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Home My WebLink About10 - Response to Orange County Grand Jury ReportPORT CITY OF NEWPORT BEACH Hearing Date: August 28, 2001 4i+EW ° m Ii COMMUNITY AND ECONOMIC Agenda Item s DEVELOPMENT No.: 10 _= PLANNING DEPARTMENT Staff Person: Sharon Z. Wood 3300 NEWPORT BOULEVARD (949) 644 -3222 NEWPORT BEACH, CA 92658 (714) 644 -3200, FAX (714) 644 -3250 REPORT TO THE MAYOR AND CITY COUNCIL SUBJECT: Responses to Orange County Grand Jury Report, "Affordable Housing, Light One Candle" SUGGESTED ACTION: Approve responses and authorize Mayor to sign letter to Presiding Judge of the Superior Court The Orange County Grand Jury issued a report entitled "Affordable Housing, Light One Candle" on June 8, 2001 (attached). The report discusses the need for affordable housing in the County, the Housing Element process, development resources, progress toward meeting housing needs, and some collaborative efforts in the County. The Grand Jury arrived at seven findings and made six recommendations, which speak to the challenge of providing affordable housing in the County and the importance of cooperative regional efforts. Orange County and all its cities must respond to these findings and recommendations by September 14. I worked with a committee of the Planning Directors Association of Orange County to draft model responses to the Grand Jury report, which were also shared with the County Housing and Community Development Department. The attached letter from the Mayor to the Presiding Judge is based on the model responses, which have been tailored to reflect Newport Beach's unique circumstances. For the most part, the responses concur with the Grand Jury's findings and recommendations. The letter notes the scarcity and high cost of land in Newport Beach, describes the ongoing work of the City Council's Affordable Housing Task Force to develop affordable housing in the City, and states the City's commitment to continue working with organizations addressing affordable housing on a regional basis. To this end, the letter suggests amending State law regarding housing elements to allow a city that has financial resources but does not have housing sites to count units it assists, even if outside its boundaries. The letter also suggests legislation that would allow more housing rehabilitation projects to count towards meeting a city's fair share of regional need. SHARON Z. WOOD As ' ant City Manager W Attachments: 1. Orange County Grand Jury Report 2. Draft letter to Presiding Judge of the Superior Court ORANGE COUNTY GRAND JURY 700 CIVIC CENTER DRIVE WEST • SANTA ANA, CALIFORNIA 92701 •714/834 -3320 FAX 714/834 -5555 June 8, 2001 Homer Bludau, City Manager City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Dear Mr. Bludau Attached is a copy of the 2000 -2001 Orange County Grand Jury report, "Affordable Housing, Light One Candle ". Pursuant to Penal Code 933.05(f), a copy of the report is being provided to you two working days prior to its public release. Please note that "No officer, agency, department, or governing body of a public agency shall disclose any contents of the report prior to the public release of the final report." Emphasis added. (Public release date —June 14, 2001). It is requested that you provide a response to each of the findings and recommendations of this report directed to your office in compliance with Penal Code 933.05(a) and (b), copy attached. For each Grand Jury recommendation, be sure to describe the implementation status, as well as provide a schedule for future implementation. It is requested that the response to the recommendations be mailed to C. Robert Jameson, Presiding Judge of the Superior Court, 700 Civic Center Drive West, Santa Ana, CA 92701, with a separate copy mailed to the Orange County Grand Jury, 700 Civic Center Drive West, Santa Ana, CA 92701, no later than 90 days after the public release date, June 14, 2001, in compliance with Penal Code 933, copy attached. The due date then is September 14, 2001. Should additional time for responding to this report be necessary for further analysis, Penal Code 933.05(b)(3) permits an extension of time up to six months from the public release date. Such extensions should be advised in writing, with the information required in Penal Code 933.05(b)(3), to the Presiding Judge of the Superior Court, with a separate copy of the request to the Grand Jury (address above). Very truly yours, 2000 — 2001 ORANGE COUNTY GRAND JURY JG:mlh Attachments j Joseph Gatlin, Foreman Grand Jury Report Penal Code 933, 933.05 2 PENAL CODE SECTION 933 AND SECTION 933.05 ¢ 933. Findings and recommendatfonx eupjes Of final mpael: comment of governing bodies, elective Officers, ar agency heads: definition (a) Each grand jury shall submit to the presiding judge of the superior coon a final report u( its findings and recommendations that pertain to county government matters during the focal Or calendar year. Final reports On any appropriate subject may be submitted to the presiding judge of the superior coon at any time during the term Of service of a grand jury. A final report may be submitted for comment to responsible Officers, agencies' depanmem& including the county board of supervisors, when applicable. upon finding of the presiding judge that the report is in compliance with this tide. For 45 days after the end of the term. the forepem. n and his Or her designees shall. upon reasonable notice. be available to clarify the recommendations of the repon. (b) One copy of each final repon. together with the responses thereto. found to be in compliance with this title shall be placed On file with the county clerk and remain On file in the off-tee of the county elerk. The county elerk shall immediately forward a true COPY u( the repon and the responses to the State Archivist who shall retain that repon and all responses in perpetuity. (e) No later than 90 days after the grand jury submits a final report On the Operations of any public agency subject to its reviewing authority, the governing body Of the public agency shall comment to the presiding judge u( the superior coon On the findings and recommendations pertaining to matters under the control of the governing body, and every elected county officer Or agency head fur whieh the grand jury has responsibility pursuant to Section 914.1 shag comment within 60 days to the presiding judge of the superior coon. with an information copy sent to the board If supervisors. in the findings and recommendations pertaining to matters under the control if that county officer Or agency head and any agency Or agencies which that officer Or agency head soperviscs.Or eontrok. In am city and county, the mavor shall also comment On the findings and recommendations. All u( these comments and reports shall forthwith be submitted to the presid. ing judge of the superior coon who impaneled the grand jury. A eupv Of all responses to grand jury mpohs shall be placed On file with the elerk of the public agencv and the office of the county elerk. Or the mayor when applicable. and shall remain On file in those offices. One copy shall be placed On file with the applicable grand jury final repon M. and in the control of the currently impaneled grand jon•, of five years. where it shall be maintained for a minimum (d) As used in this section "agency" includes a department. (Added by Start1961. c. 1284, p. 3064. § 1. Amended by Statx 1963. c 674. p. 1678, § 1: Stags. 