SR-400-001-03 (16)
santa Monica,
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jUN lit mss
California
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CA:RMM:ll427/hpC
city council Meeting 6-14-88
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4///0""- PO / -- CJ3
STAFF REPORT
FROM:
Kayor and City Council
city Attorney
Ordinance Adding Chapter 4B to Article IX
of the Santa Monica Municipal Code Implementing
program. 10 of the Housing Element
TO:
SUBJECT:
This staff report transmits to the City council an
ordinance adding Chapter 4B to Article IX of the Santa Monica
Municipal Code relating to Program 10 of the Housing Element.
At its March 2, 1988 meeting, Community and Economic
Development Department staff presented an "Outline of Program 10
Components" to the Planning commission for consideration. The
Planning Commission unanimously approved the recommendation of
staff with two changes. The changes included adding a definition
of "single room occupancy unit" and allowing a developer to build
required replacement units off-site if he or she had received a
"category Dn removal permit from the Rent Control Board which
would so permit.
On April 21, 1988, the Housing Commission considered the
"Outline of Program 10 Componentstl incorporating the Planning
Commission's changes.
The Housing Commission unanimously
approved the Community and Economic Development Department's
recommendation.
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The accompanying ordinance incorporates the components
previously reviewed and approved by both the Planning Commission
and the Housing Commission with one exception. The ordinance
provides that a developer may elect to pay an in-lieu in all
circumstances, whereas the Planning Commission and Housing
Commission recommended that this option be available only in
limited circumstances. This change has been made because of
legal concerns of the city Attorney's office.
The ordinance establishes an in-lieu fee ~ount as
recommended by the Community and Economic Development Department.
The purpose of establishing an in-lieu fee option under Program
10 is to provide an alternative to on-site replacement of
multifamily residential units which are removed from the
residential housing market. since the goal of Progra~ 10 is to
maintain t~p ~ 'tifamily housing, the amount of the fee
mus' enable the City to accomplish the
developmer.1,.. 01: t:.hese units. Thus, the determination of the
appropriate fee level required an analysis of the level of equity
required to develop new multifamily rental housing in Santa
Monica and therefore assumed the leveraging of private debt
financing and developer equity.
community and Economic Development staff determined that a
per unit fee was more desireable than a fee based upon square
footage. Such a fee would be both easier to administer and
easier for a property owner to calculate. In determining a
reasonable in-lieu fee for Program 10, staff relied upon the
data contained in the Rotin Regan & Houchly ("RRMn) study
commissioned by the City for the proqram 12 fee analysis. The
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KRM study established construction costs, land costs, market
rents, and operating costs in order to determine reasonable
estimates of development costs for multifamily units in the city.
In addition, staff used KRM's analysis of typical developer
equity contributions in order to determine the availability of
reasonable private equity funds. Staff then surveyed available
conventional financinq instruments to analyze the amount of
private debt capital which could be secured based upon market
rents. Only fixed-rate instruments were exa~ined as the use of
variable rate instruments would not be consistent with the
intended use of the in-lieu fees to be collected. The difference
between the total development costs by unit type and the amount
of private equity and debt available by unit type constitutes the
additional equity which is required to develop replacement
housing units, and thus is reflected in the amount of the in-lieu
fee established by the proposed ordinance.
SECTION-BY-SECTION ANALYSIS
The following is a section-by-section analysis of the
proposed ordinance:
Section 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 the replacement
housing requirements outlined in the ordinance apply to all
projects as conditions of project approval where the demolition
or conversion of multifamily residential units is involved.
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section 9443. This Section sets forth the project
replacement requirements, which include:
1. One-for-one replacement of multifamily
residential dwelling units with multifamily residential units of
like housing tenure for any project involving the removal of such
units.
2. On-site development of replacement units with the
exception of "Category 0" removal permitted projects which
authorize off-site replacement and situations where the Zoning
Ordinance would prohibit or legal requirements would preclude
such on-site development, in which case off-site development is
acceptable.
3. Replacement units must be comparable in size and
amenities to units being replaced.
4. Program 12 of the Housing Element and any
implementing ordinance adopted pursuant thereto apply to
replacement units required under this Chapter.
5. A Replacement Plan is required to be submitted to
Director of Planning containing certain specified information no
less than sixty days prior to the proposed removal of any
existing multifamily residential project.
6. Prior to receipt of a demolition permit or
building permit for the new project, a developer must obtain a
building permit for the replacement un! ts and provide the city
with a security instrument in an amount equal to the value of the
replacement housing units. These requirements may be waived if
the structure on the property has to be demolished due to Health
and safety Code violations, in which case the developer must
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agree to the recordation of a deed restriction on the subject
site.
