SR-11-C (2)
F
C/ED:HD :~1L:P.
Cou~c~l Mtg. 9/13183
san~Mon~caf Cal~forn~a
I (-C
TO:
Mayor and CLty CouncLl
Ser 13 \983
FROM: Clty Staff
SUBJECT: Transmlttal of Report Ent~tled RAffordable Hous~ng
Programs for the C~ty of Santa Monlca"; Recommendatlon
to Approve Report; Recomrnendatlon to D~rect Staff
to Implement Programs
Executlve Summary
I
ThlS report transmits a document entltled "Affordable Houslng
Programs for the Clty of Santa Monlca" wh~ch presents a set
of program mechan~srns wh~ch the C~ty can lmplement to effect
~ts Houslng Element Goals. The report focuses on three prlmary
areas for act~on:
o PreservatLon of the EXlstlng Stock
o Assur~ng Opportun~t~es for Low-Moderate
Income Households
o Increaslng the Supply of Affordable Houslng
The programs recommended for lmplementat~on were des~gned to
reflect the followlng requ~rements for successful program
operatlons:
o Pr1vate Capltal Investment
o Necesslty of Publ~c Subs~dy
o communlty Acceptance and Support
o Adequate Staff Resources for Implementatlon
These programs beg~n to meet a variety of needs lnclud~ng those
expressed by varlOUS owners, eXlstlng landlords and tenants.
The Programs also address the needs of resldents wlth dlfferent
~ncomes. It ~s lmportar.t to note, however, that the proposed
programs represent a prellmlnary effort deslgned to test a Il-~
varlety of approaches. A 11ffilted number of unlts wlll be affected
SEP 1 3 1983
~
~ayor and Cl~counCll
-2-
.
September 13, 1983
result~ng In no slgn~f~cant change 1n denslty or character of
the commun~ty.
It ~s posslble that some of the suggested programs may not
stimulate slgnlf~cant market lnterest. Others may not prov~de
sufflc~ent SUbS1dy to be effect~ve ~n the Santa Yonlca market-
place. For these and other reasons, these programs represent
an lncreffiental approach to a complex set of POllCY obJect~ves
and cornmun~ty needs. Ongo1ng eValuat~ons wlll undoubtedly
result In program mod1f~cations.
Preservatlon of the EX1st1nq Stock
Three mechan~sms to prov~de low cost cap1tal to rehab~lltate
and hence preserve the ex~sting stock are presented. These
programs rely upon Commun~ty Development Block Grant subs~dies
and tax exempt 1nterest rates to m1n1rn~ze rent ~ncreases caused
by rehab~11tat1on and to avert d~splacement of tenants. These
programs recogn1ze the fact that the current supply of afford-
able hous1ng cannot be replaced other than at except10nal cost.
Assur~ng Long Term Access
Santa ~onlca has a substantial 1nventory of hous~ng WhlCh lS
modestly prlced. However, there 1S no rnechanlsm to assure
that houslng Wh1ch 15 affordable to low and moderate ~ncorne
households 15 In fact avallable to them. Further, dlscrlffiln-
at10n ln the market place Ilffi1ts access of fam1l1es and ffi1nor-
~t~es in part1cular. The three programs des~gned to assure
access address these lssues:
~
Mayor and Ci~ouncil
-3-
.
September 13, 1983
o Support for acquisition of ex~sting hous~ng
by non-prof~t development corporations ~n
the form of long term low cost debt. The
non-profit would contractually agree to
provide units to el~g~ble households.
o Issuance of tax exempt mortgage revenue
bonds to provide long term fixed rate
financing for new owners of rental prop-
erty. Technical assistance for refinanc~ng
by current owners could also be provlded ~n
the course of this program.
o Creation of a rent subs~dy program which would
allow Sectlon 8 participants to have access to
a greater portlon of the stock and would ass 1st
other very low income households who, due to
famlly composltion, are not ellg~ble for
Section 8.
Increasing the Housin9 SUFply
New construction of hous~ng for low to moderate lncome house-
holds involves significant publ~c subsidy. As a means to reduce
the development costs of housing, the attached report recommends
explorat~on of developing housing in the a1r rlghts above City-
owned parcels. The report presents pro formas for owner and
renter occupied developments which would be bond financed. These
programs require substant1al study but would allow the City to
contribute in kind rather than in cash.
Impacts of Proposed Programs
Overall, the proposed programs would provlde the resources to
generate the provision of 553 units, of Wh1Ch more than 313
would be retained or added to the houslng stock available for
occupancy by low to moderate lncome households. Of the total
units, the program budgets project capacity to provide 100 units
via new construction, 240 via rehabilitation, 80 Vla acquisitlon
and to assist 133 units Vla rent subsidy. While it ~s unlikely
Mayor and C1~ounc11
-4-
stltember 13, 1983
that actual "product1on" w~ll equal the flnanc~al capaclty
Qf each mechan~sm due to lack of an adequate market or other
factors, these figures do g~ve an ~nd1cat~on of what can be
ach1eved wlth the allocat~on of a g~ven set of f~nanclal and
programmatlc resources. These programs would ~nvolve a publ~c
lnvestment of $1,523,000 and could generate prlvate capltal
~nvestments totall~ng $10,432,000, result~ng ~n a pr~vate/
publlC leverage ratio of 7:1.
The lmplementat~on of these programs would ~ncrease stafflng
needs 1n the Hous~ng D1Vls~on of the Department of Commun~ty
and Econom~c Development as well as for non-prof~t developers
part1c~pat~ng 1n the p~oposed programs.
Recomrnendatlon
Th~s report recommends that Counc~l approve the attached
document and d1rect staff to lmplement programs.
Prepared by: M~ndy Le~terman, Hous~ng Admln~strator
Department of Comrnun~ty and Economlc Development