HomeMy WebLinkAboutCorrespondence - #35
August 31, 2021
Mayor and City Council
City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
Honorable Mayor Sarmiento and Members of the City Council:
property owners, investors,
developers, managers and suppliers of rental homes, REALTORS®, and manufactured housing
communities, we respectfully request you carefully weigh the most prudent policy measures when
considering evolving housing needs, keeping housing accessible and affordable, and
maintaining livable neighborhoods.
BACKGROUND: CURRENT STATEWIDE TENANT PROTECTIONS
Recent statewide elections have
measures and voters continue to reject more restrictive forms of rent control than currently allowed
-Hawkins Rental Housing Act of 1995. For
example, in 2018, Santa Ana voters opposed Proposition 10, the Local Rent Control Initiative, and
in 2020, residents disapproved of Proposition 21, which would have replaced the Costa-Hawkins
Rental Act.
In 2019, the California State Legislature passed, and the Governor signed into law the Tenant
Protection Act of 2019 (AB 1482), effective January 1, 2020, which remains in effect for ten years
and that creates a statewide rent cap and just cause eviction standards. Since the start of the
pandemic, the California State Legislature has dealt specifically with eviction moratoria to keep
residents housed. AB 1482 was temporarily suspended, and thus superseded, by the COVID-19
sion and State Rental
Specifically, AB 832, signed into law on June 28, 2021, allocates additional federal rent relief dollars
to the state rental assistance program for housing providers with qualified tenants, ensures housing
-19 eviction moratorium through
September 30, 2021. Under AB 832, any local city or county rent moratorium ordinance that was
passed in response to COVID that protects tenants from eviction is preempted until April 2022.
PRIORITIZING RENTAL ASSISTANCE
As you are aware, t
provide a broad range of health and financial
assistance to residents, businesses and non-profits affected by the COVID-19 pandemic, is funded
by federal CARES Act money that was allocated through the state budget.
According to the State of California Business, Consumer Services and Housing Agency (BCSH), so
far the state has provided $375 million of the $1.1 billion that renters have applied for and only a
portion of the $5.2 billion in federal funds
Assistance (ERA) program, set aside for rent relief that is eligible for distribution before September
30, 2021. Under AB 832, the application process is more streamlined and no longer requires that
landlords submit documentation or concurrently apply with tenants to obtain rent relief.
More than $42 million of Emergency Rental Assistance (ERA) program funding from federal and
state agencies has been allocated to the City of Santa Ana. Based on communication with City staff,
it was reported that the City has spent $5.5 million or 13% of the total funds available and has only
approved rental assistance for 2,700 applicants. There were over 6,000 applicants deemed ineligible
or who did not complete their applications.
In addition, the Consumer Financial Protection Bureau (CFPB) has launched a new website to help
renters and housing providers find rental assistance in their own communities and the federal ERA
program allows local programs to cover rent, utilities, and home energy costs. A June 2021 Beacon
Economics report, , found that
only 9% of households nationwide have missed a rental payment (source: Federal Reserve Bank of
Philadelphia Survey, March 2021) and that the non-payment rate among renters has only increased
by 4% since before the pandemic began (source: National Multifamily Housing Council).
ADDRESSING HOUSING SUPPLY
Since 1969, California has required that all local governments adequately plan to meet the housing
for the private market to adequately address the housing needs and demand of Californians, local
governments must adopt plans and regulatory systems that provide opportunities for, and do not
unduly constrain, housing development (source: California Department of Housing and Community
Development - HCD). In 2018, HCD determined that California needs to add about 180,000 new
units of housing annually through 2025 to keep up with demand; however, at best we are producing
80,000 units per year. Estimates from Beacon Economics has put the statewide backlog at about
2.3 million housing units.
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The Southern
Assessment (RHNA), covering the period October 2021 through October 2029, identifies and
allocates a housing need of more than 1.3 million new units for the six-county region and 191 cities.
The City of Santa Ana has a total of 78,761 existing housing units and must plan for a RHNA of
3,095 new housing units (source: SCAG).
A critical pathway to addressing the housing crisis is through increasing the supply of available
housing options, but building that supply is becoming an increasingly expensive proposition, whether
it is single-family homes or multifamily rental and condominium buildings. Costs layer on top of one
another throughout the development process, from planning to construction and inspection, and the
to ease the shortfall in both supply and affordability.
From 2000 to 2016, land pricing locally almost tripled the rate of inflation. In 2017, construction price
indexes increased by over six percent compared to an average annual increase of close to three
percent between 1990 and 2000. Core elements driving construction costs include the price of
materials, such as cement, steel and lumber, and the cost of labor, both of which have also risen in
recent years. In addition to permitting and regulatory constraints, development fees in the state have
become almost three times the national average. A 2014 study found that local government design
requirements for affordable housing added an average of seven percent in total costs, which in turn
increases the amount of subsidy needed to build the affordable housing units (source: Terner Center
for Housing Innovation, 2020).
In response to the impacts of the COVID-19 pandemic on the development and construction of
starts, the Council adopted Ordinance No. NS-2994 on September 1, 2020 that further amended the
Housing Opportunity Ordinance (HOO) to lower the in-lieu housing fee for all projects from $15 to $5
per square foot, adjust the trigger of the HOO, and expand the eligible uses of in-lieu fees collected
by the City. As a result of the fee reduction
inclusionary housing fund.
This action also responded to the fact that during 2015 through 2019, immediately following the
September 1, 2015 Council action to adopt Ordinance No. NS-2881, which resulted in a HOO fee
increase, not one permit was pulled and zero funding was generated for the inclusionary housing
fund. The pandemic has only increased development costs and returning to a $15 per square foot
in-lieu housing fee will only further render new residential development financially infeasible.
CONCLUDING THOUGHTS
In order to provide housing accessibility, mobility and opportunity, a multifaceted and collaborative
approach is imperative, and this means policy measures that are not undermined by additional layers
of government bureaucracy or excessive regulations that will only undercut the goal of improving
housing conditions.
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Respectfully,
David Cordero, Executive Director
Apartment Association of Orange County (AAOC)
Steven LaMotte, Chapter Executive Officer
Building Industry Association, Orange County (BIA/OC)
Victor Cao, Senior Vice President, Local Public Affairs
California Apartment Association - Orange County (CAA)
Vickie Talley, Executive Director
Manufactured Housing Educational Trust (MHET)
Jennifer Ward, Senior Vice President of Advocacy & Government Affairs
Orange County Business Council (OCBC)
Carolyn Cavecche, President & CEO
Orange County Taxpayers Association (OCTax)
Phil Hawkins, Chief Executive Officer
Pacific West Association of REALTORS® (PWR)
Julie Paule, Regional Representative for Orange, Riverside & San Diego Counties
Western Manufactured Housing Communities Association (WMA)
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