SR-8-A (72)
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CA:RMM:tp90/hpadv
City council Meeting 2-11-92
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Santa Monica, California
j:EB 1 8 1992
STAFF REPORT
TO:
Mayor and city council
FROM:
City Attorney
SUBJECT:
Ordinance Implementing Proposition R
On November 6, 1990, the voters of the city of Santa Monica
approved Proposition R, adding Section 630 to the City Charter.
That section obligates the city Council to require by ordinance
that not less than thirty percent of all newly constructed
multifamily residential housing be permanently affordable to and
occupied by low and moderate income households.
At its meeting 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 affordable units in certain circumstances, and
allowing the payment of an in lieu fee in other circumstances.
In response to this direction, the City Attorney's office
prepared an Ordinance amending Chapter 4A of Article IX of the
Santa Monica Municipal Code which sets forth the city's current
Inclusionary Housing Program.
The proposed Ordinance was released to the City Council,
the Planning Commission, and the public on January 14, 1992. On
January 22, 1992, the Planning commission held a public hearing
on the proposed Ordinance.
The comments of the Planning
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[-&092
f;-q "' -l ''':1)2
commission are contained in the staff report from the Housing
Department attached hereto as Exhibit A.
Since the Ordinance was last submitted to the City Council,
two changes have been made. First, the findings and purpose
section has been supplemented with information contained in the
City's Comprehensive Housing Affordability strategy recently
submi tted to the Department of Housing and Urban Development.
Second, the applicability section has been amended to clarify
that projects not subject to this Ordinance will be subject to
the inclusionary requirements in effect on the date the
application for the project was deemed complete. The following
section-by-Section analysis is identical to that accompanying the
original submittal of the proposed Ordinance to the city Council.
The proposed Ordinance is attached as Exhibit B.
SECTIDN-BY-SECTIDN ANALYSIS
section 9420. This Section contains the findings and
purpose of the Ordinance. These include the findings and purpose
supporting the city's current Program 12 Inclusionary Housing
Program, as well as findings and purposes specific to Proposition
R.
Section 9421.
This section amends the definitions of
t1market rate unit" and "maximum allowable rent," adds definitions
of "developed use" and "multi-family district," and deletes
definitions of t1elderly household" and "off-site construction."
Section 9422. Section (a) amends the applicability section
to provide that, in addition to projects inVOlving construction
of two or more dwelling units, an inclusionary requirement shall
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also apply to the construction of a single family home when it
replaces more than one dwelling unit in a multi-family district.
This section leaves open the date after which development
applications deemed complete will trigger the requirements of the
Chapter, for further input from Planning commission and the
public.
section (a) also provides that an inclusionary requirement
will apply to conversions of two or more dwelling units, but will
not apply to conversions governed by the Tenant Ownership Rights
Charter Amendment. Although Proposition R does not apply to
conversions, this implementation ordinance is completely
replacing the code provisions of the current inclusionary housing
program, which does apply to non-TORCA conversions. This
requirement would only come into play should non-TORCA
conversions become permissible at some time in the future. They
are currently prohibited by the City Charter.
section 9423. This section substantially amends former
Section 9423. It deletes the alternative for off-site
development of inclusionary units. In addition, the requirements
of former section 9423 concerning the determination of the number
of units required and the development standards for on site
units, are deleted from this section, and recodified, as
appropriate in Sections 9424, 94251 and 9426, as described below.
section 9424. This section requires that inclusionary
units be provided on site whenever the project involves the
construction of 20 or more market rate dwelling units, or when
the project is located on a site at which the last developed use
was multifamily housing and at least one dwelling unit was rented
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at levels affordable to households of moderate income. In
addition, this section clarifies that once a developer has
elected to satisfy the requirements of the Chapter through the
provision of on site units, or the payment of a fee, such choice
may not be subsequently changed. The provisions concerning the
calculation of in lieu fees formerly found in section 9424, are
now contained in Section 9426.
section 9425. This section requires that in determining
the number of inclusionary units required when on site units are
provided, any decimal fraction of 0.1 or more shall be rounded up
to the nearest whole number. The section contains the
development standards for on si te units whiCh are identical to
those found in former section 9423, with the exception that
ownership units, subj ect to resale and equity restrictions, in
addition to rental units, are permitted to satisfy inclusionary
requirements. The current inclusionary program does not include
ownerShip units. The development of procedural and substantive
regulations necessary to the administration of an ownership
program will be very time consuming. Therefore, this ordinance
authorizes an ownership program, but leaves the details to be
formulated and adopted by Resolution of the City Council.
