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JUL 2 11ggg
F:IHQUSING\SHARE\WPFILESISTAFFRi~TaffordFeeresolution7-21-98 wpd
Council Meeting July 21, 1998 Santa Moroca, Califomia
TO Mayor and Members of the City Councd
FROM City Staff
SUBJECT RecommendationtoAdoptResolutionEstablishingAffordableHousmgBase
Fee
Introduction
This staff report recommends that the City Council adopt a Resolution establishing an
Affordable Housing Base Fee
Back4round
On July 14, 1998 the City Counal conducted first reading of an ordinance establishing an
Affordable Housing Production Program that wiil reqwre developers of market-rate
multifamily housing to assist in the production of affordable housing through payment of
an affordable housing development fee, development of on-site affordable units, orthrough
other specified options The wdinance provides that an affordable housmg base fee be
established approximately every two years by resolution of the City Council.
The attached resotution (see Attachment A) establishes fees of $6 14 per square foot of
iloor area (as defined in the Zoning Ordinance) for new market-rate apartment projects and
$7.13 per square foot of flaor area for new market-rate condominium projects These fees
have been established after comprehensive analyses of potential govemmental
' 9~
JUl. 2 1 19,9g
"constraints" associated with such a fee as well as a careful examination of the "nexus"
between new market-rate multi-famdy construction and the need for low income hous~ng
("Nexus Study°)
A copy of the Nexus Study is provided in Attachment B for reference A copy of the
Govemmental ConsVaints Analysis is provided m Attachment C.
Budgetarv/Financial Impact
The amount of fee revenue produced as a result of this resolution and related ordinance
depends on the number and scale of pro~ects that apply for permits Development fees
collected pursuant to a newordinance would be deposited into a deferred revenue account
until they can be programmed for use in accordance with established budget procedures
and necessary Council approvals. Approval of ihe Resolution Establishing an Affordable
Housing Base Fee does nat have a finanaal or budgetary impact at this time
RECOMMENDATION
It is respectfully recommended that the City Counc~l adopt the attached Resolution
Establishing the Affardable Housing Base Fee.
Prepared by: Jeff Mathieu, D~rector of Resource Management
Bob Moncrief, Housing Manager
Tad Read, Senior Development Analyst
Attachments
A Resolution Establishing Affordable Housing Base Fee
B Nexus Study
C Excerpts from HRBA's Apnl 6, 1998 reported entiiled
Recommendations ior Revising the City of Santa Monica'
Indusionary Hous~»g Program conceming Governmentai
Constraints Analysis
3
ATTACHMENT A
f lany'~rnuniUawl6arrylafthse res
C~ty Council Meenng 7-21-98 Santa Monca, Cahforn~a
RESOLLTION NUMBER 9295 (CCS)
(Ciry Councd Senes)
A RESOLUTION OF TF~ CITY COUNCIL OF THE CITY OF SANTA MONICA
ESTABLISHING AFFORDABLE HOUSING UNIT BASE FEES
FOR NEW MARKET RATE APARTMENT Ai1D
CONDOMIIv'IUM DEVELOPMENT
WHEREAS, the City Council of Santa Momca adopted Ordmance Number 1918 (CCS)
on Julc 21, 1998 -- the City's Affordable Housmg Product~on Program, and
Wf~REAS, the Affordable Housmg Produaion Program requires developers of mazket-
rate multifazruly 6ousmg to assist m the product~on of affordable housmg through the payment of
an affordable housmg development fee, development of on-s~te affordable umts or through o[her
specified options, and
WHEREAS, 5anta Momca Mumcipal Code Secuon 9 56 070(b) of the Af~ordable
Housin¢ Production Program provides for the establ~shment of an affordable housine un~t base fee
by Resolunon of the Gty Councd, and
WHEREAS. Santa Momca Mun~cipal Code Section 9 56 070(c) provides that the
affordable hous~ng urut base fee shall reflect, among other factors, the relationship between new
market rate mult~-family development and the need for affordable hous~ng and the impact that the
fee will have on the financ~al retum of mult~famdy pro~ect appl~cants, and
WHEREAS, Hamdtoq Rabmowtz & Alschuler, lnc ("HR&A") on behalf of the C~ty has
prepared an analysis ofthe relation~hip between new market rate apartment and condorruruum
:
development m the C~t_y and the need for affordable hous~ng created by ttus new~ development
("Nexus Stud~") The Ne~cus Study focuses on the relationstup between the demand for goods
and serv~ces creaced bv households who occupy new market rate mult~-fazruly development m the
C~t}', the number of low-wage workers m publu agenaes and businesses needed to sat~sfy ttus
demand, and the costs of producmg the affordable housmg needed by these workers The Nexus
Study demonstrates the fee ranee per square foot wlvch couid be imposed on new market rate
multi-family development to help finance the development of affordable housing needed to meet
the demand created by market rate development The Nexus Study concludes that the average fee
w}uch can reasonably be charged to developers of new mazket rate apartments ~s $6 14 per squaze
foot of floor area and the averaee fee wiuch can reasonably be charged to developers of new
muket rate condomuuums is 57 13 per square foot of floor area, and
WHEREAS, Santa Momca Mumc~pal Code Section 9 04 02 030 315 establ~shes the
defimtion of floor area, and
WI~REAS, HR&A also prepared an anah~s~s of the ~mpact that the fee w~ll have on the
financ~al return of mulnfamily pro~ect applicants for purposes of assessmg at what amount the fee
would become a"govemmental constraint" within the mearung of State Housmg Element Law
("Constramt Analys~s"), and
WHEREAS, HIt&A concluded thac a fee of S6 14 per square foot of floor area imposed
on new market rate apartments and a fee of $7 13 per square foot of floor area ~mposed on new
market rate condommiums would not constitute a govemmental constramt, and,
WHEREAS, the C~ty Councd has rev~ewed the Nexus Study and the Constramt Analys~s,
and conducted a duly nonced public heanng, pnor to adopt~ng th~s Resolution,
NOV~`, THEREFORE, TF~ CITY COUIv~CIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS
SECTIOh 1 The affordable housmg urut base fee for new market rate apattments
establ~shed pursuant to Seaion 9 56 070 ~s $6 14 per square foot of floor area
SECTIQlv 2 The affordable housmg umt 6ase fee for new market rate condonuntums
estabhshed pursuant to Section 9 56 070 is S7 13 per square foot of floor area
SECTION 3 The Crty Clerk shall certify to the adopnon of ttus Resolut~on, and the same
shall be m full force and effect sucty (60) days from the date of adoption of ttus Resolution
APPROVED AS TO FORI~1
~~f~--~i.~~-~-- ~'~
MARSHAybNES MOUTRIE
Cin• Attomev
9~030
od tor aa ~adu9omry ha+~o p~ogram m add:cs tLc ~ed
tor ~_n±+~! and aHordable hcnuiag m Program 12
(c) 'Ibe Gry Co+~: ~ p~+opaiy roasdezzd aad adopted
the aompancaa of en mrhmoea~' hrnssm8 Y«,y..,, ~vhr~
wuld ~mplcmmt the goah af Prognm 12 u~u meetmg
oa Maxs~ lU, 1987.
(d) Oa hme 28,19~8. tbe 6xy r~_ i nvnod Pmgiam
17. adoptm8 Oc~ame N~±~+!t~* isa8 (C~ to mmpkment
those xevirioas
(e) Oe May 1,1990, the ~iq Camo7 adopted Ocdi-
nance N~ba 1519 (CCS) oa au iat~:',... batis, findai8
tLat the vut ma~oray of unr housmg uaia being o0o-
suvcted m t6o C5ry of Sann Momn vecs not ~!n±rdabk
ta Qc:soos of law. moden[a, ar mid~e mwm0. thst the
aureac iedusionary cequmemems plsad on uex ho~~~+*~_
devdoyWens were ;*~~±,~,•••• co allow the Gry of Saata
Mcnira to p:wide s~m[ e~~w+s of oew 6ous~g umss
m pecsona ef Iw. moderate, ar ~ddk iacame, that the
aarc~at pet aqua~ foot iaheu fee vas madegsate to a0ov
t6e Cuy of Sann Monin to pravide the number of unia
ib1Ch Wt1IG bG Ft~.ldCG lf tEG IDC~ILGDILL7Y IT.QtII2~GnLS
06 ~CW hNW31n$ dEVCw.yuatIIt ~iiCR IDC[ Gy yav.tSlOG Of
s'
on-ste hw~~e nma~ and eh•~ u wu ne~aary to amead
the mdusjepuy pcpgram pp an ~n~-. ~u bads Iv allow com-
pletion af a„~ m dete~eye tbe moai approp:ias~e on-ste
and'm-fieu fee cequirtmea~
(t~ On November 6, 1990, the wters of the Gry of
Saan Mm~ica .pya:,.ed Pmpoaeoa K, adding ~oe
630 co [hc Gry ~!~ner to xpd u folloas:
Tlte Gry Counc~l by Ordinaace shall at a1! timcs
requfre tbas aoe lea ths* t~rry pcccenc (30~D'o) of all
multifamify-readennal k~ounng aewYy consmuced in
the Ciry an an annua! baas u per+~±~~ea8y a$ordable
to and oceupied by lod and moderate income
households For purpous of this Srivon, "law inmme
houuhold" means a hauuhold with an u~come not
e:eeedwB siuy pcrceat (6Q%) of the Cas Angela
Couary median inmme, ad~uued by family s'u.e, u
publis6ed from cme to ame try the Umted Srates
Depaztmrnt of $ouung and Urbaa Dcvelopment, and
"moderate mcome houuhold" meaas a household with
an iaeome notexceediag one hundredpeccent (100°0)
of ehc Las Angela Couary m~~~* mcome, ad~usted
by fa~++?y ~zc, az pubfuhed from nme to time by ehe
United States Deparcment of Housing and Urhan De-
velopment At leazc 6fry pe;cenc (SO%) of [he newly
~on5~vaed umts r=quiisd w'x pcrmanrntty aHoniablc
by this Scet~on shall be afEordable co and xcvp~ed hy
laav mmme househatds.
(pJ On December 29, 1.99p, the Gry of Sanra Monira
publuhed nouc~ thac on ianuary 8.1991. the Gry Counal
aould coosider issu~ mtaung co the implemcnuaon ef
Propos~non R mduding whethc; the tlurcy peccent rtqttire-
ment of Propcuiaon R could be met on-site or oS ate,
whether an in-fieu fce would be permutcd, and w6ether
the thirry pecant requi:ement had to be mct an a pmjea
by pcojcc[ baz~c Ilvs noea a1w H~ahded ehat ac rhe
lanuary 8,1991 mee~mg, che C~ry Council xrould cons~der
d~recdag sraff to prepaze an ordiaaax to implemeat
Propos~non R
(h) Gry Staff prepaced a ssaff report for the I~R+!~ry
8, 1991. ~ry Cnuml meedng idendh'mg tbe asues that
had tn be ad~~ u put of the ~plemerincan o[
Pcopaaman R su~a~onB a P*'-"'-"= far otr~%*~•~~ pubtic
mput, praee~~o Ciry Sraffs iesolunoa of atua naed
by P~st,nsiaon R's ~mplemrnncoa acd re~s~~^~
t6at m8 be d'a~*!~ w peeFmis aa ordinaace ~
Pmpaainon R
(i) At itt Jaauary 8. 1991 meedag, the CSry Crnma7
d"a~ ~ staff w ptepazs aa osdinwm :L.plcmenoa8
r.vyaainan R and to mtum thc ordinancc to tLe t5ry
Coundl on Fc6ruuy 2b, 1991.
G~ The Saata Momca Planning Co*±++~+*RioA as w~e11
az othcr groaps m the communiry, belicved the se6~ile
for tbe ie~um af the ondinance did not r~~~ide opportnni-
aes for adequace renew of vuious alterna4ve scuegies
for implemrnaag Ft~y,usirion R
(k) At iu meehng on February 19, 1991, the 6ry
COOIfO~ !~!^!S^~ t0 IC9I1S1~Ef w~1GIk1C7 8Il 4aaiu~iDCC St100~d
be pceQaced, and uheduled for uc next reg~~~•• maon8
a general ~+_=~sion ot implemeanng suategi~s.
(1) On Much 5,1991, the Ciry Councit ~ected the
~Y ~~Y w p~spaze an ordman¢ prolnb~,;•,~ tLe ~
nf aQplieaaons far ctarket-rate residential housing imal
sur1~ 6me as the Csry Couna7 adop[ed an o~+,~•~x impk_
men~g Ptc-~tian R rsecpm~g irom the ptOhbinon any
proja[ in wtuch th~rty pemnt of the unia coosn+TM±~±
on-sice azc avaitabla to low acul modc: ate mmme pecsoat
as pronded for m Proposiaon R.
(m) On Mareh 7b, 1991. Ordmance Number 1577
(CCS) ~ adopted ~mposng ~sanctio~ss on new auil++fi~yY
heus~ng co ensure campiiance with Proposiuan R Tbis
or~~*~nx was due co exp~re on September 26, 1991.
(n) On .4Pn7 3.1991. the Planaing Cnmmsson ten~wad
an outine developed by staff on the iaves aad mfocmarion
that would be ~..a~znted u parc of the analysu on the
alternanve implemensaaon scra[eges.
(o) On September 30, 1991, the Ciry Coancil adopted
Ordinanx Number 1599 (CCS) ectending the asn~ittoa~
on aew mulafamily twusmg w ensure o~mpUanee with
Propomrion R, pend~ng [he invance of a s[aH report on
a propoud 'unplementauon stratcgy under Proposinon
R, [o aliow public trnew and commen[ on the staS repoct,
and to allrnv ame far public heanngf bcfarc the Ptanning
Comm~wvn and City Council. 'IZia ordmance was du~
to expae on 7anuary 10. 1992.
(p) On Scptembcr 10, 1991, a rcpott was ~ss++ed by C+ty
s~aff on the "Proposed [mplemeneation Strategy Under
Proposiuon R" incoepora[ed ineo a Summary Report aad
Technical Report on Pmpos~t~on R_
(~ On Oao6er 16 and October 25,1991, the Plannine
CommiSSion conducted a pub(ic hearing on the propesed
impkmennnon s~tategy, and formulated a ~ecommaidadan
to the Gry Counal. Ihc Plannuig Comm~ssion rcqueued
a cwo or [hm monch aceension of the natcing moeacorn~
osdinance on mulufamily cesidenua! developmrnt co allow
for furcher pubtic rev~cw and Plannmg Commission wnsid-
eranon.
543
ATTACHMENT B
HR~ A
HA:Kll"10\, RABINOYISZ & ALSCHCLER, I:~C
Polrry, Ftnanr:a! & hianagement Conrultants
THE NEXUS BE'I'~i'EEN NEW b4ARKET RATE
AZULTI-FAMILY DEVELOPNiENTS
IN THE CITY OF SANTA MONICA AND
THE NEED FOR AFFORDABLE HOUSING
July 7, 1998
; jy;: So~ix B~~~cS DanF Scrre ---. Los A~ceies, C~uroxro~+9~~z5 • TEC ji~ Sz:; „}} • F~~ ;xo 8i~ !~-R
\ea' YonK Los A~Ge~e~
Contents
TABLE OF CONTENTS
Paee
L~st of Tables m
I. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 1
II. SCOPE AND PURPOSE OF THE ANALYSIS . . . . . . . . . . .. . . . . . . . . . . . . . . . .. 7
A Background to the City's Proposed Affordable Housmg Product~on Program 7
B Selection ofthe Analytic Approach 12
C Orgamzat~on of the Report . 17
III. HOUSEHOLD INCOME AND SPENDING IN NEW MARKET RATE
MULTI-FAMILY DEVELOPMENTS . . .. . . . . . . . . . . . . . .. . . . . . . . .. .. .. . . . 19
A Eshmatmg Total Household Income m Typ~cal New Market Rate Mulh-Farruly
Der•elopments 19
B Estimatmg Total Household Spendmg for Goods and Sernces m Typical New
Mazket Rate Mulh-Fanuly Developments 25
IV. THE CONSUMPTION-RELATED EMPLOYMENT AND EMPLOYEE
AFFORDABLE HOUSING IMPACTS OF NEW MARKET RATE MULTI-
FAIVIII~Y DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
A Margmal Employment Impacts Generated from Consumphon Expenditures by
Households m New Market Rate Multi-Family Developments m Santa Moruca 28
B Margmal Affordable Housmg Impacts Generated from Consumption
Expend~tures by Households m New Mazket Rate Mult~-Family Developments m
Santa Monica 34
~~ew,tlulp-Fam~ly Derelopment-9, f, fordable Housrng :\'ezus Page ~t
Ham:lton, Rabrnovrtz & Alschuler, Inc July 7, 1998
Contents
Paee
V. ESTIMATING JUSTIFIABLE DEVELOPMENT FEES . . . . . . . . . . . . . . . . . . . . 39
The C~ty's Subsidy Gap to Develop Rental Umts Affordable to Low-Income
Households 39
Iustifiable Development Fees 44
APPENDICES
Total Employment Impacts Generated By Household Consumphon Expenditures
for Four Prototypical Market Rate Mult~-Family Developments m the City of Santa
Momca
Estunates of the Caprtal Subsidy Needed to Develop an Affordable Rental Umt in
the City of Santa Moruca Under Altemative Affordability Thresholds, Land Costs
and Urut Sizes
Denvat~on of a Development Fee for Four Prototypical New Market Rate Mult~-
Fanuly Developments in the Crty of Santa Momca
.'~ ew b1u11:-Fam~lv Developmenr :9fjordable Hous~ng .~`ezus Page m
Ham~l[on, Rabrnoverz & Alschuler, Inc Julv 7, 1998
Contents
LIST OF TABLES
Table No. T~tle
Paee
I-1 Denvation of Lowancome Worker Household Demand Resultmg from
Total Household Consumpt~on Expenditures m Four Prototypical
5-Urut Market Rate Mulh-Famtly Developments 4
I-2 Denvaz~on of a Development Fee to Offset the Affordable Housmg Demand
Caused by Total Household Consumption Expenditures In Four Prototypical
5-Umt Mazket Rate Multi-Family Developments 6
III-1 Rents Required for Financially "Feasible" New Market Rate Apartment
Development m the R2 D~stnct 21
III-2 Household Incomes m Prototypical New Apartment Developments Impl~ed by
Vanous Rent-to-Income Rahos 22
III-3 Purchase Pnce Reqwred for Financially "Feasible' New Mazket Rate
Condorrumum Development m the R2 Distnct 23
III-4 Estimates ofAverage Annual Per-Household and Per-Pro~ect Incomes m Four
Prototypical New Mazket Rate Multi-Family Developments m the City of
Santa Momca 24
III-5 Personal Income and rts Disposition m the U S, 1995 26
III-6 Total Annual Household Income and Consumption Expenditures for Four
Prototypical 5-Urut New Market Rate Mulu-Family Developments m
the City of Santa Momca 27
IV-1 Dtstnbut~on ofEmployment Resukmg from Household Consumpt~on
Expendrtures in Los Angeles County, Market Raxe Multi-Farruly Prototype #2
(Apartment-I-Lgher Cost Area) 33
\'ew.4luln-Family Development-AJfordable Housmg \~exus Page n•
Horarlton, Rab~nowtz & A[schuler, Inc July 7, 1998
Contents
Pase
IV- 2 Total Employment Demand Resulting from Total Household Consumphon
Expendrtures in Four Prototypical Mazket Rate Multi-Family Developments
In the City of Santa Momca 34
IV-3 Denvat~on of Lowancome Worker Demand Resultmg from Total Household
Consumption Expend~tures m Four Prototypical5-Umt Market Rate Multi-
Farruly Developments m the Gty of Santa Momca 37
IV-4 Denvation of Low-mcome Worker Household Demand Resultmg from Total
Househotd Consumption E~cpenditures m Four Prototypical 5-Urut Market Rate
MultrFamtly Developments 38
V-1 Per-un~t New Development Subs~dy Gap for Very Low- and Low- Income
Households, City of Santa Momca, 1998 43
V-2 Denvation of a Development Fee to Offset the Affordable Housmg Demand
Caused by Total Household Consumption Expendrtures in Four Prototypical
5-lirut Market Rate Mult~-Farrvly Developments m the City of Santa Moruca 44
.'~`ex•.Llulb-Fam~ly Developmenr .9ffordable Housrng A`eCUS Page v
Hamrlton, Rabrnowtz & dlschuler, Inc July 7, 1998
I. EXECUTIVE SUMMARY
The Gty of Santa Momca, Cahforrua ("City") is cons~derutg a new ordinance that will
require developers of mazket rate mulh-facruly developments (~ e, apartments and condomimums)
to help meet the need for housmg affordable to low-mcome households, as defined by federal,
State of Califorma and Crty regulat~ons ("affordable housmg"), which is caused by the~r pro~ects
The proposed ordmance allows developers to mclude wuts m the~r pro~ect that are affordabie to
low-mcome households, pay a fee to the C~ty that unll be used to help 6nance new affordable
housmg, or take other spec~fied achons, including purchase of land for affordable housmg This
new program was specified in a recent update of the Housmg Element of the City's General Plan
In Lght of recent U S and Califorcua Supreme Court dec~sions, any fee the Crty may
~mpose pursuant to t}us new program must be based on const~tut~onal pnnciples These decisions
suggest that there must a legitunate publ~c purpose underlymg the imposrtion of the fee, and there
must be a reasonable relationslup between the publ~c needs created by a development pro~ect and
the amount of the fee nnposed The public purpose underlymg the Crty's program ~s art~culated m
its recent Housmg Element update, mcludmg its supportmg tectuucal append~ces, and the findmgs
m the proposed ordmance Tlus Report, w}uch was prepared by Harrulton, Rabmovitz &
Alschuler, Inc ("HR&A") at the request of the C~ty, presents analysis and conclusions wluch
demonstrate the extent of affordable housmg need that is causally related to new mazket rate
mult~-family development m the Crty, and the development fee amounts that could reasonably be
reqmred of developers
Each new market rate mult~-fatruly development pro~ect constructed and occup~ed m the
Crty adds new households with panc~ular mcome and spending charactenstics These households
create demand for goods and services, m the pnvate sector (e g, restaurants, retad goods and
med~cal sernces) and in the pubhc sector (teachers and municipal sernces) In general, the }ugher
a household's income, the more dollars are spent for goods and serv~ces New market rate mulri-
fanvly housmg m Santa Monica accommodates upperancome households almost exclusively,
because of the tugh cost of re~t or purchase pnce requued to occupy it 5upplymg goods and
services sufficient to meet the consumption demand from upper-mcome households m new market
rate muh~-family housmg requires workers across the pay scale spectrum, including lower-wage
employees Some of these lower-wage workers are members of low-mcome households who
require housmg at pnces they can afford As a result, new market rate multi-famdy development
is causally related to a demand for housmg that ~s affordable to lower-wage workers and their
households The Crty may, therefore, request that developers provide part of the cost of ineetmg
hen•:i~ulte-Fa»~dy Developmenr AJfordable Housmg:'~`exus Page 1
Hamtlton, Rab:novuz K.qlschuler, Inc Jul}' 7, 1998
Execuhve Summary
the affordable housmg demand generated by their pro~ects, through payment of an affordable
housmg fee, should they elect tlus opt~on under the proposed new Crty progam
Estunatmg the mazginal affordable housing demand caused by new market rate multi-
farruly developments m Santa Momca, and a development fee that relates to this impact, was
deternuned through a four-part analys~s, as summarized below The analysis uses four
prototyp~cal mazket rate multi-family pro~ects -- two apartment and two condorrunium pro~ects,
one of each developed m a lower-cost subarea of the C~ty (i e, relatively lower land pnces and
rents, such as in the Ivfid-City uea between Wilslure and Pico Boulevard and east of downtown
Santa Momca) and a lugher-cost subarea o£the City (i e, relatively tugher land pnces and rents,
such as north of Wilslvre Boulevard and some parts of the Ocean Park commuruty) HR&A's
analyt~c approach was selected after review and constderation of the professional hterature, the
few examples of related analyses that have been conducted to date m other~urisdicrions, and
suggestions by C~ty Council members and Crty Comcrussioners
Estimate Per-Project Household Income and Spending
Detailed analysis of the financial circumstances of typical new apartment and
condorrunium pro~ects developed m the C~ty that was prepared for the recent Housing Element
update demonstrates that developers must charge }uglt rents or purchase prices m order to eam a
financ~al return suffic~ent to ~ustify the mvestment The households who can afford to pay these
levels of rent (m the case of mazket rate apartment pro~ects) or purchased housmg costs (i e,
mortgage payments, property msurance, property taaces and homeowners' assoc~at~on dues, m the
case of market rate condomiruum pro~ects) are, by most any defimt~on, upper-mcome households
HR&A estimated that rents for market rate apaRments developed on srtes m the Crty's R2
multt-farruly restdential d~strict must average between $2,100 and $2,600, dependuig on the
submarket area of the C~ty Assummg based on a survey of households residmg m newly
constructed apartments exempt from rent control that was conducted for the Housmg Element
update, that rent for such umts represents, on average, 37 percent of household mcome, the
average mcome for households paymg rent of tlus scale must be between about $67,000 and
$85,000 per year The typ~cal five-umt apartment development therefore mcludes total household
mcome of between about $335,000 and $425,000 Analys~s for the Housing Element also found
that the average purchase pnce for new condoirumums needs to be m a range of $316,000 to
$418,000, again dependmg on the submarket area of the C~ty, m order for developers of typ~cal
pro)ects Assurrung, based on generally accepted res~dent~al lending cnteria, that total purchased
housing costs do not exceed 35 percent ofhousehold income, a household would need an income
of between about 578,000 and $99,000 to purchase condonumums m tlus price range For a
typical five-urut pro~ect, tlus implies between $39Q000 and $495,000 of total per-pro~ect
household mcome
~ew.tfulh-Famelv Developmem Af, f'ordable Xouseng hexus Page 2
Hamilton, Rabenovrtz &,4lschu[er, Inc lulv'7, 1998
Execuhve Summary
Data on household e~cpendiwre patterns mdicates that, on average, about 75 5 percent of
total household mcome ~s avazlable for consumption expend~tures, includmg housing costs The
remunder is attnbutable to ta~ces, social msurance contnbut~ons (e g, wage earner's share of
payments into Social Security), savings and consumer mterest Applyuig this consumption
expenditure percentage to total per-pro~ect household mcome means that typical five-urut market
rate apar[ment and condommium pro~ects generate between $253,000 and $375,000 in annual
spendmg on goods and services
Estimate the Employment Impacts of Per-Project Household Spending
The next step m the analysis was to denve the employment unpacts of these est~mates of
consumpt~on-related spending by households m typical market rate multi-family projects This
was accompLshed usmg the IMPLAN mput-output model of the economy of Los Angeles
County Input-output models are used to trace the econom~c effects, mcludmg employment, that
result from a change m a reg~onal economy, such as the consumption expenduures by households
m new mazket rate multo-family housmg m Santa Moruca Il1~LAN is one such mput-output
model that ~s part~cularly well suited to tius type of analys~s F~rst, it provides analysis that is
particulaz to the economy of Los Angeles County Second, ~t provides est~mates of total
employment for each of 528 sectors of the local economy for each dollaz of household spenduig
Tlus mcludes est~mates of d~rect employment (~ e, at the restaurant or retail store where a
purchase is made), andtrect employment (~ e, m the mdustnes supplmg matenals to the restaurant
or retail store) and rnduced employment (~ e, due to consumpt~on spendmg by direct and mduect
employees) T}urd, the model generates employment patterns that correspond specifically to the
spendmg charactenst~cs of upper-mcome households, hke those who occupy typical new mazket
rate mult~-farruly developments m the City
The IMPLAN analys~s md~cates that consumpt~on expenditures by upper-mcome
households m typica] new market-rate muln-family developments m Santa Moruca generate
between 3 74 and 5 54 total workers, pnmanly m the reta~l trade and services sectors of the
economy
Estimate the t~%umber ofLow-Income Households Related ta the Employment Impacts
of Per-Projecr Household Spending.
Not all of these workers are low-mcome, and only some of these aze members of
households that meet the de6nit~on of a`9ow-mcome" household -- ~ e, eammg up to 60 percent
of the Los Angeles County med~an mcome, or about $25,000 per year for a two-person
household Denvmg the subset of households meenng these cntena was accomphshed usmg the
Pubhc Use 1Vficrodata Sample (PUMS) for Los Angeles County, a speciahzed sc~entific sample of
]990 census data The most widely avazlable census data are useful only m the summary form
.``ew,ilu[A-Fam~ly Development AJfordable Housing.~exus Page 3
Ham~lron, Rabenowu & Alschuler, Inc July 7, 1998
Execunve Summary
pubhshed -- i e, discrete charactenstics of a geograplvc area PiJMS data, on the other hand,
allow for cross-tabulat~ons of census data, such as household mcome by the industry m which the
household members work The PIJMS data used an industry classification numbenng system that
conesponds v~nth the mdustry numbenng system m the Il~fPLAN model This relahonslup made it
poss~ble to produce a cross-tabulation between the IIvIPLAN mdustry sectors that account for
over 90 percent of the consumpnon-related ~obs attnbutable to new market rate mult~-fanuly
pro~ect and the household mcome of workers in those mdustnes After adjustmg for the
d~fferences between the 1997 defirution of "lowancome" households and the ] 989 household
mcomes m the 1990 census, esumates were made of the number of "lowancome" workers
generated by the consumpt~on spendmg associated vnth each of the four prototyp~cal new market
rate multi-family pro~ects m Santa Monica For the sum of the affected industnes, about 17% of
all workers fit the "low-mcome" defimhon, or between about two-tturds (0 63) and one (0 93)
low-mcome worker per new market rate multi-family development
The next step was to eshmate the number of low-mcome households assoc~ated wrth these
low-mcome workers T}us was also accomphshed usmg cross-tabulations of the PUMS data
The result is an average of 2 36 workers per household m wluch at least one worker is employed
m an mdustry affected by consumption spendmg by households m new market rate mulh-family
pro~ects m Santa Monica
The summary results of steps one through three are shown m Table I-1, below
Ta61e I-1
DERIVATION OF LOW-INCOME WORKER HOUSEHOLD DEMAND RESULTING FROM
TOTAL HOUSEHOLD CONSUMPTION EXPENDITURES IN
FOUR PROTOTYPICAL 5-UNIT MARKET RATE MULTI-FAMILY DEVELOPMENTS.
CITY OF SANTA MONICA
Prototype
Apt -- Lower Cost Area Per-Prototype
Hhltl. Income
5335,189 Total
Wnrkers
3 74 Low-Income
Workers
0 63 Low-Income
Worker Hhlds
0 27
Apt -- Higher Cost Area 5425,919 4 76 0 80 0 34
Condo - Lower-Cost Area 5387,681 4 33 0 73 O 31
Condo - Higher-Cost Area 5496,260 5 54 0 93 0 39
AVERAGE 5411,263 4 59 0 77 0 33
Source. HRRA
A~ewMulte-Familv Development AJJordable Housing.``exus Page 4
Hamilton, Robinavilz & Alschuler, Inc Juh' 7, 1998
Fxecudve Summary
Estimale an Ajfordable Housing Fee to Ojfset the Affordable Housing Demand of
Per-Praject Household Spending
The above table shows the est~mated mazgmal demand for affordable housmg caused by
the consumphon spendmg from typ~cal new market rate multi-family developments The cost of
producmg ttus much affordable housing, takmg mto account any other fund sources that are
reasonably foreseeable, ~s a basis for amvmg at a reasonable development fee
Previous HR&A analys~s estimated that it costs between about $183,000 and $275,000,
dependmg on the City submarket area, to develop two- or three-bedroom apartment units m the
R2 multrfa~ruly res~dential distnct that is affordable to a low-mcome household, under applicable
mcome and rent thresholds Tlus sum mcludes the costs of land, construct~on, professional fees,
pernuts and financmg At tlus time, only the amount of debt that can be supported by low-mcome
tenant household mcomes can be counted on to help pay ttvs cost Compehtion for federal Low-
Income Housmg Tax Cred~ts, w}uch are about the on3y non-City financial resource available for
the development of affo~dable housmg cannot be assumed for every pro~ect the Crty would
sponsor ~n the future Accounnng for tenant-supportable debt and assumptions about the most
hkely crux of uruts sizes and C~ty submazket azeas where new affordable housing would be
constructed, u was estimated that the average City financ~al contribution, or subsidy, to produce
an affordable umt is about $155,000
Muluplymg tlus average per-urut subsidy amount by the number of affordable housmg
uruts needed to meet the consumpUOn demands of new market rate muln-family developments
yields the fee amount that could reasonably be charged to the developer to offset the Crty's costs
Tlus fee amount can also be expressed as a funct~on of the gross floor area of a typ~cal new
market rate muki-family development, as shown m Table I-2
:1~ew,ifulh-Fam~ly Developmenr-,9ffordable Housang A-exus Pagc i
Hamdton, Rab:nowrz & 4lschuler, Inc Julti 7, 1998
Fxecuhve Summary
Table I-2
DERIVATION OF A DEVELOPMENT FEE TO OFFSET THE AFFORDABLE HOUSING DEMAND
CAUSED BY TOTAL HOVSEHOLD CONSUMPTION EXPENDITURES
IN FOUR PROTOTYPICAL 5-UNR MARKET RATE MULTI-FAMILY DEVELOPMENTS,
CITY OF SANTA MONICA
Prototype Per-Prototype Units of Total Fee Amount
Hhld. Income Low-Income Fee Per Gross
Housmg Amount ~ Square Foot'
Demend '
Apt -- Lower Cast Area S335,189 0 27 541,090 S5 41
Apt. -- Higher Cost Area S425,919 0 34 552,215 56.87
Condo -- Lower-Cost Area 8387,681 0 31 547,525 S6 26
Condo - Higher-Cost Area S496,260 0 39 S60,835 $8 01
' From Tahle I-1
' Housing Demand x 5154,916 per unit (Crty's average subsidy gap)
' Total Fee Amount drvided by 7,59 5 gross square feet per typical market rate multrfamil y developmeM
Source: HR&A
Considering that the analys~s is based on reasonable esttmates of the affordable housing
demand generated by prototypical new market rate apartments and condomimums, assumes that
all households res~dmg m each protoTyp~cal pro~ecYs dwellmg umts eachibit average income and
spendmg circumstances, and that there are pockets of lower-cost areas and }ugher-cost areas in
each C~ty submarket area, it would be appropnate for the Affordable Housing Production
Program fee to be based on an average of the ~ushfiable fees for each product type The average
of the ~ustifiable fee for the two apartment prototypes ~s ~6 14 per gross squaze foot for new
market rate apartment developments, and $7 13 per gross square foot for new market rate
condorruruum developments These amounts are generally cons~stent with the fees that previous
analysis md~cates can be assessed such pro~ects w~thout the fee becoming a"governmental
constramt" on new development, wrth~n the meamng of State Housmg Element law
\'ew 31u1n-Family Development-AJjordable Xousvng .\'exus Page 6
Hara~lton, Rabmowtz & Alschaler, Inc 7ulv 7, 1998
II. PURPOSE AND SCOPE OF THE ANALYSIS
The Crty of Santa Momca, Cal~forrua ("City") is considenng a new ordinance to require
developers of market rate mult~-family developments (~ e, apartments and condorrumums) to help
meet the need for housmg affordable to low-mcome households (°affordable housmg"), as defined
by federal, State of CaUforrua and Crty regulahons, wluch is caused by their projects The
proposed Affordable Hous~ng Production Program ordmance allows developers to choose to
mclude umts m their pro~ect that are affordable to low-mcome households, pay a fee to the City
that wdl be used to help finance new affordable housing, or take other speafied actions, includmg
purchase of land for affordable housmg This new program was specified m a recent update of
the Housmg Element of the City's General Plan'
In l~ght of recent U S and Califomia Supreme Court decisions, any fee the Crty may
impose pursuant to tlus new program must be based on constitutional pnnciples These decis~ons
suggest that there must a legitimate public purpose undedying the imposition of the fee, and there
must be a reasonable relarionstup between the public needs created by a development pro~ect and
the amount of the fee imposed The pubhc purpose underlying the City's program is articulated in
~ts recent Housutg Element update, mcludmg rts supporting technical appendices, and the findmgs
m the proposed ordmance Tlus Report, wluch was prepared by Hamilton, Rabinovitz &
Alschuler, Inc ("HR&A") at the request ofthe City, presents analysis and conclusions wlvch
demonstrate the e~ctent of affordable housmg need that is causally related to new market rate
multi-farruly development m the City, and the development fee amounts that could reasonably be
required of developers
A. BACKGROUND TO TAF. CITY'S PROPOSED AFFORDABLE HOUSING
PRODUCTION PROGRAM
For more than a decade, the Crty of Santa Moruca has required developers of market rate
multi-family housing to help offset the impacts that theu pro~ects have on the City's household
mcome balance, m order to comply w~th State and Crty law and local housmg pohcies The
developer ass~stance ~s but one component of a multi-faceted housmg program that also rel~es on
City and other pubhc funds to construct new housmg uruts that are affordable to lower-mcome
households Followmg detailed review m Apnl 1997, the C~ry Council concluded that the current
developer requirement, the Inclusionary Housing Program as embod~ed m Orduiance 1615 and
' Ciry of Santa Momca, 1998-2003 Hous+ng Element Gpdare, adopted by the Glc Council June 9, I 998
(I-Ieremafter referred to as "Housmg Elemen[ Upda[e" or "Updatz")
\~ew eLlult~-Famrlv Development-Aff'ordable Hausmg \'erus Page 7
Namrlton, Rab:novrtz &,9lschuler, Inc Julv 7, 1998
Purpose and Scope
related guidelmes,Z needed to be changed m order to address problems with the program, and
changes in the local housmg market, State law and the fundmg environment for affordable
housmg
Overview of the Proposed Affordable Housing Production Program
After considenng comments on six conceptual altematives to Ordinance 1615, rt was
recommended that the Crty discontmue the current pro~ect-by-project mclusionary housmg
product~on approach, and mstead enact a program that requires developers of market rate multi-
family housmg to pay an affordable housing development fee to the City, or choose from among
other speafied alternatives to fee payment The fees would be pooled and leveraged with other
available fundmg to develop housmg affordable to lower-mcome households, most likely tlvough
the ausp~ces of non-profit, commuruty-based development orgaruzat~ons The revised program
would also allow developers to mclude affordable uruts m theu pro~ects, build affordable umts on
another site or perform other acUOns that assist the development of affordable housmg Tlus
approach resembles the City's fee program to rrutigate the housing unpacts of commerc~al office
development, which has been m place smce 1984'
In summary, the recommended program has the followmg general features
Development Fee Developers of market rate multi-£amily pro~ects (~ e, two or more
uruts), may elect to pay an affordable housmg development fee to the City, assessed on a
per-gross square foot bas~s
Base Fee Amounts Base fees will be establ~shed by Resoluhon of the City Counal, after
considenng, among other factors, the feasibihty of the base fee for typ~cal mazket rate
multi-family development pro~ects (~ e,`constramts" analys~s) and the nea-us (or
relazionstup) between new market rate multi-family development and the need for
affordable housmg
Fee Reduchons as Incentrve to Avord Terlant Drsplacement Because tt ~s City poLcy to
reduce adverse impacts of new development on the Crty's supply of exishng rental
` Ordmance 161 ~(CCS), adopted March 3, 1992, and subsequently amended b~• Ordwance 1657 (CCS),
No~~ember 17, 992, mllectn~elv chaptered as Santa Momca Mumcipal Code (SMMC) § 9 28 O10 et seq The
Inclus~onan• Housmg Prop~azn also mcludes a set of unplementahon gmdelmes npproved b~• the Gtv Counal on
December ld, 1993
3 Pro~ect tvht~ganon Measures, Ciry ofSanta 34onma Land L-se and Crrcularron Elements, Ocmber 23, 1984,
at pp li~-1~6, and S.~vIIvIC § 9 04 10 12, et seg
A~'ew.tlult~-Fam~Iv Developmenr-.9ffordab[e Hous:ng A~exus Page 8
Hamelron, Rab:nowrz & dlschuler, !nc July 7, 1998
Purpose and Scope
housmg, and part~cularly rentals that are affordable to lowerancome households, the fee
will be reduced for multi-family pro~ects m the followmg circumstances
Vacant sttes m multi-family d~stncts
Srtes in commeraal or industnal zomng distncts where multi-family development
is a perrrutted use and the srte is not already developed with multi-famdy umts
On-Srte Affordable Housmg Procluction Optron As an alternative to pa}nng an affordable
housmg development fee, the developer of a new market rate multi-family project may
elect to include umts affordable to lower-mcome households m the pro~ect The number
of such uruts must match the irummum thresholds needed to quaLfy for the State-
mandated density bonus (i e, 10% affordable at 50°/a or less of the Median Family Income
(MFI), or 20% affordable at up to 60% of the MET) The program mcludes further
specifications about the on-site affordable units (e g, qualifymg household mcomes and
mimmum unit s~zes)
Other Afforduble Housrng Product:on Options Developers may also choose to perform
other acrions which ass~st m the produchon of affordable housmg, such as off-site
construct~on of affordable umts within one-half mile of the mazket-rate pro~ect, purchasmg
or opt~onmg land for, or ass~sung with the financmg of, affordable housing development
by others The details ofthese alternat~ves will be spec~fied in program ~mplementahon
gu~dehnes to be approved by Resolut~on of the City Council
The recommended program seeks to meet the requirements of Propos~tion R and other
adopted C~ty housmg pol~aes and State law, responds to a number of problems wuh the current
Ordmance 1615 approach, and reflects considerauon of comment themes that emerged over the
past six months as a half dozen conceptual alternatrves to Ordmance 1615 were a~red m publtc
workshops and heanngs
The Public Purpose Underlying the Affordable Housing Production Program
Ever s~nce the adoption of its first contemporary Hous~ng Element m 1983,° the Crty has
had a pol~cy requinng developers of new market-rate multi-fanuly uruts to provide, or assist m the
development of, uruts that are affordable to low- and moderate-mcome households as one of
several mecharusms for mamta~rung balance m the City's household mcome profile The adopted
" GR' of Santa Mrnuca, HousmgElement Pofecv Report, Januan~ 1983, at pp 73-76 (adopted as the Housmg
Element of the General Plan b~~ Resolut~on 6620 (CCS). January~ 25, 1983)
\'ew _Lluln-Famrlv Development-~lfjordable Housmg Yexus Page 9
Hamilton, Rabrnowtz & Alschuler, Inc July 7, 1998
PurPose and Scope
Hous~ngElement Update reaffirms tlvs policy The pubLc purpose underlyu~g the proposed
Affordable Housmg Production Program ~s based on the followmg laws and polic~es
The Consumpt:on Patterns of the Upper Income Hauseholds Who Occupy New Market
Rate Mult~ Famrly Hausrng Create a Need for Affordable HousTng rn the Ctty
Households create demand for goods and sernces, m the pnvate sector (e g, retail goods
and med~cal serv~ces) and in the publ~c sector (teachers and mumcipal services) The
lugher the household mcome, the more demand is created New market rate mult~-family
housmg ~n Santa Momca accommodates upper-income households almost exclus~vely,
because of the lugh cost of rent or purchase pnce required to occupy rt Supp(}nng goods
and services sufficient to meet Santa Momca's share of the demand created by upper-
mcome households m new mazket rate multi-facruly housing requ~res workers across the
pay scale spectrum, mcluding lower-wage employees New market rate multt-fam~ly
development ~s, therefore, causally related to a need for hous~ng that is affordable to
lower-wage workers
State Lm+~ Estabkshes a Need for the Gty to Accommodate Its Regional Fmr Share of
Low- and Moderate-Income Households Cal~fornta's Housmg Element law requires that
each city and county develop local housmg programs des~gned to address its "fair share"
of ex~stmg and future housmg needs for all income groups, as deternuned by the
~unsdichon's Counc~l of Governments, when prepanng the State-mandated Housing
Element of ~ts General Plan 5 The fa~r share allocaaon for Santa Mocuca is usually
deternuned by the Southern Califorrua Association of Govemments, but m the absence of
State fundmg to prepare the allocation for the 1998-2003 plamm~g penod, 5anta Momca
estunated what share SCAG would have ass~gned it The City's 1998-2003 Housing
Element Update estimates that a SCAG assigrunent would probably be 3,219 addtt~onal
housmg umts over the five-year plarwng penod, of wkuch 1,936 (60%) units should be
affordable to low- and moderate-mcome households 6 For vanous reasons articulated m
the Housmg Element Update, the Crty mstead uses a"quantified ob~ective" of 1,542 uruts,
of w}uch 734 (48%) aze mtended for low- and moderate-mcome households'
5 Cald Go~t Code §§ 65~80, 6~58](a) and 65~84
6 Id , at pp II-82 [o II-93, p V-5
~ Id , at p V-6
.~ew d1u[h-Famely Developrnent Affordable Houseng Nexus Page 10
Hamelron, Rabenovrrz & Alschuler, Inc July 7, 1998
Purpose and Scape
Recent Changes m State Law and Federa! Laws cmd Houstng Programs Inhtbtt the Giy's
Abrlrty to Fu~ll State Marrdates and Loca[ PohcTes Concernmg Household Income
Drversrty As discussed at length m the Housing Element tlpdate,8 the Costa-Hawluns
Rental Housmg Act of 1995 (wluch gradually phases out limits on the price at w}uch
voluntanly vacated umts can be re-rented uutially), reductions m State and Federal fund~ng
for housmg (e g, reduct~ons m State and Federal budget allocanons for housmg
programs) and changes m these programs (e g, reduct~ons m the Sect~on 8 Fa~r Mazket
Rents rendenng participarion in the program much less attractive to pnvate apartment
owners) and the potential expiration of controls on rents m buildmgs whose development
was ass~sted with Federal funds, all make it much more difficult for the Crty to fulfill its
affordable housmg goals under State law and local poLcy
The Y'ast Ma~onty of New Market Rate Mult: Famrly Development ts Not Affordable to
Lawer-Income Householdr Data presented m the Houstng Flement Ilpdate demonstrate
that most umts ~n new market-rate mult~-family development projects are priced at levels
that are not affordable to lowerancome households under apphcable defirutions 9 In light
of the circumstances noted above, and absent an aggress~ve, multi-faceted program,
mcluding participation by for-profit developers of multi-family housmg, the cumulatice
effect of new market rate mulU-famdy pro~ects will, over nme, contribute to an imbalance
m the City's household mcome distnbut~on and will interfere v~nth the Crty's abil~ty to
meet its reg~onal fair share of housi~g, as establ~shed through State law (48% of all new
housmg over the ne~ct five years affordable to low- and moderate-income households) and
local laws and pol~cies (30% of new multi-farculy construcrion each yeaz affordable to low-
and moderate-mcome households)
It rs the Polrcy of the Crry to Maentain Income Drvers:ty Among Its Populataon and
Househodds Accordmg to data mcluded m the draft Update, Santa Momca has been
successful m mamtairung a balance of household mcomes m the Cny smce 1980 -- ~ e,
about 40 percent low-income, about 20 percent moderate-mcome and about 40 percent
e See, for example, Hous~ng Element L'pdate. pp II-47 to IL64
' For example, the 1995 Santa Momca Apartment Tenant Surv~e~~ showed that median rent for apartments m
^ew~ bmldwgs (post-1979) was $1,100 per month for a nvo-bedroom wut (sce, Housmg Element L'pdate, Techrucal
Appendix), compazed with a ma~umum rent of $731, wlvch the Gn~ estabhshed for low-mcome households m a nco-
bedroom urut (at 60% t NIFI) m 199~ Medtan 2-BR condomuuum pnces m pco~ects consuucted ~n the last fzw vears
are more than m~~ce the mavmum of $66,69d established bc the CiR~ a, `affordable" to a low-wcome household (m
199?), accordmg to our research
.~~e+a~~.blulJrFamrlti•Development~lJ,~ordableHousrng:~exus Page 11
Hamilton, Rab~novetz & Alschuler, Inc 7uh~ 7, 1998
PurPose and Scope
upper-mcome10 Ma~ntawng this balance has been accomplished by a vanety of housuig
programs, mcludmg rent conuol, a cazefully designed condominium convers~on program,
and use of a wide vanety of local, State and Federal fundmg programs to assist m the
construction of new affordable housing and the preservation of e~usung affordable
housmg In 199Q the C~ty's voters added Section 630 to the City Charter to requ've that
30 percent of all new housmg development m the C~ty be affordable to low- and
moderate-mcome households The Housmg Element Update conhnues to mclude goals,
policies and ~mplementat~on programs to increase the supply of housing affordable to
lower-mcome and moderate-mcome households "
The C:ty Has Many Programs to Facihtate the Development and Marntenance of
Hous~ng Affordable to Lower-Income Households, But They Are Not Suffictent to the
Task The Housmg Element Update catalogues a dozen fundmg sources that the City
utilizes to assist m the development of affordable housmg'Z Together, these resources are
pro~ected to ass~st ~n the development of 403 new umts affordable to low- and moderate-
mcome households If aclueved, ttus pro~ect~on represents only 21 percent of the
estimated need for new affordable housmg m the City over the same plamung penod,
usmg the SCAG need estimate, or 55 percent of the atFordable portion of the Crty's
"quantified ob~ectrve'~
B. SELECTION OF THE ANALYTIC APPROACH
As noted above, recent U S and CahforYUa Supreme Court decisions md~cate that any fee
the Cuy may unpose pursuant to the proposed Affordable Housmg Product~on Program must be
based on const~tuhonal pnnciples, mcludmg a factual basis for concludmg that there is a
reasonable relationstup, or ne~cus, between new market rate mult~-family developments and the
need for housmg affordable to low-mcome households