1974. c 393. p 977, § 6. Slats, 1974. c. 1394 p. 3054. 13; Slats. 1977. c 107 p 5. ii § 6: Stmv1977. c. 187. p. 709 § 1: Slats. 1980. c 543. p 1499 § 1: Stat0981. c 203. p. 1126. -§ 1: Starx,1982 c. 1408. p. 5365. § 5. Slats, 1981 c 211. § 1_ urgency: eJf. lu(v 12 1985: Stan. 198Z c 690. § 1: Smu.1988 c 1297 15. Sots 1997, c 443 (AB.829). § 4. Slats. 199P4 c. 240 (A.B. 1907). § ? ) ¢ 933.05. Responses to findings (a) For porposm of subdivision (b) If Section 933, as to each grand jury finding, the responding person Or entity shall indicate one of the following: . (I) The respondent agrees with the finding. (2) The respondent disagrees wholly Or partially with the finding, in which case the response shall specify the portion If the finding that is disputed and shall include an explanation of the reasons therefor. (b) For purposes of -subdivision (b) of Section 933. as to each grand jury recommendation. the responding person Or entity shall repon one of the followine axiom: (I) The recommendation has been implemented. with a sum. Mary regarding the implemented action. (2) The recommendation has not yet been implemented. hot will be implemented in the future. with a timeframe for implemen• tction. (3),The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis Or study. and a timeframe for the matter to be prepared for discussion M the Officer Or head of the agency Or department being investigated Or reviewed, including the governing body of the public agency when applicable. This timeframe shall not exceed six months from the date of publication of the grand jury repon. (4) The recommendation will not be implemented because it is not warranted Or is not reasonable. with an explanation therefor. (e) However. if a finding Or recommendation of the grand jury addresses budgetary Or personnel matters of a county agency ur department headed by an elected officer. both the agency Or department head and the board of supervisors shall respond if requested by the grand jury. but the response of the board of supervisors shall address only those budgetary Or personnel matten over which it has some decisionmaking authority. The response of the elected agency Or depa nment head shall address all aspects of the findings Or recommendations affecting his Or her agency Or department. (d) A grand jury may request a subject person Or enrity to come before the grand jury fur the purpose of reading and discussing the findings of the grand jury mpon that relates to that person Or entity in order to verify the accura¢ of the findings prior to their release. (e) During an imcuication. the grand jury shall meet with the subject of that investigation regarding the investigation. unless the coon. either On its Own determination Or upon request of the fureperson of the grand jury. determines that such a meeting would be detrimental. (f) A grand jury shall provide to the affected agency a copy Of the portion of the grand jury report relating to that person Or entity two working days prior to its public release and alter the approval of the presiding judge. No Officer. agency, department. Or governing body of a public agency shall disclose any contents of the repon prior to the public release of the final report. (Added by Stags. /996, c. 1170 (SB.1457). § 1. Amended by State 1997. c. 443 (A.B.829). § 5.) 3 AFFORDABLE HOUSING LIGHT ONE CANDLE SUMMARY "It is better to light one candle than to curse the darkness." Ancient Chinese Proverb Orange County faces a serious shortage of affordable housing today and projections for the future suggest an even more acute problem. Some call it a crisis! Orange County's economy is vibrant and growing but most business executives now recognize housing costs as the primary barrier to locating or expanding their companies in the County. The ratio of job formation to housing units created is three times above normal, putting a strain on people of all income levels. More and more of the workforce are establishing residences in adjacent counties, which stresses our transportation infrastructure and air quality, and increases commute time. To address this problem, the Board of Supervisors has now ranked affordable housing as one of the two top priorities for the County. While affordable housing needs in Orange County are pressing in several income levels, they are most acute for the very-low income family. Only a small fraction ( <10 %) of their housing needs have been met in the last several years. There are financial and government constraints such as land scarcity, cost and zoning. Some elected officials lack the political will to overcome a fear that low- income housing will affect local property values. The County and all cities within the County are in the final stages of updates to the Housing Element of their General Plan as required by California State law. This provides a challenge and opportunity to seriously follow through in meeting goals and objectives in their plans. The 2000 -2001 Orange County Grand Jury recommends the creation of a Countywide map to assist all public and private entities to develop affordable housing units. The Grand Jury strongly recommends all stakeholders cooperate in a regional approach to diffuse this crisis. The Grand Jury recognizes that production of sufficient affordable housing is a daunting challenge. The recommendations alone will not accomplish the task. This study is one step in the process to raise the awareness and political will of policy makers and our communities. "I PURPOSE /INTRODUCTION The economy of Orange County depends upon providing housing availability and opportunities for its workforce. As additional jobs are created in the County's vibrant economy, the necessity for affordable housing becomes more apparent. As Orange County continues to be one of the nation's destinations for fulfillment of the American Dream, many large companies are scrambling to find not just affordable housing for their workers but any housing at all. The purpose of this study was to assess the processes, methods and procedures to accomplish affordable housing goals in the County's and its cities' individual Housing Elements, a part of their General