At its meeting last week, the Santa Monica City Council directed City staff to draft an ordinance aimed at increasing affordable housing production in Santa Monica.
Voters set current City goals for affordable housing production in 1990 with the passage of Proposition R, which requires that 30 percent of all new multifamily housing on an annual basis be affordable to low and moderate income households.
According to the most recent data compiled by City consultant Hamilton, Rabinovitz and Alschuler, the City has exceeded the Proposition R mandate for affordable housing production if the totals for the last ten years are averaged. However, for four years there has been a downward trend in affordable housing production.
In order to reverse the trend, the Council approved a motion crafted by Council member Kevin McKeown that directed staff to prepare a draft of a new on-site inclusionary housing ordinance “to maintain the diversity of the City…based on developers having choices.”
McKeown’s motion included three options: Option 1: “All new multifamily projects of four or more units shall include on-site 20 percent of the total units as rental units deed restricted to be affordable to low income households” whose income is 60 percent of the county median income. “On truly larger projects say 16 units or greater, that percentage should go up to 25 percent. In counting units … if the fraction is .75 or higher they have to build the unit. If under, they would pay the in lieu fee instead of building the additional unit. In the case where the in lieu fee is being paid by the developer for some fractional unit, we can reduce that fee even further in exchange for their agreeing to provide on-site family size units of three or more bedrooms. Option 2: “If a developer chooses to build a project of rental units that is 100 percent deed restricted to moderate income households, defined as 80 percent of the county median income, then they are exempt from the on–site requirements for low income units all together.” Also, there would be 100 percent of for-sale units that would be available to those whose income is 100 percent of the county median income. Option 3: At the developer’s choice, (affordable) units be built off-site within 1/2 mile of the project in Santa Monica as long as the units are twice the number that would have been required on-site.”
Council member Ken Genser, who seconded the motion and added to it said, “Clearly, under the current economy, we aren’t going to produce the annual mandated amount of affordable housing unless we make some changes.”
The only Council member who voted against the motion was Bobby Shriver, who said he couldn’t support it as it lacked an “underlying predictive analysis” of the impacts it would have on the production of new housing in Santa Monica. He went on to say, “ If I were to make this level of detail of direction in my private business, I would want to have a lot more information on what the reaction of my customers and partners would be, if I were to do these things. I can’t vote on a thing like this because I have no idea what it will do.”
Shriver did agree with his colleagues that the new draft ordinance should reflect the new state law on density bonuses.
Land Use Attorney Chris Harding, representing the Santa Monica Housing Council, reminded the Council that “The current program has worked quite well for the last eight years. It has successfully produced affordable housing that complies with Proposition R without impeding new market rate housing development. Any change to the current program should as a matter of policy … be preceded by a constraint analysis which would look at how the changes would impact new housing production.”
Prior to giving direction on the inclusionary housing ordinance, the Council voted unanimously to increase the “in-lieu” fee a developer pays into the City’s housing fund under the current ordinance rather than building affordable units on site. The new fees are $26.08 per square foot, up from $11.01 per square foot for condominiums and $22.33 per square foot for apartments, up from $6.14. McKeown said it was necessary to increase the fees because the current fee “is demonstrably too low,” noting that in the current ordinance a developer has four options to satisfy the City’s affordable housing requirements and they’re all pretty much equal. “The reality has been almost every developer has chosen the in lieu fee. Clearly, it has been too low and hasn’t produced enough revenue to produce the affordable housing” mandated by Proposition R.In other business, the Council approved Preferential Parking Zone S for six residential blocks between Nebraska and Colorado on the eastern edge of the City. In order to accommodate the next business license billing cycle, it also gave City staff direction to move forward on the proposal to amend the City’s current business license ordinance to provide a small business exemption and to lower the home business planning fee and assess it on a one-time only basis.