Anaheim to Use Bond Issue to Double Low-Rent Housing

Using $58 million in bonds, Anaheim will double the amount of housing targeted at low-income residents by the city.

The City Council today is expected to approve issuing the bonds, which represent about 15% of those approved by the state in a recent round of funding for low-rent housing projects.

“It’s a very large bond issue,” Anaheim housing manager Brent Schultz said. “It just all came together now.”

Orange County will issue about $88 million in bonds, with Santa Ana, Buena Park and La Habra also receiving shares of the remaining $30 million for housing projects.

The bonds will mostly rehabilitate existing units rather than build new housing. Anaheim has little vacant land, which means older properties must be refurbished to create the low-income housing, Schultz said. Older apartments already offer relatively low rents; the bond program guarantees they will be available to low-income tenants for 55 years.

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Developers will use the bonds’ below-market interest rates for the construction. Four projects will provide 259 affordable apartments for seniors and rehabilitate 429 apartments for low-income families, about the same number the city has seen created in the last 13 years. For 55 years, rents will stay at rates approved by HUD for residents whose income is 60% of Orange County’s median income or lower.

“It’s a valid way that developers can purchase properties,” Schultz said. “They all get pulled up to a quality that wouldn’t get achieved if the private sector did them.”

Bonds and tax credits--another financing plan in which developers sell tax credits issued by the state to private investors--make building low-income housing more attractive, said Bill Witte, a partner of Related Cos. of California in Irvine, the developer financing the remodeling of the Jeffrey-Lynne neighborhood in Anaheim.

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“The effect of this program in a city like Anaheim [is that developers buy] properties that people would think twice about investing in, even to upgrade, let alone keep affordable,” Witte said.

Though the bonds will mostly refurbish rather than add new apartments to Orange County’s housing stock, the money is still going to a good use, said Lisa Castaneda, executive director of the Shelter and Hunger Partnership. Orange County has a desperate need for “decent, safe and sanitary housing,” she said.