall be required to provide the City with an executed enforceable commitment that 30 percent of the workforce utilized to complete the construction of the project be derived from a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601; and that a minimum of 35 percent of the required skilled and trained workforce total work-hours shall be performed in accordance with local hire policies approved by the City Council. This fee shall be reduced when the developer commits to a higher utilization level as specified in the table below: Use of Skilled and Trained Workforce Fee Per Square Foot of Habitable Area 60% of workforce $10.00 90% of workforce $5.00 A minimum of 35% of the above work-hours shall be performed in accordance with local hire policies approved by the City Council. (2) Timing of payment. The total fee amount for the entirety of a project is calculated, determined, and set at the time of issuance of the first building permit for the project. All in-lieu fees allowed by this section shall be paid no later than prior to issuance of the first occupancy approval for any construction which adds net residential units. If the city approves a phased project, a proportional share of the required fee shall be paid within each phase of the residential project. The in-lieu fees collected by the city are city funds over which the city has complete and absolute discretion. (3) Inclusionary housing fund. Fees collected in compliance with this section shall be deposited in the inclusionary housing fund. Ordinance No. NS-XXX Page 10 of 18 (4) The provisions of Section 41-1904(c)(1) may only be modified by the affirmative vote of at least five (5) members of the City Council. Sec. 41-1904.1. Inclusionary housing development incentives for production of units. (a) In order to make the production of new inclusionary units on-site or off-site or off- site rehabilitated units, certain incentives, standards and concessions shall be allowed and prescribed as set forth herein below. Such concessions shall not be available to those developers that choose to pay an in lieu fee rather than build the units. The developer may opt to take advantage of up to two (2) concessions among the following possible concessions: (1) Parking concession. One on-site parking space for each zero to one bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit; two and one-half (2½) parking spaces for each four (4) or more bedroom unit. (2) Concession on one of the following Zoning Code site development standards: (i) Setback reduction of up to twenty-five (25) percent reduction on subject property; (ii) Height increase of up to twenty (20) additional feet. (b) A developer of a for sale residential project proposing to provide on-site moderate income units and a surrounding community benefit may opt to take advantage of up to three (3) of the above concessions. The surrounding community benefit will include but not be limited to park improvements, urban community gardens, developer-funded down payment assistance, or subsidy of services, activities or programs. (1) Local Density Bonus. For each 1 percent increase above 5 percent in the percentage of for-sale units affordable to moderate income households, the base density shall be increased by 1.5 percent up to a maximum of 35 percent. Sec. 41-1905. Housing plan and housing agreement. (a) Submittal and execution. The developer shall comply with the following requirements: (1) Inclusionary housing plan. The developer shall submit an inclusionary housing plan in a form specified by the executive director, detailing how the provisions of this article will be implemented for the proposed residential project. The inclusionary housing plan and its supportive documents, plans, and details shall be submitted at the same time as the site plan and application materials for the original project. All inclusionary housing plans shall be subject to the approval of the executive director and subject to appeal processes and procedures set forth in the Santa Ana Municipal Code. Ordinance No. NS-XXX Page 11 of 18 2) Inclusionary housing agreement. The developer shall execute and cause to be recorded an inclusionary housing agreement. The inclusionary housing agreement shall be a legally binding agreement between the developer and the city, executed by the city manager, or his or her designee, and in a form and substance satisfactory to the executive director and the city attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied, whether through the provision of inclusionary units or through an approved alternative method. (b) Discretionary approvals. No discretionary approval shall be issued for a residential project subject to this article until the developer has submitted an inclusionary housing plan. (c) Issuance of building permit. No building permit shall be issued for a residential project subject to this article unless the executive director has approved the inclusionary housing plan, and any required inclusionary housing agreement has been recorded. (d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued for a residential project subject to this article unless the approved inclusionary housing plan has been fully implemented. Sec. 41-1906. Standards. (a) Location within project, relationship to non-inclusionary units. All inclusionary units shall be: (1) Reasonably dispersed throughout the residential project; (2) Proportional, in number of bedrooms, gross floor area of habitable space, and location, to the market rate units; (3) Comparable to the market rate units included in the residential project in terms of design, materials, finished quality, and appearance; and (4) Permitted the same access to project amenities and recreational facilities, as are market rate units. (b) Timing of construction. All inclusionary units in a residential project shall be constructed concurrent with, or before the construction of the market rate units. If the city approves a phased project, a proportional share of the required inclusionary units shall be provided within each phase of the residential project. (c) Location outside the proposed original project. For projects where the developer proposes to either produce new inclusionary units or rehabilitate existing off-site units to meet the inclusionary affordable housing requirements of this ordinance, the off-site project(s) containing the required inclusionary units shall be subject to the following requirements: Ordinance No. NS-XXX Page 12 of 18 (1) The sum-total area (in habitable square feet) of all the newly constructed off-site inclusionary units shall be the same number of habitable square feet of inclusionary area as required by this ordinance. For the purpose of the calculation of the number of square feet of required inclusionary housing, the total gross habitable square feet of the housing units of the original market rate project shall be used, as measured from exterior walls to exterior walls of the market units provided as the base for calculation. The common areas, exterior hallways, stairways, patios, and balconies shall not be calculated in determining the number of required square feet of inclusionary housing production. All new or rehabilitated units must meet all current zoning and general plan standards. (2) While the total number of square feet of inclusionary housing requirement is calculated based on the requirements of this ordinance, the number of units, bedrooms and other amenities on the proposed off-site inclusionary housing location shall be approved by the review authority commensurate with the size and type of units most in demand at the time of submittal of the application. (3) Any off-site affordable inclusionary housing project shall be substantially comparable to the market rate units included in the residential project in terms of quality of design, materials and finishes. (4) If tenants are displaced due to rehabilitation of housing to meet the inclusionary unit requirement, the developer shall be responsible for relocation costs as required by state law. (5) No city, housing authority, or public funds, subsidies, or participation of any kind shall be expended on the production or building of any inclusionary housing projects associated with meeting the inclusionary unit requirement. (d) Timing of construction. All inclusionary units in a residential project or proposed off-site new inclusionary units or rehabilitated units shall be constructed concurrent with, or before the construction of the market rate units. If the city approves a phased project, a proportional share of the required inclusionary units shall be provided within each phase of the residential project. (e) Units for sale. (1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to the target income level group at the applicable affordable housing cost for a minimum of fifty-five (55) years. (2) Certification of purchasers. The developer and all subsequent owners of an inclusionary unit offered for sale shall certify, on a form provided by the city, the income of the purchaser and that such owners will live in such inclusionary unit as their primary residence. Ordinance No. NS-XXX Page 13 of 18 (3) Resale price control. In order to maintain the availability of inclusionary units required by this article, the resale price of an owner occupied inclusionary unit shall be limited to the lesser of the fair market value of the unit as established by a licensed real estate agent based upon three (3) comparable properties or the restricted resale price. For these purposes, the restricted resale price shall be the applicable affordable housing cost. (4) Inheritance of inclusionary units. Upon the death of an owner of an owner- occupied inclusionary unit, title in the property may transfer to the surviving joint tenant or heir (in the case of the death of a sole owner or all owners of the household). (5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of the resale price controls required by this section, the buyer and the seller shall be jointly and severally liable to the city for the amount in excess of the affordable housing cost at the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and seller to cure any violation of the resale price controls within one hundred eighty (180) days. (f) Rental units. (1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain restricted to the target income level group at the applicable affordable housing cost for fifty-five (55) years. (2) Certification of renters. The owner of any rental inclusionary unit shall certify, on a form provided by the city, the income of all members of the household above the age of eighteen (18) at the time of the initial rental and annually thereafter. (3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this article shall be required to forfeit to the city all money so obtained. Recovered funds shall be deposited into the inclusionary housing fund. (g) Execution and recording of documents. The executive director may require the execution and recording of whatever documents are required to ensure enforcement of this section; including, but not limited to, promissory notes, deeds of trust, resale restrictions, rights of first refusal, options to purchase, and/or other documents, which shall be recorded against all inclusionary units. (h) General prohibitions. (1) No person shall sell or rent an inclusionary unit at a price or rent in excess of the maximum amount allowed by any restriction placed on the unit in accordance with this article. Ordinance No. NS-XXX Page 14 of 18 (2) No person shall sell or rent an inclusionary unit to a person or persons that do not meet the income restrictions placed on the unit in accordance with this article. (3) No person shall provide false or materially incomplete information to the city or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which that person is not eligible. (i) Principal residency requirement. 1. The owner or lessee of an inclusionary unit shall reside in the unit for not less than ten (10) out of every twelve (12) months. 2. No owner or lessee of an inclusionary unit shall lease or sublease, as applicable, an inclusionary unit without the prior permission of the executive director. Sec. 41-1907. Reserved. Sec. 41-1908. Enforcement. (a) Violation. Any violation of this article constitutes a misdemeanor. (b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this article shall be required to forfeit any money in excess of the affordable housing cost at such time. Any individual who rents an inclusionary unit in violation of this article shall be required to forfeit all money so obtained. Recovered funds shall be deposited into the inclusionary housing fund. (c) Legal actions. The city may institute any appropriate legal actions or proceedings necessary to ensure compliance with this article, including actions: (1) To disapprove, revoke, or suspend any permit, including a building permit, certificate of occupancy, or discretionary approval; and (2) For injunctive relief or damages. (d) Recovery of costs. In any action to enforce this article, or an inclusionary housing agreement recorded hereunder, the city shall be entitled to recover its reasonable attorney's fees and costs. Sec. 41-1909. Inclusionary housing fund. (a) Inclusionary housing fund. There is hereby established a separate fund of the city, to be known as the inclusionary housing fund. All monies collected pursuant to this article shall be deposited in the inclusionary housing fund. Additional monies from other sources may be deposited in the inclusionary housing fund. The monies deposited in the inclusionary housing fund shall be subject to the following conditions: (1) Monies deposited into the inclusionary housing fund must be used to increase and improve the supply of housing affordable to moderate, low, very low, and extremely low income households in the city as specified in the city's affordable housing Ordinance No. NS-XXX Page 15 of 18 funds policies and procedures. A priority will be on the creation of affordable housing opportunities or units from the existing market rate housing stock rather than construction of new affordable housing units and on the creation of new affordable housing opportunities for large families currently living in the City. This includes, but is not limited to, the purchase and rehabilitation of units for sale. Monies may also be used to pay for one-time