Though the courts do not require mathematical precision, and accord local agencies
cons~derable deference m the approach they use for establ~slung neaus, part~cularly when the
requirement applies to a broad class of development pro~ects, the current body of law and
70 HousmgElement C"pdate, atpp II-l3 to II-14
'` See, for example, Goal 2 0(Increase the Supplv of Housmg Affordable to Very I,o«, Low and Moderate
Income Pe~sons). ~ts 10 rela[ed poUc~es and 11 related unplementahon pro~ams Hous:ng Element Update, pp V-12
to V-22
~` HarlsingElement L~pdate, AppendixF
~'ew.ilulta-Fa»u[yDevelopment-AfjordableXous:ng.~'exus Page 12
Hamilton, Rabenoverz &.4lschuler, Inc July 7, 1998
Purpose and Scope
expenence on tlus sub~ect suggests that certam basic themes must be considered in establishing
appropnate nexus, mcludmg "
Fee Must Be Related to the Burden Created By the Type Development on Whrch the Fee
~s Imposed The local agency imposmg a development fee must engage in a reasoned
analys~s des~gned to establish that there ~s a reasonable relat~onship between the amount
and use of the fee imposed and the burden created by a pro~ect, or class of projects
Fee Must Be Related tn Amount to the Cost of the Improvements Needed The
development fee may be sub~ect to challenge ~f the amount of the fee is not related to the
amount of facil~t~es or services created by new development
Fee May Only Reflect Prospeckve Impacts The development fee may not mciude the
costs of remed}~ng existmg factht~es or mfrastructure deficienc~es, but must focus o~ the
~mpacts created by new pro~ects
Court decisions in favor of local agencies unposmg development fees have generally been
upheld when these pnnaples have been followed and are supported by reasoned impact studies
prepared m good fa~th, wluch were relied on by the legislarive body 1°
General Approaches to Estimating the Aff'ordable Housing Impacts of New Market
Rate Residential Development
HR&A's review of the profess~onal hterature, and uut~al discussions with the C~ty Council
and C~ty Commrssioners, identified at least three general approaches that were cons~dered in
deternumng how best to assess nexus between new market rate multi-family development and the
need for affordable housing and the design of an appropnate fee if ne~cus was found These
alternatives are d~scussed below, followed by a summary of the approach ultunately selected by
HR&A
" See generally', Go~4 Code § 6600Q et seq and F_hrlrch v C~N ofCulver Crry 12C4th 854, 50 CR2d 242
(leg~slatrvel~~ unposed wndrtion not stnc[ly sub~ect [o the tests set forth m:'~`ollan v Cal~fornva Coastal Comm:ssvon
10 i SC[ 3141 and Dolan v Ctry ojTrgard 114 SCt 2309 )
'" See for example, Commerc~al Bmlders oJ,bbrthern Cakjom~a v Crry ofSacramento 941 F2d 872
(upholdmg fee on non-residenhal buildmg to offset burdens created b}~ pro~ect, based on a housmg unpacts stud}~), Russ
Bw(drng Pannersh~p v Gry and County ofSan Franc~sco 199 CA3d 1496, 246 CR21 (upholduig fee unposed on new
office developmen[ to proc~de revenua for a vans~t ~~stem based on a detazled stud-y)
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Purpase and Scope
The Mareinal Emolovee Imoact of Market Rate Housme Consumntion Snendme
The City of Santa Fe, New Me~cicots and the City of Palo Alto, Cal~forma16 conducted
studies to measure the margmal ~mpact on affordable housmg attributable to each new market rate
housmg development pro~ect Usmg general population, household and econonuc data from
surveys conducted by the U S Bureau of the Census, and general household expenditure data
from the Bureau of Econorruc Analys~s of the U S Department o£ Commerce, these two studies
est~mate the amount of employment assoc~ated with household consumption spending m new
market rate resident~al development and make esumates of the number of low-mcome workers
and households assoaated with the consumption-related employment The resulting number of
low- and moderate-mcome worker households were used to ~ustify an mclusionary housmg
requvement (16% m Santa Fe, 10% in Palo Alto) and fee m Leu of prov~dmg the units m new
pro~ects The Palo Alto study analyzed only the direct employment impacts on retail trade
employment, wkule the Santa Fe study produced a more comprehensive employment tmpact
analysis across a broad range of mdustry sectors, but st~ll counted only the d~rect impacts, due to
I~rrutauons mherent m the nat~onal data sources used m the study
The approach and data sources used m both studies aze sumlaz to those used by the Crty
and County of Sacramento to ~ustify an affordable housing fee on new commerc~al development,
w}uch was sustamed by the U 5 Nmth Cucuit Court of Appeals The approach used m the two
stud~es ~s also consistent rvith trad~t~onal tmpact miUgation analysis, wluch focuses on the mazgmal
effects of a proposed pro~ect Both of these stud~es rely, however, on general nat~onal data, much
of rt datmg from early 1990s census surveys, for the statisUCal basis of the consumption spendmg-
low wage worker-affordable housmg connect~on
The Land Pnce Comnet~pqn Apprpach
Another approach suggested m the hterature, but appazently not yet applied in practice,
asserts that any new mazket rate housmg development that does not mclude affordable housing
dumrushes the amount of land available for affordable housmg, and thereby burdens the remaimng
land by mcreasmg the amount of affordable housmg which it will need to support " Stated
° lerold Ka~~den and David L~stolan, Report forProposed AJfordable Houvng Program, C~tv of Santa Fe,
New Mewco, October 1995
16 Ke}'sei Mazston Assce , Palo _Alto R:L~R Pmgram, Reseden6al.~exus Issues and Recommendahons, C~h'
of Palo Alto, Caldorn~a, Apnl 199~ ("Palo Alto Smdy")
~7 See for example, Wdl~am W Memll III and Robert K Lmcoln, "`Lmkage Fees and Fav Shaze Regulations
Law and Melhods." 2i Urban La~tti-er 223
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Purpose and Scope
another way, market rate housing competes with affordable housmg in a mazket with firute land
resources, and therefore bids up the cost of land, makmg it mcreasutgly expensive to build
affordab-e housmg If it were possible to quanti£y tlus cost prem~um, rt could be offset with a
development fee
'Ctus approach assumes that I) there is a fimte amount of land avaxlable for res~dential
development, 2) the pnnc~pal reason that land pnces escalate ~s the competrtion between market
rate and affordable development, and 3) but for market rate development, affordable housing
would be constructed It is difficult to support any of these assumptions m the Santa Monica
contelct F~rst, the supply of land for res~dential development may be theorehcally 6nite, but rt
would be eartremely d~fficult to prove Ttvs ~s because the C~ty now pernuts resident~al
development in all of its commercial and many mdustnai distncts Market suppoR for such
housmg is lazgely untested, and therefore rt is uncertazn how much of the theorerical butldout
should be counted as part of the supply, particularly when the relative attrachveness of residential
development as agamst non-resident~al development on any grven site changes over time m
response to market conditions and land use regulations 18
Second, Santa Momca land pnces respond to a wide vanety of market forces, and not ~ust
the competrt~on for what lund of housmg to budd For example, any recent run-up m multi-family
land pnces has a lot to do with the partial deregulation in rents mandated by the Costa-Hawinns
Rental Housmg Act, and not much to do wnth new development, of wluch there has been very
l~ttle smce the late 1980s
Tlurd, even if land were cheaper, the ab~hty to bmld affordable housing would still be
extremely hrruted by the lack of other financ~al resources to pay for all of the other development
costs One need only look to other parts of Los Angeles County outside the coastal communities,
where land ~s considerably less expensrve, but affordable housmg ~s not sigmficandy more
plennful
Reolacement of Demol~shed Affordable Umts
In response to more local concems, it has also been suggested that affordable housing
ne~cus could be based on the fact that new market rate mult~-family developments sometimes
mclude the demol~t~on of umts that are affordable to low- and moderate-mcome households
Accordmgly, it has been suggested, developers should be charges a fee based on the number of
affordable umts removed The law may preclude tlus approach on several grounds
'° This ~s prec~selg the reason that the Cin~ of San Franc~sco reportedly re~ected usmg ttus approach (Palo
tUro Smd}', at p 8)
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Purpose and Scope
For example, the replacement approach may be in conflict with laws which restrict the
Ciry's abil~ty to impose addirional costs on new pro~ects undertaken pursuant to the State Ellis
Act In a San Franc~sco case mvolving single-room occupancy hotel projects,19 the Court of
Appeals mval~dated a prov~sion m a San Franc~sco ordmance that required owners of residential
hotel urnts to obtaui a pemvt from the C~ty before the units could be conveRed to tounst use
The pernut would only be ~ssued if the owner agreed to prov~de one-for-one replacement of the
converted units e~ther by constructmg replacement uruts or by pa}nng an in-lieu fee equal to 40
percent of replacement costs The Ballock court concluded that the Ellis Act protubited San
Franc~sco's attempt to reqwre an in-l~eu fee In June, 1989, the Crty adopted an ordmance putung
property owners on not~ce that they may be required to comply vnth a requirement to replace
umts demolished as a result of an Elhs Act wrthdrawal, or pay an in lieu fee 20 A fee rangmg from
$38,000 for each one-bedroom untt to $63,000 for a four-bedroom urut was under discussion In
1991, the "notice" ordmance was repealed and the one-for-one replacement or m heu fee
requirement was suspended in light of the Bullock dec~s~on 21 On the other hand, the Crty imposes
a tenant relocation requirement for lower-mcome households u
The Selected Analytic Approach
For the reasons noted above, HR&A deternuned that the margmal impact approach was
the most reasonable method for estimatmg the affordable housmg impacts of new market rate
multi-fanuly development, and the method that yields most directly a development fee that ~s
proport~onal to impacts The approach reported here improves on previous margnal impact
analyses by usmg more sop}ust~cated analyt~c tools capable of ineasunng the employment effects
of }ughancome household expenditures as they npple through the local economy, and how ttus
translates mto demand for afForda6le housmg, all specific to the regional economy in which Santa
Momca is situated
In summary, the analys~s approach ~s as follows Each new mazket rate multi-farruly
development pro~ect constructed and occupied m the City adds new households with particulaz
mcome and spendmg charactenshcs These households create demand for goods and services, ~n
the pnvate sector (e g, restaurants. retad goods and med~cal sernces) and m the publ~c sector
(teachers and muruc~pal servtces) In general, the tugher a household's mcome, the more dollars
19 Bullock v Ctty and County of San Franc~.sco, 221 Cal App 3d 1072, 271 Cal Rptr. 44
~0 Ordmance 1486 (CCS), adoptedJune 27, 1989
Z~ Ordmance1~76(CCS),adoptedMazch26,1991
2~ SIvIIvtC Chap[er 4 36
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Purpose and Scope
are spent for goods and sernces New market rate multi-family housing m Santa Momca
accommodates upper-uicome households almost exclusively, because of the high cost of rent or
purchase price requ~red to occupy it Supplying goods and services suffic~ent to meet the
consumption demand from upper-mcome households m new market rate mult~-fanuly housmg
requires workers across the pay scale spectrum, mcludmg lower-wage employees Some of these
lower-wage workers are members of lowancome households who require housing at pnces they
can afford New market rate multi-family development ~s, therefore, causally related to a demand
for housmg that ~s affordable to lower-wage workers and their households Therefore, the Crty
may requve that developers provide part of the cost of ineeung the affordable housmg demand
generated by their pro~ects, through payment of an affordable housmg fee, should they elect tlus
option under the proposed new C~ty program
C. ORGANi7.ATION OF THE REPORT
Estunahng the mazgmal affordable housmg demand caused by new market rate multi-
family developments m Santa Momca, and a development fee that is roughly proportional to ttus
unpact, was deternuned through a four-part analysis, as presented m each of the followmg
Chapters
The remaimng Chapters of t}us Report are as follows
Household Income arul Spenchng m New Market Rate Mulh-Famtly Developments
Chapter III presents esnmates of the income and spendmg charactensucs of households
who vv~ll occupy typical new market rate multi-fanuly developments The analysis uses
four prototypical market rate mult~-family pro~ects -- two apartment and two
condommium pro~ects. one of each developed in a lower-cost subarea of the City and a
}ugher-cost subarea ofthe C~ty Based on the rents and purchase pnces needed to achieve
financially viable developments, u~s possible to deduce the mcomes of the households
who w~ll occupy the umts The proport~on of total household and total per-prototypical
pro~ect spendmg for goods and services is then estima[ed
The Consumphon-Redated Employment and Affordable Housrreg Impacts of New Market
Rate Mult~-Famzly Development Chapter IV explams how the Il~IPLAN mput-output
model for the economy of Los Angeles County was used to est~mate the total employment
-- direct, mdvect and mduced -- that ~s generated by per-prototype household
expenditures for goods and serv~ces It also explams how data available from the 1990
census were used to denve the subset of total employment generated by per-prototype
household expend~tures who are low-mcome workers and theu number of households
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Hamilton, Rabenov:¢ d Alschuler, !nc July 7, 1998
Purpose and Scope
Ttus result constttutes the estimate of affordable housmg demand generated by the new
mazket rate multi-family development prototypes m the City
EstJmatrng Justifrabde Development Fees. The final Chapter presents calculat~ons for per-
prototype fees that could be chazged developers of new market rate multi-family
development prototypes m the City to offset the affordable housmg demand generated by
their pro~ects The calculation is based on the City's costs to subsidize the development of
apartments affordable to low-mcome households
Report
Several appendices include additional supportmg data and informatwn referred to m the
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III. HOUSEHOLD INCOME AND SPENDING IN
NEW MARKET RATE MiJLTI-FAMILY DEVELOPMENTS
Detailed analys~s of the financial circumstances of typ~cal new apartment and
condom~ruum pro~ects deve(oped in the Crty that was prepazed for the recent Hou.nng Element
Update demonstrates that developers must charge lugh rents or purchase pnces m order to earn a
financ~al retum sufficient to ~ust~fy the investment The households who can afford to pay these
levels of rent or purchased housuig costs are, by most any definit~oq upper-mcome households
Upper-mcome households expend a sigruficant portion of their mcomes for goods and services
obtazned from pnvate and pu6Uc sector resources This Chapter presents the basts for the
estunates of per-household mcome and spendmg, and how these were aggregated for typical new
mulh-family developments m Santa Mornca
A. ESTIMATING TOTAL HOUSEHOLD INCOME IN TYPICAL NEW MARKET
RATE MULTI-FAMILY DEVELOPMENTS
The first step m establ~slung the margmal demand for affordable housmg from typ~cal new
mazket rate mult~-family developments m the City requires defuung those typical pro~ects,
est~matmg total per-pro~ect household mcomes a~d the amount of mcome generally avadable for
spending on goods and serv~ces 24
As noted m Chapter II, the analysis presented here focusses on the affordable housmg
demand generated by the most typical new market rate multi-fa~uly developments Based on data
contamed m the HousJng Element Update, most new apartment and condomimum pro~ects m the
Gty are developed m the R2 Medmm Density Mult~family Resident~al Distnct on between one
and three ad~acent lots Under current zorung regulations, this allows for apartment or
condorruruum projects with between five and 16 mazket rate dwellmg umts, assurtung the lots abut
an alley For purposes oftlus RepoR, HR&A selected four prototypical five-umt projects that
together represent most of the cond~t~ons under w}uch new mulh-family projects will be built m
the City m future years
~' New market rate mulu-fattule developments are bwlt to meet the demand for aparUnents and condom~uums
m Ssnta Moruca Some of the households w~ho occupv these u[uts ~3•tll be m-m~grants to the City or County of Los
Angeles Other households will already be ln~~ng m the Cih~ or County, but nre mocmg to new~ ucuts m Sunt¢ Momca for
any number of reasons, such as to reside m a pazuculaz neighborhood or lurger dwellmg iuut, be closer to work, or send
theu civldren to schools m tt~e Santa Momca-Mahbu Umf'ied Schoo] D~stnct Wtule such households aze not °new'~ to
[he C~h' or CounR~, Ihey free up their pnor iav[, often to a neµ~ in-m~grant, ~n the act of mo~wg Thus, new market rate
mulh-Tamilv development m Santa Momca is associated duectle, or uidvectl~ after a senes of moves, with new
hc~useholds
:'~ex•,t~ulh-FamelyDevelopment-dffordableHousing,~'exus Page 19
Hamelron, Rabenoveu &.4lschuler, !nc July 7, 1998
Household Income and SPendrn~
The four prototypes are
^ Apartments m lower-cost subareas of the Crty, where rents and land costs are relatrvely
less expensive than other areas (e g, the central part of the City between Wilslure and
P~co Boulevards)
^ Apartments in htgher-cost subareas of the Ciry, where rents and land costs are relatively
more expens~ve than other azeas (e g, north of Wilsture Boulevard and some parts of the
Ocean Park commumty)
^ Co~rdomimums rn lawer-cost subareas of the City
^ Condomin:ums tn htgher-cost subareas of the City
Financ~al feasibility modelmg prepared by HRRcA for the Housrng Element Update, and
subsequent analysis for the design of the proposed Affordable Housing Product~on Program,25
est~mated that rents for market rate apartments developed on s~tes m the C~ty's R2 mulh-famdy
resident~al distnct must average between about $2,100 and $2,600, dependu~g on the submarket
area of the City to meet generally acceptable levels of finanaal return to the developer If these
returns are not available, developers will build elsewhere or pursue other forms of mvestment
The range accounts for both the s~ze of the pro~ect and the submarket area of the Crty in which it
is located, as shown in Table III-1
" See generally-, HR&A, "Recommrndat~ons for Revismg the C~h~ of Santa Momca's Inclus~onary Housmg
Pro~am," metnorandum to Santa Momca Housmg Manager Robert Moncnet; dated Apn16, 1998, pp 20-24 and
Appendix D
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Hamelton, Rabinovrtz & Alschuler, Inc July 7, 1998
Household Income and Spend~n~
TaWe III-1
RENTS REQUIRE~ FOR FINANCIALLY "FEASIBLE" NEW MARKET RATE
APARTMENT DEVELOPMENT IN THE R2 DISTRICT, CITY OF SANTA MONICA
Market Subaraa Total Development Development Cost Monihly Rent
and Prototype Size Cost Per Umt Requ~red to
Achiave Threshold
Retum '
Lower-Cost Area
1-LotPrqect S7,237,484 5247497 S2169
3-Lot Ro~ect 53,536,640 5221,040 51965
Average 52.067
Higher-Cost Area
1-LotPro~ect 57,593,134 5378,627 52.718
3-Lot Prqea 54,613,711 5288,319 S2,535
Average 52,627
' Cash-on-wsh return of 15% in the first stabihzed year of operation
Source. HR&A
The average mcome of the households occupymg u~uts in each prototype can be deduced
from assumptions about the proportion oftotal household mcome spent for rent HR&A's 1995
survey of households res~dmg m newly constructed apartments exempt from rent control found
that rent for such units represents, on average, 37 percent of household mcome ~` Ttus ~s tugher
than the convent~onal threshold assumed for affordable housmg programs (~ e, 30 percent of
mcome) and }ugher than the ratio ~mphed by 1990 census data (90% of households w~th incomes
over $50,000 paid less than 20% of household mcome for rent m 1989) 27 The 30 percent ratio is
a planrung target, and does not necessanly represent what household actually are wilhng to spend
for the housmg accommodation of their choice The 1990 census data ~s a blend of households m
controlled and uncontrolled rental units Because upperancome households occupy a share of
rent-controlled uruts,28 and therefore pay below-mazket rents, their rario of rent to income is not
`° See, HR&A, "Results of [he 1995 Santa Mowca Apartment Tenants Surve~~,-' Housrng Element L'pdate,
Tecluucal Appendix rable 11 shows that>j % of households m uncontrolled apartments, tt~}uch are prunanlV tuuts
consVUCted after Apni 1979, pazd ben;~een 30 % and 50% of theu mcomes for rent The med~an calculated from the
survev daza ~s 37%
" See, U S Bureau of the Census. 1990 Census oJPopulateon and Housrng, C~n~ of Santa Momca, Summan~
Tape File 3. Table H-~0
`° Overall, abaut 25% of rent controlled ~ts m the CiR~ u•ere occupied by' houceholds mt[h mcomes
esceedmg 120% ef the Coimn~ median m! 99~ Thts ranges firom 18% m the dow~town/Mid-Cin~ azea to 31 % north of
\~ew .4fuln-Family Devekpment r9Jjordable Housing .`~exus Pagc 21
Hamdton, Rabmoviu & Alschuler, Inc Julc 7, 1998
Household Income and Spendtn~
representatrve of the srtuatiom m ~ewly constructed apartments, w}uch are exempt from rent
control Therefore, the 37 percent rent-to-mcome ratio was used for ttus analysis 29 It imphes
that, on average, households payuig the rent needed to ~ustify development of prototypical new
market rate apartment pro~ects in the C~ty must have incomes of between about $67,000 and
$85,000 per year Tlus calculation, together with the results from altemahve rent-to-mcome rat~o
assumptions, are shown m Table III-2
TaWe III-2
HOUSEHOLD INCOMES IN PROTOTYPICAL NEW APARTMENT DEVELOPMENTS
IMPLIED BY VARIOUS RENT-TO-INCOME RATIOS
Prototype Average ReM Rent-to-Income Ratios
37% 35% 30% 20%
Lower-Cost Area
1-LotPro~ect 570,346 574,366 S86,760 S730,740
3-LotPro~ea 563,730 567,371 578,600 S717,900
Average 567,038 570,869 582,680 S124,020
Per-Rototype 8335,789 5354,343 5413,400 5620,100
H~gher-4oat Area
7-Lot Prqea 588,151 593,189 5108,720 S163,080
3-LotPro~ect 582,216 S86,914 S101,400 5152,100
Average 585,184 $90,051 5105.060 5157,590
Per-Pratotype 5425,919 S450,257 5525,300 5767,950
Sourr.r. HRRA
Usmg per-household mcome based on the 37 percent rent-to-mcome ratio unpl~es that the
typ~cal five-urut apartment development mcludes total l~ousehold mcome of between about
5335,000 and $426,000
Analys~s conducted by HR&A for the design of the Affordable Housmg Production
Program also found that the average purchase pnce for new condorruruums needs to be in a range
of $316,000 to $418,000, agam dependmg on the submarket area of the C~ty, m order for
developers of typical projects to ac}ueve acceptable returns, as shown m Table III-3
Wilslvre Boulevard !d, pp 27-28
Z9 "fhe unplications of usmg allematice rent-to-mcome ratios for a~ust~able developmrnt fee are d~scussed m
Chapter V
New3luln-Fam~lv Developmenr-AJfordable Hous~ng Necus Page 22
Hamrlton, Rabinov~tz & dlschuler, Inc July 7, 1998
Household Income and Spendrn~
Table 1113
PURCHASE PRICE REQUIRED FOR FINANCIALLY "FEASIBLE" NEW MARKET
RATE CONDOMINIUM DEVELOPMENT IN THE R2 DISTRICT,
CITY OF SANTA MONICA
Market Suberea Total Development Development Cost Purchase Price
and Rototype Size Cost Per Umt Reqwred to
Achieve Threshold
Return '
Lower-Cost Area
7-LotRo~ect 51,465,227 5293,045 5341,775
3-Lot Ro~ed 54,096,789 5256,049 5290,509
Average S316,142
Higher-Cost Area
7-Lot Prqect 51,841,891 5368,378 S445,067
3-Lot Ro~ect 55,331,732 5333,233 $391.617
Average 5418,342
' Cumulatrve return on eqwty of 50% at pro~ea sell-aut
G^~~•~P HR~A
Denvmg an esnmate of per-pro~ect household mcome for the condommium prototypes
requues several addrt~onal assumptions, due to the nature of purchased housmg These mclude
the amount of the down payment (20% ~s assumed), the mortgage term and mterest rate (30 years
at 7 00%), est~mates of property taaces (1 OS% x purchase pnce less homeowner's exemption),
est~mates of property msurance ($100 per month) and average homeowner's association dues
(~208 per month) The sum of these costs should not exceed about 35 percent of total household
mcome, accordmg to convenrional res~dential lendmg cntena Usmg the sum of these costs and
tlus threshold yields and estimate of between about $78,000 and $99,000 per household, or
$388,000 to $496,000 oftotal per-pro~ect household mcome, as shown m the lower half of Table
III-4 on the followmg page
:\~ew;l4uln-Famrlv Development-Afjordable Housmg ivexus Page 23
Hamilton, Rabrnovrtz & Alschuler, Inc 7uh' 7, 1998
Table IIH
Estimahs oTAwregeAnnual PauHousNwld and Per~rojact Inrom~s In Four Prototyplul Nsw MerkKRate MuMFamflyDevalopmmts
In Ma Ctty of S~nd Monics
Assumpirons 7 5-unrt DrokUS typcal of development in t~e R2 Dis[nd
2 4 Protoyp¢s yasetl an pmtoypes per Rnanaal leasibilM1y motlels
Apartment - LUV2f-GaSt A23 (3ve~ege Of one-lot anG tllreelot pldDlypes)
Apartment - Hgher-r t Area (aversge W one.lot aM threEJd prototypes)
Contlominum - Loxer-Cosl Hrea (average d onNOt anA three-lot protolypes)
Gontlominwm - Lower-Cost A~ (avzrage of one-lot an~ ihree-lot protorypesJ
3.4partmen[ rents arid condo purchase pncea set a[ raMS reqwred fo ~m [hreslwltl ret~ns, perfiasibtltty moAelc
4 Apartment RefR = 37% x Householtl Ircwne pef 1995 TeneM Sur.ey fesUtts for unconVOlleG rentel housing
Contlo Owners' Cost (mortgage propertytax insurence aM Fbmeowneis AssxaOOn tlues) = 35%x FbuseMW Ixome
Protorype #7 APartment - Lower-Cast Area (ave dge olmalot antl Mree-bt P~otypes)
7-LOt &Lats AopraQe
Avg Vmt S¢e (GSF) 1 339 1 44t 1,390
Monit~y RentlGSF S 'I 62 5 t 36 S t a9
Monthy Rent S 2169 S 1.9fi5 $ 7 067
AnnualRent S 26028 5 23,SB0
RenVHHltl Intome 37 OOB6 3] 00%
Annual Nhltl Irxome S 70 346 5 63 730 5 67 038
# UMS/ProJect 5
Pra~ec[Hhltl Income 5333~189
ProtaypeC2 Aoartrtient-Hr~frer-COStArea(ave2gadono-btarMthreabfpmtoypes)
t-LOt 3{p{g q~~y9e
Avg UndS¢e(GSF) t,339 1,G41 1,390
MonthyRenVGSF 8 207 4 176 S 189
MonthryRent 5 2.7t8 5 2,535 $ 2627
AnnualRen~ 5 32615 5 30,420
RenVHHltl Income 3~ 00% 37 00%
Annuai Hhld Ineome 5 88,'151 S 92,716 S 85 184
k VnrtS~Proied 5
Prqect Hhld Income 5425~9'19
Profotypa iR3 Contlommrum - LoweaCost Area (ave~ageWOnsbl and threabt prorotypesJ
i-LM 3-LOts Fverege
0.vg Un~ S¢e (GSF) 1,519 1 424 1 4]2
Purchau PrMe/GSF 5 225 $ 204 S 215
PurchasePrke $ 341,775 S 290,509 53~Q142
Mortgage% 8000% 8000%
Mo~qagePmtlMo 51,Bt9 51546
Prop Taz Raze 'I OS% 1 OS%
Hamewrtiers Detluci $ 7,000 5 7,000
Property7mJYr E 3515 S 2,977
PropertyimtlMo $ 293 5 248
Propertyln5U2nce/Ma $ ~pp $ ~pp
HOA Dues/Mo S 208 $ 2pg
TofalHOUSing Ccsts/MO $ 2.420 $ 2 103
Tocal Housing Cos[s/Yr S 29.044 $ 25.231
Hous~ngCC¢ts/Hhldlncame 3500% 3500%
Annual House~oltl Income 5 82.983 $ 72.090 S 77.536
p UndS/Prwet[ 5
ProJec[ Hnltl InCOme 5387.E81
Prototype wt Contlamn~um - Hgher-Cos1 Area (average o( onabt and three-lot prototypes)
1-Lot 3-LOts Arera4e
Avg VnrtS¢e(GSF7 '1,519 1424 1472
Purchase PncrJGSF S 293 5 275 S 284
PurchasePnce S G45067 $3916t7 S415342
Mortaage % 8000% 80 00%
MoMgagePmt/MO $2369 52.084
Prop Tax Rate t 05% 1 OS%
Hom~ers oea~a 5 7 00o s~ o00
ProperryTayVr $ 4g00 $ 4038
PropeMTawMo 5 383 3 337
PfapertylnsurenCrJMO 5 100 $ ~~0
HOA Dues/MO b 208 5 2~8
Total Housing Cosis/Mo b 3060 S 7]25
To[aI Housing Costs~'Ir 5 3E 726 5 34 751
Houang Gosb/H~Itl IncOme 35 00% 35 0~%
Anmal Householtl Inrome 5 104931 S 93 573 $ 95252
# Unrts/Pro~ect 5
Pro~ect Hhld Income $496.260
s~~ _~ Page 24 HRM Inc ~HS98
Household Income and Spend~n~
B. ESTIMATING TOTAL HOUSEHOLD SPENDING FOR GOQDS ANiD
SERVICES IN TYPICAL NEW MARKET RATE MULTI-FAMII.Y
DEVELOPMENTS
Households m new market rate multi-family developments use their incomes to pay taxes,
save for the future and purchase goods and sernces, including housmg costs Goods and sernces
are prov~ded by the public sector -- e g, pubLc safety, cultural and recreahonal, library and
educational sernces -- and pnvate sector -- e g, grocenes, clothing, medical services and
domest~c help The amount and pattern of goods and sercnces consumprion varies by level of
household mcome Upper-mcome households, lilce those who wdl occupy new market rate mult~-
famdy developments m the City, have more to spend and spend it on more d~scretionary rtems
than households of more modest means Because consumpt~on-related expenduures aze a crucial
element of the national economy, data about them ~s tracked on a regulu bas~s by the Bureau of
Econoiruc Analysis ("BEA") of U S Department of Commerce and the Bureau of Labor Stat~st~cs
(`BLS") of the U S Department of Labor The BEA measures the relationslup between total
personal mcome and personal consumption expenditures on a nahonal basis, the BLS sponsors
regular surveys to measure consumer expend~tures by category, region of the nat~on and income
level
In this Chapter, BEA data are used to eshmate the portion of total household income m
the four new market rate mulh-fam~ly development prototypes that is available, on average for
purchase of goods and serv~ces, mcludmg housmg costs The BLS data are used in the IlvIPLAN
mput-output model, descnbed in the ne~ct Chapter, to account for the employment assoc~ated with
the part~cular spendmg charactenstics of upper-mcome households
Table III-5 shows that, on average, about ?5 > percent oftotal household mcome ~s
available for consumption expend~tures, mcludmg housmg costs The remamder ~s attributable to
taxes, soc~al msurance contribunons (e g, wage earner's share of payments mto Soc~al Secunty),
savmgs and consumer mterest
;\'ew.4fulp-Fam~lv Development-AJjordable Housu~g.~~exus Page 2~
Hamdton, Rabinowu 8-.dlschuler, Inc Juh• 7, 1998
Household Income and SPendrn~
Table 111-5
PERSONAL INCOME AND ITS DISPOSITION IN THE U S., 1995
Item Amount Percent
15billions)
Personal Income $6,11 2 4 100 0%
Less Taxes -794 3 -13 0%
Less Soual Insurance Contnbution -294.5 -4.8%
Ad~usted Personal Income 55,023 6 82 2%
Disposable Income 55,318 1 100 0%
I~ncludmg Soaal Insurance CoMributionl -246 6 -4 6%
Less Savmgs -131 7 -2 5%
Less Consumer Interest -14.9 -0.3%
Less Foreign Transfers 54,924 9 92 6%
Net Disposable Income
Personal Consumption Expenditures (PCE) 75 5%
(Ad~us[ed Personal Income x Net Disposable
Income)
Sourr.es. U.S. Bure.au of Ecnnnm~c Analvsis. HR&A
Applymg ttus consumphon expend~ture percentaee to total per-prototype household
mcome means that typ~cal five-urut market rate apartment and condomm~um pro~ects generate
between $253,000 and $375,000 m annual spendmg on goods and serv~ces, as shown m Table III-
~ex•:ifukr-Fanulv Development-AJfordable Housrng Nexus Page 26
Hamelton, Rabenomtz & Alschuler, Inc JuIV 7, 1995
Household Income and Spendrn~
Table III-6
TOTAL ANNUAL HOUSEHOLD INCOME AND CONSUMPTION EXPENDITURES FOR FOUR
PROTOTYPICAL 5-UNIT NEW MARKET RATE MULTI-FAMILY DEVELOPMENTS
IN THE CITY OF SANTA MONICA
Prototype Per-Household Per-Prototype Per-Prototype Average
Averaga Annual Average Annual Annual Consumpt~on
Income' Householdlncome' F~cpend~tures'
Apt (Lower-Cost Area) 67,038 335,189 253,068
Apt (H~gher-CostAreal 85,184 425,919 321,569
Condo ILower-Cost Area) 77,536 387,681 292,699
Condo IHigher-Cost Areal 99,252 496,260 374,676
' From Table III-4
Y Per-HOUSehold Average Annual Income x 5 units per prototype.
' 75.5% x Per-Prototype Ave~age Annual Househdd Income
Source. HR&A
The nea~t Chapter analyzes the types and amount of employment needed m pubhc sector
orgaruzations and pnvate sector busmesses to meet the demand from annual consumphon
spendmg by the five households m each prototypical new market rate multi-fanuly development
:Gew;Llulh-Famrly Derelopmenh4rfordable Housrng \exus page 27
Hamrlton, Rabrnowtz & Alschuler, Inc July 7, 1998
N. TAF. CONSUMPTTON-RELATED EMPLOYMENT
AND EMPLOYEE AFFORDABLE HOUSING IlVIPACTS OF
NEW MARKET RATE MULTI-FAMii.Y DEVELOPMENT
T}us Chapter descnbes how the IlvfPLATi input-output model for the economy of Los
Angeles County was used to estimate the total empioyment ~mpacts of consumpnon-related
spendmg by households m typical market rate multi-family projects But, not all of these workers
are lower-mcome, and only some of these are members of households that meet the defirurion of a
"low-mcome"-- ~ e, earrung up to 60 percent of the Los Angeles County median mcome, or about
$25,000 per year for a two-person household Denvuig the subset of households meetmg these
cntena was accompl~shed usmg the Public Use Ivbcrodata Sample (PUMS) for Los Angeles
County, a spec~altzed scientific sample of 1990 census data Tlus Chapter describes the PiJMS
data set and how it was used to denve the estunates of the affordable housmg needed to
accommodate employees whose~obs result from consumpt~on expenditures by households m new
market rate mulh-farruly developments m Santa Monica
A. MARGINAL EMPLOYMENT IMPACTS GENERATED FROM CONSUMPTION
EXPENDITURES BY HOUSEHOLDS IN NEW MARKET RATE MiTLTI-
FAMILY DEVELOPMENTS IN SANTA MONICA
1. Overview of Input-Output Modeling and the IMPLAN Model
Input-output analys~s is a method for understanding the econonuc mteractions witlun an
economy, both between busmesses and between busmesses and consumers It captures all
monetary market transact~ons for consumption m a g~ven penod of t~me The resulhng
mathemat~cal formulae can be used to measure the effects of a change m one or more econonuc
act~v~t~es on an ent~re reg~on, includmg the output, mcome and employment impacts of a plan,
policy or level of new mvestment It measures not only the total amount of impact, but also the
pamcular sectors ofthe economy m wkuch the change exerts the most mfluence
In form, an mput-output model resembles a giant matnx, or spreadsheet, composed of
three d~stmct tables
Input-Output Table The mput-output table (or flow of transaction table) estabhshes the
relat~onslups between each mdustry and ~ts suppl~ers, or between a household and the
producers of household goods and servtces In cons~sts of a table of all of the output sales
by each sector to ttself and al] other sectors, mcludmg households, and of all the mput
purchases made by each sector from ~tself and every other sector, agam mcluding
:~~ew!l4ultr-Famrlv Development-djjordable Housrng;l exus Page 28
Hamtlton, Rabrnovrtz 8• Alschuler, Inc Julv 7, 1998
Employment and Employee Housin~ Impacts
households "Inflows" of goods and serv~ces needed by an mdustry (i e, the purchasmg
sectors) are the matnx columns and the rows consist of the "outputs", or sellmg sectors
Techracal Cost Coe~crent Table. Tlvs ~s denved from the input-output table Each cell
m a purchasmg sector (~ e, a matmc column) represents the dollar value of the mput from
a sellmg sector (i e, matri~c row) that goes mto the production of a dollar's worth of
output m that particular purchasmg sector
Inver.re Matrex T}us is derived from the teckuucal cost coefficient table usmg matnx
algebra Each cell in a purchasmg sector md~cates the dollar value of the total change m
the sellmg sector that is needed to meet a dollar's worth of change m the purchasmg
sector's output, after the entire economy has ad~usted to the irutial change Because most
mverse matnces are denved from dollar flow tables, total impacts computed from the
matnces are expressed m dollar terms If, on the other hand, the tables are based on
physical labor mputs, the values are expressed m terms of~obs
The combmation of these three tables makes ~t possible to deternune w}uch sectors of an
area's economy are affected, and by how much, when a dollar's worth of change, or "final
demand;' such as new household spendmg, ~s added to a particular sector or sectors of the
economy Input-output models are used throughout the world Most such models created m the
U S are based on the trade flow relationstvps contained in the input-output model created for the
national economy by the Bureau of Econormc Analysis'o
Although they are very powerful and w~dely used analysis tools, there are some important
l~m~tat~ons to mput-output models that should be kept m mmd when evaluatmg the model results
First, the mter-mdustry relationships on which they aze based necessanly denve from kustoncal
expenence that may no longer be accurate for the cunent economy, part~cularly when the
economy has been subjected to profound changes like those ofthe past decade Second, the
mput-output model ~s a snapshot of the econonuc performance of an area, when in real~ty, a local
economy ~s m a constant state ofreaction to internal and external changes
IlvIPLAN (IMpact analysis for PLANmng) ~s one w~dely used input-output model used
across the nation to assess the econoiruc impacts of programs, poltc~es and pro~ects IlvIPLAN
was ongmally developed by the U S Forest Service, the Federa] Emergency 1Vlanagement Agency
and the Bureau of Land Management to assist m federal land and resource management planning
It has evolved from a mamframe, non-mterachve appl~cation that ran m"batch" mode to a menu-
;~ Sez generall}~, U S Dept Of Commerce, Bureau of Econonuc Analys3s, The 1982 Input-Output Smecture
ujthe L' S Econom}:, Waslvngton D C, 1992 Annual mpu6output tables are published bv BEA
:'~'ex•,Nukr-FamelvDevelopment-AffordableHousrng:~'erus Page 29
Hamdton, Rabenovr¢ & 4lschuler, Inc July 7, 1998
Em~layment and Employee Hous:n~ Impacts
dnven rmcrocomputer program that is completely mterachve " The data used m the IMPLAN
models denve from the economic censuses prepared by the U S Bureau of the Census and
vanous BLS stud~es Models were created for the natioq each state and counties wrttun states,
all of wluch are internally consistent and controlled to the nahonal economy National-level data
are ad~usted with state- and county-specific data to tailor the trade flow assumpt~ons to each azea
Employment data aze denved from repoRS provided by every county and state to the Bureau of
Labor Statist~cs as part of the national unemployment insurance program operated by the states
These data mclude average annual wage and salary mformation, establ~shment counts, employee
counts and payrolls Other data are used to account for employees who are not covered by
unemployment msurance (e g, self-employed persons)
Today, IIviPLAN ~s used for the preparation of econorruc unpact analyses by many publ~c
and pnvate agenc~es, mcludmg the Califorrua Department of Fmance Locally, u has been used,
for example, to estimate the economic impacts of a major hosp~tal campus reconstruct~on plan,'Z a
profess~onal hockey and basketball stadium proposed for a site ad~acent to the Convention Center
m the Los Angeles Central Busmess Disinct,33 a plan to add 10 million square feet of new office
and other commerc~al development azound Umon Stanon," and Uruversal Studios' proposal to
mcrease the mtensity of development at Uruversal City, home of Umversal 3tud~o Hollywood,
CityWalk and the world headquarters of tiruversal's film and televis~on producuon facdmes35
The IMPLAN model ~s s~milar to RIMS II, another populaz input-output model developed
by the U S Bureau of Econocruc Analysis, in terms of rts basic structure, avadab~Lty at the county
scale of geography, and data sources The pnncipal difference is that IlVIPLAN is a
31 Mtnnesota 1MYLAN Group, I.~t1PL4:~'Projessional, Social.~ccountrng & ImpactAnalvs~s Sofhvare, 1996
" Haaulron. Rabmovitz & Alschuler, Inc , Estrmates oJthe Economac and Taz Revenue Impacts of the Sa~nt
John's Heakh Center and the Health Center's Campus.44asterPlan, November 17, 1997
33 Pnce-1d%aterhouse, Econom~c and Fiscal7mpactAnalvses for the Proposed Los Angeles Arena, prepared
for the Commwun' Redecelopment Agenc~~ of Ihe C~R~ of Los Angeles, Oc[ober 1996
34 Ham~lton, Rabmocuz & Nschuler, Inc , The Employment. Housrng and Popula~eon Impacts of the
Alameda Drsmcr Plan, 199~ Tlvs Report is a Teclw~cal Append~x to the pro7ect's Fina] Emvonmental Impact Report,
w~lvch w~as cerUfied b~~ the Los Mgeles Cin~ Council m 1996
35 Hanul[on, Rabmov~tz 8r. Alschu(er, Inc , The Economrc and Frscal Impacts of the G'nrversal C~ty Specrfic
Plnn. Draft, December 1996 Data from tkvs analys3s was also used m HR&A's analyses of the emplo~snent, housmg,
population and publ~c schools unpacts of the pro~ect, u•h~ch are mcluded as Tecluucal Appendices [o the pro~ect~s Draft
EIR no«- m pubhc recieu-
Neu;LlulG-Famrlv Development-AJJardable Hous~ng.~eeus Page 30
Hamrlton, Rabmowtz & Alschuler, Inc 7ulv 7, 1998
Rewsed Indusionary Hous~ng Program
for the Crty of Santa Monica
The lughhghted values shown m Tables 3A and 3B md~cate the fee amounts that could be
charged without causmg the fee to consritute a"govemmental constraint" w~tlun the mearung of
State housmg element law These results indicate that there are different tolerances for an
affordable development fee, dependmg on the product type (condommiums vs apartments) and
azea of the C~ty (e g,"}ugher-cost/value" azeas north of Wilsture and in Ocean Pazk vs all other
areas of the City) More specifically, the fee could range from four to eight dollazs per squaze
foot for condomimums, and five to six dollars per squaze foot for apartment pro~ects, without
crossmg our definition of a"constra~nt ° If set at these levels, typical pro~ects m wluch all of the
umts are market rate would be assessed fees as shown m Table 4, on the following page
For a one-lot apartment pro~ect, the constramt-detemuned $5-$6 per square foot fee range
~s equal to about two-tlurds (68%) to over three-quarters (81%) of the fee that is now m effect for
a low-mcome umt, although the abil~ty to pay the current fee is tughly restncted under Ordmance
1615 For a one-lot condomicvum pro~ect, the constramt-deternuned $4-$8 per square foot fee
range ~s equal to between half (54%) and ~ust over the current full fee (109%) for a low-mcome
umt
For a typ~cal five-umt apartment pro~ect, fee revenue denved vv~ttun the constraznt-
deternuned range ~s equal to about one-quarter (28%) to one-t}urd (34%) of the C~ty's subsidy
gap for a new low-mcome umt For a condoauruum vers~on ofthe same pro~ect, the constraint-
deternvned fee revenue equates to between 23 and 45 cents of each dollar of C~ty subsidy gap for
a new low-mcome umt Stated another way, ~t would take between 15 and 18 umts of market
rate apartments, or between 11 and 22 new condomimum uruts to generate enough fee revenue at
the constramt-deternvned levels to equal the average C~ty subs~dy gap needed for one new unit
affordable to a low-mcome household
Hamdton, Rab~nowtz & Alschuler, lnc page 27
April 6, 1998
Employment and EmPloyee Housin~ Impacts
For the analys~s reported here, an IlvIPLAN model of the Los Angeles County economy as
of 1996 (the latest model yeaz) was used The County is used because it ~s a functional economic
area That is, ~t is a self-suffic~ent econormc umt that mcludes most of the places where people
Lve, work and shop, most of the busmesses that supply goods and services to other busmesses,
and the travel comdors that connect businesses and consumers Although IMPLAN can be used
for smaller geograptuc areas, such as the C~ty, domg so would not capture all of the uade flow
relat~onslups of consumer spendmg by households m new market rate mult~-farruly developments
IMPLAN Estimates of Marginal Employment Impacts
As noted m Chapter III, the U S Bureau ofLabor Stat~st~cs ("BLS") sponsors the
Consumer Expend~ture Survey program The surveys, conducted for BLS by the Bureau of the
Census, track the buymg habits of Amencan consumers through its Consumer Expenditure
Survey These are the same surveys that are used, m part, to establ~sh the Consumer Pnce Index
The survey program has two components The first ~s an mternew pane] survey m which the
expend~tures of consumers are obtamed dunng five mterviews conducted every three months
The second ~s a diary completed by pamcipatmg households for two consecutive one-week
penods, w}uch tracks expenditures on small, frequently purchased items w}uch aze not always
captured prec~sely in the mterviews The two surveys query mdependent samples of consumers
that are representanve of the national populaUon Data are collected m 88 urban and 16 rural
areas of the country Data from the two surveys are then mtegated, and aze reported for various
geograptuc areas of the nat~on, mcome group and other charactenst~cs
The IMPLAN model rel~es on these data and translates the BLS data's consumer umt
values mto household values, usmg U S census and other data IlvfPLAN provides impact data
for three household mcome categones 1) low-mcome (less than $20,000), 2) r[uddle-mcome
($20,000-$SQ000), and 3) tugh-mcome (over $50,000) Because the average household mcomes
m new market rate mult~-facruly developments m Santa Moruca al] exceed $SQOOQ the "high-
mcome" consumption expend~ture pattems in the Il~LAN model were used
Entenng the esumate of total per-prototype household consumpt~on expendrtures mto the
IMPLAN model, usmg the }ugh-mcome household expendrture d~stnbution pattem, results m
est~mates that the consumpt~on expenditures by upper-mcome households in typ~cal new mazket-
rate mulh-family developments m Santa Momca generate between 3 7 and 5 5 total workers,
pnmanly m the retatl trade and services sectors of the economy Table IV-1 shows the
d~stnbution of direct, md~rect, mduced and total employment, by ma~or mdustry categones, for
Prototype #2 (apartment-higher-cost area), as an example
A~ewblult~-FamilyDevelopment-Aff'ordable Housrng \'exus Page 32
Hamdton, Rabrnovrtz 8•.9lschuler, Inc 7uly 7, 1998
Employment and Employee Houstn~, Impacts
Table IV-7
DISTRIBUTION OF EMPLOYMENT RESULTING FROM
HOUSEHOLD CONSUMPTION EXPENDITURES IN LOS ANGELES COUNTY,
MARKET RATE MULTI-FAMILY PROTOTYPE ~C2 (APARTMENT-HIGHER COST AREA)
Direct Indirect Induced Jobs Totd
Ma~orlndusny Sector Jobs Jobs Jobs'
# % # % # % # %
Agnculture & Min~ng 0 01 0.2 0 01 1 3 0 01 0 4 0 02 0 4
Construcdon 0 00 0 7 0 06 8.2 0 02 1 6 0 08 1 6
Manufactunng 0 11 3 8 0 05 7 6 0 06 4 5 0.21 4 5
Transp /Commun /Utd 0 19 6 7 0 09 13.4 0 10 8 7 0 38 8 0
Wholesale Tratle 0.04 1 4 0.00 --- 0 Ol 1 O 0.05 1 1
Reta~l Trade 1 12 39 5 0 04 5 8 0 41 32 9 1 57 33.0
Finance/Insur./Real Est 0 14 5 1 0 12 17 6 0 09 7 5 0 36 7 5
Se~vices 1 02 35.9 0 28 A1 8 0 47 37 8 1 77 37 3
GovemmeM 4,21 7,3 0.03 4,3 0.08 6.2 0.31 6.6
Total' 2.83 100 0 0.68 100.0 1.25 7 00 0 4.76 100 0
' Totals may not sum preasely due to independent rounding
--- = Less than 0.01
S^~~~CB~ HR~A
The proportaons of employment by mdustry aze consistent across prototypes, the number
of employees per industry vanes with the amount of consumption spending, as summanzed m
Table IV-2 More deta~led results from the IlvfPLAN model are mcluded in Appenduc A
\~ew:tAultr-FamiJvDevelopment-AffordableHous~ng.~'exus Page 33
Hamrlton. Rabmovitz & Alschuler, Inc 7ulv 7, 1998
EmPloyment and Employee Hous~n8lmpacts
Table IV- 2
TOTAL EMPLOYMENT DEMAND RESULTING FROM
TOTAL HOUSEHOLD CONSUMPTION EXPENDRURES IN
FOUR PROTOTYPICAL MARKET RATE MULTI-FAMILY DEVELOPMENTS
IN THE CITY OF SANTA MONICA
Prototype Per-Rototype Direct Indirect Induced Total
Average Annual Employees Employees Employees Employaes'
Consumption
Expenditures '
Apt -- Lower Cost Area 5253,066 2 23 0 533 1.00 3 74
Apt -- Higher Cost Area 5327,569 2 83 0 68 7 25 4 76
Condo -- Lower-Cost Area S292,699 2 57 0 62 1.14 4 33
Condo - Higher-Cost Area 5374,676 3 30 o 79 7.46 5 54
AVERAGE S310,503 2 73 4 65 7 27 4 59
' Fram Chapter III, Table III-6 .