Plans. Cooperative and collaborative efforts of the private, non - profit and governmental sectors will be encouraged. HISTORY /BACKGROUND Housing is considered affordable when a household pays no more than 30-40% of its gross monthly income for housing, including utilities. Affordability is further categorized by income level as shown in the table below. The area median family income is determined by a survey of household incomes conducted by the County or its cities, adjusted by household size. In absence of such a survey, it is based on the latest available eligibility limits established by the U.S. Department of Housing and Urban Development for the Federal Section 8 Housing Assistance Program. This program is part of the Housing and Community Development Act (HCDA), 88 Stat. 633, passed by Congress in 1974. Affordable Housing Annual Income Categories Cateaory Annual Income* Max, Affordable Max, Affordable 8ent_Pavrent" Purchase Price••' Very-Low (0 -50 %AMI) $34,800 $870 $113,000 Low (51 -80 %AMI) $55,680 $1,392 $184,000 Moderate (81- 120 %AMI ) $83,520 $2,088 $279,000 Above Mod. >120 %AMI) $83,520+ Over $2,088 Over $279,000 'Income limits established by HUD. Based on 2000 AMI of $69,600 for orange county "Based on 30% of income "'Asssumes 10% down payment, 7.5% interest rate, 1.25% for property tax and 340 /month homeowners Insurance, and 30% debt ratio Source: Housing Element of Orange County (Draft) The following authoritative published reports clearly demonstrate the critical need for more affordable housing. In a survey report' of business respondents, 71% named housing costs as the top barrier to doing business in the County. A shortage of skilled workers can prompt employers to move away, or simply not locate in Orange County. 'University of California Irvine Graduate School of Management's Executive Survey Report for the Year 2000 5 A 2000 UCLA economic forecastz notes that there will be an increase in jobs in California and Orange County but "... the big question is: Where will and how will we house them ?" The building pace of new housing units has slowed down in the 90's. The forecast continues, "...the mismatch between demand and supply will not only manifest itself in home appreciation but also crowding in existing housing." In Orange County, the ratio of job formation and housing units created is 4.67 to 1. The standard ratio for a healthy jobs /housing balance is 1.5 to 1 3 A Chapman University economic forecast report` projects a widening gap between job growth and the availability of affordable housing in Orange County. A Federal Department of Housing and Urban Development (HUD) report s lists Orange County as one of the areas in the country with major affordable housing problems. Orange County's different zoning processes, high cost of land and insufficient vacant suburban land make it difficult to meet the affordable housing needs for much of its population. 6 In the past year, home prices in Orange County rose 12 %, to an average of $292,000. Condominiums rose 9.5% to $175,000.' Average rents for two bedroom apartments increased 10% to $1,1758. Newspaper articles9 almost every month from July 2000 to the present describe the acute need for.additional affordable housing units in the County and highlight the increase in housing and rental costs in the County. Workers' lack of ability to pay these prices was emphasized. Orange County's 2000 census data indicates a growing population of senior citizens. Currently seniors make up 14% of the County's population, but by 2020 they will make up 23% as the Baby Boomer generation reaches retirement age.10 'University of California Los Angeles (UCLA) Anderson School of Management's Economic Forecast of September 2000 'California Budget Project, Locked Out: California's Affordable Housing Crisis, May 2000 `Chapman University, Economic and Business Review, December 2000 'Department of Housing and Urban Development, Opting In: Renewing America's Commitment to Affordable Housing, April 1999 'California Department of Housing and Community Development, 2000 ' DataQuick Information Systems, a private company that tracks and publishes statistics on home and condominiums sales 'The Los Angeles Times, May 5, 2001 'The Los Angeles Times and The Orange County Register 10 The County of Orange, Orange County Community Indicators, 2001 3 �,j Providing senior citizens with affordable housing is crucial. Many seniors live on fixed incomes so when the cost of housing goes up their ability to pay the increase is affected. The California Housing Element Law, Government Code §65580, et seq., places seniors in a special needs category. This is substantiated by the fact that seniors make up 30% of those receiving Federal Section 8 Housing Assistance Program.' In November 2000 the Orange County Board of Supervisors responded to these important needs by ranking affordable housing as one of the two top priorities for the County. Subsequent Board of Supervisors' action allocated $34.8 million over the next five years toward this effort. Housing Needs Assessment The Southern California Association of Governments (SCAG) is responsible for a Regional Housing Needs Assessment (RHNA) and subsequent allocation to the County and cities. This represents total projected housing needs based on anticipated population growth with adjustments for replacement housing due to demolitions and conversions, and for variations in local vacancy rates. Total allocation for the 1998 -2005 planning period represent an 8% increase over current Orange County housing units. Allocation for New Housing for Orange County, 1998 -2005 Income Level RHNA Fair Share of Housing Units Very Low 15,046 Low 9,725 Moderate 16,237 Above Moderate 34,506 Total 75,502 Source: Southem Califomia Association of Govemments State Housing Element Law does not explicitly require local government jurisdictions to establish separate objectives for extremely low- income households, i.e., those with incomes less than 30% of the county median or about $20,000 per year. This income group has been the priority for organizations such as the Kennedy Commission, an advocacy group. The Grand Jury believes the County and cities should recognize that it is important to address the needs of all economic segments of the County's population, including the extremely low category. The Federal Section 8 Housing Assistance Program of HUD has been the primary means for counties and cities to serve this group in the past. This program is administered through the Housing Authorities of counties and cities. The Orange County Housing Authority operates the "Orange County Housing Authority, Annual Plan, 2001 4 program for unincorporated areas and 30 cities in the County. The cities of Anaheim, Garden Grove, and Santa Ana have their own Housing Authorities. The