3. HOUSING MARKET INFORMATION & TRENDS - OVERVIEW
Housing crisis in CA and OC well documented
High demand & low supply = increased prices
Tremendous job growth/low unemployment
Median home prices > than pre-recession
OC deficit = 60,000 units (OCBC Workforce Housing Scorecard, 2015)
Demand for “urban” living (walkable, near transit, services &
entertainment)
4. RETAIL MARKET TRENDS – HOUSING EFFECT
Brick and mortar retail changing (redeveloped centers)
Ecommerce hurting B, C and D shopping center/malls the most (other
parts of US more affected than OC to date)
Experiential retail strong (Irvine Spectrum)
Changing retail = housing developed adjacent to strong retail centers
5. OC REDEVELOPMENT TRENDS
Cities adopting specific plans for underutilized office/R&D/industrial property
Sampling of Projects Developed/Planned to Date
Mall redevelopment projects (residential component)
Five Lagunas, Bella Terra
Adjacent/near mall
Villages & Park apartments (Irvine)
Brea Place
Lofts at City Place
Apartments & condos adjacent to Main Place (Santa Ana)
Pacific City (Huntington Beach)
6. ORANGE COUNTY DEVELOPMENT TRENDS (CONTINUED)
Former car dealerships – Garden Grove Galleria, Westside Costa Mesa
Former office/R&D/manufacturing
Irvine - Central Park West & multiple project in Irvine Business District
Santa Ana – DTSA & OC Register building
Anaheim – Platinum Triange
Laguna Niguel – Gateway District
Costa Mesa – Westside
7. CITY PERSPECTIVE – KEY CONCERNS
NIMBYS
High density a tough sell in OC at present time
Traffic often largest concern (& change character of existing
neighborhoods)
City revenues extremely limited
Prop 13 + Redevelopment dissolution = more reliance on Sales Tax
and TOT to fund Services
Unfunded Pension Liabilities
Commercial tax base = sustain levels of service
Can be hesitant to convert commercial property to housing
How much will additional services cost?
8. CITY PERSPECTIVE – SAMPLE HOUSING DEVELOPMENT PROJECT
Project - 250 apartments & 80
townhomes
No commercial (not mixed use)
Costs to provide service > revenues
to City
Cities with strong commercial base
can absorb
Difficult for cities with significant
budget deficit
Property Tax $ 200,000
Resident-Derived Sales Tax 40,000
Total Revenues $ 240,000
Less City Expenditures (Police,
Community Services, Environmental
Services & Public Works) $ (300,000)
NET NEW REVENUE TOTAL $ (60,000)
Revenue Category
1-Year Recurring
Revenues, 2016$
9. CITY PERSPECTIVE – BUT ON THE FLIP SIDE…….
Workforce/Affordable Housing/Sufficient
Housing Critical to Economic Development
Attract/retain businesses-employees must be able to
live in area
Amazon HQ2 RFP an (extreme) example
Development patterns are changing
Informed, balance planning (adapting to market
changes)
Fiscal/economic analysis provides data for land use
decisions
10. DEVELOPER PERSPECTIVE
Projects must be financially feasible or “pencil”
Revenues > Costs
Investors require minimum rate of return on investment
The higher the risk (past failed projects/city delays), higher rate of return
High land & labor costs affect financial feasibility
High % of new units built are “luxury”
11. DEVELOPER PERSPECTIVE
Regulation
1-2 of planning (or more) and significant financial investment
NIMBYs/public opposition
Why aren’t developers building more single family homes?