~ May not sum precisely due to ~ndependent rounding
Saurr.es Minnesota IMPI_AN Grouo~ HR&A
B. MARGINAL AFFORDABLE HOUSING IMPACTS GENERATED FROM
CONSUMPTION EXPENDITURES BY HOUSEHOLDS IN NEW MARKET
RATE MtiLTI-FAMILY DEVELOPMENTS IN SANTA MONICA
1. The Public tise Microdata Sample From the 1990 U.S. Census
The decemual U S Census of Populahon and Housmg mcludes both published summary
data and pubLc use microdata on computer tape The summary data are the most widely used
verston of census mformatioq but their usefulness in analysis ~s hnuted by the fact that they
mclude d~screte charactenst~cs of a particular geographic area It ~s not poss~ble to denve subsets
of the data beyond those that are atready publ~shed For example, the publtshed data provide the
mformation about the numbers of households who fall Nntlun various mcome ranges, and the
distnbut~on of workers among sectors of the economy and occupational categones, but It ~s not
poss~ble to denve the number of low-mcome workers m a specific sector or occupat~on from the
publ~shed data
PUMS data, on the other hand, allow for cross-tabulations of one census vanable by any
other census vanable, because the bas~c urut of data is a household and its occupants The PUMS
data are drawn from a five-percent sample of households who completed the long-form (~ e,
A~ew ,Lfuln-Family Developmenh 9Jfordable Housrng _\~exus Page 34
Ha»ulton, Rabrnovrtz & Afschuler. Inc July 7, 1998
Employment and EmPloyee Hous~n~ Impacts
detailed) census questionnaire Ttus mcludes a detailed categonzanon of the mdustry sector in
w}uch each employed member of the household works Data are reported for geograpluc areas of
about l OQ000 population each " For this analysis, HR&A used a summary set of PUMS data for
Los Angeles County to match the geographic extent of the IlvIPLAN employment esrimates The
pnncipal lurutat~on of the PLTMS data ~s that, l~ke all census data, It becomes available only at ten-
year mtervals
Estimating the Number of Low-Income VVorker Households
The total employment demand generated by consumpt~on spending m new mazket rate
multrfamdy developments m Santa Momca, as presented above, mcludes workers at al( ~ncome
levels Because ttus analysis seeks to determuie the connection between such developments and
the need for housmg affordable to low-mcome households, rt~s necessary to deternune what
portion of all such workers fall witlun tlus mcome category Tlus requires a two-part analys~s
usmg the PUMS data
Fust, the percentage of low-income households was estimated using the 1990 PLTMS data
for Los Angeles County The IlvIPLA1V employment estimates were sorted to idenhfy the 58
sectors (out of a total of 528 IIvIPLAIV sectors) that account for almost 92% of all household
consumption unpacts A crosswalk between the mdustry categones used by the IMPLAN model
and the mdustry categones used by PLJMS was developed to identify workers m the PUMS data
(and their households) who were employed m the 58 most affected sectors 38 A vanable that
~dennfies workers employed m any of the 58 sectors was created m the Pi1MS data so that the
affected workers and households could be further analyzed
Because the household mcomes reported m PIIMS were current as of 1989, the year
precedmg the Census enumerahon, a household mcome ad~ustment was requ~red to bring the
mcome data mto conformance w~th current Santa Mocuca "low-mcome" thresholds, wtuch vary
by number of persons per household " An evaluatwn of inedian famIly mcome estunates used for
" Because Santa Momca's 1990 populanon fell .chort of tlus tlueshold, its PLTMS data is combmed u~th that
for se~~eral other coastal and Sauta Momca Moun~ams commumGes rendenng It less useful for analys~s than larger
populapon centers
'° The PUMS data used an industty classdicauon numbermg system that cocresponds with the mdustry
numbenng sestem m the QvfPLAN model, both of wluch are based on the U S go~~emment's Standard Industnal
Classificarion (SIC) s's[em The correspondence behveen thz U S Census (~ e, PiJMS) classificahon s}•stem and the
IIvfPLAN mode]'s sestem is sho~~n ~tt the first hao colmnns of the IIvIPLAN emplotmrnt estunates m Append~x A
" The Citp's tlvesholds for FY 1997-98 ~aere up to $21,546 for a one-person household. up to $24,624 for a
ncn-persnn household, up to $27,702 for a threz-person household. and up to $30,780 for a fow-person household
:~'e.vA9ulh-Fam~lvDevelopment-AffordableNous+ng:'lexus Pagc 3~
Hamekon, RabrnovJ¢ & Alschuler, Inc July 7, 1998
Employment and Employee Housrng Impacts
means tesring m many federal programs indicated that the 1989 mcome figures from PLTMS
should be mcreased by 26 percent m order to appro~mate 1996 mcome levels 40
The ad~usted household income values for workers m the 58 industry sectors affected by
consumption spendmg m typical new market rate muhi-family developments in Santa Moruca
were then arrayed agaznst Santa Moruca's low-mcome housing qualificahon thresholds
Tabulatuig the results of the companson between ad~usted household mcome and the quahfymg
thresholds shows that approximately 17 percent (16 74%) of all workers in the 58 affected
mdustry sectors are members of lowancome households Th~s percentage was applied to the total
employment estimates presented m Chapter IV to calculate the number of low-mcome workers m
those mdustnes that are affected by consumption spending from households m new market rate
mulh-fatruly developments m Santa Moruca The consumption-related spenduig by households m
the four prototyp~cal five-umt apartment and condocruruum developments generates demand,
therefore, for between two-tlurds (0 63) and one (0 93) low-mcome worker, as shown m Table
N-3
"" Income Stahshcs BrancL/f~II-IES D~rision. U S Bureau of the Census, U S Depaitment of Couunerce,
3ledean Income for 4-Person FamiGes, By Smte, Februam 26, 1998
:\~ew!l4uld-Famdv Development-djjardable Housmg Nexus Page 36
Hamrlton, Rabrnowtz & Alschuler, Inc Julv 7, 1998
Emplayment and EmPloyee Housm$ Impacts
Table IV3
DERIVATION OF LOW-INCOME WORKER DEMAND RESULTING FROM
TOTAL HOUSEHOLD CONSUMPTION EXPENDITURES IN
FOUR PROTOTYPICAL 5-UNIT MARKET RATE MULTI-FAMILY DEVELOPMENTS
IN THE CITY OF SANTA MONICA
Prototype Per-Prototype Per-Pratotype Total Low-Income
Average Annu~ Averege Annual Workers' Workers "
Household Consumption
Income' Eupenditures'
Apt -- Lower Cost Area 5335,189 5253,068 3.74 0 63
Apt -- Higher Cost Area 5425,919 5321,569 4 76 0 80
Condo -- Lower-Cost Area 5387,687 5292,699 4 33 0.73
Condo - Higher-Cost Area 5496,260 5374,676 5 54 0 93
AVERAGE 5411,263 5310,503 4 59 0 77
' From Chapter III, Ta61e III-4
' From Chapter III, Table III-6
' From Chapter IV, Table IV-2
` Total Workers x 16 74%
s^~~~=P. HR$A
Not all low-income workers are necessanly members of low-mcome households The
ne~ct step m the analysis, therefore, was to estimate the number of low-mcome households
assoc~ated w~th these low-mcome workers, because mxny households are supported by more than
one worker Tabulations of the PUMS data show that households w~th low-mcome workers m
one of the 58 most affected sectors contam, on average, about 2 4 workers (2 363) The number
of new low mcome ho:~seholds ~s estimated by droidmg the number of low mcome workers by t}us
factor As shown m Table IV-4, consumption spendmg by households in the four prototypical
new market rate mult~-family pro~ects m Santa Monica creates demand for beriveen one-quarter
(0 27) and one-t}urd (0 39) low-mcome worker household
\~ew _L1ulp-Fam~ly Development-a,rfardable Hous~ng \`exus Page 37
Hnmilton, Rabinowtz & AJschuler, Inc July 7, 1998
Employmenr and EmPloyee HousrnS Zmpacts
Table IV-0
DERIVATION OF LOWaNCOME WORKER HOUSEHOLD DEMAND RESULTING FROM
TOTAL HOVSEHOLD CONSUMPTION EXPENDITURES IN
FOUR PROTOTYPICAL 5-UNIT MARKET RATE MULTI-FAMILY DEVELOPMENTS
Prototype Per-Prototype Total Low-Income Lowancoma
AverageAnnual Workers' Workers' Worker
Household Households
Income
Apt -- Lower Cost Area 5335,189 3.74 0 63 0 27
Apt - Higher Cost Area 5425,919 4 76 0 80 0 34
Condo -- Lower-Cost Area 5387,681 4.33 0 73 0 31
Condo - Highei-Cost Area 5496,260 5 54 0.93 0.39
AVERAGE 5411,263 4 59 0 77 0.33
' From Chapter III, Table III-6
' Fiom Chapter III, Table IV-2
' From Table IV-3
` Low-Income Workers divided bv 2.36 low-income workers cer household
Sourr.e. HRRA
Each of these households, by defimtion, requues a conesponding fraction of a umt of
housmg at a pnce w~tlun their means, as defined by federal, State and C~ty housmg programs
The cost to the C~ty of providmg these umts, and what ttus unplies about a fee that may be
charged developers of new market rate mult~-fairuly developments to offset ttus cost, are
discussed m the ne~ct Chapter
Veu b4uln-Famrly~ Development-AJjordable Housrng \~exus Page 38
Hamrlton, Rabrnovrtz & Alschuler, Jnc Juh~ 7, 1998
V. ESTIMATING JUSTIFIABLE DEVELOPMENT FEES
Chapter IV presented est~mates of the margmal demand for affordable housmg caused by
the consumption spendmg from typical new mazket rate multi-family developments The cost of
producmg t}us much affordable housmg, takmg mto account any other fund sources that aze
reasonably foreseeable, is a basis for amvmg at a reasonable development fee, as presented tn this
Chapter
A. THE CTTY'S SUBSIDY GAP TO DEVELOP RENTAL UNITS AFFORDABLE TO
LOW-INCOME HOUSEHOLDS
The C~ty of Santa Momca has generally relied on non-profit, commumty-based
development orgaruzations to develop units m the City that aze affordable to lower ~ncome
households The process is comphcated by the need to merge a vanety of public and pnvate
funding sources and a bewildenng rrux of regulat~ons and procedures that accompany each source
of fiindmg, wluch are sometimes m conflict with one another Further, these projects must be
camed out m the same real estate market environment as for-profit pro~ects
Development and Operating Costs
The cost of developmg affordable umts through non-profit developers is, m general,
somewhat less expensive than the cost of producmg for-profit housmg, but not much less The
reasons the savmgs may appeaz less than the "non-profit" status of the orgaruzation may mitially
suggest mclude
Multi-layered Frnancmg The layered subsidy, debt and equrty structure used in the non-
profit housmg product~on process -- wrth four to six fundmg sources per pro~ect not
uncommon -- allows rents to be maintained at levels deemed "affordable" to lower-income
households However, packagmg these resources ~s techrucally complex, tune consurrung,
costly, and can result m mefficient cho~ces about pro~ect size, unit mix and des~gn
Transact~on costs, particularly the cost of arranging for eqwty contnbutions through the
Federal Low Income Housmg Tax Cred~t program, aze expensrve
Accommodatrng Numerous Pubkc Ob~ectaves Non-profit development pro~ects, because
of the~r pubhc nature, typ~cally mvolve more tune consurrung plaruung and approval
processes (e g, ne~ghborhood design workshops), are somehmes held to a tugher (and
more costly) standard of des~gn, mcur umque development costs (e g, payment of
prevaihng construct~on wages) and often provide a}ugher level of budding management
.1`ew.~9uln-Familv Development.9ffordable Housrng:'~exus Page 39
Ham~lton, Rab~novitz 8- Alschuler, Inc Juh' 7, 1998
Jusn~iable Development Fees
and tenant sernces than is typical of pnvate pro~ects
Yet, non-profit pro~ects compete for land and buildmgs m the same real estate mazket, and
have to pay about the same costs for numerous professtonal services (e g, ardutects and
engmeers), as the pnvate sector
Affordable Housing Funding Resources
Contrary to the s~tuahon m the late 1980s and early 1990s, there are today only very
licruted sources of fundmg for erther new construction of affordable hous~ng, or the acquisihon
and rehabil~tation of existmg buildmgs to mamtain them as affordable housing Funds to develop
affordable housmg m Santa Moruca generally come from three sources
Loans Supported By Affordable Tenant Renis Affordable housmg pro~ects typically
produce enough net operating ~ncome to support a modest mortgage, wluch is usually
obtamed from a bank or an mtermed~ary ~nstitution at below-market rates (e g, about one
percentage pomt below conventional permanent loans for apartment buddtngs, or about
7 QO% today) The max~mum loan amount is a function of the average affordabil~ry level
of the tenant households, wluch dictates the ma~c~mum rent they are considered able to pay
under Federal, State and Crty guidelmes,41 and the typical costs of operatmg the building
(e g, adrrurustrat~on, mamtenance, property ta~ces, an allowance for rent collect~on losses),
plus a reserve for operating losses and buildmg systems replacement The inwme side of
the ledger is therefore constrained by tenant affordability l~rmts, and the cost s~de of the
ledger ~s generally lugher than m pnvate development, because non-profit developers tend
to provide a lugher level of sernce to tenants, and are required by pubhc lenders to
mamtam lugher reserves, than ~s typ~cal in for-profit pro~ects Thus, the amount of net
operatmg mcome (gross mcome aunus operatmg expenses and the losses allowance)
avadable from an affordable housmg development can only support a relatrvely small loan,
even at below-market interest rates
The Federal l.rnv-Income Housing Tax Cred~t About the only remazrung ~on-City pubhc
fundmg resource for affordable housmg is equrty ra~sed through selhng tax credrts to
"' Federal, State and City~ laws and pol~c~es define threz household wcome categones that ment special
housmg assistance ~~erv ]ow•-mcome households (eaznng ucider ~0° o of the Los Angeles County Med~an Familv Income
(IvIFI)), loµ~-mcome households (51 %-SD% x MFI, dependmg on the program) and moderate-mwme households (81 %-
120 % x MFI, dependmg on the program) These mcome [hresholds, coupled w~th a Federal standard that a household
should not pat' more than 30 percent of ~ts mcome for housmg costs, the Los Angeles County MFI, w}uch is nd~usted by
the Federal govenunent each }'ear and a C~h calculaUOn that concerts household s¢e to umt s~ze, is the basis for
establislung maximum affordable rents and forvsale housmg puichase pnces each yeaz
A'eu~.ilultr-Famrly Devefopment-4ffordab/e Housrng,\exus Page 40
Hamtlton, Rabrnovrtz & Alschufer, Inc JuIV 7, 1998
Hemilton, Febmovi4 & Alschuler, Inc Qty af 3an~ Monica
8aso Case for Mingation Fee Sen~[rvity Test on 3-Lo[ fl2 Dietnct
Apar[ment wrthout Incluaionary Houeio9 Heqmremeal, Lerge lot, FNOher-Pnced Area
ASSUMPTIONS, PART 2- SCENARIO 12-A
LAN~
Amount
Land Cos - Wgh~ PricedMeas ($PSF) E70
Land Cost - Lower Pnced Neas ($PSF) NA
DEV0.0PMENT PARAMEfEFS (NIC FINANCING)
No of
1/98$ Stert Start Querters
Budgg puarter Veer to Spread
Demolrtion 20,000 1 1999 1
Pre-~evdopment StudiesjAnelysis 15,000 1 1998 4
ArchiOectural & Enginaering (5% Hard Costs) 82,963 1 1998 8
Plan Check/Bldg Peimrte/City Faes/Assess 142,758 4 1998 1
Ott-5ite Reqwrements 162,735 4 1999 1
In-Lieu Fae 0 4 1998 1
ConsUBudd-OuUOn-SRelmprov(576/538PSFBIdg) 1,627,345 1 1999 4
Testing end InspecGOns 7,500 1 1899 4
Conslructron Periormance Bond (t 5%~onsn 24,410 1 1999 1
RealEstateTaxesDunngCOnstruclion 16,065 1 1999 4
Cons[ruc[ion Insurance ($4PSFlYR) 68,355 1 1999 1
Survey/rille Insurance Qand Take-DOwn @ Start oF Consl) 15,000 1 1999 1
Legal, Consultirg, Acdng, Admin 20,000 1 1998 11
MarketngendAtlvertising 10,000 3 1999 4
Constmctqn Cantingancy (10% Const) 165,926 4 1999 1
Pro~eCt Mgmt (50%Co~s NICLand~Financing & Tan~) 118.099 1 1999 7
FINANCING pAFiAMEiERS
Amount
ConstructionLoen Funding - Apts (%ot PBrm Loen Amt) 100%
Cons[ruction Loan Funding - Contlos P36 of Pro~ecled Value) NA
Con~ruchon Loan Fees (%) 1 5%
Construction Loan Inle~est ReRe (%) 9 5%
Condo VelueNnlt - Lowar Pnced Area NA
Condo ValueN~~t - Higher Priced Area NA
Consruct~on Lcen Amount - ConAOS NA
Permanent Loan, Apts
M mimum Debt Coverage Raao 1 15
Meuamum Loen b Value -LN (Ro~ected) 75%
Interest Rete (%) B 0%
Amort¢atwn Term 30
Cap Rate B 0%
Fund~ng Year 2000
Fundmg Qusrter 4
ECONOM IG PARAM EfERS
Amamt
Apartment Value
N01, Apta (95% Occup less op wcpenses) 5489,587
ValueBased on Cap Rate Approach 55,494,842
Value Baeed on Cmstruciwn Costs $4,613,111
Stabd¢ed Value (Cap Rate and OFM) 55,494,842
ConstructanLoenAmouniQ5%LT~ E4,121,131
Permanen[ Loan Amourt -
Lesser of DSC or 75%LTV ~ $4J 21,131
Annual InNat~on Ra[e - Rents, Costs, Expensas 3 0%
Annual Infiatlon RaQe - Roperty Tax~ 2 0%
Condo Sales Transac[ion Costa NA
Cash on Cesh ReNrn Threrhold 15%
Oevebper Contribuhon ot Equity (%) 100 0%
Cash Flow from Operalions to Developer (%) 100 0%
Max Axeptebla Residuel Lend Valuo Raduction 150%
Page 4
Run1 01-Feb-98
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Jushfiable Development Fees
Tabie V-1
PER-UNR NEW DEVELOPMENT SUBSIDY GAP FOR VERY LOW- AND LOW- INCOME HOUSEHOLDS,
CITY OF SANTA MONICA, 1998
(includes blend of 2- and 3-BR units and a blend of high and low land prices)
Calculation Component Very Low-Income Low-Income
(50% x MFI) I60% x MF1)
Development Cost (Rangel'
5782,920 - S274,901 5782,920 - 5274,901
Pretlictable Debt/Equrty
Contnbutions (Range)
4% Tax Credts' 537,512 - 548,528 NA
Bank ~oan' S28.396 - 538.977 549.63R - 561 .426
Total 565,908 - 87,505 549,638 - 561,426
Development Subsidy Gap IRange)
5116,984 - 5187,433 5133,044 - 5213,844
Development Subsidy Gap
(weighted averegel° S 134,822 S 154,916
' Includes land, construct~on, professional fees and const~uction financing costs
' Through sale af tax credrts assigned via compennve apphcanon for Fetleral Low-Income Housmg Tax Credrt
Progrem
' Below-market rate loan through tax-exempt finanang for the 50% x MFI unrts; convent~onal loan for others
` Refer to calculation details in Appendix 6
Sourr.e. HRRA
The 60 percent of ined~an scenazio m Tabie V-] does not ~nclude the four percent ta~c
credrt, because the City ~s unhkely to pursue t~ credrts for a taa~-exempt pro~ect m w}uch all of
the umts rent at exactly the 60 percent-of-med~an level If it d~d, the weighted average City
subsidy gap would decline to $112,988 (~ e, by the amount ofthe add~tional tax credit)
Accounting for tenant-supportable debt and assumpt~ons about the most hkely mix of units s~zes
and Crty submarket areas where new affordable housmg would be constructed, ~t is estimated that
the average Cny finanaat contnbution, or subs~dy, to produce an affordable urut is about
$155,000 Usmg t}vs value is part~cularly appropnate because evidence is begmmng to show that,
w~th the improvmg real estate market and other pressures, such as partial decontrol of rents w~th
full implementanon of the Costa-Hawluns Rental Housmg Act, land costs aze begmrung to nse
above the assumptions used m the above modeling work
,\~ew :t1ulA-Family Development-dffardable Hous~ng \`erus Page 43
Hamrlton, Rnbmow¢ &.9lscharler, Inc July 7, 1998
Jusb frable Development Fees
B. NS'ITI~IABLE DEVELOPMENT FEES
Mulhplymg tlvs average per-urut subsidy amount by the number of affordable houstng
umts needed to meet the consumpt~on demands of new market rate mult~-family developments
yields the fee amount that could reasonably be chazged to the developer to offset the Ciry's costs
Tlus fee amount can also be expressed as a funct~on of the gross floor area of a typ~cal new
market rate multi-facruly development, as shown m Table V-2 A more detailed summary ofthe
cham of calculahons m the neacus analys~s is mcluded as Appendix C
Table V-2
DERIVATION OF A DEVELOPMENT FEE TO UFFSET THE AFFORDABLE HOUSING DEMAND
CAUSED BY TOTAL HOUSEHOLD CONSUMPTION EXPENDITURES
IN FOVR PROTOTYPICAL 5-UNIT MARKET RATE MULTI-FAMILY DEVELOPMENTS
Prototype Par-Prototype Umts of Total Fea Amount
Averege Annual Low-Incane Fee Per Gross
Consumption Housmg Amount' 5qu~s Foot `
Expenditures' Damend'
Apt -- Lower Cost Area 5253,068 0 27 541,090 S5 41
Apt -- Higher Cost Area 5321,569 0 34 552,215 S6 87
Condo -- Lower-Cost Area 5292,699 0 31 547.525 S6 26
Condo - Higher-Cost Area 5374,676 0 39 560,835 SS Oi
' From Chapter III, Table III-6
~ From Chapter IV, Table IV-4
' Low-Income Housmg Demand x$154,916 Ithe City' s average subsidy costl
' Total Fee Amount drvided by 7,595 gross square feet per typical market rate multi-fami ly development
Source. HR&A
Cons~denng that the analysis ~s based on reasonable est~mates of the affordable housmg
demand generated by prototypical new market rate apartments and condomvuums, assumes that
all households res~dmg m each protoTyp~ca] pro~ect's dwellmg uruts exhibit average income and
spendmg arcumstances, and that there aze pockets of lower-cost azeas and }ugher-cost areas in
each C~ty submarket area, u would be appropriate for the Affordable Housuig Production
Program fee to be based on an average of the jushfiable fees for each product type The average
ofthe~ust~fiable fee for the two apartment prototypes is $6 14 per gross square foot for new
market rate apaRment developments, and $7 13 per gross square foot for new market rate
condorruruum developments
~bew.Llulh-Fa»~~ly Development-Affordable Housing:~~exus Page 44
Hamelton, Rabznovrtz & Alschuler, Inc Julv 7, 1998
Jushfiable DeveloPment Fees
Because the calculation ofthe fee is a d~rect function ofthe per-prototype average annual
consumption expend~tures w}uch, m turn, is a function of the household income calculation and
the housmg cost-to-mcome rat~o on wluch that calculation rests, a d~fferent fee level would result
from alternatrve rario assumphons For example, ~f the apartment rent-to-mcome rat~o ~s assumed
to be equal to the 35 percent factor used for condommiums, the apartment fees would increase by
$0 31-$0 39, or to an average of $6 49 per gross square foot (+$0 33) If on the other hand, the
housmg cost-to-mcome ratio for both the apaRment and condomuuum were modified to meet the
housmg poUcy goal of 30 percent, the average apartment fee would mcrease to $7 58 (+$1 43)
and the average condotrumum fee would mcrease to $8 32 (+$1 19) For the reasons presented m
Chapter III, however, HR&A beheves the ratios that underhe the results m Table V-2 are the
most analytically defens~ble assumptions
These fee amounts m Table V-2 are generally consistent w~th the fee amounts that
prev~ous analys~s mdicates can be assessed such pro~ects without the fee 6ecommg a
"govemmental constramt° on new development, w~tlun the meamng of State housing element law
This analysis showed that fees on typ~cal new muket rate apaRment projects could fall witlun a
range of ~5-$6 per square foot Fees on typical new mazket rate condomuuum pro~ects could fall
wittun a range of $4-$8 per squaze foot usmg a retum on equ~ty feasibihty threshold, or between
$5 and $7 usmg a gross mazg~n retum threshold 43 Though a fee of $6 14 per gross square foot
for apartments and $7 I3 per gross square foot for condommiums, per Table V-2, could lower
shghtly the financial returns for some projects, the resultmg returns would stil] be acceptable to
enough developers to enable the Crty to actueve rts "regtonal fau share" housmg producnon
target We conclude, therefore, that Affordable Housmg Product~on Program fees set at the
average of the per-product type amounts shown in Table V-2 would not consritute a constramt on
new developme~t v~nthin the mearung of State law
"' "HR&A, -`Recammendatwns for Rev~smg the Ciri of Santa Momca's Inclusionazv Housmg Progam,"
memorandum to Santa Momca Housmg Manager Robert Moncnef, d¢ted Apn16, 1998, pp 24-28 See also
supplemental mformahon, mcludmg modelmg asmg a di$'erent fensibd~n• threshold for condommmms, datcd Apn121,
1998
A~ew.ilulh-Famdy Development-Affardable Housrng.Vexus Page 4~
Hamtlton, Rabmovrtz & dlschufer, Inc Jul}~ 7, 1998
Append~ces
APPENDIX A
Total Employment Impacts Generated By Household Consumption Eapenditures
for Four Prototypical Market Rate MuUi-Family Developments
in the City of Santa Monica
NewblultrFamrl~~Development-4Jjordable Houarng Vexus Jul}' 7, 1998
Hamrlton, Rabmovriz & Alschu[eq Inc
Nsmilbn. Rabmowh 8 Aischular. Irc CM1y d Senta Monce Run 1 01-F~b-DB
Bua Cess far MMga4on F~a Sa~sitrvdy Tas1 S-Lot R2 Do~ct
Condommmm wilhwt InclueianeryHoua~ng Naqur~~n~~t, Smdl Lot N~9~-~r~d N~a
CMITK CASH FLOW - SCENMIO 10-A
TOTAL 1D98 1889 2000 2001 2002 2003 2004 2005 2008 2007 2008 2009 2010
Sovicea d Funds
CoretuchonLoenOrava a075,295 0 3,197.376 927,613 18,968 0 0 0 0 0 0 0 0 0
PrmenentLoanFunding 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cuossl~eomelSaleaRevanw 8,884,859 0 D 5,401,087 1,283,792 0 0 0 0 0 0 0 0 D
Less Sabs Costs (534 789) 0 0 (49~085) (702,709f 0 0 0 0 0 0 0 0 0
Lass Op ExpMomeowner Aaem F~~s (24,500) 0 0 (23.750) p50) 0 0 0 0 0 0 0 0 D
Tolal Soueas d FunCS 10,200,BB5 0 3137,314 5,869,845 1,788,707 0 0 0 0 D 0 0 0 0
Usas ol Funtls
NlocatedLendCOal 1,822250 0 1,622,250 0 0 0 0 0 0 0 0 0 0 0
D~molNOn IO,B00 0 20600 0 0 0 0 0 U 0 U 0 0 0
P~e-D~valopmant3tudi~s/Melynic 15,000 ~2,857 ~149 0 0 0 0 0 0 0 0 tl 0 D
Mch BEngm~rmp Coc4 671D2 43,718 41,557 2187 0 0 0 0 0 0 0 0 0 D
PlenChek/BIdpP~mte/CtlyF~n/Assesa 15B,SB2 0 158582 0 0 0 0 0 0 0 0 0 0 D
qf-SMflaquremenh 770,808 0 D 778,808 0 0 0 0 0 0 0 0 0 0
Iq-L~eu Fea 0 0 D D 0 0 0 0 0 0 0 0 0 0
ConsUBulld-OW~n-SRalmpovemenla 1,591,274 0 1,328,082 285,212 0 0 0 0 0 0 0 0 0 0
HeEentlonQlO% 176809 0 0 176,808 0 0 0 0 0 0 0 0 0 0
Tashngandlnspactiona 7,725 0 8,438 1,288 0 0 0 0 0 0 0 0 0 D
ConstrichonPerlameroaBond 25,748 0 25,74Y 0 0 0 0 0 0 0 0 0 0 0
ReN6tetaTiunsDurmgCOns~uction 1E,118 0 1~,888 2,771 0 0 0 0 0 0 0 0 0 U
Constructionlnsuience 70,<OB 0 70,906 0 0 0 0 0 0 0 0 0 0 0
SurvayeM Ti141nsuanea 15,650 0 16,450 0 0 0 0 0 0 0 0 0 0 0
LsgN,Concuttng,Acctng,Admin 30,000 9,474 9474 9,474 1578 0 0 0 0 0 0 0 ~ 0
Mak~tingendAdvatnmg 42,498 0 D 98,192 4,244 0 0 0 0 0 0 0 0 D
Cons4uchonConling~roy 105,840 0 0 1BS,B40 0 0 0 0 0 0 0 0 0 D
Prol~ctManegemant 128.595 0 52.727 &9,272 10.545 0 0 0 0 0 0 0 0 D
Pa'ma~eniLOanFea 0 0 D 0 0 0 0 0 0 0 0 0 0 0
ConaVUCUOnLoanRapaymeM 5,073,644 0 0 4,945,231 BB,013 0 0 0 0 0 0 0 0 D
TotalUca d Funda 8,382,527 89,077 3,364,825 5,8E8,8{5 84,781 0 0 0 0 0 0 0 0 0
NetPra~eclCashflox(EquRy) 818338 (68,077~ (227,511) 0 1,111,928 ~ 0 0 0 0 0 0 0 0
CumulRrve Cp6h Flav (88,07~ (289,588) (283,588) 0
"__' 0
_'_' 0 0 0 0
- 0 0
_ 0
'___ 0
ConnYucM1OnLoen Balareee '__'__ _e=v~
'____ __'_' _____
s _
"" __'_ =
_
c~'= '_
___'
_ '
a° '
___' =_'a
_ =
_'__ ==a•
Ll'ava 1075,295 0 3,197.91q 921,813 78,SB8 0 0 0 0 0 0 0 0 D
LoenF~eap15% 87,129 01,129 0 0 0 0 0 0 0 0 0 0 0 0
Atcruad Intaeat @ 9 5% 877,218 0 149,022 341.821 388,978 0 0 0 0 ~ 0 0 0 0 0
Lesa Rspeym~nta 5,013,814 0 0 0 5,013,044 0 0 0 0 0 0 0 0 0
EndingBalarce 0 61,729 3,286,397 7,289,455 (4,870,901~ 0 0 0 0 0 0 0 0 0
Peg~ 2
MULTIfNAILY PROTOTYPE#2 -APARTMENTS (HIOMrLostMa)
1BBOGneus IMPUN Cumulatlre
SIC ]~GO~ InEUS~ry DI~leY InEIneY InducsC Tefal Portan~ Ps2~m
Ba1 0.5< EaGng 8 ~nnking 38fi 82 16 B6 138 W 511 ]2
31561 11 <% 11 ~%
66K 160%
820 0.55
<90 uaRedil
Doc[ors antl Oenlhm 22]E6
200 66 38I
0 00 ei13
69 B] 2]0 33 5]% 23 7%
fiu dC] WholealeTnEe 11851 M47 5909 T120B ~'I% 261%
492 Nosplti4 138 9B 0 ~1 80 ~2 Z(10 <3 ~ 2% 3] 6%
B00 M9 Genenl MercM1antlqe Stores 12~ B6 1 18 J2 S/ 169 ]1 3 6% 36 1%
B11 0.50 FooOS[oies 111BI 263 J533 15980 J6% 395%
B~
21 d51 Aummatr:e Oea~ers 8 Servre Stam~u 93 BO 2~ 3] ~8 1<0 26 2 9% ~2 <%
B10 18B AmufementantlRecrnibn5ervicee NEC B35G O60 2]16 11130 23% ~48%
096 Qallegea, UnnwaNVa Sc~oola i2 fi0 5 61 23 3] 101 39 2 t% ~6 994
)Bl 525 Domsstlc5ervieea 'l101 000 24T/ 95]B 2096 CB9%
B23 0.52 ApparN E rYCemry Srorea 6115 018 2] 5] 8; ]1 1 8% 50 8%
'li2 462 RalEauls 2121 38D5 3613 8>OC 1896 5]M1b
]31 6]I PersonnlSUpplySSrvrea ~08 5863 TlBB 863] 18% 51<%
]00 ~01 956 Binpn9 4602 1058 2t88 10~0 16% 581l6
&A1 0.53 FumRUreBHOmeFUmg~mgaStoreS 56]1 062 191t ]BN 16% 57l%
'!11 0.59 InsuoirceGmds 5281 352 1]65 ]I00 16% 592%
B62 495 Elemenbry antl Secontlary Schoola 5~ 52 0 00 1~ 16 fi0 6] 1{% 80 )%
B'!1 500 Social5emres, N E C 51 62 0 51 1610 69 23 1 6% 82 1%
]]3'!BO C66 e~emy:~ae.ro«snw: 6161 80.3 1819 fi]63 16% W5%
)92 a63 MohlaaMLOtlgmpGlaces 3)28 1310 161< 6681 16% fM9%
)02 45] CreEttAgmcss 3a35 zao~ 1885 652] 11% 66396
860 093 OPlr MeCp12~0 Xl81015lNKlS 38 99 6&L 1 i ZO 6i OC 1 9% 67 8%
)61 6]9 Aulamabtle0.s0arantl5ervi[es 4025 425 1<'!1 5920 12% 6B9%
)'!i A6I ~auMry ClmmganCShoeRepalr ]800 12D1 1d01 5I81 129G '!00%
a81 rsing antl ProRCfive prc 2111 0 00 2J 3+ 5111 ]t 2%
841 <99 Lagalservkes i2]0 1528 1553 5352 11% '!23%
B]3 `A1 ~aOaanECmcD~ganwLOm 0023 ODl 1309 5339 11% ]3~%
6
~
e~ PuIltlingMatMals&GaMening 3965 01"! 1261 52<9 11% ]45%
4i0ai
i 435
~01 MotarFregMTnrvpaM1anOWare~ouang
ResMerNa~ G~e 18]5
2] 01 1]]3
0 00 1281 4935
4B {G 1096 )5696
1 096 )6 B%
80 56 NalnbnaneeantlRepai~OtM1erFanl~es 000 3C0.5 1235 <680 10% PB%
'!41 C]G OVixBUnnspSemca 301 29W 1130 <339 09% ~65%
C60 ceAgenffiantlBmkers 000 30)5 963 <039 08% J8396
B90 50] AcmuntmgAUamnganeeookkeePing 1D] Z6B8 992 3)8] 08% 801%
BB2 499 Child ~ay Ca~e Semca .8 0.5 0 00 ] 98 3I <3 0 i% 80 9%
d)3 Servres To Bul~Emgs 6 82 1J 61 9 13 33 56 0 i% 81 fi%
890 49] Ot~x EEUCaGOnalServces 23 55 0 BB ]'!8 32 31 0'!% e] 296
<]5 Gompuhr antl Dab Prem»ing Servm 1 ZB 21 66 8 15 31 OS 01% 8R 9%
ai2 513 l1SPOmISemce G68 1588 ]8] 3052 06% 835%
e)t 502 OU~n NonP^~ a9an~a9ons Y1 D] 0 50 ] OG 29 fit 0 6% 8d 2%
es2 508 anagameM ana cen¢uNng Servcea 0 D2 21 53 ] et ]B a6 0 6% 84 8%
641441 4<! Communra0ons,ExceptRaEaanEN 1<21 6B0 B21 2922 06% 85<%
810 lmbpRM1~p Sp0lb anU Recmton LIUGa 20 61 9]3 ] OZ 20 39 0 G16 86 0%
8G 55 Main[enance antl Repair ResitlerNal 0 00 20 24 6T, 2i 02 0 6% 86 6%
)et d6B MmxllaneousPersonal5emcce 1959 01'! fiW 2626 06% 811%
0]6 DetttMe antl Pie6cli+e Servma ] 09 11 D6 fi 3] 24 YJ 0 YM 8] 6%
)i0 0.58 Secur4yantlCOmmotlityBrokers 881 818 662 2361 OS% 861%
i61 120 ApparelNatleGromPUrchafdMaMfols 1851 061 581 ]293 OS% 806%
60i 513 OI~erSnGantlLOCaIGOV[En4rprmea t330 250 592 21]2 OS'M 891%
BBO 505 ReligpusOrgan¢aGOna 1<98 ODO <63 1960 06% 895%
522 SYahBLanlGOVemmen[-Etlucahan OW 000 U00 000 00% 1000%
523 SYateBLOplGOVemment-NarvEGUO-an ODO ODO dW 000 00% 1000%
52e ResldTnaNbrlelntluaby aW 400 000 00% t000%
526 Dummy 000 000 U00 000 00% 1000%
sz; oummy o 00 0 0o a o0 o ao 0 o^c ioo aw
528 InvenroryValuatqnntljus~man[ 000 000 000 000 00% 1000%
'NUmber ot JoES Oy 5025 9190p0 in nCE 2 B~] ]5 6]8 DO 1 25108 <"!5] 89
Ref[siae m PrIXOype 2• 5425919 in PCE 19Zn5 0 Bi800 1 ISSO6 l.i31M
MULTfAMILY PROTOTYPE Ki -0ONUOS (LowarCOH Arer)
tiW G~sus IMPIAN CumulatlW
SIC 8aclor Intluttry Dlrac~ I ntllrtR IntluwC Talal' Pm~nl PerceM
Bdt 451
953 EaGigBDnnlting
ibn
M
Rwn 3520]
3U>39 153C
33G 12564
1656 ~8305
~]]9 111%
6BY. 1139%
1H0296
e20 49U m
wua
Dory~nanEpentlm 18263 U00 6359 2~622 5]% 23'!t%
6sz M] W~oImleTiaUe 10~8] IO~B 53]B d121J 6]% 2H3]%
es~ ~sz Nowrcais tnaz oo+ ssoo iaz~z a~w az5svc
eoo as ceM~iM~rcn.~a~sm.a i~3ss +ez as~~ iuo~ a~e asu~
' 0.50 FooYSb~p Ot)9
' 2b a128 t~545 31% 395016
B~2
B21 451 PukmotNeDealersb5emce5allons 9083 2d5 M39 12161 29% 62i3%
Bto IBB NnussmsM antl Recreation Semcee N E G 1603 0 55 3t ]7 101 30 2 3% M 1996
860 496 Cdlpef Uniersdef.SeM1Ods 6608 692 211] 9229 21% K9I%
)Bi 525 DomesOCServrn 8483 D00 Z25~ 8'I11 2096 1893%
E23 452 Apparo16l1c~ClforySTnrof 5839 OiG 205! ]93t 1B% 50]]%
)12 d62 R~IEShh :936 355C 2633 7922 1B% 5260%
)3i 4]< PenonnelSUpqySemees 4<2 533] 2083 ]B61 19% SC~1%
'o
o C56 Benkmg ~189 963 )t <d 1@% 5606%
B3i 433 FumRUreElbmeWmohmpsS[orm 5i6i D5] 1~39 695i 1896 5T81%
)11 <59 InsuranpGmen G809 320 1606 8~36 1fi% 59~2%
d95 ElemeMaryantlSeconWrySC~mis <962 000 1288 6250 10% fi06]%
Bli SOU SaeblServ~esNEC <698 D~6 1e65 6210 1i% 62f0%
"
0 i86 BwulyantlBarberSM1Opa J]69 i~1 1656 B156 6352%
)B2 463 Mo[els aM LoOgmg Plews 3393 1219 tJ 69 8081 1<% W 93%
)02 d5)
083 GrMRApen<es
Ot~
M
U
i
C H
M S YL16
36 a0 2191
6 23 1531
15 68 59<0
SB ]9 14% 6630%
8] eG%
]61 d]9 er
e
ra
an
ea
srv¢ea
Au[amabeeRewrandServ~ces 3663 38] t339 5389 1]96 6889%
]11 A6/ Launtlry,ClnningantlShoeRepair 2621 1D93 12~5 <989 tYb ]00<%
G9t rsin8~~4PmhcMeCare 266'! 000 IC&5 a953 11% ]11B%
Bdt 49< ~egal3emCK 208E 1391 t<14 LB]1 11% ]23t%
509 Wbor antl Gvk Organ¢a6ona 3E 62 D 0] 11 91 OB 60 1 1% ]3 ~394
680681662 CCB BuiltlingMatemisdGaNening 3609 D16 1f08 C]13 11% ]<53%
4104i1 435 Moro~FrcghiTrenapaRantlWarMausng 1T06
3 1614
OOD 11'/'1
fOCO 6492
6C09 f0%
f0% ]55]%
]659Y
~ 56 Ms ntenance antl Repair ONer Facilies D 00 31 36 11 24
1033 a260
39aB 1 096
a9% T/5i9L
)8f8%
)dl
'/11 a~0
i80 OtM1Sr9unnefa5emces
InsurarcelgeMSaiMBmbrs 2~a
000 26a3
-2]99 8]fi 36]5 OB% ]933%
890 50] Axoumng AutlmngantlBOakNroqng 09] 2«] 903 34<i p896 8pt3%
0.99 AE Day Laro Semcea 2608 0 OC J 26 3136 0]96 80859L
)22 4]2 ServcesTOBUlltlings 621 1603 831 3D55 0'!96 81569G
BBO 69]
6>5 OtherEOUwtonal5emces
Com
uler
bG
n
tlO
s
5 2143
116 OB5
19]D )OB
)6] 2991
2826 0]%
OJ% 8I24%
Hi89%
a12 513 p
g
an
a
mu
si
mxes
L 5 PpblSerntt 608 t154 ] 16 2~ ]8 Ofi% 8353%
Bi2 502 OU~«NMplMRIXgdnli]00~5 2009 095 6~0 2695 Ofi% 8915%
882 SOB ManagemeMantlCOnfu14ig5ervees 002 1959 ]20 2601 Ofi% 84l'!%
u] OC1
489 Gommunica[pns Ex<eptRap~oanCTV
M
b
~
5
b
~R
az
Gl
C t293
e]9
' 619
O6Y l6`
639 2659
2586 Ofi%
Ofi% 8539%
80 55 em
en
ip
poe
am
arc
ron
u
S
MainrcnanceanERSpar,RaEenGal 000 1892 616 2458 Ofi% BB55%
181 ifi0 MecallaneoufPersmal9ervces 1]B3 016 593 2390 OB% B'!10%
6J6 DerecMeanaP~olecweSerrces 6d5 1005 5l9 2230 05% B]6296
)10 15B SecurayantlCammoOrtyBmkers 802 i<5 603 2198 05% 8811%
~6~ 12a PpparnuaaeFmnPUrcnafpCMrtermis ~503 055 529 2oBi 0'J% 8860%
901 512 OUwr Sb[e anO lttai GM EMeryrass t210 2 2'! 5 39 19 Tl 0 5% 980596
B80 505
SYt AelgquaOrgan¢BtlOns
n~
Sl
t
bL
iG
FA
t 1363 000
000 I21
000 1196
000 04%
000% B9d8%
1W00'%
523 -
a
e
OCa
wernme
UCa
wn
SlaceBlocalGwernment-NOnEOUntpn 000 000 000 000 000% 10000%
ssa aem rn me waria inc so-y o 00 0 00 o ao o ao a oove ioo oors
526 Dummy 000 000 000 000 0 W% 10000%
52] Dummy OW 000 000 000 00096 1000096
52B InventoryYelualionMl~~~~1 000 000 000 000 OOp96 1000096
'NUmber W JoOS g enerateC by 53B]681 00 in PCE Z 5]3'!2 61) 10 1 13960 433042
RescaieUtoVrotarype3=E39'l681inPLE ]61]M 081)t0 11TBB0 lf]Wf
MULTFFAMILYPROTOTVPE%4-CONDOS(Hgher-CwtAraa)
is9U cenus IMPLAN Cumulatlve
SIC See[or InEUS6y Direel' IntllreeC IntlucM• TotaP Pxcent Pe~eent
B61 <56 Ea6n98Dnnkin9 d5087 19fid 18083 6311d 114% 114%
B82 0.55 MncellaneousRebd 25547 62~ 8801 387~5 6~6 18094
830 GBO DoacrsantlDenGS6 239'!8 000 8140 31518 5]96 23]%
6ss M] Wholesala Totle 138 08 51 8'I BB BC 25B 7A 6 7% 284%
831 492 Hosptels 16310 002 70d0 23352 62% 328%
900 N9 GenenlMercM1andiu5torea 1<54] 20'! <959 18]1C 98% 981%
811 0.50 FooC5lnrcc 13~30 10'I 528f 19619 34% 395%
812 821 <51 AufomohveOealeia85emceSYaEans 1182] 31d /002 183A3 29% 024%
488 Amuc~ment antl R~erwGan S~mces N E C B133 0]0 9t 86 1~ 61 2 3% Ad 8%
860 498 Collepes Unrversi0es Schods 8459 630 2]29 1181] 21% 489%
)81 525 Wmes9CSeMCls BZ]3 000 2685 11158 20% 988%
823 452 APParoI 8 Accessay Storcs ]4 ]d 0 Sfi 29 30 101 60 1 8% W 8%
)12 462 RqlESbh 2478 <549 3114 10141 18% 528%
~9t 4]a Perwnnel5uppry5emces 588 8891 2806 10083 18% 56<%
]00 ]01 E56 BanYVng 5362 1232 2569 9144 18% 581%
831 d59 FumbreBHOmeFUmish~ngaStares fi60'! 073 7226 ~OB 18% 5]l%
Jll 459 ImunnceGmm 6158 610 2058 E822 18% 582%
842 d95 ElemerRaryantlSecontlarySChools 6352 000 18E9 ~Q1 11% BO194
871 500 SoaalSemces NEC 601a 059 1875 1948 14% 821%
]J2 JBO d66 9eau[yantlBaAwShops d825 835 2119 ]880 14% B35%
)82 d83 HotelsaiMLOtl9ingPlaces 4343 1561 7880 T181 14% %9%
]02 0.57 GrctlRAgenaes 2837 2804 1983 1804 19% 883%
840 693 plier Me~~cal anE HpXM1 Semus d8 BO '! 9] 20 N ]d 81 1 3% 6] 8%
J61 4]9 A~.ROmobtle Repart and Serv¢es 48 89 d 95 7'! 16 8898 1 2% 88 B%
)]1 46a LaurqryGieaninganOSM1OeRepart 3355 1389 1632 8386 12% '!00%
832 491 NursingantlProtechveGre 3158 OOU 3181 8340 11% 712%
841 0.94 LegalSemces 2645 1180 1810 8235 11% 729%
9]3 SOA LabarantlCmcQ'ganiia4ons 988] 008 1525 8221 11% '!34%
66D681682 d48 B+ildiigMa4nals8CaMeniig A619 020 1d88 fi108 11% ~45%
4104t1 C35 MotarFreightTnnspoRantlWarehousmg 2184 2086 7500 5750 10% 756%
e]O 501 ReaitlerroalQrc 4312 OOU 1332 SBM 10'% ]88%
80 So MaintenanceandRepairOtherFac~mes 000 9014 7439 5453 10% 7]8%
]41 d70 6herBusmess5emces 351 3382 1322 5055 09'% 7B5%
Jtl d60 Insura~eAgenlsandBrakers 000 3583 1122 4]OS OB% ]93%
890 50] Acwunang AutlMng antl Boolti~eeqnB 1 24 31 32 11 56 4413 0 B% 801%
882 499 LhiltlDayGreServ¢es 3082 000 930 4011 0~% 608%
]]2 6J2 ServresTe6uiltlngs J95 ~1152 tp86 3910 0]% 818%
860 69~ aher Educa4onal Semces 27 44 1 1A 9 0l 3] 84 ~ 79: 83 ~96
)32 4~5 GompNx anE Data P~ocessm9 ~+~~ ~ 48 25 T2 8 50 3618 0]% 83 8%
612 513 US Posral5emce ]78 1862 818 3556 ~8% 835%
e]2 502 0'herNOnprotROrganaa4ons 25]1 058 820 3449 OB% 842%
