Apartments for 51 families replace a gas station in Santa Ana, California. (TCA Architects)

Developers are finding unique opportunities in Santa Ana, a progressive city in Orange County, California, with a large, low-income Hispanic population. They have transformed a neighborhood strip shopping center into a model for creating more affordable and workforce housing. La Placita Cinco is an innovative $31.4 million project and a great example of how developers can revitalize old strip shopping centers, especially ones anchored by aging gas stations or run-down retail pads. With an infusion of a $6 million grant from the city of Santa Ana, it provides much-needed affordable housing, it is mixed use, it includes public art, and it revitalizes a core neighborhood in the city.  Plus, the development cherry on top; it provides public space for community events like farmer’s markets and concerts.

The 2.25-acre (0.9 ha) site, formerly called “Tiny Tim Plaza,” replaces the former gas station and a portion of a parking lot with a vibrant new affordable community of three to four stories of 51 apartments. It offers two-, three-, and four-bedroom units with ground-floor community space shared by the community and neighborhood residents.  The gas station was razed to make room for the apartment building, which has 20 two-bedroom units, 29 three-bedroom apartments, and two four-bedroom units. While it’s fully leased, the community celebrated its grand opening this summer. Rents at La Placita range from $1,682 to $2,154. Qualified applicants earn between 30 percent and 60 percent of the city’s median income of $66,000. Santa Ana is one of more than 20 cities that make up Orange County, which is notoriously one of the nation’s most expensive places to live.  

The project was developed by Community Development Partners, designed by City Fabrick and TCA Architects, and will be operated by Mercy House. Other core partners include Magis Realty, JDLA (landscape architect), Walton Construction (general contractor), Ware Malcomb (civil engineer) and Wells Fargo (community grants). 

In this before and after image, the residential development replaces some of the existing parking and a gas station on the left, with updated retail on the right.

Jack Kemp Award-Winning Model for Redevelopment

This project, which was just awarded the Urban Land Institute’s Jack Kemp Excellence in Affordable and Workforce Housing Award, is a successful example of integrating much-needed affordable housing into an existing residential neighborhood by leveraging under-utilized commercial properties. It transformed the architecturally non-descript, 1970s strip shopping center (with an abandoned gas station and oversized parking lot), to a modern, Contemporary Spanish-style mixed-use development. Named in memory of Jack Kemp, former secretary of the U.S. Department of Housing and Urban Development, this award honors developments that meet affordable and workforce housing needs and create mixed-income communities. What’s really exciting about this project is that it serves as a model for strip retail centers nationwide with similar characteristics—namely a large, underutilized parking lot—to include affordable housing. Learn more about the ULI Terwilliger Center for Housing

Healthy features included filling a vacant retail space with a nonprofit fitness center, installing outdoor gym equipment in the park, and creating a one-fifth-mile walking-jogging path that loops around the project. The service alley behind the retail component also was converted to an urban garden to provide fresh herbs and produce to some of the center’s businesses. This playground and green space is located on the second floor of the residential structure.

Public Benefits

Cities throughout the nation lack land for new development but have many similar derelict or defunct parcels in desperate need of revitalization. In fact, there are an estimated 70,000 similar strip centers throughout America ripe for redevelopment that offer tremendous potential for creating more affordable and workforce housing.

Reminiscent of the exemplary designs of world-famous Mexican architects Luis Barragan and Ricardo Legorreta, this vibrant new mixed-use project reflects the cultural diversity of the Artesia Pilar neighborhood and broader City of Santa Ana architecturally and artistically.  The public art installations provide an eclectic extension of the surrounding community with a series of curated murals created by local artists which uses local, but subtle details to incorporate the city’s history in the artwork.

The housing component opened in February 2021 and provides a built-in customer base that boosted sales for the shopping center’s locally owned small businesses, which includes a laundromat, Mexican restaurant, hair salon, and a new nonprofit fitness center.

La Placita Cinco created an opportunity to turn an auto-oriented parking lot into a more pedestrian-friendly environment with cleaver re-designs of the existing space. The remaining parking surface was redesigned to support active uses with wide, landscaped plazas along the retail facades to provide an opportunity for retail uses to spill out for an open-air market, outdoor restaurant seating or kiosks to be set up for a farmer’s market or special events.

