SR-400-001-03 (11)
'-160
, I-A
APR 2 5 1989
CA:ffi{M:11608/hpc
City council Meeting 4-25-89
Santa Monica, California
70tJ- tJtJ/-- C3
STAFF REPORT
TO: Mayor and City council
FROM: city Attorney
SUBJECT: Ordinance Adding chapter 4B to Article IX
of the Santa Monica Municipal Code Implementing
Program 10 of the Housing Element
At its June 21, 1988 meeting, the city council held a public
hearing on a proposed ordinance implementing Program 10 of the
Housing Element. Following the public hearing, the City Council
continued consideration of the ordinance so that additional staff
analysis could be undertaken.
At its June 21, 1988 meeting, the City Council raised con-
cerns about the fallowing:
1. The importance of Program 10 in terms of the City's
overall housing POllCY, and the relationship between Program 10,
Program 12, and Ordinance Number 1367 (CCS).
2. The applicability of Program 10 to Single Room Occupan-
cy (SRO) units.
3. The applicability of Program 10 to properties 1n com-
mercial districts.
4. The appl1cability of Program 10 to properties in Rl
d1stricts.
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APR 2 5 1989
5. The applicability of Program 10 to properties which
have obtained Category Band C removal permits from the Rent Con-
trol Board.
6. The components which comprise the assumptions used to
calculate the in-lieu fee requirements, including: market rents,
unit sizes, and land prices, and the proposed adjustment factor.
7. The applicability of CEQA to the proposed ordinance
implementing Program 10.
A draft staff report providing responses to these concerns
and a revised ordinance was subsequently prepared.
On October 24, 1988, the city Attorney's office distributed
the proposed ordinance implementing Program 10 and the draft
staff report to interested parties, including persons who spoke
at the public hearing on June 21, 1988, land use attorneys prac-
ticing in Santa Monica, the Chamber of commerce, members of the
Plannlng Commission and Housing Commission, neighborhood or-
ganizations, tenant and landlord activists, for review and com-
ment. The written comments received by staff are attached as
Appendix A.
This staff report provides information and discussion in
response to the concerns raised by the city council at its June
21, 1988 meeting. As a result of comments submitted by members
of the public, the draft staff report and ordinance have been
modified in several respects.
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ANALYSIS
PART I. THE NEED FOR PROGRAM 10.
The need for Program 10 was documented in staff's summary
of housing production trends in its June 20, 1988, Supplemental
Information report. This report updates that information with
recent data not included in monthly Building Department Certifi-
cate of Occupancy and Building Permit summaries, corrects an ap-
parent inconsistency in the new construction totals, specifies
large projects WhlCh inflate the annual new construction sum-
maries, restates the conclusions presented in the June 20, 1988
report, and provides a basis for staff's approach to the data
analysis.
New construction has shifted new housing opportunities to-
ward condominium ownership and away from rental housing. Between
January 1976 and December 1986, 2,845 units in multi-family
structures were constructed. Of these, 1,903 (67%) were con-
dominium units, while 942 (33%) were rental units. The number of
rental units constructed represents approximately 63% of the num-
ber which were demolished during the same time period.
Slnce 1985, with the softening of the condominium market,
more rental units have been developed than new condominium units,
788 rental units and 465 condominium units respectively. Eighty-
three percent (83%) of the rental units developed since 1979 have
been developed during these last four years (January 1985 - March
1989) .
Annual new construction figures are summarized in Table 1
below:
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TABLE 1.
CERTIFICATES OF OCCUPANCY JANUARY 1976 - DECEMBER 1986
Condominium Rental All units
Year 50+ Other Total 50+ Other Total Total
1976 0 163 163 100 (1) 67 167 330
1977 0 86 86 0 265 265 351
1978 0 104 104 0 141 141 245
1979 0 161 161 0 15 15 176
1980 144(2) 324 468 0 6 6 474
1981 0 287 287 0 6 6 293
1982 0 201 201 0 0 0 201
1983 0 169 169 61(3) 57 118 287
1984 0 99 99 0 14 14 113
1985 153(4) 2 155 126(5) 49 175 330
1986 0 10 10 0 35 35 45
Total 1,903 942 2,845
BUILDING PERMITS JANUARY 1987 - MARCH 1989
1987
1988
1989
o
o
o
105
158
37
105
158
37
o
o
o
205
304
59
205
304
59
310
462
86
Total
300
568
868
(1) Neilson villa, 100 Rental units
(2) Sea Colony II, 144 condominium Units
(3) Barnard Park, 61 Rental Units
(4) Sea Colony III, 153 Condominium Units
(5) 1528 5th (Salvation Army), 126 Rental Units
As Table 2 below details, of the 937 rental units completed
since 1979 or currently under construction, 272 (or 29%) have
been developed with some form of city financial assistance or
through development agreements:
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TABLE 2.
Development Agreements 61
Ocean Park Redevelopment Projects 116
Section 8 New Construction 24
Public Housing 19
City-wide Housing and Acquisition and
Rehabilitation Program (CHARP) projects 30
Pico Neiqhborhood Housinq Trust Fund proiects 22
Total 272
The remaining 665 units represent 65% of the 1,016 units
demolished during the same 1979-1989 time period.
staff does not believe that a more accurate view of private
sector housing production would be gained by using a 1980 base-
line, which would exclude 1978-1979 demolitions in the new con-
struction versus demolition analysis. Because much of post-1980
construction has taken place on sites cleared during the preced-
ing years, any comparative analysis must use a baseline not later
than 1979.
An overview using a 1976, 1977, or 1978 baseline
would not produce a signiflcant1y different picture than that
presented by using the 1979 baseline. with the passage of rent
control occurring in 1979, that year represents the most appro-
priate dividing line for an analysis of new construction trends.
PART II. UNITS SUBJECT TO PROGRAM lO.
A. Applicability to Sinqle Room Occupancy units.
The 1980 Census found that there were 3,970 O-Bedroom units
in Santa Monica. The Census also found 969 units with no bathroom
or only a half bath, and 1,264 units without complete kitchen
facilities.
More than one-fourth of all units without kitchen
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facilities were located in the downtown area. Since 1983, approx-
imately ninety-three percent (93%) (305) of these SRO units in
the downtown have been removed from the rental housing stock by
receiving category B (177 units) or Category C (50 units) removal
permi ts from the Rent Control Board, through exercise of the
Ellis Act (28 units), or other demolition (50 units).