programs for code enforcement, quality of life and general health and safety activities. Monies may also be used to cover reasonable administrative or related expenses associated with the administration of this article. (2) The fund shall be administered by the executive director, or his or her designee, who may develop procedures in the city's affordable housing funds policies and procedures to implement the purposes of the inclusionary housing fund consistent with the requirements of this article and any adopted budget of the city. (3) Monies deposited in accordance with this section shall be used in accordance with the affordable housing funds policies and procedures, housing element, consolidated plan, or subsequent plan adopted by the city council to construct, rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of market conversion, or to assist other government entities, private organizations, or individuals to do so. Permissible uses include, but are not limited to, assistance to housing development corporations, equity participation loans, grants, pre-home ownership co- investment, pre-development loan funds, participation leases, or other public-private partnership arrangements. The inclusionary housing fund may be used for the benefit of both rental and owner-occupied housing. (4) A developer receiving funding from the inclusionary housing fund shall implement a local preference in their resident selection criteria and marketing policies meeting guidelines established by the executive director. (5) A developer receiving funding from the inclusionary housing fund, as well as its contractors and subcontractors at every tier performing work for the new housing units is encouraged and should to negotiate in good faith to provide the City with an enforceable commitment that a minimum 30% of the labor utilizing 2 or more construction trades be performed by a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601 to complete the construction of the project. and If so provided, shall also include a minimum of 35% of such labor all work-hours for the project shall be performed in accordance with local hire policies approved by the City Council. Sec. 41-1910. Administrative. (a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in- lieu fee shall be subject to city council review and consideration as needed. Ordinance No. NS-XXX Page 16 of 18 (b) Administration fees. The council may by resolution establish reasonable fees and deposits for the administration of this article including an annual monitoring fee and an inclusionary housing plan submittal fee. (c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city will monitor the project to ensure that the income verifications are correct and in compliance with the inclusionary housing administrative procedures. For ownership units, the city shall monitor to verify that owner-occupancy requirements are maintained. Developer/property owners are required to cooperate with the city in promptly providing all information requested by the city in monitoring compliance with program requirements. The city will conduct periodic random quality control audits of inclusionary units to ensure compliance with rules and requirements. Such audits may include verification of continued occupancy in inclusionary units by eligible tenants, compliance with the inclusionary housing plan and agreement, and physical inspections of the residential project. (e) Administrative procedures. The city manager is hereby authorized and directed to promulgate administrative procedures for the implementation of this article. Secs. 41-1911—41-1999. Reserved. Section 5. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 6. This Ordinance shall become effective thirty (30) days after its adoption. Ordinance No. NS-XXX Page 17 of 18 Section 7. The Clerk of the Council shall certify the adoption of this ordinance and shall cause the same to be published as required by law. ADOPTED this _______ day of ___________, 2021. _________________________ Vicente Sarmiento Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By:_________________________ John M. Funk Sr. Assistant City Attorney AYES: Councilmembers ______________________________________ NOES: Councilmembers _______________________________________ ABSTAIN: Councilmembers _______________________________________ NOT PRESENT: Councilmembers _______________________________________ Ordinance No. NS-XXX Page 18 of 18 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached Ordinance No. NS-____________ to be the original ordinance adopted by the City Council of the City of Santa Ana on _______________, and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: ________________ ____________________________________ Clerk of the Council City of Santa Ana Ordinance No. NS-XXX Page 1 of 17 ORDINANCE NO. NS-________ ZONING ORDINANCE AMENDMENT NO. 2021-03 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA REPEALING AND REENACTING IN ITS ENTIRETY ARTICLE XVIII.I. OF CHAPTER 41 OF THE SANTA ANA MUNICIPAL CODE REGARDING THE HOUSING OPPORTUNITY ORDINANCE THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines, and declares as follows: A. On November 28, 2011, the Santa Ana City Council adopted Ordinance No. NS-2825, known as the Housing Opportunity Ordinance and appearing as “Article XVIII.I. – Housing Opportunity Ordinance” (“Housing Opportunity Ordinance”) of Chapter 41 of the Santa Ana Municipal Code. The Housing Opportunity Ordinance was adopted to implement the City’s Housing Element Goal of providing affordable housing within the City. B. On September 1, 2015, the City Council adopted Ordinance No. NS-2881, which amended the Housing Opportunity Ordinance in various respects, including applicability, options to satisfy inclusionary requirements, and calculation of the in -lieu housing fee. These amendments were intended to make the inclusionary housing requirements more predictable for housing developers and to incentivize the production of more affordable housing. C. In response to impacts of the COVID-19 pandemic on the development and construction of housing in the City, including the reduction of housing starts, the City Council adopted Ordinance No. NS-2994 on September 1, 2020. Ordinance No. NS- 2994 further amended the Housing Opportunity Ordinance to lower the in-lieu housing fee for all projects from $15 to $5 per square foot, adjust the trigger of the ordinance, and expand the eligible uses of in-lieu fees collected by the City. D. On March 2, 2021, at the direction of the City Council, an Ad Hoc Committee for Housing was formed. The Ad Hoc Committee reviewed the Housing Opportunity Ordinance and recommended certain changes. The Ad Hoc Committee’s recommendations were presented and discussed at the City Council Meeting on July 6, 2021. E. On July 26, 2021, the City Council conducted a work-study session to further evaluate the Committee’s recommendations and to receive input from key stakeholders and members of the public. The City Council provided direction to staff to prepare amendments to the Housing Opportunity Ordinance concerning the applicability Ordinance No. NS-XXX Page 2 of 17 and triggers for the ordinance, adjustments to the in-lieu fee calculation, set-aside units, and options for satisfaction of inclusionary requirements. F. On September 7, 2021, the City Council further considered this matter and provided additional direction to staff regarding proposed amendments to the Housing Opportunity Ordinance. G. At the City Council meeting of October 5, 2021, staff received direction to initiate the adoption hearing in order for the City Council to consider the changes recommended by the Housing Ad Hoc Committee. H. On October 25, 2021, the Planning Commission held a duly noticed public hearing on the proposed amendments and considered the staff report, recommendations by staff, and public testimony concerning the proposed Ordinance. The Planning Commission recommended that the City Council adopt the proposed Ordinance. I. The Request for City Council Action for this Ordinance dated November 16 and December 7, 2021 and duly signed by the Executive Director of the Planning and Building Agency shall, by this reference, be incorporated herein, and together with this ordinance, any amendments or supplements, and oral testimony, constitute the necessary findings for this ordinance. Section 2. The City Council finds and determines that this Ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a direct or reasonably foreseeable indirect physical change in the environment, as there is no possibility it will have a significant effect on the environment and it is not a "project", as defined in Section 15378 of the CEQA Guidelines. Furthermore, the proposed Ordinance falls within the "common sense" CEQA exemption set forth in CEQA Guidelines Section 15061(b)(3), excluding projects where "it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." Adoption of this Ordinance will not have a significant effect on the environment because the proposed changes will only modernize, update, and clarify existing affordable and inclusionary housing requirements responding to the current economic and housing trends in the City and will not cause a physical change in the environment. Section 3. Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code is hereby repealed in its entirety. Section 4. Article XVIII.I. of Chapter 41 of the Santa Ana Municipal Code is hereby reenacted and amended to read in its entirety as follows: ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY AND CREATION ORDINANCE Ordinance No. NS-XXX Page 3 of 17 Sec. 41-1900. Purpose. This article establishes standards and procedures to encourage the development of housing that is affordable to a range of households with varying income levels. The purpose of this article is to encourage the development and availability of affordable housing by requiring the inclusion of affordable housing units within new developments when the number of units exceed the densities permitted under the general plan, zoning classification, or the conversion of rental units to condominium ownership. Sec. 41-1901. Definitions. As used in this article, the following terms shall have the following meanings: Adjusted for household size appropriate for the unit means a household of one person in the case of a studio unit, two (2) persons in the case of a one -bedroom unit, three (3) persons in the case of a two-bedroom unit, four (4) persons in the case of a three - bedroom unit, and five (5) persons in the case of a four-bedroom unit. Administrative procedures means those regulations promulgated by the executive director pursuant to section 41-1910 of this article. Affordable housing cost means the total housing costs paid by a qualifying household, which shall not exceed the fraction of gross income specified, as follows: Extremely low-income households. Thirty (30) percent of the income of a household earning thirty (30) percent of the Orange County median income adjusted for family size appropriate for the unit. Very low-income households. Thirty (30) percent of the income of a household earning fifty (50) percent of the Orange County median income adjusted for family size appropriate for the unit. Low-income households. Thirty (30) percent of the income of a household earning eighty (80) percent of the Orange County median income for family size appropriate for the unit. Moderate-income households. Thirty (30) percent of the income of a household earning one hundred twenty (120) percent of the Orange Cou nty median income adjusted for family size appropriate for the unit. The qualifying limits for extremely low-income, very low-income, low-income and moderate-income households are established and amended annually pursuant to Section 8 of the United States Housing Act of 1937. The limits are published by the Secretary of Housing and Urban Development. Base Density means the maximum number of dwelling units allowed per acre of land within each land use category designated in the General Plan. Developer means any association, corporation, firm, joint venture, partnership, person, or any entity or combination of entities, which seeks city approval for all or part of a residential project. Ordinance No. NS-XXX Page 4 of 17 Development agreement means an agreement approved by the city council between a property owner and the city pursuant to Government Code section 65864, et seq. Executive director means the executive director of community development for the city. General plan means the adopted general plan for the City of Santa Ana. Inclusionary housing agreement means a legally binding agreement between the developer and the city, in a form and substance satisfactory to the executive director and the city attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied, whether through the provision of inclusionary units or through an approved alternative method. Inclusionary housing fund means the fund created by the city in which all fees collected in compliance with this article shall be deposited. Inclusionary housing plan means the plan submitted by the developer, in a form specified by the executive director, detailing how the provisions of this article will be implemented for the proposed residential project. Inclusionary unit means a dwelling unit that will be offered for sale or rent to extremely low, very low, low, or moderate-income households, at an affordable housing cost, in compliance with this article. Low-income units, very low-income units, and extremely low-income units means inclusionary units restricted to occupancy by low, very low, and extremely low-income households, respectively, at an affordable housing cost. Market rate units means dwelling units in a residential project that are not inclusionary units. Moderate-income units means inclusionary units restricted to occupancy by moderate-income households at an affordable housing cost. Regulatory agreement means an agreement entered into between the City of Santa Ana or the Santa Ana Community Development Agency and a developer by which the developer covenants to keep certain housing units at an affordable housing cost for a specified period of time. Rehabilitated units/rehabilitation means the improvement of a unit in substandard condition to a decent, safe and sanitary level. Units are in substandard condition when, while they may be