On a 7-0 vote, the Costa Mesa City Council adopted an inclusionary housing ordinance (IHO), bringing its long, long, long debate over this issue to a close — sort of. The City Council adopted the Staff recommendation, with six key exceptions:

• The IHO will apply to all new rental developments greater than 50 units that receive a zoning change (i.e., the areas covered by Measure K, which include our commercial corridors and areas above the 405 freeway). Note that this means that the City Council did away with the bifurcated inclusionary requirements for projects over-or-under 60 dwelling units per acre (DU/A) contained in earlier drafts and opted for a single requirement for larger projects.
• Note that this also means that all for-purchase housing developments of any size are exempt.
• Subject developments will be required to set aside at least 10% of units for low income households or at least 5% of units for very low income households.
• New developments may alternatively comply, among other ways, by paying in-lieu fees, which will be set by the City Council at a later date.
• The City Council set aside $2.5 million from the upcoming budget to provide seed funding to the City’s new affordable housing trust fund, with the intent that the money will be used to provide gap funding to fully affordable projects.
• The City Council instructed Staff to begin the process of rezoning our Measure K sites with all deliberate speed.

That’s where the City Council ended up. But how on Earth did we get there?

IHO Sparks Emotional Discussion On and Off the Dais

First, it is important to note that although this item was a “second reading”, everyone knew that the City Council would effectively review this ordinance de novo. The proposed IHO’s first reading was riddled with problems, not the least of which it was that it was discussed late in the evening when patience was running thin. Some on the dais didn’t seem to fully understand the implications of what they were passing, and Council Member Don Harper was absent entirely. So it wasn’t surprising that pretty much everything in the ordinance was up for grabs.

Second, the City Council found themselves caught between two incompatible visions about the way housing development works. On the one hand, they had the view of the Planning Commission, which viewed development in the city as fundamentally difficult and undesirable for for-profit developers, and therefore recommended a conservative IHO that didn’t impose lots of onerous requirements. On the other hand, organizers from Costa Mesa 1st allied with renters’ rights groups and several local pastors to push for a more “aggressive” ordinance that would raise the inclusionary rates to up to 15% for low income renters for projects as low as 40 DU/A, on the reasoning that developers already make plenty of profits and a higher rate would force more desperately needed inclusionary units to come to market.

Ultimately the Planning Commission’s view essentially prevailed. Although Council Member Andrea Marr and Council Member Arlis Reynolds both made impassioned and, at times, emotional pleas for higher inclusionary rates, and despite many in the audience carrying pre-made signs advocating for “15% and 40 DU/A” — an ask significantly more aggressive than the proposals put forward by either the Planning Commission or city staff — the rest of the Council seemed unmoved. Council Member Jeff Harlan was so skeptical that he made a motion to delay the effectiveness of the IHO until the rezonings of the Measure K sites was complete, which Staff admitted could take up to two years.

And this motion was poised to pass until Council Member Reynolds made a last ditch effort to allow the IHO to go into immediate effect. She not only adopted the Planning Commission’s guidance on inclusionary percentages (10% low, 5% very low) for developments with more than 50 units, she also allowed the City Council to punt on setting the in-lieu fees and eliminated the IHO requirements for projects under 50 units entirely. This compromise was good enough for everyone else, and after a 7-0 vote that papered over the nearly irreconcilable differences on the dais and in the audience, that was that.

But not everyone was happy. Cynthia McDonald, who has been leading the charge for Costa Mesa 1st and adjacent affordable housing advocates, charged up to the dais after the Council took a post-vote recess and confronted Mayor John Stephens. I’m paraphrasing but I believe she said “I hope you are happy, Mayor Mensinger”, invoking the name of Steve Mensinger, the former Mayor of Costa Mesa whose actions inspired the anti-development Measure Y. There were many accusations in public and written comment that Mayor Stephens and, implicitly, his IHO-skeptical “Team Costa Mesa” teammate Council Member Manuel Chavez were breaking their campaign promises to pursue affordable housing by not agreeing to an aggressive IHO.

And look, in many ways the adopted IHO is a stinging defeat for this coalition. But this group should realize that they were lucky to get an IHO passed at all, and without heroic efforts from Council Members Marr and Reynolds, it might not have happened. In fact, I think Costa Mesa 1st’s decision to push for something even more aggressive was a very poor reading of the room and a strategic miscalculation. Many on the dais agreed implicitly with Planning Commissioner Jon Zich, who, after recounting the ways IHO could undermine the City’s interest in housing development, suggested the City not move forward with an IHO until it could come to a consensus view such a policy was needed. Staff certainly sensed this when then larded the Agenda Report up with threats about (somewhat bootstrapped) Housing Element noncompliance and HCD enforcement if the IHO wasn’t passed. So while I’m sure Council Members Marr and Reynolds aren’t happy today, they should at least take pride in getting something on the books.