While SRO units meet the needs of a particular segment of
the community, these units are not comparable to multi-family
dwelllngs with private cooking and bath facilities. The Zoning
Ordinance differentlates between mUlti-family dwellings and
boarding houses and residential hotels, within which categories
most SRO buildlngs would fall. SRO units have not been subject
to Program 10 requirements in the past, and therefore should not
be subject to the proposed implementing ordinance. However,
based upon the continuing loss of SRO unitsl and the special role
these units play in providing housing, a separate ordinance ad-
dressing SRO unit removals is necessary, desirable, and consis-
tent with the Housing Element. Thus, consistent with the ap-
proach taken by other jurisdictions, staff will present to the
Clty council at a later date recommendations to preserve SRO
housing.
B. Applicability in Commercial Zones.
In 1975 there were 3,308 multifamily residential units in
areas zoned for commercial use. An additional 616 mobile home
unlts were located in areas zoned for industrial use.
The requirement of replacement of residential units removed
from commercial zones is consistent with the city's Housing and
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Land Use Elements and with current zoning as residential uses are
permitted in commercial zones throughout the city. Program 3 of
the Housing Element calls for the City to encourage housing in
commerc~al zones where appropriate and to consider housing in
industrial zones. The Land Use Element also contains policies
encouraging development of residential uses in commercial zones,
as does the Bayside District Specific Plan. Multi-family
residential development is currently a permitted use in the fol-
lowing commercial zones: CP, CA, C-3, C-4, C-4A, and CM.
In addition, the vast majority of multifamily residential
rental un~ts currently located in commercial zones are low- and
moderate-income rent controlled units. Even with these units,
the City has an inadequate number of affordable housing units.
If Program 10 were to be deemed inapplicable to units in commer-
cial zones, a strong incentive to remove existing affordable
housing units, to be replaced by commercial projects would be
created. The City would not only lose the affordable housing
which exists in commercial zones, but also would not recover fees
to enable it to replace the lost affordable housing elsewhere in
the city.
Since the potential exists for the loss of a substantial
number of residential units from commercial zones, and replace-
ment of these units is consistent with City land use and housing
POllCY, the replacement requirements of Program 10 should apply
to commercial zones.
As of June, 1988, of all properties withdrawn under the
Ellis Act, 52% of the properties, representing 67% (or 145) of
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all mUlti-family rental units withdrawn under the Ellis Act, have
been in commercially zoned areas.
c. Applicability in RI Zones.
Although current data is not available, in 1975 there were
541 multifamily residential units in Rl zones, some of which are
owner-occupied condominiums. Of the 439 multifamily rental units
in the zone, 180 were in duplexes, 105 were units in triplexes,
and 154 units were in developments of four or more units.
The current Zoning Ordinance limits new multifamily
residential use to the development of duplexes in transitional
areas of the Rl zone. It further limits duplex development to
those transitional parcels exceeding 6,000 square feet and abut-
ting R3 and R4 zones. Based upon review of Sandborn maps, it is
estimated that approximately 105 of the multifamily units in the
Rl zone are located in transitional zones where duplex construc-
t~on would be permitted.
Exempting Rl property from Program 10 would put at risk a
small number of the multifamily units located in the Rl zone, but
would encourage home-ownership and protect the integrity of the
zone as a community of single family residences. Therefore,
staff recommends that Rl properties be exempted from Program 10
requirements.
D. Properties with Category Band C Removal Permits.
The Rent Control Charter Amendment as implemented by Rent
Control Board regulations establishes four categories under which
property owners may petition the Board to remove units from the
rent-controlled stock:
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1. category A permits may be granted if the owner is
unable to collect the Maximum Allowable Rent.
2. Category B permits may be granted where an owner
demonstrates that the Maximum Allowable Rent does not provide a
fair return and the owner cannot rent the unit at that rent which
would provide a fair return.
3. category C permits may be granted where the Rent
Control Board determines that the unit is uninhabitable and can-
not be made habitable in an economically feasible manner.
4. Category D permits may be granted if comparable
controlled rental units are to be provided to replace those
removed, and at least 15% of the controlled units to be built
will be affordable to low income households.
The Rent Control Board has granted six Category Band 38
Category C removal permits for multifamily and SRO structures
since 1979. Category B permits have removed 253 units from the
rent controlled stock, and 233 units have been removed under Cat-
egory C.
In determining whether Category B or Category C units
should be differentiated from other units subject to Program 10,
staff examined the removal permit determination process for
points of contrast with Program 10.
Category B permits are granted to allow the owner to remove
units from the controlled rental market because, given operating
costs of the property, the controlled rents do not give the owner
a falr return and the owner could not rent the units at that rent
which would provide a fair return. A Program 10 fee or replace-
ment requirement would not be in conflict with the intent of the
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Category B process. An owner of rental units would still be al-
lowed to remove those units from the controlled stock to re-
develop with market-rate units, or, in an area with the appropri-
ate zoning, to redevelop for a commercial use. The finding that
the owner could not earn a fair return on the existing units has
no bearing on the ability of the owner to develop a market rate
rental property or to pay a fee in order to develop a commercial
project.
A Category C permit would indicate that for the particular
unlt or units considered, repairs necessary to bring the units up
to average habitability standards could not be amortized through
the Maximum Collectible Rent over a ten year period. The average
habitability standard is a subjective determination which will
vary in its application. The granting of such a permit does not
indicate the unit is uninhabitable according to City Codes, a
determination which is made by the City's Building Officer.
While the Rent Control Board flnding may indicate that the prop-
erty should not be occupied, many of the units for which category
C permits have been issued have been tenant-occupied at the time
the permit is granted.
The finding for a Category C removal is an economic finding
based as much on the rent potential of the property as the
rehabilitation needs of the property. Units requiring comparable
levels of rehab11itation may therefore not be equally eligible
for a removal permit. A determination regarding the value of a
unit's contribution to the housing stock cannot be made solely on
the basis of whether or not that unit has obtained a Category C
permit.
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As in the case of Category B, the feasibility determination
used in Category C cases does not take into account the highest
and best use of the property, i.e., the feasibility of redevelop-
lng the property with market rate housing units or paying a re-
placement housing fee in order to develop commercial property.
Whether or not the property has a Category C removal permit is
irrelevant to the determination regarding the feasibility of re-
placement or the impact of a fee. Indeed, the owner of rental
property who has poorly maintained a rent controlled property and
obtained a Category C rernoval permit may be in a better financial
position to absorb the replacement fee associated with Program 10
than an owner of a well maintained property. While the intent of
the Category C regulations is not to grant a removal permit to an
owner who has willfully allowed their property to deteriorate,
that determination is a highly subjective one. Exemption from
Program 10 requirements would constitute a clear incentive to
owners of marginal properties to allow further deterioration to
achieve Category C status.