This section also provides that if only one on site unit is
provided, it must be a low income unit, and that whenever
inclusionary units are required, the developer can elect to
satisfy the entire obligation through provision of 100% moderate
income units in the project.
The provisions of former Section 9425 concerning fee
waivers are now found in Section 9427.
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Section 9426. This section provides the formula for
determining the amount of in lieu fee payable, and permits the
payment of a fee for any low income unit required, and any
fraction of a unit required. All moderate income units are
required to be provided on site.
The fee is based on an inclusionary unit base price, to be
established and adjusted from time to time by Resolution of the
city council based upon the cost to the city of subsidizing the
construction of a new residential unit. This section requires
half the fee to be paid prior to issuance of the building permit,
and half prior to issuance of the certificate of occupancy, and
requires the posting of security prior to issuance of the
building permit. These provisions are the same as those
contained in the current inclusionary housing program.
The requirements of former Section 9426 concerning density
bonuses are now found in Section 9428.
section 9427. This section allows the waiver of the
Condominium and Cooperative Tax, and the Park and Recreation
Facilities Tax for inclusionary units when such units are
provided on site. The provisions are unchanged from former
Section 9425.
The requirements of former Section 9427 concerning pricing
requirements for inclusionary units are now found in section
9429.
Section 9428. This section provides that density bonuses
or other incentives required by state law are applicable to
projects to which this Chapter applies. This section is
unchanged from former Section 9426.
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The requirements of former section 9428 concerning
eligibility requirements for inclusionary units are now found in
section 9430.
Section 9429. This Section provides that the city council
by Resolution, shall set maximum allowable rent and maximum
allowable purchase prices for inclusionary units, on an annual
basis. Both rents and prices are to be set at rates so that
occupants of low income units pay no more than thirty percent of
the gross monthly household income for households earning 60% of
the median income, and occupants of moderate income units pay no
more than 30% of the gross monthly household income for
households earning the median income. This section contains the
same requirements for pricing rental units as were contained in
former Section 9427, and adds the pricing requirements for
ownership units.
The requirements of former Section 9429 concerning relation
to units required by the Rent Control Board are now found in
Section 9431.
Section 9430. This section amends the eligibility
requirements found in former Section 9428, by providing that the
City develop a list of income-qualified households for both
tenant and ownership units, from which a developer shall be
required to select. Such list shall give priority to persons who
have been evicted pursuant to the Ellis Act, and persons residing
or working in Santa Monica.
The section directs the development of administrative
guidelines for the tenant and purchaser selection process,
requiring original occupancy of rental units within 60 days of
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the issuance of the certificate of occupancy, and sale and
occupancy of ownership units within 120 days. vacancies are to
be filled within 30 days for rental units, and 120 days for
ownership units.
This section also prohibits the occupancy of inclusionary
units by employees and officials of the city, relatives,
employees, or other persons gaining significant economic benefit
from a direct business association with city employees and
officials, and the immediate relatives of the applicant or owner.
These same restrictions were found in former section 9428.
The requirements of former section 9430 concerning deed
restrictions are now found in section 9432.
Section 9431. This section permits replacement units
required by the Rent Control Board to satisfy inclusionary unit
requirements, provided that the units otherwise meet the
provisions of the Chapter. This provision is the same as former
section 9429.
The requirements of former section 9431 concerning
government subsides are now found in section 9433.
Section 9432. This section requires the approval of deed
restrictions or other legal instruments concerning the
obligations of the Chapter prior to the issuance of a building
permit. This section is identical to former section 9430.
The requirements of former section 9432 concerning
enforcement are now found in Section 9434.
Section 9433. This Section clarifies that the requirement
for inclusionary units shall not depend upon the availability of
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government subsidies, but that such subsidies are not precluded.
This section mirrors former Section 9431.
The requirements of former Section 9433 concerning relation
to Program 10 are now found in section 9435.
Section 9434.
This section prohibits the issuance of a
building permit or occupancy permit for a project not meeting the
requirements of the Chapter, and requires units to be rented or
sold in accordance with the Chapter.
section 9435.
