SR-8-A (214)
I sf' ~7 - N2.D.1rr1n ~ A
~p(~ 5-f1f~1'
F \HOUSING\SHARE\WPFILES\STAFFRPT\ordsupp1 WPD JUL 1 ~ t998
Council Meeting July 14, 1998 Santa MOnica, California
TO Mayor and Members of the City Council
FROM City Staff
SUBJECT Supplemental Staff Report
Recommendation to Introduce for First Reading an Ordinance Adding
Chapter 9 56 to the Santa Monica MUnicipal Code Establishmg an Affordable
Housing Production Program and to Review Nexus Study
Introduction
ThiS Supplemental Staff Report transmits comments from the July 8, 1998 JOint special
meeting of the Planning Commission and Housmg Commission concemlng the proposed
Affordable Housing ProduclIon Program ordinance and related Nexus Study Staff IS
recommending that the City Council Introduce for first reading the amended version of the
Ordinance Establishing an Affordable Housing Production Program as contained In
Attachment A
Discussion
At City CounCil direction, the Planning Commission and Housing Commission conducted
a JOint speCial meeting on July 8, 1998 to review the proposed Affordable Housing
Production Program ordmanceand draft Nexus Study and formulate recommendations and
comments for conSideration by the City Council at their July 14,1998 heanng on the matter
gA
JUL 1'1 1998
This staff report reviews the comments made by the CommisSions and prOVides staffs
response to these comments Attachment A contains an amended verSion of the
Ordinance Establishing an Affordable Housing Production Program which reflects changes
recommended In thiS report
1) Clarify Definition of Vacant Sites.
Section 9 56 070 of the proposed ordinance proVides for a reduction In the affordable
hOUSing fee on vacant sites In mulllfamlly residential dlstncts However, the Commissions
pOinted out that It IS not clear what constitutes a vacant site For example, does a site With
an abandoned bUilding constitute a vacant site? Can a developer eVict all tenants pursuant
to the Ellis Act and qualify for the fee reduction?
Staff Response In response to Commissioners' questions concerning properties
containing eXisting rental Units, these properties would be reqUired to secure the final
permit to commence construction for a replacement project before they could obtain a
demolition permit except In very limited CIrcumstances as speCified In Santa Monica
Municipal Code Section 90410 16 010(b) These properties would not be conSidered
vacant at the time of application
To c1anfy thiS, staff has prepared definitions for "vacant parcel" and "parcel" which have
been added to Section 9.56.020, Definitions, of the proposed Ordinance These
definitions read as follows
2
Vacant Parcel A parcel that has no structure located on It at the time that a multi-
family project IS filed with the City's Planning Department
Parcel.
Parcel as defined In Santa Monica MUniCipal Code Section
9 04 02 030 570
2) Clarify Certain Other Definitions within Proposed Ordinance.
The Commissions pOinted out that there are certain other definitions within the ordinance
that need greater c1anflcatlon and/or elaboration These Include the definitIOns for
Multifamily Dlstnct and Multifamily Project
Staff Response The Commissions' concern about the definJIlon of "Multifamily Project"
was that It did not Include mixed use projects In fact. the definition contained In Section
9 56 030 does Include mixed use projects
In response to comments, staff has reVised the definition of Multifamily Dlstnct and added
a definition for Industnal/Commerclal Dlstnct as follows
Industrial/Commercial District. Any district deSignated in the Santa Monica
ZOning Ordinance as a commercial or industrial distnct.
Multifamily Residential District Any district deSIgnated In the Santa Monica
Zomng Ordinance as a multifamily residenllal district
3
3) Clarify Frequency of Affordable Housing Fee Revision
Secllon 9 56 070(b) of the proposed Ordinance provides that the affordable housing fee
'shall be established every two years by resolution of the City CounCil" The Commission
correctly commented that thiS section does not specify whether the fee can be reVised
more often than every two years, nor does It speCify what happens If more than two years
go by before the fee IS reVised The Commission also expressed concern that It was not
clear exactly when the fee must be calculated and paid
Staff response Based upon the Commissions' comments, staff has reVised the language
In Section 9 56 070 as follows
(b) For purposes of thiS Section. the affordable hOUSing Unit base fee shall
be established at least every two years by resolution of the City CounCil
Notwlthstandmg the preceding.sentence, any resolution adopted pursuant to thiS
Section shall remain effective until reSCinded by a subsequent resolution The
amount of the affordable housing fee that the mullifamily projectapphcantmust pay
shall be based onthe affordable housing base fee in effect at the time that the
applicant seeks abuilding permit for the multifamily project or the time at which the
applicant pays the affordable hOUSing fee, whichever is earlier in time
4.) Reconsider 100% Moderate Income Option
The City's current Incluslonary HOUSing Program (Ordinance 1615) prOVides the option to
satisfy the Incluslonary requirement by deed-restricting 100 percent of the project units for
4
moderate Income households The proposed Affordable Housing Production Program
eliminates thiS option In light of the loss of hOUSing affordable to low- and very lOW-Income
households projected to result from the Costa-HawkinS vacancy de-control legislation and
changes to the Section 8 program. the proposed program focuses on prodUCing hOUSing
for low- and very lOW-income households only
The Planning and HOUSing CommiSSions recommended restoring the option to satisfy the
affordable hOUSing requirement by deed-restnctlng 100 percent of the units for moderate-
Income households CommiSSioners felt that under current market conditions and based
upon the City's projected hOUSing needs. there IS In fact a need for moderate-Income
hOUSing While the commiSSioners did notfeel the City should directly SUbSidize moderate
Income hOUSing, they did feel that developers should be given the option to deed-restnct
100 percent of the project units for moderate-Income households CommiSSioners pOinted
out that while the restncted rents on moderate Income units might not be Significantly less
than current market rents, under future market condl1l0ns-10 to 15 years hence-the
dlfferenllal between restricted moderate Income rents and actual market rents could be
very substantial
Staff Response Staff has conSidered the CommiSSions' arguments for allOWing developers
to satisfYing the Incluslonary requirements by deed-restricting 100 percent of the affordable
Units for moderate-Income households and believes that they have ment Therefore. Staff
IS recommending the follOWing modified language for Section 9 56 050(a)
5
(a) The multifamily project applicant agrees to construct at least (I) twenty
percent (20%) of the total units of a project for low Income households or (II) ten
percent (10%) of the total Units of a project for very low Income households or (Iii)
one hundred percent (100%) of the total Units ofa project for moderate income
households
5) Broaden Remedies Under Ordinance's Annual Reporting Requirements.
