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SR-400-001-03 (17) ~ Yoo q/t?~-CJo/- tJ3 " - "'\- JA,~ Z 5 I;.;r -~ PPD:KW: lw Council Meet~ng of 1/25/83 Santa Mon~ca, Ca1ifornla -------- -...., f-~ "--- ....-----~ TO: Mayor and C~ty Council FROM: C~ty Staff SUBJECT: Adoption of Housing Element Introduction This report provides background informat~on on the proposed Housing Element and recommends that the Council adopt the current draft of the Elemen t and Final Envlronmen tal Impact Repor t . The Housing Element ~s comprised of twc components - the Policy Report and the Technical Report. The Council prevously received coples of the Technical Report and the Flnal EIR. Attached ~s a copy of the Policy Report adopted by the Council on September 7, 1982, which was then sen t to the Planning Comm~SS10n. Background This report concerns the proposed Housing Element of the General Plan. The report includes a summary of recent City Counc11 and Plann~ng Comrnisslon actlon on the Element, discusses procedures for revision of the Element, lists comments of the Plann3.ng Commiss~on and Housing Commission, responds to comments of the State Department Housing and Community Development, and makes a recommendation that the Counc~l adopt the current draft of the Element. 1 , I-A f . , " "':: s;~ ~ ,. J ........; --7 <:l...:J Attachments to th1S report include the following: - Append1x A: Matrix displaying re-order~ng of programs. - Appendix B: Programs recommended by a Plann1ng Comm1ssioner for reinstatement. - Appendix C: Letter from State Department of Hous 1ng and Community Development comment1ng on Housing Element. - Appendix D: Overview of 1980 Census data. - Resolutions certifying Final EIR and adopt1ng Hous~ng Element. City Council version of Policy Report. It is noted that the Planning Commission's verS10n of the Element's "Technical Report" was accepted by the Counc1l. S1nce there appears to be consensus that th1s document is adequate, it it not discussed here. Recent Action on the Element On August 31, 1982 the City Council held a public hear1ng on the proposed Hous1ng Element. On September 7, 1982 the Council amended the Planning Comnussion version of the document and forwarded the changes to the Commission for their review and comment as requ.1.red by law. On September 20, 1982, by a 5-2 vote, the Planning Commission recommended that the City Council verS10n of the Element be adopted. Individual Comm.1.ssioners also commented on the element. These comments are included in this memorandum. 2 On September 30, 1982, the Hous~ng Commission reviewed the Counc~l draft. Comments of the Commiss1on are ~ncluded here~n. On December 3, 1982, the State Department of Hous~ng and Conununity Development sent a letter commenting upon the draft Element. A response to these comments is provided here1n. Procedure for Revision of the Element Local and State law requ1re that the P1ann1ng Commission review proposed General Plan elements and amendments thereto. On September 20, 1982, the Planning Commission reviewed the City Council version of the Element and by a 5-2 vote, recommended its adoption. If the Council wishes to make new changes to the Element, said changes would have to be sent back to the Planning Commiss1on for their review. The Council can, however, accept or reject suggestions for changes which have been discussed by the Commission without send~ng them back to the Commiss~on. Plann1ns Commission Comments On September 20, 1982 the Planning Commission reviewed Counc11 action on the Element. By a 5-2 vote, the Comm1ssion passed a mot1on recommending approval of the E 1 emen t as adopted by the City Council and forwarding comments of individual Commissioners to the Council. Below are listed Commissioners I individual comments, none of which were adopted as motlons. Appendix B includes several entire programs recommended for reinstatement by one Planning Commissioner. Page numbers refer to the latest (January 1983) printing of the draft policy report. 3 I . 2. 3. 4. 5. 6. 7. Page No. 32 32 34 35 36 37 37 Plann~n9 Commissioners' Comments Item The Goal Pol1cy A.I. Policy C.10 & C.13. PoLLey E.l. Policy B.2. Policy C.2. Policy C.2. Comme~ts/Change Revise "ma1ntain1ng an econom1cally sound and healthy environment to "mainta~ning a healthy and econom- ically sound environment. " Substi tute "Ensure provision of" for "Provide." Delete these policies. Revise to read as follows: llEnsure that Tentative Subd1.v1sion maps, if otherwise permitted, only be approved if the conversion is consis- tent with all laws of the City of Santa Monica. Revise to read as follows: "Ensure that Tentative Subdivision maps, if otherwise permitted, only be approved if tenants are not displaced." Revise to read: "Ensure that the conversion of rental housing to limited equity ownership housing occurs without involun- tary tenant displacement. Delete the words III inti ted equi ty II . 4 Rat1.onale Th1S appeared to be a more logical or der . Th1.S wording 1.5 more consistent w1th other Element language. Resale controls are exclusionary This word:Lng is more consistent with other Element language. This warding is more consistent with other Element language. This wording is more consistent with other Element language. Council version limits home ownership. 8. 38 9. 73 l0. 73 11. 77 12. 80 POllCY D. 8. Program 12 Program 12 Program 13 Program 15 Delete the words "Protect and malnta1.nlt and substi- tute the word .iEnsure. n Eliminate phrase reading "If the applicat1.on of the formula results in less than a whole number, it shall be rounded down to the nearest whole number. . . II Delete this Program. Delete the sentence "Housing developed by the eDC shall be subject to controls to maintain affordability when C1.ty or other government subsidies have been provided.u The Element should define who is being talked about- current language is too broad. 5 Th1.s word1.ng 1.S more consistent w1th other Element language. Rounding feature appears to make document 1nternally incons1.stent. This program is unfa1.r. It exempts single family units but not duplex or triplex owners. The program leaves commerc1alj industrial inclusionary requiremen ts to be estab- lished by HRS study. Part I I of the program installs income quotas. Ther e is no cons1.d- eration of bonuses in th1.S program. Affordabil1. ty controls ar e bad. 13. 92 Program 25 Delete this program. 14. NA Re~nstate former Planning Commiss~on Program 14, shown in Appendix B. NA 15. 101 Program 30 Delete this program and substitute former Planning Commission version, shown in Appendix B. 16. NA Reinstate former Planning Comm1ssion Program 32A, shown in Appendix B. NA Th~s program places add~t~onal constraints on conversions and limits ownership opportunit1es which is bad. Allow controlled conversion or demolitl.on of 2- and 3-unl.t rental bUl.ld1ngs. Council version limited ownerhship opportunities. Promote ownership oppor tuni ties. The above amendments recommended by indiv1dual Planning items which are 1nconistent with City P011CY. Comml.ssion members are either relatively minor word1ng changes or The staff is recommending that none of the amendments be accepted. Housin9 COlllluission Adopted Recommendations On September 30, 1982, the Housing Commiss10n met to reV1ew the City Council version of Policy Report of the Housing Element. By a major~ty vote of the Commissioners present, it was recommended that several programs which were part of the original Citizens' Advisory CCIl11lui ttee (CAC) report but not l.ncluded in the Council verSl.on be reinstated. These included: 6 - CAC Progr am 3: housJ.ng un 1. t s . Change R-l regulations to allow addl.tJ.onal positively affect the supply of housing. The CornmissJ.on felt this program would - CAC Program 9: Allow mobile homes on single famJ.ly parcels. The Commission felt State law to this effect should be - CAC Program 25: recognized 1n the Element. Allow rental of bedrooms J.n single-family dwellings. The Commission felt that rental of bedrooms can provide less costly accomodations and better utilization of the housing stock. - CAe Program 27. Pass ordinance prohibit1ng unwarranted discrimination based on family S1ze. The Commission recommended th1s program for reinstatement based on information that it is operating in Washington, D.C. and may be feas1ble in Santa Monl.ca. The Housing Commission also made recornmenda tions upon sever al programs which were included 10 the council adopted version of the Housing Element. Policy Report.) (References below are to the January 1983 HOUS1ns Commission Comments By Program pa,e No. Item 1. 3 Program 12 2. 79 Program 14 comments/Change The Commission strongly supports a mandatory inclusionary zoning program. Rationale NA Delete words "where feasible II 1n t1 tle and descript1on. A stronger statement was desired. 7 3. 80 Program 15 The Commission wished to indlcate its strong support for thlS program noting that the Hous1ng Element lS intended to address all types of hous1ng needs. NA 4. 99 Program 29 Reference to the Energy Task Force should be added to the program description. Avoid dup11catlon of energy research. 5 . 1139 Program 35 Statistics in Quantlfled Impact section should be deleted. More generallzed description. Similar to Planning Commissioners' comments, changes recommended by the Housing Conuniss1on are either 1n conflict with past Councll action or City policy, or are minor wording changes which need not be made at this time. State HCD Comments The State Department of Housing and Communl ty Development (HCD) reviews and comments upon draft hous1ng elements. On August 18, 1982, HCD received the Planning Commission verS10n of the City's Element and began a review for compliance Wl th State laW'. On December 3, 1982, HCD sent the Cl.ty a letter (attached as Appendix C) commenting upon the draft Element. HCD comments are advisory only, but must he considered by the City Council prior to adoption of the Housing Element. 