IRVINE : Builder Asks Relief From ’89 Agreement

A developer told the City Council this week that he is suffering financial losses by being held to a 1989 agreement that requires him to give away 10 condominiums for use as affordable units and pay $250,000 to a nonprofit housing organization.

Ernest Cohen, a general partner in the Metropolitan condominiums which are under construction, said the agreement will make the 261-unit project barely profitable and will force him to provide fewer moderately priced units to ordinary buyers. He also contended that the requirement is much stiffer than similar rules imposed on the Irvine Co. for its most recent major housing projects.

Rather than give up the 10 units, valued at about $1.8 million, Cohen asked the council on Tuesday to allow him to keep them in exchange for an additional $250,000 donation to a nonprofit housing group selected by the city.

Giving away 10 units is unfair because 35% of his condominiums are already planned to be affordable to people earning 80% or less of the county’s median income, Cohen said.

“You’re asking us to exchange $250,000 for a million-eight,” Mayor Sally Anne Sheridan said before the council unanimously rejected Cohen’s proposal. “A nice idea.”

The three-building Metropolitan project is near Campus Drive and MacArthur Boulevard, across from John Wayne Airport.

Ninety-seven units are nearly complete in the first building, 82 more will be ready in January in the second building and the final 82 units will open in June in the third building.

Had the project come before the current City Council, Sheridan said, its members would probably not have mandated such a strict affordable-housing requirement. But she added that the council cannot overturn a previously mandated housing requirement just because the political philosophy is different from past councils.

“The issue here is you made a commitment to the city,” Sheridan told Cohen. “You made a deal in the light of day knowing that market forces are always changing.”

Cohen said that if he gives away the 10 units, he and his partners will see a 3% return on their investment. Since 35% of the condominiums will be affordable without giving any away, Cohen said, the city should give him special consideration.

“I think we’re doing what you want, providing affordable housing,” he said. “I don’t think the city is better off taking the 10 units and forcing me to raise my prices.”

Although it rejected his proposal on the 10 units, the council did agree to examine whether Cohen should be allowed to choose another way of fulfilling the 1989 affordable housing requirement. Giving away the 10 units was one of three options provided by the Planning Commission when it approved the Metropolitan project.

The council decided to give Cohen and city staff members a month to work out a way of satisfying the affordable housing requirements using the third option, which would allow Cohen to sell 39 of the units at a discount to low-income families. The 39 units would have resale restrictions that would force the new owners to sell only to other low-income families for either 15 or 30 years.

The council will consider the matter at its Nov. 26 meeting.