Site Selection for Affordable Housing Development: An Analysis of Housing Element Suitable Sites Inventories from Orange County, California Natalie Anderson Professional Report submitted in partial satisfaction of the requirements for the degree of Master of Urban and Regional Planning Department of Planning, Policy and Design University of California, Irvine Tustin Site Client: Faculty Advisor: Dr. Victoria Basolo Abode Communities Department of Planning, Policy and Design 701 East 3rd Street, Suite 400 University of California, Irvine Los Angeles, CA 90013 Spring 2011 Table of Contents Tables …………………………………………………………………………… ……………... iii Figures …………………………………………………………………………………………... iii Acknowledgements …………………………………………………………………………… iv Executive Summary …………………………………………………………………………... v 1.0 Introduction ………………………………………………………………………………... 1 1.1 Client ……………………………………………………………………………………… 1 1.2 Problem Statement ……………………………………………………………………… 1 1.3 Audience …………………………………………………………………………………. 2 1.4 Objectives ………………………………………………………………………………... 2 1.5 Statement of Significance ……………………………………………………………… 3 2.0 Background ………………………………………………………………………………... 4 2.1 Measures of Affordability ………………………........................................................ 4 2.2 Housing Costs in Orange County ……………………………………………………... 5 2.3 Location and Affordability ………………………………………………………………. 7 2.4 Affordable Housing Supply and Demand …………………………………………….. 9 2.5 Legal Supports for Housing Development ……………………………………………. 11 2.5.1 State Housing Element ………………………………………………………………. 11 2.5.2 Regional Housing Needs Assessment (RHNA) Process …………………………. 12 2.6 Why is There a Lack of Affordable Housing in Orange County? …………………... 13 2.7 Financing for Affordable Housing: LIHTC and CTCAC ……………………………... 14 3.0 Methods …………………………………………………………………………………….. 15 3.1 Scope of the Data Set ………………………………………………………………….. 15 3.1.1 Cities Excluded from the Analysis …………………………………………………... 16 3.1.2 Data Set Consolidation ………………………………………………………………. 18 3.2 Total Housing Unit Potential Criteria ………………………………………………….. 19 3.3 Community Amenities Evaluation Criteria ……………………………………………. 19 3.3.1 ArcGIS Analysis of Community Amenities …………………………………………. 21 3.4 Final Evaluation Criteria to Produce Site Rankings …………………………………. 24 3.4.1 Site Profile Contents Summary ……………………………………………………… 24 3.4.2 Ease of Site Acquisition – Ownership and Assessed Value ……………………... 25 3.4.3 Environmental Assessment ………………………………………………………….. 26 3.4.4 Likelihood of City and Redevelopment Agency Support …………………………. 26 - i - May 10, 2011 Table of Contents cont. 4.0 Individual City / County Profiles ……………………………………………………….. 27 4.1 County of Orange ……………………………………………………………………….. 27 4.2 City of Brea ………………………………………………………………………………. 28 4.3 City of Fullerton ………………………………………………………………………….. 30 4.4 City of Garden Grove …………………………………………………………………… 31 4.5 City of Huntington Beach ………………………………………………………………. 33 4.6 City of Tustin …………………………………………………………………………….. 34 4.7 City / County Profiles Summary ……………………………………………………….. 36 5.0 Potential Affordable Housing Sites: Individual Site Profiles ……………………… 38 5.1 Brea Site …………………………………………………………………………………. 38 5.2 Fullerton Site …………………………………………………………………………….. 41 5.3 Garden Grove Site #1 …………………………………………………………………... 44 5.4 Garden Grove Site #2 …………………………………………………………………... 47 5.5 Huntington Beach Site ………………………………………………………………….. 51 5.6 Rossmoor Site …………………………………………………………………………… 55 5.7 Tustin Site ……………………………………………………………………………….. 60 6.0 Recommendations ………………………………………………………………………... 63 6.1 Parcel Rankings …………………………………………………………………........... 63 6.1.1 Sites Not Included in the Rankings ……………………………………………….... 65 6.2 City Planning Activities to Monitor …………………………………………………….. 66 7.0 Conclusion ………………………………………………………………………............... 67 Acronym Glossary ………………………………………………………………………......... 68 References ………………………………………………………………………..................... 69 Appendix ………………………………………………………………………........................ A-1 - ii - May 10, 2011 Tables 1) 2010 AMI Thresholds for Orange County, California .……………………………….. 4 2) FMR by Unit Bedrooms for Orange County, California ……….…………………….. 5 3) Percent of Population Living In Overcrowded Conditions …………………………... 7 4) 2008 Commuter Trips to and From Orange County, California ……………………. 8 5) Compliance Status of City Housing Elements in Orange County, California …….. 