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O1615 - e CA:RMM:tp73/hpadv City Council Meeting 3-3-92 Santa Monica, California ORDINANCE NUMBER 1615(CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTIONS 9420 THROUGH 9433 RELATING TO THE INCLUSIONARY HOUSING PROGRAM THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS: SECTION 1. Santa Monica Municipal Code Sections 9420 through 9433 are amended to read as follows: SECTION 9420. Findings and purpose. The City council finds and declares: (a) The City of Santa Monica has a responsibility to address the needs of its residents and residents in the region, from all social and economic groups, for decent, affordable housing, while at the same time maintaining an economical1y sound and healthy environment. (b) The Housing Element of the General Plan of the City of Santa Monica adopted on January 25, 1983, provided for an inclusionary housing program to address - 1 - e' e the need for decent and affordable housing in Program 12. (c) The city Council properly considered and adopted the components of an inclusionary housing program which would implement the goals of Program 12 at its meeting on March 10, 1987. (d) On June 28, 1988, the City council revised Program 12, adopting Ordinance Number 1448 (CCS) to implement those revisions. (e) On May 1, 1990, the city council adopted Ordinance Number 1519 (CeS) on an interim basis, finding that the vast majority of new housing units being constructed in the City of Santa Monica were not affordable to persons of low, moderate, or middle income, that the current inclusionary requirements placed on new housing development were inadequate to allow the City of Santa Monica to provide sufficient numbers of new housing units to persons of low, moderate, or middle income, that the current per square foot in lieu fee was inadequate to allow the City of Santa Monica to provide the number of units which would be provided if the inclusionary requirements - 2 - e -- on new housing development were met by provision of on site housing units, and that it was necessary to amend the inclusionary Program on an interim basis to allow completion of studies to determine the most appropriate on site and in lieu fee requirements. (f) On November 6, 1990, the voters of the city of Santa Monica approved Proposition R, adding Section 630 to the city Charter to read as follows: The city Council by Ordinance shall at all times require that not less than thirty percent (30%) of all multifamily-residential housing newly constructed in the Ci ty on an annual basis is permanently affordable to and occupied by low and moderate income households. For purposes of this Section, "low income household" means a household with an income not exceeding sixty percent (60%) of the Los Angeles County median income, adjusted by family size, as published from - 3 - e - time to time by the United states Department of Housing and Urban Development, and "moderate income household" means a household wi th an income not exceeding one hundred percent (100%) of the Los Angeles County median income, adjusted by family size, as published from time to time by the united states Department of Housing and Urban Development. At least fifty percent (50%) of the newly constructed units required to be permanently affordable by this section shall be affordable to and occupied by low income households. (g) On December 29, 1990, the city of Santa Monica published notice that on January 8, 1991, the city council would consider issues relating to the implementation of Proposition R including whether the thirty percent (30%) requirement of Proposition R could be met on site or off site, whether an in lieu fee would be permitted, and whether the - 4 - e e thirty percent (30%) requirement had to be met on a project by project basis. This notice also provided that at the January 8, 1991 meeting, the City Council would consider directing staff to prepare an ordinance to implement Proposition R. (h) city staff prepared a staff report for the January 8, 1991 City council meeting identifying the issues that had to be addressed as part of the implementation of Proposition R, suggesting a process for obtaining public input, presenting City staff's resolution of issues raised by Proposition R' s implementation, and recommending that staff be directed to prepare an ordinance implementing Proposition R. (i) At its January 8, 1991 meeting, the City Council directed staff to prepare an ordinance implementing Proposition R and to return the ordinance to the city Council on February 26, 1991. (j) The Santa Monica Planning Commission, as well as other groups in the community, believed the schedule for the return of the ordinance did not provide opportunities for adequate review of - 5 - It It various alternative strategies for implementing proposition R. (k) At its meeting on February 19, 1991, the City Council decided to reconsider whether an ordinance should