I saw the proposal to put a temporary cap on rental rate increases. This has me concerned because investors might decide not to build in Orange County anymore if the government is heavy handed, and that will cause an even greater shortage of housing and put more pressure on rents long term.
I’d like to suggest other measures that could help alleviate the problem. I work with a group that converts hotels to really nice affordable apartments – complete with gyms, game rooms, pools, coworking areas, even daycare centers and movie theaters sometimes. The apartments have full kitchens, granite counter tops, soft close cabinets, LTV flooring – all top notch. Despite this, they are affordable because the square footage of each unit is rather small and you have the benefit of an already existing structure. The small living area is compensated by great amenities.
We tried bringing this model to Orange County since there are many older, yet nicely built hotels that can no longer compete with the new resorts. However, we found we were unable to actually make it affordable here because of the very high impact fees ($12-15K/unit), rezoning complications, parking requirements (1.5 spaces/efficiency and 1-bedrooms were you only have 1 person living whom often don’t have a car), and building code upgrades required for the change of use. For example, there is a requirement for a minimum of 500SF of living area – most hotel rooms are between 220 and 300. It does not make economic sense to knock down walls between all the rooms and structurally it can’t happen safely. Generally, you only combine rooms when they were built with connecting doors. Even so, connecting two 220sf rooms doesn’t meet the 500sf minimum.
Consider relaxing these requirements and you can get more apartments into the market rather quickly, which will ease pressure on rents.