Properties which have been granted Category A, B, or C re-
moval permits are nevertheless in a position that differs from
other properties. A determination has been made by the Rent Con-
trol Board that the continued operation of the properties as they
currently exist, or as they would be after necessary rehabilita-
tion, does not yield a fair return. Owners of such property are
permi tted to remove existing structures and to build whatever
current land use and zoning regulations allow on their proper-
ties. These properties are not being voluntarily removed in the
same way as properties which may be removed pursuant to the Ellis
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Act or some other means. The owners of properties with Category
A, B, or C removal permits have shown to the satisfaction of the
city, in effect, that they must construct new projects in order
to make economically viable use of their properties.
In light of these considerations, the ordinance has been
revised to reduce the replacement housing obligation of proper-
t~es with category A, B, or C removal permits to the number of
units allowed by current zoning instead of the number of units
being removed. Thus, in those cases where density standards have
been lowered, the obligation would be consistent with these stan-
dards. Since owners of properties with Category A, B, or C re-
moval permits have demonstrated to the City that they must, for
economic reasons, recycle their properties rather than that they
have voluntarily chosen to do so, Staff believes it to be fair to
base their Program 10 replacement fees on the number of units
permitted by current zoning to be replaced.
PART III. FEE CALCULATION.
Housing Divis~on staff calculated Program 10 fees which
would be required to provide one-for-one replacement for all mul-
tifamily resldential rental dwelling units removed and not re-
placed. staff analysis indicated that one-for-one replacement
would require that a developer pay fees ranging from $27,000 for
each a-Bedroom unit removed, to $63,000 for each 4-Bedroom unit
removed and not replaced.
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A. Methodoloqy.
The fee recommended in this Ordinance represents an amount
sufficient to enable the City to replace the multifamily residen-
tial rental dwelling units being removed. The proposed fee rep-
resents the average dollar amount per unit which would be re-
quired for the City to construct a typical project incorporating
85% market rate units and 15% affordable units, as required by
current city requirements.
To calculate the equity necessary to construct one new low
or moderate income housing unit, staff estimated typical con-
struction costs, "soft" costs, and land costs, and subtracted
from the sum of these costs the mortgage which could be supported
by the average market rent. The gap between total development
costs and the supportable mortgage represents the amount required
to be funded from publ ic or private sources of subsidy and/ or
developer equity. This gap represents the fee required to pro-
vide one-for-one replacement.
In order to arrive at the fee amount, City staff first es-
tablished the components of development costs necessary to es-
tabllsh a fee structure, including: unit sizes, typical con-
struction costs, land prices, unit rents and financing. These
assumptions are summarized below.
B. Unit Sizes.
There are three existing unit size standards in effect in
Santa Monica, lncluding the Uniform Building Code ("UEe"), HUD
standards for federally assisted multifamily housing, and Or-
dinance Number 1448 (CCS) implementing Program 12 of the City's
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Housing Element. These standards, the average size of units reg-
istered with the Rent Control Board ("RCBn) and the average size
of units built by Community Corporation of Santa Monica (nCCSM")
with City assistance, are summarized in Table 1.
TABLE 1. UNIT SIZE STANDARDS (SQUARE FEET)
Unit Size RCB UBC HUD Ord. 1448 CCSM
SRO NA 220 NA NA NA
o Bedroom 400 360 415 500 NA
1 Bedroom 700 500 540 600 573
2 Bedroom 1000 640 800 850 843
3 Bedroom 1200 780 1050 1080 951
4 Bedroom 1200 920 1150 1200 1232
The Program 12 unit sizes were established based upon the
presumption that inclus10nary units should be of comparable size
to market rate units. In setting Program 12 unit sizesl the HUD
minimum standards were adjusted upward 30-85 square feet to
reflect staffls finding that new market rate projects provide
units greater in size than the federal minimum standard. Insofar
as replacement projects would have to meet the requirements of
Program 12, the Program 12 standards were used in calculating
replacement unit costs under program 10.
C. Construction Costs.
Construction costs were calculated at $55 per square foot
of dwelling area, and $10,000 per parking space required under
the zoning code. These figures are based upon standard building
industry data utilized by the Building and Safety Division in
establishing project valuation.
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D. Land Costs.
staff used a baseline land cost of $42 per square foot,
which represents the average land cost for market rate rental
projects currently in the development pipeline.
staff varied
building densities to arrive at per unit land costs, presuming
that O-Bedroom units could be built to a maX1rnurn density of 7.5
units per 7500 square foot lot, while 4-Bedroom units could be
built to a density of 5.5 units per standard lot.
Based upon
these assumptions, staff calculated per unit land costs as
detailed below.
TABLE 2. PER UNIT LAND COSTS
Unit Type Land Cost/Lot Units/Lot Per Unlt Land Cost
O-Bedroom $315,000 7.5 $42,000
I-Bedroom $315,000 7.0 $45,000
2-Bedroom $315,000 6.5 $48,482
3-Bedroom $315,000 6.0 $52,500
4-Bedroom $315,000 5.5 $57,273
E. Soft Costs.
In addi tion to land and construction costs, staff added
typical soft costs in order to establish total development costs.
Soft costs, including architecture, taxes, insurance, financing
fees, and other typical miscellaneous project costs, were esti-
mated to equal 13-15% of total development costs.
F. Total Development Costs.
Total development costs were then calculated adding
together the construction cost, land cost, and soft cost compo-
nents as follows:
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Unit Type Dwellinq Parkinq Land Soft Costs Total Cost
0 Bedroom $27,500 $10,000 $42,000 $14,483 $93,983
1 Bedroom $33,000 $20,000 $45,000 $16,100 $114,100
2 Bedroom $46,750 $20,000 $48,462 $18,892 $134,104
3 Bedroom $59,400 $25,000 $52,500 $21,453 $158,353
4 Bedroom $66,000 $30,000 $57,273 $23,580 $176,853
G. unit Rents.
To calculate the maximum affordable mortgage for the model
replacement project, staff assumed that 85% of the units would be
at these market rates, while 15% would be affordable to median
income households per the city's Program 12 Ordinance.
The Kotin, Regan & Mouchly (nKRMtt) study, commissioned by
the city for the Program 12 analysis in 1986, found market rents
for an average 1000 square foot two-bedroom apartment to range
from $1.05 per square foot in the Pico neighborhood to $1.42 in
the wilshire corridor.