Section 9 56 150 of the proposed Ordinance sets forth annual reporting requirements on
the City's progress In Implementing the ordinance and, more generally, meeting the
requirements of PropOSition R ThiS section proVides that If the requirements of
PropOSition R are not met, the Ordinance shall be amended so as to ensure that the
prOVISions of PropOSition R are met In the future
It was pOinted out that amending the Affordable HOUSing Producl1on Program ordinance
might be one remedy. but not necessanly the only remedy should the affordable hOUSing
requirements of PropOSition R not be met Other non-regulatory remedies, such as
committing additional funds for affordable hOUSing, may be appropnate
Staff Response Staff has modified the language of Section 9 56 150 to reflect the options
available to the City If the provIsions of PropOSition R have not been met In particular, the
last two sentences In Secllon 9 56 150 have been modified as follows
6
In the event the provIsions of Proposition R have not been met, the City Council
shall take such action as is necessary to ensure that the provIsions Will be met In
the future ThisaclIon may include. but is not limited to, amending the provISions
of this Chapter or Its Implementation
6) Make Eligibility Requirements More Flexible.
Section 9 56 110 of the Ordinance sets forth Income eligibility requirements for occupYing
affordable Units and requires that developer select tenants from a City-prepared list of
income-eligible tenants The CommisSions recommended that developers not be confined
to selecting from a City-prepared list, but also have the option to select tenants themselves,
subject to certification by the City Some CommiSSioners also recommended eliminating
the prOVISion that prohibits City employees from occuPYing the affordable units
Due to potential conflicts of Interest Staff does not believe the City employees should be
eligible to occupy affordable units constructed pursuant to thiS program
Staff response Staff has modified the language of Section 9 56 110, Eligibility
ReqUirements The modified language would either reqUire developers to choose tenants
from a City-administered list or, alternatively, find tenants on their own subject to eligibility
certification by City staff The modified language reads as follows
(a) Only lOW-Income and very lOW-income households shall be eligible to
occupy or own and occupy affordable hOUSing units The City shall develop a list
7
of income-qualified households, vinicn iiiay iiic:ude piiCiiities fOi e:igib:e teiiaiits
Multifamily project applicants shall be required eitherto select households from the
City-developed adiiiiiiisteied list of Income-qualified households or to select income-
qualified households which shall be subject to eligibility certification by the City
(b) The City shall develop administrative gUidelines for the tenant and
purchaser selection process detailed in thIS Section. which shall establish, at a
minimum. the timing by which affordable housing units In a project must be leased
or sold and occupied, both initially after Issuance of the certificate of occupancy for
the project and upon subsequent vacancies In the affordable housing Unit The
guidelines may also establish pnontles for income-qualified tenants.
7) More Flexible Radii for Off-site Affordable Units and Land Dedication
Section 9 56 060 of the proposed ordinance prOVides the option for developers to satisfy
the affordable hOUSing obligation by prOViding the Units off-Site As proposed. the off-Site
units must be Within one-quarter mile of the project The CommiSSions suggested that the
City be more fleXible about the radiUS For example, It was suggested that the HOUSing
Manager be given the ability to review and approve exceptions to the radiUS requirement
Secllon 9 56 080 ofthe proposed ordinance would allow applicants to meet the affordable
hOUSing obligation by dedicating, selling, or optioning land for affordable hOUSing
development Commissioners suggested that thiS section of the ordinance also be subject
to a fleXible quarter mile radiUS
8
Staff Response Section 9 56 060(f) already contains a prOVISion to allow exceptions to the
quarter-mile radius reqUirement, subject to Planning Commission approval Staff has also
added the following additional language to Section 9 56 080 to apply a flexible quarter-mile
radius requirement to the land dedication proVISions of the ordinance
Any land offered pursuant to this Section must be located withinone-quarter mile
radius ofthe matlretrate units unless the multifamilyproject appJicantdemonstrates
that locating thedand outside of thiS radius better accomplishes the goals of thiS
Chapter
Pursuant to the same Section of the ordinance. staff Will be developing administrative
gUidelines for the dedication, sale. or optioning of land which Will Include gUidelines for
evaluating exceptions to the quarter mile radiUS requirement
(8) Relax Exception for Minimum Two-Bedroom Requirement
Section 9 56 050(b) of the proposed ordinance requires that each affordable Unit have at
