Developer Held to Affordable Housing Rules : Home builders: For the first time, the Irvine City Council forces a company to donate units. City officials in opposition say the move sets a bad precedent.

The City Council told a developer early Wednesday that he will have to stick with a 1989 requirement and give away 10 new condominiums for use as affordable housing.

After a public hearing Tuesday night that stretched into Wednesday morning, the council denied Douglas Plaza Ltd.’s request to reduce the affordable housing requirements written two years ago when the Planning Commission approved the 261-unit Metropolitan condominiums near John Wayne Airport.

The affordable-housing agreement calls for Douglas Plaza to give the 10 units and $250,000 to nonprofit housing organizations that help low-income families.

The council’s 3-2 denial of Douglas Plaza’s request to scale back the requirements marks the first time Irvine has forced a developer to give away homes to satisfy affordable housing requirements. Five of the units will be given to Irvine Temporary Housing as short-term shelter for homeless families. The other five will go to Irvine Community Housing Corp. to rent as long-term affordable units.

Ernest Cohen, a general partner in Douglas Plaza, told the council that requiring him to give away the units was unfair because it would leave investors with a tiny 3% profit.

Last month, Cohen asked the council to be allowed to keep the 10 units, valued at $1.8 million, but give an additional $250,000 to a city-approved nonprofit housing organization. The council denied that request but gave Cohen until Tuesday to come up with an alternate plan that would still satisfy one of three options written into the project’s affordable-housing requirements.

Cohen suggested Tuesday that he either be allowed to keep the 10 units and rent them to low-income families for 10 years, or sell 39 units, at a discount, to low-income buyers. The council said neither alternative satisfied the 1989 agreement and rejected Cohen’s appeal.

Council members Bill Vardoulis and Barry J. Hammond voted for Cohen, saying the city should not mandate such strict affordable-housing requirements.

If the project had come before the current Planning Commission rather than the 1989 commission appointed by the previous City Council, the city would not be mandating such strict requirements, Hammond said.

Vardoulis said he does not like the idea of requiring a developer to give homes away.

“What I’m saying is this is unprecedented and I can’t support it,” Vardoulis said. “We’re confiscating X number of units and I don’t believe that’s good public policy.”

Taking the units will set a bad precedent for the city, Vardoulis said.

Councilman William A. (Art) Bloomer, though, said the council set a bad precedent by considering Cohen’s appeal to rewrite the 1989 agreement. Requiring developers to give away 4% of their units for affordable housing is not an onerous requirement, Bloomer said.