Costa Mesa Sets Affordable Requirement for New Apartments

Costa Mesa has set its first bar for affordable housing requirements on larger apartment projects.

The City Council voted to require developers of complexes of 50 apartments or more to set aside between 4 percent and 10 percent for affordable housing, the Orange County Register reported.

The number of subsidized units will depend on the density of the development and their level of affordability.

Developers under the new law can also pay the city an in-lieu fee of $10 per square foot of total leasable area of a project to meet the affordable housing requirements. The city will review the fee in two years.

Costa Mesa is the latest city in Orange County to require developers to set aside units or put up money for affordable housing. Other cities include Irvine, Huntington Beach, Mission Viejo, Newport Beach and Santa Ana.

“The person we are trying to attract to invest in Costa Mesa are the people that can develop units,” Mayor John Stephens told the council. “So, we don’t want to price ourselves out of the market, considering we have 25 cities that don’t have any price.”

Adam Wood, senior vice president for the Building Industry Association of Southern California, said the housing crisis will be solved by building homes — and “putting hurdles up is going to be tough.”

Councilman Don Harper said he had more faith in the council and city manager to get good development deals done, rather than it being forced by having a law. He said no one can be certain what the future holds for development.

“The fear is that we set the bar too high and no one builds,” Harper told the council.

For months, the council wrestled with determining the threshold for affordable units. The council had considered setting the bar at 30 units.

Councilman Manuel Chavez said he believed developers would build just under the threshold to avoid the affordability requirements.

“So my rationale is if the threshold is 50 units they’ll build 48, as opposed to if it’s 30 they will build 28,” Chavez said. “And I think for what my community needs, we need more supply.”

Councilwoman Andrea Marr wanted to set the affordable requirements at 30 units, while setting a higher in-lieu fee. She said “no one in their right mind is going to build” affordable units if the in-lieu fee is so low.

“We are going to get maybe a couple of million dollars after 10 years and then we maybe put that to developing something,” Marr told the council.

— Dana Bartholomew