CREW-OC Luncheon: Orange County Mayors, “Evolve to Survive”

By Dennis Kaiser

CREW-Orange County recently gathered for a moderated panel with mayors from five Orange County cities to discuss questions and concerns about commercial real estate from a local government perspective. The discussion, moderated by Altus Group’s Pauline Hale, touched on affordable housing and the changing retail environment, as well as how the CRE industry can work with local government to help shape Orange County’s future.

The speakers included:

• Tara Campbell, City of Yorba Linda
• Stacy Berry, City of Cypress
• Christine Marick, City of Brea
• Rhonda Shader, City of Placentia
• Diane Dixon, City of Newport Beach

A key topic the group tackled was housing, in particular solving the county’s affordability crisis. While they noted it is challenging to deliver needed housing, there are opportunities, and progress is being made. Newport Beach’s Dixon pointed out there’s been 350 affordable units built mostly in the airport area, but the future need is likely to be in the 2,000 to 4,000-unit range. She says it is “hard to provide incentives because of unfunded pension liabilities.” So, they “try to streamline process,” though projects “may require zoning variances,” said Dixon.

And for Placentia’s Shader, a goal is to make it easy to do business in the city, create an ad hoc committee to run ideas informally, and make better use of the transportation zone formed around the new train station. They created a specific plan on transit-oriented development and old town and that full EIR report helped educate citizens. She says they “did the work beforehand. It took a long time, but people clapped when finally voted upon it.” She also predicts they “may need to increase affordable units from 400 to 4,000,” and will need to promote accessory dwelling units.

Yorba Linda’s Campbell indicated that “if done right, people don’t mind affordable units,” though she agrees that developers need to figure out Opportunity Zones.

Shifting to talk about the product mix of a site, the mayor’s noted cities must be cognizant of the impact of switching from one use to another. For instance, converting retail uses to multifamily will impact tax revenue. Cities are working to retain retailers and fill vacancies because that’s a significant revenue generator. They also want to work with property owners and the commercial real estate industry to maximize a property’s uses.

Campbell indicates they can’t afford to have one retailer leave, and are proactively engaged with brokers to ensure spaces remain filled. Yet, she notes while residents hate vacancies, they don’t necessarily “make the connection to lost sales tax” if the property changes to a different use.

Brea’s Marick points out creating a better use will “require more vision.” That includes educating people that the benefits of new development can’t be achieved without some impacts. “The future is to collocate residents with malls,” she predicts.

Dixon notes they get 1% of 8% sales tax, and that online sales is taking a toll. Helping to fill that gap are restaurants, which are a big driver now, and she’s seeing new concepts emerge combining retail and dining.

The complexities of these evolving mixed-use environments played out in Cypress, where Berry says a former retail site has moved forward with a hotel, 250 units of apartments, a luxury cinema and smaller restaurants. That change required them to “educate residents what works” she says. “We need to evolve to survive.”

*Pictured above Left to right: Stacy Berry, City of Cypress, Rhonda Shader, City of Placentia, Christine Marick, City of Brea, Tara Campbell, City of Yorba Linda, Diane Dixon, City of Newport Beach

For comments, questions or concerns, please contact Dennis Kaiser