8 HCD states that .. .our reVlew indl.cates that the portions of the element dealing with eXl.sting needs, land resources, and constraints are among the best that we have reviewed. Furthermore, the element's analysis of need provides a loglcal basis for a comprehensive and thoughtful set of program ideas WhlCh ar e presented ~n the draft element. Desp~te these assets, the City's draft element does not fully comply with the requirements of Article 10.6 of the Government Code. Additional informatlon is needed to document the City's share of the regional housing need, and minor clarifications are needed in the land inventory. However, most important is the need to clarify the program descriptions contal.ned in the element, provide firmer commitments to implementation, and l.nclude those changes that have been made subsequent to the submission of the document to this Department (e.g., the reinstatement of the inclusionary program). A major problem is that due to the generalized descriptions of funding sources and anticipated program impacts, the element does not clearly demonstrate that the quantified objectives can be met. The City staff has revlewed HCO's letter. Some of HeO's concerns are no longer applicable because of the changes made by the Clty Council. However, other comments are still applicable, although City staff take issue w~th many of them. The staff's response to HeD's comments is summarized below. 9 A. Needs, Resources, and constraints 1. HCD Comment: "Include a dl.scussion of employment trends whl.ch may be based on the City's 6th Year Cormnunl.ty Development Block Grant application. II Staff Response: The draft Element's Technical Report includes extensive discussion and statistlcs on employment trends (see pages 94- HH). ThlS data was included after a reVlew of ~nformation available at the tl.me. While other data, such as the CDSG application form statlstics may be available and of lnterest, there are reasonable and practlcal Ilmi ts as to what should be included in the Element. It lS the staff. s Judgement that the Element's discussion of employment trends is adequate. 2. HCD Comment: "Ei ther include the City. s share of the regional housing need originally allocated by SCAG, or include documentation based on accepted planning methodology which supports the revl.sions contained in the element." Staff Response: The City Council revised the Element to include the City's share of the regional housing need originally alloicated by SeAGo 3. RCD Comment: "Provide an estl.rnate of the net number of addl.tlonal units which can be expected to be accommodated on under-utilized land over the f1 ve-year time fr arne of the element. This estimate may be based on information currently bel.ng prepared for additions to the City's Land Use Element." Staff Response: While perhaps interesting and desirable informatl.on to include in the Element, this data does not 10 appear to be required by State law. The Element's Techn~cal Report does contain an extensive discussion of land use and zoning (pages 2-50) and, in part~cular, a deta~led inventory of vacant land (pages 10-21). The vacant land ana1ys~s provides estimates by zone and by Census tract of bUJ.ldout potential. In addition, the Technical Report includes an estimate of residentJ.al zoning capacity (pages 29-33) providing "highU and "lowu projections. While the data HCD suggests including will be forthcomlng from the rev1sion of the Land Use Element, final informatlon is not yet available. 4. HCO Comment: uInclude an estimate of the number of units which can be accommodated on the identified 47. 1 acr es of land zoned for mixed use." Staff Response: The comment is based on an 1ncorrect assumption. Table 1 on page 4 of the Technlcal Repor t indicates that there are 47.1 acres used (not zoned) mixed use. However, as discussed in the Technical Report's "Cormnercial Land Use and ZoningU section, residential uses are allowed in most commercial zones. Further, the March 1982 SEEIR on the proposed Element includes estimates (as indicated therein, hl.ghly theoretJ.cal) of potential units in commercial zones (see pages 30-32 of SEEIR). B. Programs 1. HCD Comment: "Expand program descriptions generally to indlcate the specific funding source(s) which wlll be utilized in support of each program; indicate in more detail 11 how the programs will actually operate~ and est1mate the tenure and :L.ncome level of the households to be ass~sted." Staff Res}?onse: It 1S the staff's judgement that the Element's program descriptions are legally adequate. a. Specific funding sources (such as General Fund, fee revenues, CDBG monies or bond revenues) are ll.sted for each of the Element's programs. b. Many of the Element's programs are highly detailed. However, there are reasonable and practl.cal limi ts on how detai led program descriptions (including operational characteristics) can or should be. As viewed by the staff, the purpose of General Plan elements is to provide broad statements of policy and a general program of action for years to come. It is neither practical nor desirable to adopt an Element which includes the many studies, guidelines, regulations, resolutions, and ordinances which will be necessary to implement some of the programs. The program descriptions of the Element strike a reasonable balance between extremes of detail and generality and provide the information necessary for decisionmakers to implement the programs. c. The Element promotes both owner and renter housing. It is the staff's view that the key issue is not necessarily owner or renter housing, but avallabili ty of housing choices and the affordability of housl.ng of either type. Further, there is no need to distinguish between the two types in many of the Element's programs, such as Program 4 "Review impact of proposed orl.dnances, criteria, and regulations on housl.ng l2 affordabil~ ty and ava~labi 11 ty. 11 Some progr ams, such as Program 11 "Develop a relocation ord1nance to provide appropriate aSSl.stance to tenants dLsplaced by converSLon or demolition projects" or Program 22 "Develop programs to encourage renting of un~ts being withheld from the rental market" or Program 30, the limited equity cooperative conversion program, are specifically directed towards either renter or oW'ner housing. d. The Element does indicate (where appropr1ate) income levels of households to be assisted. Some programs are primarl.ly directed to low-and moderate income households (see programs 9, 12, 13, 16, 17, 18, 19, 20 and 21). Other programs, such as programs l, 2, 3, 4, 5, 6, 7 and 8 are intended to benefit all income levels. Clearly, it is not necessary or appropriate to cite income levels goals for many programs, such as Program 5, "Provide an expedited and coordinated permit system" or Program 34 "Review and revise the Circulation Element." 2. HCD Comment: "Either through expanded program descriptions or through additional programs, ind1cate how the City will make sites aval.lable to achieve its new construct1on goals by lncome level." Staff Response: Subsequent to HCD review of the draft Element, several new programs relating to this issue have been included ~n the Element: Program 1 "Provide adequate sites for housing, lncluding ownership housing, rental housing, factory-built housing, II Program l2 II Develop an l3 inclusionary :z.aning program" and Program 16 "Study the use of alr rights to City land for affordable hous1ng." Programs 12 and 16 are spec1f1cally directed to low and moderate income groups. These programs, in addi tlon to other f pre-exlsting ones, demonstrate City efforts to provide adequate sites for all income groups. 3. ReD COUlluent: "Describe the negotl.a tion process and cr1 ter la applled to involve developer partlcipation in the Development Agreement process: and describe how thlS process will assist in the development of housing for low-and moderate-income households." Staff Response: At the tlme the bulk of the Element was prepared the Development Agreement (OA) process W'as not being used in Santa Monica. While the DA process is certainly a useful tool, its descript10n does not appear to be legally required or reasonably necessary in the Element at this time. HCO will be provided with a copy of the DA ordinance, a copy of the dr af t Developmen t Guidebook, and a summary of DA t s to date. It is noted that other tools addressing housing needs not mentioned in the Element have been used by the City Slnce the initial draft of the Element was prepared: it does not appear to be required or seem reasonable to have to include a description of each such new tool in the Element at this time. 4. HCD Comment: "Expand the descrlption of the inclus10nary housing program to indicate how adequate site s, Wh1Ch ar e 14 appropriately zoned and are of suff1cient size, will render thl.s program workable in Santa MOnlCaj and describe specif1cally how this program w11l be lmplemented to assJ.st in the development of housing for low- and moderate-income households. II Staff Response: This program was reJ.nsta ted by the Cl ty Council. Simply stated, Program 12 makes the provision of uni ts affordable to low and moderate income persons (or an in-lieu fee payment) mandatory for projects of 3 units or more. Any 3-unit or more development on mUlti-family zoned property or any 3-uni t or more development on comrnerc1ally zoned property in the City would be subject to the inclusionary requirement. The Technical Report of the Element provides a detailed inventory of such land in the City. The Technical Report also 1ncludes extensive data on vacant multi-family zoned property. 