total number of assistance vouchers available to tenants is: • 8,169 for the Orange County Housing Authority • 5,400 for the Anaheim Housing Authority • 1,988 for the Garden Grove Housing Authority • 2,033 for the Santa Ana Housing Authority The Federal Housing and Urban Development Department has allocated additional Section 8 vouchers to California. The Orange County Housing Authority has applied for 820 of these additional vouchers. Housing Authorities of the cities have applied as follows: Anaheim --700, Garden Grove -350, and Santa Ana -500. Federal and State funds for new construction and rehabilitation have also been appropriated. The County and cities are currently pursuing these vouchers and funds. Affordable housing is extremely difficult for those workers who make $7 to $10 an hour. Occupations in this wage range include construction trade workers, nursing aides, cashiers, mail clerks, childcare workers, elder caregivers and cooks. Major amusement parks, healthcare institutions and fast food restaurants are significant job producers in the minimum and near minimum wage category. Success in providing affordable housing for these workers is sorely inadequate. A negative impact on the transportation infrastructure occurs as more of the workforce of Orange County must find housing in adjacent counties. Air pollution and freeway- commute time increase, affecting quality of life for all County residents. The Housing Element Process California State Housing Element law requires counties and cities to have a Housing Element as part of their General Plan. The State of California has declared that "... availability of housing is of vital statewide importance and the early attainment of decent housing and a suitable living environment for every California family is a priority of highest order" (§ 65580 of Government Code). Further, State Housing Element law requires "... an assessment of housing needs and an inventory of resources and constraints relevant to the meeting of these needs," (Government Code § 65583(a)). The Housing Element spells out the present condition of housing stock in a particular city or county. The element projects into the future how a city or county will address the need to provide affordable housing for residents of that community. The County of Orange and its cities are creating updated Housing Elements for the 1998 -2005 time period. In this process, SCAG has the responsibility to allocate the number of affordable housing units based on income levels for each governmental jurisdiction. When establishing affordable housing needs, SCAG attempts to arrive at a fair share allocation. The County and its cities used the Orange County Council of Governments (COG) as the entity to negotiate the fair share numbers among Orange County cities. All Housing Elements are sent to the State of California's Department of Housing and Community Development for review and approval. The Housing Elements must also consider the constraints and limitations in local communities for providing affordable housing. These can be grouped in the following categories: Financial • Land scarcity and cost Construction costs • Mortgage interest rates • Availability of mortgage and rehabilitation financing • Labor costs • Time required to process developments Government • Restrictive zoning • Building codes • Land use controls • Government fees and improvement costs • State and local tax and fiscal policies • Environmental concerns • Complicated government procedures for processing housing projects Political will and the leadership of elected officials and local governmental staff are essential for any successful program to generate additional affordable housing units. An attitude called NIMBYism (Not In My Back Yard) exists in many communities. There is a fear that creating affordable housing will cause property values to go down. The processes and procedures used by local governments to create these housing elements are intentionally extensive. It requires local entities to look closely at land use, zoning, regulations, fees and development resources. This provides a challenge and opportunity to follow through with creative plans and programs to implement the goals and objectives. Although the sanctions for not producing the affordable housing are not severe, the mandate to fulfill the allocations should be taken seriously. Development Resources No single map for the County and cities identifies the land available for affordable housing. The County's Housing Element Draft has proposed an Overlay Zone 11 that would identify affordable housing land sites. The County and some cities have maps of affordable housing site locations in their Housing Elements while other cities have it in narrative form. Countywide information is therefore somewhat fragmented. Technology called Geographic Information Systems (GIS) is available but the GIS mapping process requires computer hardware, software, data, people and training. Layers of information are created and can be superimposed. Land appropriate for higher density housing development can be depicted in a consolidated form and be made available to private and. public entities. Numerous private and public resources are available to develop affordable housing in the County. Resources can be used in a single program or in combinations to accomplish the goal to build new housing or rehabilitate existing units. A compilation of available resources prepared by the City of Huntington Beach in their Housing Element document is shown as an example in Appendix B. The County and other cities have comparable documents. Assessment of Progress The County appears to be meeting the affordable housing needs of the low and moderate- income levels but is falling far short in number of units built for the very-low income group. Less than 2% of new housing needs established by SCAG for the County unincorporated area for very-low income people have been met for the 1998 -2000 period. Progress Toward Meeting New Housing Needs Orange County Unincorporated Area 1998 -2005 source: Urange County Planning & Development Services Department City progress for the very-low income category is similar to the County's unincorporated area. Some cities have made zero progress and others have made as much as 40 %. Overall average for the county is still less than 10 %. lb Very Low Low Moderate Above Moderate Total Total needs 1998 -2005 4,084 2,950 4,992 10,661 22,687 Units built 1998 -2000* % of needs met 67 2% 2,694 91% 3,484 70% 3,106 29% 9,351 41% Remaining needs 2000 -05 % of needs remaining 4,017 98% 256 9% 1,508 30% 7,555 71% 13,336 59% *Includes production through September 30, 2000 source: Urange County Planning & Development Services Department City progress for the very-low income category is similar to the County's