This section provides that inc1usionary
units are to be credited toward requirements for on site
replacement units or fees which may be required pursuant to any
ordinance implementing Program 10 of the City's Housing Element,
and is unchanged from former section 9433.
Section 9436. This Section requires the Housing Department
to submit an annual report informing the city Council of whether
the provisions of Proposition R have been met. The City council
is required to take such action as is necessary to amend the
provisions of the Chapter or its implementation, in case the City
has fallen short of the targets of Proposition R.
RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be introduced for first reading.
PREPARED BY: Robert M. Myers, City Attorney
Mary H. Strobel, Deputy City Attorney
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Denise Altay, Senior Development Analyst
Community Development Department
9
ATTACHMENT A
BS:CE:DA:propr.staff
Council Meeting: February 11, 1992
Santa Monica, California
To: City council
From: City staff
Subject: Recommendation To Introduce For First Reading Proposed
Proposition R Ordinance And To consider Planning
Commission Comments
INTRODUCTION
This report recommends that the city Council introduce for first
reading the proposed Ordinance and give further consideration to
the comments and discussion from the Planning Commission.
This staff report contains a description of the major policy issues
in the draft ordinance, provides a synopsis of the comments made
by Planning Commission on the specific issues identified by city
council, and lists the additional concerns raised by Planning
commissioners at their January 22, 1992 meeting.
BACKGROUND
On November 19, 1991, the Council received the full staff analysis
and implementation plan for Proposition R and held a public
hearing.
At the conclusion of the public hearing the Council
extended the interim ordinance to April 10, 1992 and continued
discussion of the implementation plan to December 3, 1991.
At the December 3, 1991 meeting of the city Council, the City
Attorney was instructed to prepare a draft ordinance implementing
Proposition R. City Council further requested the Planning
commission to review the draft ordinance and to provide the council
with comments and policy guidance on several key issues. The draft
ordinance and Information Item, including a section by section
analysis, was completed by the city Attorney and released to the
public on January 14, 1992. The following items are included in
the Ordinance at the request of City Council:
criteria for Implementation
The draft ordinance contains two separate criteria for
implementation, similar to the staff proposal. (1) For projects
that are located on a site on which the last developed use was
multifamily housing in which at least one dwelling unit was rented
at levels affordable to households of moderate income levels, the
ordinance requires the developer to comply with the 30%
inclusionary requirement on site. In calculating the number of
required inclusionary units all fractions are "rounded up" to the
to the next highest whole number. The first inclusionary unit
shall be affordable to low income households, the second to
moderate income households, alternating between low and moderate
for any additional units. Thus, a four unit project must provide
two inclusionary units, one affordable to a low income household
and affordable to a moderate income household.
(2) Projects which are located on sites that did not have, as a
last developed use, multifamily units affordable to moderate income
2
households, have the option of paying a fee in lieu of any low
income unit obligation and any fraction of a unit required. All
moderate income unit obligations must always be provided on site.
In Lieu Fee for Eligible Pro;ects
The proposed base price for an inclusionary unit is $60,000,
representing the average cost to the city of subsidizing one new
rental unit. For any low income unit the in lieu fee payment
required is equal to the base price. Any fraction of a unit
required is equal to the base price times the fraction. The
second whole unit is a moderate income unit and must be provided on
site: only the low income unit obligation and any fraction can be
satisfied with an in lieu payment. Thus, a four unit building
required to provide 1.2 units (4 x .3 = 1.2) could pay $72,000 (1.2
x $60,000). A seven unit building required to provide 2.1 units (7
x .3 = 2.1 : one low income, one moderate income, plus a fraction)
must provide the moderate income unit on site and pay an in lieu
fee of $66,000 (1.1 x $60,000).
Laroe Pro;ects
Council concurred with the staff position that in lieu payments are
not available, in any circumstances, to projects of 20 units or
more. All obligations must in that case must be met on site.
Unit Tenure
Unlike previous inclusionary housing policies, the Council
3
requested that tenant selection for units developed under the new
ordinance be conducted through a City administered list of pre-
approved households. In addition, Council requested that the
ordinance allow developers of inclusionary units to sell the
designated unites) to income eligible tenants. This is a change
from the current inclusionary program which requires that all
inclusionary units be rental.