5. HCD Comment: "Indicate how the City will support the establishment and activitJ.es of one or more community development non-profit corporations to promote the development of housing for low- and moderate-income households." Staff Response: Program 13 ftFacilitate a private non-profit community development corporation" l.S such indication. As noted in the program, a CDC may be facilitated by provisJ.on of money (CDBG monies, potential in-lleu fee revenue, housing bonds) or technical assistance from City staff. HCD wl.ll he IS prov:Lded with a br:Lef descrl.ption of C1ty assistance to the recently created Community Corporation. 6. BCD Conunent: "If the City chooses to promote the rental of bedrooms in single- faml.ly homes, descr1be a f1ve-year schedule of act:Lons which commits the City to implemen ting such a progr am. .. Staff Response: The C1 ty Council does not in tend to adopt this program. It is the staff's opinion that the Council verSlon of the Element need not be amended to reflect HCD's comments. It is noted, ~ however, that once adopted, amendment of the Element can be accompl1shed up to three times a year, and further that a review and revision is mandated by State law in 1984. A detailed letter responding to HCD's comments will be prepared by staff, sent to Hcn and made available to interested persons. New Census Data At the time the City Council last acted upon the Element, a variety of 1980 Census data was not yet available. Recently, the new data was obtained. An in-depth overV:Lew of some of the key data items, together with some information which was included in the Element, is provided in Appendix D. The data do not significantly affect policies or programs of the draft Element and need not be included in the current draft. It is noted that future new data can be incorportated into an adopted Element by amendment, or in the State-mandated 1984 HouS1ng Element revl.sion. 16 Recommendation The changes recommended by individual Planning Comml.ssion members and the Housing Commission are either relatively ml.nor wording changes or amendments apparently incons1stent with City POl1CY. Changes suggested by HCD do not appear to be legally nor technically required and the array of HCD concerns can be addressed outside the Housing Element document. 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"" o 0 '0 . .:l; N I""l APPENDIX B PROGRAMS RECOMMENDE D BY A PLANNING COMMISSIONER FOR REINSTATEMENT (Former) PROGRAM 14: Regulate removal of rental unlts. OBJECTIVE: Preserve housing affordable to low- and moderate- income persons. DESCRIPTION: The City shall develop a mechan1sm so that uncontrolled rental housing affordable to persons of low- and moderate-income shall nelther be converted to non-hous1.ng uses, nor be demol1shed, except W'hen all of the fOllowing conditions are satisfied. l. Current residents of such housing are relocated to un1ts of equal utility and price or are provided W1.th a relocation cost payment. 2. Persons displaced have priority rights to any replacement housing, except that owner-occupants shall be exempt from this requirement. The above conditions are in addition to any requirements imposed by an inclusionary program. The Rent Control Board shall consider mechanisms to implement the goals of this program with respect to controlled rental units. IMPLEMENTATION: Responsihle Ageney: Planning Department in conjunct~on with the Rent Control Board. Cost: No sign1ficant costs. Staffins: Existing staff suffic~ent. Fundin9: No special funding required. Schedule: II Quantified Impact: There are a substant1al number of housing units which would be protected by this program. The program could eventually also affect the City's controlled rental unl.ts. Tenants of up to approximately 1,000 rental units would benefit from th1S program. (Former) PROGRAM 32: Develop a program that would allow the conversion of controlled rental units to limited equ~ty cooperatives without involuntary displacement of tenants, and while assuring the contl.nued protect~on of the affordable houslng stock. OBJECTIVE: Promote continually opportunities. affordable ownersh~p DESCRIPTION: The City shall develop a program which would allow, under specifl.ed conditions, conversions of controlled rental uni ts to limi ted equi ty cooperat~ ves, which are sub jec t to controls to maintain affordability. The program shall ensure that such conversions occur without involuntary displacement of existing tenants. The program will allow conversion to occur if 50% or more of the existing tenants declare their desire to convert. The program will require that the uni ts be sold to families that are 150% of median income or less at the time of sale. IMPLEMENTATION: Responsible Agency: Planning Department, Housing Division in conjunction w~th the Rent Control Board. Cost: Potential subsidy costs of $0 to less than $20,000 per converted unit. Staffins: Existing staff sufficient. (Former) PROGRAM 32A: Develop a program that would allow the conversion of controlled rental unlts wl.thout ~nvoluntary displacement of tenants. OBJECTIVE: Promote ownership opportunities. DESCRIPTION: The City shall develop a program which would allow, under specified conditions, conversion of controlled rental units to condominiums and cooperatives. The program shall ensure that such converS1ons occur without involuntary tenant d~splacement. This program will allow conversion if at least two-th1rds of the units are occupied by households wishing to convert. IMPLEMENTATION: Responsible Agency: Planning Department, in conjunct1on with the Rent Control Board. Cost: No significant costs. Staffins: Existing staff sufficient. Fundins: Departmental. No spec1al funding requ~red. Schedule: IV Quantified Impact: Impacts would vary with exact provisions of program. However, there may be several thousand units which could potentially qualify for converS.1.on. Th.1.S program will promote ownership opportunities in housing. Fundin9: Potentl.al in-ll.eu fee revenues# general fund. Schedule: IV Quantified Impact: There may be several thousand rental housing units which could be affected by this program. This program will promote ownerhip opportunities in housing that remains affordable, and w1ll reduce inflat10nary speculation in the housing market. APPENDIX C STATt: OF CAlfFORNIA EDMUND G BROWN JR. Go..ernor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT Division of Research and Policy Development 921 Tenth Street Sacramentot CA 95814-2774 (916) 445-4725 December 3, 1982 Mr. John H. Alshuler, Jr. City Manager City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Dear Mr. Alshuler: Review of the Draft Housing Element for the City of Santa Monica The Department of Housing and Community Development has reviewed the City's draft housing element received August 18, 1982, for conformity with Government Code Section 65302 tc) and Article 10.6, Sectlon 65580 et. seq. Article 10.6 states that the housing element shall contain: I} an assessment of hOUSing needs and an inventory of resources and constraints to the meeting of these needs; 2) a statement of the community's goals, quantified objectives, and policies relative to the maintenance, improvement, and develop- ment of housing; and 3) a program which sets forth a five-year schedule of actions the local government is undertaking or intends to undertake to imple- ment the policies and achieve the goals and objectives of the housing element. Santa Monica is a nearly built-out coastal corr~unity. Vacant land for new de- velopment consists of less than 40 acres of scattered sites. In addition to limited land resourcest other major constraints to the development of new hous- ing are high land and high housing costs with a 1980 median price for a new home of $189,000. At this price, few of the City's residents can afford to purchase a home. ~1oreover, 20% of the City's households are lower-income households who overpay for housing. However, in terms of resources, the City is noted for its unusua lly hi gh percentage of exist; ng renta 1 housing -- seventy-ei ght percent of the Cityls housing ;s comprised of renter-occupied housing units. Facing these resources and constraints, the City has provided an impressive array of programs designed to meet its housing needs. Of particular note is the City's rent con- trol program which preserves the affordability of existing housing wlthin the Mr. John H. Alshuler, Jr. December 3, 1982 Page two cOMmunity. and the recently reinstated inclusionary zoning program which guarantees that any new construction wlll include a proportion of units afford- able to low- and moderate-income households. Staff has informed us that the ordinance which will be adopted is a much stronger version of the inclusionary housing program than the one included in tne ele~ent submitted for our review. Also. the City has two active redevelopment areas each with a housing component. Additionally, through a development agreement process, housing for low- and moderate-income households is provided. In our review of housing elements, we analyze whether or not the document esta- blishes maximum quantified objectives for construction, rehabllitation, and con- servation over a five-year time frame as required by the Statute. We also review the extent to which the proposed programs comply with the five mandatory program requirements to: identify adequate sites to meet the community's housing goals; assist in the development of adequate housing for low- and moderate-income house- holds; remove governmental constraints; conserve the existing affordable housing stock; and promote equal housing opportunities. Sometimes in dense urban areas with a