In July, 1988, staff surveyed rents in recently constructed
market rate rental proj ects in the Pico, Ocean park, and Santa
Monica-Wilshlre Corridor neighborhoods of Santa Monica. Rents in
these areas, by unit size, fell within the ranges specified
below:
TABLE 4. RENT SURVEY
Unit size
Pico
Ocean Park
Santa Monica-Wilshire
o Bedroom
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
$579
$750
$1025-1075
NA
NA
NA
NA
$1105-1300
$1340-1600
NA
NA
NA
$1495
$1525-1600
NA
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In general, per square foot rents are found to decrease
with increases in unit size. Among the properties surveyed with
known square footages, per square foot rents ranged from $1.05
for very large three bedroom units in the Santa Monica-Wilshire
Corridor to $1.34 for small two-bedroom units in Ocean Park. Not
included in the above survey are Ocean Avenue and Downtown luxury
market rate units, both existing and under construction, with
projected rents of greater than $2.15 per square foot.
Based upon the KRM's 1986 analysis, recent consultation
with KRM, and the above-mentloned survey, city staff established
the following rent schedule for use in calculating replacement
project income and required in-lieu fees:
TABLE 5. RENT SCHEDULE
Unit size
Market Rent (85%)
program 12 Rents (15%)
o Bedroom
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
$864
$988
$1,174
$1,340
$1,513
$655
$760
$903
$1,031
$1,164
These market rents would be considered affordable to
households earning approximately 130% of the Los Angeles County
Median Income.
H. Mortqage Calculation.
Industry standard formulae were used to calculate vacancy
loss, operating expenses, taxes, and debt service coverage.
Vacancy loss was calculated at 3%. Operating expenses based upon
the formula used by KRM were calculated as follows:
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Operating Expenses
(5% x Monthly Rent) + ($1.10jSq. Ft.jI2)
Income available for debt service was calculated using a standard
debt service coverage ratio of 1.10.
The maximum mortgage was
then calculated assuming a 30 year variable rate loan at 9.5%.
I. Fee Calculation.
Finally, the maximum mortgage was subtracted from the total
development costs to give the equity gap which equals the recom-
mended fee. This calculation is summarized as follows:
TABLE 6. FEE CALCULATION
Unit Type Averaqe Rent Max. Loan Dev. Cost Gap/Fee
0 Bedroom $835 $67,472 $93,983 $26,511
1 Bedroom $954 $76,074 $114,100 $38,026
2 Bedroom $1,133 $89,195 $134,104 $44,909
3 Bedroom $1,294 $100,162 $158,353 $58,191
4 Bedroom $1,461 $113,492 $176,853 $63,361
The funding gap for each unit type was then rounded to
establish the appropriate per unit fees of $27,000, $38,000,
$45,000,
$58,000,
and $63,000,
for O-Bedroom,
I-Bedroom,
2-Bedroom, 3-Bedroom, and 4-Bedroom units, respectively.
J. Relation of Fees to Program Goals.
Program 10 was included in the city's Housing Element as
one part of multi-pronged strategy to protect and enhance the
ability of the city to provide housing for persons of all In-
comes. Because the removal process will tend to replace afford-
able units with market rate units, it is essential that the City
utilize Program 10 in-lieu fees to develop affordable units.
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However, while the proposed fee levels would allow the city
to facilitate the development of market rate projects, the fees
will not be sufficient to facilitate the development of afford-
able units on a one-for-one basis.
The table below indicates the actual gap between develop-
ment costs and the maximum affordable mortgage which could be
carried by units at affordable rent levels:
TABLE 7. FEE VS. SUBSIDY FOR AFFORDABLE PROJECTS
Subsidy Required at Affordable
Rents
unit size Per Unit Fee Median Low Very Low
a-Bedroom $27,000 $38,000 $50,000 $69/000
I-Bedroom $38,000 $48/000 $63,000 $85/000
2-Bedroom $45,000 $56/000 $74,000 $99,000
3-Bedroom $58,000 $69,000 $89,000 $118,000
4-Bedroom $63,000 $76,000 $98/000 $131,000
As the above table indicates, the proposed Program 10 fee
will not come close to allowing the city to replace units removed
wi th affordable units on a one-for-one basis.
For each unit
removed, the fee would facilitate 80% replacement at median
income rents,
60% replacement at low income rents/
and
approximately 50% replacement at very low income rents.
In order to approach one-for-one replacement/ the City will
be required to obtain additional private and public subsidies to
supplement in-lieu fees.
The availability of these outside
sources of subsidy is uncertain and should not be presumed in any
calculation of in-lieu fees.
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K. Conclusion.
Based upon the analysis outlined above, and further
detailed in Table 1 attached hereto, city staff has determined
that the fees appropriate to implement program 10 are as follows:
TABLE 8.
RECOMMENDED FEES
unit size
Per Unit Fee
O-Bedroom
I-Bedroom
2-Bedroom
3-Bedroom
4-Bedroom
$27,000
$38,000
$45,000
$58,000
$63,000
These fees would be applied to all the units to be removed
and not replaced according to unit type.
For simplicity of
administratlon and to ensure adequate funds for replacement units
of standard size, staff does not recommend imposition of the fees
on a per square foot basis.
PART IV.
RELATIONSHIP TO PROGRAM 12 AND ORDINANCE NUMBER 1367 (CCS).
The City's Housing Element establishes the basis for a mul-
ti-pronged approach to assisting low and moderate income house-
holds. Program 10, Program 12, and Ordinance Number 1367 (CCS)
are each lntended to address different aspects of the city's
housing needs.
Program 10 is a replacement program, one aimed at maintain-
ing the existing housing stock.
Recognizing that the market
pressure has removed many more rental units than it has created,
Program 10 is intended to stabilize the existing stock by ensur-
ing that mul tlfamily units are replaced as they are removed.
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Program 10 does not, however, provide a mechanism to ensure that
replacement units are affordable to low and moderate income per-
sons, except to the extent that those units are built by the city
with fees paid by developers.
Ordinance Number 1367 (CCS) is a housing production program
aimed at meeting new housing needs created by new office develop-
ment. without such an ordinance, existing housing resources, even
if replaced under Program 10, would be strained with the addition
of each new office development. provision of housing on-site or
payment of Office Housing Mitigation fees ensures that new
developments help meet the new housing demand they generate.
Program 12 is a housing affordability program. Program 12
recognizes that maintaining and expanding the supply of afford-
able housing is crucial if Santa Monica is to maintain its his-
toric diversity. By establishing inclusionary requirements and
fees, Program 12 ensures that at least a small portion of the
housing which is produced, including housing produced under Pro-
gram 10 and Ordinance Number 1367 (CCS), is affordable to low and
moderate income households.
