2014-006 - Santa Ana General Plan Housing Element and Public Safety Element Updates

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HOUSING RESOURCES EVALUATION OF PRESERVATION OPTIONS Table C -8 shows that 798 housing units are at risk of conversion by the end of the planning period (2021), and an additional 82 could convert within 10 years of the start of the planning period (2024). This section analyzes four options to preserve affordable units: 1) replacement of rent subsidies, 2) construction of new affordable housing, 3) rehabilitation of units in return for extended affordability controls; and 4) refinance of the project. Replacement of Rent Subsidies The first option is to replace the HUD rental vouchers given to each tenant (in the case of portable vouchers) or the payment subsidies given to each property owner when properties receive project Section 8 certificates. The financial cost of replacing subsidies depends on the fair market rent for the apartment and the household income level of the tenant. Typically, the subsidy would equal the difference between what a household can afford to pay (e.g., 30 percent of income after utility payments) and the fair market rent for the unit. As shown in Table C -9, replacing the rental subsidies would total $6.8 million annually, translating into approximately $340 million over 50 years. Table C -10 Preservation Strategy: Replace Rental Subsidies Unit Fair Market Rent' Affordable Rentz No. of Units Difference Annual Subsidy 1 bdrm $1,126 $844 992 $486 $5,808,600 2 bdrm $1,294 $964 38 $631 $318,744 3 bdrm $1,621 $1,084 41 $1,198 $637,140 4 bdrm $2,525 $1,204 7 $1,418 $131,682 Total $6,896,112 Notes: 1 HUD Orange County Fair Market Rent, 2013. 2The affordable rent is based on the maximum payment for a very low income household and adjusted for household size, as derived from income limits provided by the State of California, 2013. Utilities are estimated at a minimum of $125 per month plus $25 per each additional person. Figures are subject to rounding. This option assumes the property owner accepts a subsidy that guarantees fair market rent. In some cases, property owners may decline. Although this subsidy would guarantee the long -term affordability of the unit, the cost could increase over time as market pressures push rents higher and require the City to increase the rental subsidies. Generally, this option is seen as a short -term fix to a long- term problem, not considered a sustainable solution. City Preservation Projects JA& CITY OF SANTA ANA GENERAL PLAN HOUSING ELEMENT C -43