be prepared, and scheduled for its next regular meeting a general discussion of implementing strategies. (1) On March 5, 1991, the City Council directed the city Attorney to prepare an ordinance prohibi ting the filing of applications for market-rate residential housing until such time as the City Council adopted an ordinance implementing proposition R excepting from the prohibition any project in which thirty percent (30%) of the units constructed on site are available to low and moderate income persons as provided for in Proposition R. (m) On March 26, 1991, Ordinance Number 1577 (CCS) was adopted imposing restrictions on new multifamily housing to ensure compliance with Proposition R. This ordinance was due to expire on September 26, 1991. (n) On April 3, 1991, the Planning Commission reviewed an outline developed - 6 - e - by staff on the issues and information that would be presented as part of the analysis on the alternative implementation strategies. (0) On September 10, 1991, the city council adopted Ordinance Number 1599 (CCS) extending the restrictions on new multifamily housing to ensure compliance with Proposition R, pending the issuance of a staff report on a proposed implementation strategy under Proposition R, to allow public review and comment on the staff report, and to allow time for public hearings before the Planning Commission and City Council. This ordinance was due to expire on January 10, 1992. (p) On September 10, 1991, a report was issued by city staff on the "Proposed Implementation strategy Under Proposition R,t1 incorporated into a Summary Report and Technical Report on Proposition R. (q) On October 16 and October 25, 1991, the Planning Commission conducted a public hearing on the proposed implementation strategy, and formulated a recommendation to the City Council. The Planning Commission requested a two or - 7 - e -- moratorium ordinance of the existing on multifamily to allow for and Planning three month extension residential development further public review Commission consideration. (r) On November 19, 1991 the City Council conducted a public hearing on the staff proposal, and requested that staff examine additional models and provide additional information to the City Council. (s) On November 26, 1991, the city council adopted Ordinance Number 1609 (CCS) to ensure that the City of Santa Monica would comply with Proposition R while further studying approaches for long-term implementation of the measure. The ordinance was due to expire on April 10, 1992. (t) On December 3, 1991, the city council directed the City Attorney to prepare an Ordinance implementing Proposition R which utilized an approach requiring the provision of on site inclusionary units in certain circumstances, and allowing the payment of an in lieu fee in other circumstances, as set forth below. The following ordinance - 8 - e - is necessary to enable the City to meet the requirements of Proposition R. (u) According to the 1980 Census, 42.8% of all Santa Monica residents are of low or moderate income. Approximately 8,500 residents live below the poverty line. (v) The homeless population in the Santa Monica area is estimated to be between 3,000-5,000 persons. (w) Approximately 12,565 lower income households are paying more than one third of their income for housing. Over three-quarters of these are renters. When the cost of housing exceeds 30 percent, it becomes a burden, reducing the money available for other necessary expenses. (x) Approximately 2400 households in the City live in housing that is overcrowded. (y) The average sales price of a two-bedroom, single-family house in 1990 was $525,350 and a two-bedroom condominium averaged $351,108. The high cost of for-sale housing indicates that there are no opportunities for lower-income or moderate-income households to own homes in Santa Monica without assistance. - 9 - e e (z) Over 20 percent of Santa Monica's households are headed by senior citizens. Approximately 65% of the senior citizen households are renters. In 1980, senior families represented 20 percent of the families wi th incomes below the poverty level and 16 percent of the single person households living in poverty in the city. (aa) There is essentially no vacant residential land in Santa Monica. New construction must occur on recycled parcels or on marginal commercial or industrial land. When parcels are recycled which previously contained affordable housing, there is often a net loss in the total number of affordable housing units provided, even with an inclusionary housing requirement. (bb) There is inadequate federal and state support for programs to assist the City in meeting its affordable housing needs. SECTION 9421. Definitions. The following words or phrases as used in this Chapter shall have the following meanings: - 10 - e e Developed Use. A use of land which includes either residential or commercial structures. Dwelling Unit. One or more