HomeMy WebLinkAboutItem 28 - Housing Ad Hoc Committee Progress Report Regarding The Housing Opportunity Ordinance Planning and Building Agency
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Item # 28
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
July 6, 2021
TOPIC: Housing Ad Hoc Committee Progress Report and Recommendations Regarding
the Housing Opportunity Ordinance
AGENDA TITLE:
Housing Ad Hoc Committee Progress Report and Recommendations Regarding the
Housing Opportunity Ordinance
RECOMMENDED ACTION
Receive the progress report from the Housing Ad Hoc Committee, discuss the
recommendations, and provide direction to staff.
BACKGROUND AND DISCUSSION
At the direction of the Mayor and City Council, the Housing Ad Hoc Committee was
formed on March 2, 2021. Committee members consist of Mayor Sarmiento and
Councilmembers Lopez and Phan. The Committee convened its first meeting on March
22, 2021 and has since conducted three additional meetings to discuss various housing
issues. The first set of recommendations from the Committee are related to the Housing
Opportunity Ordinance.
Ad Hoc Review of the Housing Opportunity Ordinance
The HOO was originally adopted in November 2011 to implement the City’s Housing
Element goal to provide affordable housing within the City. In October 2015, the HOO
was amended to make the inclusionary housing requirements more predictable for
housing developers and to incentivize more affordable housing production on-site in
conjunction with new market rate housing development. Some examples of the ordinance
changes included simplifying the complex in-lieu fee calculation and creating additional
incentives to allow developers the option of providing inclusionary housing units either on
or off-site. In September 2020, the HOO was amended again to decrease the in-lieu fee
amount for all projects from $15 to $5 per square foot, change the trigger of the HOO,
and expand the eligible uses of in-lieu fees collected by the City.
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As part of their review of the HOO, the Ad Hoc Committee requested to review the in-lieu
fee analysis by Keyser Marston Associates (KMA) completed in May 2020 and requested
for the study to be updated with current information. The updated study is attached as
Exhibit 1. Specifically, KMA has been engaged to prepare an analysis to estimate the in-
lieu fee amounts that can be charged for rental residential and ownership housing
developments on a financially feasible basis. The results of KMA’s analysis can be
summarized as follows:
Supportable In-Lieu Fee: Housing Opportunity Ordinance Update
Rental Residential Development $17.10 to $17.80/Sq. Ft. of Leasable Area
Ownership Housing Development $13.00/Sq. Ft. of Saleable Area
Additionally, the Committee requested for available data and statistics relating to housing
and housing affordability in the City. Staff engaged a third party housing consultant, MDG
Associates, Inc. (MDG), for assistance with collecting and presenting the data. The
information collected by MDG is attached as Exhibit 2. General findings from MDG’s data
shows that: 1) relative to the total housing supply, there is a small amount of affordable
housing units (subsidized housing); 2) there is a gap between increasing rents and
wages; and 3) zip code 92705 is the most expensive and 92701 is the most affordable
based on the current rental rates, with affordability data provided for all zip codes based
on unit bedroom size.
Following their review of the information, the Ad Hoc Committee discussed three options
to amend the HOO. The three options involved a review of: 1) the project threshold/size
of a project that would require compliance with the HOO; 2) the trigger for when a project
would be required to comply with the HOO; 3) the set-aside requirements for units for
sale and for rent; 4) the options to satisfy the HOO requirements; and 5) additional
enhancements to achieve the purpose of the HOO. The Committee provided direction for
staff to draft their recommended changes to the HOO for further discussion by the full City
Council. Following this deliberative process, the Housing Ad Hoc Committee provided
direction to draft amendments to the HOO as described and analyzed in Table 1:
Summary of Amendments below. The draft HOO is attached as Exhibit 3 in redline format
with the amendments discussed below.
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Table 1: Summary of Amendments
Code Section Subject Ad Hoc Recommendations
Title Update Title:
2021 AFFORDABLE
HOUSING
OPPORTUNITY &
CREATION
The updated title will provide clarity and
distinction from prior versions of the
Ordinance.
41-1901 Definition:
Deletes Entitled
residential project
definition
The new ordinance will be likely be
effective after October 1, 2021, and the
provision for “Entitled Residential
Projects” no longer applies.
41-1902 Applicability:
Establishes new
standards for projects
that need to comply with
the ordinance
This section is amended to revert the
language to the previous HOO before it
was previously amended in October 2021.
The HOO would apply to projects that will
require a zone change or general plan
amendment, including city initiated zone
changes and general plan amendments
since November 28, 2011. The current
ordinance only applies to projects that are
requesting an increase in the density
permitted by the General Plan. The
amendment also adds a percentage of
rental units that may be built on-site for
extremely low-income households to 5
percent of the total number of units in an
effort to incentivize the construction of
extremely low-income units.
41-1903 Exempt Projects:
Clarifies which projects
are not subject to the
ordinance
This section is amended to further clarify
the exclusions to the HOO that may be
agreed upon by City Council in a
development agreement.
41-1904 In-Lieu Fee Option:
Revises the in-lieu fee
and changes the timing
of payment
This section is amended to increase the
in-lieu fee from $5 per habitable square
foot to $15 per habitable square foot. This
section also removes the incentive for
“Entitled Residential Projects” to obtain
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Next Steps
If the City Council desires to move forward with the changes recommended by the
Housing Ad Hoc Committee, it is feasible to complete the final drafting of the ordinance
and initiate the ordinance adoption process within 45 to 60 days upon receiving final
direction.
Following approval of the amendments to the HOO, the Housing Ad Hoc Committee will
reconvene and continue to discuss the remaining topics below and may return in the
future with recommendations for each topic:
a.Rent Stabilization/Rent Control
building permits during the current
economic climate. The new ordinance will
be likely be effective after October 1,
2021, and the provision for “Entitled
Residential Projects” no longer applies.
The amendments also apply to the timing
of payment from issuance of the building
permit to issuance of the certificate of
occupancy in order to make the larger fee
more reasonable to pay after the project is
developed.
41-1906 Standards:
Revised the term of
affordability for
ownership and rental
units on-site
This section is amended to require units
for sale and rental units that are built on-
site to be affordable in perpetuity as an
enhancement.
41-1909 Inclusionary Housing
Fund: Clarifies the use
of the in-lieu fees
collected
This section is amended to further clarify
the use of in-lieu fees paid to the City. It
provides the Community Development
Agency with a priority for the use of the
funds for large families and allows the
funds to be used for additional one-
time programs addressing housing
security, eviction prevention, and housing
legal assistance for city residents.
41-1910 In-lieu fee calculation:
Provides for periodic
review at the option of
the City Council
This section is amended to provide for
periodic review of the in-lieu fee when
determined to be appropriate by the City
Council.
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b.Just Cause Eviction Policies
Additionally, the Committee also discussed forms of land ownership such as cooperatives
& land trusts as well as options for regulatory streamlining and reduction of development
impact fees to promote production of housing within the City. The Committee agreed early
on that these topics are adequately covered and will be evaluated as part of the upcoming
General Plan and Housing Element updates.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact associated with initial direction from City Council. However, the
future City Council action to accept some of the recommendations would have an impact
on program revenue.
EXHIBIT(S)
1. In-Lieu Fee Analysis by Keyser Marston Associates
2. MDG Housing Data
3. Draft Changes to the HOO for Discussion
Submitted By: Minh Thai, Executive Director of Planning and Building Agency
Approved By: Kristine Ridge, City Manager
500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE 213.622.8095
2106011.SA:KHH
WWW.KEYSERMARSTON.COM 19090.017.021
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
A. Jerry Keyser
Timothy C. Kelly
Debbie M. Kern
David Doezema
Kevin Feeney
LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
MEMORANDUM
To: Judson Brown, Housing Division Manager
City of Santa Ana
From: Kathleen Head
Date: June 28, 2021
Subject: Housing Opportunity Ordinance: Updated In-Lieu Fee Analysis
At your request, Keyser Marston Associates, Inc. (KMA) updated our May 2020 financial
analysis of the in-lieu fee that can be supported by residential development that is
subject to the City of Santa Ana (City) Housing Opportunity Ordinance (Ordinance). The
following memorandum describes the methodology and assumptions that KMA used in
preparing the analysis.
The results of the following analysis can be summarized as follows:
Supportable In-Lieu Fee: Housing Opportunity Ordinance Update
Rental Residential Development $17.10 to $17.80/Sq. Ft. of Leasable Area
Ownership Housing Development $13.00/Sq. Ft. of Saleable Area
BACKGROUND
Existing Ordinance
The Ordinance was originally adopted by the City Council on November 28, 2011. The
Ordinance has been amended multiple times; the most recent modifications were
adopted in September 2020. The Ordinance imposes inclusionary housing requirements
on residential development that embodies any of the following characteristics:
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1. The proposed number of units exceeds the density permitted by the City’s
General Plan.