12 6) Regional Housing Needs Assessment Allocation for Selected Cities …………….. 16 7) RHNA Fulfillment Update for Selected Orange County Cities ……………………… 17 8) Development Potential of Vacant Residential Sites, City of Westminster ………… 18 9) CTCAC Amenities Criteria and Available Points ……………………………………. 20 10) Source of the GIS Data Files Utilized in the Amenities Analysis …………………... 22 11) 5-year Spending Projections for the Fullerton Redevelopment Agency …………... 30 12) Summary of Redevelopment Agency Resources ……………………………………. 37 13) CTCAC Amenities Analysis Results – Brea Site …………………………………….. 39 14) Parcel Ownership and Tax Valuation – Brea Site …………………………………… 40 15) CTCAC Amenities Analysis Results – Fullerton Site ……………………………….. 42 16) Parcel Ownership and Tax Valuation – Fullerton Site ……………………………… 43 17) CTCAC Amenities Analysis Results – Garden Grove #1 Site …………………….. 45 18) Parcel Ownership and Tax Valuation – Garden Grove #1 Site ……………………. 46 19) CTCAC Amenities Analysis Results – Garden Grove #2 Site ……………………… 48 20) Parcel Ownership and Tax Valuation – Garden Grove #2 Site ……………………. 49 21) CTCAC Amenities Analysis Results – Huntington Beach Site ……………………... 52 22) Parcel Ownership and Tax Valuation – Huntington Beach Site ……………………. 53 23) CTCAC Amenities Analysis Results – Rossmoor Site …………………………….. 56 24) Parcel Ownership and Tax Valuation – Rossmoor Site .……………………………. 57 25) CTCAC Amenities Analysis Results – Tustin Site …………………………………… 61 26) Parcel Ownership and Tax Valuation – Tustin Site ………………………………….. 62 Figures 1) Commuter Trips to and From Orange County, California …………………………... 8 2) Metropolitan Areas by Lowest Vacancy Rate in 2008 ………………………………. 10 3) ArcGIS Buffer Analysis Illustration …………………………………………………….. 23 4) Brea Site ………………………………………………………………………………….. 38 5) Fullerton Site …………………………………………………………………………….. 41 6) Garden Grove #1 Site ………………………………………………………………….. 44 7) Garden Grove #2 Site ………………………………………………………………….. 47 8) Huntington Beach Site ………………………………………………………………….. 51 9) Proximity of Underground Storage Tanks to the Huntington Beach Site …………. 54 10) Rossmoor Site …………………………………………………………………………… 55 11) Proximity of Underground Storage Tanks to the Rossmoor Site ………………….. 59 12) Tustin Site ………………………………………………………………………………... 60 - iii - May 10, 2011 Acknowledgements Thank you to Robin Hughes, Holly Benson and Kevin Rodin at Abode Communities for providing me with the opportunity to work on a site-selection project. I owe a debt of gratitude to Dr. Victoria Basolo for helping to arrange the project and for inspiring me with her unwavering passion for affordable housing. Thank you to all the professionals who took time out of their busy schedules to share their knowledge and perspectives with me for this project: Jerry Craig, Jim DellaLonga, Kathy DeRobbio, Adrienne Gladson, Charles Kovac, Linda Morad, Sidney Stone, John Viafora, and Erin Webb. - iv - May 10, 2011 Executive Summary The need for more affordable housing is a perennial issue across the United States, but especially in markets like Orange County, California, where land costs and housing demand are exceptionally high. In addition, the real value of wages in recent decades has not kept pace with inflation, making it that much more difficult for low and moderate income households to afford rent or mortgage payments. As such, a significant unmet need for affordable housing continues to persist in Orange County. This report was conducted on behalf of Abode Communities, a non-profit affordable housing developer based in Los Angeles. The primary objective of the report was to identify a selection of viable sites within Orange County, California, that could support the development of affordable housing projects in the future. The original data set for the report was defined as the land parcels listed in the suitable sites inventories, within the housing element of the general plan for each of the following jurisdictions: County of Orange, City of Brea, City of Costa Mesa, City of Fullerton, City of Garden Grove, City of Huntington Beach, City of Los Alamitos, City of Orange, City of Tustin, and the City of Westminster. The researcher applied various criteria to narrow the data set down to a short list of viable candidate sites. Once a developer identifies a viable site for development, project financing becomes another major challenge in the development process. Low income housing tax credits (LIHTC) serve as one of the core financing mechanisms for affordable housing development projects. The California Tax Credit Allocation Committee reviews applications for tax credits on a competitive basis. The Committee selects awardees based on the adherence of the development project to a set of guidelines prescribed by state statute. One set of tax credit evaluation criteria relates to the presence and proximity of community amenities to the project site. These amenities include public transit, schools, supermarkets, parks, libraries, medical facilities and pharmacies. Because so many developers rely on LIHTCs, competition for tax credits is intense. Rarely, if ever, does a project application win a tax credit award if it does not achieve the maximum possible evaluation criteria score. Therefore, ensuring the project will have the right combination of community amenities is critical to the success of an application. A main objective of this report was to determine which potential development sites carried CTCAC amenities scores that would qualify a proposed project on the site to receive a tax credit award. The researcher conducted geospatial analysis, using the ArcGIS 9.3.1 software program as well as Google Earth, to measure the proximity of amenities to candidate sites within the data set. - v - May 10, 2011 After eliminating sites through the analysis process, seven candidate sites remained, each of which fulfilled the required CTCAC amenities criteria score. The researcher further evaluated the viability of these sites based on the following four factors: • Projected ease of development on the particular site. • Level of potential support from the redevelopment agency within whose jurisdiction the site is located. • Potential for the greatest number of affordable units to be built on the site. • Estimated ease with which parking requirements could be accommodated. As part of this analysis, the researcher developed profiles for each of the redevelopment agencies (RDAs) within whose jurisdiction each of the candidate sites lay. The RDA profiles describe the capacity of each RDA to provide financing or project support to a potential affordable housing developer. After applying each of the above criteria to the candidate sites, the report ranked the five most suitable sites, ordered from most viable to least viable. The site rankings are as follows: 1) Tustin site (West Sixth Street and El Camino Real) 2) Garden Grove #2 site (Garden Grove Boulevard and Taft Avenue) 3) Brea site (Birch Street and Orange Avenue) 4) Garden Grove #1 site (Stanford Avenue and Barcelona Court) 5) Fullerton site (Harbor Boulevard and Chapman Avenue) The report also provides a short list of important planning activities being conducted by selected Orange County cities. These planning initiatives are likely to open up opportunities for developers to provide recommendations as to the future character of the planning areas under consideration. Developers and other interested parties will also have an opportunity to further build relationships with city and redevelopment agency staff through engagement in these planning processes. See Section 6.2, on page 66, for a complete listing and full description of these planning partnership opportunities. - vi - May 10, 2011 1.0 Introduction 1.1 Client Abode Communities is a non-profit housing developer based in Los Angeles, California. The organization was founded in 1968 as the Los Angeles Community Design Center. Abode Communities has been the recipient of many awards from organizations such as the California Redevelopment Agency, the Capital Management Fund (through the United States Treasury Community Development Financial Institution Fund), the Southern California Association of Non-Profit Housing, the Building Industry Association of Southern California, and the Los Angeles Business Council. A recent development project, Casa Dominguez – which is located in East Rancho Dominguez, California – was awarded a LEED platinum certification. Abode Communities currently owns 34 properties in Southern California that house over 4,000 residents. Abode Communities develops housing for a variety of populations – families, seniors, individuals with special needs, single room occupancy (SRO). The organization is seeking to expand the geographic scope of its projects into the Orange County market. To meet the needs of the existing population, Abode Communities plans to focus on the development of multi-family housing in Orange County. 