The project thoughtfully incorporated a 36,700 square foot mini park and open space that provides an oasis between the two commercial buildings, which serve as a community gathering space for socializing and hosting a variety of public and pop-up uses, such as fitness classes, outdoor movies, and concerts. The park wraps around a central plaza with hardscape features that include an amphitheater with stadium seating built into a planter on the east property line. The former service alley was transformed into an urban farm that provides produce for several on-site businesses. 

The retail storefronts were modernized with many tenants remaining in place.

Increasing Affordable Housing in California

With the highest cost of housing in the nation, California’s affordable housing crisis is threatening the economic vitality and social fabric of the state, driving large employers and the middle-income, skilled workers to relocate in lower-cost-of-living states, like Nevada, Arizona and Texas, and increasing the homelessness and poverty. 

Over the last few years, California’s state and local governments have taken steps to stem the tide of outmigration, implementing policies, new programs and tools to increase affordable and workforce housing stock, from revamping building codes, relaxing regulatory barriers and expediting project approvals to creating new funding sources, eliminating or reducing fees, and providing incentives to encourage developers to build new housing for low- and middle-income groups.

As a result, some developers are responding with innovative, out-of-the-box projects, particularly in progressive cities with a tremendous need and the will to bend over backwards to get more affordable housing done.  Locally based Community Development Partners (CDP), La Placita Cinco’s lead developer, is among those developers.

Kyle Paine, co-founder and president of CDP, says that when considering sites for development, his company looks at the site’s specifics, including who is living in the neighborhood now and then aligns housing and amenities to resident needs. “There was a deep desire from the City to bring more investment of affordable housing into the Santa Ana community – a desire that was complemented by a new streetcar line coming through, and the need for local residents and their families to find an affordable place to call home,” he notes.  

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Challenging Site

The site’s potential for an affordable-housing mixed-used project was first identified by local developer and broker Brian Hendricks, a principal at Magis Realty, which acquired the 2.25-acre shopping center in 2016.  Hendricks has worked with multiple affordable-housing developers in Santa Ana helping them source, conceptualize and entitle sites.

He says that a couple of homebuilders had previously attempted to redevelop the site, but one of the tenants had a 35-year lease and wanted an unreasonable sum to buyout the lease, which is why he proposed rehabbing the center’s two existing retail buildings.

“Interestingly, this was a lever for the redevelopment,” notes Brian Ulaszewski, principal and executive director of nonprofit urban design studio City Fabrick, who was engaged by CDP and Magis Realty to design the project.  He suggests that revitalizing the retail component was both a sustainable and practical solution, as the shopping center’s tenants had evolved over time to provide a perfect mix of more than a dozen neighborhood-serving businesses.

Hendricks partnered with CDP, which is known for taking on complex projects that require creative solutions.  He eventually sold his interest in the property to CDP, which formed partnerships with two California-based nonprofit, affordable housing developers/operators, Integrity Housing and Mercy Housing California, to provide affordable-housing expertise. Both of these organizations are experienced in structuring and funding affordable housing deals, as well as in providing operational and social services. The development team retained TCA Architects as Executive Architect for the project.

The development team initially proposed rehabbing the retail component, environmental cleanup of the abandoned gas station on the corner, and adding studio and one-bedroom affordable-housing units.  “But that wasn’t what the city needed,” says Judson Brown, housing division manager for the City of Santa Ana, who notes that the city needs affordable, family housing.  He explains that Santa Ana has a high population of low-income Hispanic families with three generations or multiple families living in the same household and notes that whenever a new affordable project opens, the city gets 1,000 applicants for every 50 units available.

The City saw La Placita Cinco as an opportunity to add affordable family housing stock near mass transit, as the site is adjacent to Orange County’s new 15-mile streetcar line, which is under construction and will connect rail and bus routes in Orange County and beyond, including the Santa Ana Regional Transportation Center. This project is within an easy walk of two streetcar stations to the north and south. 

Zoning Changes

On another project in the city of Santa Ana, the planning department had previously collaborated with CDP to convert an obsolete motel to housing for the homeless, but Brown says that this was very unique for the city of Santa Ana and Orange County. With La Placita Cinco, more help from planners was necessary.   “The developer couldn’t close the deal without a commitment from the city, because this project did not fit the general plan or meet zoning or environmental review regulations, and there was opposition from neighborhood residents,” he explains.

Normally developers would scrape a site and start from scratch, but CDP proposed preserving the site’s original commercial buildings and tenants, which was big plus for the city, says Brown. The developer, in fact, improved the retail component without raising tenant rents for three years, which was a more sustainable and strategic approach to development and preserved retail sales tax revenue generated for the city.

