SR-8-G
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STAFF REPORT
APR : J 1990
Santa Monica, California
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HAY 1
I 1990
CA:RMM:lld583d/hpc
City Council Meeting 4-24-90
TO:
Mayor and city Council
FROM:
city Attorney
SUBJECT:
Ordinance Amending Santa Monica Municipal Code
sections 9420, 9421, 9422, 9423, 9424, 9427,
9428, and 9429 and Adding Section 9433 to the
Santa Monica Municipal Code Relating to the
Inclusionary Housing Program
At its meeting on April 17, 1990, the City Council
introduced for first reading an ordinance amending various
sections of the Santa Monica Municipal Code relating to the
City's Inclusionary Housing Program.
The ordinance is now
presented to the city council for adoption.
RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be adopted.
PREPARED BY: Robert M. Myers, city Attorney
Laurie Lieberman, Deputy city Attorney
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CA:RMM:lld583c/hpc
City Council Meeting 4-24-90
Santa Monica, California
ORDINANCE NUMBER 1519(CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE
SECTIONS 9420, 9421, 9422, 9423, 9424, 9427, 9428,
AND 9429 AND ADDING SECTION 9433 TO THE SANTA MONICA MUNICIPAL
CODE 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 section 9420 is
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 economically 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
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the need for decent and affordable housing
in Program 12.
(c) The City Council of the City of
Santa Monica 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 of the city of Santa Monica
revised Program 12, adopting Ordinance
Number 1448 (CCS) to implement those
revisions.
(e) The vast majority of new
housing units being constructed in the
City are not affordable to persons of low,
moderate, or middle income.
(f) The current inclusionary
requirements placed on new housing
development are inadequate to allow the
Ci ty to provide sufficient numbers of new
housing units to persons of low, moderate,
or middle income.
(g) The current per square foot
in-lieu fee is inadequate to allow the
City to provide the number of units which
would be provided if the inclusionary
requirements on new housing development
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were met by provision of on-site housing
units.
(h) The city is currently
conducting studies to determine the most
appropriate on-site and in-lieu fee
requirements for the City's inclusionary
program.
(i) Pending completion of these
studies, the City Council finds it
necessary to amend the city's inclusionary
program on an interim basis as set forth
below.
SECTION 2. Santa Monica Municipal Code section 9421 is
amended to read as follows:
SECTION 9421. Defini tions. The
following words or phrases as used in this
Chapter shall have the following meanings:
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.
Elderly Household. A household
where the head of household is at least 62
years of age.
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HUD. The united states Department
of Housing and Urban Development or its
successor.
Inclusionary unit. A rental
dwelling unit as required by this Chapter
which is a ffordable by a household with
low or middle 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.
Market Rate Unit. A dwelling unit
as to which the rental rate is not
restricted by this Chapter or by the Rent
Control Law.
Maximum Allowable Rent. A monthly
housing charge which does not exceed 30%
of the median income establ ished by HUD,
adjusted for income level, household size,
and unit size. This charge shall
represent full consideration for housing
services and amenities as provided to
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market rate units in the project, whether
or not occupants of market rate units pay
separate charges for such services and
amenities. Housing services and common
area ameni ties incl ude, but are not
limited to, the following: parking, use
of common facilities including pools or
health spas, and utilities if the project
is mastermetered. Notwi thstanding the
foregoing, utili ty charge 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 the occupants of inclusionary
units in the project in addition to
maximum allowable rents collected for
those inclusionary units.
tlHoderatetl and tlLow" 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" (61% to 100% of
the area median) and "low income" (60% or
less of the area median). Further
adjustment shall be made by household size
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as established by the city. The Planning
Department shall make available a list of
moderate
and
low
income
levels
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adjusted, which list shall be updated
periodically by the City and riled with
the city Clerk.
Off-site Construction.
Erection of
loW' or moderate income housing units on
land other than that on which the
developer intends to place a project
within the City of Santa Monica.
project.
A residential development
or land subdivision proposal for which
city permits and approvals are sought.
SECTION 3.
Santa Monica Municipal Code section 9422 is
amended to read as follows:
SECTION 9422. Applicability.
(a)
An
inclusionary requirement
shall apply to all projects involving new
construction of two or more residential
market rate dwelling units or condominium
or cooperative conversion of two dwelling
units or more.
(b)
The
construction
of
any
multiple
rental
or
limited
equity
cooperative housing which has a recorded
deed restriction requiring occupancy of
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all units in the project by and rent
levels of all units affordable to low and
moderate income persons or households for
a period of not less than 30 years, and
which is either financed by federal,
state, or local housing assistance, or
owned by religious or other non-profit
organization shall be exempt from the
requirements of this Chapter.