PART V.
CEQA.
An Environmental Impact Report was performed and adopted by
the City Council when the Housing Element was adopted in 1983.
Program 10, along with other programs contained in the Housing
Element, has been implemented since that time. However, in order
to ensure that an ordinance adopted by the City Council will not
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be vulnerable to attack under the California Environmental Quali-
ty Act, the proposed ordinance should be subjected to environmen-
tal review prior to city Council action.
PART VI.
SECTION-BY-SECTION ANALYSIS.
The proposed ordinance implements Program 10 as follows.
When an owner/developer of multifamily residential rental
dwelllng units seeks to remove those units, the owner/developer
must enter into an agreement with the city to comply with Program
10. Program 10 contains a fee requirement which must be
satisfied over a ten year period fallowing issuance of a
certificate of occupancy. If an owner/developer replaces the
removed rental units on with new rental units on the site from
which they have been removed, he or she will be deemed to satisfy
the fee requirement. Replacement housing units which are
intended to satisfy the fee requirement of Program 10 must be
completed prior to issuance of a certificate of occupancy for any
subsequent development on the property from which the units have
been removed.
The following is a section-by-section analysis of the
proposed ordinance:
Sectlon 9440. This Section sets forth the findings and
purpose of the proposed ordinance.
section 9441. This Section sets forth the definitions of
words and phrases used in the proposed ordinance.
Section 9442. This Section provides that compliance with
Program 10 as outlined in the ordinance is required of all
- 22 -
projects prior to issuance of a building permit, license, or
other City approval where the demolition or conversion of
multifamily residential units is involved.
section 9443. This section provides that this Chapter
applies to any development involving removal of multifamily
residential units and to any property that has removed
mul tifamily residential units and for which a deed restriction
requiring compliance with Program 10 has been recorded.
Section 9444. This section requires that a compliance
agreement be entered into by any developer in connection with an
application for a demolition or other permit necessary for remov-
al of a multifamily residential rental unit. The compliance
agreement will indicate that the developer will comply with Pro-
gram 10 either by paying the required fee or by provision of re-
placement housing units. This Section further requires that if a
developer intends to satisfy Program 10 by paying the required
fee, he or she must enter into a fee agreement prior to issuance
of a certificate of occupancy for a development on the subject
slte. If a developer intends to satisfy Program 10 by replacing
the removed units instead of paying the required fee, he or she
must submit a replacement housing plan for approval by the Plan-
ning Director wi thin sixty days of the date of the compliance
agreement. If a replacement plan is not approved by the Planning
Director, the developer shall be required to pay the fee required
by Section 9445.
Section 9445. This section sets forth the exact fees
developers must pay in order to satisfy Program 10 and mitigate
the adverse consequences of removal of multifamily residential
- 23 -
dwelling units from a site. These fees are based on the number
and size of the units to be removed, except in connection with
properties WhlCh have been granted Category A, B, or C removal
permits. As to those properties with Category A, B, or C removal
permits, the fees are based on the number of units that can be
bUl1t on the site under the current zoning laws. Fees will be
adjusted for inflation by the percentage change in the Consumer
Price Index times .65 plus the percentage change in land cost
multiplied times .35 between the date of adoption of this
Ordinance through the month in which payment is made.
Section 9446. This Section requires a developer to enter
into an agreement to pay the fee over a period of ten years, with
the first installment due prior to issuance of a certificate of
occupancy for the development or conversion of the subject site.
This agreement will create a lien on the property and will bind
the developer and successors in interest to the property. The
agreement is to be recorded. This section also provides that in
lieu of enterlng into an agreement, a developer may pay the
entire fee prior to issuance of a certificate of occupancy for
the development or conversion of the subject site.
section 9447. All payments made pursuant to the ordinance
will be deposited in a Reserve Account separate from the General
Fund and will be used only for development of low and moderate
income mUltifamily residential rental dwelling units.
section 9448. This section sets forth the situations in
which replacement of removed units will satisfy the fee
requirements of section 9445. Those situations include:
- 24 -
1. One-for-one on-site replacement of multifamily
residentlal dwelling units for any project involving the removal
of such units.
2. Development of replacement units off-site in the
context of a City project undertaken for pUblic-serving uses.
3. Development of replacement units off-site in the
circumstance where the Coastal Commission has approved off-site
replacement units in connection with removal of multifamily
rental units in the Coastal Zone prior to the effective date of
this Chapter.
This section also requires that replacement units must be
comparable in size and amenities to units being replaced and that
replacement units must meet the requirements of Chapter 4A of
Article IX of the Municipal Code (the City's Inclusionary Housing
Program) .
Finally, this Section requires that the certificate of
occupancy for replacement housing units must be obtained prior
to issuance of a certificate of occupancy, or any other
appropriate license or City permit necessary for any new
development or activity on the subject site if the replacement
housing units are to satisfy the fee requirements of this
Chapter.
section 9449. This Section provides that multifamily
residential dwelling units developed pursuant to the replacement
requirements of the Santa Monica Rent Control Board will count
toward the satisfaction of the requirements of this Ordinance if
they otherwlse meet the Replacement Plan requirements of this
Ordinance. This section further provides that a property which
- 25 -
has been granted a Category D removal permit by the Rent Control
Board may not meet its Program 10 obligation by paying a fee
pursuant to section 9445.
section 9450. This Section provides that properties in the
R-l District, single room occupancy units, units converted
pursuant to TORCA, condominium units, and multifamily units which
are replaced by nonprofit social service uses are exempt from
this Chapter.
section 9451. This Section provides that the provisions of
this Chapter are not intended to supersede any other local
ordlnances and regulations.
RECOMMENDATION
It is respectfully recommended that:
1. The city Council direct staff to prepare an initial
study on the accompanying ordinance implementing Program 10 of
the Housing Element.
2. The ordinance be returned to City Council upon
preparation of
a negative declaration or EIR, whichever is
determined by the initial study to be appropriate.
PREPARED BY: Robert M. Myers, City Attorney
Laurie Lieberman, Deputy city Attorney
Candy Rupp, Housing Division Manager
Jeff Mudrick, Senior Development Analyst
- 26 -
CA:RMM:11443jhpc
City council Meeting 4-25-89
Santa Monica, California
ORDINANCE NUMBER
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA ADDING CHAPTER 4B TO ARTICLE IX
OF THE SANTA MONICA MUNICIPAL CODE IMPLEMENTING
PROGRAM 10 OF THE HOUSING ELEMENT
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS
FOLLm\1S:
SECTION 1. Chapter 4B is added to Article IX of the Santa
Monica Mun1cipal Code to read as follows:
CHAPTER 4B. REPLACEMENT HOUSING PROGRAM.