structurally sound, they do not provide safe and adequate shelter, and in their present condition endanger the health, safety or well-being of the occupants. Residential project/project means any of the following: A subdivision resulting in the creation of five (5) or more residential lots or residential condominium units; or The new construction of a project consisting of five (5) or more multi -family units; or The new construction of five (5) or more separate houses or dwelling units; or Ordinance No. NS-XXX Page 5 of 17 The conversion of five (5) or more existing residential rental units to condominium ownership. Target area means that area designated by the city from time to time, on an as -needed basis, as a priority area for rehabilitation due to health and safety concerns. Total housing costs the total monthly or annual recurring expenses required of a household to obtain shelter. For a rental unit, total housing costs shall include the monthly rent payment and utilities paid by the tenant (excluding telephone and television). For an ownership unit, total housing costs shall include the mortgage payment (principal and interest), insurance, homeowners' association dues (if applicable), priva te mortgage insurance (if applicable), taxes, utilities, an allowance for maintenance and any other related assessments. Sec. 41-1902. Applicability and inclusionary unit requirements. (a) Applicability. The requirements of this article shall apply to any new project comprised of five (5) or more residential lots or residential units, including new construction and condominium conversions, which meets one or all of the following applicability thresholds: (1) A change in use to allow for residential or that exceeds the general plan or zoning prescribed densities or percentage of residential development of the subject property at the time of application. (2) Implementation of the permitted residential density or percentage of residential development allowed as a result of city initiated zone changes or city initiated general plan amendments after November 28, 2011. (3) Increase of the permitted percentage of residential development allowed for a mixed-use development above the percentage permitted under the zoning classification at the time of application. (4) Development of new residential uses or increase of the permitted residential density or percentage of residential development within an overlay zone approved pursuant to Division 28 of Article I of this Chapter. (5) Conversion of rental units to condominium ownership. (b) Applications. The inclusionary requirements shall only apply to the incremental units beyond that which is allowed as prescribed in Subsection (a) above. (c) Units for sale. If the new residential project consists of units for sale, then a minimum of five (5) percent of the total number of units in the project shall be sold to moderate-income households. (d) Rental units. If the new residential project consists of rental units, the inclusionary units shall be constructed as follows: Ordinance No. NS-XXX Page 6 of 17 (1) A minimum of fifteen (15) percent of the units shall be rented to low-income households, or (2) A minimum of ten (10) percent shall be rented to very low-income households, or (3) A minimum of five (5) percent shall be rented to extremely low-income households, or (4) A minimum of ten (10) percent shall be available at an affordable housing cost of which five (5) percent rented to low-income households, three (3) percent rented to very low-income households, and two (2) percent rented to extremely low-income households. (e) Rounding of quantities in calculations. In calculating the required number of inclusionary units, fractional units shall be rounded -up to the next whole unit. The developer may choose to pay an in-lieu fee set forth in section 41-1904(c) for the fractional units, which shall be calculated based on the number of habitable square feet applicable in each case. (f) Displacement of existing inclusionary units. Notwithstanding any other provision of this article, any residential project subject to this article that results in the displacement of extremely low, very low and/or low-income household(s) shall be required to provide on- site inclusionary units as required by this article. (g) Compliance with article. All inclusionary units required by this article shall be sold or rented in compliance with this article. Sec. 41-1903. Exempt projects. The following are exempt from the requirements of this article: (a) Development agreements. A residential project that is the subject of a development agreement under applicable provisions of the California Government Code that expressly provides for an exclusion to this article , provides for a different amount of inclusionary units, or provides for a different specified method for determining the in -lieu fee provisions of this ordinance, such as the timing of payment or the point in time for determining the applicable in-lieu fee amount, to satisfy the inclusionary units from that specified by this article. (b) Project with regulatory agreement. A residential project for which a regulatory agreement has been approved, provided that the regulatory agreement is effective at the time the residential project would otherwise be required to comply with the requireme nts of this article, and there is no uncured breach of the regulatory agreement before issuance of a certificate of occupancy for the project. This may include a residential project that has Ordinance No. NS-XXX Page 7 of 17 obtained a density bonus under article XVI.I of the Santa Ana Municipal Code. Such projects cannot be used to satisfy the inclusionary requirement for another project. (c) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41, Article XVI.II - Adaptive Reuse. (d) Development Projects Approved Under the Provisions of Ordinance No. NS-2994 Adopted on September 1, 2020. A development project that has received entitlement approvals by city council action prior to November 16, 2021 to construct new residential units is hereby determined to have vested the right to carry out the completion and construction of the project under the regulations and provisions of Ordinance No. NS- 2994. The vested regulations and provisions in accordance with this section shall terminate if any or all of the entitlement approvals become invalid for any reasons or have expired under the various applicable time limits established in the Santa Ana Municipal Code. A list of these projects and the vested right(s) under Ordinance No. NS-2994 are attached hereto as Exhibit A and is incorporated herein by reference. Sec. 41-1904. Options to satisfy inclusionary requirements. (a) On-site units. The primary means of complying with the inclusionary requirements of this article shall be the provision of on-site inclusionary units in accordance with section 41-1902 above. A developer may only satisfy the requirements of this article by means of an alternative to on-site inclusionary units in accordance with the requirements and procedures of this section. (b) Off-site units. (1) New units. The developer may satisfy the inclusionary unit requirements for the project, in whole or in part by constructing the required new inclusionary housing at a different location within the city borders at the ratio of one square foot of habitable inclusionary unit space for each required habitable square foot. While the total habitable square footage area of the required new inclusionary units must be the same as the sum - total of the number of habitable square feet for the project as directed by this ordinan ce, the number of units and bedrooms associated with the off -site units may be approved by the review authority of the city, consistent with the type of affordable housing needed at the time of project review. (2) Rehabilitated units outside a designated ta rget area. The developer may satisfy the inclusionary unit requirements for the project, in whole or in part by substantially rehabilitating existing housing units elsewhere within the borders of the city at a rate of one and one-half (1½) habitable square feet per each required habitable square foot of inclusionary units. (3) Rehabilitated units within a designated target area. Upon application, the developer may satisfy the inclusionary unit requirements fo r the project, in whole or in part by substantially rehabilitating existing housing units elsewhere within the borders of Ordinance No. NS-XXX Page 8 of 17 the city at a rate of one habitable square foot per each required habitable square foot of affordable inclusionary units. (c) In-lieu fee. (1) Five (5) or more units. For a residential project comprised of five (5) or more residential lots or residential units, the developer may elect to satisfy the inclusionary unit requirements for the project, in whole or in part, by payment of a fee in -lieu of constructing some or all of the required units. The total amount of the fee allowed by this section shall be calculated using the In-Lieu Fee Schedule in section 41-1904(c)(1)(i) multiplied by the sum total of the number of habitable square feet within the entire project, as m easured from the exterior walls of the residential units. This calculation does not include exterior hallways, common areas, landscape, open space or exterior stairways. (i) In-Lieu Fee Schedule Units/Lots Fee Per Square Foot of Habitable Area 5 – 9 $6.00 10 – 14 $9.00 15 – 19 $12.00 20 or more $15.00 (ii) Local Skilled and Trained Workforce. The use of a local skilled and trained workforce shall be phased in over time and shall only apply to a development project proposing twenty (20) or more lots or units opting to exercise the in-lieu fee payment option. The implementation of this subsection shall be phased as follows: (A) Between November 16, 2021 and December 31, 2025, a project proposing twenty (20) or more lots or units exercising the option to pay the $15 per square foot in-lieu fee amount shall not be required to utilize a local skilled and trained workforce for completing the construction of the project. However, this fee shall be reduced if the developer provides the City with an executed enforceable commitment to use a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601 to complete the construction of the project as specified in the table below: Use of Skilled and Trained Workforce Fee Per Square Foot of Habitable Area 30% of workforce utilizing 2 or more construction trades $10.00 60% of workforce utilizing 3 or more construction trades $5.00 Ordinance No. NS-XXX Page 9 of 17 A minimum of 20% of the above work-hours shall be performed in accordance with local hire policies approved by the City Council. (B) Effective January 1, 2026 and thereafter, a project proposing twenty (20) or more lots or units exercising the option to pay the $15 per square foot in- lieu fee amount shall be required to provide the City with an executed enforceable commitment that 30 percent of the workforce utilized to complete the construction of the project be derived from a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601; and that a minimum of 35 percent of the required skilled and trained workforce total work-hours shall be performed in accordance with local hire policies approved by the City Council. This fee shall be reduced when the developer commits to a higher utilization level as specified in the table below: Use of Skilled and Trained Workforce Fee Per Square Foot of Habitable Area 60% of workforce $10.00 90% of workforce $5.00 A minimum of 35% of the above work-hours shall be performed in accordance with local hire policies approved by the City Council. (2) Timing of payment. The total fee amount for the entirety of a project is calculated, determined, and set at the time of issuance of the first building permit for the project. All in-lieu fees allowed by this section shall be paid no later than prior to issuance of the first occupancy approval for any construction which adds net residential units. If the city approves a phased project, a proportional share of the required fee shall be paid within each phase of the residential project. The in-lieu fees collected by the city are city funds over which the city has complete and absolute discretion. (3) Inclusionary housing fund. Fees collected in compliance with this section shall be deposited in the inclusionary housing fund. (4) The provisions of Section 41-1904(c)(1) may only be modified by the affirmative vote of at least five (5) members of the City Council. Sec. 41-1904.1. Inclusionary housing development incentives for production of units. (a) In order to make the production of new inclusionary units on -site or off-site or off- site rehabilitated units, certain incentives, standards and concessions shall be allowed Ordinance No. NS-XXX Page 10 of 17 and prescribed as set forth herein below. Such concessions shall not be available to those developers that choose to pay an in lieu fee rather than build the units. The developer may opt to take advantage of up to two (2) concessions among the following possible concessions: (1) Parking concession. One on-site parking space for each zero to one bedroom unit; two (2) on-site parking spaces for each two (2) to three (3) bedroom unit; two and one-half (2½) parking spaces for each four (4) or more bedroom unit. (2) Concession on one of the following Zoning Code site development standards: (i) Setback reduction of up to twenty-five (25) percent reduction on subject property; (ii) Height increase of up to twenty (20) additional feet. (b) A developer of a for sale residential project proposing to provide on-site moderate income units and a surrounding community benefit may opt to take advantage of up to three (3) of the above concessions. The surrounding community benefit will include but not be limited to park improvements, urban community gardens, developer-funded down payment assistance, or subsidy of services, activities or programs. (1) Local Density Bonus. For each 1 percent increase above 5 percent in the percentage of for-sale units affordable to moderate income households, the base density shall be increased by 1.5 percent up to a maximum of 35 percent. Sec. 41-1905. Housing plan and housing agreement. (a) Submittal and execution. The developer shall comply with the following requirements: (1) Inclusionary housing plan. The developer shall submit an inclusionary