Creating “Affordable” Apartments In Orange County Is No Simple Chore.



Creating “affordable” apartments in Orange County is no simple chore.

Take the 225-unit Anton Legacy apartments in Tustin, which just opened between the Tustin District shopping center and the historic blimp hangers. The story of its creation is a good example of the challenges – and ingenuity – that go into creating local housing with decent rents.

As the region’s real estate market emerged from the depths of the housing collapse, Tustin wanted to start developing housing on the old military helicopter base.

Steve Eggert, president of apartment builder/owner St. Anton Partners of Sacramento, was attracted to the neighborhood because of its desirable midcounty location and strong demographics.

“This is a great place to do multifamily,” says Eggert, a Fullerton native and Cal State Fullerton graduate whose firm last year opened the 232-unit Anton Monaco complex in Anaheim.

Local governments nudge builders in various ways to create lower-priced rentals, as California cities must meet state requirements for the construction and ongoing supply of bureaucratically defined “affordable” rental housing.

Once Eggert had targeted Tustin, he soon realized that his modest apartment company was competing with real estate giant Irvine Co. for the same city-owned land that would hold what became Anton Legacy as well as the nearby 533-unit Amalfi complex.

City rules required each apartment complex to have approximately one-fifth of the units dedicated to “low-income” tenants. That’s typically defined in California as people earning roughly half of the local median household income.

It’s complicated math, but those affordable units will usually cost the low-income tenant roughly half the local “market rate” for rents. And they must rent at deeply discounted rates for 55 years.

Anton and Irvine Co. chose to creatively combine their resources – and their mutual development interests – to win the city’s bidding:

  • Anton’s Legacy project included the affordable-housing commitment of both complexes – the 55 Anton had to build, plus the 106 that might have been at Amalfi.
  • That meant the Anton project would be primarily affordable housing, and the Irvine Co. was free to develop more luxurious rentals – its sweet spot – at Amalfi.
  • The city did well. Irvine Co. reportedly paid Tustin roughly $50 million for its land and spent another $20 million on needed nearby infrastructure. Anton compensated the city by building a $3million public park next to its complex, part of its $50 million budget for Anton Legacy.
  • Irvine Co. invested $14 million to be a passive partner in Anton Legacy, and in return it gets federal income tax breaks offered to developers of affordable housing.
  • With Anton’s project now largely affordable rentals, it was able to win $35million of tax-free, municipal bond financing from a California housing agency. The 15-year term – at roughly 4.5 percent – gives the project added financial flexibility compared with the shorter-term loans banks might offer.
  • The partnership is going so well that an Anton sister company – Anton Development Co. – will build a 256-unit “affordable” complex on Irvine Co. land in the north Irvine Portola Springs community.“We’ve come up with a successful business model that makes sense,” says Mike LeBlanc, a senior vice president of the Irvine Co., which has built 4,000 affordable units in Irvine and has plans for 1,000 more. “It’s a win-win. A three-way win. For the market-rate developer. For the affordable developer. And for the city for achieving the public-policy objective.”Many people wince when they hear of affordable rental complexes. Visions of ugly, crowded and troublesome city “projects” come to mind.Anton Legacy looks nothing like any image many may have of “affordable” housing. The complex comes with all the modern conveniences of new apartments – from pools, barbecues and workout rooms to entertainment areas, lush landscaping and fancy architectural design.The apartment units are outfitted with nice amenities, from name-brand appliances to laminate floors and fancy kitchen cabinetry and countertops.

    In some ways, Anton had to develop the project this way. There are 64 units that can rent at near the full market rate for moderate-income households – and those higher-price units can be moved about the complex, so it would be impractical to have some upscale units mixed with downscale ones.

    Also, Anton admits it doesn’t cost a lot more – well less than 10 percent of a project budget – to turn a typical project into one with pizzazz.

    And finally, Anton thought it was important to the community – both nearby residents as well as the industry itself – to see how nice affordable housing could be.

    “We want to inspire confidence that affordable housing isn’t something to be afraid of,” Eggert says.

    Anton Legacy is more than OK for Shendona Moore-Cole, a hair stylist who just moved into a two-bedroom, two-bathroom apartment at Anton with her 15-year-old son.

    “When I got inside, I was wowed,” she says.

    Moore-Cole had long tried to get into an affordable complex. In fact, she’d eyed Anton Legacy even before the builders broke ground, because where she previously lived in Irvine the rent was $1,880 a month – nearly double her new rent. At Anton, due to her limited income, she’ll pay $995.

    Those savings will help Moore-Cole pay down debts and give her some flexibility to spend more time with her son.

    “I want to be more present with him; the teens are crucial years,” she says.

    Anton Legacy won’t make a huge dent in Orange County’s growing rent burden. But maybe someone, someday, will make it simpler so more projects like this can get done.

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