The drop in affordable housing fees has led to more development in Santa Ana

SANTA ANA, Calif. – Two new large, multifamily housing developments are moving forward thanks to the strategic efforts of the Santa Ana City Council to amend the Housing Opportunity Ordinance and proactively respond to the economic impacts of the pandemic.

These are the first two developers to pull their building permits and pay the lowered in-lieu affordable housing fee of $5 per square foot approved by the City Council this summer. Not a single developer ever paid the previous in-lieu fee of $15-per-square-foot after that was enacted in 2015.

“During the unprecedented economic challenges of the pandemic, I think it’s fundamental that we figure out how to lower the threshold to entry into construction here in town,” Santa Ana Mayor Miguel A. Pulido said.

The City Council’s effort to jumpstart the economy of Santa Ana began in the middle of the pandemic as Santa Ana was experiencing the highest unemployment numbers since the Great Recession. On Aug. 18, the Council reviewed the City’s Housing Opportunity Ordinance (HOO) and the fees that multifamily housing developers were required to pay in lieu of providing affordable housing units under the ordinance.

The City Council heard from developers that the required $15-per-square-foot in-lieu fee was making it too difficult to finance multifamily housing projects in the City. In response to this need and the pandemic strangling the economic engine of Santa Ana, the City Council reduced the fee temporarily for these developers from $15 per square foot to $5 per square foot. This was an incentive for them to break ground and start construction on their projects, creating both jobs and new housing for Santa Ana residents with additional property taxes forthcoming.

Since then, two developers have paid their fees and broken ground on their projects and the City has received over $3.7 million in in-lieu fees for the development of affordable housing opportunities that otherwise might not have been received. One project is the former site of the Elks Lodge at 1660 E. 1st St., which will become a 603-unit apartment complex with 20,000 square feet of commercial space. The other is a 226-apartment complex at 651 W. Sunflower Ave.

The Editorial Board of the Wall Street Journal lauded the City’s efforts, writing, “The city of Santa Ana is trying to do something about its housing shortage, and other cities in the state should take note.”

The newspaper noted: “Santa Ana’s construction has lagged even compared to its fellow Orange County cities. Overall the stock of multifamily units within the county increased 20.1% over the past 20 years, but in Santa Ana the supply grew 7.5%, according to the nonprofit Up for Growth. The American Community Survey estimates that Santa Ana added a meager 3,000 or so housing units between 2010 and 2018, and the share of multifamily developments with 20 or more units dropped to 14.4% from 16.6%.”

This strategic, proactive effort by the City Council is keeping construction of housing moving forward in the city despite the difficult economic conditions caused by the pandemic.

Learn about other Santa Ana development projects at www.santa-ana.org/pb/planning-division/major-planning-projects-and-monthly-development-project-reports.

About Santa Ana

Santa Ana is downtown for the world famous Orange County, California. It is the county seat, the second-most populous city in Orange County, and home to a vibrant evening scene and arts community. About three-quarters of Santa Ana residents are Latino. Over 1,200 City employees work hard every day to deliver efficient public services in partnership with our community to ensure public safety, a prosperous economic environment, opportunities for our youth, and a high quality of life for residents. Learn more at www.santa-ana.org.