DISCUSSION
The Planning Commission discussed the ordinance at its January 22,
1992 meeting. The City Council identified eight key issues for
discussion and comment by the Planning Commission. While the
Planning Commission took no formal position on each of the issues
presented, there was extensive discussion by the Commissioners.
The following is a synopsis of the issues discussed and the views
of the Planning commissioners.
1. Compliance city-wide vs. prolect by project
The ordinance, as requested by city Council, requires project
by project compliance with Proposition R if all of the required
units are developed on site. For projects which are allowed an in-
lieu fee option, compliance for the moderate-income unit obligation
is to be measured project by project while compliance for the low-
income unit obligation is to be measured City-wide.
Planning Commissioners unanimously agreed with this approach.
4
However, questions were raised concerning situations where the city
was out of compliance. This issue is addressed in Section 9436 of
the ordinance which perIni ts the ci ty council to take whatever
action it deems appropriate if it finds that the City is out of
compliance.
2. In-Lieu Fees vs. On-site
Commissioners were divided on this issue. However a majority
of the Commissioners felt that the on-site requirement was so
restrictive that it would deter all housing construction, market
or otherwise. These Commissioners argued that reasonable in-lieu
fees would allow some market rate housing construction to continue,
as well as provide the City with funds to be used for affordable
housing developments. The city subsidized affordable housing
developments would insure that the specifically targeted population
receive the public benefit.
Other commissioners felt that it was not in the City's
interest to gain new affordable units at the expense of current
affordable units. Therefore, these Commissioners felt that the on-
site requirement for developers intending to demolish currently
affordable units was justifiable, given the alternative of losing
affordable units through demolition.
3. Amount of In-Lieu Fees
Commissioners agreed that the fee should be calculated
according to the city's cost of developing affordable units. They
5
did not have a recommendation on a specific amount or method of
calculation. They requested only that the method be made through
resolution by the City Council with the ability for adjustment
depending on future public funding.
4. Thresholds for Fee Payments
For those developments that are allowed a fee option, the
ordinance creates a threshold at two units, seven and at twenty
units. The Commissioners concurred that the twenty units threshold
for the allan site requirement should not be raised. However,
several Commissioners believed that the threshold should
be lowered.
Consensus was also reached on allowing an in lieu fee option
for all developments that had two or three units as a prior use on
the site, regardless of their rent levels. The Commissioners
believed that the owner already had the ability to secure an owner-
occupancy exemption from Rent Control for the previous existing
units and could thereafter increase the rents prior to
redevelopment of the site. Therefore, any additional Proposition
R requirement would be easily circumvented.
5. 30% Calculation-Roundinq
The commissioners were divided on this issue. Several
Commissioners felt that "rounding up" imposed such enormous costs
on smaller developments that nothing would be buil t. Other
Commissioners felt that the preservation of existing affordable
6
housing was a sufficiently significant concern that small
developments which caused the destruction of affordable housing
should not be encouraged.
6. Inclusionary Ownership units
The Commission was virtually unanimous in their support for
allowing ownership of inclusionary units. Several Commissioners
expressed concern that such programs are difficult to administer
and monitor and are subject to abuse. The Commissioners requested
strict regulations concerning the resale restrictions and household
eligibility. One Commissioner believed any limitations on the
increase in equity and other resale price controls should be
included in the ordinance.
7. Loss of Rent Controlled units
The ordinance does not specifically identify Rent Controlled
units for special protection. However, several Commissioners
agreed with the two tiered approach which provides more significant
requirements, such as "rounding up II and the "allan sitell
requirement, on projects which cause the loss of affordable
housing.
8. Tenant Selection
Commissioners generally agreed with a centralized city
administered list of eligible tenants for all future inclusionary
units. Several Commissioners expressed concern over the
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eligibility restrictions barring non-professional city staff from
eligibility.
Those restrictions are unclear in the current
ordinance.
ADDITIONAL CONCERNS
Several Commissioners voiced their concern over the vagueness of
the original ballot proposition, and the lack of sufficient time to
adequately analyze and respond to an implementation plan.
The Commissioners also discussed the possibility of obtaining
credit for rehabilitated units or shelter beds or even land
purchases in satisfying the Proposition's 30% requirement.
FINANCIAL/BUDGETARY IMPAC~
The proposed ordinance will have a bUdgetary/financial impact in
that in lieu fees will be collected and held for future
programming. It is not possible to predict with any certainty the
amount of in lieu fees.