2. The proposed project could not be developed under the site’s existing zoning
standards.
3. The proposed project is a conversion of rental units to ownership condominium
units.
Proposed Modifications to the Ordinance
The City Council is currently considering options for clarifying and expanding the
Ordinance. The potential Ordinance terms that were evaluated in the KMA analysis can
be described as follows:
1. The requirements would be triggered by residential projects citywide with 20 or
more units that embody one of the following characteristics:
a. The proposed project requires a change in use to allow residential
development or an increase the number of units above the density
allowed by the City’s General Plan, zoning standards, or mixed-use
development standards, under one of the following criteria:
i. The modifications were made by the City to the General Plan,
zoning standards, or mixed-use development standards at any
time after November 28, 2011; or
ii. Modifications that are being requested by a private party
following the adoption of the modified Ordinance.
b. The proposed project is a conversion of rental units to ownership
condominium units.
2. The following income and affordability requirements would be applied to the
incremental number of units proposed to be developed above the permitted
residential density:
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Income and Affordability Requirements
Ownership
Housing
Development
Rental
Residential
Development 1
Moderate Income 10% N/A
Low Income N/A 15%
Very Low Income N/A 10%
Extremely Low Income N/A 5%
3. In general, projects that are subject to the modified Ordinance requirements
would be allowed to fulfill the affordable housing requirements in one of the
following ways:
a. Production of the affordable housing units on site within the proposed
market rate project.
b. Off-site production of the affordable housing units.
c. Rehabilitation of existing units.
d. Payment of a fee in-lieu of producing the requisite number of affordable
housing units.
4. The proposed project would be required to fulfill the affordable housing
requirements within the proposed market rate project if the proposed project
would cause the removal of existing units that are occupied by low and/or very
low income households.
1 The Developer would only be required to select one of the identified income categories to fulfill the
production requirement.
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Caveats
It is important to note that the modified Ordinance should be structured to ensure that
the following standard are met:
1. Inclusionary housing requirements cannot be confiscatory or deprive an owner
of a fair and reasonable return. Recognizing that the courts have not defined
these terms, the City has some discretion in establishing evaluation parameters.
2. California Government Code Section 65583 (a) requires assessments of the
potential and actual constraints being placed on the development of housing.
Within that context, it is important for affordable housing programs to be set up
to balance the interests of property owners and developers against the public
benefit created by the production of affordable housing units.
The following KMA analysis is based on an evaluation of the affordable housing
requirements that could be supported from an economic perspective. KMA translated
the results of this analysis into order-of-magnitude estimates of the in-lieu fee amounts
that could be charged on a financially feasible basis.
ANALYSIS ORGANIZATION
The KMA analysis is supported by the following Attachments, Appendices and Exhibits:
Attachment 1: Rental Residential Development
Summary Table
Appendix A: Rent Survey
Appendix B: Affordability Analyses
Exhibit I: Affordable Rent Calculations
Exhibit II: In-Lieu Fee Analysis
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Attachment 2: Ownership Housing Development
Summary Table
Appendix A: Home Sales Survey
Appendix B: Affordability Analyses
Exhibit I: Affordable Sales Price Calculations
Exhibit II: In-Lieu Fee Analysis
RENTAL RESIDENTIAL DEVELOPMENT ANALYSIS
Affordable Housing Requirements
To assist in evaluating the supportable in-lieu fee for rental residential development
KMA compiled information pertaining to the development scopes and rents for recently
constructed projects. Based on this information KMA prepared conceptual pro forma
analyses to identify the magnitude of the income and affordability requirements that
could feasibly be imposed.
As proposed, the updated Ordinance would allow developers to select from one of the
following affordable housing obligations:
1. A 15% set aside for low income households; or
2. A 10% set aside for very low income households; or
3. A 5% set aside for extremely low income households.
The California Government Code Sections 65915 – 65918 (Section 65915) density bonus
can provide a valuable tool for mitigating the impact created by the imposition of
inclusionary housing requirements. The results of the KMA financial analysis indicate
that if the benefits provided by the Section 65915 density bonus can be effectively used,
the proposed income and affordability requirements should not create a constraint to
development.
The Section 65915 density bonus can only be used for projects that produce the
statutorily set number of affordable housing units. It is not possible to pay a fee in lieu
of producing the affordable units that generate the density bonus benefits. Therefore,
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it is necessary to evaluate the in-lieu fee option in the context of rental residential
projects that do not make use of the Section 65915 density bonus.
As can be seen in the Summary Table: Rental Residential Development Analysis, the
conceptual analysis prepared by KMA indicates that a 5% to 6% affordable housing
requirement could be feasibly imposed on rental residential developments that do not
use the Section 65915 density bonus. KMA applied these percentages in our analysis of
the in-lieu fee that could be supported by rental residential development.
Development Assumptions
The development scopes used in the rental residential development analyses can be
described as follows:
1. The development site area is set at five acres.
2. The prototype project includes the following number of units:
a. The base case scenarios include 300 units.
b. The Section 65915 scenario includes a 35% density bonus, which results
in a total of 405 units.
3. The prototype project includes the following unit mix:
Unit Mix: Prototype Project
Number of Bedrooms
Average Unit
Size (Sq. Ft.)
Percentage of
Units
Studio 750 25%
1 900 35%
2 1,140 35%
3 1,445 5%
Weighted Average / Total 974 100%
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4. The parking provided for the prototype project complies with the City’s parking
code.2
Rent Estimates
MARKET RATE UNITS
In June 2021, KMA surveyed rental residential projects in Santa Ana and Anaheim that
have been built within the past five years and that received four or more stars in the
CoStar quality ranking system. The survey is presented in Attachment 1 – Appendix A.
The purpose of this survey was to assist in estimating the currently achievable market
rents for the types of projects likely to be constructed in Santa Ana. However, the
characteristics of actual projects will vary to some degree from the prototypes.
The market rate monthly rent estimates that are used in this pro forma analysis are:
Projected Monthly Market Rate Rents – Rental Residential Development
Average Monthly Rent Per Unit
Studio Units $2,420
One-Bedroom Units $2,600
Two-Bedroom Units $2,830
Three-Bedroom Units $3,750
Weighted Average Rent Per Square Foot of Leasable Area $2.86
AFFORDABLE RENT CALCULATIONS
The Ordinance calls for “Affordable Rents” to be calculated using the methodology
imposed by California Health and Safety Code (H&SC) Section 50053. The calculations
are presented in Attachment 1 – Appendix B – Exhibit I, and the assumptions and results
can be summarized as follows:
2 The density bonus scenario used to test the on-site production requirement is based on the Section
65915 (p) provision that allows no guest parking requirement to be applied.
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1. The household income information used in the calculations is based on 2021
income statistics for Orange County as a whole. The household incomes are
published annually by the United States Department of Housing and Urban
Development (HUD) and are distributed by the California Department of Housing
and Community Development (HCD).
2. The household size appropriate for the unit is based on the H&SC Section
50052.5 standard, which is set at the number of bedrooms in the home plus one.
This is not meant to be an occupancy cap; it is simply a benchmark used to
create a consistent methodology for calculating the Affordable Rents.
3. The household incomes used in the Affordable Rent calculations are:3
a. Very low income at 50% of area median income (AMI); and
b. Low income at 60% of AMI.
4. Thirty percent (30%) of defined household income is allocated to housing
expenses.
5. KMA’s calculations are based on the assumption that the tenants will be
required to pay for gas heating, cooking and water heating; and basic electric
services. The December 1, 2020 Orange County Housing Authority utilities
allowances were applied in this analysis.
The resulting Affordable Rents are presented in the following table:
3 The percentages of the AMI used in the Affordable Rent calculations are benchmarks established by
H&SC 50053. The incomes limit used to qualify households to occupy very low income units is defined in
H&SC 50105, and the low income limit is defined in H&SC 50079.5. These limits are meant to reflect 80%
and 50% of AMI, respectively. However, HUD adjusts the income levels for Orange County to account for
conditions that warrant special consideration. The current income qualification limits exceed 80% and
50% of AMI, respectively.
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Affordable Rent Calculations – Rental Residential Development
Very Low
Income
Low Income
Studio Units
Maximum Monthly Housing Cost $934 $1,121
(Less) Monthly Utility Allowance (58) (58)
Affordable Rent $876 $1,063
One-Bedroom Units
Maximum Monthly Housing Cost $1,067 $1,280
(Less) Monthly Utility Allowance (67) (67)
Affordable Rent $1,000 $1,213
Two-Bedroom Units
Maximum Monthly Housing Cost $1,201 $1,441
(Less) Monthly Utility Allowance (90) (90)
Affordable Rent $1,111 $1,351
Three-Bedroom Units
Maximum Monthly Housing Cost $1,344 $1,601
(Less) Monthly Utility Allowance (114) (114)
Affordable Rent $1,220 $1,487
Supportable In-Lieu Fees
KMA estimated the supportable in-lieu fee amounts for rental residential projects based
on the “Affordability Gaps” associated with the on-site development of affordable
housing units within market rate rental residential projects. The Affordability Gaps for
rental residential developments are estimated in Attachment 1 - Appendix B – Exhibit II
using the following methodology:
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1. The differences between the estimated achievable market rate monthly rents
and the defined Affordable Rents are calculated for studio, one-bedroom, two-
bedroom and three-bedroom units.