shortage of vacant land, as in the case of Santa Monica, it may not be possible to construct a maximum number of units and at the same time conserve a maximum number of units. This is because new units often cannot be developed without demolishing existing dwelling units and rebuilding to higher densities. Thus, a community is faced with the difficult task of balancing the various re- quirements of the Statute. In Santa Monica's case, the City has chosen to lmplement strong programs designed to conserve the City's existing rental housing stock. In addition to rent con- trol, the rent control ordinance prohibits demolitions of affordable units unless affordable replacement units will also be built. This policy will to a certain extent discourage demolitions and recycling to higher densities that could poten- tially allow construction of more than 2,204 units which the City has established as its maximum new construction objective. However, given the magnitude of the City's eXlsting affordable housing resources, the element's proposed programs to assist in the development of new construction, and the tremendous market pressure to redevelop the community due to its location and quality of life, we believe that the City's program strategy appropriately balances the program requirements of the Statute. In terms of the specific requirements of the Statute, our review indicates that the portions of the element dealing with existing needs, land resources, and constraints are among the best that we have revlewed. Furthermore, the element's analysis of need provides a logical basis for a comprehensive and thoughtful set of program ideas which are presented in the draft element. Despite these assets, the City's draft element does not fully comply with the requirements of Article 10.6 of the Government Code. Addltional information is needed to document the City's share of the regional housing need, and minor clarifications are needed in the land inventory. However, most important is the need to clarify the program descriptions contained in the element, provide Mr. John H. Alshuler, Jr. December 3, 1982 Page three firmer commitments to implementation, and include those changes that have been made subsequent to the submission of the document to this Department (e.g.~ the reinstatement of the inclusionary program). A major ~roblem is that due to the generalized descriptions of funding sources and anticipated program lMpacts, the element does not clearly demonstrate that the quantified objectives can be met. Listed below is a summary of the specific changes which in our opinion should be made to bring the draft Santa Monlca housinq element into conformity with the requirements of Article 10.6 of the Government Code. A detailed analysis of the City's element is contained in the Appendix to t~is letter. A. Needs~ Resources~ and Constraints 1. Include a discussion of employment trends which may be based on the City's 6th Year Community Development Block Grant application. 2. Either include the City's share of the regional housing need originally allocated by SCAG, or include documentation based on accepted planning methodology which supports the revisions contained in the element. 3. Provide an estimate of the net number of additional units which can be expected to be accommodated on under-utilized land over the five-year time fra~e of the element. This estimate may be based on information currently being prepared for additions to the City1s Land Use Ele~ent. 4. Include an estimate of the number of units which can be accommodated on the identified 47.1 acres of land zoned for mixed use. B. Pr09rams 1. Expand program descriptions generally to indicate the specific funding sourcets) which will be utilized in support of each program; indicate in more detail how the programs will actually operate; and estimate the tenure and income level of the households to be assisted. 2. Either through expanded program descriptions or through additional pro- grams, indicate how the City will make sites available to achieve its new construction goals by income level. 3. Describe the negotiation process and criteria applied to involve devel- oper participation in the Development Agreement process; and describe how this process will assist in the development of housing for low- and moderate-income households. 4. Expand the description of the inclusionary housing program to indicate how adequate sites, which are appropriately zoned and are of sufficient size~ will render this program workable in Santa Monica; and describe specifically how this program will be implemented to assist in the de- velopment of housing for low- and moderate-income households. Mr. John H. Alshuler, Jr. December 3, 1982 Page four 5. Indicate how the City will support the establishment and activities of one or mane community development non-profit corporations to promote the development of housing for low- and moderate-income households. 6. If the City chooses to promote the rental of bedrooms in single-family homes, describe a five-year schedule of actions which commits the City to implementing such a program. We would like to express our appreciation for the cooperation shown by the City of Santa Monica staff during our review of the draft housing element. If you have any questions regarding our comments on the draft element, please contact either Maxene Spellman or myself at (916) 323-6174. Sincerely, ~~~ Mary Ann Karrer, Supervisor Planning, Coordination and Review Section cc: Mark Tigan, Director City of Santa Monica, Community and Economic Development Department James Lunsford, Director of Planning &Kenyon Webster, Project Manager Mark Pisano, Executive Director SCAG Jonathan Lehrer-Graiwer Western Center on law and Poverty, 1nc.* Carlyle W. Hall, Jr. Center for Law in the Public Interest* Sandra Pettet, Director of Litigation Legal Aid Foundation of Los Angeles* Norbert Dall, Executive Director Alllance for Coastal Management* *WCLP, CLPI, lAFLA, and ACM have standing requests on file with HCD to receive a copy of all office correspondence relating to hOUSing element reviews for juris- dictions in the Los Angeles area. We are forwarding a copy of this letter to them in accordance with the Public Information Act. December 3~ 1982 APPENDI x I Comments Regardin9 the Draft Housing Element for the City of Santa Monica I. STATUTORY REVIEW STANDARDS In accordance with the Statute~ the Department reviews the identification and analysis of existing and projected housing needs including: the locality's share of the regional housing needs for all income levels; analysis of level of payment compared to ability to pay by the locality's households; analysis of housing stock condition; inventory of land suitable for residential devel- opment; analysis of governmental and nongovernmental constraints upon the maintenance, improvement~ or development of housing for all income levels; analysis of houslng needs of special groups; and opportunities for energy con- servation. Secondly~ we review the houslng element goals~ policies, quanti- fied objectives~ and scheduled programs to assess whether they establish the maximum number of housing units that can be constructed, rehabilitate~~ and conserved over the time frame of the element consistent with Government Code Section 65583(b). II. HOUSING NEEDS~ RESOURCES~ AND CONSTRAINTS A. Existing Need~ Sections 65583 (a) (2) and (6) require housing elements to include an analysis and documentation of household characteristics including: level of payment compared to ability to pay. overcrowding, special needs. and housing stock condition. The City of Santa Monica's draft housing element adequately meets this requirement by providing a thorough assessment of existing needs. Regarding level of payment compared to ability to pay, the element contains extensive information on household incomes and housing costs using the 1980 Census. Based on the Regional Housing Allocation Model (RHAM) prepared by the Southern California Association of Governments (SCAG), t~e City estiMates that 8,677 lower-income households, representing approximately 20% of the City.s total households, overpay for housing~ Of these~ the ~ajority are small family (4~537 households or 52%)~ fo110wed by elderly (3,697 households or 43%), and large families 443 households or 5%). Also, the element points out that 3,452 households who overpay or 40% of the 8,677 lower-income house- holds are female-headed households. In documenting housing condit;ons~ the element notes that 72% of the housing stock was built prior to 1960. Using 1978 SCAG data, the City reports that 5,229 units~ representing approximately 12% of the City's housing stock are suitable for rehabilitation while 1,474 substandard units are suitable for demolition. Of the total 6~702 substandard units~ 97% are renter-occupied. Finally~ based on the 1980 Census~ the City indicates that 2,124 units or 4.8% of the City's housing units are overcrowded ana that the majority of these units are located in two of the City"s minority census tracts. B. Projected Needs Section 65583 (a) (1) requires that the housing element include an analysis and documentation of the locality's population and employment trends and pro- jected housing needs for all income groupSt including the jurisdlction's share of the region's housing needs. While the City adequately documents population trends, furtner analysis of employment trends and Santa Monica's share of the region1s housing needs should be included. The City includes in the element some general observations about the recent decline in the blue collar work force and concurrent increase in white collar ~rorkers in Santa Monica. Not included in the element is the number of ser- vice sector jobs