There is a general, and growing, discomfort in the relationship between the residents and their city. People who live here are asking themselves and each other – who does the city work for? Those few residents who tuned in to the meetings of Oct 12 and Oct. 26 saw plainly what is driving the city’s priorities – and what is not. The clear takeaway was that the concept of a balanced city that works for all, is fading.
Changing this trajectory is critical. The stakes are enormous.
Core Issues: Council Discussion
In these City Council meetings, the three core issues bedeviling the city were raised:
- Residential development and densification
To satisfy state’s administratively-determined requirements and avoid state reprimand.
- Priorities for commercial activities
Subordination of commercial uses of commercial property to residential development priorities, to help satisfy state mandates. Revenue generation considerations were secondary and deprioritized.
- Public Safety
A seasonal need to attract foreign visitors, holiday shoppers and Superbowl activity (the latter two of which would, of course, require ample downtown parking) supported the request to spend $1 million in one-time funds for essentially “temporary improvements” to safety.
Core Issues: Council Perspective
In none of these areas were the core long-term concerns of the residents, who are the constituency and who pay the taxes, a factor in the decision making.
- Residential development and densification
As this column has previously noted, the 8,895 residential unit target, along with the 6,158-unit affordable component, was administratively assigned by state without any validation of actual need assessed by the prior Council. Consequently, there is no city analysis that supports these targets.
The discussion of residential development was increasingly focused on 100% affordable housing projects. While even this prioritization is not entirely agreed upon by the veteran council members, it was a grudging acknowledgement by the mayor of the huge number of vacancies throughout the city. The updated 2020 Census figures place Santa Monica’s vacancies at 4,751 units, or 9.1% of total housing units. Since single family vacancies are much lower than multi-family vacancies, the multi-family vacancy rate could reach as high as 11%.
Councilmember Christine Parra raised her concerns about the burden this increase would place on the water supply, infrastructure, services costs that would come from increasing the city’s resident population by upwards of 20%. The mayor acknowledged in passing that these were real concerns. But that was it. No discussion ensued. No direction was given. The issue is especially critical since developer impact fees do not offset these costs.
Even here, no mention was made of the need for added amenities (e.g., such as swim centers, parks, and libraries) such population increases would create.
These issues are much more serious when considered within the context of a city that is deficient today in many of the most critical areas, just with its current size.
- Priorities for commercial activities
City staff had to remind the mayor that cities need tax bases and a sustainable economy.
- Public Safety
The longstanding and increasingly vocal resident desire for permanent solutions of these exact same issues was not acknowledged. Despite Councilmember Brock pointing out this glaring omission, a seasonal-only focus remained the rationale. So, after the seasonal events have passed, reversion to essentially the current state of safety is apparently expected.
What are the implications?
The absence of a holistic approach on these issues exposes the city to long term imba lances.
- 100% affordable housing projects generate significantly less property tax revenues. Concentration on city-owned land will yield very little incremental property tax revenues to offset the required increases in services, infrastructure and amenities. Even market-rate developments are not self-sustaining.
- A focus on 100% affordable projects requires an equal focus on city revenue generation.
The overall constriction of commercial activities in the city, especially the Promenade via the demolition of parking infrastructure, starting with Structure 3, to facilitate increased residential development, will irrevocably set sales tax and parking facility revenue in decline with no obvious substitutes. The lost revenue infrastructure can never be reinstated.
- Declining quality of life
Highly publicized violent incidents in the city contribute to an increasing sense of personal insecurity with residents and visitors alike, contributing to a declining quality of life for all. This is most obviously apparent in, for example, the potential closure or significant modification of Chess Park, the removal of benches on the Promenade and the conversion of bus benches to stools.
The financial costs of declining safety and quality of life in the city are reflected primarily from lost city sales tax revenue from vacant storefronts.
What should have happened in these (and prior) Council meetings?
In a city-centric, resident-focused process, balanced outcomes with long-term sustainability would have been the objectives driving the deliverables. To achieve this, the city would have:
- Studied its actual housing needs in order to appropriately reply, or outright object to, the unsupported state unit assignment.
- Studied in detail the incremental costs required to provide appropriate infrastructure, services, safety and amenities on a holistic basis since increases in population impacts the existing residents as well.
This would have provided an additional basis for the city to assess the practical scope of compliance with the state unit mandate and condition any such compliance on the receipt of appropriate financial support. Such costs are a real financial impact to any actual compliance with the state’s administrative residential unit mandate, which the state conveniently does not consider to be an “unfunded mandate.”
- Determined the level of revenue growth and cost efficiencies required to holistically sustain an enlarged city as a parallel and co-equal priority. Based on this analysis, the city should have partnered with the business community to developed an informed, researched and comprehensive retail and commercial sales tax generation plan that emphasizes business concepts that are resistant to online substitution and that provide options serving the entire resident base. While the city receives a lower share of taxes from on-line sales than from local point of purchase transactions, adding incremental revenue-generating uses would generate net gains to, and growth opportunities for, city revenues.
To be clear, the gradual elimination of essential services and amenities as a funding strategy is not an option.
What needs to be addressed
- The existing issues of safety and city cleanliness with the City’s size “as is” indicates that no expansion of residential population should even be considered until these issues are fundamentally resolved.
Only then can an appropriate baseline of the resources required to maintain that baseline be established. This would include a reversal of the socialized costs of failed policies such as the closure of Chess Park, occasional usability of Reed Park, bench removal, etc.
Safety is a fundamental city responsibility that is a core component of equity across all city neighborhoods. It is a precondition for both the provision of the basic quality of life for all residents and visitors and for the economic recovery and improvement in the city’s finances. Needless to say, safety imposes substantial quality of life and financial costs in its absence.
- Acknowledging that not only retaining, but enhancing, the existing commercial infrastructure such as parking, is critical to any such recovery plan.
This would also provide clear indications of the opportunity costs involved in eliminating irreplaceable commercial supports such as parking facilities. Elimination of downtown parking impacts both the parking facility taxes and the level of sales tax transactions overall. There are no non-regressive taxation substitutes for this revenue.
The importance of this component cannot be overstated. In the pre-pandemic budget, sales and use taxes combined with parking facility taxes supplied 20% of the General Funds’ revenues. These revenues are tightly interconnected.
What needs to happen
The city must adopt a holistic city-centric resident-focused paradigm as the first step to restoring a baseline quality of life for all residents and visitors. Looking forward, it must also create a balanced, sustainable, and nurturing environment for the improvement of that quality of life, including impacts on cost of living, for all current and future residents. That approach fundamentally includes a thriving and sustainable economic base to support those residents.
The city needs to acknowledge the critical role each of these components play in a balanced and thriving quality of life.
Only with this approach can city decisions be guided by the framework necessary to properly assess the prioritization of residential and commercial/retail assets.
By Marc L. Verville for SMa.r.t. (Santa Monica Architects for a Responsible Tomorrow)
Mario Fonda-Bonardi AIA, Planning Commissioner; Ron Goldman, Architect FAIA; Dan Jansenson, Architect, Building & Fire-Life Safety Commissioner; Michael Jolly, AIRCRE; Thane Roberts, Architect; Robert H. Taylor, Architect AIA: Sam Tolkin, Architect; Marc L. Verville M.B.A., CPA (inactive)
