The Fullerton City Council held a Special Meeting on March 9 to review the latest iteration of the City’s Housing Plan, as presented by Director of Community and Economic Development Matt Foulkes. The review covered several areas of the City government’s approach to housing, including the Housing Element of the General Plan, proposed Specific Plans, and Housing Overlay Zones. The Housing Element is part of the City’s General Plan, which is updated every 10 to 15 years, although the Housing Element is required by the state of California to be revised more frequently—every 8 years.

The current Housing Element (the 5th cycle), expires this year, necessitating the formulation of a new Housing Element (6th cycle) that will cover the years 2021 through 2029. State approval of the Housing Element makes the City eligible for housing funds.

The review was accompanied by a Powerpoint presentation entitled “Housing Game Plan,” to which Foulkes referred during the virtual meeting. The meeting’s agenda  called only for Foulkes’ report to be received and filed with no decisive action about any of the Housing Element’s components, some of which are expected to be released for public review in the coming months.

Director Foulkes reminded the Council that the City itself does not build housing, but the presentation made it clear that his department’s priority was to facilitate lots of it. The presentation’s charts and graphs illustrated how relatively little housing has been constructed in the past decade, even as high density multi-story apartment units appear each year along major thoroughfares. Fullerton is considered to be “built out,” meaning that nearly all land within the City’s borders not already covered by housing units is devoted to some other use, like industrial, retail, or open space, so new housing construction is nearly always built in areas not previously dedicated to that purpose. But as developers cannibalize former industrial or retail spaces for new high-density housing, pressure grows to retain some prior uses of the properties in mixed-use overlay zones, a subject addressed by Foulkes during the March 9 Study Session.

Housing Element

The City’s General Plan restricts uses of property in different areas of Fullerton based on its municipal zoning laws that govern everything from where an industrial facility may be operated to how many housing units may be built on a single residential lot. Projects that deviate from the General Plan require variances from the Planning Commission and/or City Council.

Most of Fullerton’s housing was built decades ago—74% prior to 1980, according to Foulkes’ presentation. The decades following 1980 saw only single digit percentage additions to the housing stock, culminating with just 3% of the City’s total residential units having been built in the last decade.

Meanwhile, housing prices have steadily increased despite boom and bust cycles, beyond rises in wages, making home ownership increasingly difficult for many residents. Even during the pandemic, home values have continued to rise as investors purchased properties. This has kept property prices high while many people have seen their incomes suddenly curtailed or snatched away entirely, as sectors of the economy shut down.

Just over half of the Fullerton residents who earn a “moderate” income can afford to spend about $500,000 on a house, but the median home price is $660,000, according to the presentation. The imbalance between what has been built and what people can actually afford to buy, if they can even find a home for sale, has created an imperative to build smaller, cheaper units for rent or for sale. Those units have most frequently come in the form of multi-story high-rises that sometimes include ground floor retail spaces. Foulkes acknowledged later in the meeting that those retail spaces are sometimes so difficult to lease out that developers just write off the expense. (In the Malden Station project on Santa Fe and Highland, one such space was eventually allowed to become a barbershop that served alcohol.)

One given reason for a State-approved Housing Element is that it confers eligibility for various funding opportunities. The California Department of Housing and Community Development (HCD) provided a Local Early Action Plan grant for two elements of Fullerton’s current planning process, namely, a regulatory review of policies and actions and an inventory of available sites “to accommodate housing needs for all income levels.” While the HCD determines how much housing is deemed necessary, its allocation is determined regionally, and in Fullerton’s case through the Southern California Association of Governments (SCAG). SCAG divides housing into income categories: Very low (which includes “Extremely Low”), Low, Moderate, and Market Rate, forecasting how many units in each category each city needs to build.

These combined Regional Housing Needs Assessment (RHNA) numbers from SCAG are supposed to govern how much new housing and in what income category a given city should build. But in past decades, Fullerton mostly built new housing for the upper and medium income levels, allowing construction of Low and Very Low units to fall behind, although some developments were built. Developers who realize greater profits through the sales or rentals of higher income units relied on subsidies from the City’s Redevelopment Agency to provide the missing profit margin. When the State government dissolved those agencies in 2012, Fullerton was left with a deficit of affordable housing and far fewer tools to encourage their production.

The RHNA goals vs. the number of actual units built during this period, roughly coinciding with the 5th Cycle, show that the City met these goals only in the Market Rate category, indeed, overshooting them at 146%, while Very Low construction lagged at 64%, Low at just 47%, and Moderate a mere 4%. Overall, the City built 1,581 of the prescribed 1,841, achieving 86% of this goal. Foulkes called that performance “a good job,” noting that the City had accommodated nearly 65% of its Very Low income needs.