expected to result from downtown redevelopment. Our review of the City's 6th Year Community Development Block Grant application indicates that approximately 1,200 additional service sector jobS will result. While this increase in new employment is not substantial, this information is read- ily available and should be included in the element. Also, the element does not contain an adequate documentation of the City's share of the regional housing need. Generally speaking, the City would be expected to include the regional housing need originally developed by the local council of governments. SCAG's original allocation to Santa Monica was 5t259 additional units between 1981 and 1986. In contrast, the City's ele- ment contains a regional growth allocation of 2,204 units. This allocation 1S distributed by income level consistent with the SCAG model and the City's existing household income distribution of 29.5% very low; 13.7% low; 21.7% ~oderate; and 35.1% above moderate income. Section 65584 (c) of the Statute permits localities to revise their share of the regional housing need so long as the revision is based on available data and accepted planning methodology. Furthermore, the housing element must contain an analysis of the factors and circumstances, with all supportlng data~ justifying the revision. This analysis and supporting data is missing from the City's element and should be included in revisions. This Department has been provided a copy by City staff, of the documentation sent by Santa Monica to SCAG justifying the City's revisions. Based on the April 16s 1982, letter to SCAG, the City requested four changes to the origi- nal Model: an increase in the number of 1981 households; a decrease in the number of units needed to replace losses; a substantial decrease in the number of new households to be added; and a reduction in the planned vacancy rate from 5% to 3%. The City's documentation provided extensive background data which was suppor- tlve of the first two revisions. However, the Department is ~oncerned with the reduction of the number of "Households Added" and the reduction of the planned vacancy rate. Since the City has shown in the housing element that suitable zoning has been provided for additional units far in excess of the household growth allocation and the units needed for a vacancy rate of 5%, there does not appear to be any clear basis for reducing the growth planning goals. A-2 Throughout the region there has been some confusion as to what the growth allocations mean. Some localities have requested reductions because current high interest rates make it unrealistic that the level of productlon involved in the SCAG allocations will be met. Inability of the market to respond when the community provides suitable zoning~ infrastructure~ processing procedures~ policies and other actions favorable to development is not a basis for reduclng allocations when the production problems of the buildlng industry are prevalent throughout the region. If~ because of national economic problems~ for example, total production is insufficient in the region~ there will be a drop in the vacancy rate~ more doubling up, or both. Since an adequate supply of suitable zoniog--on both vacant and utilized land--is a prerequisite for growth~ it is important that growth allocations not be reduced because of predictions of low housing production. The Department has been concerned throughout the region with justifications based on Ilreal1stic estimates" of production because reduced allocations can then be used as a basis for a lack of need to provide sufficient zoned residential capacity and other actions and policies favorable to development. With regard to the vacancy allowances~ it should also be noted that the 1980 U. S. Census and the latest Department of Finance estimates of vacant units in the City are approximately 5%. These figures do not appear to support the City's position that a vacancy rate goal of 3% is more realistic than the SCAG-allocated goal of 5%. Consequently, we believe that the City's vacancy rate and household reductions are not based on accepted planning methodology as required by the Statute. C. land Inventory The Statute requires that the housing element include an inventory of land suitable for residential development including vacant sites and sites having the potential for redevelopment. The element must also include an analysis of the relationship of zoning and public facilities and services to these sites. The element's land inventory is comprehensive and with minor exceptions, appears to be complete. Thp element discusses the Community's holding capac- ity in terms of two scenarios: development only of currently vacant, resi- dentially-zoned land; and potential capacity at 90% of build-out at current zoning through recycling, including residential development permitted as a special use in most commercial areas. Under the IILow" model~ the City could accommodate 800 to l~OOO additional units on 28.2 acres of vacant land. The majority of these units would be provided at densities ranging from 29 units per acre to 58 units per acre. Only 4.9 acres of vacant R-l land (s.l du/acre) remain in the City. Under the IIHigh" model, 55,400 to 78,800 additional persons could be accommodated (2B~OOO to 40,000 units at the City's current average household size of 1.97). The element points out that the High scenario is unlikely to be realized in the near future. The rent control ordinance has a prohibition against demoli- tion of rental units affordable to low- and moderate-income households unless affordable replacement housing is provided. This places a damper on recycling activity. Furthermore, information in the element indicates that no residen- tial development nas occurred in commercial zones in the past five years. However, staff indicates that Santa Monica has recently approved projects A-3 WhlCh lnclude residential use 1n commercial areas and, thus, it appears that there will be more development in these areas than has been the case in the past. We also understand from staff that the City is currently assessing the number of units which can be expected to be developed annually on thlS under- utilized land resource. This estlmate Should be included in revlsions to the housing element. The element also identifies 47.1 acres of mixed use for which the number of potential new units has not been estimated. In revislons to the element, the City should include an estimate or a range of the number of units which could be built on the 47.1 acres based on the number of units that are allowed by ordinance in these areas. Another potential residential land resource identified lS the Clty-owned Santa Monica Municipal Airport comprising 215 acres of vacant land. However, development of this land would require rezoning to residential use which is not proposed in the housing element. The remainder of vacant uncommitted City-owned land includes only small scattered mun;clpa1 parking lots. Finally, in describing current redevelopment activities, the City indicates that 2 projects, Ocean Park and Downtown Redevelopment, will result in the demolitlon of 831 units and new construction of 864 units, thereby, adding 34 new units to the City's hous1ng supply. D. Constraints Sections 65583 (a) (4) and (5) of the Statute requlre the assessment of several specific potential governmental and nongovernmental constraints including land use controls, building codes, site improvements, fees, local processing and permit procedures, the cost of land, and the cost of construction. The City adequately assesses governmental and nongovernmental constraints in the draft element. The lack of available land and high cost of land (about 35% of the total cost of developing a condominium) are two identified major constraints. Other actual and potential constraints discussed in the element do not appear to represent major problems to the development, maintenance, and rehabilitation of housing in Santa Monica. For example, it is indicated that off-site improvements are already in place; the City's building codes are designed and enforced to promote health, safety, and energy conservation; and on the average fees are less and it takes less time to process permits in Santa Monlca than in many Los Angeles County localitles {e.g., the average time for processing a tentative map in 9 cities in the area is 13 weeks, while in Santa Monica this process takes 3 weeks). With regard to zoning, the ele- ment notes that in 1974 the City lowered the permitted densities in the R-3 and R-4 zones. However, tne current allowable densities of up to 58.1 units per acre appear to be sufficiently high to allow the development of least cost multi-family hOUSing. The element also notes that some owners, developers, and investors cla1m that the rent control regulations constrain the development of new rental units. It 15 further noted, however, that the ordinance is not an actual constraint Slnce new rental units are exempt from rent control. A-4 Finally~ the element notes that the strict demolition and replacement regulations that are applied to the rent controlled units could potentially discourage recycling to higher densities since 30~OOO of the City's 44,272 units are renter-occupied. E. ~~~r9Y Conservation The City adequately addresses this requirement with the inclusion of Program 31. This proposed program would require a comprehensive review by the City's Energy Task Force on recommendations for a variety of energy conservation opportunities for new housing in Santa Monica. III. HOUSING PROGRAMS Sections 65583 (b) and (cl of the Government Code require that the housing ele- ment include a statement of community goals~ quantified objectives, and poli- cies