(c) (1) The 1990 revisions to
this Chapter shall apply to any proj ect
for which an application was filed with
the City Planning Division on or after
March 27, 1990.
( 2) A proj ect not subj ect to
the 1990 revisions to this Chapter
pursuant to subdivision Ce) (1) of this
section shall be subject to the provisions
of this Chapter as they existed on the
date of approval of the application for
the project, unless the applicant
voluntarily requests that the amendments
of this Chapter apply to the project. In
the event of such a request, the
provis ions of this Chapter shall apply to
such proj ect unless the request is barred
by the provisions of Section 9424 (9) of
this Chapter.
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SECTION 4. Santa Monica Municipal Code Section 9423 is
amended to read as follows:
SECTION 9423.
project Development
Requirements.
(a) This Chapter requires that not
less than thirty percent (30%) of the
total number of new units to be
constructed in any project developed by an
applicant at one locationl designed for
permanent occupancy and containing two (2)
or more units, excluding any density bonus
units to which an applicant is entitled
under Government Code section 65915, shall
be affordable by households of low- or
moderate-income. Not less than twenty
percent (20%) of the units must be
affordable to households of low-income and
the balance of the affordable units must
be affordable to households of moderate
income. The requirements of this section
may alternatively be satisfied at the
developer's discretion by off-site
development of required units as described
in section 9423(g) or an in-lieu fee
payment pursuant to the provisions of
section 9424.
(b) In determining the number of
inclusionary units required, any decimal
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fraction less than 0.5 shall be rounded
down to the nearest whole number, and any
decimal fraction of 0.5 or more shall be
rounded up to the nearest whole number.
However, in determining the number of low
income inclusionary units required, any
decimal fraction less than 0.5 shall be
rounded up to the nearest whole number.
(c) 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 dwelling units, if any, are intended
to satisfy the inclusionary housing
requirements of this Chapter.
(d) If located on the project site,
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 units visible
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from the exterior of the uni ts and the
size
and
design
of
the
units
are
reasonably consistent with the market rate
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units in the project, provided that all
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 unit in the proj ect and if the
floor area of the inclusionary units is
not the same as the floor area of the
market rate units at the project, each of
the inclusionary units shall satisfy the
following
minimum
total
floor
area,
depending upon the number of bedrooms
provided:
o Bedroom
1 Bedroom
500 Square Feet
600 Square Feet
2 Bedrooms
850 Square Feet
3 Bedrooms
1080 Square Feet
4 Bedrooms
1200 Square Feet
(e) All inclusionary units in a
proj ect or a phase of a proj ect shall be
constructed
concurrently
with
the
construction of market rate units in the
project or phase of that project.
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(f) Inclusionary units developed on
the project site must be rental units in
rental or ownership projects.
(g) Inclusionary units required
pursuant to this Chapter may be provided
at a location wi thin the city other than
the project site at the developer's
discretion. Any such off-site
inclusionary units shall be completed by
the developer of the market rate housing
proj ect prior to the issuance of a
certificate of Occupancy for the market
rate housing unit project and shall
conform to the requirements of the
applicable Building and Housing Codes and
the minimum size provisions cited in
section 9423 (d) . The occupancy and rents
of any such off-site units shall be
governed by the terms of a deed
restriction similar to that used for
on-site inclusionary units which shall
take precedence over all other covenants,
liens, and encumbrances of the property on
which the off-site construction is
performed.
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SECTION 5. Santa Monica Municipal Code section 9424 is
amended to read as follows:
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SECTION 9424.
In-Lieu Pees for
Xnclusionary Housing.
(a) Whenever the city requires as a
condition of approval of a market rate
housing development that the development
include inclusionary housing units
pursuant to this Chapter, the developer
may elect to pay a fee to the City in lieu
of providing such on-site or off-site
inclusionary units in accordance with the
provisions of this section.
(b) The amount of the fee pursuant
to this Section shall be determined as
follows: $15.00 per gross square foot of
floor area. In determining the required
fee, the floor area of anyon-site
inclusionary units shall be excluded from
the floor area calculation.
(c) Any fee required pursuant to
this Section shall be adjusted for
inflation by the percentage change in the
Consumer Price Index ("ePI") between the
date of adoption of this Chapter through
the month in which payment is made. For
purposes of this Section CPI shall mean
the index for Urban Wage Earners and
Clerical Workers for All Items for the Los
Angeles/Long Beach/Anaheim statistical
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area, as published by the united states
Department of Labor,
statistics.