Section 9444. This Section provides an in-lieu fee option
that developers may choose instead of providing replacement
units. These fees are based on the nn~her and size of the units
to be removed, and will be adjusted for inflation by the
percentage change in the Consumer Price Index between the date of
adoption of this Ordinance through the month in Which payment is
~ade. At least fifty percent of the fee is to be paid prior to
issuance of a demolition permit on the subject site, with the
balance of the fee due in full prior to the issuance of a
Certificate of Occupancy for the development on the site or one
year from the date of demolition, whichever is first. All fees
are required to be secured by an executed of a letter of credit
in favor of the City for the remaining amount of the obligation.
All payments made pursuant to this Section will be deposited in a
Reserve Account separate from the General Fund and will be used
only for development of low and moderate income mul tifamily
housing.
Section 9445. 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 otherwise 1D.eet the Replacement Plan requirements of this
Ordinance.
Section 9446. This section provides that the provisions of
this Ordinance are not intended to supersede any other local
ordinances and regulations.
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RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be introduced for first reading.
PREPARED BY: Robert M. Myers, city Attorney
Laurie Lieberman, Deputy City Attorney
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CA:RMM:ll426/hpc
City Council Meeting 6-14-88
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
FOLLOWS:
SECTION 1. Chapter 4B is added to Article IX of the Santa
Monica Municipal Code to read as follows:
CHAPTER 4B. m;PLACEMENT HOUSING PROGRAM.
~~40. 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 Honica has
experienced a significant reduction in the
number of multifamily residential dwelling
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units due to demolition and conversion
from residential to commercial use.
(c) The vast majority of
multifamily residential units removed from
the housing market due to demoli tion or
conversion to commercial use are low and
moderate income residential housing units.
(d) The demolition and conversion
of multifamily residential dwelling units
has altered the historic housing stock
balance and has contributed to the
scarcity of affordable housing in the
city.
(e) 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 dwelling units occurs in order
to preserve and maintain the City I S
overall housing stock.
ef) Pursuant to the pOlice power,
the City has the authority to address both
the housing imbalance created by the
removal of existing multifamily
residential dwelling units and the overall
need for housing in the City.
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(9) 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 multifamily housing to
cO!Dmerc!al use.
(h) New commercial and new
residential develop~ent which requires
demolition of existing mUltifamily housing
uni ts is generating a reduction in the
City's overall housing stock, and more
particularly a reduction in the City's
affordable housing stock, and contributes
to the imbalance between jobs and
affordable housing in the City.
(i) Conversion of rental housing to
commercial use is generating a reduction
in the City'S affordable housing stock and
contributes to the imbalance between jobs
and affordable housing in the city.
(j) 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.
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(k) 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.
(1) Any in-lieu fees collected
pursuant to this Chapter shall be used
only to finance low and moderate income
housing units.
(m) The replacement requirements
of this Chapter will serve to stabil ize
the overall stock of 1Ilultifamily
residential housing units in the City and
thereby provide greater opportunities for
low and moderate income households to
secure housing in the city.
(n) The facts and evidence
presented in the Housing Element of the
General Plan establish that there is a
reasonab: _ :.-ionship 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 in-lieu fee
established by this Chapter, and also that
there is a reasonable relationship between
the use of the in-lieu fee, where
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applicable, and the type of development
for which the fee is charged.
(0) The in-lieu fees required by
this Chapter will 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) In-Lieu Fee. A fee paid to the
City by a developer subject to this
Chapter in-lieu of providing the required
replacement housing units.
(b) Market-Rate Unit. A dwelling
uni t which is not subj ect to the rental
regulations of Program 12 of the Housing
Element or the Rent control Law.
(c) Multifamily Residential Dwell-
ing Unit. One or more rooms designed,
occupied, or intended for occupancy as
separate living quarters for the exclusive
use of a single household in a single
structure containing two (2) or more
units.
(d)
struction
Off-site Development. Con-
of multifamily residential
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standards of this Chapter shall count towards the
satisfaction of this Chapter.
SECTION 9430. Deed Restrictions. Prior to
issuance of a building permit for a project subject
to the requirements set forth in this Chapter, the
applicant shall submit deed restrictions or other
legal instruments setting forth the obligations of
the applicant under this Chapter for city review and
approval. Such restrictions shall be effective for
the lifetime of the project.
SECTION 9431. Availability of Government
Subsidies. It is the intent of this Chapter that
the requirements for inclusionary units shall not
depend upon the availabili ty of federal or state
housing subsidies. This Section does not, however
preclude the use of such programs or subsidies.
SECTION 9432. Enforcement. No building
permit or occupancy permit shall be issued, nor any
development approval granted, for a project which is
not exempt and does not meet the requirements of
this Chapter. All inclusionary units shall be
rented in accordance with this Chapter.
SECTION 2. Any provision of the Santa Monica Municipal
Code or appendices thereto inconsistent with the provisions of
this ordinance, to the extent of such inconsistencies and no
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SECTION 9443 . proj ect Replacement
Requirements. (a) One-for-one
replacement of multifamily residential
dwelling units with multifamily
resie," dwelling units of the same
housing 1:.c.~..:;e type as the units removed
shall be required as a condition of
approval of any project which involves the
removal of multifamily residential
dwelling units.