SECTION 9440. Findings and Purpose.
The city Council finds and declares:
(a) In recent years, there has
been a significant shift in multifamily
residential development from construction
of
apartments
to
development
of
condominiums both by new construction and
by conversion.
(b) The City of Santa Monica has
experienced a significant reduction in the
number of multifamily residential rental
dwelling units due to demolition and
- 1 -
conversion from residential to commercial
Use.
(c) The vast majority of
mUltifamily residential rental dwelling
units removed from the housing market due
to demolition or conversion to commercial
use are low and moderate income
residential rental housing units.
Cd) Individuals and families
displaced from multifamily residential
rental dwelling units as a result of
demolition or conversion to other use are
increasingly unable to find affordable
replacement housing in the city.
(e) The demolition and conversion
of multifamily residential rental dwelling
units has altered the historic housing
stock balance and has contributed to the
scarcity of affordable housing in the
city.
(f) Program 10 of the Housing
Element of the General Plan of the City of
Santa Monica adopted on January 25, 1983,
provides for a replacement housing program
where removal of existing multifamily
residential rental dwelling units occurs
in order to preserve and maintain the
- 2 -
city's
overall
housing
stock
and
population density.
(g) Pursuant to the police power,-
the City has the authority to address both
the housing imbalance created by the
removal of existing multifamily
residential rental dwelling units and the
overall need for affordable housing in the
city.
(h) The purpose of this Chapter is
to reduce the negative impact on
affordable multifamily housing caused by
new commercial and new residential
development which requires demolition of
existing multifamily housing and by
conversion of mul tifamily housing to
commercial use.
(i)
New
commercial
and
new
residential development which requires
demolitlon of existing multifamily housing
units is generating a reduction in the
City's overall housing stock, and more
particularly a reduction in the City's
affordable housing stock, and increases
the imbalance between jobs and affordable
houslng in the City.
(j) Conversion of rental housing to
commercial use is generating a reduction
- 3 -
in the city's affordable housing stock and
contributes to the imbalance between jobs
and affordable housing in the city.
(k) The City has a continuing need
for low and moderate income housing, and
such need is exacerbated by the demolition
and conversion of such housing by new
developments and commercial conversions.
(1) The Preliminary Draft 1988
Regional Housing Needs Assessment
published by the Southern California
Association of Governments indicates that
there is a continuing need in the City for
low and moderate income housing.
(m) Any fees collected pursuant to
this Chapter shall be used only to finance
low and moderate income housing units.
(n) The fee requirements of this
Chapter will help diminish the overall
loss of multifamily residential housing
units in the City and to mitigate the
adverse consequences of removal of
affordable housing units, thereby
providing greater opportunities for low
and moderate income households to secure
housing in the city.
(0) The facts and evidence
presented in the Housing Element of the
- 4 -
General Plan establish that there is a
reasonable relationship between the need
for the replacement of low and moderate
income housing which is removed either by
demolition or conversion and the
replacement requirements or fee
established by this Chapter, and also that
there is a reasonable relationship between
the use of the fee and the type of
development for which the fee is charged.
(p) The fees required by this
Chapter shall not exceed the reasonable
costs of constructing replacement units.
SECTION 9441. Definitions. The
following words or phrases as used in this
Chapter shall have the following meanings:
(a) Fee. A fee paid to the City by
a developer pursuant to this Chapter to
satisfy the replacement housing
requirements of this Chapter.
(b) Multifamily Residential Rental
Dwellinq unit. A multifamily dwelling
unit as defined in the Comprehensive Land
Use and zoning Ordinance which has been
used for rental purposes subsequent to
April 10, 1978, whether or not rented on
the date of adoption of this Chapter.
- 5 -
(e) On-Site Replacement.
Construction of multifamily residential
rental dwelling units on the site from
which units are to be removed.
(d) Off-site Replacement. Con-
struction of multifamily residential
rental dwelling units on a site other than
the site on which units are to be removed.
(e) Program 10., Program 10 of the
Housing Element adopted on January 25,
1983, by Resolution Number 6620 (CCS).
(f) Remove or Removal. The
demolition of multifamily residential
rental dwelling units or the conversion of
such units to other use. Removal
includes an activity for which an
occupancy permit is required pursuant to
subdivision (b) or (c) (3) of Section 4812a
of the Municipal Code. Removal does not
include an activity for which an occupancy
permit is required pursuant to subdivision
(c) (1) of section 4812a of the Municipal
Code unless there is an alteration of the
premises to reduce the number of units.
(g) Replacement Plan. A plan
describing the replacement of mul ti-
family residential rental dwelling units
- 6 -
which are removed from the mUltifamily
residential housing market.
(h) Single Room occupancy Housinq
Unit. A housing unit which is contained
within a residential hotel, rooming house,
hotel, or motel where the unit does not
contain either private food preparation or
sanitary facilities.
(i) Site. One or more contiguous
parcels under common ownership which have
been used, developed, or built upon as a
unit.
SECTION 9442.
Replacement Housinq
Requirement.
(a) No person shall remove a
multifamily residential rental dwelling
unit unless the person has complied with
the provisions of this Chapter.
(b) No permit, license, or other
approval shall be issued or granted by the
Ci ty for the development or use of any
property from which any multifamily
residential rental dwelling unit has been
removed until the person seeking the
license, permit, or other approval has
complied with this Chapter.
- 7 -
SECTION 9443. Applicabili~y. This
Chapter shall apply to:
(a) Any development, project, o~
other activity involving the removal of
any multifamily residential rental
dwelling unit. For purposes of this
Chapter, development, project, or other
activity shall include the creation of a
parking lot or open space on a site
previously occupied by a multifamily
residential rental dwelling unit.
(b) Any site from which multifamily
residential rental dwelling units have
been removed and for which an agreement
has been recorded requiring compliance
wi th Program 10 in connection wi th any
development of the site.
SECTION
Agreement.
(a) At the time of application for
a demolition permit or other approval
necessary for the removal of a multifamily
residential rental dwelling unit, the
developer shall enter into a compliance
agreement in accordance with the
provisions of this section.
9444.
Compliance
- 8 -
(b) The compliance agreement shall
provide that the developer shall be
required to comply with this Chapter
either by payment of the fee required by
section 9445 or by provision of
replacement housing units as provided by
section 9448.