unincorporated area. Some cities have made zero progress and others have made as much as 40 %. Overall average for the county is still less than 10 %. lb Cooperation and Collaboration A variety of affordable housing types can be developed or rehabilitated to provide housing choices for very-low income people: • Single- family homes • Attached condominiums • Rental apartment units • Senior housing • Single residence occupancy units (SRO) Recently, the most successful very-low income affordable housing programs use a cooperative and collaborative model. The County and city Housing Elements include examples of partnerships among for - profit, non - profit and local government sectors in producing affordable housing. Innovative financial packages can be put together so government at all levels (federal, state and local) can join with for - profit and non - profit organizations to successfully create affordable housing for very-low income people in the County. The County's earmarked Affordable Housing Fund includes provision to provide financial resources to cities to develop affordable housing. The Board of Supervisors has approved funding for nine projects consisting of 665 units of affordable rental housing in Orange County during the past year. Three projects are within the unincorporated areas and six projects are within the cities of Orange, Stanton, Anaheim, Tustin and San Clemente. The County requires all projects be marketed to residents throughout the County. In addition, cities are expected to contribute financially to the support of the project. The Orange County HCD Department facilitated the establishment of the City — County Housing Roundtable in September 1999. The membership of this organization includes local government housing and redevelopment staff. The purpose of the Roundtable is to provide a forum for discussion and coordination of Countywide housing issues, procedures and processes. The Orange County Affordable Housing Home Ownership Alliance ( OCAHOA) is an example of a private collaborative that assists the County and cities to meet the affordable housing goals in their Housing Elements. OCAHOA has the following partners: Merrill Lynch, The Enterprise Foundation, Fannie Mae, Wells Fargo Bank and the Building Industry Association of Orange County. This partnership of private and non -profit sectors is aimed at the development of targeted solutions that will increase the availability and supply of quality affordable housing for working families. An affordable housing trust fund is a key component of the Alliance. This fund provides low interest loans to affordable housing builders for pre - development, site acquisition, and /or rehabilitation. Merrill Lynch committed the initial one million dollars to establish the fund. The first project is affordable housing in Buena Park for entry-level professors at California State University, Fullerton. The Orange County Affordable Housing Collaboration is another example of an organization that uses a cooperative approach. It emerged from the Future Search Conference on affordable housing held in October of 1999. Participating are a broad range of stakeholders including: business, labor, local elected officials, government staff, lenders, affordable housing developers and non -profit service providers. A new affordable housing program called The Extra Credit Teacher Home Purchase Program has been created for first -time buyers who are credentialed teachers, assistant principals or principals. Orange County and the Southern California Home Finance Authority have teamed up to establish this opportunity for home buying. Eligible educators must commit to work at a designated low - performing school in the County for five years. The assistance package includes a $7,500 down payment grant as well as a low fixed -rate interest mortgage for a single family home. In summary, the Grand Jury is encouraged by the progress and accomplishments that are occurring. All information from housing literature and from recognized private, non - profit and government leaders indicate that government assistance is essential to provide affordable housing for very-low income residents of the County. Collaboration and cooperation give hope that one candle lighted in darkness can create light at the end of the tunnel. METHOD OF STUDY The Orange County Grand Jury interviewed housing officials of the County and the cities. Also interviewed were the Orange County Business Council, Building Industry Association of Southern California and non - profit organizations involved in affordable housing construction and management. In addition, the Grand Jury conferred with several large employers, local university academicians, SCAG officials and housing consultants for Orange County. Site visits were made to affordable single - family homes, single resident occupancy units and multi - family units in several locations within the County. The Grand Jury also interviewed occupants of these residences. The Grand Jury attended committee and taskforce meetings of several organizations: • The Orange County Area Agency on Aging • The City— County Housing Roundtable where local government housing specialists gather to discuss common issues • The Orange County Housing Element Resource Team which includes government, advocacy groups, for - profit and non - profit members These committees and taskforces include the major stakeholders who discuss crucial issues involving policy, process and procedures to accomplish the goal to provide affordable housing for the residents of Orange County. n FINDINGS Under California Penal Code § 933 and § 933.05, responses are required to all findings. The 2000 -2001 Orange County Grand Jury has arrived at the following seven findings: 1. Government financial assistance and innovative financial packages are (,,,J11 essential for the production of very-low income housing for residents of J Orange County. 2. The County does not have a consolidated document or map to illustrate L rt. r/ available land for affordable housin units. The Count and individual citiesct! create their own separate documents depicting the land available to meet affordable housing needs. i 3. The City- -County Housing Roundtable brings together local government housing experts to discuss mutual programs and plans from a regional perspective. 4. Production of affordable housing is most successful when the County and cities cooperate with all stakeholders to provide land, zoning and financing. 5. The County and cities have a great challenge to provide needed affordable I housing for the extremely -low and very-low income people including the f� working poor, large familie.3, seniors on fixed incomes and the disabled. 6. The County's and cities' Housing Authorities have been provided with the opportunity for additional Federal Section 8 Housing Assistance Vouchers. 