Report Says Housing Goals Being Met : Affordable Units Built Since Program’s End Exceed Projections

In Laguna Niguel, Capistrano Beach, El Toro and other communities, new condominiums and apartments are appearing in numbers that prove, county officials say, that Orange County is meeting a top-priority goal: affordable housing.

The condominiums range from $57,000 studios with 441 square feet to $130,000 homes with three bedrooms. The apartments can rent for $545 per month or $960. But the county considers all within the reach of people with low or moderate incomes.

Meeting Goal

A new report by the County Administrative Office says that although the number of new housing units is less than expected, the county is meeting its goal of providing affordable housing.

The report also shows that builders increasingly are constructing rental units, mostly apartment houses, rather than single-family homes.

“I have a sense of pride that the (affordable housing) program is working well, doing what it is supposed to do,” said Peter Hersh, a senior planner at the county Environmental Management Agency.

But critics contend that even if houses and apartments are being built for people earning between $31,000 and $46,000, far too little housing is available for people earning less than $31,000 in one of the wealthiest counties in the nation.

Jonathan Lehrer-Graiwer, one of the attorneys involved in an affordable housing suit against Newport Beach, said that for a family of four with a $19,000 annual income--”which is not that low”--anything priced over $50,000 or renting for more than about $400 a month is probably out of reach.

Fewer Units Than Expected

“Very little, if any, of that housing is being built, and it’s exactly by the county’s elimination” of a mandatory affordable housing program that the likelihood of that housing being built is severely reduced, he said.

The new county report shows that between July of 1983 and January of 1985, 4,691 housing units were added in the unincorporated areas of the county. That falls far short of the 7,500 units the county had anticipated.

But new affordable units in that period totaled 2,935, more than the 1,875 expected.

Supervisor Roger Stanton said that from the report “one can draw the conclusion that affordable housing, particularly affordable rental housing, is available and growing in the unincorporated parts of our county.”

Stanton said the report vindicates the decision of the Board of Supervisors in 1983 to begin a three-year phase-out of a program that required builders of new homes and apartments in unincorporated areas of the county to price 25% of the units in the affordable range.

Incentives for Builders

As defined by the county, 5% of the units were to be affordable for people earning up to $45,960, which in January was 120% of the median income in the county. Another 10% were to be affordable for those earning the median income, $38,300, or less. And 10% were meant for those earning 80% or less of the median figure.

With the phase-out of the mandatory program in favor of a voluntary one, the county continued to provide incentives for builders to put up affordable units.

A chief incentive has been tax-free bonds sold to let builders provide mortgages at cheaper than prevailing interest rates.

A report from the county Environmental Management Agency shows that county bonds issued to help first-time home buyers have totaled $469 million since the program began in 1980. But the amounts have dropped sharply since the peak year of 1983, when $147.8 million in bonds were sold. Last year only $55.8 million worth of bonds were sold, with the same amount expected this year.

By contrast, the program issuing bonds to help construction of multifamily units has increased dramatically. From $40 million issued in 1982, the amount has grown to $404 million for the first seven months of this year.

Growth in Apartments

“Apartments have become a very lucrative way to satisfy” the affordable housing targets, Hersh said. He said the bond program and tax incentives have encouraged developers to build more apartment buildings.

Although Stanton argued that the report by the County Administrative Office shows the county’s wisdom in abandoning its mandatory affordable housing program, the report itself cautions that it is not intended to have that effect. Some county officials noted that many of the affordable units mentioned in the latest report were built while the mandatory program was in effect.

They said that while the voluntary program is too new to judge, preliminary data indicates that it will provide enough affordable housing to meet county goals.

But Carlyle Hall, the director of the Los Angeles-based Center for Law in the Public Interest, says that without a mandatory program, poorer Orange County residents will be shut out of the housing market.

Lawsuit Continues

Hall said that while he had not seen the most recent county report, his public interest law group is continuing its lawsuit against the county for dropping the mandatory program.

State law requires each community “to plan and provide housing for all economic segments of the community, not just the upper end of the economic spectrum.” he said.

Before the mandatory program began in 1979, the major developers in Orange County built “for the upper end of the market,” Hall said. The people who could afford those homes wanted neighbors like themselves and were not about to favor low-income housing in their communities, he said. “So there’s very little political support for the lower and middle part of the economic spectrum.”

Stanton, however, argued that the mandatory program held down the number of affordable units built, and the voluntary program is increasing them.

“The proponents of the (mandatory) housing program, the doomsday prophets, if you will, . . . were wrong,” Stanton said. “People are willing to produce in a county where they don’t have the restrictions.”

Heavy Lobbying

Developers heavily lobbied the Board of Supervisors to drop the mandatory program. Wendy Wetzel, manager of corporate communications for the Mission Viejo Co., said the voluntary program “is obviously working much better than the old program, as evidenced by the latest (county) report.

“The mortgage revenue bond program has done more to assist lower-income home buyers than any other county effort,” she said.

The bond program, lower interest rates and “a growing market for smaller units and smaller families” mean that affordable housing will continue to be built despite the abandonment of the mandatory program, Wetzel said.

Builders agreed that with inflation low and home values growing at a slower pace, builders are having trouble selling very expensive homes and are concentrating on houses in lesser brackets.

E. A. (Sandy) Sandling, president of the Carma-Sandling Group, which built more than 1,000 affordable housing units under the mandatory program, said that “lower-end housing,” which he defines as costing $120,000 or less, is being built more because it “has proved to be a very good market.”

Tough on Low Incomes

But the developer conceded that people making less than 80% of the median county income “are really hard to get into a unit,” because they don’t have enough money to make mortgage payments.

“We could do it easily in 1979-80, when we brought our first big project on line,” Sandling said. “Now it’s almost impossible.”

The view is much the same from where Crystal Sims sits.

Sims, an attorney with the Legal Aid Society, who is one of the attorneys in the Newport Beach suit, also brought the lawsuit against the county alleging an adequate housing plan. Her suit is widely credited with leading the supervisors to come up with the 1979 mandatory affordable housing program.

The society’s clients earn 50% or less of the median income, putting them below $20,000 a year.

“For the economic segment of the county we represent, there is little or no housing available in the unincorporated areas of the county,” Sims said.

In addition, she contends that the amount of housing available to the poorest in the county is declining.

“With an effective (mandatory) program, they could make it happen,” Sims said.