(1) If the developer intends
to comply with this Chapter by paying the
fee required by Section 9445, an agreement
which meets the requirements of section
9446 shall be delivered to the city prior
to the issuance of a certificate of
occupancy for any development on the
subject site. If no certificate of
occupancy is required for the conversion
or other new activity on the subject site,
the agreement shall be delivered to the
City prior to commencement of the new use
or activity on the subject site.
(2) If the developer intends
to satisfy the requirements of this
Chapter by providing replacement housing
uni ts , a replacement plan in accordance
with subsection (c) shall be submitted to
the Director of Planning within sixty (60)
days of the date of the compliance
agreement. If a replacement plan is
- 9 -
submitted in a timely manner and is
disapproved by the Planning Director I a
developer shall be permitted to re-submit
a replacement plan within thirty (30) days
of the disapproval. If the re-submi tted
replacement plan is not approved by the
Planning Director, or if no plan is
re-submitted following disapproval, the
developer shall be required to pay the fee
required pursuant to section 9445.
( 3 ) The compl iance agreement
shall provide that the replacement housing
requirement may be satisfied by providing
replacement units for a portion of the
uni ts removed and a fee payment for the
remainder of those units.
(4) The compliance agreement
shall contain other provisions deemed
necessary by the City to ensure compliance
with this Chapter.
(c) A replacement plan must contain
the following:
( 1) Identif ication of the
site for development of replacement units
and proof of site control.
(2) Description of proposed
replacement units, e.g., size of units and
numbers of units.
- 10 -
(3) Schedule for construc-
tion and estimated completion and
occupancy date for replacement units.
(4) A security instrument in
a form acceptable to the City to guarantee
the successful completion of the
replacement housing units in lieu of
meeting the fee requirements of this
Chapter.
(5) A deed restriction to
ensure that replacement housing units
shall be mUltifamily residential rental
dwelling units for the lifetime of the
project.
(6) Information establishing
that the replacement units are comparable
in size, and provide amenities comparable
to the multifamily residential rental
dwelling units which are to be removed.
(7) Such other information
as the City may require to determine that
the units being removed will be
satlsfactorily replaced.
SECTION 9445. Fee.
(a) The replacement housing fee
required by this Chapter shall be
- 11 -
satisfied by payment of a fee to the City
in the amount required by this section.
(b) The amount of fee required
pursuant to this Section shall be based on
the number and the size of the units to be
removed and not replaced on-site by units
pursuant to section 9448 as follows:
o Bedroom Unit $27,000 per unit
1 Bedroom Unit $38,000 per unit
2 Bedroom Unit $45,000 per unit
3 Bedroom Unit $58,000 per unit
4 or More Bedroom Unit $63,000 per unit
(c) with regard to a property which
has been granted a Category A, B, or C
removal permit by the Rent Control Board,
the required fee shall be calculated on
the basis of the number of units permitted
to be constructed on the site pursuant to
Chapter IX of the Municipal Code. The
percentage of 0, 1, 2 , 3 , and 4 or more
bedroom units being removed shall be
calculated and this calculation shall be
used to establish the bedroom size for the
units for which the fee is required.
(d) Any fee payment required
pursuant to this Section shall be adjusted
for inflation by the percentage change in
- 12 -
the Consumer Price Index ("CPP')
mul tiplied times .65 plus the percentage
change in land cost multiplied times .35
between the date of adoption of this
Chapter through the month in which payment
is made.
(1) For purposes of this
Section, CPI shall mean the index for
Urban Wage Earners and Clerical Workers
for the Los Angeles/Long Beach/Anaheim
statistical area, as published by the
United states Department of Labor, Bureau
of Labor statistics.
(2) For purposes of this
Section, "land cost" shall mean the
average purchase price per square foot for
multifamily residentially zoned property,
as determined through an independent
survey performed for the Community and
Economic Development Department by a
qualified real estate consultant and
adjusted on an annual basis.
SECTION 9446. Payment of Fee.
(a) A developer shall enter into an
agreement with the city for payment of the
fee required by this Chapter.
- 13 -
------
(b) The agreement shall contain
the following requirements:
(1) The fee shall be paid in
ten (10) annual installments.
(2) The first installment
shall be due prior to issuance of the
certificate of occupancy for any
development or conversion on the subj ect
site.
(3) The agreement shall
create a lien on the property which shall
be binding on the developer and any
successor of the developer, including any
person acquiring an interest in the
property by foreclosure, trust sale, or
other proceeding.
(4) Installment payments
shall be adjusted annually for inflation
pursuant to section 9445{d).
(5) The agreement shall be
recorded.
(6) Such other provisions as
are reasonably deemed necessary by the
city to ensure payment of the fees
required by this Chapter.
(c) In lieu of entering into the
agreement provided by this section, a
developer may pay the entire fee prior to
- 14 -
issuance of the certificate of occupancy
for any development or conversion on the
subject site.
SECTION 9447. Deposit and Use of
Fee. Any payment made pursuant to this
Chapter shall be deposited in a Reserve
Account separate from the General Fund to
be used only for development of low and
moderate income multifamily residential
rental dwelling units. Any interest
income earned by monies in such account
shall be expended only for development of
low and moderate income multifamily
residential rental dwelling units.
SECTION 9448. Replacement Housing
units In satisfaction of Fee Requirement.
(a) A fee shall not be required by
section 9445 as follows:
(1) To the extent that
removed multifamily residential rental
dwelling units are replaced by multifamily
residential rental dwelling units on the
site from which they have been removed,
the replacement housing fee required by
Section 9445 shall be deemed satisfied.
(2) To the extent that
multifamily residential rental dwelling
- 15 -
units removed from a property owned,
controlled, or operated by the City are
replaced by multifamily residential rental
dwelling units either on the site from
which they have been removed or off-site,
the replacement housing fee required by
Section 9445 shall be deemed satisfied.
( 3 ) To the extent tha t the
Coastal commission has approved off-site
replacement multifamily residential rental
dwelling units in connection with the
removal of multifamily residential rental
dwelling units located in the Coastal Zone
prior to the effective date of this
Chapter, the replacem.ent housing fee
required by Section 9445 shall be deem.ed
satisfied by such off-site replacement
units.
(b) with regard to a property which
has been granted a category A, B, or C
removal permit by the Rent Control Board,
the number of units required to be
replaced shall be calculated on the basis
of the number of units permitted to be
constructed on the site pursuant to
Chapter IX of the Municipal Code. The
percentage of 0, 1, 2, 3, and 4 or more
bedroom units being removed shall be
- 16 -
calculated and this calculation shall be
used to establish the bedroom size for the
replacement units.