relative to the maintenance~ improvement, and development of housing and include a program to implement these policies and achieve these goals and objectives. This program should: 1. identify adequate sites which will be made available to facili- tate and encourage the development of a variety of types of housing for all income levels; 2. assist in the development of adequate housing to meet the needs of low- and moderate-income households; 3. address and, where appropriate and legally possible, remove government constraints to the maintenance, improvement~ and development of housing; 4. conserve and improve the condition of the existing affordable housing stock; and 5. promote housing opportunities for all persons regardless of race~ religion~ sex, marital status~ ancestry~ national origin~ or color. A locality's housing program should describe what the locality is doing and will do over the time frame of the housing element. Also~ in accordance with the provisions of Section 65583 (c), the descriptions of a locality's housing program should: establish the maximum number of units that can be construc- ted, rehabilitated, and conserved over a five-year time frame; include the agency or official responsible for implementation; contain a fully developed set of actions the locality will undertake to achieve its objectives; and identify the funding sources to be utilized. A. Identification of Adequate Sites The housing element Statute recognizes that total housing needs may exceed a jurisdiction's ability to meet those needs due to limitations on resources, including land. However~ the housing program must establish the maximum number of units that can be constructed over a five-year time frame (See A-5 Section 65583 (b)). The first program requirement to achieve this objective is the identification of adequate sites with appropriate zoning to facilitate a variety of housing for all income levels. The site identification should accommodate~ to the extent tha+ lt is feasible to do so, the City1s new con- struction needs including its share of the regional housing need. Since gen- erally the regional share is equivalent to the community's total new construc- tion need by income level over the next five years, we first look to see: 1) if the locality's existing supply of vacant land zoned for residentlal use and served by infrastructure provides sufficient sites to accommodate the locali- ty's identified new construction needs; and 2) if currently available sites have appropriate densities and development standards to enable a variety of housing to be built which will meet the needs of households at all income levels. If a locality's existing vacant land supply at current zoned holding capacity is incapable of supporting the projected new construction need, and/or if the existing zoning and development standards do not enable a variety of housing to be built, we then look to the programs contained in the element to see if they will make up any shortfall. Based on the City's revisions to its share of the regional housing need, the housing element establishes Santa Monica's goal for new construction over the next five years as 2,204 units. Of these, 480 units are anticipated to be replacements for demolished units. Furthermore~ the City will attempt to facilitate the construction of units affordable to new households in the same income proportions as currently exist in the City: 650 units (29.5%) afford- able to very low-income households; 302 units (13.7%) affordable to low-income households; 478 units (21.7%} affordable to moderate-income households; and 774 units (35.1%) affordable to high-income households. As previously noted, the City's vacant~ residentially-zoned land can only ac- commodate 800 to 1,000 new units. Furthermore, although the actual holding capacity is not given in the element~ it would not appear that the 7.77 acres of vacant, commercially-zoned land upon which residential use is permitted could support the shortfall of 700 to 900 units. However, the element does indicate that the City's existing zoning capacity on already-developed land could accommodate far in excess of the number of needed new units. Further- more, the City's existing zoning on vacant and underutilized sites is of sufficient density and variety to permit the construction of a variety of types and prices of housing. Thus, the major problem facing the City is what programs and strategies can be utilized to actual1y IImake sites available" to meet the community's near-term new construction needs for all income levels. This task is complicated by the fact that even though the City does have some vacant high density zoned land which would allow the construction of a variety of housing types~ the element points out that many of the parcels are quite small and seem unlikely to be developed. In our review of the housing element~ we find only one program which could potentially increase the City's residential land capacity. This is Program 2 which indicates that the City will encourage the development of housing in commercial zones and consider it in industrial zones. This program is par- ticularly important in that as the element notes, the majority of underuti- lized land is in commercial use. However, Program 2 as described in the ele- ment, does not indicate what actual steps the City will take over the next five years to encourage the development of housing on underutilized industrial/ commercial sites. A-6 In terms of making sites available for a variety of housing apart from existing zoning, there are no clear programs contained 1n the element. Two programs are included which have the potentlal of assisting in making sites available--the use of Community Development Block Grant funds and bonding for the housing development, and the inclusionary hous1ng program. However, as described in the element, there is no indlcation that the CDBG or bonding programs would be used to directly make sites available (e.g., land write downs). Furthermore, the element does not indicate whether suitable sites are available to effectively apply an inclusionary program. For example, the element should indicate whether there are vacant sites zoned at high densi- ties which are of a sufficiently large size to possibly accommodate the inclusionary units. These programs are more fully discussed in the following section. Consequently, the element as written does not adequately identify sites which will be made available to accommodate the City1s new construction goals for all income levels. One program which is not described in the element but which has the potential to assist in the provision of both additional sites for housing and the provision of sites for housing affordable to low- and moderate-inc~~e households is the development agreement process. Through conversations with staff we are aware that the City is currently taking actions to encourage residential development on underutilized sites zoned for commercial and industrial use through a Development Agreement Process. Using this process, the City has been successful in providing additional sites for the development of housing, a portion of which has been made affordable to low- and moderate-income households. In addition, we understand that the City has established criteria for identifying commercial/industrial sites which are susceptible to a change in land use. Also, in relation to these sites, the City is currently prepar1ng estimates of the number of new units which annually can be expected to be built as a result of such changes in land use~ vie commend the City for actively applying its "Oevelopment Agreement Processll to provide additional sites for new housing and for considering changes in land use~ A description of both of these programs including an estimate of the number of units which can be expected to be built over five years on underutilized land should be included in revisions to the element. Without this information we cannot tell whether the City will make sites available with the capacity to accommodate the new construction goal of 2,204 units. Finally, we note that three noteworthy programs were deleted from the document prior to the submittal for our review. We urge the City to reconsider these programs as they represent appropriate strategies for increasing the City's ability to make adequate sites available~ especially in view of the City's limited vacant land supply. Briefly, these programs include Program 3--change R-l regulations to allow additional housing units on 6,200 R-l zoned parcels; Program lO--include housing in any redevelopment of the Santa Monica Airport; and Program 16--provide for use of air rights to City-owned land for producing low- and moderate-income housing. B. Ass~st in the Development of Housing Affordable to Low- and Moderate-Income Households The Department interprets this program requirement to refer primarily to the construction of new affordable unlts since rehabilitation and conservation A-7 of affordability of existing unlts is referred to in Section 65583 (c) (4) of the Statute. Our review of the City's housing element programs indicates that the City has apparently considered an array of creative techniques and a variety of funding sources to address this program requirement. Generally~ however~ more infor- mation is needed in the program descriptions to clarify which specific funding sources will be used in support of which programs; how the programs will actually operate; the tenure and income levels of the households to be assisted; and for some of the programs, a firmer commitment to implementation should be shown. Following is our analysls of seven of the City's programs which we believe support the Statutory requirement to assist in the development of housing af- fordable to low- and moderate-income households. The first three are directly related to funding sources. The last four represent creative uses of Santa Monica's local public powers. The City proposes the following three programs which represent noteworthy ideas for funding housing projects in Santa Monica. 