least two-bedrooms, unless the proposed prOject IS at least ninety-five (95%) one-bedroom
units or zero-bedroom units, In which case the affordable Unlt(s) may be one-bedroom or
zero-bedroom units The Commission felt that the 95% threshold was too strict and
suggested It be reduced to 80%
Staff response Staff believes that the need for family hOUSing IS Significant enough to
warrant a minimum reqUirement for two-bedroom affordable units, unless a proJect consists
9
predominantly of zero- or one-bedroom Units
'predominantly" should be defined as 95 percent
Staff continues to believe that
Nevertheless. as reflected In Attachment A, staff IS recommending modifications to the
language of Section 9 56 050(b) to address Instances In which a project may Include a mix
of zero- and one-bedroom units and to make clear exactly what the minimum square
footage of the affordable unit shall be
9) Use of Affordable Housing Fees
The Commissions asked staff to consider the feasibility of allOWing developers to pay the
required affordable hOUSing fee directly to non-profit organizations for the development of
affordable hOUSing Among the advantages would be the Immediate availability of cash
to non-profits and the expeditiouS use of affordable hOUSing funds
The Commissions also asked staff to ensure that use of the funds collected through the
program be stnctly limited for use In developing affordable hOUSing and not mixed With
other City funds for purposes other than affordable hOUSing
Staff Response Staff does not believe the City should allow direct payment of fees to
affordable hOUSing developers In lending funds for affordable hOUSing, staff relies upon
affordable hOUSing trust fund gUidelines as well as underwntlng gUidelines to ensure the
use of funds IS consistent With all applicable statutory, POliCY, and program requirements
10
For this reason, staff believes that It would not be appropriate to allow pnvate developers
to determine how these funds are used
Concerning the potential of use of affordable housing funds for other purposes. all
affordable housing funds are deposited Into a separate account used exclUSively for the
purpose of financing affordable housing
Apart from CommiSSion comments, staff IS also proposing a modification to Section 2 of
the proposed ordinance to allow the administrative gUidelines currently being used In
conjunction With Ordinance 1615 to continue to be used under the new program until such
time that the City adopts administrative gUidelines for the new program, to the extent that
the eXisting administratIVe gUidelines are consistent With the new program
Questions asked by Planning and HOUSing CommiSSions
In the course of their diSCUSSion, the Planning and HOUSing Commission asked several
questions. the response to which may be of Interest to the City CounCil
1) What proportion of households In Los Angeles County are moderate-Income?
According to the t 990 Census, 19 4 percent of Los Angeles County households are
moderate-Income, compared to 20 7 for the City In 1990
2) How many 100 percent moderate Income proJects and units have been bUilt
under Ordinance 1615?
11
Four 100 percent moderate-Income proJects Including 81 Units have been bUilt In the
City since the adoption of Ordinance 1615 In March, 1992 All of these projects
have received partial funding through the City'S MERL program
3) If not produced under the Affordable HOUSing Production Program, how else Will
moderate-Income Units be produced In the City?
Two other sources available to the City for finanCing 100 percent moderate Income
projects are tax exempt bond finanCing and redevelopment set-aSide funds
Budqetary/Financlallmpact
The amount of fee revenue produced as a result of these amendments depends on the
number and scale of prolects that apply for permits Affordable hOUSing fees collected pur-
suant to a new ordinance would be deposited Into a deferred revenue account until they
can be programmed for use In accordance With established budget procedures and neces-
sary CounCil approvals Approval ofthe new Affordable HOUSing Production Program does
not have a financial or budgetary Impact at thiS time
Recommendation
It IS respectfully recommended that the City CounCil
1) ConSider the comments from the Planning and HOUSing CommiSSions,
12
2) Introduce for First Reading the amended Ordinance Adding Chapter 965 to the
Santa MOnica MUnicipal Code Establishing an Affordable Housing Production
Program contained In Attachment A.
3) ReView the Nexus Study
Prepared by
Jeff Mathieu, Director, Resource Management Department
Robert T Moncrief, HOUSing Manager
Tad Read, Senior Development Analyst
Attachments
13
f\atty\mulli\law\barry\aflhsg2 ord
City Council Meeting 7- I 4-98 Santa MOllica, CalIfornia
ORDINANCE NUMBER (CCS)
(CIty Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
ADDING CHAPTER 956 TO THE SANTA MONICA MUNICIPAL CODE
ESTABLISHING AN AFFORDABLE HOUSING PRODUCTION PROGRAM
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS
SECTION I Chapter 9 56 is hereby added to the Santa Monica MUnicipal Code to read