(c) Replacement housing units shall
be deemed to satisfy the fee requirements
of section 9445 only insofar as such units
are developed in accordance with the
approved replacement plan required by
section 9444(c).
(d) Replacement housing units shall
be subject to the requirements of Chapter
4A of Article IX of this Code, except that
such requirements may not be satisfied by
the payment of an in lieu fee.
(e) Replacement housing units shall
be deemed to satisfy the fee requirements
of this Chapter only if the certificate of
occupancy for such units has been obtained
prior to issuance of a certificate of
occupancy for any development, conversion
or other new activity on the subject site.
If no certificate of occupancy is required
for the conversion or other new activity
on the site, in order to satisfy the
requirements of this Chapter, the
certificate of occupancy for the
replacement housing units must be obtained
- 17 -
prior to commencement of the new use or
activity on the subject site.
SECTION 9449. Relation to
Replacement units Required by Rent control
Board.
(a) Multifamily residential rental
dwelling units developed pursuant to
replacement requirements of the Santa
Monica Rent Control Board shall count
toward the satisfaction of this Chapter if
they otherwise meet the requirements
described herein.
(b) A property which has been
granted a Category D removal permit by the
Rent Control Board may. not meet its
Program 10 obligation under this Chapter
by paying a fee pursuant Section 9445.
SECTION 9450. Exemptions. The
following shall be exempt from the
requirements of this Chapter:
(a) Units located in the R-l
District.
(b) Single room occupancy units.
(c) Units converted pursuant to
Article XX of the City Charter.
- 18 -
(d) Units converted or constructed
pursuant to a tentative map approved after
April 10, 1979.
(e) Units converted pursuant to a
final map approved after April 10, 1979,
and for which a Rent Control Board
exemption or removal permit has been
obtained.
(f) Units which are removed from a
site and replaced by a nonprofit
residential social service use which
constitutes the principal use on the site,
but only as long as the nonprofit
residential social service use exists on
the property, and only upon execution of a
deed restriction in a form acceptable to
the city imposing the requirements of this
Chapter should the nonprofit residential
social service use terminate.
SECTION 9451. Applicability of
Other City OrcUnanc:es and Regulations.
None of the provisions in this Chapter are
intended to supersede any provision of the
City Charter, ordinances, regulations, or
resolutions concerning demolition of
residential housing, relocation of
displaced tenants, rent control removal
- 19 -
requirements, or inc1usionary housing
requirements applicable to multifamily
residential projects.
SECTION 2. Any provision of the Municipal Code or
appendices thereto inconsistent with the provisions of this
Ordinance, to the extent of such inconsistencies and no further,
is hereby repealed or modified to that extent necessary to effect
the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause,
or phrase of this Ordinance is for any reason held to be invalid
or unconsti tutional by a decision of any court of competent
jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The city Council hereby
declares that it would have passed this Ordinance, and each and
every section, subsection, sentence, clause, or phrase not
declared" inval id or unconstitutional , without regard to whether
any portion of this Ordinance would be subsequently declared
invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall
attest to the passage of this Ordinance. The city Clerk shall
cause the same to be published once in the official newspaper
- 20 -
within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
~ w.... ~
ROBERT M. MYERS 0
City Attorney
- 21 -
~'YI:88~
;'/$~ ../~ ./bed . /~ 3tl/
./~ ~. -c~ .9tl.vt73
October 28. 1988
CITY t..iiORNE'T
SANTA MONICA
OCT 3\ 17 21 fM 'DO
C~ty of Santa Honlca
1685 Ma:1.n St.
Santa Mon~ca. Ca. 90402
Att: Ms. Laur:1.e Liebe~an, Deputy City Atty.
SubJect: Proposed Ord:1.nance Program 10
Dear Ms. L1eberman:
Your transm1ttal letter request:1.ng comments on the above was rece1ved Oct.
27th w1th an 1mput deadl1ne of Oct. 28th. HopefUlly, add1tlonal tlme w1ll be
allowed under such Clrcumstances.
It 1S clear that the pr10clpa1 lntent of th:1.s proposed ordloance 1S to thwart
both the sp1rlt and stated purpose of the state's Ell1S Act WhlCh guarantees all
rental houslng owners the fundamental rlght to go out of bUS1ness and to put
the1r property to lawful alternat:1.ve use.
The net effect of th:1.s proposed 1egls1at1on 1S to force rental hous:1.ng owners
back 1nto the bus10ess they seek to leave or ~n the alternat:1.ve, force them to
pay an enormous ransom, wh:1.ch 1n a great many S:1.tuat1ons would represent most
or all of thelr land value. It:1.5 clear from recent declslon5 that the courts
w111 not tolerate these tactics and that attempt1ng them wlll expose thlS Clty
to substantlal l:1.abllltles.
The staff report of June 20, 1988 c:1.ted 1n the analysls :1.nd1cates extreme preJu-
dlce against mult:1. un:1.t ownershlp houslng 10 favor of multl unlt rentals. It
also falls to acknowledge that Clty pol~cles lnstltuted 1n 1973 dellberately dlS-
couraged the constructlon of rentals leav:1.ng mult1 un:1.t ownersh:1.p unlts the only
economlcally v1able alternat1ve.
Program 10 was vlgorously opposed by a large m1nor~ty of the C~tlzens Adv1sory
Commlttee on houslng from Wh1Ch :1.t emerged. The goal ~t purports to support,
that of preserv~ng the C1ty'S demograph1c m~x as ~t eXlsted 1n the late 19705 :1.S
hl;tor~cally flawed.
From 1ts found1ng only 117 years ago, Santa Mon~ca has undergone constant demo-
graph~c change. Not too long ago 1t was almost exc1us~vely prlvate homes. Only
with the complet1on of the Santa Mon1ca freeway in 1965 d1d ~t become a rental
domlnated commun~ty wlth a h1gh water mark in 1980 of 70% rentals and 30% owners.
There is no compelling social po11cy reason at all for the appllcat10n of force
to preserve any part1cu1ar status quo.
) .
City of Santa Mon1ca
Page 2
If more rental hous1ng w1th a 15% 1nclus1onary component is des1red there 1S a
workable alternative to th1S illegal ord1nance. The C1ty Counc11 could fa1rly
qUlckly restore the low dens1ty. low rlse rental construction standardS pi 1972
wh11e 1eav1ng unchanged the restrictlons for multl ownersh1p unlts. If th1S were
coupled wlth a long term real guarantee aga1nst future pr1ce controls then almost
all new multl unlt houslng construction would be rentals.
4AMES W. BAKER
, ...
/' J~"
Y
Incent1ves work....force does not.
JWB/b