Land constraints (SFD requires larger development site) – need a large
infill site
Lack of large vacant land sites in OC
Affordability (< $1 M is sweet spot)
Financial feasibility not strong given land & construction costs
12. DEVELOPER PERSPECTIVE
Affordable Housing requires subsidy
Most public funding sources for rental
projects
Less sources of funding post RDA
dissolution
LIHTC help but are not enough
HUD/LIHTC uncertainty
USES
Acquisition $0
Construction Costs (Hard costs) $20 M
$11.4 M
Total Uses $31.4 M
SOURCES
LIHTC and AHP Funds $13.5 M
Loans $11 M
Income and developer fee $3.2 M
Total Sources $27.7 M
Deficit/Subsidy Needed $3.7 M
Proforma Summary (Actual) - 80 Low Income
Apartments (50% or below AMI)
Soft Costs (Architectural, Engineering,
Financing, Legal, Permit & Impact Fees,
Reserves)
13. CHALLENGES
Loss of Redevelopment ($1 billion/yr affordable housing
funds)
NIMBYs
Lack of Public Transportation/Community Traffic Concerns
Affordable Housing = Development Subsidies due to high
cost of land and labor (already cash-strapped cities)
New State funding/City zone changes will take time
14. OPPORTUNITIES
2017 State housing bills
Streamlined development process/less regulation = less risk and
lower costs
More housing = higher supply = enhanced affordability
“Incentivized” zoning (density bonus for public
improvement/benefit project constructed by developer)
Residential around/in retail centers = placemaking, experiential
retail (enhanced by walkable residential)
Public Outreach
15. OPPORTUNITIES (CONTINUED)
CFDs to fund public improvements (large projects)
YIMBYS
Low Income Housing Tax Credits to Subsidize Affordable
Housing
Midrise appears to be less controversial in OC communities
now
SERAF Loan Repayments to Housing Authorities/Entities ($
for housing)
16. IN SUMMARY
Ecommerce changes (experiential retail) likely to bring more
housing development opportunities
Housing in/around shopping centers
Redevelopment of office/industrial for housing
State housing bills will increase the total units built
Prices should begin to stabilize when unit deficit is reduced
Cities will change zoning to allow for higher densities
There will be more housing in OC!
Data on OC retail market still remains strong but changing – example of this is Irvine Spectrum (experiential retail)
Not an inventory of all projects, but some larger projects over the last several years
Mention Burbank IKEA
Westfield Promenade 2035 – redevelopment of Westfield mall in Woodland Hills. 35 acre mixed use residential, office, retail, public space. Unveiled plans in 10/2016. Will not likely get all approvals until early 2018. Will open late 2020.
Westfield Promenade 2035 – redevelopment of Westfield mall in Woodland Hills. 35 acre mixed use residential, office, retail, public space. Unveiled plans in 10/2016. Will not likely get all approvals until early 2018. Will open late 2020.
Amazon RFP requests info on “diversity of housing options, availability of housing near potential sites for HQ2,
and pricing.”
Cities need a fiscally sustainable economic development plan moving forward (especially in light of housing leg.) that includes housing as a component of ED, not just State housing requirements. This plan needs to be updated every few years are major shifts in comm. RE and housing market occur.
Redevelopment project for large sites that include mixed use tend to balance the fiscal hit to cities for services.
Underutilized and/or vacant property is a market signal about the relevancy of that property.
It takes so long to bring lots to market in the current regulatory environment,” he said. “And you don’t have a lot of available land where you can generate new lots, so you’re faced with the more challenging role of recycling older lots for reuse. As you look city to city, you see they have some older warehouse uses and office buildings that are looking tired and old.”
Those, he said, can often be revamped into new in-fill housing communities.
“Fountain Valley is going through a specific plan to re-energize some of their older warehouse properties to get some new, mixed-use residential development,” Holman said. “There’s really no farmland left unless you’re in Irvine.” (Daily Bulletin, June 2017)
Amazon RFP requests info on “diversity of housing options, availability of housing near potential sites for HQ2,
and pricing.”
Cities need a fiscally sustainable economic development plan moving forward (especially in light of housing leg.) that includes housing as a component of ED, not just State housing requirements. This plan needs to be updated every few years are major shifts in comm. RE and housing market occur.
Redevelopment project for large sites that include mixed use tend to balance the fiscal hit to cities for services.
Underutilized and/or vacant property is a market signal about the relevancy of that property.
It takes so long to bring lots to market in the current regulatory environment,” he said. “And you don’t have a lot of available land where you can generate new lots, so you’re faced with the more challenging role of recycling older lots for reuse. As you look city to city, you see they have some older warehouse uses and office buildings that are looking tired and old.”
Those, he said, can often be revamped into new in-fill housing communities.