7. The County has participated in cooperative efforts with some cities by providing financial support to develop affordable housing. 1 Responses to all Findings are required from the Orange County Board of Supervisors and the City Councils of: Anaheim Costa Mesa Fountain Valley Huntington Beach La Palma Laguna Niguel Los Alamitos Orange San Clemente Seal Beach Villa Park Brea Cypress Fullerton Irvine Laguna Beach Laguna Woods Mission Viejo Placentia San Juan Capistrano Stanton Westminster Buena Park Dana Point Garden Grove La Habra Laguna Hills Lake Forest Newport Beach Rancho Santa Margarita Santa Ana Tustin Yorba Linda 10 3 Responses to Findings 1 -5 are requested from the Orange County Housing and Community Development Department. Responses to Findings 2 and 4 are requested from the Orange County Planning and Development Services Department. A Response to Finding 6 is requested from the Orange County Housing Authority and the Housing Authorities of the cities of Anaheim, Garden Grove and Santa Ana. RECOMMENDATIONS In accordance with California Penal Code § 933 and § 933.05, each recommendation requires a response from the govemment entity to which it is addressed. These responses are submitted to the Presiding Judge of the Superior Court. Based upon the findings, the 2000 -2001 Orange County Grand Jury recommends that: 1, The Orange County Housing and Community Development Department (HCD) and the Orange County Planning and Development Services Department should take the lead cities in the County to j with create a consolidated Geographic Information System (GIS) map or other instrument designating available land for affordable housing units. This map should be made available to private and public entities. (Finding 2) 2. A regional approach to provide affordable housing in the County should be continued. (Finding 3) I�C 3. Orange County HCD should continue to bring stakeholders (business, labor, II local elected officials, government staff, lenders, housing developers, and _ _ _non- profit service providers) together to accomplish the task to produce more affordable housing units in the County. (Finding 4) 4. Each time the Federal Government allows applications for additional Federal 8 Housing Assistance Vouchers the Housing Authorities of Orange vt_&�Section County and the cities of Anaheim, Garden Grove and Santa Ana should vigorously pursue them. (Finding 6) 5. The County and cities should make a concerted effort to create innovative Ir financial packages with private, non - profit and public sectors to produce Ci additional affordable housing for the working poor, large families, elderly and U disabled. (Finding 1) 6. The Orange County Board of Supervisors should continue to support a regional approach to affordable housing including financial support to cities in their efforts to create additional units. (Finding 7) 11 Responses to all Recommendations are required from the Orange County Board of Supervisors and the City Councils of: Anaheim Costa Mesa Fountain Valley Huntington Beach La Palma Laguna Niguel Los Alamitos Orange San Clemente Seal Beach Villa Park Brea Cypress Fullerton Irvine Laguna Beach Laguna Woods Mission Viejo Placentia San Juan Capistrano Stanton Westminster Buena Park Dana Point Garden Grove La Habra Laguna Hills Lake Forest Newport Beach Rancho Santa Margarita Santa Ana Tustin Yorba Linda Responses to Recommendations 1 -5 are requested from the Orange County Housing and Community Development Department. A Response to Recommendation 1 is requested from the Orange County Planning and Development Services Department. A Response to Recommendation 4 is requested from the Orange County Housing Authority and the Housing Authorities of the cities of Anaheim, Garden Grove and Santa Ana. COMMENDATIONS The Grand Jury commends the Orange County Board of Supervisors for placing the need to create more affordable housing units as one of the two top priorities for the County. The Orange County Housing and Community Development Department is commended for its initial efforts to bring together County and city housing staffs to coordinate the regional efforts to produce more affordable units. HCD also brought together major stakeholders in an effort to create more affordable housing units for profit corporations, non - profits and the local government representatives. Orange County Community Housing Corporation, Jamboree Housing, Mercy Housing of California, Habitat for Humanity, Orange Housing Development Corporation and Neighborhood Housing Services of Orange County are commended for their dedication and accomplishments in the field of affordable housing for Orange County residents in spite of many obstacles. 12 ' 5 Appendix A The Orange County Housing Element (Draft) 2001 City Housing Element, (Available Drafts) 2000, 2001 California's Department of Housing and Community Development, Raising the Roof: California Housing Development Projections and Constraints, 2000 California Budget Project, Locked Out: California's Affordable Housing Crisis, 2000 County of Orange, Proposed Affordable Housing Strategy, March 2, 1999 County of Orange Housing and Community Development Department, Annual Action Plan Fiscal Year 1999 -2000 The Urban Institute, Section 8, Mobility and Neighborhood Health, October 1999 Southern California Studies Center, University of Southern California, Sprawl Hits The Wall: Confronting the Realities of Metropolitan Los Angeles, 2001 Orange County Council of Governments, Smart Growth Strategies to Accommodate Orange Counties Future, 1999 13 �C Appendix B Example of Financial Resources Available for }lousing Activities Program Type Program Name Description Eligible Activities Grants awarded to the city on a Acquisition 1. Federal Community formula basis for housing and Rehabilitation Programs Development community development activities. Home buyer assistance Block Grant (CDBG) Recipients must be low to moderate Economic development a. Formula/ Income (up to 80% MFI), or reside Homeless assistance Entitlements in a low and moderate-inoome Public services (150/6 cap) target area. Neighborhood revitalization Home Investment Flexible grant program awarded to New construction Partnership (HOME) City on formula basis for housing Acquisition activities Rehabilitation • Home Buyer Assistance • Tenant -based assistance • Planning Section 8 Rental Rental Assistance payments to Rental Assistance Assistance Program owners of private market rate units (certificates), or directly to tenants (vouchers). Section 8 tenants must be low income (up to 50% MFI). Administered by the Orange County Housing Authority Section 202 Grants to non -profit developers of Acquisition b. Competitive supportive housing for the elderly. Rehabilitation Programs Rental assistance is available to New construction very low - income elderly persons (up Rental assistance to 50% MFI). Support services Section 811 Grants to non- profits developers of Acquisition supportive housing for persons with Rehabilitation disabilities, including group homes, New construction Independent fiving facilities and Rental assistance intermediate care facilities. Section 203 (k) Provides single long -term, low- Acquisition — dwellings and interest loan at fixed rate to finance land both the acquisition and Rehabilitation rehabilitation of residential property. Relocation of unit to another site on new foundation on the mortgage property Refinance existing indebtedness 2. State Programs Mortgage Credit Income tax credits available to first- Home Buyer Assistance Certificate (MCC) time homebuyers for the purchase Program of new or existing single - family housing. Local agencies (County) make certificates available. 