2. KMA assumed that the property taxes for projects that include designated
affordable housing units would be based on a lower assessed value due to the
reduction in net operating income that would be generated by the project. KMA
deducted this lower property tax expense from the estimated rent difference.
3. The estimated annual Affordability Gap is equal to the net rent difference minus
the property tax savings.
4. The net Affordability Gaps are estimated by capitalizing the annual Affordability
Gaps at the threshold returns derived from the pro forma analysis of a market
rate development.
5. The net Affordability Gaps are translated into the supportable in-lieu fees per
affordable unit and per square foot of leasable area.
The results of the in-lieu fee analysis are summarized in the following table:
Supportable In-Lieu Fees – Rental Residential Development
In-Lieu Fee
Very Low Income
Alternative
Low Income
Alternative
Per Affordable Unit $333,000 $289,000
Per Total Unit in the Project $16,700 $17,300
Per Sq. Ft. of Leasable Area $17.10 $17.80
OWNERSHIP HOUSING DEVELOPMENT ANALYSIS
Affordable Housing Requirements
The current affordable housing requirement for ownership housing development
requires 10% of the units in a project that is subject to the modified Ordinance to be
sold to moderate income households. As can be seen in the Summary Table: Ownership
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Housing Development Analysis, the conceptual analysis prepared by KMA indicates this
requirement could be supported under current conditions. As such, KMA applied this
percentage in our analysis of the in-lieu fee that could be supported by ownership
housing development.
To assist in evaluating the financial characteristics of ownership housing development,
KMA compiled information pertaining to the development scopes and sales prices for
recently constructed projects. Based on this information KMA prepared conceptual pro
forma analyses to identify the magnitude of the income and affordability requirements
that could feasibly be imposed.
Development Assumptions
For the following reasons the prototype ownership housing development created by
KMA for the pro forma analysis is a condominium project:
1. For single family homes, the average gap between the market rate price and the
“Affordable Sales Price” is in the range of $600,000 for moderate income
households.
2. Given the disparate characteristics of the new housing inventory in Santa Ana,
and that the same in-lieu fee schedule will be applied to all ownership housing
development, it is KMA’s opinion that it is more equitable to base the in-lieu fee
on the Affordability Gap associated with condominium development.
As can be seen in the Summary Table: Ownership Housing Development Analysis, the
development scope applied in the prototype analysis consists of the following:
1. The development site is set at one acre of land area.
2. The prototype project includes 35 units.
3. The units in the project included a weighted average unit size of 1,720 square
feet of saleable area.
4. The parking provided complies with the City’s parking code requirements.
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Sales Price Estimates
MARKET RATE UNITS
In June 2021, KMA surveyed ownership housing projects in the Santa Ana vicinity that
have been built within the past five years (Attachment 2 – Appendix A). It is important
to note that the prototype analysis is intended to reflect average or typical ownership
housing projects rather than any specific project. It should be expected that specific
projects will vary to some degree from the prototype.
The average sales prices used in the pro forma analysis are set at the following amounts:
Projected Market Rate Sales Prices – Ownership Housing Development
Three-Bedroom Units $690,000
Four-Bedroom Units $775,000
Weighted Average Price Per Square Foot of Saleable Area $417
AFFORDABLE SALES PRICE CALCULATIONS
The Ordinance calls for Affordable Sales Prices to be set using the H&SC Section 50052.5
calculation methodology. The calculations are presented in Attachment 2 – Appendix B
– Exhibit I, and the assumptions and results can be summarized as follows:
1. The household income information used in the calculations is based on 2021
income statistics distributed by HCD.
2. The household size appropriate for the unit is based on the H&SC Section
50052.5 standard of the number of bedrooms in the home plus one. As was the
case in the Affordable Rent calculations, this is a benchmark, not an occupancy
cap.
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3. The household incomes used in the Affordable Sales Price calculations are set at
110% of AMI.4
4. Thirty-five percent (35%) of the benchmark household incomes are allotted to
housing expenses.
5. Housing expenses are comprised of the following:
a. Household utilities costs, which are based on allowances that were
published by the Orange County Housing Authority on December 1, 2020;
b. Homeowners association dues and homeowners insurance premiums;
c. Maintenance costs;
d. Property taxes; and
e. Mortgage debt service.
The supportable mortgage amount is estimated based on the following:
1. The amount of income available for mortgage debt service after the payment of
all the other housing expenses;
2. The application of typical lender underwriting standards; and
3. The current market interest rate plus an upward adjustment to reflect the
potential for interest rates to increase between the commencement of
construction and the ultimate sale of the affordable unit.
The Affordable Sales Price is equal to the supportable mortgage plus a benchmark down
payment. The benchmark down payment is only used for the purpose setting the
Affordable Sales Price.5
4 The percentages of the AMI used in the Affordable Rent calculations are benchmarks established by
H&SC 50052.5. The incomes limit used to qualify households to occupy moderate income units is defined
in H&SC 50093.
5 The actual down payment amount can vary widely, but it does not impact the Affordable Sales Price.
Instead, the actual down payment contributed by a home buyer is subtracted from the defined Affordable
Sales Price to establish the allowable first trust deed mortgage amount.
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Estimating the achievable Affordable Sales Prices for moderate income households is
complicated by the fact that KMA believes that the Affordable Sales Prices are too close
to the projected market rate sales prices to be marketable when irrevocable resale
controls are imposed:
1. It is reasonable to assume that a home buyer will not purchase a home that is
subject to long-term covenants unless there they receive a substantial discount
from the unrestricted market rate sales price.
2. In KMA’s experience the required discount falls within the range of 30%.
3. When a 30% discount is applied to the projected market rate sales prices, the
achievable prices for moderate income units are estimated as follows:
a. The achievable price for three-bedroom units is estimated at $483,000.
b. The achievable price for four-bedroom units is estimated at $542,500.
The resulting Affordability Gaps are estimated as follows:
Estimated Affordability Gaps – Ownership Housing Development
Sales Prices
Three-Bedroom
Units
Four-Bedroom
Units
Market Rate Sales Price $690,000 $775,000
Affordable Sales Price $483,000 $542,500
Affordability Gap Per Unit $207,000 $232,500
Supportable In-Lieu Fees
As shown in Attachment 2 – Appendix B – Exhibit II, KMA estimates the supportable in-
lieu fees at the following amounts:
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Supportable In-Lieu Fees
Ownership Housing Development
In-Lieu Fee
10% Moderate
Income Units
Per Affordable Unit $215,000
Per Total Unit in the Project $21,500
Per Sq. Ft. of Saleable Area $13.00
SUMMARY
It is important to set the in-lieu fee amounts at defensible amounts for the following
reasons:
1. The courts have ruled that inclusionary housing requirements cannot be
confiscatory or deprive an owner of a fair and reasonable return;
2. California Government Code Section 65583 (a) prohibits jurisdictions from
imposing requirements that constrain the development of housing; and
3. To maximize the production of housing, affordable housing programs should be
set up to balance the interests of property owners and developers against the
public benefit created by the production of affordable housing units.
