The Santa Ana City Council is poised to adopt a law that would encourage developers to hire local union labor while also increasing developer fees for projects that don’t include affordable housing.

The council will consider on Tuesday, April 19 finalizing an ordinance that would increase in-lieu affordable housing fees from $5 to up to $15 per square foot.  At the same time, the ordinance would provide incentives to hire local workers. In-lieu fees are paid by builders to a city or county to help subsidize affordable housing as an alternative to including such housing in their projects.

“There is a natural link in ensuring the people who build homes can afford the homes that they build,” Councilwoman Thai Viet Phan said during the board’s April 5 meeting

Mayor Vicente Sarmiento said: “When I was looking at other ordinances, very few have language like this. So this is a big win, I think, for us – skilled and trained workers and labor. This is something that hopefully other communities will emulate.”

Supporters hail the ordinance, which the council gave initial approval to on a 5-2 vote April 5, as a win for affordable housing and union labor, particularly local workers.

“It is crucial that the city strengthen the Housing Opportunity Ordinance to ensure that housing opportunities are available for all residents in Santa Ana along with new housing options being created in the city,” Nancy Mejia, of Latino Health Access, wrote to the council.

Other organizations that have written in support, often using nearly identical language, include the Asian American Senior Citizens Service Center, the Public Law Center and the Cambodian Family Community Center.

Critics say the proposed changes will halt new construction in Santa Ana and make housing more expensive.

“If you set an in-lieu fee that’s so high that a developer can’t pencil it out, there will be no new developments,” Adam Wood, vice president of the Building Industry Association of Orange County, said Monday.

People for Housing, which also opposes the changes, wrote to express concern about a requirement in the proposal that calls for “skilled and trained workers.” That would require “privately funded, unsubsidized housing development to use union labor,” wrote the group’s director, Elizabeth Hansburg. “It will distort the regional labor market in Orange County and make it harder to build unsubsidized housing in Santa Ana.”

In 2017, Santa Ana agreed to hire unionized workers for city construction and public works projects.  The new proposed ordinance, Hansburg said Monday, would apply to all new housing development in the city, including those that get no federal money.

The proposed action creates several thresholds of in-lieu fees that allow developers from opting out of including affordable housing in projects.

For higher-density projects, of at least 20 units per lot, the in-lieu fees range from $15 per square foot to as low as $5 per square feet. The lower fee is offered if at least 60 % of the workers on the project are “skilled and trained” and at least 20% of them live in the community. After Jan. 1, 2026, that formula changes. To qualify for a $5 in lieu fee, for example, 90 % must be skilled and trained and 35 % must reside in the community.  And even those who are paying $15 in lieu fees must have 30 % skilled and trained workers and 35 % must also be local residents.

While the ordinance does not refer to union labor, it’s understood that “skilled and trained” means union workers, Wood said.

Under California public contract code 2601, graduates of an apprenticeship program in the building and construction trades are considered skilled and trained.  And since Jan. 1, 2020, the law has required that at least 60% of those employed must be skilled journeypersons.

“Most of the workers defined by PCC 2601 will likely be union, but it’s not necessarily so,” Phan said Monday.

The council has been debating a revision to the housing opportunity ordinance for several months. During that time at least one council member, Phan, recused herself while awaiting a response from the Fair Political Practices Commission, which briefly investigated an allegation of potential conflict of interest before the ordinance was re-introduced.

The council meets Tuesday at 5:45 p.m., following a closed session, at 22 Civic Center Plaza in Santa Ana.

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