as follows
CHAPTER 9 56
AFFORDABLE HOUSIKG PRODUCTION PROGRAM
9.56.010. Findings and Purpose.
(a) Santa Monica IS a coastal city m a pnme locatIOn, bemg bordered by the City of Los
Angeles to the north, east and south The combmatlon of a scemc oceansIde locatIOn, excellent
chmate, and the ready avallablhty of urban facilities, servIces, and entertamment make Santa
Monica an extremely deSirable place to live
(b) The land area of the CIty IS very small- approximately eight (8) square miles Santa
MOllica IS already a fully bUilt-out city, With only sixty-two vacant reSidentIal parcels It also has a
population of approxImately 90,000 Santa MOnica's population denSIty, 11,200 persons per
square mIle, IS the second hIghest among nelghbonng and nearby junsdlctlOns, and is the densest
among coastal commUnities In Los Angeles County
(c) The vast majority of new market rate mull1-famdy development In the CIty IS not
affordable to lower-mcome households Moreover, market conditions, including the high cost of
resIdential land, construction costs, and the availability and cost of financing, make the
development of affordable housing in the CIty extremely dIfficult
(d) In addltion, the consumption patterns of the upper-income households who occupy
these new market rate multI-family housing umts create a need for affordable housing in the City
More specIfically, households create demand for goods and services In the pnvate sector, such as
retaIl goods and medIcal services, and jobs in the publIc sector, such as teachers and murnclpal
servlces The higher the household's income, the more demand is created New market rate
multi-famIly housing In Santa Momca accommodates upper-Income households almost exclusively
because of the /ugh rent or purchase pnce reqUired to occupy It SupplYIng goods and services
suffiCIent to meet the demand created by upper-Income households In new market rate multi-
family housmg reqUires workers across the pay scale spectrum, including lower-wage employees
(e) The Clty has prepared an analysis ofthls relationship between new market rate
apartment and condominIUm development In the City and the need for affordable housing created
by thiS new development ThiS study focuses on the relatIOnship between the demand for goods
and servIces created by households who occupy new market rate multi-famIly development in the
City, the number oflow-wage workers In public agencies and businesses needed to satisfY this
demand, and the costs of producing the affordable housing needed by these workers ThiS study
demonstrates the range per square foot whIch could be Imposed on new market rate mull1-farruly
development to help finance the development of affordable housmg needed to meet the demand
created by market rate development
2
(f) In addIl1on, because the CIty is bUllt-out, land available for resIdential development m
the CIty IS limIted Further, land which could be used for development of housmg for low income
households IS bemg depleted by development of high cost housing Thus, continued new
residentIal development which does not mclude or contribute toward the cost of housing for
lower mcome households will only serve to further exacerbate the current affordable housing
shortage
(g) Requmng developers to assIst m the production of affordable housmg IS also
consistent with the City's long-standmg commitment to achieve and mamtam a suitable livmg
environment mcludmg decent housmg for persons at all economic levels This mumcipal
commitment conforms wllh Stale and Federal policIes and IS a prInCIpal goal of the City's recently
adopted 1998-2003 Housmg Element Update
(h) The City has lustorically effectuated this commItment through extraordmary efforts
mamfest m varIOUS City laws, polICies and programs For mstance, the CIty's voters have adopted
mitIative measures which stnve to maintam and promote affordable housing in the City The Rent
Control Charter Amendment, adopted m 1979, has as its primary purpose the protectIOn of
affordable housmg and has hIstorically been the CIty's most Important legIslatIve tool for
mamtammg the supply of affordable housing Similarly, PropOSition R, adopted by the voters m
1990, mandates that tlurty percent of all new multi-family housmg umts constructed m the City
each year be affordable
(I) The CIty's zonmg laws and poliCies also include substantial incentives for the
production of affordable housing, including heIght and denSIty bonuses and reduced parking
requirements In addItion, the City operates a number of programs whIch facilItate the producllon
3
of affordable housing These Include loans to private, for-profit developers and owners and
funding to non-profit agencies to acquire or construct affordable hOUSIng umts
(J) DespIte the CIty's pnme locatIon and high real estate values, the City has historically
been hIghly successful in maintaIning its economIc dIversIty According to the 1998-2003 Update,
23 percent of the CIty's households are very low Income, 16 1 percent are low income, 20 7
percent are moderate Income, and 40 1 percent are upper income Moreover, 53 percent of
households resIdIng in rent-controlled apartments are very low- and lOW-Income ThIS diversity IS
an essential element of the City's character It sets the City apart from all other slmllarly sItuated
coastal CIties In Cahfomta
(k) However, notwIthstandIng the CIty's ongoIng commItment and efforts, changes in
State and Federal law and market condItions are makIng It mcreasIngly difficult for the CIty to
ensure a contInued supply of affordable housmg In 1986, the State enacted the Elhs Act wruch
enables a property owner to cease operatmg property as reSidential rental property More
recently, In 1995, the State enacted the Costa-HawkIns Rental Housing Act which phases out
hmits on the rents which a property owner may charge when re-renting voluntanly-vacated units
Except in hmIted circumstances, It ehminates the City's ability to control the rent a property
owner can Impose when a unit IS InItially rented Although the full Impacts of Costa-Hawkins wlll
not be felt until ] 999 and the years thereafter, studies prepared by the Santa Monica Rent Control
Board trackmg the rent levels ofumts decontrolled as a result of Costa-HawkIns demonstrates
that these umts are already lOSIng theIr afford ability Thus, thIS law IS haVIng and Will continue to
have a slgmficant Impact on the CIty's supply of affordable housmg 1.foreover, there is an
extremely low vacancy rate for the existIng rental housing stock In addltlon, reductions In State
4
and federal funding for affordable housing, changes in these programs, and the potential
eXpiratIOn of controls on rents in federally-asSISted projects all hinder the City's ability to provide
or promote affordable housing In short, changes in State and federal law senously threaten the
City's eXisting affordable housing stock The decline In the affordablhty of thIs housing stock IS
further exacerbated by the production ofluxury market rate housing GIVen current economic
condItIOns and the general desIrability of the City, the new housing costs will only continue to
mcrease, thereby further exacerbatmg the growmg shortage of housing affordable to very low-
and low-income households In the City
(I) Califorma's HOUSing Element law requIres each cIty and county to develop local
housing programs designed to address ItS "fair share" of eXisting and future hOUSing needs for all
mcome groups The CIty's 1998-2003 Housmg Element Update establishes the CIty's fair share
at 3,219 hOUSing units of which 1,369 (43%) should be affordable to very low- and lOW-income
households
(m) The Housing Element Update catalogues a dozen fundIng sources that the City
utilizes to assIst in the development of affordable hOUSing These substantIal resources are
projected to assist In the development of 403 new units affordable to low- and moderate- income
households However, this represents only twenty-one (21 %) of the estimated need for new
affordable hOUSing In the City as established by the City's fair share Consequently, the total
housing needs of the City exceed the City's avatlable resources and the City's ability to meet these
needs The vast majonty of housing umts have been and will continue to be produced by the
pnvate housmg Industry
5
(n) Tlus Affordable Housing Production Program will benefit the City as a whole Each
development which contnbutes to affordable hOUSIng through the provisions of this Chapter
augments the CIty's hOUSIng miX, helps to increase the supply of housing for all economic
segments of the commumty, addresses the affordable housing need generated by the development,
and thereby supports a balanced community which is beneficial to the public health, safety and
