Santa Ana poised to hike developer fees, push for union workers

OC city would boost in-lieu affordable housing fees to $15 psf, offer incentives to hire union labor

Councilmember Thai Viet Phan (City of Santa Ana, iStock)
Councilmember Thai Viet Phan (City of Santa Ana, iStock)

Santa Ana could soon increase developer fees for projects that don’t include affordable housing, and offer incentives to hire union workers.

The City Council is poised to finalize an ordinance that would hike in-lieu affordable housing fees to $15 per square foot, from $5, the Orange County Register reported. In-lieu fees are paid by builders to subsidize affordable housing when not including it in their projects.

At the same time, the ordinance would provide incentives to hire “skilled and trained” workers – which means they would most likely be graduates of union apprenticeship programs.

Supporters hail the ordinance, which the council gave initial approval to early this month, as a win for affordable housing and union labor, particularly local workers.

“There is a natural link in ensuring the people who build homes can afford the homes that they build,” Councilwoman Thai Viet Phan said.
Critics say the proposed changes will halt new construction in Santa Ana, while making housing more expensive.

“If you set an in-lieu fee that’s so high that a developer can’t pencil it out, there will be no new developments,” Adam Wood, vice president of the Building Industry Association of Orange County, said.

People for Housing, a pro-development group, expressed concern about the requirement that calls for “skilled and trained workers.”

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

That would require “privately funded, unsubsidized housing development to use union labor,” said the group’s director, Elizabeth Hansburg, in a letter. “It will distort the regional labor market in Orange County and make it harder to build unsubsidized housing in Santa Ana.”

In 2017, Santa Ana agreed to hire unionized workers for city construction and public works projects. The new proposed ordinance, Hansburg said, would apply to all new housing developments in the city, including those that get no federal money.

The proposed action creates several thresholds of in-lieu fees that allow developers from opting out of including affordable housing in projects, with in-lieu fees as low as $5 per square foot for developers who employ “skilled and trained” workers and local residents.

In October, Santa Ana became the first city in Orange County to enact a rent control ordinance.

Other cities in California have eyed developer fees. In March, San Jose agreed to cut fees for developers who provide affordable housing, as long as they are paid in full prior to construction. Its measure eases so-called commercial linkage fees by 20 percent.

[Orange County Register] – Dana Bartholomew

Read more