Based on the results of the KMA financial analysis, the supportable in-lieu fees are
estimated as follows:
Supportable In-Lieu Fee: Housing Opportunity Ordinance Update
Rental Residential Development $17.10 to $17.80/Sq. Ft. of Leasable Area
Ownership Housing Development $13.00/Sq. Ft. of Saleable Area
ATTACHMENT 1
RENTAL RESIDENTIAL DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Rent; ATT 1 TITLE Page 1 of 8
SUMMARY TABLE
RENTAL RESIDENTIAL DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
MARKET RATE
ALTERNATIVE
VERY LOW INCOME
ALTERNATIVE
LOW INCOME
ALTERNATIVE
VERY LOW INCOME
DENSITY BONUS
ALTERNATIVE
I.Project Description
A.Site Area (Sf)217,800 217,800 217,800 217,800
B.Total Units 300 300 300 450
C.Density (Units/Acre)60 60 60 90
D.Unit Mix - %
Studio Units 75 75 75 113
One-Bedroom Units 105 105 105 158
Two-Bedroom Units 105 105 105 158
Three-Bedroom Units 15 15 15 23
Total Units 300 300 300 452
E.Gross Building Area (Sf)343,676 343,676 343,676 343,676
F.Number of Parking Spaces Provided 510 510 510 633
Parking Spaces Per Unit 1.70 1.70 1.70 1.41
II.Development Costs
A.Property Acquisition Costs $13,068,000 $13,068,000 $13,068,000 $13,068,000
Per Square Foot of Land Area $60 $60 $60 $60
B.Direct Costs $94,230,000 $94,230,000 $94,230,000 $134,873,000
Per Square Foot of GBA $274 $274 $274 $392
C.Indirect + Financing Costs $30,965,000 $31,131,000 $31,131,000 $44,780,000
As a % of Direct Costs 33%33%33%33%
Total Development Cost $138,263,000 $138,429,000 $138,429,000 $192,721,000
Per Square Foot of GBA $402 $403 $403 $561
III.Stabilized Net Operating Income $6,413,000 $6,179,000 $6,170,000 $8,969,300
IV.Return on Total Investment 4.6%4.5%4.5%4.7%
V.Supportable Inclusionary Housing Requirement 1 5%6%10%
VI.In-Lieu Fee Per Per Square Foot of Leasable Area $17.10 $17.80 NA
1 Based on the total number of units in the project.
Prepared by: Keyser Marston Associates
File name: 6 24 21 SA HOO Rent; Rent Sum Page 2 of 8
APPENDIX A
RENT SURVEY
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
RENTAL RESIDENTIAL DEVELOPMENT
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Rent; App A Titles Page 3 of 8
APPENDIX A
RENT SURVEY
4 STAR PROPERTIES CONSTRUCTED AFTER 2010
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Name Address
# of
Units
Unit Size
(SF)Total Per SF
Year
Built
888 on Main 888 N Main St Santa Ana 103 503 $1,807 $3.59 2021
The Charlie 3630 Westminster Ave Santa Ana 23 540 $2,013 $3.73 2019
Artist Village Apartments 300-301 W 2nd St Santa Ana 14 555 $2,666 $4.80 2015
Vivere Flats 1725 S Auburn Way Anaheim 58 557 $1,961 $3.52 2017
Jefferson Edge at Platinum Park 1921 Union St Anaheim 28 579 $1,778 $3.07 2019
Jefferson Rise at Platinum Park 1910 S Union St Anaheim 61 600 $2,044 $3.41 2019
Core 1815 S Westside Dr Anaheim 25 604 $2,133 $3.53 2018
The George 2211 E Orangewood Ave Anaheim 30 608 $2,360 $3.88 2017
Gateway II 2100 E Orangewood Ave Anaheim 25 618 $1,874 $3.03 2016
Broadstone Archive 1901 E. Dyer Road Santa Ana 100 780 $2,513 $3.22 2020
Broadstone Arden 1951 E Dyer Road Santa Ana 976 816 $2,548 $3.12 2020
Vivere Lofts 1331 Katella Ave Anaheim 30 1,080 $2,650 $2.45 2012
Minimum 503 $1,778 $2.45
Maximum 1,080 $2,666 $4.80
Weighted Average 755 $2,408 $3.22
Artist Village Apartments 300-301 W 2nd St Santa Ana 77 653 $1,833 $2.81
Jefferson Edge at Platinum Park 1921 Union St Anaheim 161 713 $1,972 $2.77
The Marke 100 E MacArthur Blvd Santa Ana 158 749 $2,381 $3.18 2014
888 on Main 888 N Main St Santa Ana 45 751 $1,963 $2.61
The Charlie 3630 Westminster Ave Santa Ana 90 759 $2,244 $2.96
Prisma 301 Jeanette Ln Santa Ana 111 762 $2,227 $2.92 2018
Core 1815 S Westside Dr Anaheim 218 766 $2,255 $2.94
Vivere Flats 1725 S Auburn Way Anaheim 102 770 $2,274 $2.95
Nineteen01 1901 E 1st St Santa Ana 117 776 $1,937 $2.50 2016
The George 2211 E Orangewood Ave Anaheim 184 776 $2,724 $3.51
Market Lofts DTSA 401 N Bush St Santa Ana 24 800 $2,595 $3.24 2021
Jefferson Rise at Platinum Park 1910 S Union St Anaheim 174 835 $2,364 $2.83
Broadstone Archive 1901 E. Dyer Road Santa Ana 103 879 $2,772 $3.15
Gateway II 2100 E Orangewood Ave Anaheim 220 892 $2,241 $2.51
Broadstone Arden 1951 E Dyer Road Santa Ana 141 915 $2,738 $2.99
Vivere Lofts 1331 Katella Ave Anaheim 30 919 $2,273 $2.47
Stadium House 2100 E Katella Ave Anaheim 80 997 $2,295 $2.30 2020
Minimum 653 $1,833 $2.30
Maximum 997 $2,772 $3.51
Weighted Average 804 $2,316 $2.89
Average Effective Rent
Studio Units
One-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Rent Page 4 of 8
APPENDIX A
RENT SURVEY
4 STAR PROPERTIES CONSTRUCTED AFTER 2010
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Name Address
# of
Units
Unit Size
(SF)Total Per SF
Year
Built
Average Effective Rent
Artist Village Apartments 300-301 W 2nd St Santa Ana 106 994 $2,445 $2.46
Prisma 301 Jeanette Ln Santa Ana 71 1,017 $2,684 $2.64
The Charlie 3630 Westminster Ave Santa Ana 96 1,031 $2,588 $2.51
Vivere Flats 1725 S Auburn Way Anaheim 84 1,046 $2,989 $2.86
Jefferson Rise at Platinum Park 1910 S Union St Anaheim 136 1,078 $2,765 $2.56
Jefferson Edge at Platinum Park 1921 Union St Anaheim 156 1,120 $2,588 $2.31
The Marke 100 E MacArthur Blvd Santa Ana 128 1,132 $3,012 $2.66
Nineteen01 1901 E 1st St Santa Ana 118 1,135 $2,533 $2.23
Broadstone Archive 1901 E. Dyer Road Santa Ana 183 1,146 $3,229 $2.82
Core 1815 S Westside Dr Anaheim 157 1,154 $2,843 $2.46
The George 2211 E Orangewood Ave Anaheim 116 1,165 $3,323 $2.85
Broadstone Arden 1951 E Dyer Road Santa Ana 97 1,170 $3,136 $2.68
Gateway II 2100 E Orangewood Ave Anaheim 150 1,215 $2,780 $2.29
Vivere Lofts 1331 Katella Ave Anaheim 32 1,315 $2,888 $2.20
Stadium House 2100 E Katella Ave Anaheim 162 1,316 $2,428 $1.84
Minimum 994 $2,428 $1.84
Maximum 1,316 $3,323 $2.86
Weighted Average 1,139 $2,814 $2.48
The Charlie 3630 Westminster Ave Santa Ana 19 1,238 $3,519 $2.84
Jefferson Rise at Platinum Park 1910 S Union St 5 1,350 $3,604 $2.67
Jefferson Edge at Platinum Park 1921 Union St 26 1,356 $3,288 $2.42
The Marke 100 E MacArthur Blvd Santa Ana 14 1,374 $3,784 $2.75
The George 2211 E Orangewood Ave 10 1,445 $4,430 $3.07
Broadstone Archive 1901 E. Dyer Road Santa Ana 17 1,527 $4,243 $2.78
Nineteen01 1901 E 1st St Santa Ana 29 1,598 $3,545 $2.22
Broadstone Arden 1951 E Dyer Road Santa Ana 7 1,669 $4,485 $2.69
Minimum 1,238 $3,288 $2.22
Maximum 1,669 $4,485 $3.07
Weighted Average 1,443 $3,732 $2.60
Source: CoStar; June 2021.
Two-Bedroom Units
Three-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Rent Page 5 of 8
APPENDIX B
RENTAL RESIDENTIAL DEVELOPMENT
AFFORDABILITY ANALYSES
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Rent; App B Titles Page 6 of 8
APPENDIX B - EXHIBIT I
AFFORDABLE RENT CALCULATIONS
2021 INCOME STANDARDS
RENTAL RESIDENTIAL DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Studio Units
One-Bedroom
Units
Two-Bedroom
Units
Three-
Bedroom Units
I.General Assumptions
Area Median Income (AMI)1 $74,700 $85,350 $96,050 $106,700
Monthly Utilities Allowance 2 $58 $67 $90 $114
II.Affordable Rent Calculations 3
A.Very Low Income - Rent Based on 50% AMI
Benchmark Annual Household Income $37,350 $42,675 $48,025 $53,350
Percentage of Income Allotted to Housing Expenses 30%30%30%30%
Monthly Income Available for Housing Expenses $934 $1,067 $1,201 $1,334
(Less) Monthly Utilities Allowance (58)(67)(90)(114)
Maximum Allowable Rent $876 $1,000 $1,111 $1,220
B.Low Income - Rent Based on 60% AMI
Benchmark Annual Household Income $44,820 $51,210 $57,630 $64,020
Percentage of Income Allotted to Housing Expenses 30%30%30%30%
Monthly Income Available for Housing Expenses $1,121 $1,280 $1,441 $1,601
(Less) Monthly Utilities Allowance (58)(67)(90)(114)
Maximum Allowable Rent $1,063 $1,213 $1,351 $1,487
1
2
3 Based on the California Health & Safety Code Section 50053 calculation methodology.
Based on the 2021 Orange County household incomes published by the California Housing & Community Development Department
(HCD). The benchmark household size is set at the number of bedrooms in the unit plus one.