housing plan in a form specified by the executive director, detailing how the provisions of this article will be implemented for the proposed residential project. The inclusionary housing plan and its supportive documents, plans, and details shall be submitted at the same time as the site plan and application materials for the original project. All inclusionary housing plans shall be subject to the approval of the executive director and subject to appeal processes and procedures set forth in the Santa Ana Municipal Code. 2) Inclusionary housing agreement. The developer shall execute and cause to be recorded an inclusionary housing agreement. The inclusionary housing agreement shall be a legally binding agreement between the developer and the city, executed by the city manager, or his or her designee, and in a form and substance satisfactory to the executive director and the city attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied, whether through the provision of inclusionary units or through an approved alternative method. (b) Discretionary approvals. No discretionary approval shall be issued for a residential project subject to this article until the developer has submitted an inclusionary housing plan. Ordinance No. NS-XXX Page 11 of 17 (c) Issuance of building permit. No building permit shall be issued for a residential project subject to this article unless the executive director has approved the inclusionary housing plan, and any required inclusionary housing agreement has been recorded. (d) Issuance of certificate of occupancy. A certificate of occupancy shall not be issued for a residential project subject to this article unless the approved inclusionary housing plan has been fully implemented. Sec. 41-1906. Standards. (a) Location within project, relationship to non-inclusionary units. All inclusionary units shall be: (1) Reasonably dispersed throughout the residential project; (2) Proportional, in number of bedrooms, gross floor area of habitable space, and location, to the market rate units; (3) Comparable to the market rate units included in the residential project in terms of design, materials, finished quality, and appearance; and (4) Permitted the same access to project amenities and recreational facilities, as are market rate units. (b) Timing of construction. All inclusionary units in a residential project shall be constructed concurrent with, or before the construction of the market rate units. If the city approves a phased project, a proportional share of the required inclusionary units shall be provided within each phase of the residential project. (c) Location outside the proposed original project. For projects where the developer proposes to either produce new inclusionary units or rehabilitate existing off -site units to meet the inclusionary affordable housing requirements of this ordinance, the off-site project(s) containing the required inclusionary units shall be subject to the following requirements: (1) The sum-total area (in habitable square feet) of all the newly constructed off-site inclusionary units shall be the same number of habitable square feet of inclusionary area as required by this ordinance. For the purpose of the calculation of the number of square feet of required inclusionary housing, the total gross habitable square feet of the housing units of the original market rate project shall be used, as measured from exterior walls to exterior walls of the market units provided as the base for calculation. The common areas, exterior hallways, stairways, patios, and balconies shall not be calculated in determining the number of required square feet of inclusionary housing production. All new or rehabilitated units must meet all current zoning and general plan standards. Ordinance No. NS-XXX Page 12 of 17 (2) While the total number of square feet of inclusionary housing requirement is calculated based on the requirements of this ordinance, the number of units, bedrooms and other amenities on the proposed off -site inclusionary housing location shall be approved by the review authority commensurate with the size and type of un its most in demand at the time of submittal of the application. (3) Any off-site affordable inclusionary housing project shall be substantially comparable to the market rate units included in the residential project in terms of quality of design, materials and finishes. (4) If tenants are displaced due to rehabilitation of housing to meet the inclusionary unit requirement, the developer shall be responsible for relocation costs as required by state law. (5) No city, housing authority, or public funds, subsidies, or participation of any kind shall be expended on the production or building of any inclusionary housing projects associated with meeting the inclusionary unit requirement. (d) Timing of construction. All inclusionary units in a residential project or proposed off-site new inclusionary units or rehabilitated units shall be constructed concurrent with, or before the construction of the market rate units. If the city approves a phased project, a proportional share of the required inclusionary units shall be provided within each phase of the residential project. (e) Units for sale. (1) Time limit for inclusionary restrictions. A unit for sale shall be restricted to the target income level group at the applicable affordable housing cost for a minimum of fifty-five (55) years. (2) Certification of purchasers. The developer and all subsequent owners of an inclusionary unit offered for sale shall certify, on a form provided by the city, the income of the purchaser and that such owners will live in such inclusionary unit as their primary residence. (3) Resale price control. In order to maintain the availability of inclusionary units required by this article, the resale price of an owner occupied inclusionary unit shall be limited to the lesser of the fair market value of the unit as established by a li censed real estate agent based upon three (3) comparable properties or the restricted resale price. For these purposes, the restricted resale price shall be the applicable affordable housing cost. (4) Inheritance of inclusionary units. Upon the death of an owner of an owner- occupied inclusionary unit, title in the property may transfer to the surviving joint tenant or heir (in the case of the death of a sole owner or all owners of the household). Ordinance No. NS-XXX Page 13 of 17 (5) Forfeiture. If an inclusionary unit for sale is sold for an amount in excess of the resale price controls required by this section, the buyer and the seller shall be jointly and severally liable to the city for the amount in excess of the affordabl e housing cost at the time of such sale of the inclusionary unit. Recovered funds shall be deposited into the inclusionary housing fund. Notwithstanding the foregoing, city may allow the buyer and seller to cure any violation of the resale price controls within one hundred eighty (180) days. (f) Rental units. (1) Time limit for inclusionary restrictions. A rental inclusionary unit shall remain restricted to the target income level group at the applicable affordable housing cost for fifty-five (55) years. (2) Certification of renters. The owner of any rental inclusionary unit shall certify, on a form provided by the city, the income of all members of the household above the age of eighteen (18) at the time of the initial rental and annually thereafter. (3) Forfeiture. Any lessor who leases an inclusionary unit in violation of this article shall be required to forfeit to the city all money so obtained. Recovered funds shall be deposited into the inclusionary housing fund. (g) Execution and recording of documents. The executive director may require the execution and recording of whatever documents are required to ensure enforcement of this section; including, but not limited to, promissory notes, deeds of trust, resale restrictions, rights of first refusal, options to purchase, and/or other documents, which shall be recorded against all inclusionary units. (h) General prohibitions. (1) No person shall sell or rent an inclusionary unit at a price or rent in excess of the maximum amount allowed by any restriction placed on the unit in accordance with this article. (2) No person shall sell or rent an inclusionary unit to a person or persons that do not meet the income restrictions placed on the unit in accordance with this article. (3) No person shall provide false or materially incomplete information to the city or to a seller or lessor of an inclusionary unit to obtain occupancy of housing for which that person is not eligible. (i) Principal residency requirement. 1. The owner or lessee of an inclusionary unit shall reside in the unit for not less than ten (10) out of every twelve (12) months. Ordinance No. NS-XXX Page 14 of 17 2. No owner or lessee of an inclusionary unit shall lease or sublease, as applicable, an inclusionary unit without the prior permission of the executive director. Sec. 41-1907. Reserved. Sec. 41-1908. Enforcement. (a) Violation. Any violation of this article constitutes a misdemeanor. (b) Forfeiture of funds. Any individual who sells an inclusionary unit in violation of this article shall be required to forfeit any money in excess of the affordable housing cost at such time. Any individual who rents an inclusionary unit in violation of this article shall be required to forfeit all money so obtained. Recovered funds shall be deposited into the inclusionary housing fund. (c) Legal actions. The city may institute any appropriate legal actions or proceedings necessary to ensure compliance with this article, including actions: (1) To disapprove, revoke, or suspend any permit, including a building permit, certificate of occupancy, or discretionary approval; and (2) For injunctive relief or damages. (d) Recovery of costs. In any action to enforce this article, or an inclusionary housing agreement recorded hereunder, the city shall be entitled to recover its reasonable attorney's fees and costs. Sec. 41-1909. Inclusionary housing fund. (a) Inclusionary housing fund. There is hereby established a separate fund of the city, to be known as the inclusionary housing fund. All monies collected pursuant to this article shall be deposited in the inclusionary housing fund. Additional monies from other sources may be deposited in the inclusionary housing fund. The monies deposited in the inclusionary housing fund shall be subject to the following conditions: (1) Monies deposited into the inclusionary housing fund must be used to increase and improve the supply of housing affo rdable to moderate, low, very low, and extremely low income households in the city as specified in the city's affordable housing funds policies and procedures. A priority will be on the creation of affordable housing opportunities or units from the existing market rate housing stock rather than construction of new affordable housing units and on the creation of new affordable housing opportunities for large families currently living in the City. This includes, but is not limited to, the purchase and rehabilitation of units for sale. Monies may also be used to pay for one-time programs for code enforcement, quality of life and general health and safety activities. Monies may also be used to cover reasonable administrative or related expenses associated with the administration of this article. (2) The fund shall be administered by the executive director, or his or her designee, who may develop procedures in the city's affordable housing funds policies and Ordinance No. NS-XXX Page 15 of 17 procedures to implement the purposes of the inclusionary housing fund consistent with the requirements of this article and any adopted budget of the city. (3) Monies deposited in accordance with this section shall be used in accordance with the affordable housing funds policies and procedures, housing element, consolidated plan, or subsequent plan adopted by the city council to construct, rehabilitate, or subsidize affordable housing or to recapture affordable housing at risk of market conversion, or to assist other government entities, private organizations, or individuals to do so. Permissible uses include, but are not limited to, assistance to housing development corporations, equity participation loans, grants, pre -home ownership co- investment, pre-development loan funds, participation leases, or other public-private partnership arrangements. The inclusionary housing fund may be used for the benefit of both rental and owner-occupied housing. (4) A developer receiving funding from the inclusionary housing fund shall implement a local preference in their resident selection criteria and marketing policies meeting guidelines established by the executive director. (5) A developer receiving funding from the inclusionary housing fund , as well as its contractors and subcontractors at every tier performing work for the new housing units is encouraged to negotiate in good faith to provide the City with an enforceable commitment that a minimum 30% of the labor utilizing 2 or more construction trades be performed by a “Skilled and Trained Workforce” as defined in Public Contract Code section 2601 to complete the construction of the project. If so provided, a minimum of 35% of such labor for the project shall be performed in accordance with local hire policies approved by the City Council. Sec. 41-1910. Administrative. (a) In-lieu fee calculation. The amount per square foot of the inclusionary housing in- lieu fee shall be subject to city council review and consideration as needed. (b) Administration fees. The council may by resolution establish reasonable fees and deposits for the administration of this article including an annual monitoring fee and an inclusionary housing plan submittal fee. (c) Monitoring/audits. At the time of initial occupancy, and annually thereafter, the city will monitor the project to ensure that the income verifications are correct and in compliance with the inclusionary housing administrative procedures. For ownership units, the city shall monitor to verify that owner-occupancy requirements are maintained. Developer/property owners are required to cooperate with the city in promptly providing all information requested by the city in monitoring compliance with program requirements. The city will conduct periodic random quality control audits of inclusionary units to ensure compliance with rules and requirements. Such audits may include verification of continued occupancy in inclusionary units by eligible tenants, compliance with the Ordinance No. NS-XXX Page 16 of 17 inclusionary housing plan and agreement, and physical inspections of the residential project. (e) Administrative procedures. The city manager is hereby authorized and directed to promulgate administrative procedures for the implementation of this article. Secs. 41-1911—41-1999. Reserved. Section 5. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 6. This Ordinance shall become effective thirty (30) days after its adoption. Section 7. The Clerk of the Council shall certify the adoption of this ordinance and shall cause the same to be published as required by law. ADOPTED this _______ day of ___________, 2021. _________________________ Vicente Sarmiento Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By:_________________________ John M. Funk Sr. Assistant City Attorney AYES: Councilmembers ______________________________________ NOES: Councilmembers _______________________________________ ABSTAIN: Councilmembers _______________________________________ NOT PRESENT: Councilmembers _______________________________________ Ordinance No. NS-XXX Page 17 of 17 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Daisy Gomez, Clerk of the Council, do hereby attest to and certify the attached Ordinance No. NS-____________ to be the original ordinance adopted by the City Council of the City of Santa Ana on _______________, and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: ________________ ____________________________________ Clerk of the Council City of Santa Ana 2021 List of Entitled Projects Vested Under the Regulations and Provisions of Ordinance No. NS-2994 The development projects listed in Table 1 have received entitlement approvals by Planning Commission and/or City Council action prior to November 16, 2021, to construct new residential units and are hereby determined to have vested the right to carry out the completion and construction of the project under the regulations and provisions of Ordinance No. NS-2994 (HOO). The vested regulations and provisions shall automatically terminate if any or all of the entitlement approvals become invalid for any reasons or have expired under the various applicable time limits established in the Santa Ana Municipal Code or any applicable State Covid-19 pandemic relief or other applicable time extension provisions. Ordinance No. NS-2994 is incorporated herein by reference. Table 1. Entitled Projects Vested Under the Regulations and Provisions of Ordinance No. NS-2994 No. Project Address Project Name Number of Dwelling Units HOO Compliance Requirements 1.1122 N. Bewley Street Bewley Townhomes 10 Provide inclusionary units as required under NS-2994 or payment of in-lieu of $5/sf 2.301 N. Mountain View Street Mountain View Townhomes 8 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf 3.200 N. Cabrillo Park Drive The Madison 260 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf 4.1109 N. Broadway One Broadway Plaza 415 $15/sf in-lieu payment under a project Mutual Declaration 5.3025 W. Edinger Avenue Haphan Townhomes 17 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf 6.2800 N. Main Street/Specific Plan No. 4 MainPlace Mall Transformation 1,900 residential units 1,900 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf 7.419 N. Harbor Boulevard (previously 421 N. Harbor Boulevard) Fifth and Harbor Mixed Use Apartments 94 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf 8.3417 W. Fifth Street West Fifth Villas 8 Provide inclusionary units as required by NS-2994 or payment of in-lieu of $5/sf The development projects listed in Table 2 have received entitlement approvals by Planning Commission or City Council action prior to November 16, 2021, but did not trigger HOO provisions and have been identified herein for implementation clarity. Table 2. Entitled Projects Not Triggering HOO requirements No. Project Address Project Name Number of Dwelling Units HOO Compliance Requirements 1.201 W. Third Street 3rd and Broadway 171 HOO provisions not applicable to project 2.409 E. Fourth Street and 509 E. Fourth Street 4th and Mortimer 169 HOO provisions not applicable to project 3.1801 E. Fourth Street Central Pointe 644 HOO provisions not applicable to project 4.200 E. First American Way Legado at the Met 278 HOO provisions not applicable to project 5.114 E. Fifth Street and 115 E. Fifth Street Rafferty (4th + Main) 220 HOO provisions not applicable to project EXHIBIT A 0 COMMUNITY ACTION 11870 Monarch Street PARTNERSHIP ORANGE COUNTY Garden Grove,CA 92841 February 15, 2022 City Council City of Santa Ana 20 Civic Center Plaza P.O. Bo 1988, M31 Santa Ana, CA 92701 Re: Item 25: Strengthen Housing Opportunity Ordinance and Affordable Housing Funds Policies and Procedures Dear Mayor and City Council Members, Born of the War on Poverty, Community Action Partnership of Orange County CAP OC) has worked to enhance the quality of life here since 1965. Through our broad network of community partners, we boldly address the root causes of poverty and advocate for change through systemic reforms, social justice, and racial equity. We live and work in the neighborhoods we so passionately serve—coming together from all backgrounds and experiences to stabilize, sustain and empower individuals and families so they may build stronger communities. Every two years, we conduct a Community Needs Assessment (CNA) to capture the problems and conditions of poverty in Orange County. Our last CNA conducted in 2021 determined the lack of access to affordable housing to be a top concern for our respondents. With many respondents feeling as if they were "one check away from homelessness". We are writing to support the amendments to the Housing Opportunity Ordinance and Affordable Housing Funds Policies. The changes will ensure that development in the City addresses housing needs for all residents in a balanced manner. Many working families in Santa Ana continue to be impacted by the rising cost of housing and the scarce housing opportunities available at rents they can afford. In addition, many continue to face economic uncertainty because of the ongoing COVID-19 pandemic. The creation of housing at all income levels is vital to our recovery and will provide stability for the majority of Santa Ana residents that are struggling with housing availability and cost that existed long before the pandemic. It is crucial that the City strengthen the Housing Opportunity Ordinance (HOO) to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the City. 0 0 COMMUNITY ACTION 11870 Monarch Street PARTNERSHIP ORANGE COUNTY Garden Grove,CA 92841 The City of Santa Ana is a renter majority city and despite the City's progress towards meeting its Regional Housing Needs Assessment (RHNA) allocation for very low- and low- income housing, there continues to be a great need for housing that is affordable to its residents. The current pandemic has increased the economic and housing pressures on low-income families in Santa Ana. As incomes are decreasing and jobs are being lost, many low-income families are struggling to remain housed. This is especially true for the majority of Santa Ana's low-income households that are suffering with the impacts of housing cost and economic uncertainty. According to the City's local data, 70% of Santa Ana renters are low and very low-income renters. 80% of renters in Santa Ana fall into the moderate, low-and very low-income categories and 84 of residents hold low-income occupations that pay less than $53,500 per year'. Santa Ana's households are predominantly families comprising 81%of households.2 These households are also rent burdened and live-in overcrowded conditions3. While the City has seen increased production of affordable housing there has been a disproportionate production of above moderate housing with a total of 3,274 above moderate units produced between 2013-2021, the City exceeded its RHNA allocation by 3,638% per the City's RHNA progress reports submitted to the state. With average rents of$2000 -$4000, none of these above market rental units are affordable to most of Santa Ana's working families. Housing costs in Santa Ana have been out of reach and will continue to be out of reach in this current economic climate. Households in Santa Ana must earn $44.83 an hour to afford two-bedroom housing.4 The proposed amendments further incentivize housing units with market rate rents and are not affordable to the majority of the City's residents. The Commission supports the amendments to update the in-lieu fee to $15 per sq ft to be in line with a fee that is fair and allows the City to fund much needed affordable housing for Santa Ana residents. We also support the wider application of the Housing Opportunities Ordinance in the City of Santa Ana. This will continue to facilitate the development of affordable housing in various areas of the city.The Commission also recommends that the HOO apply to all residential developments in the City. At a minimum the HOO affordable housing requirements should apply to all residential and mixed-use developments that are asking for zone changes, upzonings, following city initiated specific plans, general plan updates or those asking for other development incentives. City of Santa Ana General Plan Housing Element 2014-2021,p. 14,January 2014. City of Santa Ana General Plan Housing Element 2014—2021 page 11 3 City of Santa Ana General Plan Housing Element 2014—2021 page 20 O 4 National Low Income Housing Coalition.Out of Reach The High Cost of Housing 202 Lpg.18.Out of Reach 2021(nlihc.or 0 COMMUNITY ACTION 11870 Monarch Street PARTNERSHIP ORANGE COUNTY Garden Grove,CA 92841 In addition, the HOO should apply to all developments taking advantage of City initiated land use and zoning changes, specific plans and general plan updates and amendments. Land use changes may create higher land values, profit, and incentives for market rate developers. At the same time many of these market developments are not affordable to the majority of Santa Ana's residents. In exchange for these development incentives, new affordable housing for Santa Ana residents must be created. The City must also ensure that the Inclusionary Housing Fund monies prioritize the construction of affordable housing for extremely low-and very low-income families.These are the families that have the most pressing needs in the City of Santa Ana. In addition, the fund should also prioritize addressing housing insecurity, eviction prevention, and housing legal assistance for residents that would directly help current Santa Ana residents with the exception of code enforcement. Diversion of these funds to other programs unrelated to housing and direct help for families would not increase or improve the supply of affordable housing. We urge you to take into consideration the amendments and proposed recommendations to the Housing Opportunity Ordinance. These recommendations will help the city increase affordable housing options for residents and help the city meet equitable housing production goals. Sincerely,INA Curtis Gibbs Director of Planning Mow L- uKen nedyMMISS1 • February 15, 2022 www.kennedycommission.org 17701 Cowan Ave.,Suite 200 Irvine,CA 92614 949 250 0909 Mayor and City Council City of Santa Ana 20 Civic Center Plaza P.O. Bo 1988, M31 Santa Ana, CA 92701 Re: Item 25: Housing Opportunity Ordinance Dear Mayor and City Council Members, The Kennedy Commission (the Commission) is a broad-based coalition of residents and community organizations that advocates for the production of homes affordable for families earning less than $27,000 annually in Orange County. Formed in 2001, the Commission has been successful in partnering and working with Orange County jurisdictions to create effective housing and land-use policies that has led to the new construction of homes affordable to lower-income working families. We are writing to support the amendments to the Housing Opportunity Ordinance and Affordable Housing Funds Policies.The changes will ensure that development in the City addresses housing needs for all residents in a balanced manner. Many working families in Santa Ana continue to be impacted by the rising cost of housing and the scarce housing opportunities available at rents they can afford. In addition, many continue to face economic uncertainty because of the ongoing COVID-19 pandemic. The creation of housing at all income levels is vital to our recovery and will provide stability for the majority of Santa Ana residents that are struggling with housing availability and cost that existed long before the pandemic. It is crucial that the City strengthen the Housing Opportunity Ordinance (HOO) to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the City. The City of Santa Ana is a renter majority city and despite the City's progress towards meeting its Regional Housing Needs Assessment (RHNA) allocation for very low- and low- income housing, there continues to be a great need for housing that is affordable to its residents. The current pandemic has increased the economic and housing pressures on low-income families in Santa Ana. As incomes are decreasing and jobs are being lost, many low-income families are struggling to remain housed. This is especially true for the majority of Santa Ana's low-income households that are suffering with the impacts of housing cost and economic uncertainty. According to the City's local data, 70 % of Santa Ana renters are low and very low- income renters. 80% of renters in Santa Ana fall into the moderate, low- and very low-income categories and 84 % of residents hold low-income occupations that pay less than $53,500 per year'. Santa Ana's households are predominantly families comprising 81% of households.2 These households are also rent burdened and live-in overcrowded conditions'. 1 City of Santa Ana General Plan Housing Element 2014-2021,p.14,January 2014. 