882 508 ManagemerrtantlGe~urong5emcas 002 2509 82t 3432 ~69: BCB%
441 442 C41 WmmumcaLOns Ex^2pt RaGio and N 18 55 ~ 82 9% %04 O B% BS <%
Bto 489 MembershipSportsandRecrmhanClubs 2405 O85 818 3309 O6% B80%
eD 55 Ma~ritenanceandReDairRevEeMiel 000 2358 ~BB 31d8 OB% 86896
781 C68 MiscellaneousPasonal5emces T282 020 758 3080 OB% 871%
]40 4]8 DMeeMeandPratecuve5emces 826 1283 742 Z854 OS% 878%
arM1y an moarty Brakxs t0 ffi 9 53 ]>1 ]) 5~ D 5% 881%
161 124 ApparelMatleFmmGUrchasMMatenah 1924 071 677 76]2 05% 88fi%
801 512 P.harSb[eanOLOCaIGwIEMerynses 1599 29t 680 ]531 0591 B91%
Be0 505 RelqiousOryanaa4ore t]0.5 000 538 ]280 04% 895%
522 Sate6LacalGa+emment-FAUCaLOn OCO OW 000 000 00% 1000%
43 5a[eBLOCaIGa.emrtqn[-NOnFAUCaM1On 000 OOD 000 000 0091 10001fi
52a Res[UTheWOrI4lnRSby C00 OOC 000 000 00% 1000%
526 Dummy 000 OW 000 000 00% 1000%
52> Dummy 000 000 000 000 009: 1000%
528 ImxnmryValuatronAttuspnent 000 000 000 000 00% 10p0%
'NUmoerCJObs genentea Uy5488260000~nPCE 329455 ]8883 115877 554325
Rescale7toProtoryped=59962WinPCE 329955 078993 1A5877 534325
Appexd~ces
APPENDIX B
Estimates of the Capital Subsidy Needed to Develop an Affordable Rental Unit
in the City of Santa Monica Under Alternative Affordability Thresholds,
I,and Costs and Unit Sues
:'~ewblultr-Famfly Development-Affordable Housrng:~'exus July 7, 1998
Hamdton, Rabmov~tz & Alschuler, /nc
Append~ces
APPEI~TDIX C
Derivation of a Development Fee for Four Prototypical
New Market Rate Multi-Family Developments in the City of Santa Monica
.~~ew:lluln-Famrlv Development-AJfordable Housrng:'~ezus July 7, 1996
Ham~lton, Rabmoviu & Alschuler, Inc
DERIVATION OF MAXIMUM JUSTIFIABLE DEVELOPMENT FEE
FOR THE AFFORDABLE HOUSING DEMAND GENERATED BY PROTOTYPICAL MARKET RATE MULTI-FAMILY DEVELOPMENTS
IN THE CITY OF SANTA MONICA
Prototype#1 Prototype#2 ProtoTypep3 Prolotypell4
Calculation Factor Apt ILower Cost ApL/Higher Coat CondolLower Cost CondolH~9her Cost AVERAOE
5Lnit Market Rale Mulh-Family Pro~ect Proflle
(fiomHRBA'COnatre~nYMOtlNS f990Cenaua)
Monthly Rent or Purchaso Pnce Per UnR E 2,087 $ 2,627 S 376,142 S 418,342
RentorOrmershipCostasPercentofHouseholdlncome 3700% 3700% 3500% 3500%
Imputed Average Tofal Household Income Par Unit S 67,038 $ 85,784 $ 77,536 $ 99,252 $ 82,253
TotalHouseholdlncomePerUmtxSUmts $ 335,189 $ 425,919 ~ 387,681 S 488,280 E 411,282
Ad~ustment (or Taxes, Consumer Interest 8 Savings
(M1om U S Bwm~W F.cwiorrr¢ Anelysrs)
Household Consumptlon EMpendRUres/Household Income 75 50% 7550% 75 50% 75 50%
Householtl Consumptlon EMpentlrtures PerS-Unrt Pro~ect f 259,068 $ 321,589 S 292,699 S 374,676 i 310,503
Tofal Worker Oemand Per 6•Unit Pro~ecYs
Household ConsumpUOn Expendihres
(/rom IMPLAN MntlelJ
Dnact 2 22524 2 82775 2 57372 9 29455 2 73032
Indvect 0 53354 0 87800 0 61770 0 78993 0 85464
Induced 098530 125208 713980 145877 ].20BB9
Total 3 74409 4 75784 4 33042 5 54325 4 59380
Numbar of Low•Inwme Worker Households
(homWMSDete ~980Cenvus)
Percent of Workars in Consumptlon Industries in Households at 60%x Median 76 74% 1874% 16 74% 1614%
Num60f oI Low-InC Consumptlon Indusiry WoMers in Househaltls 0 82878 0 79646 ~ 72481 0 92794 0 78902
Number of Workers Per Low-Inwma Household With Workers 2 36300 2 36300 2 36300 2 38300
Numhar of Low-Ineoma Worker Households Dua to ConsumpNon Demand 0 26524 0 33706 0 30678 0 39270 032544
Juspfiable Development Fee
(/rom NRBA Subsrdy Gap Eahmafea nM'ConabavrY MadelJ
Gross Square Feet (GS~ Per 5-Unit Projact 7,595 7,595 7,595 7,595
Low-Inc Clly Subsidy Gap/Rental UnR (~ 60%x median and no Taz Credds) 8 154,918 S 154,918 S 154,976 5 154,916
Jushfiabla Davabpment Fee
SubsidyGapxCLow~lnc WorkerHouseholdsMDemand S 41.090 5 522i5 S 47,525 S 60,835 f 50,416
FeeIGSF $ 541 $ 687 5 626 $ 801 5 6&9
Averege by Product Type S 814 ~ ~ 713
SeMONevMav<ek1N¢~olAae) Pegat HRAAIrc 1/13I98
GPIfAL tUlWY RlOUPm TO DCVLLOP,IW AlrORDAtL! RlN7Al UNT
yp[p Kip11UTN! ArfORDAlIlTY TINEtMOLDl, LMID COfTt AIa WT 8~6
em oF wrt~ r~wNCw +x~
Rx~d ProMet. R2 Dw mtv. 50% X NFl RMaI Prabn. F 7 DwnM l01i X MFI
2-BR/t-BA 3-BR/L-BA 3-BW1~BA S8R/2-BA
Uns • CalcWtlm Fadas Low CoN Mah CoY Low Coaf Mch Cori Low Coat Hsh Cos Lw CoM H~ Caal
~ ur. ie ie is i~ ie is ix i~
rrew cavsrnucnaa ~vcaona~
1 LACouxyMMdanFa~ryYxan~µ~~nonlNd) S 51,300 S 51,100 f 51,900 i 51,~00 f 51,300 S 51,7U7 f 51,~00 S 57,7f10
3 hre~nl ol M~dan FmWY Y~eem~ 50% 50% SO% 50% 80% BO% 80% 90%
~ Mealmim Hou~Nwld Yieom~ M~shoq ({qrs.) S Y5,850 f 75,850 f 35,050 i Y5,850 S 30,780 S 30,7&1 f 7~,780 S 30,780
4 MofdeObMa~M/IbwYqCoM N~ N1 NA W1 f 770 S lT) S 770 f 770
S ND o/ YRS A¢s4nNt FaClo~ N~ W1 N~ PM 0 BS 0 f5 1 085 1 OBS
! Ln~ MID I11iy A1ows~e~ S (6~ f (8~ f (!3) f (72) S - S • S • S •
7 MuYnunA~ow~bNRMp~rCLLy N~ W1 NA PM S 731 S 791 f 833 S 835
8 iCAC I/owaM~ R~nl S 577 f 577 S 888 f 888 N~ N4 fM N~
B AWkmmAMWebMRvMp~rTCAC S 670 S 570 S SW S 50t N~ N\ NA NA
10 L~s~. NoRProhY Bn~ Moti1Yy OpwalYp Coab S (250) f (2'A) 7 (350) i (PF+O) 3 (250) S (23e7) i (750) i (7FA)
11 L~s~ hapxlyTm 3 (1) S (7) 7 (t) S (7) 9 (13) f (N) f (75) S (i6)
1] L~+~ R~placrnrYRrw~ S (35) f (15) f (25) S (25) f (35) f (25) i (IS) f (Z4)
13 Lw~ Nao-Proi'sVmaicy/BWD~6tNowrs~e~ S (75) f (15) S (1B) S (18) S (Y~ i (~) f (25) S (35)
1~ NN Op~rafY~p Ywom~ (M011 P~r 1AW S T7 G f 218 S 300 S 300 S ~72 f 42+7 f 520 f 518
75 D~bt CovKepe R~Iie 1 10 7 70 7 10 7 70 1 10 / 7D 110 7 70
18 WWnunMwMHyMatpp~~ayrtw~Y S 798 S 1B8 S Y77 S 272 S 3B4 S 8B2 1 ~72 S ~~
17 8uppoMaENMwtOap~ f3B,12~ SZB]98 57b.977 338,910 fIB,BtS S~B,B]6 581,~78 581,057
10 LKS iaY DwNepmxR Cof1 S 187,820 f 212 B07 S 334,187 i 77~,801 S 182,BI0 S 212 B87 f 2N.1B7 f 37a,901
70 L~~s WTCEqWy S ~1.517 f 97,572 f'8.548 f4832B f • S ~ f - f -
20 L~ss qMrM~WeSUbslQ~orEqWy f • S - S - S • f - f - i - S -
27 bqWr~dCapNalBUbsldy f 116884 S 1~8,]58 S 1~6.89] S 187,433 f 133,001 f 181,03d S 172771 f 27J.841
2] SIMPLE AV8M6E SUBSIDY PER IRR S 1C9,167 f 770,682
37 WEIGNT[DAVCMGEEUB&UYPERIRR i 111,BZ1 f 150Y16
No1s~
P« u s o.q a ~ax,ny aa uwn oe~ewpnen cFUO) '
9U% a UW' incoma per Prap R '~
Lnr 7 z L,M 2 i
(3a%x Uns 3y12 moMha
~q..a~e m ooM.n +p.rw~ no~enaa ~o M.ra~r oe e.aooman.:~, v.~ tMr
CNY ~9 ~ IneluEe IM HUD alowanc~ 1or tmaM~paid u6tlas. abwancalnwmeA lor UHfC deW oM/
~ro 4 x ~m 5, 90%x MFI oNy I
Per Sate's Taz Geat NoeWm ComnXSe
We B~ Lins 8, 50%x MFI orYy ,
bfunes S~.~OhrA/yr pa HRM
Par Naw ~f+NOqiwrA Coal Assnpqons spreaAtMN, 60% anA !0%K MFI qY a'~d ua~samM~ oNy
ns.~me~ uoar.aux o« cxr ~an y
7% % UM 7 a Line B, aS ipplC~Ma, Da F1(tM ~
LIM 7 d L~~w 9•(llm 70 ~ lJm 11 t Lins 13 + LYN 19)
Px trall Clly ~ntle~wRnq plMiMS aM Hfldl1
l~M 71Nm IS
Nwmes J0.yr term, 7 S%(SO% z MFI) a B 5% (80% K MFq rab and maN1Yy paymenls = Wis 1E
Pa New DevNOpmn~ Cost AcHnpllons xproaASMe1
Fa 50%x MFI oNy. aswmhg lax ekempl boM Ar~ndnp, 80%x MFI W~I Iln, W wouM no1 Ea puswa by fM Cqy
Nme Ikey rt any level o/ attatlab~Ny
4ne 16 -(4ne 17 ~ Line t8 ~ Llne 20)
Simple avaa0e o/ a1 lar seenarlas wriNn each ~rtor0abl11y cabpory ~
WnphlaE averape aswNrp (a) 3 3-9R wls lor wxy 2 bBR vNs, (b)'~ bweoM bBR far wxy M~eoR 3•BR,
~e ~ no N~aost 38R Wta ~
AeMhTtlpqlk~ Pp~1 M~Mhe if16191 t1liN1
CAPITAL 9UBSIOY REGI11RE0 TO GEVELOP AN AFFOROABLE RENTAL I1NR
UNOER IILTERNA7NE AFFOROA91lJTY THRESXOLOS, lANO COS73 ANO I1NfT SQES,
CT' OF SANTA MONIG4 198t
D~YNopnxMCo~fCabuwba
Lena WeMSa
Lend
PvcMSe ~ppralsal
7XIe Ymrence
Escrarfees
Mlsc Coris
s~aw.i
Cmslnctlon
~emoMion
BuHny Coals
Sutler PsMny
~•f~10 ~IIIWOVOftIGI-9
Catlnpricy
SOtahl
Professlorel Fees
Mlited~nYEnyfneenny
LmOSCaDelvcl~
CMVSrvey
Sdk Oplnaar
D~ply 6vpecta
Emirarmer~J Pheu I
LeqelFees
ACCeounlrg/PLdI
Construdion MairohqemaR
Suhlolel
Olher
Cly panYls snE lees
MaMNirg an0 Leeso-iq
L~es~up Ras~rva
3Widd
Devebpa Fae
Fin~ndrg Coatt
Core4uctlm lan Fee
Permener~t Lwn Fee
Cais6utlon pa~lod IKaeal
Rael EYNa Taxet (57~%x MFp
Real Esttle Tuws (501i x MFry
-iwence
Caultuctlon BonU
Bait Maila6g
Apprebel
swiav
TOTAI
NEW CONSTRUCTION DEVELOPMENT COSTS
TM DwNOpmMN Sc~nab
~S~ Non-Droni . I~x-axempl eomnnlybaseA Eevabpmek Wy~nxWOn
BWItlNq Z•~as (78,000 sf slle Includnp eby erce), R] dersilywtl~ 50%dmsdy bon~s, ilet sAe wdh rw uusuel conbtlom
11,000 sl tofel, 2 slqles I
U 7+ EiMer 76 2-BRH-BA (B50 s~ or 121BR2-BA (1.D80 s~ y>a~rtme~is
cM~fs 1 5 sDecas Oa uM W~+ vxsl oaildM, el m ane s~Eterreroan lavel +
AdNNslrelrve MMOVeI entl MB approval, no otlbr 6srretlonery ePMOVeIS ~
cx~ Fees ocemq trom scnoa lees ~na rarestlon uiM tex
LBRR-flA
8!L gy~
76 FJq6N 18 0pb1~
llrYtCOai TMalGOSt P~r•UNt Basls UNtCoN raaco~ P~r-UNI Basls NM~s
s4MeM s/ T 600,OOD S 37,500 t - L70AaM s! S 1,050,000 S 65,625 S • BaseO on HRdA qmrysls oI Or0 1615
A~wez° S 750 : q S - Pbwuke S 750 t 41 L - Per tre11 Ciry u~de~witlnp pYEefnes, bw sM
i1/i7,000 t 600 S 7B S - Sid7,000 R 1,050 S 66 S - PadeRClryu~dpy~ItlngpulAelnes,bwend
!/ SOit1.000 i g00 S 56 S - S1 SWi1.000 5 1.5T5 t 98 i - Per dall Cily uidbwlllnp qudelnps. (oW CM
5250/f1,000 S 1.500 S 91 S - SZ`.+aS1000 ! 2,625 S 764 S - HRdA
i 603,750 S 37,731 3 • 5 1,056,000 S 66,000 i -
e~~ E 10,000 S 625 E 70,000 abwerce E, 10,000 S 825 S 10.000 Por HRdA
~4Me9 ~ S 1,176,000 S 73,500 S 7,176,000 584Mtly sl S 1,176,000 S 73,500 S 1,176,000 PerdrellC~lyuMervmUrgyuipellnes,bwend ~i
E13,SOONpate T 324,000 5 20,250 5 3N,000 E73,500/Spece S 321000 S 20250 S ' 324000 Pe~GIBI1Cqyu1Ce1WM~Iqglltle111p5,MdielgC
70%zherdcosls S NT,800 S 7,750 S 117800 10SixMrtl~osls E 177,600 S 7,]50 S H7
600 PuHRdA
594 z Aerd tosls § 58,800 5 3,675 E SB,B00 5°A x herd costs S 58,800 S J,675 S ,
58,800 Per Cly ~aR u~deiwrlYrg g~IdNnes, bw entl
S 1,888,400 5 705,100 E 1 BB6.~00 6 1,BB6,/00 S 105,100 S 1,886,100
59i x sW here msts S 84,320 5 5,770 5 N,330 5% x s~t herd cosis S 84,320 S 5,270 S Bl,320 Ps City trall u~denvrNny yu0elnes, bw end
~anee S 7.000 S 725 S 2.000 PJOV.e'ee 4 2,000 S 125 S 2.000 Pa Gly trell uiderw~lliny puAelnes. pwr pq
~'a~ S 10,000 S 625 E 70,000 Abwance T 10,000 S 625 S 10,000 PxCAytrelluiderwritlnpqulUeAnes,Hpl~eM
Alo~ance S 5000 S J17 S 5,000 FJCwance S 5,000 S 319 S 5,000 PxGydrelluMerxnyigyulMlros,iryA-r~npe
I~Yovsxs S 1i,000 = 750 E 1Y000 Pbwence S 12,000 S 750 E 12,000 PerGlytrafluMawrltlnypYhlnes,mlbronqe
Ncwente S 2.500 3 156 S 2,500 Alcwsnce 4 2.500 f 15s S 2.50o Pn Cey aan v~da~xitlnp yuiAel„es. Hyh aq
~1w+ence S 17,500 S 7.091 t 4,175 Abwanee S 17,500 E t,091 S 1,375 Px CNy dra11 ~Menxltlnp gulEelneg, bw py
Alowexe S 5000 5 J1J S 2,5U0 Abwance ,~ 5,000 Z 317 S 2500 PuCXytrellunckrnnhnyyutEMnes.bwantl
Aloxance S 50,000 t 9.725 S 5D 000 PJOw~nce S 50,000 L 3,725 S 50,000 Pa dly dra11 uidqwtlqig yuld,yips, Hgh en0
S 18B,~20 E 71,770 S 172695 S 188,320 t 11,770 S 772.695
E7/sf S 28000 S 7,750 S 2B,OOp t7h1 5 28,000 f 7,750 S 28,000 PxHRM
Akxence 5 400 5 25 S • Plowance d 100 S 25 5 - Px Uly 6aR uMerwnUny p10.Wnes, Hgli m0
5300MH x 3 moa S 7~ 400 = 9oa S - i7oonM x 3 mos S t1,IOU i 900 S • Pa HRdA
{ 28,400 S 2,875 S 28,000 $ 28,100 S 2,675 f 28,000
854xhard*wll.other E 171,281 j 10705 171,291 9%xMrNSOR•dher S 171,281 S 10,705 171,281 PxQlytrellmderNnOnpydtleAnes,Nghentl
10%xpensnwuY S ~9,000 j i,B7] S 79,000 10%xbsnemout { 32,000 S 2,000 S
1091xbenemoui S 29,000 j t,B77 S - 1o%xbensmauM i 1200o i 2,000 S
SU %~ %iBte %lan { 123,250 { 7.70] S 123.250 50l6 x rete x ben Y 136,000 L 8,500 f
11%x(AWtost+lentl) S 25750 j 1,577 S 25.750 71%x(MrdcosHlenO) ~ 70,100 f 7,887 i
0 7% x(hrd coal.lend) i • S - 0 196 z lMM cost•Nn~ ; • s .
SBOOMIt f 17,800 S 800 E 12,800 fB00AM S 12,B00 S EW S
191 z hafd Cos~s S 18,881 { 7 054 S 76 Be~ 1% z IIerC cosls & 16 68~ i 1,051 S
Alarsncs E 8,000 S 500 S 8,000 Abxence b g,ppp f 500 S
Abwenee E ~.500 S 78t S 13U0 Nowence ~.500 S 281 5
S 2~8.56~ S 15,535 S 219,561 i 272.7W S 77.077 5
S 7,826,775 f 181,ffi0 s 3,271,9W ~ 7,~02.665 S 277,667 S
vw~ weerscrso
32,000 Aswnes ban+ 1004t x Total Develoqneit
• Asw~ws ban =1009t z Totel DevebpmeN Ca~
7J6.000 Assirnas E 5%ben nte, ban m 700%x Tatd [ Coat
10,100 60% 8 100%[ meAan do nd qusiry lor Wc aftt on
50%x medan µpMes fa exa~ptlon of levy W not Aroq essess
72 800 Paf CNy fts71 u~AwrrXhp y~/delnes, bW e~
16.861 Px HR3A
8,000 Pa CAy 6a11 vMpw~ItlM WOeMes, Nd~ end
1~500 Per CIIY da11 VMetwNnp gultldnes. bw anG I
240.281 I
2~Y9B,8{0
~wu.k rnelse »~~u.~
CAPfTA~ EUBdIGY REOUIRm TD DEVELOP AN A~FOROIIBLE RENTAL UNR
UNDER 11LTERNATNE AFFORDA&LITY THHESH~LDS, UND GOSTE AND UNfT 82ES,
CITY OF SANTA MONM.A, 7998
low#fcan~ HausYq 7ax CnAI Calalallan
rh~ o.v.iopm.nt sanano
Dawrons Na.prom, ~ez-armw eomnWn~-Ws.a d~OPTMr~I oryaNZeti«~
S!b 2-LOIS (76,000 sT sNa IncAdny eley sreel. R2 CensXy wHh `A%demAy brnn, ON sAe wiU no uuswl ~oMllons
ew~daq 11,000 sf IaN, x ~tales
UMb EUror 16 2-BR/1-BA (750 sp a 1318R2BA (1 OBO s~ epxNKr~s
Prlurq 1 5 spsees pM uYt pMS peal D~d~D. N on one ,uMnranean Nval
CAy Permns AdnNstralive PFprowl end ARB approval, no dher dsae0amry epprowk
Clry Fees Erempl hom sGwd 7ees enG roaeatlm uYt te[
YBRM-BA
Low Cos1 Hiy~ Coal
E4pib4 Ba~w t 2.277.9M i 4.298,840
L~w Hrtera 7~x CndR i0 t0
EFyD/sBws 0 2.277.940 1 ],198,840
P~~o.nt LIHTGEIqi6Y 100% iY.P77,940 100% ~P,298,640
30% I~wn~w for DDA Rop~rtro~ 1LA County) 1 ^~ I.or.n i683.38Y 1 ^ nunv.. i689,58Y
15% Irwn~M DDA Prop~tt~~ Iwbarram~n p~rkinv) ~ ^ m~^v~^ i444.198 1 ~~^+~^ i448,R35
SubmMOu~67wdB..r 03,405,521 i3,438,487
Lsw Or~ntProewd. {0 00
Qu~f(wd Bur {3,405,521 t3,436,467
237/dlf9J L.m~e lLA CounH1 57.011,651 52.011,851
22fldll3l Lmrt. l.~bnnm.•n v~rkmpl 5~.~14,199 52.313,J99
A~pwebdB~ew NqNnel Uu i7,313,399 NaNirel
~ Use {2,313,399
Ann~~lAequwRnnT~xCr~dn 4°h 377% i85,8Y7 4% 777% i85,8E7
Graa AapuMRan Tax Cr~dK 8858.471 ~ i858,271
AnnualLowlneom~HeunnpT~aCradrt 90% 8&54i i0 90% 865% 60
GroM Low Ineom~ Maunnp T~z GndR 00 CO
LPSh~n 999% CB57A73 999'k 6857613
GV 6hm 0 1% ~858 0 1% C858
TeMMnuN T•r Crsdrt,e/ee•6en ~65,827 i85,827
TaMOro« T.x Cndrt i858,271 te58,Y71
N•[ fl~w os~ Dollu i0 70 60 70
N~tF~r~ i800,189 i600,189
V~PwtarsCrtc ~ Htah~s fneM ~~aawA
CAPITAL SUBSIDY RECUIRED TO OEVELOP AN AFFORDABLE RENTAL UNR
UN~ER 11LTCftNATNE AFF011DAlILfTY THRESMOLf13, LAND COST811ND UNR S~S,
CRV OF SANTA MONICly 7898
D1v~lopmwd Cost CaNW~~
Li~W Wdlesa
Lend
Plfd1e50 ~ppfi1Y91
T!N ~nsrencs
Escrowtees
Mlsc Cosb
s~ta.i
ca,stn,ctlon
Demoltlon
Buqnp Cm7s
Subter PuMnq
OfFsAe imprwanenls
Cortlnpency
saa.i
Professimel Fees
PrcMacluWF pnenkg
L~ndsaGa kM
~'~
Sax Egneu
DepUy Inspe 1a
Erntromier/el Plrese I
Legal Fees
Accou~tl,glHtll
Con~lnctlon Mena9ement
s~o~av
OIMr
Cily pemMS anC /ees
MsikaGny eM Leaee+ip
Lesso-~p Reswe
tiElaal
Devebpa faa
Firondrg Cosls
ConsGUCtlon Loen Fee
PameneM Lwn Fee
Comtructlon D~od Meresl
Reel EslNe Teaes (57~%z MF1)
Red Efete Tams (50%s MFl)
Inwence
Comtnctlon BaM
BeHC Montorlnq
Apprelsel
SiMdel
TOTAL
NEW CONSTRUCTION DEVELOPMENT COSTS
TM oevNopmM x~narb
Oe~elq~Y NonpoR, la~o-esmipl eMVnMybeSeC Oeve'qryne~i olpBn20tlon
S~ 2•Lals (76,000 si sNe Indudn9 eky area), RT dercXy WN 50X tlmslly Opws, flet sRe vnlh no uMmml condqons
8~~~0 1/,000 sY Idbl. 2 StortK
U~ ~IMr 78 2-BRH-BA (B50 s1) a 72 1BR2-6A (7 O80 s1) apeNneMs
PrR7rp 15 spaces par uW plus yuest DaAdnp, al m ax sWmaneen level
CM f'ermla AANNstMrve Approrel ud M8 approW. no WMr dscalimery epprovals
~fi ~+ Exemp from sdwd fees and reaeatlon uN Inx
2BRR•BA
72 EIpWb 12 ~N •
UNI Cost TotY Cost P~nUNI Bask UM Coq Tdal Cost Pu-U~YI Bask Nol~s
S~NhMS/ S 600,000 S 50,000 f - S70hMSf S 7,050,000 f 87,500 f - BeutlanHRMamysisofOrd7615
Noxance E 75o S 57 S - nlaxarce S 750 S 87 E - Per srrt CMy uiAaMnTirg plAelnes, bw end
i1R7,000
S 600 S
50 S
- i1/E7,000
E 7,050 5
BB S - ~
PertlrollCHyuWervrtNingpYEeYas,bwentl
tt 50/57.000 { 900 S 75 S - 51 SWE7,000 S 7,575 S 131 5 - Per trell City uMnvnlling gJdeMs, bwwM
L250/51,000 E 150D S 725 5 - S25Q'{1000 E 28I5 S 219 S • HRdA
s sos,~so s
so,s~s s
-
s~,o5s,ooo s
ea,ooo s - ~
do~wmce S 10,000 t B33 5 f0000 Alowence E 10000 S B33 S 10000 PttHRdA
Sb~A~7ps7 S 1,776,OOU S 98,000 S 1,776,000 SBIAWysf E 1,176,000 E 98,000 E 1,116,000 PadrellCiryindervnPonpyul0elnes,bwenE
51~.SOOhpete S N3,000 f 20,250 S 2/3.000 517.500/spece E 2~3,000 S 20,Z5U S ' 7<3000 PatrallCiryukbrn~tlnpplESlnel,Mdnnya
10%xherdcosts S 117,800 S 9800 S 7176U0 1096xMrO[osts S 177,600 S 9,800 S 717,600 PaHRdA
5l6zMNCOSIS L 58,800 S 4,900 S SB,800 5%zMrdcosts 5 58,800 S 1,900 S 58,800 PxCltydenindefxiitlrqgudefnes,bweM
S 18Q5100 S 733,7b3 f 7,605400 E 1,805,400 $ 113,783 E 1,805,~00
I
591 x s~t IrrO costs i d0,270 S 6,689 S 80,270 5%z wd ImN cozts S 80,270 S 6,688 S 80,270 a« c~ry a~en uae~wrrti~q yuaemes, ww ena I
Nwance S 2,000 f 767 S 2,000 Alawence 5 Z 000 S 187 S ~~ Per CNy drell uM~lxAllny yIIMMC, bw mE .
Plowence S 10,000 S &17 S 10 000 Alowance 5 10,000 S B33 S 10,000 Per qty 6e11 uide~wl6np gudeiws, N9h m0
Plowente 5 5,000 S N 7 S 5,000 Alowa~e S 5,000 S 117 S 5 000 Pa qy tlrell vitlervrtitlnp yulEelnes, MMenpe
niow.M. s tz,ooo E ~ooo i ~z,ooo eaowaMe i i~.ooo s ~,ooo S ix,ooo aeraytren~,demm~nyy~iaaties,mannye
Plowence S t,500 S 208 S 3,500 Alowenae S 2,500 S 208 S 2,300 Per qy tliaM1 vitlenmtlnp plAeMS, Nph eM
Plowence S 11,50D S 1ASE f ~,375 AAowaMe S 17,500 S tA58 S 1,375 PerCNytrelluWenrtltingpUEeiies,lowend
Mowuce S S,OOD i N 7 S 2,500 Rbwer~ca S 7.000 i 177 5 z 500 Per Clry Orert uqervmtinp puiAeias, bw ana
Manwnca S 50 00~ f ~ 767 S 50,000 Alowence f 50,000 t 1,167 S 50,000 Per Cfy dreR undervrtlUny yuitleFes, Hyl~ eM
S 184,27D S 15,356 i 768,645 S 161,270 S 75,356 S 168,W5
27M 5 2B,OOD S 3,333 S 28,000 57M E 78,000 S 2373 t 28000 PaHRBA
Obwanro S 400 S 31 S - PJOwen~e S ~00 S 13 i - Pp CNy dreR uidervnMirp plEepnes, Hyli en0
i300MYtx3mos S 10,800 S 900 S - SJOOArR:7mas S 70,800 E 900 S - PaHRBA
S 2A.400 S 3,261 S 28000 S ]BA00 S 3,267 S 38,000
9%zhutl~SOR~OIhef S 187626 5 7J,676 763,828 94i%IfefWf011•WM! S 1B3,6Z6 S 17,636 167,636 PelCllyptHllvqpiwTlplgyypeNpS,tYg110M
1 0%x ben amouM S YB 00o S 1,7B7 S Zg 000 7 0% K b~n emant S ~1.000 S 2.597 S 31,000 Assumes ben • 100%x Tdd Devebp~wrl Coat
/ 0%z lun ~mout L 26,000 S 2,167 S - 1 a%x bsn unan S 97 000 S 2 3&M1 S - Aawrws ben = 7009i s TdN Owabpmen Cost
SOS6 x Me x ben S 110,500 S 9 20B S 710 500 50% % nla x ben E 7~1.750 S 10,979 L 131,750 Aszunes 8 5% ben role, ben =1009f z Tdel Davelcpnert Cost
11%:(~WCOSt+IU~ 5 21,259 S 2,022 S 21,259 11%x~heMcosl•lendi S 782U8 S 2,471 S ~~ 6M687WW.xmeAanEOnatquslylatexexanptlen
~~% x Om~d coal•Mn0) i - i - O 1% x(~s~tl cost+ISnEi E • i • 509i x meden quelfias for exenptlm of penerel bvypLL rq1 Aract essess
f800ArY1 f 9,600 S 800 S 9,600 fB00ArW E 9.600 f 800 f 9,600 PerCNydsM1in7e~wrdlnppuEeiias,bwenO
t%xMMtosts S 16,051 S 1,J3B S 16,05~ 1%xlrMCOSIS 5 16051 i 1,178 S 18,051 PaHRdA
Nowsnce S B OOU I 667 f E 000 Alowsnca i ' 8,000 S 667 L 6,000 Px City AaM1 uMervrtlhnp y~ldeins, Hyh end
Alo~wance S 180D S ~75 f ~.500 FJOwerca S I.S00 s 375 i 4,500 Px Gy trell Yn00Mfltllg yuGeiqs, IOW ME
S 224,911 E 18717 f 19891] S Zfi1,111 S 21,T59 S 230,1U
f 2,870,380 f 231,197 f 2~7W~SB5 S 7,T9B,810 : ]T1,901 f 2,195,785
P~p~ ]AlBItClM
NfN,le iR69! H]]NA
CAPRAL SUBSIDY REQI11RE0 TO DEVELOP NN AFFOROABL[ RENTAL UNIT
UNOER 11LTERNATNE AFFORDA<' THRESNOLDA UND C09T8 ANO UNR S~S,
CfTV OF 6ANTA MONICA, 799t
LowMOm~ XasYq Ta[ CrWI CakWllan. Low#icam~ XanYq Taz CrMI CaltW~lbn
7M o.v.lopmxil Sc~naAo
Dewbper Non-P~o~M. tuaxercq ta~muYlYbased deiabM~ ageNZaUOn
Slfe ]-Lds (18,000 ai aNe IndMrp eley ersal. F2 EereNy wiM 3096 aerisiry n«us~ M ane vAtn no uusuel canatlons
BWMNp 71.000 st lolel. Y slales
Urxfs ~ttwr 76 bBRH-8A (850 sp or 72 }BR2•EiA (7.OB0 sf) epeAnials
PerWiq 15 sPSas P~ ~ P~ 9~ PetltliS~ N an ane ~btwnneen bval
CMyParmlb Hm~NatnWeApprovalandARBepprow iooCiaascretlonvyepprovels
CMy Feea Exertpt irom sdnd lees W retrntlm uYl tex
}BR/!-BA
Low CosA Hiyli Cost
ElqibN Bnw i ~J84.585 i 2,795,785
lww HwWra Tax Cnd~ SO SO
ESpbNBws { 4,189,585 1 Y,195.785
P~romt LIHTGEIqi6N 70096 i2,761,SB5 70094 i2,193,783
30%Inv~~~w ior ~DA Rop~rtM~ M CouM 1 ~ m~ n.r.+ f8I8,375 1 ^ m 6858,735
15%Inen~w DDA Prop~rtx~ buM~rrana~ 1 ~ onns.~ i4YY,096 1 ~ m+~ i448,178
Su6rorN av~ d B.ru t3 2]6.054 SS 28P.69B
Lrw or~nePro~ i0 EO
d~s4!l.deu. f3,Z16,051 L3,2B2,698
231ld1l~1 Lwixo fLl1 CounNl it 951.741 i1.951.794
2Y 1(dll31 Lu'ub leubarr~ne~n v~rknal L2,2H,363 52.211,363
Rrpw~M1dBuw Noml~rel Ux {2,Y14,583 Nominal Use t2,446,563
Annual AoQUrrtan T~z Cndrt 4% 3 71% EB3,773 4% 3 71% t87,27]
Grow AapuwRwn T.x G~drt SB]2,71M1 5837,733
~
qnnwl Low Inoom~ Meu~x~p Tax Cr•drt 9 0% B 85% SO 8 D% 8 65%
S~
Gro~~ Lew Ineom~ Mounnp T~s Cr~dR SO ~
LPSh~r~ 99976 5811.900 999°A SB31,900
GPSh~n Ot% {973 079i SB37
7otdAm~dT•r CradrtANee~wn iB9.271 E83.277
TotN Ornu T~r Credn t8J2,733 Sb37,731
N~t R~r p~r Dallrt $0 70 50 70
Nei Rwa 5582,370 f58Z,710
q~yyp~y~y~ V~W ]MMClID I Mt{A he 1/161M 11']] MI
ATTACHMENT C
Attachment C.
This attachment contains various excerpts from HR&A's April 6, 1998 repart entitled
Recommendauons for Revrsrng the Crty of Scn~faMonrca's Inclusionary Housing Program.
These e~ccerpts constitute the Governmental Constraints Analysis.
Rewsed lnclusionary Housing Program
for the C~ty of Santa Monrca
IV. DEVELOPMENT FEE ISSUES
The proposed Affordable Housmg Product~on Program inverts the focus of Ordmance
1615, to one that provides for payment of an affordable housing development fee or other opt~ons
that also ass~st affordable housmg producuon, from the current pro~ect-by-project requirement to
provide affordable uruts on srte, vnth an ui-Leu fee option under limited circumstances How the
fee relates to the actual cost of producing units affordable to low-mcome households, and at what
pnce to set the affordable housmg development fee, are therefore central ~ssues ta consider
A. The Cost of Producing Housing iu Santa Monica That is Affordable to Low-Income
Households
The City of Santa Monica has generally relied on non-profit, commumty-based
development orgaruzations to develop units m the Crty that aze affordable to lower ~ncome
households The process is compLcated by the need to merge a vanety of public and pnvate
fundmg sources and a bewildenng rmx of regulanons and procedures that accompany each source
of funding, w}uch aze sometimes m confl~ct wrth one another Further, these pro~ects must be
camed out in the same real estate market environment as for-profit pro~ects
Develonment and Oneratme Costs
The cost of developing affordable umts through non-profit developers is, m general,
somewhat less expens~ve than the cost of producmg for-profit housmg, but not much less The
reasons the savings may appeaz less than the "non-profit" status of the organizat~on may imttally
suggest mciude
Mulh-layered Financnag The layered subs~dy, debt and eqwty structure used in the non-
profit housmg production process -- vv~th four to s~x fundmg sources per pro~ect not
uncommon -- allows rents to be mamtazned at levels deemed "affordable" to lower-mcome
households However, packagmg these resources is techmcally complex, time consurrung,
wstly, and can result m inefficient cho~ces about pro~ect size, umt mix and des~gn
Transact~on costs, particulazly the cost of arrangmg for equity contribut~ons through the
Federal Low Income Housmg Tax Cred~t program, are expensrve
Accommodatrng Numerous Pnblrc Ob~ectrves Non-profit development pro~ects, because
of their public nature, typically mvolve more t~me consuming plamvng and approval
processes (e g, neighborhood des~gn workshops), are sometimes held to a h~gher (and
more costly) standard of design, mcur umque development costs (e g, payment of
Hamrlton, Rab~nowtz & Alschuler, Inc Page 14
Apnl 6, 'I 998
Revised Inclusionary Housmg Program
forthe CityofSanta Mon~ce
prevailmg construchon wages) and often provide a higher level of buildutg management
and tenant sernces than is typical of pnvate projects
Yet, non-profit pro~ects compete for land and buildmgs tn the same real estate market, and
have to pay about the same costs for numerous professional sennces (e g, azctutects and
engmeersj, as the private sector
Affordable Housme Fundme Resources
Contrary to the situat~on m the late 1980s and early 1990s, there are today only very
hmtted sources of fundmg for e~ther new construcnon of affordable housing, or the acqmsition
and rehabilrtat~on of existing buildmgs to mamta~n them as afFordable housmg Funds to develop
affordable housmg m Santa Momca generally come from three sources
Loans Supported By Affordable Tenant Rents Affordable housmg pro~ects typically
produce enough net operahng mcome to support a modest mortgage, wtuch is usually
obtamed from a bank or an mtermediary inst~tution at below-market rates (e g, about one
percentage pomt below conventional permanent loans for apartment build~ngs, or about
7 00% today) The maximum loan amount ~s a funct~on of the average affordabiLty level
of the tenant households, wluch d~ctates the maximum rent they are cons~dered able to pay
under Federal, State and C~ty guidelmes,~b and the typ~cal costs of operatmg the buildmg
(e g, adrtumstranon, mazntenance, property taxes, an allowance for rent collection losses),
plus a reserve for operatmg losses and buddmg systems replacement The income side of
the ledger ~s therefore constramed by tenant affordabdity l~nuts, and the cost s~de of the
ledger ~s generally higher than m pnvate development, because non-profit developers tend
to prov~de a higher level of sernce to tenants, and are reqmred by pubLc lenders to
mamtam higher reserves, than ~s typical in for-profit pro~ects Thus, the amount of net
operating mcome (gross income r~unus operahng expenses and the losses allowance)
avadable from an affordable housmg development can only support a relat~vely small loan,
even at below-market interest rates
'° Federal, State and Cin' laws and policies define three household mcmne categanes ihat ment special
housmg ass~stance verv low-mcome households (eaznmg under ~0% of the Los Mgeles Counn~ Med~an Familr Inwme
(:viFI)), lou~-mcome households (51 %-80 % a MFI, dependmg on die program) and moderate-wcome households (81%-
120 % x MFI, depend~ng on the prograzn) These mcome thresholds, coupled tii•~th a Federal standard that a household
should not pac more thun 30 percent of its mcome for housmg costs, the Los Angeles Counh~ MfI, }~}vch is ad~usted b}~
the Federal goeenmient each year and a Cig~ calculahon that com~erts household s~ze to uwt s~ze, is the bas~s for
estabLslvng maxunum affordable rents nnd for-sale howmg p~schasc pnces each year
Hamdton, Rab~nov~tz & Alschuler, Inc Page 15
April 6, 1998
Rewsedlnclus~onary Housing Program
for the C~ly of Santa Mon~ca
The Federal Law-Income Houstng Tax Credtt About the only remazmng non-C~ty pubhc
funding resource for affordable housmg is equuy raised through selhng taac credits to
private investors under the Federal Low-Income Housmg Ta~c Credrt program Because
of the way these cred~ts are made available m Cahforma, and the fierce competrtion for
them from both non-profit and for-profit developers, the ma~umum cred~t, equal to about
mne percent of el~g~ble development costs, ~s no longer avazlable to pro~ects in Los
Angeles County Four percent tax credrts are still readily available when used in
combination w~th the ~ssua~ce by the Gty of tax-exempt bonds Tlus ~s the approach that
unll most l~kely be used m the future to build new affordable hous~ng in Santa Moiuca
Though the ta~c credit ~s available to projects m wluch all of the umts are rented at pnces
affordable to households at 60 percent of the County median fanuly mcome, the C~ry's
affordable housmg pro~ects usually attempt to also ass~st households of even more hmrted
means Thus, as a practical matter, neither tax credrts nor any other non-City financial
assistance would be avazlable to pro~ects m wluch all ofthe uruts were affordable at
Proposmon R's and Ordmance 1615's defimt~ons of `9ow-" and "moderate"-mcome (i e,
60% and 100% x MFI, respectively)
Crty Resources The Crty has several current, and pro~ected future, sources of funds that
rt channels mto the development of affordable housmg Bnefly, these include 17
Federal Affordable Housrng Funds Allocated to Santa Monrca The C~ty receives
annual allocanons of funds under two Federal programs for affordable housmg, on
a formula bas~s These are the HOME Investment Partnerslup and the Commumty
Development Block Grant Only a port~on of the funds receroed by the City aze
used for new construction of affordable housmg The annual amounts of the City
allocations depend on national budget dec~sions made each year by the U S
Congress, and the local share of those funds ava~lable for affordable housing
development depend on annual City budget decisions
Repayment of MERL Program I_nans The GTy w~ll eventually recerve repayment
of $33 4 rrull~on m loans from CDBG and HOME funds made available by the
Federal government to ass~st vv~th reconstructron of damaged multi-family
buildmgs after the 1994 Northndge earthquake Loan repayment proceeds w~ll be
restncted to uses el~g~ble under the CDBG and HOME programs (i e, to benefit
lower-mcome households), mcludmg affordable housmg development
~' More detailed etplanahons of these progrums. the~r pro~ected fice-Yeaz}~rclds, and thc number of new
affordable un~U theo~ are es[unated [o help suppuri, are mcludcd m Appendix D to the Hous~ng Element L-pdate
Hamdton, Rabrnovrtz & Alschuler, Inc Page 16
Apnl 6, 1998
Rev~sed Inclus~onary Housing Program
lor fhe City of Santa Monica
-- Redevelopment Housmg Funds At least 20 percent of the tas mcrement revenues
derived from the City's four redevelopment project areas must be reserved for the
product~on of affordable housmg
-- Other E:c7sting Devedopment Fee Programs The City also receives fundmg for
affordable housmg through an existmg fee on the developme~t of commercial
office buddmgs, and the remaining balance of tas revenues from the sale of
condommiums converted from apar[ments under the Tenant Ownerslvp Rights
Charter Amendment (TORCA), wluch has now expired
-- OtherMtscellaneous Ctty Programs Fundmg is also available for affordable
housmg development from repayment of an mter-fund loan to assist with the
purchase of property at the comer of Pico and Cloverfield Boulevazds to expand
Virgmia Park, funds comm~tted through negotiated Development Agreements and
from the existmg Ordmance 1615 m heu fee program (less than $1OQ000
pro~ected over the next five years) The Crty Council also allocates funds from the
General Fund to assist development of affordable housmg
-- Nex~ Tccr-Exempt Bond Program The draft 1998-2003 Housmg Element Update
proposes a new fundmg program through which the City would ~ssue tax-exempt
bonds to provide below-market rate loans for affordable housing development
City Financial Contnbutions to Affordable Housm¢ Proiects
The scale of the Crty's contnbutton to the cost of affordable housmg pro~ects, through one
or more of the above sources, is denved by subtrachng the value of a rent-supportable mortgage
and any Federal, State or other non-Crty debt, equ~ty or subsid~es from total development cost
Today, we estimate that the per-urut subs~dy gap for newly constructed rental uruts affordable to
low- and moderate-mcome households ~s as shown m Table 1(all calculauon details are provided
m Append~x C)
Hamdton, Rabrnowtz & Alschuler, Inc Page 17
Apnl 6, 1998
Revised Indusionary Ho~srng Program
forthe CrtyofSanta Monica
Table 7
PER-UNIT NEW DEVELOPMENT SUBSIDY GAP FOR LOW- AND MODERATE-INCOME HOUSEHOLDS,
CITY OF SANTA MONICA, 1998
(mcludes blend of 2- and 3-BR units and a blend of high and low land pncesl
Calculat~on Component Very Low-Income Low-Income Moderate-Income
(50% x MFq (60% x MPI) 1100% x MFI)
Development Cost
IRangel' S182,92~ - S274,901 5782,920 - S274.901 5182,920 - 5274,901
Pred~ctable Debt/Equity
ContribuGons IRange)
4% Tax Credits' 537,512 - 548,528 NA NA
Bank Loan' 528.396 - 538.977 549.638 - 561.426 588.679 - S1D7.152
Total 565,908 -87,505 549,638 - 561,426 588,679 - S1D7,752
Developmerrt Subsidy
Gap (Range) 5116,984 -$187,433 5733,044 - 5213,844 591,193 -$171,813
DevelopmeM Subsidy
Gaplweightedaveragel° $134,822 5154,916 5112,092
' Includes land, conatruction, p rofesa~onal feas and conetrucnon finanang costs
' Through sale of tax credrts aceigned wa competinve apphcetwn for Faderal Low-Income Ho ueing Tax Credit Program
' Below-market rate loan for th rough tax-exempt financmg for the 50% x MFI units, convenL Onal loan for othera
° Refer to calculetian detaile in Appendix C
Sourca HR&A
The 60 percent of ined~an scenano m Table 1 does not mclude the four percent tvc credu,
because the City is unlikely to pursue taz credits for a tax-exempt pro~ect in wtuch all of the units
rent at the 60 percent-of-median level If rt d~d, the we~ghted average City subsidy gap would
declme to $112,988 (~ e, by the amount of the additional tax credit)
The m l~eu fee for a low-mcome ucut under Ordmance 1615 was ongmally set at $51,000,
based on the average Gty-provtded subs~dy for four new affordable development projects
completed between 1988 and 19921e Cumulatrve ad~ustment for mflation smce then puts the fee
today at $56,055, or about $7 38 per gross square foot for an average five-umt market-rate
'° Resolution 8414 (CCS), adopted June 9, 1992 The uunal T'ee of $~ 1,000 fee was based on City subsidies
totalmg ~6,685:139 for I 3 I unts m four affordable pro~ecu of behveen 12 und 45 ucuts w2th a cmx of bedroom s¢es
Three of the four pro~ects also mcluded funduig from the State Renttil Housmg Constiuct~on Program, wlvch is ~o
longer aeailable
Hamdton, Rabmov~tz 6 Alschuler, !nc Page 18
Apnl 6, 1998
Rev~sed Indusionary Housrng Program
for the Crly of Santa Monica
pro~ect " If the current subs~dy gap to develop a new umt affordable to very low-mcome
households (i e, at 50% x MFI) were to be used as the basis of the Ordinance 1615 m l~eu fee, or
alternatively as the bas~s for an Affordable Housmg Produchon Program fee, the $134,822
we~ghted average equates to about $18 per square foot for the same average five-unit market-rate
pro~ect
As wil( be d~scussed below, if a fee of ttus scale were to be added to the development cost
budget of typ~cal new market rate apartment and condormmum pro~ects m Santa Momca, and
such pro~ects were otherw~se financially feas~ble, tlus fee amount would, m HR&A's judgment,
render typ~cal projects Snancially mfeasible for experienced developers, and it would therefore
render the requirement a"constramt" wit}un the meacung of State housmg element law
B. Indicators of Feasible Fee Amounts
The precedmg discuss~on establishes the scale of the C~ty's cost to develop affordable
housmg -- expressed as the we~ghted average subs~dy gap -- for new construction pro~ects This
sect~on presents our analys~s of how altemahve fee levels could affect the Snancial feas~bility of
the lunds of apartment and condomuuum pro~ects typically developed m Santa Mon~ca, and how
t}us compares with our threshold for a housmg element "constraxnt "
HR&A Feasibiluv Simulat~on Model Undate
In the course of prepanng the recommended program, HR&A updated the financ~al
feasibdrty s~mulat~on models we constructed for the analysis m the 1998-2003 Housing Element
Update concernmg whether certaui City programs conshtute a"constramt" m the development of
new housmg, wrthm the meamng of State housmg element law The updated model accounts for
vanous changes, generally for the better, m local market conddions than existed at the time the
ong~nal Housing Element Updare analys~s was completed Among the changes made to the
assumphons m the model aze those shown m Table 2
" Tkus is based on one low-mcome ~nvt reqmred for a hp~cal ~-utvt proJec[ on nn R2 lo[ A hpicul R2
D~stnc[ lot abuttmg an alle~~ ~vould yield about 7,600 gross square feet of bmldmg floor arca, or abou[ fi~•e 1,520-s f
nn,ts ~n a rico-ston- [o~~nhousz arrangement, mcludmg loft area on thz upper floor
Hamilton, Rabrnovrtz & Alschuler, Inc Page 19
Apnl 6, 1998
Rewsed Indus~onary Housing Program
for the Crty of Santa Mornca
Table 2
CHANGES TO HR&A'S MULTI-FAMILY DEVELOPMENT FINANCIAL FEASIBILITY MODEL
Model Paremeter August 7996 Model Fe6ruary 1998 Model Notes
Pra~ect Start Date 1/1/96 1!1/98 Updated Analysis
Ciry Development Fees Vanes Vanes Updated to FY 1997-98
Crty Fee Schedules
Construction Costs ~
Apt (Low cost area, 1 lot) S68lGSF mcl Pk'g S71 /GSF mcl Pk'g 4% mfla4on m LA
Apt. (Low cost area, 3 lots) 564lGSF incl Pk'g. S67/GSF mcl. Pk'g County construction
Apt (High cost area, 1 lot) S77lGSF incl Pk'g 580/GSF mcl Pk'0 costs
Apt (High cost area, 3 lots~ S73/GSF mcl Pk'g 576/GSF mcl Pk'g
Condo (Low cost area, 1 lot) 573lGSF mcl Pk'g S76/GSF mcl. Pk'g
Contlo IL-ow cost area, 3 lots) S68/GSF mcl Pk'g 5711GSF mG. Pk'g
Condo (H~gh cost area, 1 lot) 582JGSF mcl Pk'g 585/GSF mG Pk'g.