welfare of the City
9.56.020. Definitions.
The follOWIng words or phrases as used In thIS Chapter shall have the follOWing meanings
Affordable Rousing Fee A fee paid to the City by a multifamily project applicant
pursuant to SectIOn 9 56 070 of this Chapter to assist the City in the productIOn of housing
affordable to very low- and low-income households
Affordable Housing Unit A housing umt developed by a multlfamlly project apphcant
pursuant to Sections 9 56 050 or 9 56 060 ofthls Chapter which Will be affordable to very low- or
low-Illcome households
Dwelling Unit. One or more rooms, designed, occupied, or intended for occupancy as
separate hVlng quarters, With full cooking, sleeping, and bathroom faclllttes for the exclUSive use
of a single household Dwelling umt shall also Illclude SIngle room occupancy units as defined in
Santa Momca Mumcipal Code Section 9 04 02 030 790
Floor Area. Floor area as defined III Santa Momca Mumcipal Code Section
90402030315
HUD. The United States Department of Housing and Urban Development or its
successor
6
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 hou sehold income
Industrial/Commercial District Any dlstnct deSIgnated In the Santa Monica Zoninf!;
Ordinance as a commercial or industrial district
"Low," "Very Low," and "~foderate" Income Levels. Income levels determined
penodlcally by the CIty based on the Umted States Department ofHousmg and Urban
Development (HUD) estImate of median family mcome m the Los Angeles-Long Beach Pnmary
:Metropolltan Statlstlcal Area The maJor mcome categones are "Iow-mcome" (sixty percent or
less of the area median), am: "very low-mcome" (fifty percent or less of the area median), and
"moderate-income" (one hundred percent or less of the area median) Adjustment shall be made
by household size as established by the City
Market Rate Unit. A dwelling umt as to which the rental rate or sales pnce IS not
restncted by this Chapter
~faximum Affordable Rent. A monlhly housmg charge which does not exceed one-
twelfth of thIrty percent ofthe maximum very low-, i1(II:: low-, and moderate-income levels as
defined in this Chapter and adopted each year by the City ThiS charge shall represent full
consideratIon for housmg services and amemtles as proVided to market rate dwelling uruts m the
project, whether or not occupants of market rate dwelling umts pay separate charges for such
services and amemtIes Housmg services and common area amenitles mclude, but are not hmlted
to, the followmg parking, use of common facllitles Including pools or health spas, and utihtles If
the project is master-metered Notwlthstandmg the foregomg, utlhty charges for use of natural
7
gas and electncity, to the extent indIvidually metered for each unit m the project, may be passed
through or billed dIrectly to the occupants of affordable housing units in the proJect in addition to
maxImum allowable rents collected for those affordable housing units
Multifamily Project. A multifamIly resldenllal development, mcluding but not limited to
apartments, condomlruums, townhouses, or the multlfamily resldentlal component of a nuxed use
project, for whIch City permits and approvals are sought
Multifamily Project Applicant Any person, firm, partnershIp, assoCIatIOn, joint
venture, corporation, or any entlty or combinatIOn of entIties which seeks City development
permits or approvals to developed a multlfamIly project
Multifamily Residential District. Any dIstrict deSignated m the Santa Maruca Zorung
Ordinance as a multifamtly reSidential dlstnct
_ __..!-,,__~_ _u__1LL"_____L_ ..I
'-'LHJ ..........u..b _......._.. ... ........... ................u..uJ ~n....u.ub
.. 1
........;.;., ......;,;;.;. y......UL...._... ...........