14 Program Type Program Name Description Eligible Activities California Housing Below Market rate financing offered New Construction 2. State Programs Finance Agency to builders and developers of Rehabilitation (cunt) (CHFA) Rental multiple family and senior rental Acquisition of properties Housing Programs housing. Tax exempt bonds provide from 20 to 150 units below - market mortgages. Low Income Housing Tax credits available to individuals New construction . Tax Credit and corporations that invest in low- Rehabilitation income rental housing. Tax credits Acquisition sold to people with high tax liability, and proceeds are used to create housing 3. Local Redevelopment 20 percent of Agency tax Increment New construction Programs Housing funds are set -aside for affordable Rehabilitation Set -Aside Funds. housing activities governed by state Acquisition law. Tax Exempt Housing The city can support low income New construction Revenue Bonds housing by issuing housing Acquisition Rehabilitation mortgage revenue bonds requiring the developer to lease a fixed percentage of the units to low income households and maintain the rents at a specified rate. 4, Private Federal National Loan applicants appty to Resources/ Mortgage Association participating lenders for the Financing (Fannie Mae) following. programs: Programs a. Community Mortgages which fund the Home buyer assistance Home Mortgage purchase and rehabilitation of Rehabilitation Improvement a home. Program b. Community • Fixed rate second mortgages Home buyer assistance Seconds issued by private mortgage Mortgage Loans Insurers. c. Fannie Low Down Payment Home buyer assistance Neighbors Mortgages for single - Family Home In under served low - income and minority communities d. Fannie 97 3% down payment mortgage Down payment assistance loans for low income home buyers 3% loans for nonprofits, government agencies to pay for dosing costs Federal Home Loan Direct Subsidies to non - profit and New Construction Bank Affordable for -profit developers and public Housing Program agencies for affordable low- income ownership and rental projects. Applicants respond to NOFAs, with funds awarded on competitive basis. 15 ai oa Mayor --Now Garold B. Adams Mayor Pro Tem Tod W. Ridgeway Council Members Steven Bromberg Norma J. Glover John Heffernan Dennis D. (YNeil Gary L. Proctor CITY OF NEWPORT BEACH OFFICE OF THE MAYOR (949)644 -3004 September 4, 2001 Honorable C. Robert Jameson Presiding Judge of the Superior Court 700 Civic Center Drive West Santa Ana CA 92701 Responses to Grand Jury Findings and Recommendations re: Affordable Housing Dear Judge Jameson: The City of Newport Beach has carefully considered the report of the Orange County Grand Jury, "Affordable Housing: Light One Candle." The City believes that the report is accurate, and does a good job of describing the challenges to providing affordable housing in our county. Following are the City's responses to the findings and recommendations, as approved by the City Council on August 28, 2001. Finding 1: Governmental financial assistance and innovative financial packages are essential for the production of very -low income housing for residents of Orange County. Recommendation 5: The County and cities should make a concentrated effort to create innovative financial packages with private, non - profit and public sectors to produce additional affordable housing for the working poor, large families, elderly and disabled. Response: The City of Newport Beach agrees with the recommendation to create innovative financing programs for the purpose of creating affordable housing. The City has leveraged funds from our Community Development Block Grant (CDBG) to produce hundreds of affordable units. We now have funds paid by developers in lieu of providing affordable housing in their market rate projects, and we are exploring the most effective use of these funds, including leveraging them with tax credits or tax- exempt mortgage revenue bonds. Additionally, Newport Beach is considering participating in a proposed Orange County Area Housing & Finance Agency, a JPA that would City Hall • 3300 Newport Boulevard • Newport Beach, California 92663 -3884 implement a lease purchase mortgage program to provide affordable for -sale housing. City staff has met with the sponsor of this proposed program on two occasions and indicated our interest in participating, but a schedule for implementation has not been developed yet. The City of Newport Beach does not have a redevelopment agency, and does not have conditions that warrant the establishment of an agency. Therefore, we do not have the resource of a.housing set aside fund that is available in communities with a redevelopment agency. Finding 2: The County does not have a consolidated document or map to illustrate available land for affordable housing units. The County and individual cities create their own separate documents depicting land available to meet affordable housing needs. Recommendation 1: The Orange County Housing and Community Development Department (HCD) and the Orange County Planning and Developmental Services Department should take the lead with cities in the County to create a consolidated Geographic Information System (GIS) map or other instrument designating available land for affordable housing units. This map should be made available to public and private entities. Response: As noted in Finding 2, each city and the County does identify sites for affordable housing in our General Plan housing elements; this is a requirement of State law. Newport Beach does have GIS mapping capabilities, but we are aware that this capability vanes from city to city, with some cities not having the capability at all. While it may be possible for the County to consolidate the site information in the various housing elements into one map, funding for such a project would have to be identified and a method developed for keeping the information up to date. And although a consolidated map could identify vacant land available for the construction of new affordable housing units, it would not be able to identify sites where existing market rate units can be converted to affordable units through rent subsidies, mortgage write- downs, etc., or where a complete redevelopment or change of use could occur, e.g., from commercial to affordable housing. The City of Newport Beach would support a consolidated mapping effort, if it were found to be feasible. Finding 3: The City — County Housing Roundtable brings together local government housing experts to discuss mutual programs and plans from a regional perspective. 