Condo (High cost area, 3 lots) S77/GSF mcl Pk'g S80/GSF mG Pk'g
Loan Interest Rates
Construction Loan 10 5% 9 5% Improved Market
Permanent Loan 8 0% 8 0% Condtions
Apt Caqtalizat~on Rate S 5% 8 O% Improved Market
Condit~ons
Apartment Market Rerrts
Low CostArea S1 15lSF/Mo S1 25/SF/Mo Improved Market
HighCOStArea 51407SF/Mo 5150/SF/Mo. Conditions
Condo Market Sales Price
Low Cost Area 5735lSF 5160/SF Impraved Market
High Cost Area 5200/SF 52351SF Conditions
So~rce HR&A
Recent smgle-family home and apartment buildmg sales indicate that land values are nsmg
once again We mamtamed the land cost assumptions from our previous modelmg work ($40-$75
per square foot), however, because there has not been a suffic~ent number of comparable sales
(~ e, erther vacant land or s~gruficantly underdeveloped sites) over the last year to establish a clear
pattern of change across the C~ty
2 Feas> >h Thresholds
As we noted m our m~tial rev~ew of Ordmance 1615 for the Housrng Element Update, all
housmg development pro~ects and housmg developers are not equal, and therefore it is not
poss~ble to establish a bnght-lme threshold for adverse feas~b~hty impacts that will apply in every
case Property owners and developers have var}ang degrees of experience, resources, abihty to
Ham~Xon, Rabrnovriz & Alschuler, Inc Page 20
April6, 1998
Rewsedlndusionary Housing Program
for the City of Senta Mornca
raise capital, skdls and tolerances for navigahng through the ]ocal land use approval process, and
degrees of mohvation to seek an altemat~ve use of their properties The itucumum acceptable
financial retums that property owners and developers expect from a multi-family residential
pro~ect m order to proceed w~th new construchon, or to continue owmng or managmg an existing
building, also vary Further, the ~rununum acceptable return will vary by pro~ect s~ze, location,
and product type (e g, condomuuums versus apartments)
In our previous work analyzing whether certam City programs constituted an actual
governmental constraznt on new housutg development witlun the meamng of Govemment Code
Sect~on 65583(a)(4), we selected several financial feas~bility thresholds for cons~deration These
financ~al feasibi6ry thresholds establ~shed the pomt at wtuch we beheved a reasonably well-
mformed and expenenced property owner or developer with a typical mult~-fairuly housmg
development pro]ect would elect not to pursue that pro~ect because of the cost of complymg ~nth
a Crty program, regulat~on or procedure A pro)ect that results in a financial return below these
thresholds ~s deemed mfeasible, because a wel]-mformed and eapenenced property owner or
developer would, mstead of developmg the muln-farmly pro~ect ~n Santa Momca, pursue
development pro~ects m other locat~ons where these rrvmmum thresholds are achievable, or make
other mvestment choices
Bnefly restated, these thresholds are
Cash-on-Cush Return for Apartment Pro~ects Among the many measures of retum on
mvestment for income-producmg properhes that are used m the real estate uidustry, cash-
on-cash return on eqmty ~s now a particulazly important benchmark, even for apartment
buildmgs that wilt be held for a number of years Real estate competes with an
~ncreasingly vnde range of altemative opportumties to earn a return on mvested cap~tal In
add~t~on, our expenence and d~scuss~ons wrth other real estate professtonals md~cate that
developers, and theU lenders, want to actueve their returns from real estate mvestment
sooner rather than later 20 Developers expect to achieve rates of retum that are greater
than alternat~ve, largely passive forms of uivestment (e g, msured deposrts, bonds or other
secunties, or mutual funds) commensurate vv~th the level of nsk and active mvolvement
required by real estate development
`" That is, de~~elopers and their lenders no longer count on e4Vnordmun mflahon m value over ume to
produce the level of return needed to ~ushfr the mvestment No~a•, an acceptablc mtum nceds to be aclvevablc m a much
shorter penod of tunz, such as when an apnrtment prqect aclueces stabilizzd occupancy, or a condomw~um pro~ect sells
ou.
Ham~Jton, Rab~novrtz & Alschuler, Inc Page 21
Apnl 6, 1998
Rewsed Inclusionary h'ous~ng Program
for the Crty of Santa Monica
A developer of a small apartment pro~ect must be reasonably certam of ackuevuig between
12 and 15 percent return on mvested equity by the tirne the pro~ect reaches a stabilued
occupancy level (i e, 95 percent) before committing to undertake the pro~ect Once agam,
tlus ~s a general benchmark, and one to wluch there aze undoubtedly some except~ons
T}us cash-on-cash return threshold, because rt~s a funct~on of mcome over time, apphes to
the apartment scenarios only It is calculated as the pre-tax net cash flow (i e, net
operatmg mcome irunus debt service) drvided by the equrty contnbution (m the form of
land and/or cash) Any extra development costs, such as an Affordable Housmg
Product~on Program fee, would have a direct effect on cash-on-cash retum Thus,
assurrung a pro~ect was otherwise feasible, a fee that causes tlus measure of retum to dip
below 12 percent, holdmg everytlung else constant, would, in our~udgment, be the
difference between a feas~ble and an mfeasible pro~ect, for most small-scale pro~ects, and it
would therefore constrtute an "actual governmental constraznt "
Developer Profrt for Condominaum Pro~ects Tlus is the mazgmal difference to the
developer between the value of the completed pro~ect when all of the umts have been sold
(i e, goss sale value nunus the cost of sales) and the cost of developmg it (i e, total
development cost, mcludmg land), compared with the equiry contnbunon (land and cash)
T}us return on equ~ty calculat~on d~ffers from the cash-on-cash return descnbed above for
apartments m that rt mcludes the cost of development In our opimon, which is supported
by d~scussions w~th a number of other real estate professionals, most condoirumum
developers would need to be reasonably confident of receivmg a retum on eqwty of
between 40 and 50 percent, m addrt~on to the value of all development costs, m order to
proceed wrth a pro~ect, particularly small ones Inasmuch as an add~tional development
cost, such as an Affordable Housmg Productior Program fee would dvectly affect
developer profit, a fee that causes profit to be less than 40 percent for small projects,
holdmg everyttung else constant, would cause a typ~cal pro~ect to be mfeasible, and the fee
level would therefore constrtute a"constramt "
Reducttoit in Resadual Land i~a12re For each apartrnent and condorrurnum pro~ect
scenano, the res~dual value of the land ~s denved from the estimated sale or market value
(~ e, gross sale pnce fess cost of sales) of the fimshed pro~ect From t}us value we deduct
all the costs mvolved wrth creatmg the improvements, mcludmg hard construction costs,
finanang and other "soft" costs, and a 20-25 percent (for apaRments) to 50 percent (for
condormruums) profit mazgm for the devefoper Any remaimng value in the fimshed
project ts assumed to be allocated to land, thus the term "residual land value " Any
decrease m market value or mcrease m costs, whether caused by a City program or
requirement, or any other factor (e g, an increase m mterest rates), that cannot be passed
forward to consumers m the form of }ugher rent or condomiruum sale pnce, and if the
Namdton, Rab~nowtc & Alschuler, Inc Page 22
Apri16,1998
Rev~sed Inclus~onary Housmg Program
for the Crty o/ Santa Monica
developer ~s unwilhng to accept a lower profit, would cause the developer to seek a
reduction in the land cost by a like percentage Z' In our feas~bil~ty model, we assume that
when a City program causes such a reduction (i e, by addmg to development cost or
reducmg mcome), the developer and land owner would renegohate the price of the land,
but only up to about a 15 percent reduct~on from the assumed askuig pnce A City
program or requirement, or other factor, that results m a residual land value reduction of
more than 15 percent would be a scale of reduction that the land owner would probably
not find acceptable and the deal would collapse Once more, tkus is a general feasibihty
guidehne, and mdiv~dual circumstances could support other conclusions
Usmg these thresholds, and the more financ~ally favorable assumpnons noted above, we
re-ran the simulat~ons of financ~al feasibihty for one-lot, two-story pro~ects and three-lot, two-
story pro~ects m the RZ D~smct The simulat~ons agazn included an apartment and condo~rumum
vanation of each prototype, and both a lower and higher land cost and rents or purchase pnce
vanat~on for each (total of eight scenanos) For the one-lot and three-lot R2 prototypes, the
rev~sed simulat~ons resulted m the same conclus~on that we reached for the HousrngElement
Update typical pro~ects are stdl not feasible, based on the above feas~bility thresholds, even
without the Inclus~onary Housmg program Tlus is due to the fact that, holding all other City
zornng and development rules constant, assummg a pro~ect follows all currently apphcable Gty
approval procedures and related Cuy fees, and pays for land at market pnces and all customary
construct~on costs, profess~onal fees and financmg costs, the sum of total development costs
e~cceeds the mcome that a developer can actueve from operation (apartments) or sale
(condorruruums) of the completed project, such that the resultmg mcome falls below trununum
thresholds of financ~al feasibihTy that aze generally rehed on m the development commuruty H~gti
land costs still represent the overridmg factor that affects the feasibil~ty of mulh-family pro~ects in
the C~ty Land costs contmue to be at levels that cannot be ~ustified on the bas~s of the total cost
of development and average market rents and condormmum purchase pnces
As we noted m our analysis for the 1998-2003 Housrng Element Dpdate, these
simulatwns are best-approx~mations of the financ~al situahon of the most typical multi-fanuly
resident~al development circumstances m Santa Momca, but do not account for all poss~ble
vanations It ~s also important to recall that the feas~b~ty model assumes a particulaz approach
to muho-fa~ruly res~dent~al development, wluch ~s typical m 5anta Momca, but not uruque The
` In pracnce, an~~ such pro~ec[ cost mcrease ~vould probably be absorbed, [o van-ing degrees by all flu-ee
sources. but the exact allocation of the added cost ~eould be pro~cct-speafic We do not bel~eve the current mazket wzll
support passmg ven~ much of [he cost forvvard to consumers, but dccclopcrs mae be w~dlmg to shave the~r profi[s
somewhat Because we cannot account for such w~~de vanatwn m poss~bic outcomes, u•e have assumed m the feas~bilm~
model that all such costs u~ill be bome by a reduct~on m the pnce a developer would be w211mg to pay for land
Hamdton, Rabtnowtz & Alschuler, Inc Page 23
April 6, 1998
Rev~sed Indusionary Hous~ng Program
for the Cdy of Santa Monrca
approach reflected m the simulat~on models assumes that a developer buys a site from another
party m an arms-length transaction The developer secures the nght to purchase the site at a 6xed
pnce once all Crty enhtlements to develop are m hand (i e, up to and mcluding a buildmg permit),
through payment of a monthly sum (i e, option-to-buy payment) begmung v~nth pro~ect
conceptuaLzahon and contmumg until the City ~ssues a budding pernvt Only at that pomt in ume
is the land purchased The models also assume that the developer obta~ns conventional financmg
for the pro~ect Tlus means that the amount of the loan (and hence, the amount of equity
required) ~s a funct~on of 75 percent of the value of the completed pro~ect, or in the case of an
apartment pro~ect, the mortgage amount that can be supported when the monthly cash flow is
equal to 115% of the debt sernce, whichever is less The model does not account for outside
eqmty mvestors, nor the preferred return on their mvestment that they are usually due Any other
approach to the decelopment of a site -- e g, by a property owner directly who has a low cost
basis m the land, or use of below-market rate financmg -- could lead to different results about
pro~ect development costs, mcome and feasibilrty than those discussed here
For the R2 D~stnct, where most multi-family development m the Crty occurs, we esrimate
that, holdmg all other ttungs constant, rents would have to utcrease between 30 and 35 percent for
the one-iot projects to be feasible For the three-lot apartment prototypes, rents need to chmb
another 10 to 19 percent to reach feasibilrty Condo pnces m a one-lot prototype need to mcrease
between 25 and 41 percent, and m a three-lot pro~ect, they need to mcrease 17 to 28 percent to
reach feasib~lrty
Feasibil~tv Imnl~cations of Alternative Affordable Housme Develonment Fees
To test the financtal feasibil~ty implications of alternative fee levels on typical pro~ects m
the R2 D~stnct under these circumstances, we assumed that rents and purchase prices reach the
pomt at wluch typical pro~ects are feastble, holdmg all other tlungs constant, and then added one
dollar mcrements of potential Crty affordable housmg development fee to the °feasible" one-lot
and three-lot R2 prototypes Table 3A shows the results for prototypical apartment pro~ects, and
3B shows the results for prototypical condomm~um pro~ects Appendix D conta~ns the output
from each of the eight simulat~on model nins that estabhsh the "base cases" -- i e,"feasible"
prototypes with no fee
Hamdton, Rab~novrh & Alschuler, !nc Page 24
April 6, 1998
Revised Inclusronary Housmg Program
forthe CrtyofSante Monrce
Tahle 3A
IMPACTS OF AN AFFORDABLE HOUSING PRODUCTION PROGRAM FEE, IN ONE DOLLAR MICREMENTS,
ON `FEASIBLE' PROTOTYPICAL APARTMENT PROJECTS I N THE R2 DISTRICT IN THE CITY OF SANTA MONICA,
UNDER HIGH AND LOW LAND COSTS AND RENTSIPURCHASE PRICES
Fee Amount 1-Lot Pro~ects in iha R2 District 3-Lot Pro~ects m the R2 District
Per GSF
Lower•Cost' Higher-Cost~ Lower-Cost Higher-Cost
Cash-on Delia Cash-on Oelta Cash-0n Delta Cash-on Delta Land
-Cash' Land -Cash Lantl -Cash Land - -Cash Res~d.
Resid' Resid Resid
149% 00% 159% 00% 153% 00% 14.9% 00%
51 14 2% -2 O% 14.4% -1.0% 14 4% -2 5% 14 3% -2 7%
S2 136% -38% 136% -21% 735% -50% 136% -41%
S3 130% -58% 129% -4.1% 128% -75% 130% -54%
S4 12 4% -7.796 12 3% -5 2% 12 2% -12 5% 12 5% -6.8%
$5 71.9% -~:6'~Xi 1'I.796 -~296 'lt~s96 -75~0% 12 0% -9 5%
$6 11 4Yo -71 5% 11 2% -7 2% 11.0% -17 5% '1~.f9b -'1~:8~2
S7 11 0% -13 5% 10 7% -8 3% 10 5% -20 0% 11.2% -72 2%
gg 108% -754% 10296 -93% 101% -250% 108% -135%
S9 10 3% -17 3% 9 8% -10 3% 9 7% 27 5% 70 4% -16.2%
g~p 99% -19.2% 95% -113% 9.3% -300% 101% -776%
g~~ 96% -21 2% 91% -724% 89% -32.5% 97% -189%
g~p 93% -231% 88% -134% 86% -375% 94% -20.3%
g~ 3 9 0% -25 0% 8 5% -74.4% 8.3% -40.0% 9 2% -23 0%
514 8.7% -26 9% 8.2% -15 5% 8 0% -42 5% 8 9% -24 3%
g~5 8 5% -30 8% 7 9% -16 5% 7.8% -45 0% 8.8% -25.7%
$~ g 8 2% -32.7% 7 7% -17.5% 7.5% -50.0% 8 4% -27 0%
g~ 7 8 0% 34 6% 7 5% -18 6% 7 3% -52 5% 8 2% -29 7%
g~g 78% -365% 72% -196% 71% -550% 80% -311%
g~ g 7 6% -38 5% 7 0% -20 6% 6.9% -57.5% 7.8% -32.496
$Zp 7 4% -40 4% 6 S% -21 6% 6 7% -62 5% 7 6% -33 8%
' S45/sf (one lot) to 540/sf (three lots) land cost, S7 25/sf/mo c urrerrt market rent.
' S75/sf (one IoU to S70/sf khree lots) land cost, S7 50/sf/mo curreM market ren[
' Cash-on-cash return m the fvst stabdaed year
` Percent change in residual land value
Source HFi&A
Hamitton, Rabmov~h & Alschuler, !nc Page 25
Apnl 6, 1998
Revised Indusionary Housmg Program
for the Crty of Santa Mon~ca
Table 36
IMPACTS OF AN AFFORDABLE HOUSING PRODUCTION PROGRAM FEE, IN ONE DOLLAR INCREMENTS,
ON 'FEASIBLE' PROTOTYPICAL CONDOMIN/UM PROJECTS IN THE R2 DISTRICT IN THE CITY OF SANTA MONICA,
UNDER HIGH AND LOW LAND COSTS AND RENTSIPURCHASE PRICES
Fee Amount 7-Lot Pro~eds in the R2 Distnct 3-Lot Projects m the R2 Distnc t
Per GSF
Lower-Cost' Higher-Cost' Lower-Cost Higher-Cost
P~ofiP Delta Profif Delta Profif Delta Profit De/fa
land Land Land Land
Resid' Resid. Resid Resid
SO (Base Case) 50 2% a.0% 50 7% 0 0% 50 296 0 0% 50 4% 0 0%
S1 48 0% -2 0% 49 4% -1 4% 47 6% -2 6% 49 0% -1 5%
S2 458% -41% 480% -27% 451% -53% 475% -30%
S3 43 6% -6 14U 48.7% -4 1% 42 5% -7 9% 46 O% -4 5%
$4 41 0% -8 2% 45.4% -5 5% ~~;~~ :'[~_~~j 44 6% -6 1%
§$ 39.29~t -10:29b 44 1% -6 9% 37 3% -73 2% 43.1 % -7.6%
S6 37 0% -12 2% 42 8% -8 2% 34 6% -15.8% 4~ •6% -9 1%
$7 34.8% -16.3% 42 4% -9 6% 32.2% -78.4% +~~:~~ =~#1:#i7b
~$ 3z 6% 18 a% 4D.1% -1.7:~96 z9 6% -21 1% 38 7% -1o s%
30 4% -2D 4% 38 8% -12 3% 27.0% -23.7% 37.2% -12 1%
S9 z8 2% -22 5% 37 5% -13 7% 24 5% -26 3% 35 7% -13.6%
S10 280% -24.5% 362% -757% 21.9% -290% 343% -152%
S~~ 23 8% -26 5% 34.9% -16 4% 19 3% -26 3% 32 8% -16 7%
S~ Z Z~ 6% -2B 6% 33.5% -16 4% 16 7% -34 2% 31 3°~' -18 2%
S13 ~ 9 4% 3D 6% 32 2% -17 8% 14 2% 36 8% 29 8% -19 7%
514 17 2% -32 7% 30 9% -19 2% 11 6% -39 5% 28 4% -21.2%
S15 15.0% -34.7% 29 6% -20.5% 9 096 42 1% 26 9% -22 7%
516 12 8% -36 7% 28 3% -21 9% 6 4% -44 7% 25 4% -24.2%
S~~ 10 6% 36 8% 27 0% -23 3% 3.9% -47 4% 24.0% -25 8%
S18 84% -408% 256% -24.7% 1396 -500% 225°6 -273%
S79 6 9% -42 9% 24 9% -26 0% 0 0% -52 6% 27.0% -28.8%
S20
' S45lsf (one lotl to S40/sf (three lots) land cost, S 7 60/sf curreM market purchase pnce
' S75lsf (one lot) to S70/sf (three Iots) land cost, 5235/sf curr eM market purchase pnce
' Developer profit margin (after return on all ~nvested caprtal and development costsl.
° Percent change m residual land value
Source HR&A
Hamdton, Rabinovitt & Alschuler, Inc Page 26
April 6, 1998
Rewsed Indusionary Hous~ng Program
for the Crty of Santa Monica
The lughhghted values shown m Tables 3A and 3B md~cate the fee amounts that could be
charged without causmg the fee to consritute a"govemmental constraint" w~tlun the mearung of
State housmg element law These results indicate that there are different tolerances for an
affordable development fee, dependmg on the product type (condommiums vs apartments) and
azea of the C~ty (e g,"}ugher-cost/value" azeas north of Wilsture and in Ocean Pazk vs all other
areas of the City) More specifically, the fee could range from four to eight dollazs per squaze
foot for condomimums, and five to six dollars per squaze foot for apartment pro~ects, without
crossmg our definition of a"constra~nt ° If set at these levels, typical pro~ects m wluch all of the
umts are market rate would be assessed fees as shown m Table 4, on the following page
For a one-lot apartment pro~ect, the constramt-detemuned $5-$6 per square foot fee range
~s equal to about two-tlurds (68%) to over three-quarters (81%) of the fee that is now m effect for
a low-mcome umt, although the abil~ty to pay the current fee is tughly restncted under Ordmance
1615 For a one-lot condomicvum pro~ect, the constramt-deternuned $4-$8 per square foot fee
range ~s equal to between half (54%) and ~ust over the current full fee (109%) for a low-mcome
umt
For a typ~cal five-umt apartment pro~ect, fee revenue denved vv~ttun the constraznt-
deternuned range ~s equal to about one-quarter (28%) to one-t}urd (34%) of the C~ty's subsidy
gap for a new low-mcome umt For a condoauruum vers~on ofthe same pro~ect, the constraint-
deternvned fee revenue equates to between 23 and 45 cents of each dollar of C~ty subsidy gap for
a new low-mcome umt Stated another way, ~t would take between 15 and 18 umts of market
rate apartments, or between 11 and 22 new condomimum uruts to generate enough fee revenue at
the constramt-deternvned levels to equal the average C~ty subs~dy gap needed for one new unit
affordable to a low-mcome household
Hamdton, Rab~nowtz & Alschuler, lnc page 27
April 6, 1998
Rev~sed Indusionary Housmg Program
forthe CrtyofSanta Mon~ca
TBble 4
PER-PROJECT COST OF CONSTRAINT-DEFINEU FEES IN THE R2 DISTRICT
# Units Floor Area
IGSF)
5 7,600
10 15,000
Apartment Prqects Condomimum Prqects
Fee Per Fee Amount Fee Per SF Fee Amount
SF
55.00 538,000 54.00 530,400
5600 $45,600 5500 538,000
56.00 546,600
S7 00 553,200
58.00 560,800
S5 00 575,000 S4 00 560,000
56.00 590,000 55.00 575,000
56.00 990,000
S7 00 S105,000
5800 S120,000
15 22,500 S500 5712,500 54.00 590,000
5600 5135,000 5500 5112,500
S600 5135,000
S7 00 5157 500
S8 00 5180,000
20 30,000 S 5 00 S 150,000 S4 00 S 7 20,000
3600 5780,000 55.00 5150,000
5600 5180,000
S7 00 5270,000
58.00 5240,000
25 35,000 55.00 5187,500 54.00 5150,000
S6 00 S225,000 S5 00 5787,500
S6 00 S225,000
S7 00 5262,500
SS 00 5300,000
Source HR&A
For whatever development fee or fee range ~s eventually adopted, ~t ~s also recommended
that the fee be reduced when new mulh-family pro~ects are p~oposed on vacant resident~al sites, or
vacant or underutilized commercial sites, rather than on multi-family sites with e~stuig rent-
controlled apartments Tlus mcentrve may reduce the potent~al for displacement of e~stmg
renters, should a developer elect to ut~hze the Ell~s Act or successfully obtaui a Rent Control
removal pemut
Ham~lton, Rab~nowtz & Alschuler, Inc Page 28
Aprd 6, 1998
Rewsed Mdusionary Housing Program
for the Crty of Sante Monrce
Table 5 shows that m add~tion to a reduced fee, certaui other calculadon ad~ustments may
be needed m order to prevent an Affordable Housmg Producuon Program fee from exceedmg the
fee now m place to offset the affordable housmg impacts of new office development, and thereby
reduce the attractiveness of developmg a residenhal pro~ect on a commercial site that ~s also
su~ted for office development Tlus example suggests that the reduced fee would have to be set
between $5 and $6 per gross squaze foot, it would have to be appl~ed aga~nst residential floor area
counted at one-half its actual value, and the floor area for any ground floor parlang would have to
be ~gnored Tlus approach to countmg floor area would be generally consistent wtth e~sting
zorung code regulations that aze mtended to encourage development of housmg in commerc~al
zones
Table 5
AFFORDABLE HOUSING FEE FOR NEW MARKET RATE MULTI-FAMILY HOUSING
ON A STANDARD C3 COMMERqAL SITE VS.
THE AFFORDABLE HOUSING FEE FOR COMMERCIAL OFFICE DEVELOPMENT
Prqect Parameter Market Rate Commercial Office Pro~ect
Mult~-Family Prqect
Apartment Condom~nium
Maximum Bwldmg Height
Feet (hy SMMC) 60'-0^ so~-o° as'-0"
Stories (by design) 5 5 3
Parking Levels One @ 1st FI One @ 1st FI All
1-2 Subt t-2 Subt Subtenanean
Maximum FAR 2 0 2 0 2 0
Floor Area Per Floor 4,500 4,500 5,000
Gross Floor Area 22,500 22,500 15,000
Ad~usted Gross Floor Area 9,000 9,000 15,000
(residential at 50% x actual,
not mcluding ground floor parking)
Number of Residential Units 20 16 NA
Fee Per GSF or Ad~usted GSF $5 60 S5 60 53 38 -- 1st 15,000 GSF
S7 51 -- Over 15,000 GSF
Total Fee 550,400 550,400 550,700
Source HR&A
Ham~Ron, Rabinovitr & Alschuler, Inc Page 29
Apnl 6, 1998
Rev~sed Mclus~onary Ho~smg Program
forthe Cdy ofSanfa Monica
The Case for an On-Site Affordable Housm¢ Altemative
Because of the gap between the constramt-detemuned fee levels and the average C~ty
subsidy needed to produce a dwellmg urut affordable to a low-mcome household, rt is m the Ciry's
mterest to facilrtate the mclus~on of low-mcome uruts m proposed market rate projects (i e,
actueve whole uruts wrth no addu~onal City fundmg) Our analysis of the Snancial feasibilrty
implicat~ons of the proposed new development envelope and parkmg flexibdities For dens~ty bonus
pro~ects mdicates that the addrtional cost of mcluding a low-mcome umt m a typ~cal one-lot
pro~ect m the R2 D~stnct would be completely offset by the abdity to ac}ueve one additional
market rate urut (~ e, s~x market-rate uruts and one low-mcome umt m a density bonus pro~ect vs
five market rate umts otherwise allowed) If set at levels that meet the mmimum requ~rements of
the State dens~ty bonus law, projects m the R2 D~stnct should be able to produce the numbers of
affordable uruts shown ui Table 6, if the proposed development envelope and pazlung flexibilities
are enacted Table 6 also suggests that the State density bonus formula wil] probably encourage
developers who elect tkvs option for larger projects to prov~de umts at 50 percent or less of
median family mcome, because domg so wdl allow more market rate units to be developed
Table 6
AFFORDABLE AND MARKET RATE UNITS FOR TYPICAL PR0.IECTS IN THE R2 DISTRICT
UNDER THE PROPOSED ~ENSITY BONUS PROGRAM REVISIONS
Lot Size Base Units Units Allowed Market Rate Low-Income
(with helf Allowed With 25% Units Umts
alley width) 17:7,500 sf) Density Bonus
1 la 5 7 6 1@ 50% x MFI or
(8,000 sf) 1@ 60% x MFI
2 lou 11 14 1 7-12 2@ 50% x MFI or
(1 6,000 sf) 3@ 60% x MFI
3 lots 16 20 16-78 2@ 50% x MFI or
(24,000 sf) 4@ 60% x MFI
Source HR&A
The Case for Other Alternatives
We further recommend that the C~ty allow developers two add~tional alternahves for
meetmg their obl~ganon to ass~st m the product~on ofaffordable housmg, besides payment ofa fee
or mcludmg affordable umts on site wrth a density bonus Though these other alternat~ves are
somewhat more difficult to spec~fy, they would enable the pnvate market to choose from among a
Hamilton, Rabmowlz & Alschuler, Inc Page 30
Apnl 6, 1998
Rev~sed Indus~onary Housmg Program
for the City of Santa Mon~ca
full range of strategies, and thereby better ensure that the Crty's atFordable housmg production
ob~ectives are met
The add~t~onal recommended altematives include
Off-Site Affordable Housrng Produchon There may be mstances in which a
pnvate developer would see it in lus or her interest to build affordable uruts at
anotherlocation m the C~ty, alone orin partnership unth other private developers
m order to fu1811 the~r respectrve obfigahons, or ~n partners}up with a commumty-
based, non-profit development corporat~on We recommend that the number of
any off-site uruts be equal to the State dens~ty bonus formula (i e, 10% of the
mazket rate umts at 50% x MFI, or 20% of the market rate uruts at 60% x MFI)
To address other City policy ob~ectroes, we further recommend that any off-s~te
affordable umts be developed wuhin a one-half mile rad~us of the market rate umts
Other requireme~ts about the size and character of the off-srte units could be
consistent with requ~rements for on-srte affordable umts
Land Acqursatton for Affordable HousrnR Land ~s the smgle largest cost item m
an affordable development pro~ect Pnvate multi-family developers can sometimes
provide, or help prov~de, ttus cnhcal component at less cost or m less hme than the
City or its non-profit development partners Tlus couid result from other
propert~es that the developer owns, or by harnessmg the developer's financial
resources for the benefit of an affordable housmg project Examples include
do~atmg land m return for a ta~c deduction, selhng land at below market rate or
ophomng land on behalf of the C~ty or a non-pro&t
The new tmplementat~on ordinance should provide for these alternat~ves, though HR&A
recommends that the specifics awa~t development of separate program gu~delmes
Hamdton, Rabmowtz & Alschuler, !nc Page 31
April 6, 1998
Append'u A
i i~ ~ _ ~
PROPOSITION R
SECTION 630. Inclusionary Housing.
The C~ty Council by Ordinance shall at all times require that not less than thirty percent (30)% of ail multifamily-
residential housing newly construded in the City on an annual basis is permanently affordable to and
oceupied by low and moderate income households. For purposes of this Seetion, "low income household"
means a househotd with an income not exceedinp sixty percent (60%) of the Los Mgeles County median
income, adjusted by family size, as published from time to time by the Unked States Department of Housing
and Urban Development, and •moderate income household' means a household with an income not
exceed~ng one hundred percent (1D096) oi the Los Mgeles County median income. adjusted by family size,
as pubiished from time to time by the United States Department of Housing and Urban Development. At least
Tifty percent (5~%) of the newly constructed units required to be permanently affordaWe by this Seetion shal~
be affordabla to and occupied by fow income households.
~
CfTYATTORNEI^S IMPARTIALANALYSIS OF PROPOSITION R
Pursuant to prov~sions of the Govemment Code, the City Council has proposed that the City Charter be
amended to add Section 630 relating to inclusionary hous~ng.
This measure would add Section 630 to the City Charter to require thai the City Council by ordinance shall at
all times require that not less than thirty percent (30%) of all multi-family residential housing newly constructed
in the City on an annual basis is permanently affordable to and occupied by low and moderate income
households.
The measure defines "low income household" as a household wkh an income not exceeding sixty percent
(60%) ot the Los Angeles County median mcome, adjusted by family size. A"moderate income household' is
defined as a household with an income not ezceeding one hundred percent (100%) of the Los Mgetes
County median income, adjusted byfamilysize.
Under the measure, at least fifty percent (50%) of the newly constructed units required to be permanently
affordable must be affordable to and occupied by low incame households. In other words, at least fifteen
percent (15%) of aIl newly constructed housing in the City must be affordable to and occupied by low income
households
The measure gives the City Council discretion in the method of implementing the requirements of this
Sedion. However, whatever method the City Councii adopts 6y ordinance must ensure that at least thirty
percent (30%) oi the muiti-family housing newly constructed each year in the City is permanently affordable to
low and moderate income households.
ROBERT M. MYERS, City Attomey
i
usa~ / n
9.?a.I30
g[sater de•••t (prior •~•,~!• § 9411A. addcd by Ord Na_
231CCS. adoFted 10l10I50)
91A140 Nc+~ ot re*ixd dements.
~n ~~~+~uan ce thosc dcmeua pteno~sly set fo:th ia
~ c~,anrcr. the follawnng new or renxd elcmean sbaIl
be iaduded m the gweral }~~*' a laad ux demw6 a
~*++>>coa elcmrn~ a ha~ ~+*y elemenc, a oomavaaon
demca~ aa opea spae~ demeac, a scismic safsty de~~~-
a safery elcmea~ a noise element, and a soeaic h+!hray
~.~.~+r: ui m~loimaY..+W c•n•• ~qummeas, Such otha
~ad 5athrz ~. or a~+^~^~ to the abo~e el~ss
~sy be addcd ar made from nme so cma to comply with
cr~:~ nqu„~...ents (Pnot code § 9M111H; added by O[ii
No. 231CC5, edcPted 10/10/50)
9.24.150 G"" ~1 Pe~P~~ ~ ~ P~d
In che Y. t}•aneion of tbe mzsser plsa the Cc+~++~+~+m
~haII,,,,tie mrcfiil ~*+~+:~,.w.:~Smsive stiave/s snd st~ies
of che ~*+~o ooodinoas aad probabYy futu:t gavth of
the mnniapalicy aad iss canmos'lUe ptan s6a(t be made
~vith tbe genaal pu:paae of g~,ia,~g and +._..~,.Y~~B
a eoord'mau4 adJ~tted, aad humonious development of
the muaicipaluY v~'v'~+ ia acoordaaa with msung aad
~,~••• ncedt, w~ best pcomote public ~~. safety. motaLs,
ooaveaience, PcosPa'it9. or the geoeral wetface, as well
az effiaeary and ewnamy in thc proczss of devclop~~**-
(Pnor code $ 9412; added by OttL Na. 731CCS, adopeed
16130/56)
924160 Adoptioa of a!~••*er plaa
'Ihe CaR*~+++n+on map prepare and adopt all ar a~ part
of tbe msuer plan aad may rta+~+~ead svr~t ~+x m the
Ciry Counal for adopaon az offiaal pla~~ Befoce rrmm-
mcndmg ~o che Cary Cc+,,•~t aay wch piaa or any amend-
mcn~ chereeo, the Plaming Co~*++*»+~n ~h>t hold at least
one publ~c hean*+o- nocct of [he ome and place of wh~d~
~+a~~ be gvcn by one pubtraoon in a newspaper of geoenl
cuwlanon m the Csry aad by such othet moaat as che
Cc+~*'*•~~~a may deem e~~-_ry. "!be adoprion af the
pian or any part, 3mCIIdmeII4 O[ 7dd1C06, shall be by
ruolunon camed by tbc affi+mahvc vo[a of not less than
a majoriry aE all af che mombers of the Com~++~ro~a'Ibe
resoiucon shall refer ~,~~.~ w the maps, ducriptive
mactez and other maturs m[ended by the Coe+~+~«ion
eo focm the ahole or pazt of the plaa md the aciion taken
shall be recorded on the adopted plan or part chereof by
the idennfymig sgnanae of fie seaetary of the Comm~o~
and a cflpy of the plan or pazt theteot shalS be cert~ed
to the ~ty CoundL
Upon rece~p[ of a cemfied copy of the master pla~
or any part [heroof, or amendment there[o, az adopted
by the Plazuw~g Com~++~R~o4 the Ciry Cound shall adopt
wch paru ehereof az ceasonabfy may be appl~ed [o ~he
developmen[ oi the Ciry for a cusanable prnod of ume
ensuing. Such paru shall theceupon be rndoesed and
czrufied u offinal plaas [hus adopced for [he cemtory
coveru: and haeby ue dalazed m be aablsshed to
consave ard p.:,~note the publit healtf4 safcry and genecal
welfare. Sefore adopcing any such plan or part thereof
ar amen~mt ~haero. the ~ry Couaai sinU 6o1d Y ieart
aoe putrlie beuin8 ~henoa noact of the time and piaoe
a[ ~rhirh shail be published at leau once in a n~wr~fpa
ot sencral ~..:ulanoa in the 6q at le~st tea days baleit
the day of surb Learmg. No ~age in or ~~++~^n m tLe
master piaa or aoy pact thaooL or ameodment theseto.
as adopced yy the plammg Ce,••~*;a~;•~p~ aCaa be mde
by the City Ca~meII m adoptint ~be same as ao aS~da!
pian tmtIItbe aidpcvpcxe~d ~angc or ~±~7~ shaIl ~~c
beea :s6ecxsd w thc P~~~~:~~ Co~^•^~~,~+a for a report
theceon aad aa acested copy of su~ iepoct s6aII hare
bem 51ed w~ith ehe Gty Coanol Faihere of tLe P~•••^:^•
COIDmIffiOII f0 LO ttpOrt ~vlLb1G fOt[}~ d7}~S. Ot tS7CE1 jOIISC[
period. as msy be de.ae~,..,r.n by the CSry Co~tndl, sftu
wrh ~faeme, ~+~~~ be d~smed to be approval of the
ProP~d cbange or addiaoa (Pnor code 4 9413: added
by Ord. No. ZiiCCS, adop[ed 1W10/50)
(;~pta 92E
INQ,USTONARY HOUSWG PROGRAM
9.?8.010 Pfudinp and pcrposa
9.2i.020 DeBnitioos.
9.28.030 Appliabilit7.
9.26.040 Ptoje~ de+e{opment reqaicemeats.
918A50 Oa-eiee sod io-liea fee opaaas
926.060 Oe-site iednsionary uait
de~eiopmmt cequirem•~••
9~.070 In.lim fees for indmioaaq
~
9.Z8.080 [.
Fee wai-ers
9.28.090 Dmsit7 bouas and other
in«afl.es.
9.26.100 Pri~+~~ eequiremeaU tx
inNosiooaq unitt
4.28110 EliDbilitY ce4ainmmts.
9.28.120 R~!~sioo to uuits requiesd b~ :mt
wn~ol bwrd.
9.28.130 Deed eetrietioos.
9.28.140 A~ailabiliry o[ gonrommt
subsidia.
9.26.150 Ec[orc~mt
9.28.160 Rdatioa to units or [ees esqnired
putwant to futuee ordinaacet
impl~mhag peoYram 10 of ffie
Citys Honsin= Etemeat
9.28170 Mau~l cepoR
9.78.010 Fadic~s and purposa
Zhe Ciry Counc~ finds and dedares:
(a) '[be Gry o[ Santa Moma has a rapo~biliry to
address the needs of i~s taidenu and residents in the
rep~on, trom all soeial aad econocnic groups, for decsa[,
affordable hoaung, wttile ac [he same [iate mam[aiaiag
an cwnom~cally sound and healttry rnrironmeeG
(b) 'I1u Housing Flement of [he Genoraf Piaa ot the
Gry of Sann Monua adopced on Jmuary 75. 1983, pcw~d-
542
9~030
od tor aa ~adu9omry ha+~o p~ogram m add:cs tLc ~ed
tor ~_n±+~! and aHordable hcnuiag m Program 12
(c) 'Ibe Gry Co+~: ~ p~+opaiy roasdezzd aad adopted
the aompancaa of en mrhmoea~' hrnssm8 Y«,y..,, ~vhr~
wuld ~mplcmmt the goah af Prognm 12 u~u meetmg
oa Maxs~ lU, 1987.
(d) Oa hme 28,19~8. tbe 6xy r~_ i nvnod Pmgiam
17. adoptm8 Oc~ame N~±~+!t~* isa8 (C~ to mmpkment
those xevirioas
(e) Oe May 1,1990, the ~iq Camo7 adopted Ocdi-
nance N~ba 1519 (CCS) oa au iat~:',... batis, findai8
tLat the vut ma~oray of unr housmg uaia being o0o-
suvcted m t6o C5ry of Sann Momn vecs not ~!n±rdabk
ta Qc:soos of law. moden[a, ar mid~e mwm0. thst the
aureac iedusionary cequmemems plsad on uex ho~~~+*~_
devdoyWens were ;*~~±,~,•••• co allow the Gry of Saata
Mcnira to p:wide s~m[ e~~w+s of oew 6ous~g umss
m pecsona ef Iw. moderate, ar ~ddk iacame, that the
aarc~at pet aqua~ foot iaheu fee vas madegsate to a0ov
t6e Cuy of Sann Monin to pravide the number of unia
ib1Ch Wt1IG bG Ft~.ldCG lf tEG IDC~ILGDILL7Y IT.QtII2~GnLS
06 ~CW hNW31n$ dEVCw.yuatIIt ~iiCR IDC[ Gy yav.tSlOG Of
s'
on-ste hw~~e nma~ and eh•~ u wu ne~aary to amead
the mdusjepuy pcpgram pp an ~n~-. ~u bads Iv allow com-
pletion af a„~ m dete~eye tbe moai approp:ias~e on-ste
and'm-fieu fee cequirtmea~
(t~ On November 6, 1990, the wters of the Gry of
Saan Mm~ica .pya:,.ed Pmpoaeoa K, adding ~oe
630 co [hc Gry ~!~ner to xpd u folloas:
Tlte Gry Counc~l by Ordinaace shall at a1! timcs
requfre tbas aoe lea ths* t~rry pcccenc (30~D'o) of all
multifamify-readennal k~ounng aewYy consmuced in
the Ciry an an annua! baas u per+~±~~ea8y a$ordable
to and oceupied by lod and moderate income
households For purpous of this Srivon, "law inmme
houuhold" means a hauuhold with an u~come not
e:eeedwB siuy pcrceat (6Q%) of the Cas Angela
Couary median inmme, ad~uued by family s'u.e, u
publis6ed from cme to ame try the Umted Srates
Depaztmrnt of $ouung and Urbaa Dcvelopment, and
"moderate mcome houuhold" meaas a household with
an iaeome notexceediag one hundredpeccent (100°0)
of ehc Las Angela Couary m~~~* mcome, ad~usted
by fa~++?y ~zc, az pubfuhed from nme to time by ehe
United States Deparcment of Housing and Urhan De-
velopment At leazc 6fry pe;cenc (SO%) of [he newly
~on5~vaed umts r=quiisd w'x pcrmanrntty aHoniablc
by this Scet~on shall be afEordable co and xcvp~ed hy
laav mmme househatds.
(pJ On December 29, 1.99p, the Gry of Sanra Monira
publuhed nouc~ thac on ianuary 8.1991. the Gry Counal
aould coosider issu~ mtaung co the implemcnuaon ef
Propos~non R mduding whethc; the tlurcy peccent rtqttire-
ment of Propcuiaon R could be met on-site or oS ate,
whether an in-fieu fce would be permutcd, and w6ether
the thirry pecant requi:ement had to be mct an a pmjea
by pcojcc[ baz~c Ilvs noea a1w H~ahded ehat ac rhe
lanuary 8,1991 mee~mg, che C~ry Council xrould cons~der
d~recdag sraff to prepaze an ordiaaax to implemeat
Propos~non R
(h) Gry Staff prepaced a ssaff report for the I~R+!~ry
8, 1991. ~ry Cnuml meedng idendh'mg tbe asues that
had tn be ad~~ u put of the ~plemerincan o[
Pcopaaman R su~a~onB a P*'-"'-"= far otr~%*~•~~ pubtic
mput, praee~~o Ciry Sraffs iesolunoa of atua naed
by P~st,nsiaon R's ~mplemrnncoa acd re~s~~^~
t6at m8 be d'a~*!~ w peeFmis aa ordinaace ~
Pmpaainon R
(i) At itt Jaauary 8. 1991 meedag, the CSry Crnma7
d"a~ ~ staff w ptepazs aa osdinwm :L.plcmenoa8
r.vyaainan R and to mtum thc ordinancc to tLe t5ry
Coundl on Fc6ruuy 2b, 1991.