Based on the Orange County Housing Authority utility allowance schedule effective as of 12/1/20. Assumes: Gas Heating, Gas Cooking,
and Gas Water Heater; and Basic Electric.
Prepared by: Keyser Marston Associates
File name: 6 24 21 SA HOO Rent; Aff Rent Page 7 of 8
APPENDIX B - EXHIBIT II
IN-LIEU FEE ANALYSIS
RENTAL RESIDENTIAL DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Very Low Income Low Income
I.Rent Difference 1
A.Studio Units
Market Rate Units $2,420 $2,420
Affordable Units 876 1,063
Difference $1,544 $1,358
B.One-Bedroom Units
Market Rate Units $2,600 $2,600
Affordable Units 1,000 1,213
Difference $1,600 $1,387
C.Two-Bedroom Units
Market Rate Units $2,830 $2,830
Affordable Units 1,111 1,351
Difference $1,719 $1,479
D.Three-Bedroom Units
Market Rate Units $3,750 $3,750
Affordable Units 1,220 1,487
Difference $2,530 $2,264
II.Distribution of Total Units 2
Studio Units 25%25%
One-Bedroom Units 35%35%
Two-Bedroom Units 35%35%
Three-Bedroom Units 5%5%
III.Annual Affordability Gap Per Inclusionary Unit $20,093 $17,468
Less: Property Tax Difference 3 (4,660)(4,050)
Annual Affordability Gap Per Inclusionary Unit $15,433 $13,418
IV.Net Affordability Gap Per Inclusionary Unit 4 $333,000 $289,000
V.In-Lieu Fee
Per Total Unit in the Project 5 $16,700 $17,300
Per Square Foot of Leasable Area 6 $17.10 $17.80
1
2 Based on the unit mix distribution applied in the pro forma analysis.
3 Based on the rent differential capitalized at a 5.0% rate to establish the value, and a 1.16% property tax rate.
4 Based on the Annual Affordability Gap Per Inclusionary Unit capitalized at the Threshold Return on Total Investment.
5 Based on the Affordability Gap Per Inclusionary Unit multiplied times the Inclusionary Housing Percentage.
6 Based on the Affordability Gap Per Inclusionary Unit divided by the average leasable area per unit.
The market rents are drawn from the pro forma analyses (See APPENDIX A - EXHIBIT I). The Affordable Rents are
based on the H&SC Section 50053 calculation methodology. (See APPENDIX B - EXHIBIT I).
Prepared by: Keyser Marston Associates
File name: 6 24 21 SA HOO Rent; Fee Page 8 of 8
ATTACHMENT 2
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.
File Name: 6 24 21 SA HOO Own; ATT 2 Title Page 1 of 8
SUMMARY TABLE
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
MARKET RATE
ALTERNATIVE MODERATE INCOME
I.Project Description
A.Site Area (Sf)43,560 43,560
B.Total Units 36 36
C.Density (Units/Acre)36 36
D.Total Units: (Five-Bedroom Units)0 0
E.Gross Building Area (Sf)68,707 68,707
F.Number of Parking Spaces Provided 128 128
II.Development Costs
A.Property Acquisition Costs $2,614,000 $2,614,000
Per Square Foot of Land Area $60 $60
B.Direct Costs $14,423,000 $14,423,000
Per Square Foot of GBA $210 $210
C.Indirect + Financing Costs $5,417,000 $5,343,000
As a % of Direct Costs 38%37%
Total Development Costs $22,454,000 $22,380,000
Per Unit $624,000 $622,000
III.Net Revenue $24,357,000 $23,551,000
IV.Developer Profit $1,903,000 $1,171,000
As a % of Total Development Cost 8.5%5.2%
V.10%
VI.In-Lieu Fee Per Square Foot of Saleable Area $13.00
Supportable Inclusionary Housing Requirements
Prepared by: Keyser Marston Associates
File name: 6 24 21 SA HOO Own; Own Sum Page 2 of 8
APPENDIX A
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
HOME SALES SURVEY
Prepared by: Keyser Marston Associates, Inc.
File Name: 6 24 21 SA HOO Own; App A Titles Page 3 of 8
APPENDIX A - EXHIBIT I
HOME SALES SURVEY
UNITS CONSTRUCTED AFTER 2010
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Address City Zip Code Unit Size (SF)Total Per SF Year Built
I.Condominium & Townhome Units
1434 N Harbor Blvd #1 Santa Ana 92703 1,528 $640,000 $419 2018
607 N Garfield St Santa Ana 92701 1,354 $576,500 $426 2014
16042 Newhope Way Fountain Valley 92708 1,399 $583,000 $417 2011
1016 Hope Ln North Tustin 92705 1,688 $840,000 $498 2018
1551 W Walnut St #51 Santa Ana 92703 1,513 $550,000 $364 2018
1570 W 1ST St #15 Santa Ana 92703 1,513 $560,000 $370 2018
1452 N Harbor Blvd #3 Santa Ana 92703 1,740 $570,000 $328 2018
484 N Porter St Santa Ana 92701 1,358 $627,000 $462 2014
1060 S Harbor Blvd #6 Santa Ana 92704 1,598 $610,000 $382 2017
806 E Santa Ana Blvd Santa Ana 92701 1,641 $600,000 $366 2014
1416 N Harbor Blvd #4 Santa Ana 92703 1,528 $660,000 $432 2018
1310 N Harbor Blvd Santa Ana 92703 2,195 $740,000 $337 2017
1060 S Harbor Blvd #2 Santa Ana 92704 1,588 $635,000 $400 2017
609 N Garfield St Santa Ana 92701 1,461 $585,000 $400 2014
Minimum 1,354 $550,000 $328 2011
Maximum 2,195 $840,000 $498 2018
Average 1,579 $626,893 $397 2016
4256 W 5th St Santa Ana 92703 1,892 $690,000 $365 2016
1222 N Harbor Blvd Santa Ana 92703 2,135 $720,000 $337 2017
1440 N Harbor Blvd #3 Santa Ana 92703 1,748 $673,000 $385 2018
1080 S Harbor Blvd #7 Santa Ana 92704 1,879 $630,000 $335 2017
306 E Jeanette Ln Santa Ana 92705 2,185 $635,000 $291 2010
3336 S Alton Ct Santa Ana 92704 2,360 $880,000 $373 2011
Minimum 1,748 $630,000 $291 2010
Maximum 2,360 $880,000 $385 2018
Average 2,033 $704,667 $347 2015
Sales Price
Three-Bedroom Units
Four-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Own; Home Sales Page 4 of 8
APPENDIX A - EXHIBIT I
HOME SALES SURVEY
UNITS CONSTRUCTED AFTER 2010
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Address City Zip Code Unit Size (SF)Total Per SF Year Built
Sales Price
II.Single Family Homes
221 W Tribella Ct Santa Ana 92703 2,119 $743,000 $351 2016
793 N Concord St Santa Ana 92701 1,573 $478,000 $304 2014
18806 Winnwood Ln North Tustin 92705 4,620 $2,100,000 $455 2021
556 S Harbor Blvd Santa Ana 92704 1,905 $650,000 $341 2017
4284 W 5th St Santa Ana 92703 2,193 $730,000 $333 2015
12791 Panorama Crst North Tustin 92705 6,227 $2,900,000 $466 2015
2138 N Hathaway St Santa Ana 92705 1,861 $770,000 $414 1965
11871 Simon Ranch Rd North Tustin 92705 3,700 $1,830,000 $495 2010
12351 Ranchwood Rd North Tustin 92705 3,244 $1,991,000 $614 2021
524 S Harbor Blvd Santa Ana 92704 1,894 $600,000 $317 2018
13982 Sandhurst Pl North Tustin 92705 2,660 $1,845,000 $694 2017
920 W Tribella Ct Santa Ana 92703 2,032 $699,000 $344 2018
202 W Tribella Ct Santa Ana 92703 2,119 $810,000 $382 2017
2038 Rembrandt Santa Ana 92704 3,056 $1,249,000 $409 2018
11300 Delphinium Ave Fountain Valley 92708 3,374 $1,460,000 $433 2017
13426 Peony Ave Garden Grove 92840 2,490 $895,645 $360 2020
12281 Baja Panorama Santa Ana 92705 3,850 $1,510,000 $392 2020
13462 Peony Ave Garden Grove 92840 2,699 $935,000 $346 2020
Minimum 1,573 $478,000 $304 1965
Maximum 6,227 $2,900,000 $694 2021
Average 2,868 $1,233,091 $430 2014
18808 Winnwood Ln North Tustin 92705 3,804 $1,968,000 $517 2020
18804 Winnwood Ln North Tustin 92705 4,038 $1,950,000 $483 2021
2254 N Lyon St Santa Ana 92705 3,408 $1,263,000 $371 2019
10889 Lotus Dr Garden Grove 92843 2,992 $880,000 $294 2013
10807 Lotus Dr Garden Grove 92843 2,561 $839,500 $328 2013
10781 lotus Garden Grove 92843 2,992 $990,000 $331 2014
10926 Lotus Dr Garden Grove 92843 2,992 $835,000 $279 2014
1615 W Pomona St Santa Ana 92704 3,897 $1,350,000 $346 2019
10787 Lotus Dr Garden Grove 92843 2,561 $800,000 $312 2013
10802 Lotus Dr Garden Grove 92843 2,561 $839,500 $328 2014
Minimum 2,561 $800,000 $279 2013
Maximum 4,038 $1,968,000 $517 2021
Average 3,181 $1,171,500 $368 2016
Source: Redfin. The survey includes executed sales that occurred between June 2020 to June 2021.