2 City of Santa Ana General Plan Housing Element 2014-2021 page 11 3 City of Santa Ana General Plan Housing Element 2014-2021 page 20 While the City has seen increased production of affordable housing there has been a disproportionate production of above moderate housing with a total of 3,274 above moderate units produced between 2013- 2021, the City exceeded its RHNA allocation by 3,638% per the City's RHNA progress reports submitted to the state. With average rents of$2000 - $4000, none of these above market rental units are affordable to most of Santa Ana's working families. Housing costs in Santa Ana have been out of reach and will continue to be out of reach in this current economic climate. Households in Santa Ana must earn $44.83 an hour to afford two-bedroom housing.'The proposed amendments further incentivize housing units with market rate rents and are not affordable to the majority of the City's residents. The Commission supports the amendments to update the in-lieu fee to $15 per sq ft to be in line with a fee that is fair and allows the City to fund much needed affordable housing for Santa Ana residents. We also support the wider application of the Housing Opportunities Ordinance in the City of Santa Ana. This will continue to facilitate the development of affordable housing in various areas of the city. The Commission also recommends that the HOO apply to all residential developments in the City. At a minimum the HOO affordable housing requirements should apply to all residential and mixed use developments that are asking for zone changes,upzonings, following city initiated specific plans, general plan updates or those asking for other development incentives. In addition, the HOO should apply to all developments taking advantage of City initiated land use and zoning changes, specific plans and general plan updates and amendments. Land use changes may create higher land values,profit, and incentives for market rate developers. At the same time many of these market developments are not affordable to the majority of Santa Ana's residents. In exchange for these development incentives, new affordable housing for Santa Ana residents must be created. The City must also ensure that the Inclusionary Housing Fund monies prioritize the construction of affordable housing for extremely low- and very low-income families. These are the families that have the most pressing needs in the City of Santa Ana. In addition,the fund should also prioritize addressing housing insecurity, eviction prevention, and housing legal assistance for residents that would directly help current Santa Ana residents with the exception of code enforcement. Diversion of these funds to other programs unrelated to housing and direct help for families would not increase or improve the supply of affordable housing. We urge you to take into consideration the amendments and proposed recommendations to the Housing Opportunity Ordinance. These recommendations will help the city increase affordable housing options for residents and help the city meet equitable housing production goals. Sincerely, Cesar Covarrubias Executive Director 4 National Low Income Housing Coalition.Out of Reach The High Cost of Housing 2021,pg.18.Out of Reach 2021(nlihc.org) 13 r 2/15/2022 Mayor Sarmiento and City Council City of Santa Ana 20 Civic Center Plaza P.O. Bo 1988, M31 Santa Ana, CA 92701 Re: Item 25: Strengthen Housing Opportunity Ordinance and Affordable Housing Funds Policies and Procedures Dear Mayor and City Council Members, I write on behalf of Chispa to express our support for the amendments to the Housing Opportunity Ordinance and Affordable Housing Funds Policies. The changes will ensure that development in the City addresses housing needs for all residents in a balanced manner. Many working families in Santa Ana continue to be impacted by the rising cost of housing and the scarce housing opportunities available at rents they can afford. In addition, many continue to face economic uncertainty because of the ongoing COVID-19 pandemic. The creation of housing at all income levels is vital to our recovery and will provide stability for the majority of Santa Ana residents that are struggling with housing availability and cost that existed long before the pandemic. It is crucial that the City strengthen the Housing Opportunity Ordinance (HOO) to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the City. The City of Santa Ana is a renter majority city and despite the City's progress towards meeting its Regional Housing Needs Assessment (RHNA) allocation for very low- and low- income housing, there continues to be a great need for housing that is affordable to its residents. The current pandemic has increased the economic and housing pressures on low-income families in Santa Ana. As incomes are decreasing and jobs are being lost, many low-income families are struggling to remain housed. This is especially true for the majority of Santa Ana's low-income households that are suffering with the impacts of housing cost and economic uncertainty. According to the City's local data, 70 % of Santa Ana renters are low and very low-income renters. 80% of renters in Santa Ana fall into the moderate, low- and very low-income categories and 84 % of residents hold low-income occupations that pay less than $53,500 per year'. Santa Ana's households are predominantly families comprising 81% of households.' These households are also rent burdened and live-in overcrowded conditions'. While the City has seen increased production of affordable housing there has been a disproportionate production of above moderate housing with a total of 3,274 above moderate units produced between 2013-2021, the City exceeded its RHNA allocation by 3,638% per the City's RHNA progress reports submitted to the state. With average rents of$2000 - $4000, none of these above market rental units are affordable to most of Santa Ana's working families. Housing costs in Santa Ana have been out of reach and will continue to be out of reach in this current economic climate. Households in Santa Ana must earn $44.83 an hour to afford two-bedroom housing.4 The proposed amendments further incentivize housing units with market rate rents and are not affordable to the majority of the City's residents. The Commission supports the amendments to update the in-lieu fee to $15 per sq ft to be in line with a fee that is fair and allows the City to fund much needed affordable housing for Santa Ana residents. We also support the wider application of the Housing Opportunities Ordinance in the City of Santa Ana. This will continue to facilitate the development of affordable housing in various areas of the city. The Commission also recommends that the HOO apply to all residential developments in the City. At a minimum the HOO affordable housing requirements should apply to all residential and mixed use developments that are asking for zone changes, upzonings, following city initiated specific plans, general plan updates or those asking for other development incentives. In addition, the HOO should apply to all developments taking advantage of City initiated land use and zoning changes, specific plans and general plan updates and amendments. Land use changes may create higher land values, profit, and incentives for market rate developers. At the same time many of these market developments are not affordable to the majority of Santa Ana's residents. In exchange for these development incentives, new affordable housing for Santa Ana residents must be created. The City must also ensure that the Inclusionary Housing Fund monies prioritize the construction of affordable housing for extremely low- and very low-income families. These are the families that have the most pressing needs in the City of Santa Ana. In addition, the fund should also prioritize addressing housing insecurity, eviction prevention, and housing legal assistance for 1 City of Santa Ana General Plan Housing Element 2014-2021,p. 14,January 2014. 2 City of Santa Ana General Plan Housing Element 2014—2021 page 11 3 City of Santa Ana General Plan Housing Element 2014—2021 page 20 4 National Low Income Housing Coalition.Out of Reach The High Cost of Housing 2021,pg.18.Out of Reach 2021(nlihc.ora) residents that would directly help current Santa Ana residents with the exception of code enforcement. Diversion of these funds to other programs unrelated to housing and direct help for families would not increase or improve the supply of affordable housing. We urge you to take into consideration the amendments and proposed recommendations to the Housing Opportunity Ordinance. These recommendations will help the city increase affordable housing options for residents and help the city meet equitable housing production goals. A4-r-4 Bulmaro `Boomer'Vicente Policy Director L- RennedyMMISS1 • January 18, 2022 www.kennedycommission.org 17701 Cowan Ave.,Suite 200 Irvine,CA 92614 949 250 0909 Mayor and City Council City of Santa Ana 20 Civic Center Plaza P.O. Bo 1988, M31 Santa Ana, CA 92701 Re: Item 8: Housing Opportunity Ordinance Dear Mayor and City Council Members, The Kennedy Commission (the Commission) is a broad-based coalition of residents and community organizations that advocates for the production of homes affordable for families earning less than $27,000 annually in Orange County. Formed in 2001, the Commission has been successful in partnering and working with Orange County jurisdictions to create effective housing and land-use policies that has led to the new construction of homes affordable to lower-income working families. We are writing to support the amendments to the Housing Opportunity Ordinance and Affordable Housing Funds Policies. The changes will ensure that development in the City addresses housing needs for all residents in a balanced manner. Many working families in Santa Ana continue to be impacted by the rising cost of housing and the scarce housing opportunities available at rents they can afford. In addition, many continue to face economic uncertainty because of the ongoing COVID-19 pandemic. The creation of housing at all income levels is vital to our recovery and will provide stability for the majority of Santa Ana residents that are struggling with housing availability and cost that existed long before the pandemic. It is crucial that the City strengthen the Housing Opportunity Ordinance (HOO) to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the City. The City of Santa Ana is a renter majority city and despite the City's progress towards meeting its Regional Housing Needs Assessment (RHNA) allocation for very low- and low- income housing, there continues to be a great need for housing that is affordable to its residents. The current pandemic has increased the economic and housing pressures on low-income families in Santa Ana. As incomes are decreasing and jobs are being lost, many low-income families are struggling to remain housed. This is especially true for the majority of Santa Ana's low-income households that are suffering with the impacts of housing cost and economic uncertainty. According to the City's local data, 70 % of Santa Ana renters are low and very low- income renters. 80% of renters in Santa Ana fall into the moderate, low- and very low-income categories and 84 % of residents hold low-income occupations that pay less than $53,500 per year'. Santa Ana's households are predominantly families comprising 81% of households.' These households are also rent burdened and live-in overcrowded conditions'. 1 City of Santa Ana General Plan Housing Element 2014-2021,p.14,January 2014. 2 City of Santa Ana General Plan Housing Element 2014—2021 page 11 3 City of Santa Ana General Plan Housing Element 2014—2021 page 20 While the City has seen increased production of affordable housing there has been a disproportionate production of above moderate housing with a total of 3,274 above moderate units produced between 2013- 2021, the City exceeded its RHNA allocation by 3,638% per the City's RHNA progress reports submitted to the state. With average rents of$2000 - $4000, none of these above market rental units are affordable to most of Santa Ana's working families. Housing costs in Santa Ana have been out of reach and will continue to be out of reach in this current economic climate. Households in Santa Ana must earn $44.83 an hour to afford two-bedroom housing.4 The proposed amendments further incentivize housing units with market rate rents and are not affordable to the majority of the City's residents. The Commission supports the amendments to update the in-lieu fee to $15 per sq ft to be in line with a fee that is fair and allows the City to fund much needed affordable housing for Santa Ana residents. We also support the wider application of the Housing Opportunities Ordinance in the City of Santa Ana. This will continue to facilitate the development of affordable housing in various areas of the city. The Commission also recommends that the HOO apply to all residential developments in the City. At a minimum the HOO affordable housing requirements should apply to all residential and mixed use developments that are asking for zone changes,upzonings, following city initiated specific plans, general plan updates or those asking for other development incentives. In addition, the HOO should apply to all developments taking advantage of City initiated land use and zoning changes, specific plans and general plan updates and amendments. Land use changes may create higher land values,profit, and incentives for market rate developers.At the same time many of these market developments are not affordable to the majority of Santa Ana's residents. In exchange for these development incentives, new affordable housing for Santa Ana residents must be created. The City must also ensure that the Inclusionary Housing Fund monies prioritize the construction of affordable housing for extremely low- and very low-income families. These are the families that have the most pressing needs in the City of Santa Ana. In addition,the fund should also prioritize addressing housing insecurity, eviction prevention, and housing legal assistance for residents that would directly help current Santa Ana residents with the exception of code enforcement. Diversion of these funds to other programs unrelated to housing and direct help for families would not increase or improve the supply of affordable housing. We urge you to take into consideration the amendments and proposed recommendations to the Housing Opportunity Ordinance. These recommendations will help the city increase affordable housing options for residents and help the city meet equitable housing production goals. Sincerely, Cesar Covarrubias Executive Director 4 National Low Income Housing Coalition.Out