1.2 Problem Statement The process of site selection for housing projects is one of the major challenges that any developer faces. Site selection, particularly in Orange County, CA, poses a unique set of challenges to developers seeking to build affordable housing. Some primary factors that constrain site selection opportunities in Orange County are: 1) high land costs, 2) scarcity of viable and available land parcels, and 3) minimum parking requirements. While there are still some vacant parcels available for development, the majority of Orange County land has already been developed, or has been zoned for a non-compatible use. In addition to space constraints, gaining political support for the approval of an affordable housing development plan can be challenging. Certain communities within Orange County have historically opposed the development of affordable housing, based on the stigma associated with such development. Some communities hold the belief that affordable housing projects increase traffic flows, decrease property values, and bring crime and blight into neighborhoods. Contrary to these beliefs, projects that have been completed by Abode Communities, as well as other non-profit developers, have demonstrated that there is little difference between the appearance of affordable housing and market rate housing. Often times, new affordable projects appear to be of even better quality than the surrounding market rate housing in the neighborhood. - 1 - May 10, 2011 Despite the high quality of affordable housing that is built today, some Orange County communities continue to resist the siting of affordable housing within their boundaries. 1.3 Audience The primary purpose of this report is to provide analysis and recommendations for the client, Abode Communities, regarding potential sites for affordable housing development within Orange County. The report can be equally beneficial to any other housing developer who intends to develop affordable housing in Orange County. Local governments, city housing agencies, and housing non-profit organizations may also wish to draw upon the assembled set of background information and analysis within the report. Considering the meager body of literature that currently exists, pertaining to the topic of site selection for affordable housing, this report will support further research by academics. 1.4 Objectives This report aims to accomplish the following: 1) Identify a set of sites within Orange County that have the attributes necessary to support successful development of new affordable housing. 2) Develop an attribute profile for each of the selected sites. (See the Methods section for a detailed description of the contents to be included in each profile). 3) Provide a ranking of each of the selected sites and a rationale for the rank order. 4) Develop profiles of the redevelopment agencies (RDAs) within whose purview the selected sites lie. The RDA profiles will summarize the resources available to the RDAs, which may be used to support potential affordable housing projects. Physical conditions, parcel availability, political landscapes and consequent development opportunities are constantly shifting. Although portions of this report will be a resource for the longer term, the intention of the report is to give a snapshot of development potential within Orange County, assuming a 1 to 2 year development project initiation horizon. - 2 - May 10, 2011 1.5 Statement of Significance Orange County, California has one of the highest costs-of-living of any county in the United States. Arguably the most substantial factor contributing to the cost-of-living within the County is the exceptionally high cost of housing. The distribution of housing unit costs does not align with the distribution of income levels in Orange County, leaving a significant unmet need for low-cost and affordable housing. Because affordable housing is out of reach for many individuals who work within the County, these individuals must either find housing outside the County, and pay additional costs to commute, or live in overcrowded conditions with friends or family members. The toll that long commutes and overcrowding have on families, children and the community, negatively impacts the long-term sustainability of Orange County. - 3 - May 10, 2011