rooms, designed, occupied, or intended for occupancy as separate living quarters, with full cooking, sleeping, and bathroom facilities for the exclusive use of a single household. Dwelling Unit shall also include Single Room Occupancy unit. HUD. The united states Department of Housing and Urban Development or its successor. Inclusionary Unit. A rental or ownership dwelling unit as required by this Chapter which is affordable by a household with low or moderate income. Income Eligibility. The gross annual household income considering household size and number of dependents, income of all wage earners, elderly or disabled family members, and all other sources of household income. In Lieu Fee. A fee paid to the City by a developer subject to this Chapter in lieu of providing the required inclusionary units. - 11 - e e Market Rate unit. A dwelling unit as to which the rental rate or sales price is not restricted by this Chapter. Maximum Allowable Rent. A monthly housing charge which does not exceed 30% of the Los Angeles County low income (in the case of a low income unit) or median income (in the case of a moderate income unit), adjusted for household size, as published from time to time by the united states Department of Housing and Urban Development. This charge shall represent full consideration for housing services and amenities as provided to market rate dwelling units in the project, whether or not occupants of market rate dwelling units pay separate charges for such services and amenities. Housing services and common area amenities include, but are not limited to, the following: parking, use of common facilities including pools or health spas, and utilities if the project is master metered. Notwithstanding the foregoing, utility charges for use of natural gas and electricity, to the extent individually metered for each unit in the project, may be passed through or billed directly to - 12 - e e the occupants of inclusionary units in the project in addition to maximum allowable rents collected for those inclusionary units. "Koderate" and "Low" Income Levels. Determined periodically by the City based on the united states Department of Housing and Urban Development (HUD) estimate of median income in the Los Angeles-Long Beach Primary Metropolitan Statistical Area. The two major income categories are: "moderate income II (61% to 100% of the area median) and "10w income" (60% or less of the area median) . Further adjustment shall be made by household size as established by the city. The Planning Department shall make available a list of moderate and low income levels as adjusted, which list shall be updated periodically by the City and filed with the City Clerk. Hul ti-Family District. Any zoning district in which mUlti-family dwelling units are a permitted use. Project. A residential development or land subdivision proposal for which City permits and approvals are sought. - 13 - e e SECTION 9422. Applicability. (a) An inclusionary requirement shall apply to all projects for which a development application was deemed complete after February 11, 1992, involving new construction of two or more residential market rate dwelling units or condominium or cooperati ve conversion of two or more dwelling units, or involving new construction of a single family home when it is replacing more than one dwelling unit in a mUlti-family district. An inclusionary unit requirement shall not, however, apply to tenant participating conversions governed by the provisions of the Tenant ownership Rights Charter Amendment, Article XX of the Santa Monica city Charter. (b) A project not sUbject to this Chapter pursuant to subdivision (a) of this Section shall be subject to the provisions of this Chapter as they existed on the date the application for the project was deemed complete, except that with respect to any project for which an application has been filed but not approved at the time this Chapter becomes - 14 - e e effective, the applicant can elect to have the provisions of this Chapter apply to the project. SECTION 9423. project Development Requirements. (a) This Chapter requires that not less than thirty percent (30%) of the total number of new dwelling units to be constructed in any project developed by an applicant at one location, designed for permanent occupancy, excluding any density bonus units to which an applicant is entitled under Government Code section 65915, shall be affordable to households of low- or moderate-income. SECTION 9424. On site and In Lieu Fee Options. (a) The requirements of Section 9423 shall be met by providing on site inclusionary units meeting the requirements of section 9425 in either of the following circumstances: (i) The project is on a site for which no Category C Removal permit was issued prior to February 18, 1992 (or was issued after February 18, 1992, but applied for prior to February 18, 1992), - 15 - e e and which the developed use on February 18, 1992, was multifamily