RECOMMENDATION
It is recommended that the City Council introduce for first reading
the proposed Ordinance and give further consideration to the
comments and discussion of the Planning commission.
Prepared by: Barbara stinchfield, Acting Director
Chuck Elsesser, Housing Program Manager
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CA:RMM:tp73/hpadv
City Council Meeting 2-11-92
Santa Monica, California
ORDINANCE NUMBER
(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 1 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 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,
Council revised Program 12,
Ordinance Number 1448 (CCS) to
the City
adopting
implement
those revisions.
(e) On May 1, 1990, the City
council adopted Ordinance Number 1519
(CCS) 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 uni ts which would be
provided if the inclusionary requirements
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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 ci ty 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 City
on
an
annual
basis
is
permanently
occupied by
affordable
low and
to and
moderate
For
income
households.
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
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time to time by the united
states Department of Housing
and Urban Development, and
"moderate income householdll
means
a
household
with
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 permi tted, and whether the
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thirty percent (30%) requirement had to be
met on a proj ect by proj ect 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
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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.
(I) On March 5, 1991, the City
Council directed the city Attorney to
prepare an ordinance prohibiting 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 prohibi tion any proj ect 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,
commission
reviewed
1991, the Planning
outline developed
an
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by staff on the lssues 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," 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
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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
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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 hous ing . 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.
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(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 with 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:
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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 Uni t. 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,
disabled family members, and
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.
elderly or
all other
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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
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the occupants of inclusionary units in the
project in addition to maximum allowable
rents collected for those inclusionary
units.
"Moderate" 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" (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
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.
Multi-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.
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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 cooperative conversion of
two or more dwell ing 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
proj ect 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
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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 located on
a site at which the last developed use was
mul tifamily housing and at least one
dwelling unit was rented at levels
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affordable
to
households
of
moderate
income levels.
(ii)
construction of
The project involves the
20 or more market rate
dwelling units,
bonus units to
excluding
which an
any densi ty
applicant is
Code section
entitled under
65915.
Government
(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, in
either of the following circumstances:
(i) The project is not located
on a site at which the last developed use
was multifamily housing and at least one
unit was rented at levels affordable to
households of moderate income levels.
( ii) The proj ect invol ves the
construction of less than 20 market rate
dwelling units, excluding any density
bonus units to which an applicant is
entitled under Government Code section
65915.
(c) Whenever inclusionary units are
provided on site, such units must comply
with the requirements of section 9425.
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(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 dwelling 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.
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
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of 0.1 or more shall be rounded up to the
nearest whole number.
(b) Inclusionary units shall,
whenever reasonably possible, be evenly
distr ibuted throughout the proj ect. 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
units 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
project, each of the inclusionary units
shall satisfy the following minimum total
floor area, depending upon the number of
bedrooms provided:
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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
proj ect or a phase of a proj ect 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 proj ects. 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
to low income households. The second
inclusionary unit provided may be
affordable to moderate income households,
and alternating thereafter.
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(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 Housing.
(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 uni ts. Any
fraction of a unit required shall not be
considered either a low or moderate
income unit.
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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.
( i i) 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
illustrative purposes only, an
inclusionary unit base price of $60,000:
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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
(c) For purposes of this Section,
the inclusionary unit base price shall be
established and adjusted from time to time
by Resolution of the City 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
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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.
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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.
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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 more than 30% of the gross
household income for households earning
the median income.
SECTION
Requirements.
(a) Only low- and moderate-income
households shall be eligible to occupy or
own and occupy incl us ionary uni ts . 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 city shall develop
9430.
Eligibility
administrative guidelines for the tenant
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and purchaser selection process, which
shall require, at a minimum, that 80% of
the inclusionary units in a project 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.
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(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,
but not limited to, the income eligibility
requirements of the Chapter, deed
restriction requirements, and pricing
requirements. New inclusionary uni ts
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
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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.
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SECTION 9435. Relation to units or
Fees Required Pursuant to Future
ordinances Implementing Program 10 of the
City's Housing 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.
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1
'I
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 adoptlon. This Ordinance shall become
effective after 30 days from its adoption.
APPROVED AS TO FORM:
~~~~
ROBERT M. MYERS
City Attorney
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