Four-Bedroom Units
Five-Bedroom Units
Prepared by: Keyser Marston Associates, Inc.
File name: 6 24 21 SA HOO Own; Home Sales Page 5 of 8
APPENDIX B
AFFORDABILITY ANALYSES
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Prepared by: Keyser Marston Associates, Inc.
File Name: 6 24 21 SA HOO Own; App B Titles Page 6 of 8
APPENDIX B - EXHIBIT I
AFFORDABLE SALES PRICE CALCULATIONS 1
2021 INCOME STANDARDS
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Three-Bedroom
Units
Four-Bedroom
Units
Four-Bedroom
Units
Five-Bedroom
Units
I.Income Information
Area Median Income 2 $106,700 $115,250 $106,700 $115,250
Household Income as a Percentage of AMI 110%110%110%110%
Benchmark Household Income $117,370 $126,775 $117,370 $126,775
Percentage of Income Allotted to Housing Expenses 35%35%35%35%
Income Allotted to Housing Expenses $41,080 $44,371 $41,080 $44,371
II.Expenses
Annual Utilities Allowance 3 $2,976 $3,756 $3,756 $3,780
HOA, Maintenance & Insurance 3,360 3,600 1,920 2,160
Property Taxes @ 1.16% of Affordable Sales Price 6,180 6,580 6,300 6,830
Total Expenses $12,516 $13,936 $11,976 $12,770
III.Income Available for Mortgage $28,564 $30,435 $29,104 $31,601
IV.Affordable Sales Price
Supportable Mtg @ 3.88% Interest 4 $505,900 $539,000 $515,400 $559,700
Home Buyer Down Payment @ 5% Aff Sales Price 26,600 28,400 27,100 29,500
Affordable Sales Price $532,500 $567,400 $542,500 $589,200
V.Estimated Achievable Price 5 $483,000 $542,500
1
2 Based on the H&SC Section 50052.5 that sets the benchmark household sizes equal to the number of bedrooms in the unit plus one.
3
4
Based on 2021 Orange County household incomes published by the California Housing & Community Development Department (HCD). The
Affordable Sales Price calculations are based on the California Health and Safety Code Section 50052.5 methodology.
Utilities allowances are based on the Orange County Housing Authority utility allowances effective as of 12/1/20. Assumes: Gas Cooking, Gas
Heating, and Gas Water Heater; Basic Electric; Water, Sewer; and Trash.
Based on a 50 basis points premium applied to the Bankrate site average APR as of June 17, 2021 for a fixed-interest rate loan with a 30-year
amortization period.
Condominium & Townhome Units Single Family Homes
Prepared by: Keyser Marston Associates
File name: 6 24 21 SA HOO Own; ASP
APPENDIX B - EXHIBIT II
IN-LIEU FEE ANALYSIS
AFFORDABILITY GAP APPROACH
OWNERSHIP HOUSING DEVELOPMENT
HOO: IN-LIEU FEE ANALYSIS
SANTA ANA, CALIFORNIA
Moderate Income
Units
I.Sales Price Difference 1
A.Three-Bedroom Units
Market Rate Sales Price $690,000
Affordable Sales Price 483,000
Difference $207,000
B.Four-Bedroom Units
Market Rate Sales Price $775,000
Affordable Sales Price 542,500
Difference $232,500
II.Distribution of Total Units 2
Three-Bedroom Units 70%
Four-Bedroom Units 30%
III.In-Lieu Fee
Per Inclusionary Unit 3 $215,000
Inclusionary Housing Percentage 10%
Per Total Unit in the Project 4 $21,500
Per Square Foot of Saleable Area 5 $13.00
1
2 Based on the unit mix distribution applied in the pro forma analysis.
3 Based on the weighted average difference between the market rate prices and the Affordable Sales Prices.
4 Based on the Affordability Gap Per Inclusionary Unit multiplied times the Inclusionary Housing Percentage.
5 Based on the Affordability Gap Per Inclusionary Unit divided by the average saleable area per unit.
The market rate sales prices are drawn from the pro forma analyses. (See APPENDIX A - EXHIBIT I). The Affordable Sales Prices are
based on the H&SC Section 50052.5 calculation methodology. (See APPENDIX B - EXHIBIT I).
Prepared by: Keyser Marston Associates, Inc.
File Name: 6 24 21 SA HOO Own; Fee Page 8 of 8
Statistical Data on Housing
Availability, Income and Affordability
Levels
CITY COUNCIL AD HOC COMMITTEE ON HOUSING
MAY 27, 2021
1
Comparative Baseline Data
2CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Average household size 2017 2018 2019
City of Santa Ana 4.31 4.17 4.11
Orange County 3.03 3.02 3
Median household income 2017 2018 2019
City of Santa Ana $65,655 $65,313 $70,084
Orange County $86,217 $89,759 $95,9934
Unemployment rate 12 month high (May 2020)Current (March 2021)
City of Santa Ana 15.1%7%
Orange County 14.9%6.4%
Minimum wage 25 employees or less 26 employees or more
State of California, 2021 $13/hour $14/hour
Sources: ACS 1-year estimates, BLS Local Area Unemployment Statistics, CA Department of Industrial Relations
Zip Code Base Map
3CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
•CoStar rental data
◦Properties with 5 or more
units
◦Location
◦Size
◦Effective rate
◦Star rating
◦Age
◦U.S. Department of Housing
and Urban Development
◦Comprehensive Housing
Affordability Strategy
(CHAS) data
•U.S. Census Bureau,
American Community
Survey
◦Housing and economic
statistics
•U.S. Bureau of Labor
Statistics
◦Unemployment and
occupational wage
statistics
•National Preservation
Housing Database
4CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Sources
Supply: Tenure
5CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
CITYWIDE ZIP CODE
CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702 6
Supply: Number of Unit Types
4,750
12,525
24,978
22,440
12,079
2,252
No bedroom
1 bedroom
2 bedrooms
3 bedrooms
4 bedrooms
5 or more bedrooms
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
92701 92703 92704 92705 92706 92707
No bedroom 1 bedroom 2 bedrooms 3 bedrooms
7CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Supply: Subsidized Units
54%
41%
4%
1%
Units
Section 8
LIHTC
HOME
PBV
Total
Units
0-1
Bedroom
Units
Two
Bedroom
Units
Three
Plus
Bedroom
Units
Total Housing Units 79,024 17,275 24,978 36,771
Subsidized Units 2,557 1,142 177 202
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Number of UnitsAxis Title
Federally Subsidized Housing Units
Subsidized Units Total Housing Units
•Vacancy
◦City of Santa Ana
•1.45%, Q2 2017
•1.32%, Q3 2020
◦Orange County
•1.3%, Q2 2017
•1.25%, Q3 2020
•Section 8 Housing Choice
Voucher Waiting List had
2,352 families on it, as of
March 2021.
8CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Demand is High
9CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
The Gap: Crowding & Cost Burden
5.6%
3.1%
16.1%
8.8%Overcrowded 1.01 to 1.50Overcrowded 1.51 or moreOvercrowding, Renter & Owner
Santa Ana Orange County
21%
19%
26%
22%30-50% Cost Burdened >50% Cost BurdenedCost Burden, Renter & Owner
Santa Ana Orange County
The Gap: Rent & Income
10CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
-20%
-10%
0%
10%
20%
30%
40%
2006 2010 2015 2019 2006 2010 2015 2019
Orange County, California Santa Ana, California
Cumulative % Change (Rent)Cumulative % Change (Income)
Housing Wage by Zip Code to
Afford a 2-Bedroom Unit
11CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
1-Bedroom Affordability for 2-
Person Families, by Zip Code
12CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
13CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
2-Bedroom Affordability for 3-
Person Families, by Zip Code
3-Bedroom Affordability for 5-
Person Families, by Zip Code
14CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
Studio Affordability for 2-Person
Families, by Zip Code
15CITY OF SANTA ANA, COMMUNITY DEVELOPMENT AGENCY
20 CIVIC CENTER PLAZA, SANTA ANA, CA 92702
EXHIBIT 3 - DRAFT CHANGES TO THE HOO FOR DISCUSSION
Redline & Without Redline Versions Attached
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY & CREATION ORDINANCE[22]
Footnotes:
--- (22) ---
Editor's note— Ord. No. NS-2881, § 2, adopted September 1, 2015 , repealed and replaced art. XVIII.I,
§§ 41-1900—41-1910, in its entirety. Former art. XVIII.I pertained to similar subject matter, and was
derived from Ord. No. NS-2825, §§ 2—12, adopted November 28, 2011.
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 or the conversion of rental units to condominium ownership when
the number of units exceed the densities permitted under the general plan.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 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.
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.
Exhibit 3 - Redline Draft
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.
Entitled residential project means a development project that includes residential units subject to the
provisions and applicability of this Article XVIII.I. that received entitlement approvals by city council action
between August 4, 2015 and August 17, 2020 to construct the residential project and which has not been
issued a building permit prior to August 18, 2020. A list of the currently entitled residential projects is
attached hereto as Exhibit A and is incorporated by reference.
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 very low, low, or
moderate income households, at an affordable housing cost, in compliance with this article.
Low-income units and very low-income units means inclusionary units restricted to occupancy by low
or very 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.
Prior project means any project for which an application was submitted and the application was
deemed complete prior to August 4, 2015.
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
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
Exhibit 3 - Redline Draft
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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1902. - Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new residential project comprised of
twenty (20) or more residential lots or residential units located withinwhich has not received entitlement
approvals by the cityCity Council as of MONTH DATE, 2021, including new construction, and
condominium conversions which exceedmeets one or all of the general plan prescribed
densities.following applicability thresholds:
(1) A change in use to allow for residential or to exceed the general plan or zoning prescribed densities
or percentage of residential development of the subject property at the time of application.
(2) Implement(b) Applications. The requirements of this article shall apply to any new residential project
proposed in connection with an application to do any of the following:
(1) Increase the permitted residential density of the subject property above the density or percentage
of residential development allowed as a result of city initiated zone changes after November 28, 2011.
(3) Implement the permitted by the general plan at the time of the application. The inclusionary
requirements shall only apply to the incremental increase in the number of units beyond that which is
allowed by the applicable density permitted by theresidential density or percentage of residential
development allowed as a result of city initiated general plan. amendments after November 28, 2011.
(2) 4) Increase the permitted percentage of residential development allowed for a mixed-use
development above the percentage at the time of the application. The inclusionary requirements shall
only apply to the incremental increase in the number of units beyond that which is allowed by the
density permitted by the general plan. permitted under the zone at the time of application.
(3) 5) 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 this
Chapter.
(6) Convert rental units to condominium ownership.
(b) Applications. The inclusionary requirements shall only apply to the incremental increase in the number
of units beyond that which is allowed by the density permitted by the general plan. as prescribed in
Subsection (a) above.
(c) Units for sale. If the new residential project consists of units for sale, then a minimum of ten (10)
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, then a minimum of fifteen (15)
percent of the units shall be rented to low-income households, or ten (10) percent rented to very low-
income households, or five (5) 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 very low and/or low income
household(s) shall be required to provide on-site inclusionary units as required by this article.
Exhibit 3 - Redline Draft
(g) Compliance with article. All inclusionary units required by this article shall be sold or rented in
compliance with this article.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1903. - Exempt projects.
The following are exempt from the requirements of this article:
(a) Applications deemed complete. Applications that include a residential project for which a
development application has been deemed complete prior to November 28, 2011.
(b) 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 or provides for a different amount of, provides for a different amount of
inclusionary units, or provides for a different specified method for determining the in lieu
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,
provided the development agreement was adopted and executed on or before November 28,
2011MONTH DATE, 2021.
(c) 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.
(d) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41, Article XVI.II -
Adaptive Reuse.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 41-1901, 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 at a rate of one and one-half (1½) habitable square
feet per each required habitable square foot of inclusionary units.
Exhibit 3 - Redline Draft
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) More than twenty (20) units. A residential project comprised of more than twenty (20) 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 amount of the fee allowed by this section shall be fivefifteen dollars per square
foot ($515.00/ft. 2 ).) of 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.
(2) Entitled residential projects. Timing of payment. The applicant(s) of an entitled residential total
fee amount for the entirety of a project (see Exhibit A) may either construct the inclusionary units
or pay an in lieu fee as follows:
(i) Twenty (20) or fewer units. In the case of an entitled residential project containing between
five (5)is calculated, determined, and twenty (20) 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
amount of the fee allowed by this section shall be five dollars per square foot ($5.00/ft.) of
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.
(ii) More than twenty (20) units. In the case of an entitled residential project comprised of more
than twenty (20) 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 amount of the fee allowed by this section
shall be five dollars per square foot ($5.00/ft.) of 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. The in lieu fee amount allowed herein by this subsection shall
revert to fifteen dollars per square foot ($15.00) on October 1, 2021 for any construction
which adds net residential units, which has city-approved entitlements, that has not been
issued aset at the time of issuance of the first building permit by October 1, 2021.
(iii) A residential project that has been entitled and approved with conditions to pay a specific
in lieu fee or has a city council approved development agreement to pay a specific in-lieu
fee shall comply with the conditions or the development agreement as approved and shall
not be modified by this ordinance.
(3) Timing of payment. The developer shall pay the for the project. The developer shall pay all in-
lieu fees allowed by this section for the entire project prior to issuance of the building permitfirst
occupancy approval for any construction which adds net residential units. The developer may
provide input regarding what project the in lieu fees should be applied towards, but such input
shall not be dispositive. The in lieu fees collected by the city are city funds over which the city
has complete and absolute discretion.
(43) Inclusionary housing fund. Fees collected in compliance with this section shall be deposited in
the inclusionary housing fund.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1904.1. - Inclusionary housing development incentives for production of units.
Exhibit 3 - Redline Draft
(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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Editor's note— Ord. No. NS-2885, § 2, adopted October 6, 2015 , amended § 41-1904.1, to read as
set out herein. Previously § 41-1904.1 was titled "Inclusionary housing development incentives."
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.
(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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Exhibit 3 - Redline Draft
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 either ten (10) percent for very low income or fifteen (15)
percent for low income inclusionary units. 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.in perpetuity.
Exhibit 3 - Redline Draft
(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 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.in
perpetuity.
(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.
(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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1907. - Reserved.
Exhibit 3 - Redline Draft
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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 funds policies and procedures. A priority
will be on the creation of new affordable housing opportunities or units fromfor large families
currently living in the existing market rateCity. Other eligible uses of the inclusionary housing
stock rather than construction of new affordable housing units. This includes,fund include but
isare 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. :
(i) Create affordable units from the existing market rate housing stock including but not limited to,
the purchase and rehabilitation of units.
(ii) Pay for one-time programs for code enforcement, quality of life, and general health and safety
activities.
(iii) Cover reasonable administrative or related expenses associated with the administration of
this article.
(iv) Implement and promote programs addressing housing security, eviction prevention, and
housing legal assistance for city residents.
(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
Exhibit 3 - Redline Draft
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 opting for the in lieu payment option or 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 provide an enforceable commitment that a skilled
and trained workforce will be used to complete a contract or project in accordance with Public
Contract Code §§ 2601—2602.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 before the end of calendar year 2018, but after June
30, 2018. Between July 1, 2018 and December 31, 2018, staff shall report on the effectiveness of this
ordinance and provide options for council consideration on the components of this ordinance,
including, but not limited to, the monetary amount of inclusionary in-lieu fee per square foot. from time
to time.
(b) Prior projects. The applicant(s) of any project for which a site plan review application was submitted
and such application was deemed complete prior to August 4, 2015, may either construct the
inclusionary units pursuant to the prior housing opportunity ordinance (Ordinance No. NS-2825) or pay
an in lieu fee calculated by the formula under the prior housing opportunity ordinance (Ordinance No.
NS-2825) or request to revise its inclusionary housing plan and/or inclusionary housing agreement
and pay an in-lieu fee of nine dollars and thirty-five cents ($9.35) per square foot of habitable space
for the entire project's inclusionary housing obligation.
(c) 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.
(d) 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 assure 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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Secs. 41-1911—41-1999. - Reserved.