housing and at least one dwelling unit was rented at levels affordable to households of moderate income levels or if vacant on February 18, 1992, when last rented. (ii) The project involves the construction of 20 or more market rate dwelling units, excluding any density bonus units to which an applicant is entitled under Government Code section 65915. (b) The requirements of section 9423 shall be met either by providing on site inclusionary units meeting the requirements of section 9425, or by satisfying the requirements of 9426, if both of the following circumstances apply: (i) The project is not on a site as described in subdivision (a) (i) of this section. (ii) The project involves the construction of less than 20 market rate dwelling units, bonus units to entitled under 65915. excluding which an Government any densi ty applicant is Code section - 16 - e e (c) Whenever inclusionary units are provided on site, such units must comply with the requirements of Section 9425. (d) Whenever the payment of an in lieu fee is allowed by this Chapter, such payment must comply with the requirements of Section 9426. (e) At the time of filing an application with the City's Planning Department for permission to develop multi-family market rate dwelling units, the developer shall specify the number, type, location, size, and construction schedule of all dwelling units proposed to be developed and shall indicate which of the dwell ing units, if any, are intended to satisfy the inclusionary housing requirements of this Chapter. (f) Once the developer of a project has elected to satisfy the requirements of this Chapter through the provision of inclusionary units on site, or through the payment of an in lieu fee, such option is determinative for the life of the project. - 17 - . e e SECTION 9425. On Site Inclusionary Unit Development Requirements. (a) In determining the number of inclusionary units required when on site units are provided, any decimal fraction of 0.3 or more shall be rounded up to the nearest whole number. (b) Inclusionary units shall, whenever reasonably possible, be evenly distributed throughout the project. The applicant may reduce either the size or interior amenities of the inclusionary units as long as there are not significant identifiable differences between inclusionary and market rate dwelling units visible from the exterior of the dwelling units and the size and design of the dwelling units are reasonably consistent with the market rate units in the project, provided that all dwelling uni ts conform to the requirements of the applicable Building and Housing Codes. Inclusionary units provided shall have at least the same number of bedrooms as the average dwelling unit in the project and if the floor area of the inclusionary units is not the same as the floor area of the market rate dwelling units at the - 18 - e e project, each of the inclusionary units shal1 satisfy the following minimum total floor area, depending upon the number of bedrooms provided: o Bedroom 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms 500 Square Feet 600 Square Feet 850 Square Feet 1080 Square Feet 1200 Square Feet (c) All inclusionary units in a project or a phase of a project shall be constructed concurrently with the construction of market rate dwelling units in the project or phase of that project. (d) On site inclusionary units must be rental units in rental projects. In ownership projects, inclusionary units may be either rental units, or ownership units. Ownership units shall comply with requirements concerning sales price, monthly payment, limited equity, and resale restrictions established by Resolution of the city Council to ensure that subsequent purchasers are also income-qualified households. (e) If only one inclusionary unit is required, such unit must be affordable - 19 - e e to low income households. The second inclusionary unit provided may be affordable to moderate income households, and alternating thereafter. (f) Whenever inclusionary units are required by this Chapter, the requirement may be satisfied at the developer's discretion by providing 100% of the units in the project affordable to moderate income households, provided that all such units meet the requirements of subsections (b) and (d) of this Section, and Sections 9429, 9430, and 9432. SECTION 9426. In Lieu Fees for Inclusionary Housinq. (a) Whenever this Chapter allows the payment of an in lieu fee, the required inclusionary unit number shall be determined as follows: Number of units in the project, (excluding density bonus units) x 30% = required inclusionary unit number. The first inclusionary unit required shall be affordable to low income income households, and the second to moderate income households. Additional inclusionary units shall alternate between low and moderate income units. Any - 20 - e e fraction of a unit required shall not be considered either a low or moderate income unit. An in