G~ The Saata Momca Planning Co*±++~+*RioA as w~e11
az othcr groaps m the communiry, belicved the se6~ile
for tbe ie~um af the ondinance did not r~~~ide opportnni-
aes for adequace renew of vuious alterna4ve scuegies
for implemrnaag Ft~y,usirion R
(k) At iu meehng on February 19, 1991, the 6ry
COOIfO~ !~!^!S^~ t0 IC9I1S1~Ef w~1GIk1C7 8Il 4aaiu~iDCC St100~d
be pceQaced, and uheduled for uc next reg~~~•• maon8
a general ~+_=~sion ot implemeanng suategi~s.
(1) On Much 5,1991, the Ciry Councit ~ected the
~Y ~~Y w p~spaze an ordman¢ prolnb~,;•,~ tLe ~
nf aQplieaaons far ctarket-rate residential housing imal
sur1~ 6me as the Csry Couna7 adop[ed an o~+,~•~x impk_
men~g Ptc-~tian R rsecpm~g irom the ptOhbinon any
proja[ in wtuch th~rty pemnt of the unia coosn+TM±~±
on-sice azc avaitabla to low acul modc: ate mmme pecsoat
as pronded for m Proposiaon R.
(m) On Mareh 7b, 1991. Ordmance Number 1577
(CCS) ~ adopted ~mposng ~sanctio~ss on new auil++fi~yY
heus~ng co ensure campiiance with Proposiuan R Tbis
or~~*~nx was due co exp~re on September 26, 1991.
(n) On .4Pn7 3.1991. the Planaing Cnmmsson ten~wad
an outine developed by staff on the iaves aad mfocmarion
that would be ~..a~znted u parc of the analysu on the
alternanve implemensaaon scra[eges.
(o) On September 30, 1991, the Ciry Coancil adopted
Ordinanx Number 1599 (CCS) ectending the asn~ittoa~
on aew mulafamily twusmg w ensure o~mpUanee with
Propomrion R, pend~ng [he invance of a s[aH report on
a propoud 'unplementauon stratcgy under Proposinon
R, [o aliow public trnew and commen[ on the staS repoct,
and to allrnv ame far public heanngf bcfarc the Ptanning
Comm~wvn and City Council. 'IZia ordmance was du~
to expae on 7anuary 10. 1992.
(p) On Scptembcr 10, 1991, a rcpott was ~ss++ed by C+ty
s~aff on the "Proposed [mplemeneation Strategy Under
Proposiuon R" incoepora[ed ineo a Summary Report aad
Technical Report on Pmpos~t~on R_
(~ On Oao6er 16 and October 25,1991, the Plannine
CommiSSion conducted a pub(ic hearing on the propesed
impkmennnon s~tategy, and formulated a ~ecommaidadan
to the Gry Counal. Ihc Plannuig Comm~ssion rcqueued
a cwo or [hm monch aceension of the natcing moeacorn~
osdinance on mulufamily cesidenua! developmrnt co allow
for furcher pubtic rev~cw and Plannmg Commission wnsid-
eranon.
543
9?S.O30
(r) On Nwemlxs 19.1991 the 6ty Ca~~~~ oon•~~,+••~
a pubhc hearm8 on tbe svff proposaL and tequeued+t,~+
staff rn~+me ~,~i,ticual modek acd pmnde addidooal
infotmanoa m ~he Gry Couaal
(s) On Nwembcr ?b.1991. the Ciry Coundl adapted
Ocdmmce N„**,~+cr 1609 (CfS) to emlae tha[ the Gry
of Saaa Manua wrnsld :~.Wrty wuh Psopomeoc R whle
furti~er ~S ~"'drs toc ~°°g+i`~. ~k,,.~.,.~"°
of the meuiae.'Ibe ond'mana was due ro c~iso w A}a~7
16, 194L
([) On Dectmbcr 3,1991, the Gry Couocil ~~^•±
the Ciry Anrnnry m gcspa:c an m*±~•••••~ impiemr~*••~
Prop^~~^~n R whi~ u'~~a sa .y~,a~ach roqttaing tbe
prwisiaa of on-flte iad+n~~±osry unim ia aRs+++ ~aim-
sta :-. aad allowmg the paymmt of an m-I~eu fre ic aher
m.,,,~.~.,~_~ as sct:~.v, belaa. Tlfe fiodoMmg o~dinanoe
u ncrsssry to eaabk the C'iry to mxt tLe iequitemeaes
of A~~ooo R .
(n) p.» ., ~;++o to the 1980 C~~~a, 42.8% oF all S~aa
Maoiri rti+~*~ ue of ba or moderate ir:n;~„a AE,~.mt;-
mauty eigbt [housaad 5ve 6undmd resdeaa Iive below
the povetty liae.
(v) Ybe hamelms populamn ia the Santa Mo+++~ azea
is ~*+~~ted ro be beiwxa thtee thauand and frve [hou-
sand penoat
(a') A~pmmmardy twelve thc+~n?~ fm hund:ed y,~t7-
fivc lower mmme hoiueholds are pying more chan one-
third of their ineome for hrn+~*~ Over thise~uarteis of
these are rontexs W6ea the eost of bousiag ~,,;r.eds thitry
peta¢t, it becoma a busde0. r~~~±^~ the mon~y ah~ahle
for othet ~M-~~ry es~easa.
(z) P.YY.~.-~,~r~ytwothc~,n~dfourhundcrdhouse-
holdc in ~he ~ty live m ho~+d~e that is weruowded
(y) The average sales price of a cwo~bedroom,
y~~~_r~n,~ty house m 1990was frve hundred [wenry-five
thrn~~^,d [hzee huadied fihy dollazs aad a tao-bedroom
w~ort+,n+um averaged chroe 6undced fifry-0ne [haumd
one b++++~'*ed eight ddlazs'il~e h~gh ~ of foraale housng
ir~±~~~u thac iLexc aze no oppommiria for iower-iaeome
or moderate-mwme hoiueholdt to own 6amcs ia Sanu
Momca w~thout ~tanca
(z) Over cwenry pcmat of Sann Mouica's ho»vholds
azc headed by seoior dtiuns Appror~+=~efy sz¢y-5ve
pacent of the uuior einun households afs sentecs. Ie
1980, utuor f~~~hes represeated caenry percent of she
fa~++~~ia anth ~nmmes below the poverry level and suteea
pescent oE the sing{apecsanhouxholda tmng in povecry
m the Ciry.
(aa) There a essenaally na vacan~ raidential land in
San~a Moruca. New mnswaion m~ut oaur on rscycled
panel~ or an mazgnal commeraal or induunal tand Wha~
pemLc ue recyded whid~ pmiously ooowned affo~able
houcmg, there u ohen a net loss in the wal numher uf
aHordable ho,~n~ u:ua prwided, evrn wuh an induvonary
houting requi~ment.
(bb) Thero u ~nadequau feaeral and scace wpporc
for progs~**+~ ro assiut the Gty m meetmg iu aHordable
honung needs. (Pnor code § 942o- amende~ by Ord_ No.
isi9ccs, aa~«a sn~o: Ord. No. 1615CC5 § 1, ~op«a
3/3N2)
918.07A Deliaihom.
'Ihe foUowu~B votds or phraus as ~~4•,_+ iss ~his mspoa
sbal! have the follaviag meanin~:
De.eSo~+ed Use. A use o[ laad which i~udes e;rM•
r~deaaal or mmmana! °+^
nw~+~:..~ Unic ooe or mom rooms. ~~ ~d.
or mte*_~ for _-^M^+^'y u xpara~ WmB 9~ ~
tull aant;++~ sleepmg, and.b~th*mm ficilitics [or t6e
~s~xwc ux of a ~~~~~ houxhold D~vellmg uait shall
alsa mdude angle mom occupaacy ~mic
HUD. The Uni~ed St~t~ Depacsmenc of Housiag a~
Ur6aa Developmea[ or its ~~_^^~^,.
Iadndooar~ Unit. A rmui or owaaship dw•t~;•,~ ++•,+~
aa mqmmd by thn Cba~ta ah~eh is aHorda6le by a hause-
hold wlth low or modmie mmme.
Iname ~'~'~^i. lbe gsos affiual-household 'mcame
wosde:mg houxhold m~ aad mimber of depeade^*~.
iocome of all wage earnecs, ddeciy or disabled fa~1y
membas, aad all other srnuees ot houxhold iacoma
In-Iiea Fa. A tee paid w the City by a devebper
subjea m rtic~ c~.~~,cr ia tieu of y~~ding the reqtatsd
inr2usonary unia
:-S~ciret Rate UmL A dv~~~ imt[ u to whith the ~tal
nce or sala pnce is noc cesa~iaed by this n±~pmz.
Irlmmam Allawable Reat A mo¢thly hrn=~~~ chuge
wtuch does noc eueed thirry par,~nc of ehe Laa Angdes
Counry lo+v iaeome (in the cau of a low ineame unit) or
me~?~=~ w~,u;e (ia the eau of a modecate income uuit~
adjusted for hwsehold ~+*, u puh~~ fmm rime to 6me
by the Uniced Suces Depaxmimt of Houvng aad Uchan
Devek,y,~,tae'Ibis ei,a~ ~lun np~._,,t fuU mrmdetauon
for ho~,~,rto sernees and ameninas az provided m market
raze dwelLag unia m rhe projec~ whether or not omipana
of T~*ket rete dwellwg uaia pay separate chaTga for s~ch
scivices and amemrics. Hrn ~~~ sernas and co*~*~+QC aiea
amemria mUude, but aze not ~~n+,ted [o, the Eollowing
ParYus& ~ue of co~,m~n s ~~,des md~~a,++g pools or health
~, ~,_,,,r„ss if the pro~ea cs ^,~~•••-me¢ied. Notwith-
standiag thc fongoing, uriliry chazga for use of naiusat
gas and elecmnry, co [he euent ind'nnduaUy mecered for
ea~h wut in the projoce, may bc passcd ttawgh ot bilSed
di:utly ro thc -"`''_ --" of i¢duswnary uni[s in thc Proje4
m adduion co ma~um allowablerrnu mltcaed for shase
inclus~onary umR.
"Modeiate^ and "I.ow^ Inmme Levels. Determined
penodually by ihe Gty based on the Uniced Suta De-
parcmrnt o[ Haiuuig and Llrban Dcrclopmrnt (FiLJD)
~scuaare of ~ed~an maome in the Ins Angeles-L.ong Headi
Pnmazy MeQOpotitan Statutical Area. Ihe two major
mcome pecgona are: "modesate mcome" (SUty-one
pecr.enc to one hundred penxn[ of the asea med~an} and
"low mcome" (suay percenc or I~ss ot [he area median).
Funher ad~ustment shall he made by household size at
escabtished by [he Gry. The Plann~ng Dcpartment shall
make avaitable a l~st of modence artd Irnv mcnme le~els
as ad~tutcd, whsh Lu[ sha11 be updated pcnodically 6y the
Ciry aad filed vnth Ne Gty Qerk
Mdcbmily D~a. r~ny zomng dauia m which mulri-
fam~ty dwetl3ng un¢s aro a pe:m~ceed use.
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918.09p
918090 Dmacy bonns and otber
piojxu wh~ch meec apphcabk requixemencs of State
laa u a r~+k. of mclu.aonary wuts aro enridcd to de~ry
bonuses ar o~ha w~nwes in a«ordance w~[h che provr
soas of ~,rh Iaw (Pnor oode § 94I8. amended by Ord.
No. 1519C.'LS. adcpmd 5/1~90: OrcL No. 1615CCS 3 1,
adopted 3I3l92)
91L100 Pt±'+^: ~eqairementi tor
'Ibe Qry Cc~, ~ aan. yy ~esoh,•~•••_ on an ~.,...nl baas.
set •••u..-.,,m aDow~bk xrna and ~.,..:r.,sm allanbk p~a'
c~ = pnar for ieciuaooary uait~ adPtacd bY the vumhcr
of bed=oomt Su~~ ~..:..,~ albaable :ena ~~ m-s~:...,mm
allOav161e ptlf~6SG ptiCCS ch~ll ~~ az~tQ y~ rhsr
q~,~t~ed ocu~pants Eor low ~,~e uma pay ao mocz than
th:cry peiceac of the gtnss monthly ha~uehold maome for
households ur~~*s say pe~cent of the median incoma
Qualified om~an~ Eoc modenu iacome uaia shall pay
0o moce r++~n nc~iypacr~t of the ¢nss hotuchold incame
for households carniag the±+±~++~~ mcoma (Prior ~:z
3 9479, amended by Ocd. No.1519CG5~ adnPted 5/U9lT,
Ord. No. 1615CCS ~ 1, adapted 3l3/92)
918.110 ~~'bititl ieqausmeats.
(a) OdY loav-income aad modcrtea~wme houscholdt
a
shaII be e~ _~Ie re xwpy or owa and cxs~py;~ti~d^^s
unus. The Gry shall develop a l~st of iaaome-quali5ed
havseholds w~eh gra prioriry to peraorss who have been
Cyinr.i p.~e snr Tp (~ FJlie p,a~ (~iOVO+R*M'4t ~+?!~ $l1~00
?~bU, pcrsans rard~ag m Saata Monica, and pcnoas
wor3~+±e ia Saau Monicb Devclapecs s6a1! be :equited
ro selea households Erom•the Gry-a~inis[tred l~st of
umme-qualified t~rnueholds The Caty stsall de~ebp admin-
isQauvc guidelma for the tenan[ aad pu=thaser seleecon
proeess, which shall rcquue, at a+!++*~++++im, that eighty
pemnt of thc inchuionary uairs in a project be leased
and oavp~ed wi~hm ~~ days of ~R+,~*~ of ~he cerrifiate
of occvpaary tor thc pro~cct, or sold and o¢upied within
one hundced twenry days of iawnx of tho ceraficate of
xwpaary for the pro~ec~ and that any vatanaa ia
ind,•c:••nary ttnits shall be teased and oaatpied vneh~r @yny
days of racarxy, orsold aad om~prod avuhin one hundted
twenry days of vrranry.
(b) 2hefollowu~gmdmd+~ale.yyvu~ccieoftheirpostwn
or ttlauoaship, aze ~pclip~ble to occvpy an mdacionary
umt
(1) All emplcyea and o~aals of tha Ciry of Santa
Manim or us agencra, authonua, or commimons wha
havc, by the auchonty of theu posuion, policy-making
authonry or m0uena affeetingGry hotumg ptog*a =~
(2) The immed~ate relauva, cmployea, or other
pusosss gamuig sgn~Gmnc econrnmc beae5[ from a di:ett
busmas ~oc~auon wieh pubtic emoloyees or oQ'iciaLs
(3) 'IT~e immedia~e :elawes of the appbmn[ or ownar,
indudu~g spouse, children, parcn[s, grandpuzncs, brother,
s~ster. father-urlaw, mo[hcr-in-law, sor~-¢rlaw, ~„~hcer-in-
law, aun4 unde, mece, nephew, s~ster-~n-law, and brother-
in-law. (Pnor code § 9a30: added bv Ord. No laa8CCS,
adaptr,d firl8l88: amended by Oc~ No. 1615CCS f 1.
adopted 3l3192)
9.2E.120 Rdaoan w oaics *eqai~d b~ emt
metrol baard.
I aa-moome and maderarrmwme daT~ tmiu de~el-
oped u gut of a market nce pco,~* pu~+=~ ^! w xspiaoe-
ment Tequuemena ot ehe Saau Manin Reat Coa~l
Bosai. shall awac so.ruds thc s~astac~an at this Qupoer
if thry o[heswise meet appl~nble requiremmss for tLn
Cbipter indudiag, but not l~ited to, the mcome elipbi7ay
~s of tbe ~apcer~'-o".± ~ ~.~q
and psiRing requi:emai¢ t3ew iadusionary+ un~ts ie.qm~ed
6y the Rent Concol Bnud arhieh meec the sw+dards of
this Qupmr shall munt tnwarcis the saasfaman of this
Chapra (Prior eode 4 9431: added by Ord I3a 1448CGS.
adopted 6r28/88: amended by Ord. No. 1615CCS f 1,
adoptrd 3l3i92)
9.1~.13C Dad ~ai~oas.
Prmr to ~ » vf a bw'lding permi[ for a p~yea
a~bjea co the requir~,sma set forth in this C3apcer. the
applicaa[ shall submit dad r~strieaoas or o[her lega!
uua~eaa xmng fonh the obiigauon of the appli~
under [his C~ap[er for C~ry cevier md apprwat. Such
ratsxtiaas shall be eSecave tor che lifeame of the projxt.
(Prior code § 9432; added by Ocd. No.1448CCS, adopted
6rlPJ88; amrnded try Ord. No. 1615CC5 § 1, adopted
3/3H2)
9.28.146 A~ailabilit7 Ot $ovetflmenl
mbaidies
It is [he inteat of t6u Qiapter t6at the requiremenrs
for the inctusionaryumrs s6a11 nat depend upvn che sva~l-
abiliry of Federal or Suce housing subsidia.'I]us Sectioa
does noc, hoaevcr, preclude the ux of such progr~+*+^ or
su6s~dus (Piior mde § 9433, added by Ord Na 1519CLS,
adopced 5/1r9Q; amended by Ord. Ne.1615CCS § 1, adopt-
ed 3!3/92)
9.28.150 Eafarcemeet
13o buiid'mg pcrmi[ or _~+•panry pcnnit sha!! be isnied,
aor airy devel~p.,.enc appmral panced, for a projxtwhieh
is not exempc and doa not mcet the requiremeat of this
Chaptet. All mcluvonary un~ct sha!! be rented or owned
in ~. c,,~,',ance wnth tFux C]upter. (Pnor wde ~ 9434: added
by Ord. No. 1615CCS 4 1, adopced 3/3/92)
428.160 Refatiom m ~nits oc kes requi~ed
punuant to future ardinanees
implemmtine prngnm IO o[tbe
Gt~'s Housmg Elemeat
Lnw•inwme or moderaic-inrnme dwelling unia eon-
su„~•~, w mat the mquucments o[ stus C]iapier, or urlieu
tee: paid to meet the requuements of ttus Chap[er, shall
be crediced ~oward requirements for on-ste reptacemenc
units or fecs reqvired puauanc to any ordinana imple-
meanng P:vgcam 10 of che Gty,s Housing Elcment (Prior
code § 9435, added by Ord No. 1615CCS § 1, adopted
3!3/42)
Sa7
9.28.170
9.18.170 Amaa! ~ePatt•
~n~ r~a~~~.,~~ ~u ~: ~~ ~
C'iry Coux~ai on aa anaual ba.nsw~hich shall contaia mfor-
marioa ~pncer•~;~e tpa ;•~lemeatatian of thu Chsptec
and w6etber tlx pcwivons of Pcopomooa R have been
met In the event the pcwinoal of Peopoanon R have
nabxn+^K=tlaeCayC-, ~~heII~k••s,•~,~••,_•••~.
sazy w amead ~hc pravisom of thit n+•;wec cc ia ~pla-
mmabaa to mAas thac die groriaiom rnIl be met. (Ptiar
cvde f 943b; added bT Orb Nc. 1615CC5 # 1, adoPoed
3/3fl2)
n••porr 932
~~ _nrl~C:1l7RA1. ~
$CbOOt
93Z010
Pm'pok
932DZ0 D~ritiaos
9 n ~+'i0 Arehtteeeoeal ~eriew Bwrd~
MembQWip.
93ZOr0 Gaiddias ~d staadaeds.
93ZD50 Gaiddiae aad atandae~ds-
Sobmission [or sppeanF-
M•~••••••••••• aad a~a~7abBit~ of
mpies.
93Z060 AAPoinm~i and tam al o~e~
932.070 Rnles.
932.OSD Offims, "!_?+ou af offieas
932.090 Seaetae~.
93Z300 M»*+*~-
932110 Atd~i!_~^!^-tl n+iew msttius.
93Z120 ]erisdie~oa
93Z130 P:ooedere tor+eview.
932140 Criteria.
932150 Site ptaas.
932.160 Appnts.
932.I70 Anhi~e^~*al ieriew disaiet
bonndaria.
93Z180 Poa~~_ o[ p*operty.
932.010 Parpw~
The putpose of this Cbapta is to paomo~e the pubiie
healih, safery and genera! welfare by esmbiuhing sud~
prooedures and providing mch ~gutauons u ace deemed
necessary eo preserve adsung azeat of na[ural beauty,
ea
culeurat isnpocunee; so assuro thaz 6uitdings, sauecures.
signs er arher dnelopmenu ace in good taste, good dm~
hazmeeuau with autvund'a~g de+rebpmmts aad in general
conmbute m the pcssenaton ot Saan Maua's tsputadon
bc a place of beaury, spaeiaumess and quality, w prevent
the dcvdopment oi suucNra ot uses whieh aze not of
acceprable euenor design or appeacaaoe, are of inferior
qual~ry ar tikefy m havc a deprcdacing etfea on [he local
ccmronmene or sunounding ura by teasoa of appearanoe
or value: to efirt+;~ate maduw~u, Stve[ura. sigiss or asu
which by rcaton of theu effea tend co degnde the heal[h,
u[ery or genenl wel6ce of the ammuniry; md provide
a mntinving wume of programs and meaas of im~,.~~ing
the Gtys menp appear „K, (pxior aode 4 45U1: added
~ o~ Ho. ss9ccs. adopsed 7Af14)
432.020 D.~s~~hoos
Forpurp^~K of shss mapcec, thc foitowwg dc6ainom
~h~u have the mcaamgs defucd hemn:
(a) (;Lapur - Shall ccfcr w Chaptat 932, Arr~tic7c 4,
Saah Monua Mumapal Code.
(b) Cammimee - ShaII ~n ehe Architecaaa! Review
G..-:..-,.;ttee.
(e) C :~•:,•, -9u11 mean the Sanw Momo Plaa
mns (',~++n.n+evqp,
(~ Coand - Shall meaa the Ssau Monica Ciry
Counc9l.
(e) Distriet - Stiall maa an .,rrt _~n~r desgnated uchi-
uaunl renew diarut
(~ Mmber - S6all mean a wting member of the
AISb1tGGilii~ RCV1Cw' CP~*+*+~+StCC. (P170i COdC § 950~1:
added by Otd No. 959CGS. ~~~a ~~vn.~
93Z410 Ar~~~++~~al Rniew Bmr~-
Mambacship.
Aa A:chiternual Iteview Boazd ss hc~ehy atab[ished
which stuil conuu af seveu ('n memben. At lns[ t«o (2)
of tha members shall be profaswaal ush~teccs Ot6ec
membets of the board shall be pcxwas wfio, as a~st+tt
of their v~;,,:~_ ~, ~~,.~,.,,~ti,~, K y..sh•_~l
co aaalyx md mrea~..~¢ aichrtectural and eevixonmeasal
tzends and infotmaaan, co appreiie r~soucze ~ in Iight
of the polides ut forth in thu ordina~e, w be crspoacive
W the sodal, aeuheric, ieawtional and eulcural aeeds
of the communiry. Other expertix sueb u consecvatioa.
rareauoa design, landuaping, tne am. nrban plarn~no.
ailtural-hiscosieal presecvaooa aad ecolo~d and eevaoo-
menW saen«s <r,~n. i~ofar as pracnobk, be izpcs~a[ed
on the Board. (Prior code y 9503; added by Ord. No.
959CCS. adopted 7AI7a, amended by Ord Ivo. 1003CCS,
adopied 7B/75)
932040 Gniddiars snd standuds.
The Architecnual Rev~ew Board may, by saolution,
esublish guiddina and scandards Eor in rnlustion of
propoud developmenu within aa arctuteenua! mi~+v
dis~ici w wppiemrnt the aiuna see forth ~n this Chapter.
Such guiddinu and standards shail mflect and eKeenute
the pu~oses expresced by Settion 93Z010 of thu Code
and shall mcluda but need not be hm~eed to, c9ntideration
of the fotfovnng elemenrs•
1'I~e integnry oE nnghborhood envisonmentc:
2 Fasnrtg locat, soaal, authcac, reaeadonal and
cultural faciiiua, daigns and pattems within the disttiet;
3. Zhe dispaca[e elemen¢ of naghbochood ootnm~uu-
tiu wuhm a d~sencc and che arehitecmrat celauort~hiQ of
adjommg neighbarhood commun~[ies; and
4. General pattems and standards uf aichiceaural
devebpmeot vnt}un thc en[ue dumet (Pnoraade § 9503.~
added by Ord No. 2003CCS, adopced 7!&(75)
Sa8
Rev~sed fndus~onary Housing Progiam
for the City of Santa Mon~ca
APPENDIX B
Matrix Comparing Six Conceptual ALteroatives to Ordinance 1615
HamiHon, Rabinowfz & Alschuler, Inc Apnl 6,1998
Eonceptual Attemative ~ ~t Impacts ~ Implementatiort
issues
#1: No Privata Sactor •Pnvaci
profits' ~~ement
•Repeal Ord 1615 and edopt
Requirements
•Othen replacement
SlS adm~n , •May need stand-by progrem to
orcement costs reach 30%
orgarozanona! •May want credrc-trad~ng program
#2: Voluntary Private Sector •Non-p~
•New ~~ Element
•Davelop, model end refine
Program w/Incentives
affordak ,~cenn~es
lextra density, zoning flexibility, _
o~s co5cs
•Enact replacement ordinance
[8C1UC@d fBBS, axpedited z~gn, admimster •Repeal Ord 1615
processing, city financing) 11Ve3
A~3: Permit Rationing That Favors •sec e~
Va~ Element
~
•Adopt new program ordmance
Afiordable Units app
o
•Es[abli •Align procedurel reqwremen[s
~~5 costs
We~
hte •Repeal Ord. 1615
g
9~ and
~gram
A'4: Mandatory Fee w/In Lieu •Manda
Element
•Determme fee amount
PeffOrlT18nC8 •Credrt? •Feasibdity tests
(buy ~an~~ 5 costs •Prepare nexus study, if needed
Citywide housing •Adopt new ordinance
_ recovers •Adopt fee ezpenditure plan
. costs •Repeal Ord. 1615
~s' study
#5: More Flexible Mandatory On- •Keeps
Element
•Speafy new program elements
SitB Rqltlt. reqwren
(higher t •Test for feas~bility
more of~' ~ 615 costs •Enact Ord 1615 changes and
.enue emend gwdehnes
#6: Status Quo w/Limited Changes •Keeps
•OevaloQ fea amendments
I requirerc
more fle enue •Test for feasibtlity
~ .Amend Ord. 1615
HR&A, Inc.
October 14, 1997
Rewsed Mclusionary Hous~ng Program
for the Cr[y of Santa Monrca
APPENDIX C
Estimates of the Capital Subsidy Needed to Develop an Affordable Rental Unit
in the City of 5anta Monica Under Alternative AtTordability Threshotds,
Land Costs and Unit Sizes
Ham~lton, Rabmov~tr & Afschuler, Inc April 6,1998
e~nrK swov rteouneo ro nevaw~w~rram~e~e w~ru uMr
uom Krewurrve ~rtow~uurr r~ncaan~. wo eosi~~uo uxr ~t,
cm or wrt~ro~u, ~e~
_ RwMd helwt p2 pM~M.50%%MFl R~'Yd Pro bcL R2 Dw nNY.60%%MFl
3~BRl1-BA 7~BWL-BA 2-BRH~.4 J-0R/L-B A
LI~N blW~tlm FaCan Low Cwt Hah CeM Low Coal Md~ CaY Low Coal H~ Cael Low Cast Mal~ Coal
UNIS 18 78 1Y tY 18 78 12 17
NEW CONS IR UC T pN APPRQ4CH
1 LACo~nqINMF~iyYma~wµy~nonHtl6~ f S1,J00 f 51,700 S 51,300 f 51,700 f 51,300 S 51,300 I 51,900 S 57,300
Y ~rawYdMMdenFrWYYssan~ 50% SO% 50% 50% 80% 80% 80li 80%
3 Yexkm~n Mous~hdd heam~ M~~hdd (Ipws.) S 25,850 S 25,850 S 75 E50 S 25,~0 f 70,780 f 70,780 S 70,780 f 90,780
1 AllerdWbl~e~WY)XewYqCoY Nh W~ W~ N~ i 770 S T70 f 770 S T70
5 No af BR~ A~uYmM~t FsNw NA ryq W~ W~ 0 95 0 95 1 085 7 OBS
0 L~ss• M1D UiLLy Alow~~ S (87) t (87) i (T1) S (72) i • S - S - i -
~ w.~..~m ~wwaa. R«w r« ~b r+~ ru ru~ r+~ s ~ai s ~si f eas t eas
8 TCAC AlowaEl~ RMM f 577 f 577 S e86 f ~ NA NA N~ PN
B IYxYmmAWw~6NR~nIpwTCAC f 57~ t 510 f SW f 5B4 NA NA IU NA
10 L~f~ Men.M1eM'~ Yw~ Ya~rhy Oprrkp CoM f (Y50) f (250) S (7fd) S (~) i (750) f (250) f (250) S (250)
11 Ln~ hopwyTax S (1) S (1) S (1) S (2) f (t7) f (11) S (15) S (18)
1Y Usu Rplx~~tRn~rw S (25) f (]5) S (25) S (25) i (25) S (z3) S (25) f (25)
71 LN~. NwFho1M1 VsawylBaA D~Et Nowrro~ S (75) S (15) S (1E) f (18) i (23) S (12) i R5) f (~)
7~ M~t CPnetYq Y~ewM I~I ~N UtY S 218 S 21B S 300 S 700 S 12P S /ZO ~ S]O S S18
15 D~6t Covlrp~ Rello 7 t0 7 to 7 70 7 70 1 to 1 10 1 to t 10
1R Muhx+nMmMhlyMOnWD~PaymM S 199 i 1DB f Y73 f t72 S 381 S 382 S s72 S 489
17 EippalaENMOrtpeq fY8,124 f2B398 5~6,077 576910 519,Y75 N8,838 581,428 587,057
18 Uss Tdd D~rNopm~nt Cop S 187,920 S 317.887 S Zl~ 197 f 274.801 f 182.820 S 3 12,887 S Y71,197 f 271,901
18 Lns LFRC Equity f 37,572 S ~7,513 f 18,SYB S~b,5P8 S - S - 7 - S -
YO L~as qh~r P~4~ 9ubYdy or EquYy i • i - S - S - 5 • S • S • S -
Y7 R~aWndCapNal9uEfWy S 118,984 S 7~9,75B S 118,892 S 187,{33 S 133,001 S 1 63028 i 172771 S 217.8M
~I EYPLEAVEMGESUBlIDYPERINI f 749,~67 S 170~l82
73 YYEIOHTEO AVlMGE A1851DY PER IMT S 13/,622 S 751,918
NotH I
Per U S Depl ollbNnp ~M lkh~n Devebpmxl(HU~)
BO%= bJ iMam pv Prop R
uMi.un.s
(DO% x Lnro 3Y11 mor~lo
CdA y~d~o~s~fwt xeA~M IM ViUD abwmC~ fof dnaMy d W~las, abwa D i wM0 kf LRffC Mals oNy
lJro 1 M Lme S. BO% z MFI aNy I~
P~r Slat~'s Tax GY~6t IVOOatim Comndw ~
LLw 8~ LM~s 8, 50%x MFI My i
bw~ws S3,OO0luYVyr per NR6A
Pxliv Da+ekpnieM Coa~ Asvmplp~s apr~dsheq. 50% anE 8D% x~1 p~y And assnsnwits oNy
nswn.a saoon.wyr ~.. cny s~.rt i
3%x Lina T ar Lina 8, as applade, pu MRM
Line 7 a Lina 9- (Lhe 70 ~ IJfu 11 • lJro 72. Uro 7~) u
Px trall CMy uMeneMlnp pWEeNes anA HRdA ~
u~. iuix,e is f
Ass~mes 3Pyr le~m, 7 5% (50%x MFq w 8 5% (BO%x MFp nls and ~r~rtlly paymerh = Lhw 78
Per New DevekP~N Cosl Asn~nqlens spreaMMM 11
Far SOX z MFI aYy aswdnp lu ~xempt bond Mandnp, 80% z MFI qWjMH, p~ wqly ~ be D~/~tl by the CXy
Nons fXay a1 anY k'+M a~RwdzbRy
lJM iB •(LM 17 ~ LIM 19 ~ LIM 20) ~
&mpN away~ o/ d Iar scmarlos wNNn ~ach a1brGWNy utspory
Waphted a~aaps aswminp p) 3 bBR uNls for svxy 2}gR uYts, (E) ~ b~rreal2-BR far evary Nd~eost 2-BR,
(o ) ro NyFta# 1BR uNs
~~m I
P~W 1 MMIS 1/1'JA~ 11]~MI
CAPITAL SUBSICY REOUIREO TO DEVELOP AN ~1FFOROABLE RENTAL UNR
UNDER AL7ERlUTNE AFFORDA&LITY THRESXOLDS, LANU C08T81W G IINR 8~3,
CRY OF eANTA NONIC/~ 199B
LowMom~ Noustq Tax Cr~d CakWIMn Low~rwpn~ NousYg Tu CnAI CaleWaliw~
7M MvNopm~rN Se~naAo
Oewbper Nanpro(~1 l~x-axmq tarrnuYlWbeseE EavebpneM agaNZatlon
Srb 2-Lda (16,000 af aNe Indudny eby aros~, R2 darsM1y wM 504~ demAy barus, llat sAe wiM no uuswl con74an
BwMNp 14.000 ~I ldel. 2 slorlee
UMS EMar 16 2-BRH-BA (850 sp or 1218Fif2-BA (1,OB0 sq apulrnais
PMunp 1 5 spsms par Wt µn yue~t pulOng, al an ara wbtertenean bvel
CMy PartNL AdNNstraWe Pppmel and ARB apprarel, ro o~her dsudlamry approveh
C!ty Fees Exmpl lrom sGad feas enA rattealion uNl Wc
yeaa-en
low Cost Hi~ Con
EIq~bN e~~w f 2.16{,585 i ].195.785
L~~~ HMeere T~x Cndt SO SO
EiyDNB~w { 7184,585 i 2,195,795
hromt LIHTC-Elqibb 700% f2.76l.585 100% t3.1%.785
30% Inar~m br ODA Prop~rtr~ ~LA Ceunt 1 ~ m i.wn i849,375 1 ~~~~ i858,735
15%Inar~~wD~AProp~rtr~Mublernn~a 7 ~ao.n.rn ~4Y2,094 1 ^m.nw t~Y8,178
Submfd 4u~iRed B«u E3,276,05/ i7 282 89B
Lwe Onnf Pronb SO SO
Qu~ d B«n E3,236,05~ 5J,282,688
YY flOlf31 Lxrotr !lA Counry) E7,851,784 i1 951,791
3] Ifdll3J Lxroar bubhn~ne~n p~rknai 52.2l1.563 f7.2~~.563
RpusehdB~rw NaNnel Use ~q,2{4,583 NannN Use C2,244,563
Annu~lAoyurRonT~zCr.drt 4% 371% SB3,273 4% 37791 i87,273
Crow Aequ.rc~an T~a Cndrt fB32,73J ' S832,733
Annual low Ineem• Hounnp 7.x Cndrt 9 MA 8 6596 50 90% B 65% t0
Grow Low Inoom~ Hounnp T+a Cr~drt {p s0
lP3A.n 9999i =EJ7900 99994 5831,900
GPShan 01% fs]] 01% tB13
TofNAmrudT xCrsdrtAAbc~bon 503.277 tEi.271
7otN Crou T r Cradrt SE}2,7JJ fB72.777
N~< N~~u p~r De1W - S0 70 50 70
Nst RNrs SSB2,370 4582 930
ie~wnra~m vw~vnersvm hw.K rnem n:u~w
0lvabpmM COA Cat~pM~s
Le~M Hrd~eae
LaM
Pirdrex eDP~sel
TXblmuance
Esaar/ees
Misc Costs
svaaai
cons~~ucuai
Demoltlon
ana~ cou:
S~ter Parldnp
Off•sMelmprovanentf
Contlngency
suna.~
Pro/essionsl Fees
HcNletivaYE~Pnaalkq
~eMSt~pe Plch
De
CIHV3uvry
Sals EnQMar
Oep~ylnspeNa
Emiramxiel Phese I
Le9v Fees
Accouing/Audt
CanslnxAlon Mene9~mm1
seiaai
se
Olher
cXy pem~ls ana /ees
MaMNlny eM Leaso-up
Leaso-~p Resena
SCtotel
~e.elopar Fee
FNendnp Cmle
Cmahucllun Laen Fee
PartuneM Lwn Fee
Canshu.tion pMOd IntmM
Reel EAale Tules (51•K z MFp
Reel Exlele Ta~as (509i K MF1)
IIISlRMO
Corn6w,tlon Bond
BeM MoNlai~g
Ayqalsal
SuMdal
ToTAL
CAPITAL SUBdIDY REO~IRm TO DEVELOP AN AFFORDABLE RENTIL UNR
UNDER FLTERNATNEAFFORDABILRY THI1lONOlC8, IAND C08T811N0 UNR SQE3,
CRV Of SANTA MONIC.11998
NEW CONS7RUCTION DEVELOPMENT COSTS
TM o.vNopm~nl ac~narb
Osrolme~ Nonpof2, tu•exmq tomnurly-b~satl dawb{Hnert orpeNZeUm
Sne 2-LO1s (18,000 si ata mcluarg aley eroaj, R2 Aensilywih 50% densdy barus, Ilal sRe witl~ no uxmial wndUons
eurpxp 1 t,000 sf tael, z storles
Umb EMer 18 2-BRA-9A (BSU s~ or 121BRR-BA (1,080 sp aperhroriz
P+'Fmp 1 5 spetts per WI plus giwR paildny, ~1 on aa adanroan levd
Ciry Pamds AtrNNStrahve Approwl end ARB approvel, no dher dscreUonary approveh
CM Feea Exempl /ran aclwW /eea erM reueNbn vyl taz
}BRR-!A
•
72 EIpbN 7t Eq61a ~
UiYI cost Total Cosf P~r-UNI Bask UN Casl Tdal Cosl P~r~IINt Basis NMa
S~OAend sf S 600.000 S 50.000 S • 570A~ntl sT f 1,050.000 f 87,500 f • eeud on HRdAerelysis M Ord 1615
Plov~ence E 750 S 63 5 - Alowencs 750 t p 5 • Pa trall Ciry undervrtitlrq giidelnes, bw end ~
itR7,o00 S 5nD S 50 S • it~t7.000 i t,osa S 88 S - PwCronclryuMen~tNlrpyuaefnes,bweiM
L750/51,00~ S 900 f 75 f - 575M1,000 S 1,575 S 191 S - PertrellCityuNervnNlrgyJdelnes,bw~nd
L250/51,000 i 1,500 S 1~5 S • Ez3NL1000 ; 2,625 S 219 S • HRdA
S eo~ ~so s so,au s - S t ose,ooo s ea o0o s -
slowen[e i 10,OOD S 873 S 10,000 Pbxence S 10,000 E B73 S 10,000 Per HRBA
584AItlp s( E 1,176,000 5 98.000 S 1,176,000 581AItlp 31 4 1,178000 S 98000 f 1776,000 PerOSIlCiryu~GaMTtlnpgul0elnes,bwe~
E13,SOOhpece L N],OOD S 20250 5 2~],000 577.Saahpece S 2/1,000 S 20,250 S ~ 243,000 PdtrallC~tyu~AmwMirppldelnes,mlGronpe
70%xMrdwsU t 717,60D S 9,800 S 717,600 10%zMM~osls f 117600 S 9,8~0 L 717.600 PerHRdA
5%%MfEtosts i SB,B00 5 4,900 S 5B,BU0 5%zMMcosts 6 SB,B00 S 4900 S `.~Bb00 PaCitydsRirdefwi~llnpyil0elnes,bwend '
i 1,605,000 5 133,7B1 S 1,605,4D0 S 7,605,100 S 13~,783 E 7,605,400
5%z w6t MrE cosls i 9U,270 S B,BB9 { 80,270 5%x ubl hord coAs f 80,270 E 6,689 S 80,270 Per Ciry AnM1 uiderwl4~p yudei~rcs, bw en0
Ploxa~we E 2.000 5 167 S 2.000 Naw~nte i T.000 f 167 S 2,000 PerCINdaIltnOer~rlUnpqUtlelnes,bwe~M ~
Ploxvice 5 10,000 S &17 5 f0,000 Alowanro i 10,000 5 833 S 70000 PerClydaM1u~dervnlUnpyildelnes,NgheM ~
Alowanca S 5,000 S 417 S 5 000 Plowence i 5,000 S N 7 S 5,000 POf CIry trell ui0erM111np yulGelnes, Mbnnpe
Nwenee E 1xo0o s looo s 12,000 Alowenee 12,00o t 1.OOO E tzooo verdydartuMerv,NUnppYEelnes,mbnnye '
Ploxance E 7,500 S 208 E 2 500 Alowence f 2,500 S 208 S 2,500 Pa Cly trell uiAervmlinp pYdelnes, Ngh end '
Plovnnce S 77500 L 1,158 S /,175 Alowance L 17,500 t 1158 S 4,375 PxCitydallunderorlUnpgulEelnes bwenE
~
Nowence E 5,000 S 477 E 2W0 Alowance x 5000 i ~17 S 2,500 PerClytralluiUerMnll~qyWdeLros,bwend
Mowsnce S 50,000 S 1,167 S 50,000 Alowance 5 50,000 i ~,187 5 50000 PerCiydelluMervmtlnppJGefnes,NgAeM
E 781,270 S 15,358 S 188&5 5 781,370 i 15,756 E 168,615
~
57M S 2800~ S Z,337 S 28,000 SLSf Y 48000 t 2737 S 28,000 PaHRBA
Plowsnce S 400 L 37 f - Alowance F /00 S 33 S - Per Cily ben u~tleiw~inp y~ltlelnes, Ng0 anC ~
f300MJtx 3 moa E 7o,B00 f 900 f - E4o0M1 x 7 mos 5 10,800 f 900 S - Pa HRdA
S 28,100 E 9 287 5 28,000 S 78,/00 S 3,267 E 2B,000
9%z1urA*wMdlror S 76~.628 S 17,636 163,626 9'kxhord~aoR•atliar 5 763,638 i 7~898 763628 PaCilydefluda~NirqyulEelnes,HytiaW
1 D%z ban amouR
S
28,000 S
3,187 f
28 000
1 0%x ben amout
i
J7,000 S
2,593 S
71,000 i
Pswvas ben =100%x 7del Davebpmqt Cost
7 0%x loen ema~t E 28 00~ f 2,167 S 1 09~ z bsn amaM f 97 000 f ? 583 f Assuros ben = 700X z Tdel Oevebpmni Cosl
50%x nla x ben 5 110,500 S 9,208 5 110 500 50%x nla x bsn F 7~1,750 S 10,979 f 137,750 Pssunas B 5% ban nte, ben =100%x Tdd Devel'opmnt Cosl
11%x(ImrOCOStaM~ S 2I.259 S 7,022 S 2~,259 11%x(herdcosl+hnd) 5 Y9,209 f 21N S 29.209 60%6700%xmeaenEOnatquely/orlezaxempUOn
o tx x pwa eou•r~ f - t - o tx x{here eoa~+mne~ ~ - s - sox x mes.n w.mn tu eaeirWon m yenemt ~rr~r w na mea .:.es:
SBOOAaYI S 8 800 = B00 S 9,800 SBOOMiI E 9 800 S B00 S 9,600 Pa Gry daM1 uWeixrRlnp pitlelnes lar aM
176xhafEtosts S 16,05~ S 1~78 S 16,0.5{ 7%Xherdcosts S 16,05! S 1,778 S 160% PttHRdA ~
Pb~w~we S B 000 S 667 S 8,000 Abn~nw S B 000 S 667 Y 8 000 Per Lily trall ui0eron~~p pYdelnes, liyh and ~
Plawnce S 1 S00 E 775 f {.500 Plaxa~e S ~,500 S 375 f 4,500 Pa City de11 uidero~tlnp pYAelnes, br end ~~
S 221.977 i 18,711 S 198,913 L 267 NS S 21,759 S 270,N9
S P.810,1H0 f 2L,19~ = Y,781,585 5 3,Y98,810 S ]71,901 f 3,795,785
~~ Pp~ WtBQC/tU HIMYi[ 1/ISIIO ll:iJNl
GAPITAL SUBSIDY RECUIREO TO ~EVELOP 11N AFFORMBLE AENTAL I1NIT
I1N~ER ALTERNATNE AFFOROA&LITY TXRESXOLDe, UND C03T8 AND UNR SQE9,
G7Y OF BANTA MONICA, 1998
low~i~com~ HwsY~y Tax CrWI CakWlon
TM OWyopmeH Sea~uM
~*~ NmproR, lss-asemq canvrxNry-0esetl Oevelopment agaNZellon
blda (16,000 sf sda includny eley ~roel, R2 dmsNy rith 50li dertsAy bo,y~s, Mt sM1e wlhro uuswl condtlais
6WM6'q 71.000 s} lotd. 2 s1011»
U^~ 5Nn i6 2-BRH-BA (850 sf) a 72 }BR2-BA 11.080 s~ epeMneHs
~~^7 15 spacas per uM pAx guesl perltlnq, el on aro s6inrtanean bval
qb' Pam/k AOriIisUBWe AypOVe~ enE AR8 ePM~I. nD dlar Asuetlanery ~PPr~b
CIIY F~s Exe'rpf hom sctwd feec anE recrostion uYl lut
Y-BR/I.BA
Low Cosl Hiyi Cosl
EIn~bM B~n~ 1 2.277,940
6
Y.Y9H.840
Lq~ FlNtorn T~z Cr~dR t0 ~O
fipLMBuw i 4,277.910
i
2.Y98.640
P~ra~nt LIMTC-EIqiEM 100iF iY,T77.9<0 100% iP,29B,640
30% Inenaw (w ~OA Prop~rtw (LA Gunq~ 1 ^ eu r~.r.• 0683,38Y 1 ~ cun.r.~ OBH8,58Y
1 Syi Inen~M DOA Ropertr~ Iwbbrnna~n prtkmp) 1 ^ oo~ r~.~.n µM,196 1
~ ~+~~+~^
1448,135
S~protM Qu~NNd Bra ~3,405,5Y1 i3,438,487
L~u OrmtRooa~d~ ~p t0
~~~ 4BW~ -3,405,521 t3.438.487
271ld1/Jl LuMO M Counryl 52.OH.657 52,017.851
21 fldlfsl L~m~a l+ubnn•r~.m v~ml 52.711,799 57,713,399
R~quxrodBwu Nomnal Usa l2,313,399 ' NpNrol Use i2,313,399
Annu~l Aaquwrtan T~x Cndt 4% 3 774G ~85,847 4% 3 71% C85
827
Grep AoquMrtron T~x Cr~CR ~858,Y71 ,
~858,171
AnnadLowlnoom~Heuunp7~zCndrt 80% 9659f ~0 80% 885% ~O
Grow Lew Ineem~ Mou~np Tax Cndrt Op ~0
LPSh~r~ 999% i857,413 999%
1857
413
GP SAn~ 0 1% i858 0 1 % ,
p958
ToblMnud i rCrsdrtAbe~von ~g5,817 ~85,847
TotN 6row T x Gedrt ~859,271 ~858,471
Nn Raw~ psr po14r t0 70 ~0 70
Net Rwe
{600.189
iB00.1H9
~47~i~+M
Pp~ tAMIld}p ~
1qiA1% }nM~ I1.11N1
CAPfTAL SUBSIOY REOUIRED TO OEVELOP AN AfFOR~ABLE RENTIIL UNR