But more importantly it proved a very effective way to provide affordable housing, so the city agreed to provide $6-million in funding, a zoning change from commercial to mixed-use, and assistance with the community approval process if the developers revised the plan to create affordable housing designed for families.

The new design provides 50 two-, three- and four-bedroom units, 15 units of which are for extremely low-income families earning 30 percent of Orange County’s $88,000 area median (household) income (AMI), 5 units are for 50 percent of AMI; and 30 units are for 60 percent of AMI. The one additional unit houses a project manager employed by Southern California-based FPI Management, an industry leader in affordable and market rate residential property management. 

Entitlements, Design and Parking

Ali Pezeshkpour, principal planner for the City of Santa Ana, was the major force behind the project’s final design, entitlements, and community approval process.  He says that working with the developers and architects to create a plan that met the city’s housing needs and managing the entitlements was relatively simpler compared to the community engagement process.

He notes that residents were initially concerned that parking would overflow into the neighboring residential community, and some of them had the misconception that “affordable housing” means “cheap housing” and could attract an undesirable element including gangs.

Gaining community approval for the project required a creative parking solution. “We revisited the plan to create a podium structure with a parking garage on the ground level high enough to install car lifts,” Pezeshkpour says, noting that this doubled the parking to provide 91 parking stalls or 1.75 parking spaces per unit. This approach reduced construction costs, created a taller volume on the street-facing ground floor sections, and resulted in greater adaptability of spaces if the project transitioned to include ground-floor retail over time.

But he says that working with the community to overcome the misconception about what affordable housing is and who it serves provided the greatest rewards by helping the developer and neighbors form a long-lasting relationship and establish greater communication. Pezeshkpour notes that murals on the residential building by local artists Brian Peterson of Faces of Santa Ana and Damin Lujan added interest to the project and created a meningful connection with the Santa Ana community that helped in gaining acceptance by the neighborhood.

The new residential building, which anchors the corner of Hawley and 5th Street, activates the pedestrian realm with a collection of accessible outdoor spaces, a lobby, and resident amenities.

The podium-style, residential structure surrounds a central courtyard, which opens up and blends into the residential neighborhood. The 5th Street portion of the building, which is on the urban edge, is four stories then steps down to three stories to respond to the community, providing a better scale in relation to the single-family homes and retail buildings, which are one or one and one-half stories. This portion of the building opens up to allow a view and signage opportunities for the rear retail building.

The 5th Street residential building’s “floating box” design also provides an opportunity to see into the retail, and the three-story portion of the building angles toward the West to reveal more retail beyond and additional signage opportunities for retail from 5th Street. 

Community Services

Besides parking, the ground level of the residential structure includes a shared community center operated by Mercy House, which provides adult programming and children’s activities. Mercy House residential coordinator Stephanie Medina-Aleman plans and organizes all social services, activities and events offered onsite for La Placita Cinco and neighborhood residents and space for organized community meetings.

The community center has a large art space and offers a program that helps children with their homework and provides computer and Internet access, which often is unavailable to children at home. It also provides space for adult classes and activities, including computer training, help with resumes, craft workshops and aerobic classes, and serves as a resource for community nonprofit organizations.

In addition, Medina-Aleman serves in a social services capacity, connecting residents in need with community resources, such as rental assistance, a food pantry, counseling or other services need, and helps them navigate the process.  She says that Mercy House initially conducted a survey of La Placita Cinco residents to learn what types of programs and activities they desire or need, which is frequently repeated to update offerings.  During the pandemic, onsite services were been modified for safety considerations, and residents were kept engaged with classes and activities offered via Zoom.

Part of the 50 trees planted on the site provide a shady canopy for the park and plaza areas, providing a cool atmosphere for events, socializing with neighbors or where parents can relax while watching their children play. There also is a second-floor children’s playground in the residential structure with benches for parents. 

Remodeling the Retail

The two commercial buildings were reinvigorated with new facades that architecturally match the residential component and rebranded with signage from Tiny Tim Plaza to La Placita Cinco. Renovations also upgraded pedestrian access and addressed long-deferred building maintenance, including repairs to the roof and mechanical and electrical systems. CDP also added a new cool roof to help offset escalating energy costs.