lieu fee may be paid only for low income units required, and any fraction of a unit required. All moderate income units required shall be provided on site. The fee shall be determined as follows: (i) For any low income unit, the in lieu fee payment required shall equal the inclusionary unit base price, as established in subdivision (c) of this section. ( ii) For any fraction of a unit required, the in lieu fee shall equal the inclusionary unit base price times the fraction of a unit required. (b) The following chart illustrates the in lieu fee payable, the number of on site inclusionary units required, and whether such units must be affordable to low or moderate income levels, using, for il1ustrative purposes only, an inclusionary unit base price of $60,000: - 21 - , e e NO. UNITS BUILT EXCLUDING DENSITY BONUS MODERATE INCLUSIONARY UNITS ON SITE FEE 2 0 $ 36,000 3 0 54,000 4 0 72,000 5 0 90,000 6 0 108,000 7 1 66,000 8 1 84,000 9 1 102,000 10 1 120,000 ec) For purposes of this Section, the inclusionary unit base price shall be established and adjusted from time to time by Resolution of the ci ty Council based upon the cost to the City of subsidizing the construction of a new residential unit. (d) Fifty percent (50%) of any fee required pursuant to this section shall be paid prior to the issuance of a Building Permit for the project. The remaining fifty percent (50%) shall be paid in full before a Certificate of Occupancy is - 22 - e e issued for any unit in the housing project. (e) Any fee required by this section shall be secured by execution of an irrevocable letter of credit in favor of the city or other security acceptable to the city for the total amount of the obligation. The letter of credit or other acceptable security shall be delivered to the City prior to the issuance of a building permit for the housing development. The letter of credit or other security shall be released and returned to the developer immediately upon payment in full of the in lieu fee. (f) Any payment made pursuant to this section shall be deposited in a Reserve Account separate from the General Fund to be used only for development of low income housing. (g) If an lieu fee is paid pursuant to this section, such payment shall not be considered provision of an inclusionary units for purposes of determining whether the housing development qualifies for a density bonus pursuant to Government Code section 65915. - 23 - e e SECTION 9427. Fee Waivers. The Condominium and Cooperative Tax described in Section 6651 of the Santa Monica Municipal Code and the Park and Recreation Facilities Tax established in Chapter 6C of Article VI of the Santa Monica Municipal Code shall be waived for required inclusionary and for low and moderate income dwelling units developed by the city or its designee using in lieu fee funds. However, any developer who elects to pay an in lieu fee shall not be eligible for any fee waiver under this section. SECTION 9428. Density Bonus and Other Incentives. Projects which meet applicable requirements of State law as a result of inclusionary units are entitled to density bonuses or other incentives in accordance with the provisions of such law. SECTION 9429. Pricing Requirements for Inclusionary units. The City council shall, by Resolution, on an annual basis, set maximum allowable rents and maximum allowable purchase prices for inclusionary units, adjusted by the number of bedrooms. - 24 - e e Such maximum allowable rents and maximum allowable purchase prices shall be set at rates such that qualified occupants for low income units pay no more than thirty percent (30%) of the gross monthly household income for households earning 60% of the median income. Qualified occupants for moderate income units shall pay no household more than 30% of the income for households gross earning the median income. SECTION 9430. Eligibility Requirements. (a) Only low- and moderate-income households shall be eligible to occupy or own and occupy inclusionary units. The City shall develop a list of income-qualified households which gives priority to persons who have been evicted pursuant to the Ellis Act, Government Code Section 7060, persons residing in Santa Monica, and persons working in Santa Monica. Developers shall be required to select households from the City-administered list of income-qualified households. The Ci ty shall develop administrative guidel ines for the tenant - 25 - e e and purchaser selection process, which shall require, at a minimum, that 80% of the inclusionary units in a proj ect be leased and occupied within 60 days of issuance of the certificate of occupancy for the project, or sold and occupied within 120 days of issuance of the certificate of occupancy for the project, and that any vacancies in inclusionary units shall be leased and occupied within 30 days of vacancy, or sold and occupied within 120 days of vacancy. (b) The following individuals, by virtue of their position