2 Recommendation 2: A regional approach to provide affordable housing in the County should be continued. Response: We concur that affordable housing is a regional issue, and that it is beneficial to use a regional approach to provide affordable housing in the County. The City of Newport Beach intends to continue its participation in the City - County Housing Roundtable, Orange County Housing Authority Advisory Committee, and Shelter and Hunger Partnership of Orange County. We also believe that there is potential for an even stronger regional approach, if new State legislation were adopted. For example, State housing element law now requires each city and county to plan for providing its regional "fair share" of housing need within its own jurisdiction. In the recent update of Newport Beach's Housing Element, we had difficulty identifying sites sufficient for our fair share, as the community is nearly built out. Legislation that allows cities to count units they have assisted, even if outside their boundaries, would facilitate sharing resources within the region. The League of California Cities, of which the City of Newport Beach is a member, is currently working with legislators to reform the housing element process. Finding 4: Production of affordable housing is most successful when the County and cities cooperate with all stakeholders to provide land, zoning and financing. Recommendation 3: Orange County HCD should continue to bring stakeholders (business, labor, local elected officials, government staff, lenders, housing developers, and non - profit service providers) together to accomplish the task to produce more affordable housing units in the County. Response: The City of Newport Beach concurs with this finding. Our City Council's Affordable Housing Task Force is currently working with private landowners, affordable housing developers and the lending community to develop additional affordable housing in the City. As a nearly built -out community, Newport Beach recognizes that the City may need to rehabilitate housing units and make them affordable for families and others as a means of providing affordable housing. Unfortunately, current housing element law does not allow full acknowledgement of these efforts. Rehabilitation projects, even if they add more affordable units in a community, do not count towards satisfaction of a city's regional housing needs unless they add to the overall housing stock. We believe that the State Legislature should enact legislation that encourages more rehabilitation of existing housing stock. The League of California Cities, of which the City is a 3 member, is currently working with legislators to reform the housing element process. Finding 5: The County and cities have a great challenge to provide needed affordable housing for extremely low and very low people including the working poor, large families, seniors on fixed incomes and the disabled. Response: The City of Newport Beach concurs. Rising housing costs have placed an undue financial burden on these individuals. As housing costs escalate, local governments are faced with an even greater challenge to meet these needs. The Orange County Register recently reported the median cost of a home in Orange County is $301,000 requiring an income of over $90,000 per year to qualify to purchase such a home. The median rent is reported to be over $1,200 per month. Households at low or very low income cannot afford these prices, and very deep subsidies are required to make housing affordable, especially in Newport Beach where land prices are very high. Finding 6: The County's and cities' Housing Authorities have been provided with the opportunity for additional Federal Section 8 Housing Assistance Vouchers. Recommendation 4: Each time the Federal Government allows applications for additional Federal Section 8 Housing Assistance Vouchers the Housing Authorities of Orange County and the Cities of Anaheim, Garden Grove and Santa Ana should vigorously pursue them. The Orange County Housing Authority administers the Section 8 vouchers allocated to the City of Newport Beach. The City supported the County Housing Authority's recent application for additional Section 8 vouchers because we believe that any additional housing resources that become available will benefit the entire County. With the additional vouchers approved, the County was able to serve all those on the waiting list for rental assistance and new applications were accepted. The City made applications available at City Hall and local libraries, and City staff was available to answer questions and assist people in completing their applications. The City wholeheartedly agrees that the Orange County Housing Authority should vigorously pursue additional vouchers, whenever a Notice of Funding Availability is issued. The City will support future applications and assist the public when additional vouchers become available. n 4 Finding 7: The County has participated in cooperative efforts with some cities by providing financial support to develop affordable housing. Recommendation 6: The Orange County Board of Supervisors should continue to support a regional approach to affordable housing including financial support to cities in their efforts to create additional units. Response: We acknowledge that the County has worked cooperatively with some cities to assist in developing affordable housing. The City of Newport Beach has identified County funding programs in its updated Housing Element, which the City intends to pursue over the next five years. These include tax exempt mortgage revenue bonds, and the Housing Authority's Senior/Disabled or Limited Income Repair Loan and Grant Program. The City of Newport Beach appreciates the Grand Jury's study of this very important issue, and the opportunity to respond to the findings and recommendations. We intend to continue our efforts to provide more affordable housing in our community, and look forward to participating in ongoing regional efforts. Sincerely, GAROLD B. ADAMS Mayor of Newport Beach Cc: Orange County Grand Jury 5 5