UNDER 11LTEftNATIVE /1FFORDABLLffY TNRESNOLOS, U1ND C08T511N0 UNR SQES,
CTTV OF SANTA MONM.11, 799Y
NEW CONSTRUCTION DEVELOPMENT COSTS
rn. o...wp~.r~ x.rwm
Dewbper Na~P~M, l~z<aamd camWM~aud devdoprneM aP~etlm
~
S~ 2-Lats (18 000 sf sXe InUWng ela~ sree). R2 tlemily vMh 509{ tldWy ba.rs. Ila1 sM1S wM no uwrsiwl eoM6am
ewltllnp t~,000 sf lah4 2 daies ~
UMfa p~er 16 2-BRH-BA (850 s/) u 17 }BR/2-BA (1.080 s~ epeM~elMs
Prkirq 7 5 sp aces pa uNt pMn guesl perhrg, al an ane s~btrneneen bval
Crty Pamrts AOnNstretlva Approvel ene AftB approvd ro dAx ascretlanery epprovao
d7y Faer Exmp from sclqd fees ~nd recreatlon uM tu ~
&8W4BA
9X 9%
i6 EIp6N 16 EIyM~
DwNOpmxA Cost CaUpM~~ I1Nt CoA Tdd Cost Px-UNt Bxk UiYI Cost Tdal Cosl Pw-UNI Basis NWn ~
Lantl Puc~ase
LeM S<~~e~d s7 L 600.000 = 37,500 S • f70Mnd s/ f 7,050,000 f 65,G15 L - Besetl on HRiA ~nWyGS M Ord 7615
RrcMSe ~ppnisal Alvxeroe t 750 S Q S - Alowon~e i 750 S 17 t - Px traR City uidawrNnq pudelnes, bw md
rilMireuence E1IS7,000 { 600 5 3B S - E7/57,000 S 1,050 L ~ i • PatrellCNymde~itlnppidelnes,bwand~
Escrow 6~s 51 50/57,000 L 900 4 F~ S - 57 SOIt7.000 i 1,575 L 9B f - Pm Oe11 Gty u~darnNnp pldeines, bw end
Misc Cwls SZ SOR7 000 L 1,500 t 9I t • 52 SOI51,000 S 2,625 S 761 f - HR6A
&Mdel S 609750 S 77,77~ S - S 5,058.000 E 66.000 f -
CmsOudian
Dermltlon alawence S 10,000 S 825 E 10,000 elowen~e E 10,000 S 625 5 70000 PuHRdJ1
&ilOnpCOSts SBINMy sf S 1,778,000 5 73,500 S 1,776,000 S91r-ICq si S 1.178.000 L 77.500 5 1,176,000 PadraRCAyulOefwiXinqyuld0lMS.bWdIC
Sida Oehhg E73,500/specs S 32~,000 S 20,250 S 324,000 S17,SOOkpaee f 32/,000 f 2U,250 S ~ 721,000 Pr 3a11 CRy u~AarvnNnp pidelnss, mid-~vgs
OfFsilalmprovameMs 70%z1iW[ofts f 777,600 5 7,J50 S 777,600 70%xMMCOSIS S 177800 S 7,350 S 717,600 PaHR6A
Cortligen~y 5°h x AeM cosls S 58.800 5 7 875 S 5b b00 5% x MrC coals S 58,000 S J,675 L SE,E00 Px CAy tre11 uiderw~Pony yWdelnes, bw ana
SYMdaI i 7.BB6.100 y 105,400 S 1,686,100 S 7.fiB6.100 { 705.{00 S 1.888.100 ~
Professlanel Fees
PrchVacdraYEqnear4g 59i x sM teN costs 5 81,320 { 5,370 S 84,120 3% x wd Mrd costs i 81,320 S 5,270 i 8~,320 Pef CM1y GlII InEelSMtlq puEe1M5, bW anU
Lsndsupe Md~ AAOwercs L 2.000 5 125 S 2.OOO Abrarce S ?~ S 125 t 2,000 Px Clly Aal1 mtlenHitlnq pYCNnss, bw mN
CINVSrvey Alowence S 10,000 S 625 S 10 000 Pbwance S 10,000 S 615 S 10.000 Px City 6e11 vMivMrNnp puldelnes, Hph en
Sdh Enqlneer Atlowsnro i 5,000 S 313 5 5,000 Abwenca S 5,000 S 717 T 5,000 PM Cily 0'el1 uiEeMTiUny gulENnes, Mtlasr
DepUy IMpecta Pbxanee S 7 P,000 = 750 L 72 000 PJaMMe E 12,000 E 750 S 12.000 Px Cky trert vMe~wPo~q pldelnes, mid-rar
E(MfOlY1M11~e1 PIIBSE 1 lUON6IICG § ],500 = 156 $ 2,500 AbW9fIC! s 2 500 f 158 { 7.$00 PH CNy EflK ~1WlMIIIIIQ QIYENMt, NQII Mj
Leqel Fan Alowance S 77 500 5 t ON S 1,375 Abwerce S 17,500 S 1,09/ S /,375 Px Clty Orell ~MerwNrg pildelnes, bw m~l
AeewNnp/Audl Alowance S 5,000 E ~73 i Z,500 Abwanca S 5,000 S 313 5 Y,500 PaCNydroRUMerv,AtlnypWdeAnes,bwaM
CaMnictlon Mwpement Nowance S 50.000 5 9,125 E 50.000 Pbwence S 50,000 S J.175 f 50.000 Per CNy O~rt uMerwMrg puldefnas, Hph mN
&bldel S 188,320 5 11,770 S 171,695 S 188320 S 11770 S 172,W5
dher
Clypem~lssnCfeas L7/sf L 28000 : 7,750 S 28,000 Sys~ S 28,000 S 1,750 S 28,000 PxHRd.A
Mukqirg uq Leamp Nowe~e i 400 t 25 5 • Allowance S ~~ L 25 i ~ Pa CXy Ra11 uMervmliny yuiONnes, liyh mp
Luse~p R~cwv~ S300NN1 s 3 mos S 71,400 j 900 S - L300AaW x 3 mos i 14,~00 t 900 i - Pa HRd.A
SWldal L 28,/00 S 2,675 S ZB,000 L 2B,IOU i 2875 { 28000 ~
OevalopaFee 8%xhvMwll~dhar S 177,281 = 10,705 171,281 9%xMrd~wll•aUror 5 171.2E7 5 10,705 777,287 PerGIry0e11uWerx~Nnypldalnes,Hyiertl
FlronWqCmb
CaehWlon Laan Fse 1 0% z ben ~maul S 28,000 i 1,B1J S 28,OW 1 09~ z ben smauM S 32,000 5 3,000 S 33,000 Assunes ben = 100%x TdU OevelopneM :osl
Pa~meneM Lwn Fee 1 OX x ben smpnt S 29,000 S 7 B17 { - 1 0% v lun ~mouR f 37,000 f 2.000 f - Pssums ban m 7 WSG x Tattl ~avebpmsN Coal
Con#nctlm pariod Irleroal 50% x nle %lo~n S 123 250 S 7,70J S 123,250 50% x Me z b~n t 138,000 E 8,500 S f36,000 Aswnes 8 5% ben rete, bsn =100%%ToM{I Developmeli Cost
RealE~leleTaze~(51~%zMFp 71%x(MMwsl•Mnd) S 25,150 S 1.572 S 25,750 11%x(herdcosl+ler~ S 30,100 S 7,BB7 S 70,100 60%8100%xme6ao0onalqualry(orlexbYemptlon
RaelExfeN7ews(50%xMFp 01%x(MrdcosNMnE) S - S - 01%x(heMCOSf.WM~ : - f - 5096xrrro40nquYMeslaezmpflanof IlevydRiwtAractessass
Inwarce SBOOANt S 12,800 5 800 S 1Y.B00 EBOOANt S 12,800 S B00 S 72,B00 Px CM ~n ~dmwftlnv WdMnes, lax
Corntndlm8ond 7%1xAerdeosls f 76,861 5 1,051 S 16,861 7°AxtiWcosts E 78861 i 1051 S 76,864 PaHR6A
BW~ MaNtalny Alowvwa S 8,000 j 500 S 8 000 Pbwance S 8,000 S 500 S 8,000 Pa CNy tleM1 u~EervrtNrg pilCelnes, tYgl~ ertl
ApplnlsN Moasnw f 1.500 Y 207 S ~,500 Aiowarce S ~,500 f 2B1 S 4,500 PerCNydwM1V~tlaw~lUrypYdMries,bwm~~l
9HoG~ S 2/8,561 5 75,595 S 279,561 S 77Y,28~ L 77,017 L 2~0,761 ~
TOTAL S 1.ffi6,775 ~ 1B3,9I0 S Y~277~W0 S ]~~OZ,665 f ]77,667 S 2~79Y,8~0
~
I
Pp~ ]MdSf/lp ~
IRN YIL 1/1LN 11]i1111
Retnsed Inclus~onary Housrng Program
for the Crty of Santa Mon~ca
APPENDIX D
Financial Feasibility Simulation Model Results for
10 Prototypical Apartment and Condominium Projects in the City of Santa Monica,
Base Cases With No Affordable Housing Production Fee
Hamilton, Rabrnovrtc & Alschufer, Inc Apnl 6,1998
~
1
$
0
~
~
2
c~
0
~
U
~
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Hemil6n Ra6uwviK 8 Afschule~, Irc CRy d Santa Monca Hun 1 01-F~b-OB
Aprlment will~oul Irclwqn~yHowinq Haqursm~nt SmdILoC Low~-Rk~d N~a
CMITAL CASH ROW - SCENMIO 9-A
TOTA~ 1998 1999 2000 2001 2002 2003 2004 2005 2008 2007 2008 200G 2010
3oucea d Funds
CoretuctwnloenQa s 1,008,480 552,297 458229 0 0 0 0 0 0 0 0 0 0 0
PermanentLoanFUnding 1,1p5424 0 1,105,424 0 0 0 0 0 0 0 0 0 0 0
Gross licome/Salae (50%d 4 monlha) 22,343 0 22,947 0 0 0 0 0 0 0 0 0 0 0
LecsVicercy/QadDabt (7,117) 0 (1,11J) 0 0 0 0 0 0 0 0 0 0 0
Lesa Op EHpManeownar Aeam Fea ~4.292) 0 (4 282~ 0 0 0 O 0 0 0 0 0 0 0
TatelSOUCeadFUntls 2,130,829 55Z237 1,578587 0 0 0 0 0 0 0 0 0 0 0
Usas ol FunOs
Allocel~dLendCost 394,250 344,250 0 0 ~ 0 0 0 0 0 0 0 0 0
Demolroan tU,000 10,000 0 0 0 0 0 0 0 0 0 0 0 0
Pn-Dw•IOpm~nl S1udu~/Mdysie 10,000 10,000 0 0 0 0 0 0 0 0 0 0 0 U
Prch d Engln~eing Coala 24q99 28,274 1,225 0 0 0 0 0 0 0 0 0 0 0
PlenChck/BldpPrmtslCityFeas/Aseasa 54,S15 54,515 0 0 0 0 0 0 0 0 0 0 0 0
In-Liw Fea 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0~1-Sih Rsquremenls 47,535 0 47,535 0 0 0 0 0 0 0 0 0 0 0
ConaVBwld-OuVOn-StlslmR~~am~nts 427,811 190,138 2~7,873 0 0 0 0 0 0 0 0 0 0 0
RBhnho~ ~ 10% 47,535 0 47,595 0 0 V 0 0 0 0 0 0 0 0
7ashng and Inepaetions 7 500 3,933 0,187 0 0 0 0 0 0 0 0 0 0 0
Cons4uchonPerlamareaBOnd 7,150 7,190 0 0 0 0 O 0 0 0 0 0 0 0
R~dEstateTax~cDuimgCOnstuchon Z559 /,125 1,484 0 0 0 0 0 0 0 0 0 0 D
COns4whonlnsure~wa 20,085 20,OB5 0 0 0 0 0 0 0 0 0 0 0 D
3wvay aM Titr I~nvaroa 1D,000 10,000 0 0 0 0 0 0 0 0 0 0 0 0
Legel,Consukng,ACCIng,Admin 20,000 11,429 8,571 0 0 0 0 0 0 0 0 0 0 0
MxkehngendAtlvatising 5.150 0 5,150 0 0 0 0 0 0 0 0 0 0 0
Cona4uctionConbngarcy 50,487 0 50,487 0 0 0 0 0 0 0 0 0 0 0
PropetMenagement 51,842 16.952 35,891 0 0 0 0 0 0 0 0 0 0 0
PSmaflefltLOanFee 18581 0 18,587 0 0 0 0 0 0 0 0 0 0 0
Conc6uchonLOenRapaymant 1,105,124 0 7,105,424 0 0 0 0 0 0 0 0 0 0 0
TotalUcea d Funds 2,282,883 701,230 1,581,839 0 0 0 0 0 0 0 0 0 0 0
NatPro~aclCashFlor ~Equdy) (1~2,OB0) (198,994j 19,G84 0 0 0 0 0 0 0 0 0 0 0
CumuletrveCeehFlpw (14B,B94) (132,080) 0 0 0 0
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Rmva 7,OOB.488 552,297 458,228 0 0 0 0 0 0 0 0 0 0 D
LoanFaes@15% 15,127 15,127 0 0 0 0 0 0 0 0 0 0 0 0
Accmedlnlaect@95% 81,831 28,231 55,900 0 0 0 0 0 0' 0 0 0 0 0
Lem R~peyments 1,105,424 a 1,105,42a o 0 0 0 0 0 0 0 0 0 0
EndingBalarc• 0 587,505 (683,585) 0 0 0 0 0 0 0 0 0 0 0
PeB~ 2
Flemiltm, Rabnrnn48 Alschuler, Inc CRy of Saifa Mmice Run 1 01-Feb-98
ApMmen[ vnfiwl Inelusimary Hous~ng Requiement. Smdl Lot Lower-Priced Mea
ASSUMPiIONS. PART 1- SCENARO 9-A
DEN9TY PAflWNG
maunt mant
Lot S¢e (s~ 7,500 Reqwred Pakng et 2 Spaces Per lhR - Merket Rate i 0
AIIeyAreaCwnted(sf) 590 ReqwredPerkhgatlSS~xcesPerlhd-Afbrdable 0
3iteArealncludngAlle/Porfia~(sQ 8,000 Rac}nredGuestParkhgatl3ppcaPertOUnlta(raundecn 0
2mng R2 TotalPaking Speces Wq~rcad ~t lavdbelowgmde) f0
Menmum SReAreNUM (siiLn~ 1,500
Mewmum Base Umis/Sde (randed) 5
2~G Densty Hanus (raundeclJ 0
Total Allowable l+hib 5
UMTS
Amwnt
Nirrberof MarMetReteApatrnenb 5
FLrtber at AHortleble Apertmaits D
Numbel ot lav Incama 0
Number of Malerate Income o
N.i mber of Merket Fhte Cmdomhiums N4
PLrrber af Aftddable Condomiwms Wt
Number oi Lo.v Income r14
Number of Moderete Income M4
Type W lhits 26dp2be
EcanomcA~ea(lower-aHgher-Preed) Lowar
S¢e ot Merket Rate Unrts (sQ 1,33s
Sice oi Affadable Urnis (sQ N4
Bwldng Elfinen~y Faci« (%) 10096
Gross Bulding Aree (sQ 6,695
SCHEDULE
Amount
Stat Pre-Developrnent (mdyr) ~
Pre-De~elopment Perlod (mmtlts) 8
Stat Con64uchm 9/1/98
Cmstruchon Parod (mmMu) 9
Exf Cmstuctm 5l31/99
Start Lease-UplSalesPerwd 611~99
Manf~s to 100% Leese-Up 4
Mmfis to 1 W36 Seles NA
Laase-Up/Sel-Out Canple6m 9/3D/99
INCOME
1998 1998 1 ree t
Rait SelesPr~ce Sa.lesPrke (mmtlis)
Apertrnent Rmt (per mmh) 0
Mdket Fiate $2,169
Afbrdabla Low Income $731
Afbrdable Mod Income ~LOwa of Maiket a Mod Rait) 51278
CandomUllum SalesPnc84 (ps~
Maiket Rete N4
Afbrdeble Low Ineome N4
Atfordeble Moderete Incane N4
CPER471NG E~ENSFSANtlpAR4METERS
Amant
Aperhr~t Bad DebUCollectlon Loss Rsk 5 9~6
Aparhnent Leasng Commisaims 0 096
Operatlrg E~enses, Includng Reserves (per unR P~ Y~) ~,`~
Fbmeowner Assouetim Fees (per unk per yeer) N4
Page3
Hamdton. Rabinovih & Alschuler, Inc CRy of Sente Morooa Run 1 01-Feb-88
Aperlment Mthou[ Inclueionery hlouwng Requnement, Small Lot, LoWer-Pnced Area
ASSUMPTIONS PART 2- SCENARIO 9-A
IANp
Amount
Land Cost - Lower Pncetl Meas ($PSF) $45
Land Cos[ - Wgher Pnced Ar~s ($PSF) NA
DEVFIOPMENT PARPMEI'ERS (NIC FINANCING)
No of
1(98 $ Star[ Slart puerters
Budget Ouarter Year toSprerad
DemOh[lon 70,000 3 1998 1
Pre-DevelopmentStudies/Anelysis 10,000 1 1998 9
ArcMtacturel & Engmeermg (5% Hard Costs) 24,499 1 1998 6
PlanCheckj&dg PemiltsJC~ty FeeslASSeas 54,515 3 1998 1
Off-SiteFequirements 47,535 2 1999 1
In-LieU Fee 0 3 1998 1
ConsVBuild-Out/On-Site Improv ($71 PSF 81dg) 475,345 3 1998 4
Tashng and Inspectians 7,500 3 1998 4
Constructpn Pertormanca Bond (1 5%consp 7,130 3 1998 1
Real E~e[e Tazes Dunng Construc[ion 2,559 3 1998 4
Construcnon Insurance ($4PSF/VR) 20.085 3 1998 1
SurveyJritle Insurenca aand Teke-Down Q Star[ of Cons[) 10,000 3 1998 1
Legel, Consulting. Acetng, Admin 20,000 1 1998 7
Merke~~g arW Advert~sing 5,000 2 1999 2
Constructron CmLngency (10% Const) 48,998 3 1998 1
Prolec[ Mqmt (70%Costs NICLandlFinancinq 8 Tax~) 51.842 3 1998 5
FINANCING PARAMEIEFiS
Amount
Censtruction Lofln Fundmg - Apts (%d Pe~m Loe~ Amt) 100%
Constrvclirn Lwn Funding - Condos (%of Pro~ec[edValueJ NA
Construction Loan Fees (%) 1 5%
Constructan Loan Irnerest Re[e (%) 9 5%
Condo ValueN~~~ - ~ower Pnced Area NA
Condo ValueN~~t - Higher Prwed Area NA
Construc[ion Loan Amount - Condos NA
Permanent Loan, Apts
M mimum Debt Coverage RaLo
Mexfmum Loan m Velue -LN (Pro~eeted)
Intarest Reta (%)
Amortizahon Tem
Cap Rate
Fundmg Year
Fundu~g ~uaAer
ECONOMIC PARAMETERS
AmouM
ApaAment Value
N01, Apts (95% Occup less op ~cpenses)
Value Basetl on Cap Rata Approach
Value Based on Co~strucdon Casts
Stabil¢ed Velue (Cap Rafe Approqch)
Construclqn Loan AmouM (75% LN)
PermanentLoan Amourn -
Lesser of DSC or 75%LN
1 15 Annual Infle4an Rate - Renls, Cosis, F~cpenses
75% A'mual InHat~m RMe - RopaAy Texea
8 0%
30 Condo Seles Trensacnon Coeta
8 0% Cash on Cash Return Threahold
~evebper Contribuhon of Equlty (%)
1999 Cash Flow from Operations to Developer (%)
4 Max Axepteble Realdual Lend Velue qeduction
Page 4
$117,912
$ ~ ,473.899
~1.287,484
$1,473,899
$1,105,424
$1,105,424
30%
20%
NA
15%
100 0%
100 0%
15 0%
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Apar[menl wrthout Inclus~onary Houmng Reqwremen4 Smell Lot, Wgher-Priced /4~
ASSUMPTIONS. PART 2- SCENAHIO 10-A
LAND
Amount
Lend CoS - Lower Pnced Ar~s (SPSF) $75
Lend Cost - Highef Pnced N~s ($PSF) NA
DEVELOPMENT PARAMETERS (NIC FINANCING)
No of
1/98$ S[art S[arl Ouar[ers
Budgel Quarter Year ro Spread
Demolition 10,000 3 1998 1
Pre-DevelopmentStud~es/Analysis 10,000 1 1998 3
Arehiteclural & Enginaering (5% Hard Cosis) 2T,557 1 1998 6
Pkn Check~Bldg Permns/City Fees/Assess 54,846 3 1998 1
Off-SrteReqwrements 53,560 2 1999 1
In-Lieu Fee 0 3 1998 1
ConsUBUlld-OuUOn-Sdeimprov(SBDPSFBIdg) 535,600 3 1998 4
Terting end Inspectiona 7,500 3 1998 4
Constructbn Perlormanca Bond (1 5% consQ 8,034 3 1998 1
RealESataTaxesDunngConstruchon 4,313 3 1998 4
Construction Insurence (~4PSF~YR) 20,085 3 1998 1
Survey/~rtle Insursnce aand Take-Down @ S[art oF Cons[) 10,000 3 1998 1
Legd, Consultirg, Accing, Admin 20.000 1 1998 7
Marketng antlAdveNSing 5,000 2 1999 2
Consttue6on ConUngeney (10% Conat) 55,113 3 1998 1
Pro~~t Mgmt (7 036 Co~s NIC Land/Financing 8 Tex~) 57,211 3 1998 5
FINANCING PAflAMEfERS
Amount
Constmctan Loen Fund~ng - Apts (96 of Perm Loen Amt) 100%
ConSrucuon Loan Funtling - Condos (96 oi Pro~ec[etl Value) NA
ConSNCt~on Loan Fees (96) 1 5%
Constructnn Loan Interest Rffie (%) 9 5%
Condo ValueNnit - Lower Pnced Aree NA
Condo ValueNnit - Highar Riced Prea NA
ConHrucdonLOan Amount - ConUOS NA
Permenent Loan, Apts
M~mmum Debt Covarage Raho 1 15
Max~mum Loan fo Velue -LN (Rqected) 75%
IMerest Rate (%) 8 096
Amotlizffiion Term 30
Cap Ra[e 7 5%
Fundmg Yeer 7999
Fund~ng Duarta 4
ECONCM IC PARAM EfERS
Amount
ApaAment Value
NOI, Ap[s (95%Occup lesaop expenses) $148,458
ValuaBasedonCapRa[eApproach 51,979,437
Value Besed on Canstruchon Costs 51,593,134
Stabil¢ed Va~ue (Cep Rate Approach) 51,979.437
Constmctan Loan Amount (/5%L1h S1,A84.578
Permanen[ Loan Amourt -
Lessd of DSC or 75%LTV ~ 51,484,578
Annual Inflapon Rate - Rants, Cosis, Expenses 9 D%
Annual Inflatim Rele - Roperty Tazes 2 D%
Condo Seles Transa;tion Costs NA
Cash on Cash ReNm Threshold 15%
~evebper Cqntnbutwn of Equlty (9G) f00 0%
Cash Flow from Operetlore to Daveloper (%) 100 0%
Mex Acceptnble Reaidunl Lend Velue Reduction 15 0%
Page 4
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Condomimum wdhout InclunorwyHoudnq fl~quF~m~M, Smdl Lol, Lawr-PFk~d M~~
CMITAL CASH FLOW - SCENMIO 13-A
TOTAL 1896 1997 1898 1099 ?000 2001 2002 2003 2004 2005 2008 2007 2008
Soueea d Funde
Cormtuctwn Loen Rnvs
Prman~M Loan Fundinp
aross lieoma/Selsa RaV~nue
Usc Sabe Costs
Losa Op ExpMomeownai Assm Fees
Tohl Sovicea ol Funds
Uses ol Funtls
Nloceted Lend Coat
D~moiNon
Pr~-Davabpmant Sudi~afMalysla
Arch BEngln~aing Cosb
Plen Chek/Bltlg Pimts~GiryP~es/Aecass
In-Lisu Fae
Ofl-Sde Rpuromanta
ConsVBmld-Ouf/On-Sita Improv~meMa
R~anton @ 70%
Toatm9 entl liwpxllona
Cona4irtlon Pcfamence 8ond
RaY Entab TanasD~nMg Constucuon
Cons4uctlon Inawene~
Surwy aM Ti14 Insuarc•
Uyd, Conauling, AccMg, Admm
Mdk~ting end AWsbemg
Constructbn CoMlnflancy
Prqect Menagsment
v vmanem ~oen Fee
Conctrucbon Loan Rep~ymanl
TotalUses d Funds
Nol Pro~oct Cesh Flox (Equrty)
Gumultlrva Cazh Flwv
Conctuclion Loan Bslaroas
Reva
Loen Feaa Q 1 3%
Accrued Inlaest @ 9 5%
Las Rapeyments
Ending Bplenca
1197,OB2 5129t1 8742~8 ~4.545 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 D 0 0 0 0 0 0
1,781 267 0 1,OSB,065 725,178 0 U 0 0 0 0 0 0 0 0
~iax,soi~ o ~e4.sa71 (se,oia~ o 0 0 0 0 0 0 0 0 0
(9,271) 0 (3,E46) (825) 0 U 0 O 0 D 0 0 0 0
2,8J7 353 31Z311 1638,158 081,OB4 0 U O 0 0 0 0 0 0 0
345958 ]IS,D38 0 0 0 0 0 0 0 0 0 0 0 0
~oooo io,ooo o a o 0 0 0 0 0 0 0 0 0
10.000 t0.D00 0 0 0 0 0 0 0 0 0 0 0 0
29868 28,702 2GB7 0 0 0 0 0 0 0 0 0 0 0
61,755 04,755 0 0 0 0 0 0 D 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
57 722 0 57,722 0 0 0 D 0 0 0 0 0 0 0
519488 115,444 404,054 0 0 0 0 0 0 0 D 0 0 0
57,72z o 51,7z2 0 0 0 0 0 0 0 0 0 0 0
7500 1,987 5.833 0 0 0 0 0 0 0 0 0 0 D
8 E58 8,B5B 0 0 0 0 0 0 0 0 0 0 0 0
Z571 563 2,OU8 0 0 0 0 0 0 0 0 0 0 0
22 785 22,785 0 0 0 0 0 0 0 0 0 0 0 0
10,00~ 10000 0 0 0 0 0 0 0 0 0 0 0 0
30,0~0 13,333 13,333 3,333 0 0 0 0 0 0 0 0 0 0
20,800 0 20600 0 0 0 0 0 0 0 0 0 0 0
81,118 0 81,1/8 0 0 0 0 0 0 0 0 0 0 0
83,535 7,675 41,848 11,212 0 0 0 0 0 0 0 0 0 0
0 0 0 0 o a u u u u o u o 0
1,335,847 0 9a7.952 3E7,BB5 0 U 0 0 0 0 0 0 0 0
2,858,018 837,919 1,898,158 382,541 0 0 0 0 0 0 0 0 0 0
173,595 (725,008) (0) 298,514 0 0 0 0 0 0 0 O 0 D
~125,008) (125,008) 173,585 0 0 0 0 0 0 0 0 0 0
1,187,082 512311 870208 14,515 0 0 0 0 0 0 0 0 0 U
17958 17,850 0 0 0 0 0 0 0 0 0 0 0 0
120,829 24,335 80,504 10,090 0 0 0 0 0 ~ 0 0 0 0 0
1335,94J 0 0 1,336,847 0 0 O 0 0 0 0 0 0 0
(0) 554,801 750,710 (1,30.5,3t2) 0 0 0 0 0 0 0 0 0 0
Paqa 2
Hamdtm, Rebnrnnrt&Alsdwler,lnc Crty otSaiteMmica Run 1 01-Feb-98
Condanm~um wAhout Indusimery Hausng Reqwrement, Srt~ell Lot, Lower-Pnced Aree
ASSUMPiIONS, PART 1- SCENAqO 19-A
DEN9N
~auM
Lot S¢e (s~ 7,500
Alley AreaCounted (st~ 500
SdaArealncludngAlley PorLm (s~ 8,000
Zmng R2
Mewrrum Srte Aree~UNt (sfNn~t) 7,500
Mawmum BsgeUnits/SNe (randed) 5
2siG oa~ary ea,us (rwnded) o
Total Allowable UnRs 5
UM7S
Amount
M~mber of MerkelFataApartnents -T11~
Nurrbar of Attadable Apartrnenis M4
Number of lar+lneome Nq
Number of Moderate Income Wl
Number of Merkat Rate Cmdomniums 5
rLrtber of Attadable Condominums 0
Number of Lav Incame 0
Number oi Moderatelncome 0
Type of l.hMS 26dY1be
EemomqAree(Lower-arHgher-Prced) Lower
SiEe ot Mazkat Rate lhrts (5' 1,519
S¢e of Afiordabie Urxts (sQ 850
BwWvfg Eflicienay Fedn (%) 100%
Gross Buildirg Aree (sQ 7,595
PARWNG
mant
Fiequrced Pakng et 2 SpecesPer Lhd - Market Rate 10
Requred Pakng et 1 5 SpacesPer LhR - Aibrdeble 0
fiequred Guest Parkng at I SpecePa 701hiffi (randeci) 0
ToW Paking Spaces Req~ued (1 level below grede) 10
SCHEOULE
Amant
Stazi Pre-Develapment (mq~yr) 1 1
Pre-De~elopmertPerad (mmlhs) 10
Start Cmstrucum 11/1 /98
Construchm Perod (mmths) 9
End CmsEUC6m 7I31/99
S4vt Lease-Upl~es Period 811/99
Mrnhs ro 100% Lease-Up W1
Mmhs to tOV76 Sales 8
Lease-Up/Sel-Out CanpleUm 3(91/00
INCOME
1988 7998 1998 ree t
Hent SalesPrra SaleaPrice mmths
Apertment Pent (per mmfi) W+
Maricet Rate NA
ANordeble Low Income N4
Atbrdable Mod Income (Lawer of Meiket a Mod Rent) !y4
Gandaminlum SalesPnces (ps~
MaketRate $22500 $341,775
AtfurdebleLawlncome $8002 $fiB,OtB (PerOrdnance1615Pragram(~klallnes,7998)
Afbrdeble Moderele Incane $152 12 $729,306 (Per Ordnmce 1615 Pragrem Ciildelnes, 1998)
OPERATING E7~ENSeSANDPAR4MkfERS
Amaunt
Aperknent Bad De6UCallechan Losa RaU N4
Apertrnait Leesng Comnlsa~ms N4
OpereErg Eq~enses, Includng Resavm (per unrt per yea) fW
HomeownerAssoae4mFaes(perunrtperyear) 52,500
Pepe 3
Hamifton, Rabinovrtz & A~chuler, Inc Crty of Santa Monica
Condomm~um: wRhout Inclusionary Housing RequiemeM, Small Ld, Lower-Pr~ced Area
ASSUMPTIONS, pART 2- SCENARIO 13-A
Land Cost - Lower Pnoed Neas ($PSF) $45
Land Cosl - H~gher R~ced Neas (yPSF) NA
DEVH.OPMENT PARAMETERS (NIC FINANCING~
No d
1 i98 $ Sfart Sfait Quarters
Budget Quarter Year to ead
OemolNon 10,000 4 1998 1
Re-DevelopmeMSWd~es/Analyss 10,000 1 1998 4
/VdtRecturel & Enginaermg (5 % Fkvd Cos~) 29,669 1 7998 7
Poan Check/Bldg PermRs~CAy Faes/l~ssess 64,755 4 1998 1
Off-&te Requremen4 57,722 3 7999 1
InTL~eu Fee 0 4 1998 1
Corst(0udd-Outpn-SRe Imprw ~$7fiP5F Bldg) 577,220 4 1998 4
TesUngandlnspecLore 7,500 4 1998 4
ConstrucUOn Pertamancs Bond (1 5 o const) 8,658 4 1998 1
Real Estate Taxes Dirmg Cons4'udion 2,571 4 1998 4
Gonstruchonlrsurance($4PSF/YR) 22,785 4 1998 1
Survey/TiUe Insurance (l.and Take-DOVm ~ Start of Const) 10,000 4 1998 1
Legal, Consumng, Acctng, Atlmm :i0,000 1 1998 9
Marketing and Adver45mg 20,OD0 6 1999 3
ConstrucUon Cor~6ngency (10°/,Cot~sq 59,338 4 1998 3
Ro~ect Mgmt (/ 0°/, Costs NIC Land~Financing & Taxes) 63,535 4 1998 6
FINANCING PARAMETERS EGONOMIC PARAM6TERS
Amount Amount
Comtuc4on Loan Fundmg - Apts P/ ot Perm Loan Ar~ NA Cpndommwm Value
CoretrucLon Loan Fundmg - Condos (% W Pro~e[ed Value) 75% Value Based on Sales R~ces $1,781,263
ConstruchonLoanfees(%) 15% ValueBasedonConstrucOonCosts E1,465,227
Construchon Loan Interest Rate (%) 9 5% Construchon Loan Amourd (75%LN - Sales Pr~ce) $1,335,947
annuai Intation Rate - Rer~, GosS, Expenses 3 0%
Total Value d Condommmrrs $7,781,269 Annual Inllatim Rate - Roperiy Taxes 2 0%
Co~do Sales Transachon Cosis 8 0%
Cash an Cash Rehrn Theshdd 50%
Develaper ContribWOn ot EquAy (%) 100 0%
Ro1it from Sale to Developer (°h) 100 0%
Max. Pcceplable Residual Land Value Reducbon 15 0%
Run 1 Ot -Feb-98
Page 4
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HemAOOn, Rabinovit & Alachular, Irc Ciry of Senta Mon6a Run 1 01-F~b-98
Condomimum wilhaut Inclu~~orwyHounnq p~qur~m~~R, Smdl Lo~ Hlphr-Pric~d M~F
CMITAL CASH FLOW - SCENMIO 11-A
iO7AL 7898 1997 1988 1999 2000 2U0~ 2002 2009 2004 20D5 2000 2001 2008
Sauces d Funds
ConsfuctionLoan(kewx 1,550593 790,110 740,864 75,620 0 D 0 0 0 0 0 0 0 0
PermanentLoanFUnding 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Grosa Income~5alas Reve~ua ~319,800 0 t,J75,251 9t4,943 0 0 0 0 0 0 0 0 0 0
LessSsbeCOSts (185588) 0 (I10,021) p5,547) 0 0 0 0 0 ~ 0 0 0 0
Lass Op ErpMameownar Aqsa Foea (5,125~ 0 (7,375) (750) 0 D 0 0 0 0 0 0 0 0
TotetSOUCeadFunds 3,878,500 790,118 2,OU5,718 688,885 0 D 0 0 0 0 0 0 0 0
UseS ol FUnds
AllocafadLendCosl 578,583 57Q568 0 0 0 0 0 0 0 0 0 0 0 0
DsmolNon 10,000 10,000 0 0 0 0 0 0 0 0 0 0 0 0
R~-OevalopmeMSludi~o~Melyau t0000 f0,000 0 0 0 0 0 0 0 0 0 0 0 0
Mch 8 EnqiMe~np Costc 33,138 29,824 &316 0 0 0 0 0 0 0 0 0 0 0
PlanChcklBldgPrmta/CRyPwafAa~~ts B5.088 85,086 0 0 0 D 0 0 0 0 0 0 0 0
In-liw F~e 0 0 0 0 0 0 0 U 0 U 0 0 0 0
Off-SRe flequraments 86,558 0 BC,SSB 0 0 0 0 0 0 0 0 0 0 0
ConcpBudd-OuVOn-Sil~knprovemanta 581,018 128,715 451,809 0 0 0 0 0 0 0 0 0 0 0
RaESnUOnQtO% 84,558 U 84,SSB 0 0 D 0 0 0 0 0 0 0 0
T~stingandlnapedions 7,500 7,887 5,839 0 0 0 0 0 0 0 0 0 0 0
ConsVuctionPerinmanceBond 9884 8,884 0 0 0 D 0 0 0 0 0 0 0 0
Rod6teNTexeaDudngCOnstuction 128/ G38 3,347 0 0 0 0 0 0 0 0 0 0 0
GonaVUetionlneurenca 22,785 22,785 0 0 0 0 0 0 0 0 0 0 0 0
Swvay and Tilk Insvanea 10,000 10,000 0 0 o D o 0 0 0 0 0 0 0
Legd, Consuttng, Acctng, Admm 30000 18,833 73,833 a,333 0 0 0 0 0 0 0 0 0 0
Mak~6ngsndAdaeLamB 20,600 0 20,800 0 0 D 0 0 0 0 0 0 0 0
Gonatris~IOnContmg~ncy BB269 0 68,284 0 0 D 0 0 0 0 0 0 0 0
PropctManegemenl 89,fl22 8,191 48,145 12,288 0 0 0 0 0 0 0 0 0 0
P9mananlLOanFeB 0 0 0 0 0 0 0 0 0 0 0 0 0 0
GonetruchonLOenRapaVmen! 1,73B,7D0 0 1,2BO,SBt 078,839 0 D 0 0 0 0 0 0 0 0
Tatel Usas d Fund9 3,387 339 887,185 2005,718 CB4,468 0 D 0 0 0 0 0 0 0 0
NetPro~ectCashflav(Eqwty) 292,141 (97088) D 3B92A7 0 D 0 0 0 0 0 0 0 0
Cumuletrva Cash Flwv (97,OB8) (97,OE8) 29Z747
_'_' 0 0 0 0 0 0 0
_ 0 0
_'_ 0
Cansfuctwnloan 8alama "=='c '___' 's": c o=
_'_' ==' _ "s'
_
__'_ _ _
____ '~'_
=
_x=' _
_
'
__
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_
____
OrM's 1,550,593 700110 744,851 15,820 0 0 0 0 0 0 0 0 0 0
Loan Fees @ 1 5% 23 25B T3,259 0 0 0 0 0 0 0 0 0 0 0 0
Accruadlntwast~95% 185,848 31,531 110,442 17,876 0 0 0 0 0 0 0 0 0 0
Lam R~peyments 1,789,700 0 0 1,778,700 0 D 0 0 0 0 0 0 0 0
Ending9alenc~ 0 850,908 855,2ae (t,708,205) 0 0 0 0 0 0 0 0 0 O
Pege2
FiemiHm, Rebnow48 Alschuler, Inc Ciry of Smta Mmica FLm 1 01-Feb-98
Condommum wdhaul Incluelanary Hauang Requiramant, SmaO Lo1, Hi¢~er-Priced Aree
ASSUI~P710N3, PART 1- SCENAHO 14-A
OENBN
-
m~aunt
Lot S¢e (sQ 7,500
Alley AreaCamted (s4~ 500
Site Area Indudng Alle~ Por4m (sQ 8,000
Zmng R2
Mewrtum SRe ArmNM (sStind) 1,500
Mewmum Basa Umts/Sita (ramded) 5
2976 Daiaty Banus (raunde~ 0
Total Albweble lki~ls 5
UNITS
Amaunt
N~rcber of MarketFeteApartrnenfe -~
PLmber of AHadable Apevtmeits N4
Number of Lw~ (ncane ly4
Number oi Maderate Ineome PYt
N.~rtber ot Markat Rete Condomniums 5
PLmher of AHarcle6le Cmdomxwms 0
Number of Lav Incane 0
Number of Maderate Income 0
Type of lhAs 2bd!ffie
EeanomcArea (Lower- a Hgher-Preed) Hgher
Svs of Mmket Pate lhAs (sTj 1,519
S¢a ofAflordable Unita (sf) 850
Bwlding Eficierxa~ Fatlor (96) tOD96
Gross B~ilk1~~g Area (sQ 7,595
PARIONG
mant
ReqWred Pakng at 2 Spnces Per l.hR - Market Rate 10
RequcedPerknget195pacesPerUnh-Afbrdable 0
Hequired GuastParkng et 1 SpacaPer 10l.hiLS (rounde~ 0
Toml Pakirg Spaces Heq.iired (1 IevEi below grede) 10
SCNk~U_E
Anwwit
StMPre-Develqxnant (maryr) 1 1
Pre-De~elopmentPerbd (mmtla) 1U
Stert Cmstruchon 11/1 /9B
Cms4uchm Pared (mmtlu) 9
End CmsWchm 7131(99
Start Leese-Up/Seles Period B/1/99
Mmhe to 1 W36 Leese-Up w1
Mmhs to 1003G Seles 8
Lease-UpJSeI-Out Canple6an S/31/00
INCqME
1988 1998 ree t
Fienl Sales Pnce Selas Prlce mm1Fs
qpar6nent Fient (per mmfi) ~
Market fkte ~
Afbrdebla Low Income ~
Afbrdable Mod Income (Lowa of Merket a Mod Reit) N4
Cmdm~irwm Sales Pricea (psf)
Market Rate
Afbrdable Low Incoma
AHordable Moderate Income
$293 00 5445.067
y0013 $68,108 ~erOrdnance5815PrcgremGudelFes,1998)
$152 12 $129,306 ~er Ordhence 1615 Pragrem (i.1delhes, 1988)
OPEPATtNG D~EN823 AND PAR4MEtERS
Amounl
Apertmmt Bad DebUCdiectlm Lnes RaU P14
Apartrnent Leesng Commiasima NA
Operearg E~ensea, lnclud'ng Raseru~m (pa und par yea) MA
Flomeowner Assa~a6an Fees (px un~t Per y ee~) 53~000
Page3
Ham~Ron, RabinovRz & Akchuler, Ina CRy of Sanfa Monica Run 1 01-Feb-98
Condamimum wdhaut Inclusionary Housmg Requreme~R, Small Ld, Higher-Prwed Area
ASSUMPiIONS PART 2- SCENARIO 14-A
LAND
Land Cost - Lower Pnoed Meaz ($PSF)
Land Cost - Higher Pnced Preas ($PSF~
DEV~OPMINT PARAMETERS (NIC FINANCINGI
Arcaunt
$75
NA
No d
1ry8$ 54~rt Siart Quartars
Budget _ Quarter Year
! W Spread
DertwlNon 10,000 4 1998 1
Pre-Development StudieslAnalyse 10.000 7 1998 4
ArdtRedural & Engineermg (5%Flard Cosls) 33,138 1 1998 7
Plan CheckJBldg Perm~IS~Ry Fees/l~ssess 65,086 4 1998 1
Off-SRe Requrements 64,558 3 1999 1
In=Lleu FB9 0 4 1998 1
Const/Build-Outpn-SRe Improv ($85PSF Bltlg) 645,575 4 1998 4
Tes4ngantllnspec4ors 7,500 4 7998 4
Coratrucbon Performance Bond (1 5°o const) 9,684 4 1998 1
Real EsTate Taxes Diring Construdion 4,284 4 1998 4
Construchonlreurence ($4PSFJYRJ 22,785 4 1996 1
Survey/Tide Irisuranae (Land Take-DOwn @ Start o} Consq 10,000 4 1998 1
Legal, ConsulUng, Acdng, lWmn 90,00o t tssa s
Marke4ng antl Pdverhsmg 20,000 8 7999 3
Corctruc4on Cor~hngency (70%Cor~ 66,276 4 1998 3
Ao~ect Mgmt (/ 09o Cos25 NIC Land~Finanang & Taxes) 69,622 4 1998 6
FINANCING PARAMETERS ECONOMIC PARAM~fERS
Amount Amour~t
Gor54~ucUOn Loan Funtlmg - Ap1s (%oi Perm Laan Amp NA Condammium Value
Corutruc4on Loan Fundmg - Condos (% of Ro~ected Value) 75% Value Based on Sales Rices $2,319,600
Construchon loan Fees (%) 1 5% Valua Based on ComtuWon Cos1s $1,841,897
Construchon Loan IMerest Rate P/,) 9 5% Coristruction Loan Amourd (/5%LN - Sales Pr~ce) $1,739,700
Mnual Inllatian Rate - Rerds, Costs, Expenses 3 0%
7oTal Value d Condomirnurcs $2,319,600 Annual Inllahon Rate - Ropeity Taxes 2 0%
Condo Sales TrensacSon Costs 8 0%
Cash on Cash Rebrn Threshdd 50%
Developer Contribuhon of EquRy (%) 100 0%
RoTit ham Sa1e to Devalopar P/,) to~ o%
Max Pcceplsble Residual Land Value Reduchan 15 0%
Paga 4
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o,
~
Hemilbn, RebinoviR 6 Alachuler, Irc CM1y d Sante Monca Run 1 01-F~b-BB
Bas~ Cmeia MRipa~on Fw Sana~WRy Te~t on 3-Lot R2 Outrkt
Apatm~nt wilhoul Irclusbnsy Houamg paqur~ment, Lerqa Lof, Low~r-Rk~d kae
CMITK CASH ROW - SCENMIO I1-A
TOTAL 1988 199p 2000 2001 2002 2003 2004 2005 2008 2007 2008 2008 2010
Soucco d Fundn
ConshuttlonLoanRmvs 2.771,6g8 0 2,885,693 taeoas 0 o p o 0 0 0 0 0 0
PsmenantLoanFundinp 9,187,920 0 0 3187,320 0 0 0 0 0 0 0 ~ 0 0
Cxosslrcome/Salen(50%d4moMhs) 150,tt2 0 0 /50,112 0 0 0 0 0 0 0 0 0 0
LascVsarcy/BadDeb! (7,508) p 0 (7,508) 0 0 D 0 0 0 0 0 0 0
Losc Op EKpMansowner Assac Fees ~J1,82~ 0 0 (31,827) 0_ 0 0 0 0 0 0 0 0 0
Tolsl Sovcas d Funds 6,049,787 0 Zb85,6B3 3,984,104 0 D 0 0 0 0 0 0 0 0
ca~~o ~ena cas~
Damelmon
Prs-DwNopmant Studies/Maly~is
Mch A Enpinarirg Coats
Plan Chck~HlEg P~mts/CM1y Feas/llaf
Qf-Sde RsqUremanls
In-Lieu Fea
ConaVBUild-OuVan-Sde Nnpowr
Rebnhon @ 10%
Rstmg end Innpeclwns
Conatruchan Perfumaro~ Bond
Rsel Esteb Teaas Dwing Conat ueti
Conetruohon Insu~anw
Survaysnd Titk Inavenca
L~gd, ConcuMng Aecing, Admin
Mrk~tinq and Awatnmg
Cons6uchon Con6ngaroy
Pro~ect Managamanl
Pamanenl Loan Fee
Comtructlon Lonn R~peymant
TotalUasa d Funtls
N~t Pra~eet Ceah Flav ~EQuity)
Cumuldrve Cesh Flow
COnBtllCtlOl1 LOAII 60I9ICB5
Rrvn
Loen Fass p 1 596
Acorwd Intaeat @ B 5%
L~~ Rapeymmts
EndmgBeNnc•
ez~,ooo o e27,oo0 0 0 0 0 0 0 0 0 0 0 0
20,800 0 20,800 0 0 0 0 0 0 0 0 0 0 0
IS.ODO 75,000 0 0 0 0 0 0 0 0 0 0 0 0
zz,~e~ a~,eee io,on o 0 0 0 0 0 0 0 0 0 0
14Z008 142,OB8 0 0 0 0 0 0 0 0 0 0 0 U
148,052 0 108,952 0 0 0 0 0 0 0 0 0 0 D
0 0 0 0 0 0 0 0 0 0 0 0 0 D
1322,SE4 0 1,322,504 0 0 0 0 0 0 0 0 0 0 D
iae,esz o iae,esz o 0 0 0 0 0 0 0 0 0 0
7,125 0 7,725 0 0 0 0 0 0 0 0 0 0 U
21,401 0 21401 ~ 0 0 0 0 0 0 0 0 0 0
8,180 0 8,180 0 0 0 0 0 0 0 0 0 0 0
70,408 0 70,406 0 0 0 0 0 0 0 0 0 0 0
15.450 0 75,650 0 0 0 0 0 0 0 0 0 0 0
20,800 7,<91 7,481 5,818 0 0 0 0 0 0 0 0 0 D
10,300 0 Z575 7725 0 0 0 0 0 0 0 0 0 D
74C,D28 0 148,928 0 0 0 0 0 0 0 0 0 0 0
705,354 0 80.202 45.152 0 0 0 0 0 0 0 0 0 0
~7,510 p 0 47,510 0 0 0 0 0 0 0 0 0 p
3,107,J20 U 0 3,167320 0 0 0 0 0 0 0 0 0 0
8,419,117 22E,/31 ZD79,342 9273,324 0 0 0 0 0 0 0 0 0 0
(989,320) (226,457) (255,848) 11D,779 0 0 0 0 0 0 0 0 0 0
(228,457) (480,099) (389,320) 0 0 0 0 0 0 0 0 0 0
2,771,688 0 2,865,893 70Q005 0 0 0 0 0 0 0 0 U 0
41,575 41,575 0 0 0 0 0 0 0 0 0 0 0 0
354,0/8 0 139,949 219,097 0 0 0 0 0 0 0 0 0 0
S,1B7,320 0 0 3,167,920 0 0 0 0 0 0 0 0 0 0
0 41,676 2,805,842 (2,847,218) 0 p 0 0 0 0 0 0 0 0
Peg~ 2
Flamdlan Rabno~n~BAlsdwler.fnc QtyotSanteMmice Runl 01-Feb-98
Bese Casa for Mi4gatirn Fee Sensihviy Test m 9-LW R2 Distrld
Apertment vnfiwt Inclus~mary Ha~sng Requrement. Lerge Lot. Lewer-Pnced Area
ASSUAiPTON3. PAflT i- SCENARO 11-A
DEN9T'
mwnt
Lot S¢e (s~ 22,500
Alley Area Counted (sQ 1500
Sne Area Includng Alle/ Paum (s~ 24,000
Zmng R2
Mawmum Site AreoNnR (sfNniQ 1,500
Mawmum Base Units/Site (raundad) 16
2916 Deigry Banus (ramde~ o
Totel Alloweble UnRs 16
UM75
Amount
Nu irber of Merket F~te AparMaits ~~
w~~. o~andd~ian~cr,~,~ o
NumberolLavlncane 0
Number o} Moderate Income 0
Na rFber ot Markat F~te Candomnwms N4
N~ tr6a of AHadable Condomnx~ms N4
Nunber of Lav Inccme P14
Numbef otMaderatelncome N4
Type of Lhits 2bd/2ba
Eemomo Aree (Lower- a Hgher-Prced) Lower
S¢e of Merket f~te lhRs (sf) 1,424
S¢e oi Atbrdable Uniis (s~ 850
&eklirg Elfiaenq Fadar (9G) 100%
Gross Buildug Area (sq 22,~85
PARFONC3
mount
Required Pakng at 2 SpacesPer lhR - Merket Rate 92
Required Pakng at 1 5 SpecesPer lhR - Aflxda6le 0
Required GuestParkng at 1 SpecePer 5l,hita (rouMed) 4
ToWI Pakmg ° es Flequrted (i level below grede) 36
SCHEDU.E
maunt
Btert Pre-Development (mq~yr) 1 7
Pre-De~elopment Penod (mmths) 12
SfnrtCmstruchm 1/1/99
Cans6uctlm Perod (ma~iFs) 12
End CanstrutUm 17J31~99
Smrttease-UplSdesPenod Vi/00
Mrnhs ro 10096 Lease-Up 9
Mrnris ro 100%Sales N4
Lease-Up/Sel-Oul Canple4m 9/9D/00
INCOME
1998 1 ree t
Rad Salea Price Sdes Pnce mmtlu
Apertment Flait (per mmfi) 0
n~x~ aare atsss
Afbrdable Low Incoma ST31
AflndableMod Income(LowaoTMarkelarMad Rait) $1,218