Now What? New Fights over Fees and Zoning

While the discussion on the IHO text is formally at an end, the fight over affordable housing will continue. The most immediate arena will be setting the in-lieu fee and the adoption schedule. Obviously if a developer has a choice between paying a fee and building affordable housing, her decision will turn entirely on what that fee is. Cities have been really struggling with setting these in-lieu fees and getting the level of development they want, so I expect this to be yet another, ahem, robust debate.

But the elephant in the room tonight was zoning. The entire functionality of the IHO turns on our zoning reforms in the Measure K sites to “compensate” developers and landowners for the compliance costs imposed by the IHO, so it’s been a bit surreal that these reforms have effectively been a black box the entire time. As noted above, the Staff was instructed to get started on this right away, so I expect related items to come forward in the next few months.

I would keep a particular eye on parking requirements. Every draft of the IHO has alluded to vague parking incentives, but nothing (included the adopted ordinance) has elaborated on what those might be. This issue has the potential to split both the pro-market housing advocates and the pro-price-control, affordable housing advocates, as both groups have critics and defenders of our existing car-oriented transportation approach in their ranks. Personally, I think that it’s time to do away with minimum parking requirements in Costa Mesa, so expect a good long post on that at some point in the future.

Other Stuff that Happened: (Somewhat Worthless) Cannabis Reforms Move Forward; Fire Station #4 Training Tower Approved

On cannabis, the Staff recommendation — which simply incorporated the recommendations discussed at the prior meeting — passed on a 6-1 vote (Mayor Stephens unsurprisingly voting no). Mayor Stephens did try a final time to jettison those recommendations in favor of a 35 store cap followed by a 3 year moratorium on new applications, but that motion had a hard time finding supporters. As I noted in my prior write up, other than the 35 storefront cap, none of the reforms will take effect until the city begins processing new retail cannabis applications. And that won’t occur until the total number of stores operating in the city falls below ten (10). With up to 35 retail storefronts operating in the city when the dust settles, the likelihood we will get down to ten storefronts in the next 10 or even 20 years is basically zero. So much for all that work.

The City Council also grilled staff on the costs associated with the proposed training tower project at Fire Station #4, which got bids that came in significantly over budget. Bids for capital projects have typically been coming in 20% or even 30% above original estimates thanks in part to our current inflationary environment. But for this project, the project scope also increased since it was last reviewed… which is a bit strange. As public commenter Ralph Taboada, member of the Finance and Pension Advisory Committee, observed, FiPAC reviewed this project just a few months ago and it was not alerted to the need for additional funding. Council Member Don Harper picked up on Mr. Taboada’s comments and asked Staff to elaborate on why the cost of the project increased. Instead of letting the public works staff respond, City Manager Lori Ann Farrell Harrison jumped in and curtly responded: “the scope changed.” I definitely sensed that City Manager Farrell Harrison seems to be very sensitive to any questioning of Staff’s judgments over spending decisions.

Despite some hemming and hawing, as is the case with almost all public safety items, the request sailed through 7-0.

Agenda-pocalpse… Later? Mid-Year Budget Update, Committee Appointments Punted to Next Meeting

I jokingly referred to this meeting as “agenda-pocalypse” when I previewed it earlier, because it seemed like there was simply too much to cover in one meeting. And lo and behold, as the meeting was getting on towards midnight, the City Council enthusiastically moved to adjourn before addressing the scheduled items covering the mid-year budget update or the appointments to the committees.

I get it. They were tired, and likely wrung out from some emotional items. But as a now-former committee member, I am so disappointed by how excited the City Council seems to be to ignoring its resident committees. Members with expired terms will now be left in limbo for another two weeks, and applicants will have to come back yet again to see if their applications were accepted. I had quietly asked that the committees be dealt with at the beginning of the meeting but that didn’t happen. I do think it would have been a much better use of our time than introducing our new staff members, who, while very important, are paid to work at City Hall. The committee members are all volunteers and its sad to see them routinely marginalized and disrespected.

Whatever. As City Clerk Brenda Green confirmed on an unintentionally live mic, the April 16 City Council meeting is going to be a monster. So prepare yourself for yet another marathon session.

Correction: the prior version of this post misspelled Steve Mensinger’s name. I need more coffee.