Business & Economy

Santa Ana wants developers to convert office towers into housing

Santa Ana city leaders would like to see outdated, underutilized office towers like this one located at 888 N. Main St. converted into apartment or condo complexes to bring more residents into the downtown area and provide housing stock. The city's adaptive reuse ordinance provides incentives for developers to carry out these types of conversions.
Santa Ana city leaders would like to see outdated, underutilized office towers like this one located at 888 N. Main St. converted into apartment or condo complexes to bring more residents into the downtown area and provide housing stock. The city's adaptive reuse ordinance provides incentives for developers to carry out these types of conversions.
Erika Aguilar/KPCC

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Conversion of old commercial buildings into housing helped revitalize downtown Los Angeles, and city leaders in Santa Ana are trying to entice developers to carry out similar conversions of a number of buildings in their downtown area.

The Santa Ana City Council tried to further sweeten the pot earlier this month when it waived its requirement that developers include affordable housing in commercial-to-residential conversion projects.

The process, known as adaptive reuse, is an architect’s way of recycling underutilized or historic buildings by converting, for example, outdated and vacant office towers into apartments or condominiums.

"If you want to bring them back in the office market and make them competitive, you need to upgrade them," said Hassan Haghani, executive director for the Santa Ana city planning and building agency.

Builders could demolish defunct commercial buildings, start from scratch and build new high rises but that can be expensive. Another other option is to gut them and create apartments or condos by turning conference rooms into kitchens and cubicles into bathrooms.

Santa Ana's council approved its adaptive reuse ordinance late last year, modeling it on the 1999 one that helped change the face of downtown Los Angeles.

A lot of potential

Experts say Santa Ana has the most potential for adaptive reuse in Orange County because of the city’s age and its distinct downtown core.  

There are 13 buildings, mostly office towers, in and around downtown Santa Ana that the city has tagged as having potential for residential conversion.

One of them is located at 888 N. Main Street. It’s a sturdy-looking white, 10-story building that houses Orange County Social Services Agency administration offices; that lease is up at the end of this year. Next to the building is a performing arts school and two other similar office towers within four blocks.

“Right now, at night this place is dead,” said Vasil Chekardzhikov, a guitar instructor who offers lessons at a music studio on Main Street across from the idle white office tower.

He said there is foot traffic in the mornings as parents drop off children at the nearby schools and government workers clock in, but after 6 p.m. this part of Main Street is stagnant.

Santa Ana city leaders want to bring people and bustle to these parts of town while creating more housing stock in a place where there is almost no undeveloped land. Haghani believes converting outdated office towers into apartment or condo complexes can help.

“If those get transformed, all of a sudden we can have a 150 households move in a building where there was none before,” he said.

Relaxed building and fire codes

In Santa Ana, the adaptive reuse ordinance relaxes certain building, fire code and parking requirements for developers wanting to transform commercial buildings into residential.

To make conversion more attractive, the city council amended a housing ordinance to no longer require developers to set aside a percentage of converted residential units for affordable housing, which is sold or rented below the market rate.

Haghani said seismic upgrades and fire code modifications can be costly, and unless a developer can get a return on the building conversion by selling the units at market rates, developers won’t take on adaptive reuse projects because profits would be minimal.

The city's waiver of the low-cost housing requirement worries Cesar Covarrubias, executive director of the Kennedy Commission, an affordable housing advocacy group.

"You may be creating parts of the downtown that are going to be, essentially, segregated, to individuals who can afford it," he said.

Covarrubias also worries that converted luxury or high-end housing units in and around downtown Santa Ana will have an upwards ripple effect on rental prices in surrounding communities.

"For those areas, you are going to see a huge turn in who moves in, and who is in those neighborhoods," he said.

"We are getting inquiries"

Haghani contends there’s nothing in the adaptive reuse ordinance that prevents developers from building affordable housing from old office towers.

"Without mentioning names and places, we are getting inquiries about a couple of those buildings, by many developers, including affordable housing developers," he said.

Some developers carried out adaptive reuse projects long before the city started to promote the idea. That's what happened about 10 years ago to a motel on East 17th Street in Santa Ana.

Standing under what used to be a drive-up motel arch, Todd Cottle punches in the security code to the lobby of what is now a senior living apartment complex, Santiago Villas.

Santiago Villas in Santa Ana (Erika Aguilar/KPCC)

Cottle’s real estate company C&C Development converted 155 motel rooms into 89 affordable housing apartments for seniors. He said a one-bedroom rents for about $975 a month, which is $225 less than the local market rate.

Cottle said it’s possible for adaptive reuse projects to become affordable housing projects; the key is getting a good price for the property that will be converted.

"If you’re buying the property for a decent value, you can make it work at a lower rent level, too," he said.

Other developers have kept quiet about what, if any, commercial buildings in Santa Ana they are interested in converting.