Bureau of Labor
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a Certificate of Occupancy is issued for
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Cd) Any fee required pursuant to
this section shall be paid in full before
any unit in the housing project.
(e)
Any
fee
required by this
section shall be secured by execution of
an irrevocable letter of credi t in favor
of the city or other security acceptable
to the ci ty 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 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 and moderate income housing.
Up to
twenty-five percent (25%) of in-lieu fee
funds may be used to develop affordable
housing for moderate income households,
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and up to fifteen (15%)
funds may be used
administration costs.
(g) This Section shall not apply to
any housing development for which an
agreement has been executed between the
City and developer to provide for an
on-site inclusionary uni t and the
inclusionary unit has been occupied.
(h) This section shall not apply to
any housing development in which a density
bonus has been given pursuant to
Government Code section 65915.
of in-lieu fee
for program
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SECTION 6. Santa Monica Municipal Code Section 9427 is
amended to read as follows:
SECTION 9427. pricinq Requirements
for Inclusionary Units. The city shall,
on an annual basis, set maximum allowable
rents for inclusionary units, adjusted by
the numper of bedrooms. Such maximum
allowable rents 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 more
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than 30% of the gross household income for
households earning the median income. The
owner of each inclusionary unit shall
retain discretion in the selection of
eligible renters for that unit, provided
that such renters meet the requirements of
Section 9428.
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SECTION 7. Santa Monica Municipal Code section 9428 is
amended to read as follows:
SECTION
9428.
Bligibility
Requirements.
(a) Only low- and moderate-income
households shall be eligible to occupy
inclusionary units. The City may
establish administrative guidelines for
determining household income, minimum and
maximum occupancy standards and other
compatible eligibility criteria. The City
council may, by resolution, approve a
tenant certification process with which a
proj eet appl icant subj eet to this Chapter
shall be required to comply.
(b) The following individuals, by
virtue of their position or relationship,
are ineligible to occupy an affordable
unit:
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(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.
(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.
(c) In setting priorities among
eligible households, first priority shall
be given to Santa Monica residents, second
priority to persons employed in Santa
Monica, and third priority to other
persons.
SECTION 8. Santa Monica Municipal Code Section 9429 is
amended to read as follows:
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neighborhoods. At the same time, modifications to the City's
Zoning Ordinance in recent years have reduced maximum allowable
densities for housing. The effect of this reduction has been to
further increase the per unit land cost for affordable housing
projects, and to increase the extent to which project feasibility
is affected by inflation in land cost. The impact of this infla-
tion is even greater in areas of relatively high land cost, such
as the Santa Monica-Montana corridor, than in historically low
cost areas such as Ocean Park and the Pico Neighborhood.
While in syndicated low income housing projects increases in con-
struction costs can be partially offset by additional capital
contributions because of increased depreciation and tax credit
potential, increases in land cost simply widen the gap between
total development costs and available capital and debt financing,
necessitating greater subsidy. To the extent that projects are
developed in high land cost areas, or provide long-term benefit
primarily to very low and low income residents, these proj ects
will require the greatest subsidy. The example below indicates
the projected sources and uses of funds for two typical projects
containing six three-bedroom units.
Example 1: Low Land Cost Area ($40/ft)
USES OF FUNDS:
TOTAL COST
PER UNIT
Land Acquisition
Construction (Building)
Construction (Parking)
Financing/Misc. Soft Costs
$300,000
$356,000
$139,750
$102,250
$898,000
$50,000
$59,333
$23,292
$17,042
$149,667
TOTAL DEVELOPMENT COSTS
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requirements for on-site replacement units
or fees required pursuant to any ordinance
implementing Program 10 of the city's
Housing Element.
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SECTION 10. 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 11. 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.
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SECTION 12. 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:
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ROBERT M. MYERS
city Attorney
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Adopted and approved this 1st day of May, 1990.
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I hereby certify that the foregoing Ordinance No. 1519(CCS)
was duly and regularly introduced at a meeting of the city
council on the 17th day of April 1990; that the said Ordinance
was thereafter duly adopted at a meeting of the City council on
the 1st day of May 1990 by the following Council vote:
Ayes: Councilmembers:
Abdo, Finkel, Genser, Mayor Zane
Noes: Councilmembers:
Jennings, Katz, Reed
Abstain: Councilmembers:
None
Absent: Councilmembers:
None
ATTEST:
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