Parcel Parcel as defined m Santa Monica MUniCipal Code SectIon 9 04 02 030 570
Vacant Parcel. A parcel that has no structure located on it at the tlme
project IS filed With the CIty's Planning Department
9.56.030. Applicability of Chapter
(a) The obhgations established by thiS Chapter shall apply to each multlfamtly project for
which a development apphcatlon was deemed complete on or after March 1, 1998 Involvmg the
construction oftwo or more market rate umts No bwldmg permit shall be Issued for any
multifamily project unless such constructIOn has been approved in accordance with the standards
and procedures provided for by this Chapter
8
(b) MultifamIly projects for which a development apphcation was deemed complete prior
to March 1, 1998 shall be subject to the provIsions of Santa Monica MunicIpal Code Section 9 28
g ~ as they eXIsted on the date the applicalton for the project was deemed complete
Section 9.56.040. Affordable Housing Obligation
All mulltfamily project applicants subject to the provisIOns of thIs Chapter pursuant to
SectIOn 956030 shall choose one of the follOWIng optIOns to meet the requirements of this
Chapter
(a) Providing affordable housmg umts on-site m accordance wIth Section 9 56 050
(b) ProvIdIng affordable housing units off-site In accordance with SectIOn 9 56 060
(c) Pa)1ng an affordable housing fee In accordance with Section 956070
(d) Acquinng land for affordable hOUSing In accordance with Section 9 56 080
A multIfamIly project apphcation WIll not be deemed complete until the apphcant bas
submitted plans and proposals which demonstrate the manner m which the reqUIrements of this
Chapter Will be met
Section 9.56.050. On-Site Option
A multifamIly project applicant may meet the affordable housing obligations established by
thIS Chapter by prOVIdIng affordable housmg umts on-site ID accordance wllh the follOWIng
reqUIrements
(a) The multifamily project applicant agrees to construct at least (i) twenty percent (20%)
of the total umts of a project for low-income households or (II) ten percent (10%) of the total
units ofa project for very-low income households or (Iii) one hundred percent (100%) of the total
umts of a project for moderate-mcome households Any fractional affordable housmg umt that
9
result from the formulas oftbs subsection (a) shall be treated as a whole affordable housmg urnt
(I e any resultmg fractIOn shall be rounded up to the next larger mteger) and that unit shall also
be built pursuant to the provisions of this section The Planmng and Commumty Development
Department shall make available a list of very low-, auu low-, and moderate-mcome levels
adjusted for household Size, the correspondmg maximum affordable rents adjusted by number of
bedrooms, and the mlmmum number of very low- or low-mcome units required for typical sizes of
multi-family projects, which list shall be updated periodically
(b) The multifamily project applicant may reduce either the size or mterlor amernl1es of
the affordable housmg umts as long as there are not sIgnificant Idenl1fiable differences between
affordable housmg umts and market rate umts vIsible from the exterior of the dwellmg umts,
provided that all dwelhng umts conform to the reqUirements of the applIcable BUilding and
HOUSing Codes However, each affordable hOUSing umt proVIded shall have at least two
bedrooms unless (I) the proposed project compnses at least nmety-five (95%) one bedroom units,
excluding the manager's umt, in which case the affordable housing units may be one bedroom,
(u) the proposed project compnses at least mnety-five percent (95%) :;~::> zero bedroom units,
excludmg the manager's umt, m which case the affordable housmg umts may be zero bedroom
-:;~Gunits or (III) the proposed project compnses zero and one bedroom units, excluding the
mana"er's umt, In which case the affordable housmg umts must be at least one bedroom units
The ~ deSign of the affordable housmg urnts shall be reasonably consistent with the market
rate umts in the project :;~ u;; ;;~. ;;;~~ ;:~~:: An affordable housmg umt shall have a mmlmum total
floor area, dependmg upon the number of bedrooms provided, no less than the following
10
o Bedrooms 500 Square Feet
1 Bedroom 600 Square Feet
2 Bedrooms 850 Square Feet
3 Bedrooms 1080 Square Feet
4 Bedrooms 1200 Square Feet
Affordable hOUSing umts In multifamily projects of one hundred (100) umts or more must be evenly
dIsbursed throughout the multlfamtly project to prevent undue concentratIOns of affordable housing
units
(c) All affordable housing umts in a multifamily project or a phase ofa multifamtly
project shall be constructed concurrently WIth the constructIOn of market rate umts In the
multifamtly project or phase of that project
(d) On-sIte affordable hOUSing umts must be rental umts m rental projects In
ownership projects, affordable hOUSing umts may be eIther rental units or ownership units
Affordable hOUSing ownershIp umts shall comply WIth requirements concerning sales pnce,
monthly payment, and limited equity and resale restnctions as establIshed by resolutIOn of the City
CouncIl to ensure that subsequent purchasers are also Income-quahfied households
(e) Each multifamIly project apphcant, or hIs/her successor, shall submIt an annual report
to the City identIfying whIch umts are affordable units, the monthly rent (or total housing cost if
an ownership umt), vacancy Information for each affordable umt for the prior year, verificatIOn of
mcome of the household occupYing each affordable umt throughout the pnor year, and such other
InformatIon as may be reqUired by CIty staff
(f) A multifamIly project apphcant who meets the reqUirements oftlus Section shall be
II
entitled to the density bonus development standards established In Santa MOnica MUnicipal Code
SeCllOn 9 04 to 14040
(g) All resIdential developments provIding affordable hOUSing on-sIte pursuant to the
provlSlons of thIS SectIOn shall receive pnonty building department plan check processing by
which hOUSing developments shall have plan check review In advance of other pending
developments to the extent authonzed by law
Section 9.56.060. Off-site Option.
A multifamily project applicant may meet the affordable hOUSIng obligatIOns established by
this Chapter by providing affordable housing units off-Site In accordance WIth the following
reqUIrements
(a) The multIfamily project applicant shall agree to construct the same number of
affordable houSing Units as specified In Secllon 9 S6 OSO
(b) The multIfamIly project apphcant shall idenltfy an alternate sIte SUItable for residential
housing whIch the project applicant eIther owns or has site control over (e g , purchase
agreement, option to purchase, lease) subject to CIty review to ensure that the proposed
development IS consIstent With the CIty'S hOUSing objectives and projects
( c) The off-Site unIts shall be located wlthm a one-quarter mIle radIUS ofthe market rate
Units
(d) The off-site units shall sallsfy the requirements ofsubsectlOns (b)-(f) of SectIOn
9 S6 OSO
12
(e) The off-sIte umts shall not count towards the satisfaction of any affordable hOUSIng
oblIgation that development of the alternative sIte with market rate units would otherwise be
subject to pursuant to thIS Chapter
(f) Exceptions to the locatIOn of the off-site umts specIfied In thiS Section may be granted
by the Planrung CommissIOn on a case-by-case basIs upon a shOWing by the multifamily proJect
applIcant, based upon substantial evidence, that the locatIOn of off-site umts in a locatIOn different
from that specified In this Section better accomphshes the goals of thIs Chapter
(g) The Housmg DIVIsion ofthe Resource Management Department shall prepare
admmlstratlve gUIdelines to Implement thiS SectIOn
Section 9.56.070. Affordable Housing Fee.