of Reach The High Cost of Housing 202Lpg.18.Out of Reach 2021(nlihc.org) II January 14th, 2022 Mayor Sarmiento and City Council Members City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Re: Item 8: Strengthen Housing Opportunity Ordinance and Affordable Housing Funds Policies and Procedures Dear Mayor and City Council Members, Chispa is a political home for young Latinx in Orange County. Chispa seeks to engage with excluded peoples to uproot systems of oppression and cultivate systems grounded in community accountability, solidarity, and self-determination for our communities to thrive. We are writing to support the amendments to the Housing Opportunity Ordinance and Affordable Housing Funds Policies. The changes will ensure that development in the City addresses housing needs for all residents in a balanced manner. Many working families in Santa Ana continue to be impacted by the rising cost of housing and the scarce housing opportunities available at rents they can afford. In addition, many continue to face economic uncertainty because of the ongoing COVID-19 pandemic. The creation of housing at all income levels is vital to our recovery and will provide stability for the majority of Santa Ana residents that are struggling with housing availability and cost that existed long before the pandemic. It is crucial that the City strengthen the Housing Opportunity Ordinance (HOO) to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the City. The City of Santa Ana is a renter majority city and despite the City's progress towards meeting its Regional Housing Needs Assessment (RHNA) allocation for very low- and low- income housing, there continues to be a great need for housing that is affordable to its residents. The current pandemic has increased the economic and housing pressures on low-income families in Santa Ana. As incomes are decreasing and jobs are being lost, many low-income families are struggling to remain housed. This is especially true for the majority of Santa Ana's low-income households that are suffering with the impacts of housing cost and economic uncertainty. According to the City's local data, 70 % of Santa Ana renters are low and very low-income renters. 80% of renters in Santa Ana fall into the moderate, low- and very low-income categories and 84 % of residents hold low-income occupations that pay less than $53,500 per year'. Santa Ana's households are predominantly families comprising 81% of households.' These households are also rent burdened and live-in overcrowded conditions'. While the City has seen increased production of affordable housing there has been a disproportionate production of above moderate housing with a total of 3,274 above moderate units produced between 2013-2021, the City exceeded its RHNA allocation by 3,638% per the City's RHNA progress reports submitted to the state. With average rents of$2000 - $4000, none of these above market rental units are affordable to most of Santa Ana's working families. Housing costs in Santa Ana have been out of reach and will continue to be out of reach in this current economic climate. Households in Santa Ana must earn $44.83 an hour to afford two-bedroom housing.4 The proposed amendments further incentivize housing units with market rate rents and are not affordable to the majority of the City's residents. The Commission supports the amendments to update the in-lieu fee to $15 per sq ft to be in line with a fee that is fair and allows the City to fund much needed affordable housing for Santa Ana residents. We also support the wider application of the Housing Opportunities Ordinance in the City of Santa Ana. This will continue to facilitate the development of affordable housing in various areas of the city. The Commission also recommends that the HOO apply to all residential developments in the City. At a minimum the HOO affordable housing requirements should apply to all residential and mixed use developments that are asking for zone changes, upzonings, following city initiated specific plans, general plan updates or those asking for other development incentives. In addition, the HOO should apply to all developments taking advantage of City initiated land use and zoning changes, specific plans and general plan updates and amendments. Land use changes may create higher land values, profit, and incentives for market rate developers. At the same time many of these market developments are not affordable to the majority of Santa Ana's residents. In exchange for these development incentives, new affordable housing for Santa Ana residents must be created. The City must also ensure that the Inclusionary Housing Fund monies prioritize the construction of affordable housing for extremely low- and very low-income families. These are the families 1 City of Santa Ana General Plan Housing Element 2014-2021,p. 14,January 2014. 2 City of Santa Ana General Plan Housing Element 2014—2021 page 11 3 City of Santa Ana General Plan Housing Element 2014—2021 page 20 4 National Low Income Housing Coalition.Out of Reach The High Cost of Housing 2021,pg.18.Out of Reach 2021(nlihc.org) that have the most pressing needs in the City of Santa Ana. In addition, the fund should also prioritize addressing housing insecurity, eviction prevention, and housing legal assistance for residents that would directly help current Santa Ana residents with the exception of code enforcement. Diversion of these funds to other programs unrelated to housing and direct help for families would not increase or improve the supply of affordable housing. We urge you to take into consideration the amendments and proposed recommendations to the Housing Opportunity Ordinance. These recommendations will help the city increase affordable housing options for residents and help the city meet equitable housing production goals. Bulmaro Vicente Policy Director Orozco, Norma From: Alex Lee <a1exlee1212@protonmail.com> Sent: Tuesday, January 04, 2022 7:15 AM To: eComment; Gomez, Daisy; Carvalho, Sonia R. Subject: HOO and Additional Thai Phan Complaint Attachments: Complaint Form 01-04-2022.pdf, Phan Complaint Addendum 12-08-2021.pdf, Phan Complaint Addendum 12-22-2021.pdf, Phan Complaint Addendum 12-16-2021.pdf Please see attached. Contrary to Phan and/or the City Attorney's opinion, a conflicted official MAY NOT participate in any way including asking for a continuance. Complaint Type Electronic Complaint System Complaint: If you suspect someone has violated the Political Reform Act, file a complaint with the FPPC's Enforcement Division using the Electronic Complaint System. To file, provide the requested information on the complaint below, attach all documents you have containing evidence of the violations using the document uploader, and click submit. You will receive an email confirming receipt of your complaint if you provide a return email address. If you file a sworn complaint, you will receive notifications regarding your complaint. Referral: Filing officers can submit referrals to the Enforcement Division using the Electronic Complaint System. To refer a matter for prosecution by the Enforcement Division, provide the information requested below, attach the respondent's most recent statement or report and a copy of your conflict of interest code (if applicable), and click submit. You will receive an email confirming receipt of the referral and notification when the FPPC takes action on the referral. If you have questions or problems submitting your complaint or referral, please email complaint@.ppcca.gov and we will assist you. Complaint Type Complaint Type: Non -Sworn Complaint You will not receive any notifications regarding your complaint, but may be contacted for more information. Your complaint is a public document. Complaint Details Your Contact Information First Name: Alex Last Name: Lee Email: alexleel212&protonmail.com Phone Number: email please Please note that non -sworn complaints do not receive notice of the resolution of the complaint. In order to check the status of your complaint, you will need to email complaint&fppc.ca.gov. Complaint Submission:: Page 1 of 3 Respondent Information Position/Office First Last Zip Phone Held (if Jurisdiction Name Name Address City State Code Email Number applicable) 20 Civic San( ta City Council Santa Ana Thai Phan Center Ana CA 92701 tphan(a)santa-ana.ora 647-5400 Plaza Committee or Organization Name Committee ID Address City State Zip Code Email Phone Number Entity Name Entity ID Address City State Zip Code Email Phone Number Violation Information Violation Violation Code Violation Comments Type Section Manner of Conflict Disqualification/Leave Please see letter and description in other violation allegation. Phan must not of participate in the HOO hearings. She cannot make motions to continue with antheRoom Interest Requirement (87105) unwaivable conflict of interest. Conflict Please see attached letter. Councilwoman Thai Phan has a conflict of interest in of 87306.5 - Conflict of the issue of the Santa Ana Housing Opportunity Ordinance because she works Interest Interest Code; Local for Rutan & Tuckler who represents many local developers. Rtaher than recuse herself, she has participated in three hearings. ATTN - THE FPPC WILL NOT ACCEPT COMPLAINTS REGARDING THE FOLLOWING VIOLATIONS: Brown Act False or Misleading Campaign Materials Election Fraud Federal Campaigns Local Ordinance/Local Contribution Limits Vandalism to Campaign Signs Not Living in the Jurisdiction These alleged violations are not enforced by the FPPC. Please contact your local jurisdiction (i.e. your city attorney, county counsel, or District Attorney). Witnesses First Last Street Address (including City State Zip Phone Email Information this Witness Name Name number) Code Can Provide Upload Files Document Name Complaint Submission:: Page 2 of 3 Update Date/Time Phan Complaint Addendum 12-08-2021.pdf 1 /4/2022 6:40 AM Phan Complaint Addendum 12-16-2021.pdf Phan Complaint Addendum 12-22-2021.pdf Please click the upload document button after selecting your additional files. Submit Submit 1 /4/2022 6:40 AM 1 /4/2022 6:40 AM Complaint Submission:: Page 3 of 3 December 22, 2021 sent January 3, 2022) Fair Political Practices Commission Enforcement Division 1102 Q Street, Suite 3000 Sacramento, CA 95811 Also sent via email to complaint@fppc.ca.gov Santa Ana City Clerk 20 Civic Center Plaza Santa Ana, CA 92701 Also sent via email to dgomez@santa-ana.org Santa Ana City Attorney 20 Civic Center Plaza Santa Ana, CA 92701 Also sent via email to scarvalho@santa-ana.org Regarding: Complaint regarding Conflict of Interest by City Councilwoman Thai Phan To Whom it May Concern, This letter is an addendum to the letters dated December 1, 2021 and December 8, 2021 regarding the same conflict. On December 21, 2021, after receipt of that letter and with full knowledge of the issues outlined, Councilwoman Thai Phan continued to participate in the HOO amendment matter and quadrupled down on her violation of the code by making a motion to continue the HOO amendment item. The video of the hearing can be found at https://youtu.be/BJM5QCPiOds (Santa Ana Council, Dec 21, 2021-English, published by City of Santa Ana). At Hour 4, minute 42, Mayor Sarmiento asks the Council if there are any items they would like to pull from the consent calendar. Councilwoman Thai Phan made the following comment: Thank you Mayor, 1 would like to ask that we again continue Item number 17, that's regarding the Housing Opportunities Ordinance. Last time this item came up 1 asked for a similar continuance in order to receive advice from the FPPC subject to a complaint or referral comment from the public. 1 also did confirm with Madam City Attorney that a request to continue an item is not a violation of FPPC regulations so that is one item. And the other is 1'd like to specifically state that 1 have a conflict of interest on Item 29 only as to the contract for Item 1 which is relating to Atkinson, Adelson, Loya, Ruud, AALR, as they are client of my employer Rutan & Tucker. So 1 will be able to vote on the remaining items on Item 29, but not that particular Agreement. So, Councilwoman Phan does apparently understand what a conflict of interest based on her employment at Rutan & Tucker is. It is hard to ascertain how she believes she still has the right to participate on the HOO item under any circumstances. At Hour 4, minute 46, Councilwoman Phan makes a motion on Item 17, the HOO 1 would move to continue it. As previously stated, the proper procedure for Councilwoman Phan would have been to recuse herself from the item completely and, if the City Attorney felt that a continuance was in order, for the City Attorney to provide the option to the City Council to continue the item until a response of the conflict of interest was received. IT IS A SEPARATE AND ADDITONAL VIOLATION OF THE STATE LAW AND MUNICIPAL CODE FOR COUNCILWOMAN THAI PHAN TO MAKE A MOTION TO CONTINUE ON A VOTE WHERE SHE HAS A CONFLICT OF INTEREST. There is no exception in the law for participation in a matter where an official has a conflict of interest to obtain a continuance of the item and certainly no ability to make a motion of any kind where a conflict exists. The common sense reasoning for this would be if Councilwoman Phan wanted to block the HOO amendment from being adopted for the benefit of her Rutan & Tucker builder and developer clients, she could continually make motions to continue the item thereby preventing the adoption of the item. The fact that the City Attorney requested an opinion from the FPPC does not create a safe harbor for the conflicted official to continue to participate in the matter in any way, even to continue it. We ask the Fair Political Practices Commission to take this blatant disregard into consideration when considering the investigation against Councilwoman Phan. As a professional municipal lawyer, she knows the law and cannot plead ignorance. She has clearly let her political aspirations cloud her professional judgement. Councilwoman Phan and the Santa Ana City Attorney are acting with a blatant disregard for the public by continuing to allow her to participate on this item. Sincerely, a e- Alex Lee On behalf of numerous concerned Santa Ana residents alexleel212@protonmail.com Enc: Package dated 12/1/2021 Package dated 12/8/2021 Orozco, Norma From: Alex Lee <alexlee1212@protonmail.com> Sent: Thursday, December 16, 2021 10:10 AM To: Gomez, Daisy; Carvalho, Sonia R.; eComment Subject: Re: FPPC Complaints filed Against Councilwoman Phan and Commissioner Ramos and Agenda Item 9 Attachments: Phan Complaint Addendum 12-16-2021.pdf The attached addendum was sent to the FPPC We are working with legal council and intend to take action against the City of Santa Ana unless this issue is properly dealt with. Alex Original Message ------- On Tuesday, December 7th, 2021 at 12:10 PM, Alex Lee <alexlee1212@protonmail.com> wrote: Hello, I am writing on behalf of many concerned Santa Ana citizens. We feel that the HOO amendments put forward by Commissioner Ramos and Councilwoman Phan have been a coordinated effort to reward their political benefactors and that the votes taken by these two officials have been violations of State and City code. We call on the City Attorney, Mayor, and City Manager to cure this issue at once and to send the HOO back to the Planning Commission (as several Councilmembers requested) for a hearing of the new items raised by the conflicted members and a fair an impartial process without Commissioner Ramos or Councilwoman Phan involved. The referral to the FPPC is a referral and not a complaint yet. A sworn complaint will be filed if the Council votes on the item tonight. The violation has already occurred regardless of the vote tonight, however, Councilwoman Phan and the rest of the Council should not commit an additional violation by voting on this item this evening. Furthermore, the item is NOT appropriate for a second reading on the consent calendar because the item has changed so materially from the original item that a full presentation of the change MUST be presented before approval. Legal issues of this approval include but are not limited to: 1. Improper Vote at Planning Commission with a conflict of interest and a pre -written motion drafted by sources of income to Ramos. 