or relationship, are ineligible to occupy an inclusionary unit: ( 1) All employees and officials of the city of Santa Monica or its agencies, authorities, or commissions who have, by the authority of their position, pOlicy-making authority or influence affecting City housing programs. (2) The immediate relatives, employees, or other persons gaining significant economic benefit from a direct business association with public employees or officials. - 26 - e e (3) The immediate relatives of the applicant or owner, including spouse, children, parents, grandparents, brother, sister, father-in-law, mother- in-law, son-in-law, daughter-in-law, aunt, uncle, niece, nephew, sister-in-law, and brother-in-law. SECTION 9431. Relation to units Required by Rent control Board. Low- and moderate-income dwelling units developed as part of a market rate project, pursuant to replacement requirements of the Santa Monica Rent Control Board, shall count towards the satisfaction of this Chapter if they otherwise meet applicable requirements for this Chapter including I but not limited to, the income eligibility requirements of the Chapter, deed restriction requirements, and pricing requirements. New inclusionary units required by the Rent Control Board which meet the standards of this Chapter shall count towards the satisfaction of this Chapter. SECTION 9432. Deed Restrictions. Prior to issuance of a building permit for a project subject to the requirements set - 27 - e e forth in this Chapter, the applicant shall submit deed restrictions or other legal instruments setting forth the obligation of the applicant under this Chapter for City review and approval. such restrictions shall be effective for the lifetime of the project. SECTION 9433. Availability of Government Subsidies. It is the intent of this Chapter that the requirements for the inclusionary units shall not depend upon the availability of federal or state housing subsidies. This section does not, however, preclude the use of such programs or subsides. SECTION 9434. Enforcement. No building permit or occupancy permit shall be issues, nor any development approval granted, for a project which is not exempt and does not meet the requirement of this Chapter. All inclusionary units shall be rented or owned in accordance with this Chapter. - 28 - e e SECTION 9435. Relation to Units or Fees Required Pursuant to Future ordinances Implementinq proqram 10 of the city's Bousinq Element. Low- or moderate-income dwelling units constructed to meet the requirements of this Chapter, or in lieu fees paid to meet the requirements of this Chapter, shall be credited toward requirements for On site replacement units or fees required pursuant to any ordinance implementing Program 10 of the City's Housing Element. SECTION 9436. Annual Report. The Housing Department shall submit a report to the City council on an annual basis which shall contain information concerning the implementation of this Chapter and whether the provisions of Proposition R have been met. In the event the provisions of Proposition R have not been met, the City Council shall take such action necessary to amend the provisions of this Chapter or its implementation to ensure that the provisions will be met. - 29 - , e e SECTION 2. Ordinance Number 1609 (CCS) is repealed. SECTION 3. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, are hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance. SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this ordinance, and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional. SECTION 5. The Mayor shall sign and the city Clerk shall attest to the passage of this Ordinance. The city Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective after 30 days from its adoption. APPROVED AS TO FORM: ~ v-,~ ROBERT M. MYERS city Attorney - 30 - e e Adopted and approved this 3rd day of March, 1992. Q~A MaY~PrO Tempore I hereby certify that the foregoing ordinance No. 1615(CCS) . was duly and regularly introduced at a meeting of the city council on the 18th day of February 1992; that the said ordinance was thereafter duly adopted at a meeting of the city Council on the 3rd day of March 1992 by the following Council vote: Ayes: Councilmembers: Olsen, Vazquez, Zane, Abdo Noes: Councilmembers: Holbrook, Katz Abstain: Councilmembers: None Absent: Councilmembers: Genser ATTEST: /~o>~ il~ -- - City Clerk I e e Adopted and approved this 3rd day of March, 1992. Q~A May~prO ~empore I hereby certify that the foregoing Ordinance No. 1615(CCS) was duly and regularly introduced at a meeting of the city Council on the ~8th day of February 1992; that the said Ordinance was thereafter duly adopted at a meeting of the city Council on the 3rd day of March 1992 by the following Council vote: Ayes: Councilmembers: Olsen, Vazquez, Zane, Abdo Noes: Councilmembers: Holbrook, Katz Abstain: Councilmembers: None Absent: Councilmembers: Genser ATTEST: '~Q.?Ll~ ...-/ - Ci ty Clerk I