“Fountain Valley is going through a specific plan to re-energize some of their older warehouse properties to get some new, mixed-use residential development,” Holman said. “There’s really no farmland left unless you’re in Irvine.” (Daily Bulletin, June 2017)
Amazon RFP requests info on “diversity of housing options, availability of housing near potential sites for HQ2,
and pricing.”
Cities need a fiscally sustainable economic development plan moving forward (especially in light of housing leg.) that includes housing as a component of ED, not just State housing requirements. This plan needs to be updated every few years are major shifts in comm. RE and housing market occur.
Redevelopment project for large sites that include mixed use tend to balance the fiscal hit to cities for services.
Underutilized and/or vacant property is a market signal about the relevancy of that property.
It takes so long to bring lots to market in the current regulatory environment,” he said. “And you don’t have a lot of available land where you can generate new lots, so you’re faced with the more challenging role of recycling older lots for reuse. As you look city to city, you see they have some older warehouse uses and office buildings that are looking tired and old.”
Those, he said, can often be revamped into new in-fill housing communities.
“Fountain Valley is going through a specific plan to re-energize some of their older warehouse properties to get some new, mixed-use residential development,” Holman said. “There’s really no farmland left unless you’re in Irvine.” (Daily Bulletin, June 2017)
Amazon RFP requests info on “diversity of housing options, availability of housing near potential sites for HQ2,
and pricing.”
Cities need a fiscally sustainable economic development plan moving forward (especially in light of housing leg.) that includes housing as a component of ED, not just State housing requirements. This plan needs to be updated every few years are major shifts in comm. RE and housing market occur.
Redevelopment project for large sites that include mixed use tend to balance the fiscal hit to cities for services.
Underutilized and/or vacant property is a market signal about the relevancy of that property.
High density cities have good public transportation (NYC, DC, SF)
Atkins’ Senate Bill 2 imposes a $75 to $225 fee on real estate transactions and is expected to generate as much as $258 million per year for housing development aimed at low-income inhabitants and programs to combat homelessness. Under the amendments, half of the funding will be spent on initiatives to combat homelessness and half will go to local governments to update zoning, general plan and other local documents during the first year. Cities and counties will receive 70 percent of the annual revenue beginning in 2019. The remaining 30 percent will be distributed by the state.
SB 3 - $4 billion bond on the November 2018 ballot. If approved by voters, $1 billion would be used to help military veterans purchase homes with low or no down payment at below-market interest rates. The other $3 billion would pay for housing development programs. Taxpayers would cover the principal and interest on the $3 billion for housing projects, with annual debt service costing roughly $195 million over 30 years. Debt service for the $1 billion in borrowing for veterans housing programs would come from participating veterans’ loan payments.
Senate Bill 35, from Sen. Scott Wiener, D-San Francisco, seeks to streamline the approval process for new housing developers in cities that aren’t on track to meet their state housing requirements regional housing needs assessment (RHNA) numbers. will be allowed to bypass local government review. Local elected officials will retain decision-making control in cities that are on track to meet their goals. The measure, which received support from labor, would also mandate higher prevailing wage for workers on housing projects of more than nine units. Not required in coastal zones or severe fire areas & bill is only in effect for 6 years. Requires prevailing wage.
“Not-In-My-Back-Yard - SB 166 would require cities to identify enough development sites to meet unmet housing needs. SB 167 would prohibit local officials from voting down housing projects that fit within zoning and other land-use designations.
Senate Bill 540 from Sen. Richard Roth, D-Riverside, would allow developers to approve local housing projects under one master plan and environmental review document. Fifty percent of projects would be affordable for low-income households, with an additional 10 percent of low-income housing required in market-rate housing projects.
Cities need a plan and good data on how to balance uses to both preserve comm. Tax base (fiscal sustainability) and provide enough housing – and now they will have to (State leg)
Cities need a plan and good data on how to balance uses to both preserve comm. Tax base (fiscal sustainability) and provide enough housing – and now they will have to (State leg)
Cities need a plan and good data on how to balance uses to both preserve comm. Tax base (fiscal sustainability) and provide enough housing – and now they will have to (State leg)