Santa Ana Developer Seeks New Way to Undermine Affordable Housing Policy

Back in July, developer Ryan Ogulnick tried to change SanTana's Housing Opportunities Ordinance (HOO) for Heritage Village, the city's largest mixed-use project. He asked the planning commission to allow for phased payments of almost $10 million in affordable housing “opt-out” fees. A legion of nonprofits spoke out against any such move, saying it would delay affordable housing funding in the midst of a crisis before the commission deadlocked on the issue, sending the question to city council.

Council members originally planned to bring up amendment for discussion and a possible vote on August 16, but decided to postpone until September. Affordable housing advocates and developer-friendly planning commissioner Phil Bacerra hashed out their respective sides in competing Voice of OC op-eds in the meantime. But the HOO amendment has vanished ever since.

According to documents obtained by the Weekly, Ogulnick is still pushing for phased payments—only this time solely for his own Heritage Village development agreement. The developer rescinded his original request to amend the HOO while William R. Devine, an attorney for Heritage Village, wrote an August 19 letter to Santa Ana City Attorney Sonia Carvalho outlining their new strategy, one that goes before the planning commission this afternoon.

Heritage Village's “in-lieu” fees in question are slated to help construct a 69-unit affordable housing project by Amcal on East First Street. “Our understanding is that the developers of the Amcal Project plan to seek tax credit financing for their project in the first quarter of 2017,” Devine wrote. “We also understand that in order to obtain the tax credit financing Amcal will need a letter from the City pledging up to $8.75 million toward the cost of development of the Amcal Project.”

Devine deemed opposition to amending the HOO as mainly concerned with possibly delaying Amcal's construction and offered what he believes as a solution to the problem. With Heritage Village planning to pull its first building permit at the end of this year, they want to pay just $2.6 million in phased in-lieu fees, instead of the nearly $10 million at front. “Following the payment by the Developer of its in lieu fees for the first phase of development, the City will have on hand a total of about $9 million that it can utilize for affordable housing development,” Devine wrote.

Heritage offered that SanTana could pledge up to $8.75 million, dipping into $3.5 million of its Housing Fund, in order for Amcal to get tax credit financing. Shifting the immediate financing to city funds would only be temporary in theory with Heritage Village paying the rest of its in-lieu fees during phase 2 and 3 of its project. “This will help replenish the City's in lieu fee fund,” the attorney added.

The move is being met with the same skepticism as the original HOO amendment proposal. “I'm concerned that it may set a new precedent that's going in the opposite direction of what the Housing Opportunities Ordinance intended,” says Ana Urzua, campaign coordinator for Santa Ana Building Healthy Communities. “Amcal getting the tax credit is important but the developer is putting that responsibility on the city. I don't understand why the city would have to assume the risk of the developer not completing their project.” 

Following the new proposal, City Manager Dave Cavazos wrote in an August 30 email that he planned to speak with council members Vincent Sarmiento and David Benavides, favoring preparing an amendment to the development agreement as opposed to going through Requests for Proposals (RFPs). Benavides, as the Weekly reported, has ties to Ogulnick through KidWorks, the nonprofit the councilman leads and that rescinded its letter of opposition to the original HOO amendment request. Cavazos also sought to speak with Amcal and Heritage, too. “I don't understand the pledge issue; why not just allocate the funds and backfill the funds when monies come in to avoid double counting and risk?' Cavazos asked Carvalho.

Hassan Haghani, Executive Director of Santa Ana's Planning and Building Agency, invited affordable housing advocacy groups like Latino Health Access and the Kennedy Commission for a meeting on Wednesday where the Heritage Village proposal was discussed. “According to staff, they think it's good public policy,” says Nancy Mejia, Director of Community Engagement and Advocacy at Latino Health Access. “But the problem with phased payments is that now we would have to wait another three years for there to be another pot of money for other affordable housing projects.”

Mejia says that Planning staff offered that since Heritage Village is the city's largest mixed-use project, the exception would be wise and rare, especially amid concerns that phases may not be completed as planned. The advocacy groups countered, citing developer Mike Harrah's One Broadway Plaza, another huge project slated to be built in Santa Ana. And they'll be out at today's planning commission meeting defending the HOO like they did in July. In an July 26 email obtained by the Weekly, Haghani had his own take on how the commission split.”The advocacy groups were there en mass [sic],” Haghani wrote to Cavazos. “Two commissioners got intimidated.”

Mejia disagrees with Haghani's characterization and will be at today's meeting arguing against the changes. “It's already a compromise to allow developers to pay an in-lieu fee as opposed to building affordable housing on-site,” Mejia says, deeming the latest proposal akin to preferential treatment. “It's our intention to elevate the voice of the community that is the most vulnerable to increasing housing costs. That's what we are going to continue to do.”