This project leverages the diverse commercial amenities already existing among the tenants including a restaurant, bakery, market, butcher, salon, and laundromat to tend to the community’s daily needs, effectively creating a neighborhood Main Street. Taking advantage of the pandemic lockdown, when nonessential businesses were closed, the developer phased renovation work by section and provided walkway access so retail tenants could remain open throughout the duration of construction. The fact that we were able to keep the existing business open during construction, was one of the most challenging aspects of this project, but also, one of the most rewarding.

“Our goal was to keep the retailers there and open,” says Paine, noting that businesses were reimbursed for any extra expenses caused by construction, such as refrigerated supplies lost, and CDP covered the cost of insurance payments and utilities and paid their employees during the COVID-19 lockdown. 

Sustainable and Healthy Living

The project design incorporates both sustainable and healthy features. It replaced the large asphalt parking lot with strategically located open space with a natural turf in the middle of the project, increasing the green-space ratio to asphalt to reduce the heat-sink effect and improve the project’s overall microclimate.

Ulaszewski notes that the environmental cleanup was minimal, as the gas station fuel tanks had been removed long ago. The site had since been used as a mechanics shop, so the developer simply replaced the contaminated soil.

Solar panels were installed on the residential building, taking the project a step closer to “net zero” energy.  The open courtyard above the podium is strategically oriented to allow natural light and air into the internal units facing the courtyard, and an updated water quality management system allows the site to retain and percolate rainwater runoff.  Upgrades to the flatwork and landscape areas allow full accessibility to all public spaces, which allows for compliance of universal design standards.

Healthy features included filling a vacant retail space with a nonprofit fitness center, installing outdoor gym equipment in the park, and creating a one-fifth-mile walking-jogging path that loops around the project. The service alley behind the retail component also was converted to an urban garden to provide fresh herbs and produce to some of the center’s businesses.  

Financing

The project leveraged traditional and innovative funding sources that are unique to rehabilitating a blighted commercial property with affordable housing. Paine notes that retail component was advantageous in securing financing, with rents providing some leverage.

The project was supported with a 9 percent tax-credit award, funding from the City of Santa Ana, and a cooperative lender and investor partners who worked diligently to find solutions that supported both the new construction of affordable residential units and retail plaza renovations. Freddie Mac provided the long-term debt, R4 Capital the Equity Tax Credits, Citibank provided construction financing, and the City of Santa Ana Low- and Moderate-Income Housing Asset and Inclusionary Housing funds ensured the financial feasibility of the project with a $6-million grant.

Additionally, the Wells Fargo Foundation provided a grant to City Fabrick to work with the existing small businesses, which have been a vital and indelible part of local residents’ lives over generations, to consider new branding and signage as part of the commercial buildings’ rehabilitation. Linda Nguyen, vice president of Community Relations at Wells Fargo Foundation, notes that this grant focused on the project’s retail businesses because they not only meet the everyday needs of residents, but mom and pop shops are embedded in the neighborhood’s social milieu.

“The grants serve as a catalyst for a paradigm shift in thinking about community development and how grant funding can be leveraged to compliment housing development projects’ financing beyond tax credits and loans,” she adds.

“This project was very successful—a win-win, and we would 100 percent repeat it,” says Paine, noting that his company is looking for sites that provide a similar opportunity and hopes that other developers will look a La Placita Cinco as a prototype to realistically create much needed affordable and workforce housing throughout the state and revitalize disadvantaged communities.

Zoning changing were needed for this parcel but Santa Ana is a city known for its progressive policies and public support for these types of projects. “Technically this project did not fit city planning and zoning regulations, but it transformed a deteriorating shopping center into a real community center and created much needed affordable housing,” adds Pezeshkpour, stressing that city planners shouldn’t be afraid to advocate for projects they know will benefit the community.

“What’s important is to identify good projects and facilitate them, as policies and codes are supposed to represent what we think is good and positive for the community.”

It’s estimated that there are about 70,000 strip shopping centers like this throughout the nation and we expect they’re going to undergo similar transformations eventually. They are ripe for redevelopment, especially since we’re out of land and these are often derelict or defunct and in desperate need of new life.

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TIM MUSTARD is a principal at TCA Architects. He is also a member of the ULI Affordable Workforce Housing Council. Founded in 1993, TCA Architects are nationally recognized leaders in high-density, mixed-use, multifamily housing, and signature hospitality environments. The firm’s collaborative approach and industry leading technological expertise have resulted in award-winning, sustainable projects that respect our communities and the environment.

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