Affordable Housing Can Be Expensive - Part 1

This is a cautionary tale about the foibles of government planning and the problems when developers underwrite the campaigns of City Council candidates. The data emerged at the last City Council meeting, but the issue itself is coming up again at the next City Council meeting.

The State government encourages cities to build a substantial amount of “affordable” homes when new homes are being built. By their very nature, affordable homes sell and/or rent for much less than market value, so it’s obvious that there is a dis-incentive for most developers to build affordable homes. Yet the profits are so great from most development projects that building about 10% of the units as affordable still allows developers to make a hefty profit on their investment.

Nonetheless, some developers shy away from building “affordable homes” and instead, the City has developed an alternative – allowing developers to pay “in lieu” fees that a City can use to create their own affordable homes, thus allowing the developer to avoid building any affordable units on their site.

In the recent past, developers such as Shea/Baker and Baldwin (Portola Hills) decided to build their affordable homes on their sites (187 for Shea/Baker and 57 for Baldwin), but Brookfield and Trumark instead opted for “in lieu” fees and the Council accepted their offer.

Bear in mind that the link between Brookfield and Trumark and City Council members has been well established. Along with their associates in the building industry, Brookfield and Trumark poured more than $100,000 into recent Lake Forest City Council elections, insuring that their every want and need would be accommodated. And so it was. Against the advice of the City staff and the Planning Commission as well as the wishes of the overwhelming majority of the residents, Brookfield and Trumark were allowed to convert commercial real estate into residential, to build tandem parking garages, and to build units that most people felt lacked sufficient amenities. Even worse, they added nearly 250 new homes to a City that already had 4,000+ new homes in the pipeline, with no real idea of the impact of these 10,000+ new people on traffic, schools, water, electricity, etc. Many people urged that the approval of the Brookfield and Trumark homes be delayed until the City had some idea of the impact of the 4,000+ new homes, but Brookfield and Trumark were anxious to proceed, and their financially supported newly elected City Council members gave them everything they wanted, even reducing the size of the tandem garages that many people identified as too small to begin with.

When developers give you thousands of dollars, it’s hard to say “no” to their demands. Read more about this sad state of affairs by clicking here.

Brookfield and Trumark promised the City about $1.5 million dollars in lieu of building affordable homes on site. This money would go into a special fund that could only be used for affordable homes in the City. For the 200+ units they were approved to build, about 30 should have been affordable. In our next article we’ll see what $1.5 million can buy when used by the City to create affordable homes, and then compare this with what the City would have received had Brookfield and Trumark been required to build the affordable homes on site.

ABOUT THE AUTHOR

Dr. Jim Gardner is on the City Council for Lake Forest. You can check him out on LinkedIn and/or Facebook and you can share your thoughts about the City at Lake Forest Town Square on Facebook. His comments are not meant to reflect official City Policy.

Dr. Gardner has office hours every Tuesday from 3 pm to 5 pm at the City Hall. In addition, he holds a mini town meeting every other month. The next meeting will be on May 16 at 2 pm at the Foothill Ranch Public Library.