A multifamily project apphcant may meet the affordable housmg obhgations establIshed by
th,s Chapter by paying an affordahle housmg fee In accordance with the following reqUIrements
(a) An affordable housing fee may be paid In accordance With the followmg formulas
(1) Multifamily Projects In Multifamily Resldenllal Distncts
Affordable housmg umt base fee X floor area of multifamily project
(2) Multifamily Projects m Multifamily Residential Dlstncts on Vacant Parcels
L _r-~___'L_.c_ , _
.;JH....... .u."'..........~ ..ii~.,","';';' ~.;..;..;..;..;..:;~.;. ;;;:"';::":':''':'::;';'';'.i- y;;';j~;"'.. ~yi';iv~...";;i
Affordable housmg umt base fee X floor area of multifamIly project
X 75%
(3) Multifamily ~_~~:'::~;-.:;~: Projects In tl;;.. .~~,a~..t:tl El,ol...L
Industna1/CommercIaI D,stncts on _parcels that are not already developed
With multifamily housmg
13
Affordable housmg unit base fee X floor area of project devoted
to residential uses X 50%
(b) For purposes ofthis Section, the affordable housmg unit base fee shall be estabhshed-'!1
least every two years by resolution of the City CouncIl Notwtthstandlnf!; the preceding sentence,
any resolutIOn adopted pursuant to this SectIOn shall remain effective unJess rescinded by a
subsequent resolution The amount of the affordable housing fee that the multifamdy project
apphcant must pay shall be based on the affordable housmg base fee In effect at the time that the
apphcant seeks a buildmg pemllt for the multifamily proJect or the tIme at which the applIcant
pays the affordable hOUSing fee, whichever is earlier m time
( c) The amount of the affordable hOUSing umt base fee may vary by product type
(apartment or condonnmum) and shall reflect, among other factors, the relatIOnship between new
market rate multi-famIly development and the need for affordable hOUSing and the Impact that the
fee will have on the financial return of multlfanuly proJcct applicants
(d) The fee shall be paId In full to the City pnor to the City grantmg any approval for the
occupancy of the project
(e) The City shall depOSIt any payment made pursuant to thiS SectIOn in a Reserve
Account separate from the General Fund to be used only for development of very low- and low-
income hOUSing, admimstratlve costs related to the production of thiS hOUSing, and momtoring
and evaluation of thiS Affordable HOUSing ProductIOn Program Any monies collected and
interest accrued pursuant to thiS Chapter shall be committed wtthm five (5) years after the
payment of such fees or the approval of the mulhfamlly project, which ever occurs later Funds
that have not been appropnated Within thIS five year penod shali be refunded on a pro rata share
14
to those multifamily project applicants who have paid fees dunng the penod Expenditures and
commitments of funds shaH be reported to the City CouncIl annually as part of the City budget
process
(f) An affordable housmg fee payment pursuant to this Section shaH not be considered
proVision of affordable housmg units for purposes of determimng whether the multifamIly project
quahfies for a densIty bonus pursuant to Government Code Section 65915
Section 9.56.080. Land AcquisitIOn.
A multifamIly project apphcant may meet the affordable housmg obligations established by
thiS Chapter by makmg an Irrevocable offer (a) dedlcatmg land to the City or a non-profit
housmg provider, (b) selhng ofland to the CIty or a non-profit housing provider at below market
value, or (c) optlomng of land on behalf of the CIty or a non-profit housing proVider Each of
these optIOns must be for a value at least eqUIvalent to the affordable housmg obhgatlon otherwise
reqUIred pursuant to thiS SectIon The multifamily project apphcant must IdentifY the land at the
time that the development apphcatlon IS filed WIth the City Any land offered pursuant to thiS
Section must be located wlthm one-quarter mIle radIUS of the market rate umts unless the
multIfamIly project apphcant demonstrates that locatmg the land outSide of this radIUS better
accomphshes the goals of this Chapter The City may approve, cond1l10nally approve or reject
such offers subject to admlmstratlve gUidelines to be prepared by the Housmg DIVISIOn of the
Resource Management Department lfthe City rejects such offer, the multifamily project
apphcant shaH be required to meet the affordable housmg obligation by other means set forth 111
thiS Chapter
15
Section 9.56.090. Fee waivers.
The Condominium and CooperatIve Tax descnbed In SectIOn 6 76 010 of the Santa
Monica Muntclpal Code and the Park and Recreation Faclhtles Tax estabhshed m Chapter 6 80 of
Article 6 of the Santa Momca Mumclpal Code shall be waIved for required affordable housing
untts and for low and very low income dwelhng units developed by the City or Its designee using
affordable housing fees However, any multIfamIly project apphcant who elects to pay an
affordable housing fee shall not be ehglble for any fee waIver under th,s SectIOn
Section 9.56.100. Pricing requirements for alTordable housing units.
The City CouncIl shall, by resolutIOn, on an annual basIs, set maxImum affordable rents
and maximum affordable purchase prIces for affordable hOUSIng umts, adjusted by the number of
bedrooms Such maximum affordable rents shall be set at rates such that quahfied occupants for
low Income umts pay monthly rent that does not exceed thuty percent of the gross monthly
household Income for households earnIng sIxty percent of the medIan Income and that quahfied
occupants for very low income umts pay monthly rent that does not exceed thirty percent of the
gross monthly household mcome for households earnmg fifty percent of the median mcome Such
maxImum affordable purchase price shall be set at rates such that quahfied occupants for low
income uOlts pay total monthly housing costs (mortgage payment, property taxes, homeowners'
Insurance, property mortgage msurance, homeowners' association fees) that do not exceed thlrty-
eight percent of the gross monthly household income for households earnmg sixty percent of the
median Income and that quahfied occupants for very low Income uOlts pay total monthly housmg
costs (mortgage payment, property taxes, homeowners' msurance, property mortgage msurance,
16
homeowners' association fees) that do not exceed thIrty-eIght percent of the gross monthly
household income for households earmng fifty percent of the median mcome
Section 9.56.110. Eligibility reqnirements.
