Lack of 'affordable' housing threatens industrial base
Santa Ana, Calif. — ''We bring a hot prospect out here, an engineer from Boston, say,'' an official with a well-established defense firm in northern Orange County, says . . .
''And he asks, 'Is the weather like this all the time?'
''And we say, 'Yeah!'
''And he says, 'Wow! What's that there?'
''And we say, 'A palm tree.'
''And he says, 'Wow! And what's that there?'
''And we say, 'A beach!'
''And he says, 'Wow! And what's that there?'
''And we say, 'A house for sale!'
''And he says, 'And what does that sign out front say?'
''And we say, 'For sale: $190,000.'
''And then he gets back on the plane and laughs all the way to Boston.''m
Can Orange County afford its own success? Or will escalating property values drive its industrial base away?
Industry got started here because lower land costs made Orange County a cheaper alternative to expansion in Los Angeles County.
But the median selling price for a new single-family home or condominium in Orange County has hit $147,500, according to Anaheim Mayor Don Roth. ''The point where a gap opens between supply and demand,'' says Irvine Company president Peter C. Kremer, ''is $120,000 to $125,000.'' Below that, the shortfall is acute.
The popular wisdom is: If you're making only $25,000 a year, forget about buying anything in Orange County.
It's not hard to find people who admit - quietly - to having 5 percent mortgages, usually on houses bought in 1959 or so. Rentals remain fairly reasonable, and even chic Newport Beach has trailer parks - dating, to be sure, from an earlier era in zoning law.
But first-time buyers are in a bind. So are corporations wanting to move executives in from other parts of the country.
Some people end up buying houses in neighboring Riverside County and contributing to freeway congestion. Some firms end up leaving Orange County.
The threat of erosion of the county's industrial base has prompted the Board of Supervisors to adopt a controversial ''affordable housing'' program. The plan calls for 25 percent of the units in a builder's developments to be affordable (assuming normal down payments) by families making 120 percent or less of the county's median income.
In July 1982 that income was $32,000, so in practice, ''affordable housing'' is that which costs $70,000 to $110,000.
Forty percent of this ''affordable housing,'' or 10 percent of the total of a development, is to be affordable to those earning less than 80 percent of the median - as long as the county can provide some sort of special financing. Another 40 percent is to be aimed at those earning 81 to 100 percent of the median level. And 20 percent is to be aimed at buyers in the range between 101 to 120 percent.
As a reward for their efforts in helping keep middle America in Orange County , builders are being allowed to pack more units onto a given acreage. County officials are also working to speed the building-permit process, which stringent state and local environmental regulations have made time-consuming and hence costly.
The county has also floated $203 million in bonds to raise money for mortgages with below-market interest rates, thereby enabling buyers to afford the ''affordable'' homes. In some cases, says John H. Gibson, manager of the housing revenue-bond program, this has meant mortgage rates lower than the interest on the tax-free bonds. In one new project, interest rates for the higher-priced ''affordables'' will subsidize rates for those at the lower end of the scale, allowing ''deep penetration'' into the below-80 percent income group, he says.
Although the Board of Supervisors has been hailed for its political courage in trying to keep Orange County from becoming a ghetto for millionaires, the program has its critics.
Orange County is full of young two-career couples, mortgaged to their eyebrows, who are resentful of those just a few thousand dollars down the pay scale who qualify for ''subsidized housing.''
And some of the ladies of Laguna Hills mutter darkly to their hairdressers about ''riffraff'' moving into the neighborhood.
''I've been accused of social engineering!'' says an incredulous Harriett M. Wieder, who is on the Board of Supervisors. She stresses that the county is not expecting ''Cadillacs at Chevy prices'' - that the intent is not to force builders to sell houses at below-market prices.
Others say that it's impossible to build houses in the prescribed affordable range, and that if units are being sold at those prices, builders are making the buyers of their non-affordable offerings subsidize their less affluent neighbors.
But an official who works closely with the program says it doesn't work that way. He says Orange County residents will not pay tens of thousands of dollars extra for the privilege of living next door to someone who earns substantially less than they do. Besides, the 25 percent goal does not mean every fourth house must be affordable. In practice it generally means an affordable tract within a much larger development.
Another controversial aspect of the program is that the resale prices of these homes will remain tied to current county median income, which makes them a questionable investment.