Anaheim could soon adopt the city’s first affordable housing requirements for new developments, which councilmembers said they hope will spur the production of more units.
The City Council discussed ideas in a workshop Tuesday, Sept. 10, for how the city could get more affordable housing built if it were to require developers to either pay an in-lieu fee or set aside some units that would be kept at affordable rates.
How aggressive councilmembers will make the new policy is not yet determined. Most councilmembers spoke in favor of some sort of new affordable housing requirement, but some argued the city would scare away development by increasing costs.
Councilmember Carlos Leon reminded that the city fell far short of its affordable housing aspirations for a planning cycle that ran from 2013 to 2021. The city over that time had 369 affordable housing units built compared to more than 8,300 market-rate homes.
“One of the big unintended consequences of not doing anything, I think, is losing out on a lot of opportunity,” Leon said. “Not just for our city, but obviously for our residents.”
The city’s housing director, Grace Ruiz-Stepter, presented a hypothetical framework to councilmembers based on what other Orange County cities have required for what developers would need to do to support affordable housing.
The example showed anywhere from 5% to 15% of units at larger developments being required to be affordable. Developers could choose to pay an in-lieu fee of around $10 per square foot that the city would then use to finance future affordable projects.
The council in August approved creating an affordable housing trust that will fund affordable developments and is where in-lieu fees would be utilized.
Planning Director Ted White said the city needs to bring around $5 million to $6 million to the table to help finance affordable developments that are around 100 units.
An in-lieu fee on the lower end, around $5 per square foot, he said, would get an affordable project built for every 10 market-rate developments that pay the fee if they were all the same size at 100 units.
The council didn’t vote on Tuesday, but will consider an ordinance drafted by city staff at a future meeting. The council will have to decide what size developments would trigger affordable housing requirements and whether it would apply to just rentals or homes that will be sold.
Other OC cities with affordable requirements for new developments include Santa Ana, La Habra, Irvine, Costa Mesa and Huntington Beach. Costa Mesa set its threshold for only rentals that are 50 units or larger to have affordability requirements.
Mayor Ashleigh Aitken said the city is way past due on having an affordable housing requirement.
“We are not trying to be so aggressive that we stifle development, but we are trying to find a middle-ground policy which I would advocate includes for sale and rental,” Aitken said.
Councilmember Natalie Rubalcava suggested that the requirements be limited to new rental developments that are 50 units or larger. The city would be best served by having a competitive in-lieu fee that matches or is lower than other Orange County cities, she added.
Councilmember Jose Diaz argued increasing fees won’t lead to more development.
“What we need to do is decrease regulations. What we need to do is incentive the private sector to build more housing, not to make it more difficult for them,” he said. “That’s the only thing I will support.”
Diaz blamed single-family zoning, NIMBY neighbors who don’t want to see development and state policies as some of the drivers behind the lack of affordable housing getting built.
White told the council that it’s an impossible exercise to see if policies that require developers to set aside some units as affordable cause less development overall. He said the city’s housing production is significantly down in the last few years due to higher interest rates and inflation. Anaheim saw 822 homes get built in 2023. The city last had more than 1,000 homes built in a year in 2019.
Councilmember Natalie Meeks said she isn’t in favor of a mandate that would make building more expensive. She also asked that the city consider allowing smaller apartments for affordable developments to get more units, but also to encourage people to move out when they can afford market-rate housing.
Meeks said newer apartments today are smaller and if “their next step up to get out of subsidized housing is a much smaller unit for more money, that’s not really incentivizing them to move out of a subsidy.”