Cb) Replacement units
developed on-site unless one
following circumstances exist:
(I) The Rent control Board
grants a "Category Oil removal permit which
expressly allows off-site development, in
which case so long as the off-site
location is in the same neighborhood as
the s1 te from which the Dlul tifamily
residential units are to be removed,
replacement requirements may be satisfied
by off-site development.
( 2 ) The Zoning Ordinance
prohibits the replacement of all or a
portion of the new multifamily residential
uses on the property.
shall
of
be
the
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(3) Legal requirements
prohibit the replacement of all or a
portion of the multifamily residential
units on-site.
If the circumstances set forth
in either subsection (b)(2) or subsection
(b)(J) of this section apply, the
requirements of this Chapter shall be
satisfied by off-site development that
complies with all other requirements of
this Chapter. The burden of establishing
t.hat t.he circumst.ances set. fort.h in
subsection eb) (1), (b) (2), or (b) (3) exist
shall be on the project applicant.
Cc) Replacement units shall be
comparable in size and shall provide
amenities comparable to the multifamily
residential units which are to be removed.
(d) Replacement units shall be
subject to t.he requirements of Program 12
of the Housing Element and any ordinance
implementing Program 12.
(e) A Replacement Plan shall be
submi tted to the Director of Planning by
any developer seeking to remove existinq
mUltifamily dwellinq units and must
contain the following:
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(1) Identification of site
for development of replacement un! ts and
proof of site control.
(2) Description of proposed
replacement units, e.g., size of units and
numhers of units.
(3) Schedule for construc-
tion, and estimated completion and
occupancy date for replacement units.
(4) Such other information as
the City may require.
The Replacement Plan must be
submitted for review and approval no less
than sixty (60) days prior to the proposed
removal of any existing multifamily
residential project. Prior to receipt of
a demolition permit or building permit for
the proposed new project, a developer must
obtain a building permit for the
replacement housing units and provide to
the City a security instrument in a form
acceptable to the City in an amount equal
to the value of the replacement housing
units as determined by the Building
Department.
(f) In the event that demolition of
a property as a public nuisance is
permitted in accordance with Municipal
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Code Section 9123, the requirement for
submi ttal of a Replacement Plan and
receipt of a Building Permit may be
temporarily waived on the condition that
the developer aqrees to the recordation of
a deed restriction on the subject site.
The deed restriction shall run with the
land and shall require complianoe with the
replacement requirements of this Chapter
prior to the development of any permitted
use on the subject site.
SECTION 9444. In-Lieu Pees.
(a) In lieu of complying with
Section 9443, the replacement housing
requirements of this Chapter may be
satisfied by payment of a fee to the city
in the amount required by this Section, in
which event Section 9443 shall not apply.
(b) The amount of fee required
pursuant to this Section shall be based on
the numher and the size of the units to be
removed and not replaced as follows:
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0 Bedroom or Single
Room Occupancy Unit $20,000 per unit
1 Bedroom $30,000 per unit
2 Bedrooms $37,000 per unit
3 Bedrooms $44,000 per unit..
4 or More Bedrooms $51,000 per unit
(c) Any fee required pursuant to
this section shall be adjusted for
inflation by the percentage change in the
Consumer price Index ("CPlt') between the
date of adoption of this Chapter through
the month in which payment is made. 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.
(d) At least fifty percent (50%) of
the total fee required pursuant to this
Section shall be paid prior to the
issuance of a demolition permit or a
building permit for any development on the
Subject site. The balance at the fee
shall be paid in full prior to the
issuance of a Certificate of Occupancy for
any development on the subj ect si te, or
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one year from the date of demolition,
whichever is first.
(e) Any fee required by this
Section shall be secured by execution and
delivery to the City of an irrevocable
letter of credit or other form of security
acceptable to the city in favor of the
ci ty for the remaining amount of the
obligation. The letter of credit or other
acceptable security shall be delivered to
the City prior to the issuance of a
building permit for any demolition or
development on the subject site.
(f) Any payment made pursuant to
this Section shall be deposited in a
Reserve Account separate from the General
Fund to be used only for development of
low and moderate income housing. Any
interest income earned by monies in such
account shall be expended only for
development of low and moderate income
housinq.
SECTION 9445. Relation to
Replacement Units Required by Rent Control
Board. Multifamily residential dwelling
units developed pursuant to replacement
requirements of the santa Monica Rent
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control Board shall count toward
satisfaction of this Chapter if
otherwise meet the Replacement
requirements described herein.
the
they
Plan
SECTION 9446.
Applicability of
other City Ordinances and RequlatioDs.
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
requirements, or incl usionary 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 r~~' ~ to that extent necessary to effect
the provisions of th~s 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
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every section, subsection, sentence, clause, or phrase not
declared invalid 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
within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
fL..t"-t.....J'r j..y;... ~ ____
RO:aERT M. MYERS ()-
City Attorney
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