The 6th Cycle goals presented by Director Foulkes revealed a dramatic increase in numbers of housing units deemed necessary to be built in Fullerton from the 1,841 of the prior cycle to a staggering 13,180 proposed for the current one, an overall increase of over 600%. Foulkes explained that appeals to SCAG by cities in Los Angeles County and the county of Riverside itself resulted in an even higher allocation to Fullerton—13,209— than that represented in the presentation’s chart. In response to a question by Councilmember Ahmad Zahra about what would happen if those units weren’t all built during the 8-year cycle, Foulkes explained that the State was concerned with planning for growth, and called it “incredibly unlikely” that all 13,209 units would be built, or the total 1.3 million total new units called for in cities across the State.

Housing Incentive Overlay Zones

Lacking capital for housing subsidies formerly available through the now defunct Redevelopment Agency, Fullerton has begun proposing overlay zones, which allow more flexibility in development. Housing Incentive Overlay Zones (HIOZ), proposed for a “limited number of non-residentially-zoned properties” would allow residential construction in some areas not currently zoned for it.

Overlay zones are already in use for historic preservation and rural areas of the Fullerton, but the HIOZ model is contemplated as a way to work affordable housing into areas not currently zoned for such purpose. HIOZs are promised to provide “context-appropriate development standards” for residential use, and the City would benefit from increased land values and/or fees associated with expanded residential uses. Overlay zones were proposed several years ago in the wake of the failure to adopt the highly-touted $ 1 million Core and Corridors Specific Plan, and are seen as a piecemeal way to achieve the same residential construction approvals without the necessity of individual Planning Commission and City Council approved variants from the City’s General Plan. HIOZ planning was funded by a state grant.

Specific Plans

Director Foulkes also presented the idea of a Specific Plan for what he called the “Rail District,” for a 30-acre area south of the BNSF (Burlington Northern and Santa Fe) Railway right of way, Truslow Ave./Valencia Dr., Harbor Blvd., and the eastern edge of the 2014 Liberty Walk-housing project east of Euclid St.

City Rail District Specific Plan idea presented by Director Foulkes.

The footprint is identical to that first proposed by property manager Tony Bushala several years ago. During the public comments early in the March 9 study session, Bushala pointed out that he and a partner had formed a legal partnership called the Fullerton Rail District, a name they trademarked. Bushala objected to the City “appropriat(ing) the designation that The Fullerton Rail District partnership devised in 2014.” The district is a mixture of industrial sites (some stagnant), warehouses, small business yards, single family homes, and a 50-foot wide abandoned railway line. The City’s Union Pacific Park is sited on the eastern end of both proposed plans. The park has been closed to the public since 2003, first to facilitate toxic cleanup, and then because neighbors complained that the park had become “a hangout for illegal activity.”

Bushala’s proposed district would include adaptive reuse of existing structures in creative new ways, “a sustainable, real mixed-use community, fully integrated into the texture of the neighborhood surrounding it; a community that valued historic preservation and the pursuit of architectural excellence.” By contrast, he called the City’s proposal “a blanket housing overlay [that] will almost certainly result in demolishing historic structures, in lot consolidation and massive apartment blocks that provide inadequate parking, and create worse traffic circulation.”

Tony Bushala and/or his brothers own a significant portion of the properties in the proposed district, though not a majority of them. He urged the Council not to “receive and file” the City’s proposed specific plan, but rather to “consider taking positive action on pursuing a creative and original concept for this area of Fullerton in question.”

Foulkes countered that the City was not proposing any “land assembly.” He said he had met with Bushala and thought many of their concepts were similar and aligned, but in subsequent conversation with The Observer, Bushala said he thought the City’s planning staff had a different vision for the area. For example, speaking about one of the many existing older industrial structures in the plan area, Bushala said, “We could tear that down and build a mega-block, but that’s not what I want.”

During the presentation, Director Foulkes said the rail-adjacent area had been identified for development by “previous councils,” but in a subsequent phone conversation with The Observer said the City’s current proposed specific plan was at least inspired by the one put forth by Bushala, who in 2017 successfully got the Council to issue a Request for Qualifications (RFQ) for his plan, which netted no responses. Bushala thinks that the City should have instead issued a Request for Proposals (RFP). The City subsequently applied for and received a $200,000 SCAG (Southern California Association of Governments) grant for mixed use, Transit Oriented Development housing plans to fund its own Rail District plan, which Foulkes said would be presented to the public in coming months.

Mayor Pro Tem Nick Dunlap said he was concerned that the City’s Rail District plan could result in a “higher density neighborhood within dense neighborhoods.”