Condammum Selas Prices (psQ
Market Rate
Afbrdable Low Income
Affordable Moda~e Inmme
OPEPATING ~ENSE3 ANO PAPAMEfERS
Amamt
Apertrnmt 8ed Debt/(bllectim Lass Reb 5 096
Apartrnent Leasng Commissims 0,096
OperaBng Eq~enses, Includng Resero~ (pa und per yea) 52,500
HomeoNner Aesoaetlm Fees (per unrt per yeer) NA
Page3
Hemilton, Rebinovi~ & Alschuler, Inc City of Santa Monica Run 7 01 -Feb-98
Base Case for Mrtigat~on Foa Sens~trv~ty Test on 3-Lot R2 Dietnct
Apartment wrthout Incluaionery Flouang Reqwremen4 Larye Lot, Lower-Pnced Mea
ASSUMPTIONS. PART 2- SCENARIO 11 -A
IAN~
Amount
Land Cost - Lower Pnced AreaS (SPSF) 540
Lend Cos - Hgher Pricetl Areas ($PSF) NA
DEV0.0PMENT PARAMEfEflS (NIC FINANCING)
No of
1/9B$ Start Start ~uarters
Budget ~uarter Year [o Spread
Demolition 20,000 1 1999 1
Pre-Development Studies/Annlys~s 15,000 1 1998 4
ArchiOectuml & Englneering (5% Had Costs) 72,781 1 1998 8
Plen CFwck181dg Parmita/Crty FeeslAssoss f 42,096 4 1998 1
IXf-Srte Reqwremen[s 142,671 4 1999 1
In-UeuFee 0 4 1998 1
Con6UBUAd-Out/On-Sitelmprov(567/$33 PSF Bldg) 7,426,714 1 1999 4
Teahrg end Inspecl~ons 7,500 1 1999 4
Co~structanPOdormanco6ond(75%consn 21,401 1 1999 1
RealEStataTazesDuringConstrucnon 9,180 1 1999 4
Con9lruchon Insuranca ($4PSF/YR) 88,355 1 1999 1
Survey(Title Insurance aenA Take-Dov.n Q Start of Const) 15,000 1 1999 1
Legd, Consulhng, Acctng, Admm 20,000 1 1998 11
Marketng end Advertis~ng 10,~00 3 1999 4
Constructbn Contingenay (1096 Const) 745.561 4 1999 1
Pro~ectMgm[(50%COS1sNICland/Financmg&Taxes) 105,354 1 f999 7
FINANCINO PARAMETERS
Amount
Construction Loan Fundmg - Apis (% W Perm Loen Amt) 100%
ConstruChon Loan Funtling - Condos (%ot Pro~eCletlValue) NA
ConArucnon Loan Fees (%) 1 5%
ConsVUChon Laan Inlarest Rale (%) 9 5%
Condo VelueNnit - Lower Prlced Aree NA
Cando ValueNn~t - Higher Riced fvea NA
Construction ~oan Amount - Condos NA
Permanant Loan, Apta
Mu~imum Debt Co~erege Rato 1 15
Maximum Loan b~ Value -LN (Ra~ected) 759G
Interest Rate (96) 8 ~%
Amotlizetion Terrn 30
Cap Ra[e 8 0%
FundMg Vear 2000
Funding (~uerter 4
ECONOMIC PARMAEf£RS
Amount
Apertment Value
NOf, Apts (95%Occup less op expenses) S3S7,847
Value Based on Cap Rate Approach 84,223,089
Value Besed on ConalrucGon Costa 53,536,640
Stabilized Value (Cap Rate Approach) $4,223.093
Constructan Loen Amount (75% LT~ 53,167,920
PermanentLoan Amown -
Lesser oi DSC or 75%LTV $3,167,320
Annual InMehm Rate - Rents, Costs, Expanses 3 0%
Mnuel InAehon Rete - Roperty Texes 2 0%
Condo Sales Transaction Costs NA
Cesh vn Cesh Relum Threshola 75%
Devebpar Contribuhon of Equity (%) 100 0%
Cash Flow hom Ope~etlore to Developer (96) 1000%
Mex Aaepta6le Residuel Land Value Raductb~ 150%
Pege 4
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HsmilOOn, Rebinawh d Alschular, Irc City d Senta Monea Run 1 01-F~6-YB
6u~ Cu~ (d M~bg~twn FM S~n~rtn~ty T~st on 3-Ld N2 D~~f kl
Ap~tm~nt wN~out I~clwqn~ry Howmg q~quY~m~nf, L~rp~ Lot, Hiqha-Rk~d M~~
CMITII CASH FLOW - SCENMIO 12-A
TOTAL 7998 1999 2000 2001 2002 2003 2006 2005 2008 2007 2009 2DOB 2010
Sovicea d Funds
CoretuehonLoanLYmva 3,805397 D 3,/79,823 725,774 0 0 0 0 0 0 0 0 0 0
PxmensntLoenFUnding 4.121,191 0 0 4,121.171 0 0 0 0 0 0 0 0 0 0
Cross IrcomalSalea (50%uf 4 moMhs) 183,823 0 0 193,823 0 0 0 0 0 0 0 0 0 0
UceVCercy/BadDebt (9,OB7) D 0 ry,681) 0 0 0 0 0 0 0 0 0 0
LaceOp ExpM~aowncrACSx Fea (38,192) D 0 (38,102) 0 0 0 0 0 0 0 0 0 0
Total Souces d Funds 7,BM 278 0 3,479,923 4,392,C54 0 0 0 0 0 0 0 0 0 0
Usas o~ Funtls
ANOCSIedLsndCost 1,822,250 0 1,822,250 0 0 0 0 0 0 0 0 0 0 0
D~molNOn 20,600 0 20,600 0 0 0 0 0 0 0 0 0 0 0
Pr~-DsvNopmentStudbs/Anelysn 15,000 75000 0 0 0 0 0 0 0 0 0 0 0 0
Arch BEngirwrmg Cocts 82,088 T0.51b 12,444 0 0 0 D 0 0 0 0 0 0 D
PlenChck~HldpPrmts/CilyFeas/Ascasa 1IZ75E 142,758 0 0 0 0 0 0 0 0 0 0 0 0
Off-SIIaRequrement¢ 167,0~7 0 167,87] 0 0 0 U 0 0 0 0 0 0 D
In-Lieu Faa 0 0 0 0 0 0 0 0 0 0 0 0 0 U
ConsUeudd-OuVOn-Sdehnpovamenm 1,508,54D 0 1,508548 0 0 0 0 0 0 0 0 0 0 0
R~bnhonQlO% 167,817 D 187,817 0 0 0 0 0 0 0 0 0 0 0
Tecbngandlnap~ctiona 7,725 0 7725 0 0 0 0 0 0 0 0 0 0 0
Com4ucM1OnP~rfamareaBond 24.410 0 2q410 0 0 0 0 6 0 0 0 0 0 D
R~d6t~GTac~~DuringConatuctbn 1E,OE5 0 iB,085 0 0 0 0 0 0 0 0 0 0 D
Con{4uctlonlneurancs 10,408 0 70,408 0 0 0 0 0 0 0 0 0 0 0
SwveypndTitbina~rarca 15,650 0 75,460 0 0 0 ~ 0 0 0 0 0 0 D
Lagd,Correuling,Atcing,Admm 20,600 7,497 ~,991 S,Ete 0 0 0 0 0 0 0 0 0 0
Mwk~tlnqandAdvetising 10,900 0 ;575 7,725 0 0 0 0 0 0 0 0 0 0
ConahuCtlonConhngarcy 1]0,903 0 170,90~ 0 0 0 0 0 0 0 0 0 0 0
Pro~~etMenegemant 118,099 0 67,685 5~,816 0 0 0 0 0 0 0 0 0 D
PamananlLOanFae 61,817 0 0 B7,Bt7 0 0 0 0 0 0 0 0 0 0
CanatructwnLoanRepayment 4,121,191 0 0 4,121,191 0 0 0 0 0 0 0 0 0 0
TotelUc~c d Funde B,3d4,257 235,785 3.881 S87 1,248,005 0 0 0 0 0 0 0 0 0 0
N~lRo~eclCeshFlav(EquRy) (9Y1800) (235,705) (401,884) 145,749 0 0 0 0 0 0 D 0 0 0
Cumulalrve Cesh Flow
=='_s' (235,785~ (837,72Y) (407.GflU)
____' "___ ___'_ 0 0
__'_' 0 0
'x_'= 0
='_a_ ' 0
__-_ 0
=_'c~ 0
"___ 0
=se== 0
Conatuchon Loen Belaneea
Rs4a 3,805,987 0 9,479,028 123,779 0 0 0 0 0 0 0 O O D
Losn F~~a Q 7 5% 56,OB1 S4,4e1 0 0 0 0 0 0 0 0 0 0 0 0
Mauad Inleest ~ B 5% 481,853 0 7B2BB0 278,973 0 0 0 0 0' 0 0 0 0 0
L~n R~paymenta 4,127,131 0 0 4,121,181 0 0 0 0 0 0 0 0 0 0
EndingBalancs 0 64,081 3,662,J03 (i,71B,384) 0 0 D 0 0 0 0 0 0 D
pega 2
HamiMm, RabnoHtr 8 Alsdiuler, In~ Crty of Santa Mmica FAn 1 Ot -Feb-88
Base Case ta M~4gelion Fee Sens~h~i~ Teat m 9-Lot R2 D~atriet
ApMment xnlhaut Inclusimary Hougng Requrement, Lerge Lot, Wpher-Prfeed Area
ASSU6P710NS. PART 1- SCENAHO 12-A
DEN9TY PAHWNG •
mamt maunt
Lat S¢e (s~ 22,500 Reqwred Pakng at 2 Speees Per l.hA - Merket Rate 32
Alleq Aree Counted (sQ 1500 Flequved Parkhg at 1 5 SpacesPer l,hd - ANardable 0
SiteArm Includng Alle/ Portwn {s~ 24,000 RequNed Gues~ Parkng at f 3pace Per 5 Unhs (rounded) 6
Zmng R2 Total Perking Spaces Req.iued (1 IewA below giade) 38
Mawm.im Srte Area~V nrt (s1~5mr1) 1,500
Mawrtum Bese UnRsJSrte {rounded) 16
2936 Daisily Banus (rwnded~ 0
TofalAllowebleUnils ' 16
UNITS
Amwnt
hLrtbx o( Merket Rata Apertmants 16
w~w~r otnx~dd,ia na~m,~,~ o
Nunber of Lw/ lncane 0
Number of Maderete Income o
N~mber of Market fiate Candomniums f~14
N,trber otAttddable Condanmums tyA
Number of Lwv Inccme N4
Ntmber of Motlerata Income M4
Type of Urnb 2bd/2ba
Ecmomb Aree (Lower- or HgF~-Prced) Hgher
Size of Mxket Rate lhrts (SQ 1.424
Size of Albrdable Umb (s~ 85D
BukLrg Efiaenq Fect« (%) t OD%
(3oss B~nkJvg Area (sQ 22,785
SCHEDULE
Amaunt
SfartPre-0awlopmarrt (mqyr) -~1 9~
Pre-De~elopment Period (mmtlo) 12
Stert CmstrucLm 1 /I/99
Constuchm Parqd (mmths) 12
End Cmstruc6m 11J31~99
Smrt lee~se-Upf`~a~esPe~~af 1 /t/00
MmFs b 10096 Lease-Up 9
Mmha to 10096 Seles N4
Leese-Up/Se1-Oul Canpletim 9I3DI00
INCOME
t~a 1 7 ree t
Hs~t SalesPrlce StdwPrfce mmrire
Aperm~ait Re~t (per mmfi) 0
Mmket F~te $2,535
Affordabla low Ineome E731
AHordeble Mod Income (Lowe of Medtet a Mad RenQ $1,218
C',aManmum Saka Pnces (ps~
Mwlcet Rate NA
Afbrda6le Low Income N4
ANadable Moderde hcome W1
OF'ER4TING F.~ENSE9 AND PAR4METERS
Amount
Apertrnent Bad DebVCollechm Lase F§al~ 5 0%
AparAnait LeeBhg Commisslana 0 0%
Opere~^B Eq~mses. Inalutltg Resaves (pa unit per yee) 89,000
Homeo~erAssoae4m Feea (per unR per yeor) N4
Pepe3
Hemilton, Febmovi4 & Alschuler, Inc Qty af 3an~ Monica
8aso Case for Mingation Fee Sen~[rvity Test on 3-Lo[ fl2 Dietnct
Apar[ment wrthout Incluaionary Houeio9 Heqmremeal, Lerge lot, FNOher-Pnced Area
ASSUMPTIONS, PART 2- SCENARIO 12-A
LAN~
Amount
Land Cos - Wgh~ PricedMeas ($PSF) E70
Land Cost - Lower Pnced Neas ($PSF) NA
DEV0.0PMENT PARAMEfEFS (NIC FINANCING)
No of
1/98$ Stert Start Querters
Budgg puarter Veer to Spread
Demolrtion 20,000 1 1999 1
Pre-~evdopment StudiesjAnelysis 15,000 1 1998 4
ArchiOectural & Enginaering (5% Hard Costs) 82,963 1 1998 8
Plan Check/Bldg Peimrte/City Faes/Assess 142,758 4 1998 1
Ott-5ite Reqwrements 162,735 4 1999 1
In-Lieu Fae 0 4 1998 1
ConsUBudd-OuUOn-SRelmprov(576/538PSFBIdg) 1,627,345 1 1999 4
Testing end InspecGOns 7,500 1 1899 4
Conslructron Periormance Bond (t 5%~onsn 24,410 1 1999 1
RealEstateTaxesDunngCOnstruclion 16,065 1 1999 4
Cons[ruc[ion Insurance ($4PSFlYR) 68,355 1 1999 1
Survey/rille Insurance Qand Take-DOwn @ Start oF Consl) 15,000 1 1999 1
Legal, Consultirg, Acdng, Admin 20,000 1 1998 11
MarketngendAtlvertising 10,000 3 1999 4
Constmctqn Cantingancy (10% Const) 165,926 4 1999 1
Pro~eCt Mgmt (50%Co~s NICLand~Financing & Tan~) 118.099 1 1999 7
FINANCING pAFiAMEiERS
Amount
ConstructionLoen Funding - Apts (%ot PBrm Loen Amt) 100%
Cons[ruction Loan Funding - Contlos P36 of Pro~ecled Value) NA
Con~ruchon Loan Fees (%) 1 5%
Construction Loan Inle~est ReRe (%) 9 5%
Condo VelueNnlt - Lowar Pnced Area NA
Condo ValueN~~t - Higher Priced Area NA
Consruct~on Lcen Amount - ConAOS NA
Permanent Loan, Apts
M mimum Debt Coverage Raao 1 15
Meuamum Loen b Value -LN (Ro~ected) 75%
Interest Rete (%) B 0%
Amort¢atwn Term 30
Cap Rate B 0%
Fund~ng Year 2000
Fundmg Qusrter 4
ECONOM IG PARAM EfERS
Amamt
Apartment Value
N01, Apta (95% Occup less op wcpenses) 5489,587
ValueBased on Cap Rate Approach 55,494,842
Value Baeed on Cmstruciwn Costs $4,613,111
Stabd¢ed Value (Cap Rate and OFM) 55,494,842
ConstructanLoenAmouniQ5%LT~ E4,121,131
Permanen[ Loan Amourt -
Lesser of DSC or 75%LTV ~ $4J 21,131
Annual InNat~on Ra[e - Rents, Costs, Expensas 3 0%
Annual Infiatlon RaQe - Roperty Tax~ 2 0%
Condo Sales Transac[ion Costa NA
Cash on Cesh ReNrn Threrhold 15%
Oevebper Contribuhon ot Equity (%) 100 0%
Cash Flow from Operalions to Developer (%) 100 0%
Max Axeptebla Residuel Lend Valuo Raduction 150%
Page 4
Run1 01-Feb-98
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Hamdbn, Rebmavih 6 Alschular, Irc City d Sante M o~ca Run 1 01-Feb-OB
B~ae Casa fw MRigetan F~~ S~nuMdy T~at on 3-Lot R2 d~t~ct
Condamm~um w~lhout IneludonuyHoudnp H~quR~m~M. Smdl LoR ~~~- Ak~d N~~
CMITA~ CASM FLOW - SCENARIO 15-A
TOTAL 1808 1898 2000 2001 2002 2003 200~ 2005 2008 2007 2008 Z008 2010
Soucae d Funds
ConsYUtLonLoanOravs 7,093,877 0 2198,78d BI9,B48 14,305 0 0 0 0 0 0 0 0 0
Pamen~ntLoanFUnding 0 0 D 0 0 0 0 0 0 0 0 0 0 0
Groca IrcomelSales Revenue 4,958,950 0 0 4,008 BIO 952,840 0 0 0 0 0 0 0 0 0
LYSS Seke Cos~s (396 716) 0 0 (320,529) (76 187) 0 0 0 0 0 0 0 0 0
LesaOp ExpM~eown~rAsaoc Fees ~20.477) 0 0 (19792) (825) 0 0 0 0 0 0 0 0 0
TofAI Sovices d Funds 7,575,754 0 2188,780 4,488,t97 890,9J3 0 0 0 0 0 0 0 0 0
Uses o1 Funtls
Allocetad Land Cost 927,000 0 027,000 0 0 0 0 0 0 D 0 0 0 0
DamolNOn PO.B~O 0 20,800 0 0 0 0 0 0 ~ 0 O 0 D
P~e-~walopmeMStudias~Analys~e 16.000 1Y,857 2,743 0 0 0 0 0 0 0 0 0 0 0
NchBEngln~eingCosta 77,308 38853 38,720 1,073 0 0 0 0 0 0 0 0 0 D
PlsnChck/BldgPrmts~CtlyFaas/Assac 157,907 0 157,907 0 0 0 0 0 0 0 0 O 0 0
OX-SdsRaquremm[5 15B.13B 0 0 758,198 0 0 0 0 0 0 0 0 0 D
Iq-Lia~ Fae 0 0 0 0 0 0 0 0 0 0 0 0 0 D
Conat/Buiid-OuVOn-SMMprowmsnle 1,405224 0 1171,020 234,204 0 0 0 D 0 D 0 0 0 0
R~Oanlion Q 10% 158,188 0 0 158,138 0 0 0 0 0 0 0 0 0 0
Tashngendinapecbons 7M3 0 B,43B 1,288 0 0 0 0 0 0 0 0 0 0
CanstruclionPerfamercsBond 22,738 0 22,788 0 0 0 O 0 0 D 0 0 0 0
RodEstnt~TeicesDunngCOnskuchon 8,211 0 7,850 1,581 0 0 0 0 0 D 0 0 0 0
ConsVUC~lon Insurenca 70,400 0 70,qOB 0 0 0 0 0 0 0 0 0 0 0
Survoyard Tn6lnsvarca 15,450 0 75,450 0 0 0 O 0 0 0 0 0 0 0
Legd, ConzuNng Aecing, Admin 80,000 9,474 9,41e 9174 1,579 0 0 0 0 D 0 0 0 0
MakehngandAdvatining 42.498 0 0 ~B,f02 4,244 0 0 0 0 0 0 0 0 0
ConatrictanContmgarcy 194o2B o 0 784,028 0 0 0 0 0 0 0 0 0 0
Pro~aclMenegemenl 11~.78< 0 47,414 SB,BB7 9.489 0 0 0 0 0 D 0 0 D
PefmanenlLOanFee 0 0 0 0 0 0 0 0 0 0 0 0 0 0
ConatrucBOnLOenRepeymont 8,719212 0 0 S,BB6,2B9 52,823 0 0 0 0 0 0 0 0 0
TotelUsesdFunda 7,/10,309 80,984 Z49a,95B 4,968,177 88,229 0 0 0 0 D 0 0 0 0
N~1 Pro~act Gash Flon (Eqwly) 465,445 (E0,9B4) (298,178) 0 822,805 0 0 0 0 D 0 0 0 0
CumuldrveCaShFlav (80,984) (357,760) (357,180)
" 0
- 0 0 0
_ 0
-
_- 0
~' 0
~"" 0
_'"~ 0
z___` 0
'_:`~
ConeYuchonLoenBelemes "--__ '-__' "'_' -
'- '-_-- ' '-' _____ -'--_ ' --
-
pawa 3,093,837 0 218878~ 819,848 /5,305 0 0 0 0 0 0 0 0 0
loen Fess @ 1 5% 48,509 45,SOB 0 0 0 0 0 0 0 0 0 0 0 0
AcoruedlntaeatQ95% 879,788 0 104,442 207,827 287,497 0 0 0 0 0 0 0 0 0
L~SSflepayments 3,718,2/2 0 0 0 3,719.212 0 0 0 a 0 0 a 0 0
EndmgBaMnce (0) 45,500 ;303,228 1,087.875 (3,418,410) 0 0 0 0 0 0 0 0 0
Pe9~ 2
htamikm,Fabno~tz&Alsdiulef,~nc Ciryof5mlaMmi~e Runt 01-Feh-98
Bme Case la Mdgatlm Fea Sena~Smty Tmt m 9-Lot R2 D~atrict
Condominum wtlhaut Inclusanmy Housing ReqwremenC ~ge Lot, Lawa-Preed Aree
ASSUIYP710NS. PART 1 - SCENAFi015-A .
DEN9TY PARWNG
mount mamt
Lot S¢e (s~ 22,500 Flequired Pakng et 2 SpacesPer lhit - Merket Hate 32
Allay AreeCounted (si~ 1500 Reqwred Pakngat 1 S SpacesPer Utrt - Afiardnble 0
S~IeArenlncludng Alley Pafim (s~ 24,OOD Requved GuestPerknA at 1 SpecePer 5 WMs (rounded) 6
Zanng F2 Totel Paking Speces Fleq.iired (t levd below grade) 38
Mawmum Ste Aree,Umt (sWnn) t,500
Mw~rum Base UrutslSrte (~wnded) 16
2976 Denmly Banus (rwnded) 0
Tofel Alloweble Units i 6
UMTS
Amount
PLrrber ot Mevkat Rete A{wUnats ~
N~ mber of ANardeble Apatmaits N4
Number of Lav Incane NA
Numbar ol Malerate Income ty4
Narcber o} Market Rete Candomniums I6
FL hber of ANordable Cmdanmums 0
Number oi Lvrv Income 0
Number ol Moderate Income 0
Type oi W its 26d/ffia
Ecmomc Nen (Lower- or Hgher-Proed) Lower
szaan~a+amau,~s (~ry i.aza
sim marr~reacia uNr~ csn e~o
BukLng Elficiena/ Faftar (%) 100%
Gro55 Bwlding Area (s~ 22,785
SCNEDULE
Amamt
SimtPre-Develapment (mqyr) 17fr~8
Pre-De~elopmmt Period (mmtls) 14
S1ari Canstruthm 3/1/99
Canstruotion Perod lmmths) 12
Fnd Cmstruc4m 2/28/00
STart Lease-UP/~~ Period 3/1/00
Manhsto 10096 Leas~Up N4
Mmhs to 100% Seles 12
Lepse-Up/Sel-OUl Comple4m 2J28)Ot
INCOME
1 1 7998 ree t
Fiait Sal~ Price Sales Price mmths
Apertment Fienl (per mmh) W~
Merket Refe M4
ANordehle Low i~come t~N
AtAxdable Mod Incana (Lower af Meiket w Mod Reit) P14
Condamrrum Seles Prwes (ps~
MerketRata $2040~ 5290~509
AHadable Low Income 58013 $68,108 ~er Ordnaice 1815 Pragrom (3~belnes, 1993)
Afbrdable Moderate Income 515212 3129,308 ~er Ordnaice 1815 Pragram Ciddeflnes, 1989)
CPER471NG E7ff+ENS~ANDPAR4MEfER9
Amaunt
Apertment Bed DebVCollectlm Lass Rele -!~A
Aperhnent Lenshg Commisama N4
OpereBng E~v~ses, Includng Pasetvas (pa ut~K peryaa) NA
Homeowner Assadatim Fees (per unR per yepr) E2,500
Pape 9
Hartxtton, RabmovRz & Alschuler, ~na Crty of Santa Monica Run 1 01-Feb-98
Base Case for MiUgatian Fee SensRrvity Tast on 3-Ld R2 Dstr~ct
Condamimum: wAhout Inclusionary Housmg Requieme~, Srtiall Lat, Lower-R~oed Mea
ASSUMP170NS PART2 - SCENARID 15-A
LlWD
Amount
Land Cost - Lowar Pnoed Neas ($PS~ $40
Land Cost - Higher R~ced Preas (3PSF~ NA
DEV~OPMENT PARAMETERS (NIC FINMICING)
No d
1~98$ Start Start Quarters
Budget _Quarter Year to ead
DemolAon 20,000 i t999 1
Re-DavelopmeMS4rdias/Analyss 15,000 1 1998 5
Arch~ecturel & Engineermg (5 ~ Hard Cos~) 77,306 1 1998 9
Plan CheckJ6ldg Permds~Cily Fees/~ess 157,907 2 1999 1
OR-SRe Requrements 151,588 1 2000 1
In=L~eu Fee 0 2 1999 1
Conet/Budd-Outpn-Srte Improv ($71/$35 PSF Bldg) 1,575,883 7 7999 4
Testmgandlnspec6ons 7,500 7 1999 4
ConstrucLon Perfarmance Bantl (1 5%cornt) 22.738 1 1999 1
Real Es~te Taxes Dirmg Co~utrudion 9,211 1 1999 5
Constructionlrsurance($4PSF/YR) 68,355 1 1999 1
Suvay/TRIe Ireurance (Land Take-DOwn @ Sfart of Consn 15,000 1 1999 1
Legal, Consulhng, Accfig, Atlmm 30,000 1 1996 13
Marke4ng and AdverUsmg 40,000 8 1999 3
Corwtuc6on CorNngency (f0% Corr~ 154,612 2 2000 3
Ro~ect Mgmt (5 0°/,COSts NIC Land~Finanemg & Taxes) 113,794 1 7999 4
FINANC~NG PARAMETERS ECONOMIC PARAMETHRS
Amount AmouM
Construct~on Loan Funtlmg - Apis (%of Perm Loan Amt) NA Contlom~n~um Value
CoiutucUon Loan Fundmg - Condos (°/, ot RoJected Value) 75% Value Based an Sales Rroes $4,958,950
Corstruc4on Loan Fees (%) 1 5% Vafue Based on Coristruc4on CossL $4,096,789
Cora~truc4on Loan Interest Rate (%) 9 5°6 Corstriwt~on Loan AmourR (!5% LN - Sales Prke) $3,719,212
Mnual Inllatian Rate - Rerds, Costs, Expanses 3 0%
7otal Value d Condommiurcs $4,958,950 Mnual IrMatian Rate - Roperty Taxes 2 0%
Condo Sales TrensacLOn Cos~ 8 0%
Cash on Cash Retun Ttreshdd W%
Developer ContribWOn of Equdy (%) 100 0%
aotit trom sale m oevetoaer P/~ too o%
Max. PccepMble Residual Land Value ReducUan 15 0%
Pege 4
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Nsmilbn. Rabmowh 8 Aischular. Irc CM1y d Senta Monce Run 1 01-F~b-DB
Bua Cess far MMga4on F~a Sa~sitrvdy Tas1 S-Lot R2 Do~ct
Condommmm wilhwt InclueianeryHoua~ng Naqur~~n~~t, Smdl Lot N~9~-~r~d N~a
CMITK CASH FLOW - SCENMIO 10-A
TOTAL 1D98 1889 2000 2001 2002 2003 2004 2005 2008 2007 2008 2009 2010
Sovicea d Funds
CoretuchonLoenOrava a075,295 0 3,197.376 927,613 18,968 0 0 0 0 0 0 0 0 0
PrmenentLoanFunding 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cuossl~eomelSaleaRevanw 8,884,859 0 D 5,401,087 1,283,792 0 0 0 0 0 0 0 0 D
Less Sabs Costs (534 789) 0 0 (49~085) (702,709f 0 0 0 0 0 0 0 0 0
Lass Op ExpMomeowner Aaem F~~s (24,500) 0 0 (23.750) p50) 0 0 0 0 0 0 0 0 D
Tolal Soueas d FunCS 10,200,BB5 0 3137,314 5,869,845 1,788,707 0 0 0 0 D 0 0 0 0
Usas ol Funtls
NlocatedLendCOal 1,822250 0 1,622,250 0 0 0 0 0 0 0 0 0 0 0
D~molNOn IO,B00 0 20600 0 0 0 0 0 U 0 U 0 0 0
P~e-D~valopmant3tudi~s/Melynic 15,000 ~2,857 ~149 0 0 0 0 0 0 0 0 tl 0 D
Mch BEngm~rmp Coc4 671D2 43,718 41,557 2187 0 0 0 0 0 0 0 0 0 D
PlenChek/BIdpP~mte/CtlyF~n/Assesa 15B,SB2 0 158582 0 0 0 0 0 0 0 0 0 0 D
qf-SMflaquremenh 770,808 0 D 778,808 0 0 0 0 0 0 0 0 0 0
Iq-L~eu Fea 0 0 D D 0 0 0 0 0 0 0 0 0 0
ConsUBulld-OW~n-SRalmpovemenla 1,591,274 0 1,328,082 285,212 0 0 0 0 0 0 0 0 0 0
HeEentlonQlO% 176809 0 0 176,808 0 0 0 0 0 0 0 0 0 0
Tashngandlnspactiona 7,725 0 8,438 1,288 0 0 0 0 0 0 0 0 0 D
ConstrichonPerlameroaBond 25,748 0 25,74Y 0 0 0 0 0 0 0 0 0 0 0
ReN6tetaTiunsDurmgCOns~uction 1E,118 0 1~,888 2,771 0 0 0 0 0 0 0 0 0 U
Constructionlnsuience 70,<OB 0 70,906 0 0 0 0 0 0 0 0 0 0 0
SurvayeM Ti141nsuanea 15,650 0 16,450 0 0 0 0 0 0 0 0 0 0 0
LsgN,Concuttng,Acctng,Admin 30,000 9,474 9474 9,474 1578 0 0 0 0 0 0 0 ~ 0
Mak~tingendAdvatnmg 42,498 0 D 98,192 4,244 0 0 0 0 0 0 0 0 D
Cons4uchonConling~roy 105,840 0 0 1BS,B40 0 0 0 0 0 0 0 0 0 D
Prol~ctManegemant 128.595 0 52.727 &9,272 10.545 0 0 0 0 0 0 0 0 D
Pa'ma~eniLOanFea 0 0 D 0 0 0 0 0 0 0 0 0 0 0
ConaVUCUOnLoanRapaymeM 5,073,644 0 0 4,945,231 BB,013 0 0 0 0 0 0 0 0 D
TotalUca d Funda 8,382,527 89,077 3,364,825 5,8E8,8{5 84,781 0 0 0 0 0 0 0 0 0
NetPra~eclCashflox(EquRy) 818338 (68,077~ (227,511) 0 1,111,928 ~ 0 0 0 0 0 0 0 0
CumulRrve Cp6h Flav (88,07~ (289,588) (283,588) 0
"__' 0
_'_' 0 0 0 0
- 0 0
_ 0
'___ 0
ConnYucM1OnLoen Balareee '__'__ _e=v~
'____ __'_' _____
s _
"" __'_ =
_
c~'= '_
___'
_ '
a° '
___' =_'a
_ =
_'__ ==a•
Ll'ava 1075,295 0 3,197.91q 921,813 78,SB8 0 0 0 0 0 0 0 0 D
LoenF~eap15% 87,129 01,129 0 0 0 0 0 0 0 0 0 0 0 0
Atcruad Intaeat @ 9 5% 877,218 0 149,022 341.821 388,978 0 0 0 0 ~ 0 0 0 0 0
Lesa Rspeym~nta 5,013,814 0 0 0 5,013,044 0 0 0 0 0 0 0 0 0
EndingBalarce 0 61,729 3,286,397 7,289,455 (4,870,901~ 0 0 0 0 0 0 0 0 0
Peg~ 2
Flarniltm, Rebhrnnt & Alsdwler, Inc Ciy of SaNa Mmice Run 1 01-Feb-98
Bese Cese tor Mrtg~ion Fee Sensrtmly Tast m 3-Lot R2 Distrbl
Condommum w~lhout Induawnary Hauang Requirement lerge Lot, Hgher-Prced Atee
ASSUMP710NS PART 1- SCEWIRO 16-A
DEN9T'
_
mcunt
Lot S¢e (s~ 22,500
Alley Area Counted (sfj 1500
SdeArealncludng Alle~ Pahm (s~ 24.000
Zmng R2
Mewmum See Are0.A/nn (syund) 1,500
Mewmim Base Units/S~te (raunded) 76
25% Densty Baius (rwnde~ 0
Tatal Allowable l.hits 16
PARqNG
mamt
RequKedPakngel2SpacesPerlkirt-MerketRate 32
RequrcedPwkngffi15SpacesPerUi~1 -Aifurdable 0
Requved Gueat Perkng et 1 Spece Per S lhrta (rourded) 6
To~IPakmpSpacesPecfaved(11evAbefowgrtde) 38
UNITS
Amamt
N.~mber of Market RetaApaztrnants -~1
Nirtber ofAffadableApertrnenffi N4
Nim~ber of Lan Incame N4
Number of Maderatelncome M4
I~Lrtber of MerkatRateCandomniums 76
Nimber of Aflordable Condanmums 0
Number of Lcw Incane 0
Number of Matlerate Income 0
Type ot lhits 26d/2be
EcmomcAree (Lower- a Hgher-Preed) Higher
S¢e M Mevket Pete lkills (sf) 1,924
S¢a of Aflordable Urots (aQ 850
Buildirg Efficiency Fec1a (%) 10096
Gross Buikling Area (sf) 22,785
SCHEDUI.E
Amaunt
SfaztPre-Davelopment (mc~yr) 1 8
Pre-~e~elopmeNPenod (mmtha) 14
S~ar~ CmstrucUan 3J1/99
Cons4uchm Period (mmths) 12
End Canstruchm 2/'L81~
Start Lease-Up/SplesPeriod 3/7/00
Mmhs io 1 WN6 Leaee-Up P14
Mmhs to 1009G Salas 12
Leage-UpJSeI-Oul Canplefim 2/28/01
INCOME
1 8 1 8 ree t
Renl SalesPr~ce SalesPnce mmths
Apar4neit Rait (per mmh) ~
Market Rate PY+
Afbrdeble Low Income NA
Affordable Mod Income {Lowa of Mazket a Mod Fient) fy4
Candammium Sales Pnces (psQ
Me~ket Rete
Atladable Low Incoma
Atbrdable Moderete Income
$275 00 L391.617
$80 13 568,108 ~Per Ordnance 1615 Program CLidelhes, 1993)
5152 12 $129.306 ~er Udnan~e 1815 Pragram C~delnes, 1983)
GPER4TNG FJ~ENS~'S AND PAR4MEfERS
Amamt
Aperhneit Bad DebU~ollechan Loss Rag W1
/1per4nent Leesng Commissims W1
OperaYng E~aises, Includig Reserves (per unrt peryea) N4
HomeoNner Assode4m Fees (per unrt per yeer) 59.000
Pege3
DEFINING A "GOVERNAAENTAL CONSTRAINT"
UNDER STATE HOUSING ELEMENT LAW
Housing E/emen! Law. State law reqwres local ~unsdictions to assess any
constraints imposed by local government on the maintenance, improvement or
development of housing In formulating a five-year housing strategy,
~unsdictions are reqwred to, among other things, consider removing any such
constraints
Cify's "Consfraint" Definition. The C~ty's 1998-2003 Housmg E/ement Update
defines an "actual governmental constrainP' as follows
A City program, either mdividually or m combination with other programs,
is a"constraint" if it has a significant adverse impact on the City's abdity to
meet its fair share ~f the regionai need for additional housmg
This "sigrnficant adverse impacY' occurs when reasonably well-mformed
and expenenced property owners or developers elect not to pursue
average multi-family housing development pro~ects in the City because
the cost of compiymg with a City program, regulation or procedure causes
the pro~ect's financial return to fall below minimum thresholds generally
accepted by the development community lf it does, developers or
owners would pursue the average development in another ~unsdiction
where the minimum thresholds are achievable, or to make other
mvestment choices, thereby substantially diminishing the likelihood that
the City wouid meet its "fair share" target
Financial Ratios As Indicators of "Constrainf." It is difficult to say precisely
when the "constramY' line has been crossed, because of the wide vanety of
developers and development pro~ect arcumstances There are, nevertheless,
generally accepted fmanaal ratios that can be used to identify when the cost
impacts of a City program or regulation on typical apartment and condominium
pro~ects become a "constraint "
HR&A's analysis of whether Ordmance 1615 constituted an actual
governmental constraint evaluated four typical apartment and four typical
condominium pro~eets, and the effects Ordinance 1615 would have on key
financial ratios for each pro~ect, using computer models that simulated the
finanaal perFormance of these typical pro~ects
HamiHon, Rab~nowtt & Alschuler, !nc Page 1
Apnl 21, 1998
The 1998-2003 Hous~ng Element Update ident~ed the City's Inclusionary
Housing Program as a potential, not an actual constramt on the
development of new multi-family housing Based on finanaal modeling
(which included reasonable assumptions about land, construction and
other development costs and income vanables for typical pro~ects in the
R2 District), HR&A concluded that market conditions would noi support
new multi-famdy developments of the type analyzed, even if the City had
no Inclusionary Housmg Progam High land cost was the overnding
factor that adversely affected the financial returns of the typical pro~ects
modeled Average land costs were at levels that could not be ~ustified on
the basis of the income achievable from the completed pro~ect
HR&A's finanaal models were updated to help define the point at which
the scale of an Affordable Housing Production Program fee would
become an "actual governmental constraint " However, ad~usting the
models to account for today's more favorable economic climate did not
alter the conclusion that market conditions do not support new multi-
famdy developments of the type analyzed, because land costs remain
very high
Hamdton, Rabmov~tr & Alschuler, Inc Page 2
Apn121,1998
FURTHER EXPLANATION OF THE CONDOMINIUM PROJECT RATE OF RETURN
THRESHOLDS USED TO DEFINE A"GOVERNMENTAL CONSTRAINT"
^ Rea/ Estate Developmenf Competes for Financial Capital ~fh Many Othei
Much Less Risky /nvestment Alternafives
Real estate pro~ects take longer to produce a return on investment,
cannot be converted easily to cash and are substantially nskier
investments than many other altematroes
For comparison, the long-term histoncal average return in the stock
market (S&P 500) is about 13% per year Dunng the bull market of the
past three years, the average annual return on the market as a whole
(S&P 500) was about 31 % per year These levels of return were
avadable with no more effort than a few phone calls to a bank or
brokerage
Real estate investors, therefore, expect to earn higher returns on invested
capital than on other, largely passroe forms of investment (e g, stocks
and bonds)
^ Alternative Returrr on /nvestment lndicators for Gondominium Projecfs.
Measuring "return" m real estate is also more complicated than m many other
forms of mvestment because of the very same distmguishing factors (e g, time,
liquidity and nsk) and because it usually involves several sources of capital,
including borrowed funds (i e,' leverage")
For condominium pro~ects, at least three different "retum" indicators area
generally used
ALTERNATIVE "FEASIBILITY" THRESHOLDS FOR
SMALL-SCALE CONDOMINIUM DEVELOPMENTS
Threshold Name Formuia Generally
Acceptable Range
Cash-on-Cash Return on Eqwty IGross Sales-(Cost of Sales+TOtal 40-50%
(Leveraged) Development Costl]/Equity
Gross Margm ("Rofrt"1 IGross Sales-(Cast of Sates+Total 18-20%
(Unleveraged) Development Cost1]/Gross Sales
Return on Development Cost [Gross Sales-ICost of Sales+TOtal 20-25%
(Unlevereged) Development Cosi1](fotal
Developmerrt Cost
Source HR&A
Rabinovrtz & Alschuler, lnc Page 3
Apnl21, 1998
^ The "Return on Equity" Threshold. HR&A's analysis has consistently used
the return on equrty approach to evaluate and establish "constrainY' thresholds
for typical apartment and condominwm pro~ects in 5anta Mornca
For condommiums, this represents the total, cumulafive refurn on
money invested by the developer (i e, to buy land and pay for other pre-
construction costs), which is received afterthe pro~ect has been
approved, constructed and all of the units have been sold
It is not a measure of profit per urnt or an annual rate of return
~ Constraint-Defrned Fee Ranges lmplied By The Return on Eqoity
Threshold. Usmg this threshold, HR&A estimated that an Affordable Housing
Production Program fee would not be a governmental constramt on typical new
condominium pro~ects if the fee was in the range of $4 to $8 per gross square
foot, depending on pro~ect location in the city and pro~ect size
^ The lmplications Of An Alfernative "ConsfrainY' Threshold. In response to
questions about the return on eqwty threshold, HR&A also applied the "gross
margin" threshold to the same prototypical condominium pro~ects
This is another way of evaluatmg the same typical pro~ects, but involves a
different calculation, and not merely a change in the threshold
percentage
This threshold removes the effects that borrowmg may have on financial
results due to fluctuations in interest rates, loan-to-value ratios and the
creditworthiness of the developer
The resultmg constraint-defined fee range using gross margin as a
threshold is $5 to $7 per gross square foot, or about the same range
implied by the return on eqwty threshold
[See Table 38-2, on the followmg page]
Hem~Mon, Rabenovrtt & Alschuler, Inc Page 4
April2l, 1998
Table 36-2
IMPACTS OF AN AEFORDABLE HOU3ING PRODUCTION PROGRAM FEE, IN ONE DOLLAR
INCREMENTS, ON PROTOTYPICAL CONDOMINIUM PROJECTS IN THE R2 DISTRICT IN THE CITY
OF SANTA MONICA, UNDER HIGH AND LOW LAND COSTS AND PURCHASE PRICES,
USING AN 18%-20°k GROSS MARGIN CONSTRAINT THRESHOLD
Fee Amount 1-Lot Pro~ects m the R2 Distnct 3-Lot Pro~ects m the RZ Distnct
Per GSF
Lower-Cost' Higher-GOSt~ Lower-Cos£ Higher-Cost~
Profit' Deka Profif Detta Profit Deka Profit Detta
Land Land Land Land
Resrd' Resid Resid Resid
$0
(Base Case) 19 9% D 0% 20 0% 0 0% 19 9% 0 0 h 2D 0% D 0°k
$~ issr -20~ is~i -~ai issi -2si is7~ -~s~
$2 192°/a -41% 194% -28%a 191% -53% 194% -30°h
$3 188% -61k 190% -42% 188a/ -79% 191% -45%
$4 'I85% -82% 187% -56% 184°k -1D5% 188% -61%
$5 "181% -102% 189% -69% ~g;(~~f _~$;~ 185% -76%
$6 ~7.7%a :123°h 18 1% -8 3% 17 6% -15 8% 18 2% -7 6%
~7 » a~ -~ a 3~ 'E7.8% -9:7°~ n 3 t -~ a a~ ~€~_9% 7:6~70
ss nor -is3r i~s^,w -ii~^~ ~ss~ -2ii^~ nsr -eii
~yg 166% -184% 172% -125°k 165% -211% 173% -106%
$10 163% -204% 169% -139% 161% -237% ~70% -121°k
$~~ 159% -224% 166% -153% 158% -263% 168% -736%
$~Z 155% -245% 162% -167% 154% -289% 165% -152%
$13 152% -265% 159% -181°h 150% 316% 162% -167%
$14 148k -286% 156% -194h 148% -342°!0 159k -182%
S15 ~44% 306% 153% -208% 142°k -368% 156% -197%
~~g 141% -327°h 150 0 -222% 138% -395% 153% -212%
g~7 137% -347% 147/ -236% '133% -421k 15D% -227%
g~g 133% -367% 144°6 -250% 129k -447% 146% -242k
g~g 130% -388% ~41% -264% 125~ -474°k 143% -258%
$2D 126% -408% 137% -278% 121% -540% 140% -258h
'$49/sf (one lot) to $38lsf (three lots) land cost, $262-$328/sf assumed sale price
~$72/sf (one lot) to $661sf (three lots) land cosZ $243-$314/sf assumed sale price
' Developer profit margin =[(Total Sales -(Cost of Sales + Total Development Cost))lTotal Sales~
` Percent change in residuai land value
Source HR&A
Hamilton, Rabinov~tc & Alschuler, Inc Page 5
Apnl21,'1998
An Affordable Housing Production Program Fee Must Be Supported By
Evidence of "IVexus." Before imposing an affordable housing fee on new
multi-famtly development pro~ects, Constitutional law also reqwres an
appropnate analytic foundation to show, among other things, that there is a
reasonable relationship between new market rate multi-famdy housing and the
need for affordable housing
HR&A is preparing a Nexus Study that analyzes the demand for goods and
services created by households who occupy new market rate multi-famdy
housing, the number of lower-wage worker households needed to meet that
demand, the cost of supplying housing that is affordable to those lower-wage
worker households, and what this means about the fee amount chargeable to
new market rate multi-famdy development to offset the need for affordable
housing that these pro~ects create
The Nexus Study will be completed by early June and will be considered by the
Planning and Housmg Comm{ssions and City Council along with any draft
ordinance thai the City Council may direct the City Attorney to prepare to revise
the City's Inclusionary Housing Program
Hamrlton, Rabmowtz 8 Alschufer, !nc Page 6
ApN 21, 1998