(a) Only low-income and very low-mcome households shall be eligible to occupy or own
and occupy affordable housing uruts The CIty shall develop a list of income-quahfied households;
-_-.-~-.:~~: :-.:~:; :::~~-'~~ y;;;:';;;;~~ ;;:.:- ~~:e.;~~': ;~:-.;::;;~ MultIfamily project apphcants shall be reqUIred
eIther to select households from the CIty-developed ~~;::;:::c;;;;~~ hst of mcome-quahfied
households or to themselves select mcome-quahfied households which shall be sublect to
ehglblhtv certificatIon by the City
(b) The CIty shall develop admlmstratlve gUldehnes for the tenant and purchaser selection
process detailed m thiS Secllon, which shall establish, at a mmimum, the timing by whIch
affordable housmg umts in a project must be leased or sold and occupied, both mlllally after
issuance of the certificate of occupancy for the project and upon subsequent vacancIes in the
affordable housing umt The gUldehnes may also estabhsh pnorilles for mcome-qualified tenants
(c) The followmg mdlvlduals, by vIrtue of thetr posItIOn or relationship, are ineligible to
occupy an affordable housmg unit
(1) All employees and offiCIals of the City of Santa Momca or ItS agencIes, authontles,
or commiSSIOns who have, by the authonty of theIr position, pohcy-making authority or mfluence
affectmg CIty housmg programs
(2) The Immediate relatives, employees, or other persons gaimng SIgnificant economic
benefit from a direct busmess association WIth public employees or offiCials
(3) The Immediate relatives of the apphcant or owner, mc1udmg spouse, children,
17
parents, grandparents, brother, sister, father-m-Iaw, mother-in-law, son-in-law, daughter-in-law,
aunt, uncle, mece, nephew, sister-in-law, and brother-m-Iaw
Section 9.56.120. Relation to units required by Rent Control Board.
Very low-income and low-mcome dwelhng units developed as part of a market rate
project, pursuant to replacement reqUIrements ofthe Santa Monica Rent Control Board, shall
count towards the salisfactlon of thIs Chapter If they otherwIse meet apphcable requirements for
this Chapter mcludmg, but not hmited to, the lOCO me ehglblhty reqUIrements, deed restriction
reqUIrements, and pncmg requirements New IOcluslonary umts reqUIred by the Rent Control
Board which meet the standards of thIs Chapter shall count towards the satisfaction of this
Chapter
Section 9.56.130. Deed Restrictions.
Pnor to issuance of a bUlldmg permit for a project meetmg the reqUIrements of this
Chapter by provldmg affordable umts on-slle or off-Site, the multifamIly project apphcant shall
submit deed restnctions or other legal mstruments settmg forth the obligalion of the applicant
under thiS Chapter for CIty review and approval Such restnctlOns shall be effectIve for at least
fifty-five years
Section 9.56.140. Enforcement.
No building penmt or occupancy penmt shall be issued, nor any development approval
granted, for a project which IS not exempt and does not meet the reqUIrement of this Chapter All
affordable housing umts shall be rented or owned in accordance With thIS Chapter
18
Section 9.56.150. Annual Report.
The Housmg Division of the Resource Management Department shall submit a report to
the City Council on an annual basIs which shaH contam mformatlOn concermng the
implementation of this Chapter This report shaH also detail the projects that have received
planmng approval during the previous year and the manner in which the proviSIOns of thiS Chapter
were satisfied ThiS report shaH further assess whether the provisions of Proposition R have been
met and whether changes to thiS Chapter or ItS Implementation procedures are warranted In the
event the provIsIOns of PropositIOn R have not been met, the City CouncIl shall take such action
as IS necessary to ensure that the proVISiOnS will be met m the future ThiS acUon may mclude, but
not be limited to amending the provisions of thiS Chapler or ItS ImplementatIOn
Section 9.56.160. Principles and Guidelines.
(a) In addition to the admmlstraUve gUldehnes specificaHy required by other provisions of
thiS Chapter, the City Manager or hIS or her designee shall be the deSignated authonty to develop
and Implement rules and regulalions pertammg to thiS Chapter, to enter mto recorded agreements
With multifamily project apphcants, and to take other appropnate steps necessary to assure that
the reqUired affordable housmg Units are provided and are occupied by very low- and low-mcome
households
(b) Wlthm one year from the passage of this Chapter, admlmstrative rules and regulations
pertaining to thiS Chapter shall be brought before the City Council for adoption
19
SECTION 2 Chapter 9 28 of the Santa MOnica MUnicipal Code IS hereby repealed in ItS
entirety and the C;;.;;:;.,- ~ 2~ implementatIOn guidelines adopted pursuant to Chapter 9 28 are
rescinded to the extent that the guidelines are Inconsistent with the prOVISions of this Chapter
SECTIOK 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, is hereby repealed or modIfied to that extent necessary to effect 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 competent
junsdlction, 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 evcry
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
20
within 15 days after Its adoption ThIs Ordinance shall become effective 30 days from its
adoptIOn
APPROVED AS TO FORM
MARSHA JONES MOUTRIE
CIty Attorney
21