2. Improper Vote at City Council with a conflict of interest and illegal conditions presented by Councilwoman Phan. 3. Improper Vote on second reading at City Council with the same conflict of interest, illegal conditions, and a improper placement of the item on consent calendar when the item had material additional amendments. The residents of Santa Ana deserve better representation than this. If the Council proceeds with this vote tonight on the consent calendar, the Council will be improperly approving an already improperly reviewed ordinance, drafted in a flawed process, by conflicted officials who should have recused themselves from this item. There are several flaws in the process which WILL subject the City to costly litigation. Sincerely, Alex Lee December 8, 2021 Fair Political Practices Commission Enforcement Division 1102 Q Street, Suite 3000 Sacramento, CA 95811 Also sent via email to complaint@fppc.ca.gov Santa Ana City Clerk 20 Civic Center Plaza Santa Ana, CA 92701 Also sent via email to dgomez@santa-ana.org Santa Ana City Attorney 20 Civic Center Plaza Santa Ana, CA 92701 Also sent via email to scarvalho@santa-ana.org Regarding: Complaint regarding Conflict of Interest by City Councilwoman Thai Phan To Whom it May Concern, This letter is an addendum to the letter dated December 1, 2021 regarding the same conflict. On December 7, 2021, after receipt of that letter and with full knowledge of the issues outlined, Councilwoman Thai Phan continued to participate in the HOO amendment matter and tripled down on her violation of the code by making a motion to continue the item. The video of the hearing can be found at https://www.youtube.com/watch?v=bFtvMlUmKnM (Santa Ana Council, Dec 7, 2021-English, published by City of Santa Ana). At Hour 1, minute 27, before public comments, Councilwoman Thai Phan made the following comment: Thank you, Mayor. So, this afternoon, the City and 1 received a correspondence from an alleged resident stating that, or alleging that 1 have a conflict of interest, calling in my ethical reasoning and my judgement. This is regarding an alleged conflict on the Housing Opportunity Ordinance. 1 do not believe that 1 have a conflict of interest, however, out of an abundance of caution, 1 have asked the City Attorney's office to seek a formal opinion letter from the FPPC regarding the Housing Opportunity Ordinance. As a result, and related thereto, 1 will move and ask the Council to continue Item 9 regarding the Housing Opportunity Ordinance and again, out of an abundance of caution, Item 37, the General Plan Amendment until the City receives a response from the FPPC. The proper procedure for Councilwoman Phan would have been to recuse herself from the item completely and, if the City Attorney felt that a continuance was in order, for the City Attorney to provide the option to the City Council to continue the item until a response of the conflict of interest was received. IT IS A SEPARATE AND ADDITONAL VIOLATION OF THE STATE LAW AND MUNICIPAL CODE FOR COUNCILWOMAN THAI PHAN TO MAKE A MOTION TO CONTINUE ON A VOTE WHERE SHE HAS A CONFLICT OF INTEREST. There is no exception in the law for participation in a matter where an official has a conflict of interest to obtain a continuance of the item and certainly no ability to make a motion of any kind where a conflict exists. We ask the Fair Political Practices Commission to take this blatant disregard into consideration when considering the investigation against Councilwoman Phan. As a professional municipal lawyer, she knows the law and cannot plead ignorance. She has clearly let her political aspirations cloud her professional judgement. Attached is an analysis which our attorney prepared in preparation for challenging the decision should the City of Santa Ana refuse to remedy this situation. Sincerely, a e.- Alex Lee On behalf of numerous concerned Santa Ana residents alexleel212@protonmail.com Enc: Package dated 12/1/2021 Legal Analysis This letter serves as a follow up to the December 1, 2021 "Complaint regarding Conflict of Interest by City Councilwoman Thai Phan" (the "Complaint"). The facts and allegations stated in the Complaint are incorporated herein. As a member of the Santa Ana City Council ("City Council"), Ms. Phan is prohibited by Government Code Section 87100 of the Political Reform Act of 1974 (the "PRA" or the "Act") from making, participating in making, or attempting to use her official position to influence any governmental decision in which she knew, or had reason to know, she had a financial interest. By making governmental decisions in which she had a financial interest, Ms. Phan violated Government Code Section 87100. The only acceptable remedy is for the City Council to formally rescind its November 16, 2021 approval of the Housing Opportunity Ordinance ("HOO") and convene a new vote among eligible, non -conflicted members of the City Council. I. Introduction to the Law When the PRA was enacted, the people of the state of California found and declared that previous laws regulating political practices suffered from inadequate enforcement by state and local authorities. Government Code § 81001(h).) Government Code Section 81003 requires that the Act be "liberally construed to accomplish its purposes." As such, the Act sets the floor, but not the ceiling, for the conduct of public officials. The goal of the State's conflict -of -interest laws is to promote public confidence in public agencies. The Act is intended to ensure that "[p]ublic officials, whether elected or appointed ... perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them[.]" (Government Code § 81001(b).) Section 87100 prohibits public officials from making, participating in making, or attempting to use their official positions to influence any governmental decision in which they knew, or have reason to know, they have a financial interest. A public official has a financial interest in a decision if it is reasonably foreseeable that the decision will have a "material financial effect" on a recognized economic interest of the official. (Government Code § 87103.) An analysis on this issue requires six steps to determine whether a public official has a conflict of interest in a governmental decision.' That analysis follows: 1. The public official must be one as defined in the Act. Government Code Section 82048 defines "[p]ublic official" to mean every member of a "local government agency." Government Code Section 82041 defines " [1]ocal government agency" to include a city council, which is "any department, division, bureau, office, board, commission or other agency" of a City. 2. The public official must make, participate in making, or attempt to use their official position to influence a governmental decision. A public official "makes a governmental decision" when the public official votes on a matter. Regulation § 18704(a).) The Public Generally Exception (Regulations § 18703(a)) does not appear to apply here, nor does the Legally Required Participation Exception (Government Code § 87101). 3. The public official must have an economic interest that may be financially affected by the governmental decision. A public official has an economic interest in any business entity from which they have received income aggregating $500 or more within 12 months prior to the time when the relevant governmental decision is made. (Regulation 18700.1(a)(2).) 4. The economic interest of the public official must be directly or indirectly involved in the decision, or there must be a nexus between the public official's duties owed to the source of income and the official's public agency. A nexus exists between the public official's duties owed to the source of income and the official's public agency if the public official receives or is promised the income to achieve a goal or purpose that would be achieved, defeated, aided, or hindered by the decision. (Regulation 18702.3(b).) 5. It must be decided what materiality standard applies to the economic interest of the public official Any reasonably foreseeable financial effect on a business entity that is a source of income to a public official is deemed material if the public official receives or is promised the income to achieve a goal or purpose that would be achieved, defeated, aided, or hindered by the decision. (Regulation 18702.3(b).) 6. Finally, it must have been reasonably foreseeable, at the time the governmental decision was made, that the decision would have a material financial effect on the economic interest of the official If the financial effect can be recognized as a realistic possibility and more than hypothetical or theoretical, it is reasonably foreseeable. (Regulation 18701(a), (b).) A material financial effect on an economic interest is reasonably foreseeable if it is substantially likely that one or more of the materiality standards applicable to the economic interest will be met as a result of the governmental decision. II. Application of the Law to the Facts Ms. Phan was a Public Official. At all times relevant to this matter, Ms. Phan was a member of the Santa Ana City Council, and was thus a public official under the Act. 2. Ms. Phan made a Governmental Decision. On November 16, 2021, Ms. Phan, in her official capacity as a member of the City Council, not only voted on the HOO, but lead the discussion. When Ms. Phan voted on the matter, she made a governmental decision. Ms. Phan had an Economic Interest. During the 12 months before November 16, 2021, Ms. Phan received over $10,000 of income from the law firm of Rutan & Tucker (the "Firm"). Ms. Phan's 2021 Form 700 shows over $100,000 from the Firm, where she remains employed as of the date of this letter. She therefore had an economic interest in the Firm on November 16, 2021. 4. There was a Nexus between Ms. Phan's Duties owed to the Firin and to the Council. Ms. Phan's duties as an attorney within the "Builders and Land Developers Team" of the Firm includes advocating on behalf of the Firm's real estate client base, which includes developers of projects in Santa Ana. Upon information and belief, the Firm represents real estate developer Centennial in the re - entitlement of the 49-acre Main Place Mall as well as the developer(s) of the One Broadway Plaza project, which is being re -entitled to include 14 floors of residential apartments. Both are major redevelopment projects in Santa Ana. Centennial's Santa Ana Main Place Mall and the One Broadway Plaza project developer(s) could be two of the "vested" projects specifically carved out of the HOO legislation approved by Ms. Phan. Because Centennial, the One Broadway Plaza developer(s), and likely other developers of Santa Ana residential projects are clients of the Firm, and Ms. Phan's duties as an associate attorney within the "Builders and Developers Team" includes representing developer clients and promoting the financial interests of the Firm, Ms. Phan's votes on the HOO created a nexus between her duties owed to the Firm and her duties owed to the public via the City Council. (Regulation 18702.3(b).) It takes little imagination to foresee a situation where a Firm client might directly, and significantly, benefit from certain changes to the HOO. Any Reasonably Foreseeable Financial Effect on the Firm met the Materiality Standard. Because there existed a nexus between Ms. Phan's duties to the Firm and its clients and to the City Council, any reasonably foreseeable financial effect on the Firm is deemed material. (Regulation 18702.3(b).) It was Substantially that Ms. Phan's Decisions would have a Financial Effect on the Firm. Upon information and belief, it was substantially likely that Ms. Phan's decisions would result in benefits to Centennial, the developer(s) of One Broadway Plaza, and potentially other Firm clients who have projects within the City. It is also substantially likely Ms. Phan's decisions could increase or enhance those clients' ties to and business with the Firm, or attract new clients to the Firm. As such, it was reasonably foreseeable at the time of the decision that the decision would have a financial effect on the Firm. III. Conclusion Based on the above, by making governmental decisions in which she had a financial interest, Ms. Phan violated Government Code Section 87100. As stated above, the only acceptable remedy is for the City Council to formally rescind its November 16, 2021 approval of the Housing Opportunity Ordinance and convene a new vote among eligible, non -conflicted members of the City Council.