1) Possibly develop a system of linked deposits by depositl~g City funds in financial institutions to provide loans for new and/or rehabilitated housing or other housing projects for low- and moderate-income households; 2) Participate in State and federal low- and moderate-income hous- ing programs (also, it is stated under existing programs that it is the City.s fiscal policy to assign the highest priority for use of CDBG funds to meet the needs of low- and moderate- income households). 3) Issue housing or industrial revenue bonds to increase the supply and promote the rehabilitation of low- and moderate- income housing. A problem with all three of these programs is that we cannot tell whether pro- grams are directed towards housing development or rehabilitation. If the development of housing for low- and moderate-income households ;s the program goal, it is not clear how each program will work to facilitate the development of housing, the type of housing (i.e., rental or ownership) to be assisted, nor the proportion of assisted funding which will go towards low- and moderate-income households, respectively. In additions with regard to #1 above, if the City intends to apply local funds to the development of low- and moderate-income housing, language used to describe this program should demonstrate a firm commitment to implementation. Regarding #2 and #3 above, while it appears that there is a commitment to use government assisted programs and to issue bonds, the City should describe which specific programs will be pursued and how each program and type of bond will operate to assist in the development of low- and moderate-income housing. A-8 In terms of programs using local public powerst we note that the element's Program 11 proposes to facilitate a private non-profit Community Development Corporation (CDC) to maintain and develop housing primarily for low- and moderate-income households. We support the CltylS intent to faCl11tate the creat10n of a Community Development Corporation; but as describedt it 15 not clear which of the program obJectives (i.e., purchase, development, or reha- bilitation of housing) will be supported by which fundlng source(s) during the time frame of the element. Furthermoret it is not clear how the CDC w11l operatet the type of housing to be assistedt nor the proportion of CDC project effort which will go towards assisting low- and moderate-income households, respectively. Thus~ the program description suffers from the same ambiguities noted above. Through conversations with staff we are aware that the City is facilitating the establishment of various CDC's, each with a different focus. This infor- mation should be included in the element. We suggest that to adequately address the requirements of Section 65583 (c) (2), the City should first expand the program description to indicate how one or more of the COC's which has been or will be created by the City will promote the development of hous- ing for low- and moderate-income households. Then, based on clarificatlons of the three programs relating to funding sources, the City should be able to describe which of the specific sources of funding and/or government programs will support the development of housing for low- and moderate-income house- holds through the activities of the COC's over the next five years. The Department recognizes the difficulty faced by localities in attempting to estimate future State and federal funding levels and the availability of pro- grams. However, for housing element purposes, we suggest that the City pro- ject future levels based on past participat10n and funding levels except in those cases where the City has firm infonmation that funding will be reduced. The element also proposes an inclusionary housing program. However, as men- tioned above under the discussion of adequate sitest the inclusionary program description should be expanded to reflect recent Council decisions and to in- dicate how this program will be implemented to prov1de housing for low- and moderate-income households. As now described, the element simply states that an inclusionary zoning program shall be developed which is based either on a tax voted on by the people or a voluntary program w1th incentives. We are very pleased to learn from discussions with staff that the City recently rein- stated a mandatory inclusionary program. We believe thlS is a commendable use of local powers to help meet the needs of low- and moderate-income households. However, a full description of the program should be lncluded in revisions to the element. As also mentioned under the discussion of adequate sites, through the City's "Development Agreement Process"~ the City is able to assist in the development of housing for low- and moderate-income households. We understand that the City encourages developer participation in achieving community goalst inclUding the provision of low- and moderate-cost housing, in exchange for granting a change in land use. We strongly support the City in these efforts; but as mentioned above, the City should include a housing element program which describes the "Development Agreement Process". Speclfically with regard to Section 65583 (c) (2), if the City intends to assist in the development of A-9 housing for low- and moderate-income households through the development agreement, the element should be revised to indicate the general parameters regarding: 1) the conditions under which such houslng should be sought; and 2) the proportion of housing that will be sought through the appropriate de- veloper-City negotiated projects that will be affordable to very low-, low-, and moderate-income households. Finally, the element contains a noteworthy program to encourage home sharing. As described under Program 25, to increase the supply of rental housing, the City proposes to amend the zonlng ordinance to allow rental of bedrooms w1thin single-family dwellings. We observe that Program 25 is linked to Program 26 which states that the City may establish or help finance a home-sharing infor- mation service. While we support this approach, the language used to describe Program 26 does not commit the City to implement a home shar1ng information service. Therefore, in revis10ns, the City shoUld show a greater commitment under Program 26 to facilitate the home sharing program and, thereby, promote efficient use of the affordable housing opportunities which will be provided through the changes in zoning which are proposed for implementation under Program 25. c~ Removal of Governmental Constraints Section 65583 (c) (3) of the Statute states that the housing program shall address and, where approprlate and legally possible, remove governmental con- straints to the maintenance, improvement, and development of housing. Gener- ally speaking, the programs included to meet this requirement would logically flow from the analysis of potentlal and actual governmental constraints re- quired by Section 65583 (a) (4) of the Statute. Major constraints noted in the Santa Mon1ca element include high land costs and the severe shortage of vacant land suitable for residential development. Our comments regarding the City's programs to provide adequate sites and reduce the cost of land are set forth in Section A above. Generally, the City adequately addresses the removal of governmental constraints through the City's zoning ordinance which allows a variety of densities, including high density development on the remaining vacant land. The City also proposes to review ordinances, criteria, and regulations and make appropriate amendments in order to reduce housing costs attributable to unnecessary governmental re- gulations. In addition, the City proposes to centralize housing related functions by maintaining an office of housing coordination; simplify develop- ment of multi-family units by standardizing regulations; speed up the permit review process by coordinating an expedited permit review system; and assist developers in preparing their plans by defining Architectural Review Board development criteria 1n order to promote clarity and to streamline the process. Finally, the City should be commended for including a program to address the potential constraint that rent control is perceived to have on the development of new rental units. Program 8 proposes to increase rental construction by providing a greater assurance of exemption from future rent control. The pro- gram description states, lIConsistent with the City Charter, a mechanism shall be developed by which the City may enter into agreements with developers, as provided by Government Code Section 65915 and by Government Code Section 65864 et seq. guaranteeing exemption from rent control for new rental housing". A-IO D. Conservation and Improvement of the Existing Affordable Houslng Stock The requirement of Section 65583 (c) (4) to conserve and improve the existing affordable housing stock envisions two types of program responses: structural conservation and rehab1litation; and conservation of the existing affordable housing stock. The City's housing element contains policles and programs which adequately address both of these concerns. In terms of structural rehabllitation, the City shows a firm commltment to utillze prlmarily CDBG funds to annually rehabilitate 100 to 160 units. Pro- gram 11 under Policy B indicates that between 5157,000 and ~272,OOO will be spent