RSG Presentation
•Download as PPTX, PDF•
0 likes•92 views
Presentation from the 2017 OC Housing Summit
Recommended
More Related Content
What's hot
What's hot (20)
Similar to RSG Presentation
Similar to RSG Presentation (20)
More from NeighborWorks Orange County
More from NeighborWorks Orange County (13)
Recently uploaded
Recently uploaded (20)
RSG Presentation
- 1. HOUSING OPPORTUNITIES IN THE AGE OF ECOMMERCE– TRENDS, PERSPECTIVES, CHALLENGES & OPPORTUNITIES ORANGE COUNTY HOUSING SUMMIT, SEPTEMBER 2017
- 2. TOPICS COVERED Housing Market Information/Trends Retail Market Trends – Housing Effect Redevelopment Trends City/Developer Perspectives Challenges Opportunities
- 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!
- 17. QUESTIONS Hitta Mosesman, Principal RSG, Inc. hmosesman@webrsg.com
Editor's Notes
- 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)