Councilmember Jesus Silva asked whether or not Inclusionary Housing requirements would be included in the Specific Plan to allow for more affordable housing. Foulkes replied that higher density would be offered to developers in exchange for building affordable units. Dunlap didn’t think such Inclusionary Housing was necessary, calling the housing problem a supply-driven one. He said that additional restrictions would only discourage developers and infringe on the rights of property owners.

Mayor Bruce Whitaker said that “by-right” mass approval approaches were problematic, recalling the public’s opposition to the ultimately abandoned Core and Corridors plan, and cautioning that “a broad brush could lead to rough sledding.” “By right” approvals allow developers to bypass review by city council and Planning Commission of some aspects of their plans. Inclusionary Housing would drive housing pricing up as developers were forced to absorb the costs of affordable units. According to Whitaker, residents had valid concerns that further urbanization could result in a diminishing quality of life in some areas in the form of increased congestion, rises in crime rates, noise, and air pollution, and shrinking open space.

No other Specific Plans were presented during the March 9 meeting. In 2010, Fullerton adopted the Fullerton Transportation Specific Plan northeast of the proposed Rail District to develop mixed-use retail and housing on City-owned land surrounding the historic train station. However, no structures have since been built there although the City did subsequently enter into an exclusive agreement with the developer of a proposed boutique hotel on part of the land, also, as yet, unbuilt.

Council and Public Responses

Calling in to the meeting, Jane Rands expressed concern that too many permissions might be given “by right” to developers, only to have them sell the development rights once they are approved, as happened with the Amplifi apartments on Commonwealth Ave. west of Euclid St. She also wanted to see more aggressive requirements for road rehabilitation than had been pursued in the past, where new developments would result in more traffic on City streets.

Foulkes also referred to City properties that are “potentially in need of update,” including Fullerton’s own City Hall and Fire Station #1, which includes a training facility. Both have been the subject of discussions about how they might be leveraged to gain newer facilities at no cost to the City while providing existing City-owned land for additional housing. Public commenter Jane Reifer, of Friends for a Livable Fullerton, asked what guidelines could be put into place to prevent developers from being unfairly advantaged and that adjacent property owners are not adversely affected. She cited the propensity of some developers to “buy, build, and flip,” and wanted to put a “massive emphasis on below-market levels” of housing while avoiding the “cookie cutter stack and pack” mega developments that have become the standard throughout the City and surrounding region.

No one could argue against the need for more affordable housing, said Councilmember Fred Jung, who said the City had for far too long “passive aggressively” determined what projects developers could build. Planning staff had “picked winners and losers,” presenting the Council with limited options for consideration, citing the plan to sell City Hall, which has only thus far been discussed in closed session with no reports out to the public. He encouraged City staff to be more efficient and transparent.

Foulkes also reported that the recently passed federal American Rescue Plan Act will provide Fullerton with approximately $2 million in homelessness assistance funds. How the money will be used has not yet been determined, but he did note that last year the Council had approved a recordation that supportive and permanent housing be allowed on land owned by religious institutions, as recommended by the Fullerton Homeless Plan Committee.

Director Foulkes introduced the new Housing Game Plan web site (www.cityoffullerton.com/housinggameplan) to familiarize people with the City’s plan to address California’s “Housing Crisis.” The site includes videos, maps, statistics, and even a 5 – 10 minute survey that  participants can complete in both English and Spanish, though not Korean language, as Council member Jung pointed out. (Foulkes promised to include a Korean version.) Jung also took issue with the Housing Game Plan’s advisory committee not including any developers or business owners among its membership. The so-called “Housing Champions,” to whom Jung referred, are acknowledged in the presentation and were referred to by Foulkes as a “sounding board” who meet weekly to help the City staff craft its housing plan. The 11 members include two current Planning Commissioners, Elizabeth Hansburg and José Trinidad Castañeda, as well as one recent one, Chris Gaarder. Hansburg leads a group called People for Housing OC, part of a “YIMBY” (“Yes in My Backyard”) network, who advocate for “new housing proposals and projects that expand housing opportunities,” according to the 501C-4 group’s website.

The Housing Champions also include Barry Ross of Providence St. Joseph’s Health, Habitat for Humanity’s Leonel Talavera, Mohammad Raghib of the Islamic Center of Fullerton, Jay Williams and Frank Haselton of OC United, Laura Riegler from CSUF Facilities, Kevin Mo-Wong from Solidarity, which works to improve immigrant Latino neighborhoods, and Amy Santos of CSUF’s Center for Healthy Neighborhoods. The group’s meetings are not open to the public and no minutes are kept for public inspection.

The City Council unanimously voted to receive and file the report.