annually to rehabilitate primarily multi-family rental housing. Policy B states that this program will be designed in a manner which wlll avoid the displacement of residents when feasible. This program is complimented by the City's strategy to conserve the structural condition of housing: Program 28 is deslgned to improve the City's code enforcement capabllities by reviewing and revising, if necessary, the enforcement procedures. It is indicated that the City will coordinate with the Rent Control Board and the County Health Department to accomplish this goal. The City's ongoing and proposed programs which are designed to protect the af- fordability of the existing housing stock are exemplary and far-reaching. In particular, the City's ongoing rent control program is a noteworthy use of local public powers. This program is designed to regulate rental units, including renter-occupied mobilehomes, so that rents are not to be increased unreasonably while allowing landlordS a fair return on their investment. As described in the element, landlords are required to justify any rents in excess of rent levels in effect one year prior to the adoption of the Rent Control Amen~~ent and any general increases allowed by the Rent Control Board. The regulations restrict demolition and conversion of the controlled rental units by requiring Just cause for any eviction from SUCh a unit. In addition, our reading of the Rent Control Charter Amendment indicates that the afford- able housing opportunities provided by the controlled units will be protected by its provisions. For example, removal of a controlled unit will not be allowed if the unit is occupied by low- or moderate-income households; the unit is affordable to such households; or the removal will affect the supply of housing in Santa Monica. Also, the amendment stipulates that decontrol will not occur unless the vacancy rate of the controlled rental units exceeds five percent. Currently there are 30,000 control led rental units. Given the nature of the City's housing needs, resources, and constraints, the City's rent control program ;s an appropriate strategy to conserve the existing affordable housing. The element notes that although low- and moderate-income households face a tight rental market (1.7% rental vacancy rate) and are unable to afford ownership housing, 77.9% of the total units are renter-occupied. Thus, by achieving the goals of this program and of those described below, the City will conserve the affordability of between two-thirds and three-fourths of the City's existing housing supply. As mentioned under Governmental Constraints, recycling to hlgher denslties is potentially constrained by the strict demolition and replacement provisions of the Rent Control Charter Amendment. Nevertheless, the benefits of this program far outweight the negative lmpacts of the City's ability to accommodate A-II growth. For the reasons enumerated 1n t~e prevlDus paragraph and in the cover letter~ we believe that the City's rent control praqram 15 an appropriate way to utilize eXlsting resources to help meet the housing needs of all income groups and especlally the needs of the lower-income groups. Add1tional programs further strengthen the Cityls strategy to conserve the eXlstlng affordable housing stock. The City plans to contlnue the federal Existlng Section 8 program to assist lower-income households to be able to afford existing rental housinq. Page 269 of the housing element Technical Report notes that "...the HUD rental rate takes precedence over the rate set by the Rent Control Board. In some cases this may result 1n a higher allow- able rent and operate as an incentive for partlcipating 1n the Section 8 pro- gram}' The City also plans to develop a program to prevent tne displace~ent of low- and moderate-income households who may res1de 1n the City's approxi- mately l~OOO uncontrolled rental units by only allowing conversion or demoli- tion If certain replacement housing or relocation criteria are met. Additlonally~ the City intends to pass an ordinance to insure that Just cause~ as established in the Rent Control Charter ~endment~ is the only basis for tenant eVlctlon for all controlled rental housing units; and in the case of an eviction the tenant must receive relocation assistance. Further~ Santa Monica will promote continually affordable homeownership opportunities by allowing controlled rental units to convert to limited equity cooperatives without the involuntary displacement of tenants. Finally~ hOUSing element Program 32A proposes to allow conversion of apart- ments to condominiums. This program has the potential of reduclng affordable housing in the co~unity Slnce as described in the eleMent it does not include provisions to main~ain affordabillty of the converted unlts. FurtherMOre~ it is unclear from the element whether Dr not this program is intended to result in a loosenlna of the restrictions on conversions contained in the Rent Con- trol Charter Amendment. However, through conversations with staTf~ we under- stand that the City Council is in the process of revlsing its condom1nlum conversion ordinance to make it consistent with the Rent Control Charter Amendment. These revisions should be reflected in the adopted housing element. Also~ for your informatlon, in our reV1ew of converSlon ordinances~ we look for three issues to be addressed: - protection of the basic rights of tenants; - assurance of an adequate supply of rental housing; and - consumer protection for purchasers. E. Promotion of Equal Housin9 Opportunities The Statute states that a locality's housing program shal l "promote housing op- portunities for all persons regardless of race~ reliqion~ sex, marital status~ ancestry~ national origin, or color. The Santa Monica draft housing element adequately addresses this program require~ent. The City indicates in the element that while in the past CDBG funds were used to hire an agency to handle discriminatiop complaints, recently~ a City staff A-12 position was created to deal wit~ such complaints. Also~ Progra~ 36 commits the City to maintaining a housing accessibillty prograM and develop specific programs to help meet the needs of the aged, disabled, and famllies with children. We suggest that in making revisions to the element. lf posslble, the City include a description of these specific programs. IV. LEVEL OF EFFORT Article 10.6 requires that "quantified objectives should establish the maximum number of housing units that can be constructed. rehabilitated, and conserved ..... (Section 65583 (b)). In our reVlew. in attempting to determine whether a community has established maximum objectives. we ask the fol lowing questions: a) Uoes the element establish quantified objectives for construc- tion, rehabilitation~ and preservation; and are the objectlves proportionately related to need (e.g.. owner/renter. large and smal I family and to the four income groups); b) Do the programs selected adequately address the five program requirements of Section 65583 (c) of the Statute; are they clearly described; and is there a clear commitment to imple- mentation; c} Is the locality making full use of available, appropriate federal and State prograMs; and d) Is the locality making full use of its local public powers to assist in the preservation and development of sound~ afford- able housing? rhe City establishes five-year quantified objectives which are proportionately related to needs. The City establishes obJectives to construct 2,204 units (29% for very low-income households, 14% for low-income households~ 21% for moderate-, and 35% for above moderate-income households); to rehabilitate 790 units (30 owner-occupied and 760 renter-occupied); and to provide assistance to 1,302 lower-income households in the same proportion to smal I familles, large famllies, and elderly as identified for each of these groups. FinallY, through implementation of the City's rent control program and other programs to conserve existing affordable housing. it is clear that the City is commit- ted to preserving the affordable housing opportunities provided by Santa Monica's sizeable rental housing stock. However, as indicated in the foregoing section. the element does not substan- tiate that the objectives for new construction and for assistance in the development of housing for low- and moderate-income households will be met. Program descriptions do not clearly demonstrate how the proposed sources of funding will be applied to make sites available for the development of housing. Also, some of the programs which could potentially help the City achleve these two overall program obJectives are not described In a way that commits the City to implementation. A-I3 With regard to making full use of federal and State programs~ the element notes that it is the City's policy in uti11z1ng tbese programs to assign the highest priority to meeting tre needs of 10\1- and morlerate-income households. However~ there is no firm commitment to pursue specific programs to faclll- tate the development of housing durinq a specific tlme frame. Finally~ the element demonstrates that the City is making an exceptional effort to fully utilize its local public powers to conserve its existing af- fordable housing stock. The City is also making extensive use of its local public powers to remove governmental constraints to the development~ mainte- nance, and rehabilitation of housing. However, as noted throughout this letter, there are other programs using local publlC powers which are lined out in the draft document which was submitted for our review. We believe that many of these programs would be appropriate for addressing Santa Monica's new constructlon need and should be reconsidered for i~plementation. A-14