Exhibit 3 - Redline Draft
Without Redline
ARTICLE XVIII.I. - 2021 AFFORDABLE HOUSING OPPORTUNITY & CREATION ORDINANCE[22]
Footnotes:
--- (22) ---
Editor's note— Ord. No. NS-2881, § 2, adopted September 1, 2015 , repealed and replaced art. XVIII.I,
§§ 41-1900—41-1910, in its entirety. Former art. XVIII.I pertained to similar subject matter, and was
derived from Ord. No. NS-2825, §§ 2—12, adopted November 28, 2011.
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 or the conversion of rental units to condominium ownership when
the number of units exceed the densities permitted under the general plan.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 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.
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.
Exhibit 3 - Without Redline Draft
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 very low, low, or
moderate income households, at an affordable housing cost, in compliance with this article.
Low-income units and very low-income units means inclusionary units restricted to occupancy by low
or very 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.
Prior project means any project for which an application was submitted and the application was
deemed complete prior to August 4, 2015.
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
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.
Exhibit 3 - Without Redline Draft
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1902. - Applicability and inclusionary unit requirements.
(a) Applicability. The requirements of this article shall apply to any new residential project comprised of
twenty (20) or more residential lots or residential units which has not received entitlement approvals
by the City Council as of MONTH DATE, 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 to exceed the general plan or zoning prescribed densities
or percentage of residential development of the subject property at the time of application.
(2) Implement the permitted residential density or percentage of residential development allowed as a
result of city initiated zone changes after November 28, 2011.
(3) Implement the permitted residential density or percentage of residential development allowed as a
result of city initiated general plan amendments after November 28, 2011.
(4) Increase the permitted percentage of residential development allowed for a mixed-use
development above the percentage permitted under the zone at the time of application.
(5) 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 this Chapter.
(6) Convert 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 ten (10)
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, then a minimum of fifteen (15)
percent of the units shall be rented to low-income households, ten (10) percent rented to very low-
income households, or five (5) 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 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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Sec. 41-1903. - Exempt projects.
The following are exempt from the requirements of this article:
(a) Applications deemed complete. Applications that include a residential project for which a
development application has been deemed complete prior to November 28, 2011.
(b) 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
Exhibit 3 - Without Redline Draft
different specified method for determining the in lieu 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, provided the development agreement was
adopted and executed on or before MONTH DATE, 2021.
(c) 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.
(d) Adaptive Reuse. Adaptive reuse development projects pursuant to Chapter 41, Article XVI.II -
Adaptive Reuse.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 41-1901, 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 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) More than twenty (20) units. A residential project comprised of more than twenty (20) 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 amount of the fee allowed by this section shall be fifteen dollars per square
foot ($15.00/ft.) of 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.
(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. The developer shall pay
all in-lieu fees allowed by this section for the entire project prior to issuance of the first occupancy
Exhibit 3 - Without Redline Draft
approval for any construction which adds net residential units. 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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Editor's note— Ord. No. NS-2885, § 2, adopted October 6, 2015 , amended § 41-1904.1, to read as
set out herein. Previously § 41-1904.1 was titled "Inclusionary housing development incentives."
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.
Exhibit 3 - Without Redline Draft
(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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 either ten (10) percent for very low income or fifteen (15)
percent for low income inclusionary units. 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.
Exhibit 3 - Without Redline Draft
(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 in perpetuity.
(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 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 in perpetuity.
(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.
Exhibit 3 - Without Redline Draft
(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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 funds policies and procedures. A priority
will be on the creation of new affordable housing opportunities for large families currently living in
the City. Other eligible uses of the inclusionary housing fund include but are not limited to:
(i) Create affordable units from the existing market rate housing stock including but not limited to,
the purchase and rehabilitation of units.
(ii) Pay for one-time programs for code enforcement, quality of life, and general health and safety
activities.
(iii) Cover reasonable administrative or related expenses associated with the administration of
this article.
(iv) Implement and promote programs addressing housing security, eviction prevention, and
housing legal assistance for city residents.
Exhibit 3 - Without Redline Draft
(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 opting for the in lieu payment option or 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 provide an enforceable commitment that a skilled
and trained workforce will be used to complete a contract or project in accordance with Public
Contract Code §§ 2601—2602.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
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 from time to time.
(b) Prior projects. The applicant(s) of any project for which a site plan review application was submitted
and such application was deemed complete prior to August 4, 2015, may either construct the
inclusionary units pursuant to the prior housing opportunity ordinance (Ordinance No. NS-2825) or pay
an in lieu fee calculated by the formula under the prior housing opportunity ordinance (Ordinance No.
NS-2825) or request to revise its inclusionary housing plan and/or inclusionary housing agreement
and pay an in-lieu fee of nine dollars and thirty-five cents ($9.35) per square foot of habitable space
for the entire project's inclusionary housing obligation.
(c) 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.
(d) 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 assure 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.
( Ord. No. NS-2881, § 2, 9-1-15 ; Ord. No. NS-2885, § 2, 10-6-15 ; Ord. No. NS-2994 , § 3, 9-1-20)
Exhibit 3 - Without Redline Draft
Secs. 41-1911—41-1999. - Reserved.
Exhibit 3 - Without Redline Draft
CITY COUNCIL
HOUSING AD HOC COMMITTEE
PROGRESS REPORT & HOO
RECOMMENDATIONS
J U LY 61 2021
PURPOSE
For the City Council to:
Receive a report on the progress of the
Housing Ad Hoc Committee
Discuss the changes recommended by the
Committee to the Housing Opportunity
Ordinance
Provide direction to staff
HOUSING AD HOC COMMITTEE
Progress & Recap
Mayor & City Council formed the Housing Ad Hoc Committee on March 2,
2021
Key Affordable Housing Discussion Topics
a. Housing Opportunity Ordinance
b. Rent Stabilization/Rent Control
c. Just Cause Eviction Policies
d. Forms of land ownership
e. Fee Reductions
f. Regulatory Streamlining
Recommending changes to the HOO
Committee will return with additional recommendations regarding rent
stabilization & rent control and just cause evictions policies
Remaining topics (d-f) to be evaluated and considered as part of the General
Plan and Housing Element updates
The Gap: Rent & Income
40%
30%
20%
10%
0% f
10%
20%
2006 2010 2015 2019 2006 2010 2015 2019
Orange County, California Santa Ana, California
Cumulative % Change (Rent) —Cumulative % Change (Income)
Housing Wage to Afford 2-
Bedroom Multi -Family Rental Unit
Pa` $30.72 •i
I •
92706•
s
92703
92701 $28.30
30.90
92704
39.32
32.57
36.14 705
a<
Legend
Housing Starts 2010 — 2020
SFD (383 points)
RDU (106 points)
MF2-4 (21 points)
MF5, (851 points)
Housing Wage for
2-bedroom unit
28 30
28.31 - $30.90
30.91 - $32,57
32.58 - $39.32
DJN
0.
5 0 1
M fles
3-Bedroom Affordability for 5-
Person Families, by Zip Code
92707
92706
l 061
92704
92703 _
92701 L
92701 92703 92704 92705 92706 92707
Subsidized 51 117 - - 16 18
NOAH 43 1 2 1 5
Unaffordable 55 46 133 118 150 128
Market + No rate data 87 26 16 2 4 16
92705
a`
2% 92706
10%
701
703
0 40% -
r
1%
92704
2% 92707
92705
kG
asp
Legend
Percent of Units Affordable
0.00% - 10.00
Omni 10,01%-25-00%
25-01'A - 45.00%
45.%-
0N
0-
5 0
Miles
KEY HOO PROVISIONS & COMMITTEE
RECOMMENDED CHANGES
Residential projects with 20 or more units
Increase in the residential density prescribed by the
General Plan or mixed -use development standards
Conversions of rental units to condominium ownership
Applies to only incremental units above the permitted
density
Requires construction on site if the project will
displace existing low & very low income households
10% Moderate Income (81-120%AMI)
15% Low Income (51-80% AMI)
10% Very Low Income (31-50% AMI)
Build onsite
Build offsite
Rehabilitate existing housing stock
In -Lieu Fee: $5/sf
No Change
Include increase in the residential density permitted
by the zoning classification
Inclusive of all City initiated General Plan
Amendments and Zone Changes after November 28,
2011
5% Extremely Low Income (0-30% AMI) category for
Units for Rent
Set In -Lieu Fee at $15/sf
AdditionalIn addition to existing eligible uses the inclusionary
enhancements housing fund, prioritize housing security, eviction
prevention, housing legal assistance, and programs
promoting creation of large bedroom units and
focusing on extremely low income families.
Supportable In -Lieu Fee
17.10 to $17.80/Sq. Ft. of Leasable
Area
13.00/Sq. Ft. of Saleable Area
2021 In -Lieu Fee Analysis by KMA
City Council Discussion