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SR-400-004-06PCD:SF:JT:AS:BR:TK~f:\plan\share\Council\strpt\construction rate design.extnd1101.doc Council Mtg: September 25, 2001 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Interim Ordinance Extending The Construction Rate Program For Multi- Family Development in all Multi-Family Residential Districts and The Design Compatibility Permit Requirement For The Development of Condominiums and Other Multi-Family Ownership Housing For Twelve Months. INTRODUCTION This report recommends that the City Council adopt an interim ordinance extending for 12 months the Construction Rate Program for multi-family development in all multi-family residential districts and the Design Compatibility Permit requirement for the development of condominiums and other multi-family ownership housing. The current interim ordinance will expire on November 11, 2001 unless extended prior to that date. BACKGROUND On May 25, 1999 the City Council adopted an emergency ordinance establishing a moratorium on multi-family development. The purpose of the moratorium was to allow time for the City to evaluate and develop requirements and programs to preserve the City's character, diversity, and quality of life which were threatened by the rapid change occurring in multi-family neighborhoods and an irreparable loss of affordable housing. The City Council responded to these concerns, in part by adopting Ordinance No. 1966 (CCS) on March 7, 2000. It established a citywide construction rate program in multi-family residential districts and created a new Design Compatibility Permit for condominium development. This interim ordinance also served to implement two programs included in the 1998-2003 Housing Element Update: Program 1.a. requiring the elimination of the Conditional Use Permit (CUP) requirement for condominiums and the evaluation of other procedures which could achieve an appropriate level of design review, and Program 7.f. requiring the monitoring of the rate of development activity in multifamily residential districts, and the consideration of enacting measures such as a construction rate program if the rate or pattern of development was found to negatively affect the quality of life or character of the neighborhood. The City Council extended Ordinance No. 1966 (CCS) for eighteen months by adopting Ordinance No. 1969 (CCS) on April 11, 2000 to provide staff with time necessary to complete the process required for implementing a permanent ordinance. On or about May 17, 2000, a lawsuit was filed against the City challenging the construction rate program. The petitioners' principal contention was that the City failed to comply with the California Environmental Quality Act ("CEQA") prior to adopting the construction rate program. In the interest of resolving the dispute and to codify current administrative practice, the City Council adopted Ordinance No. 1984 (CCS) on August 1, 2000, making minor modifications and clarifications to the construction rate program. Ordinance No. 1984 (CCS) will expire on November 11, 2001. The need for the proposed ordinance remains the same as when Ordinance No. 1966 (CCS) was originally adopted. A copy of the March 7, 2000 staff report discussing ordinance No. 1966 (CCS) is attached hereto. In short, extension of the interim ordinance is necessary in order to avert the negative impacts of construction, such as traffic circulation and noise, by continuing the Construction Rate Program which minimizes the disruptive effects of construction on residential neighborhoods by limiting the number of projects in close proximity to each other which can be constructed at any one time. Additionally, the ordinance extension is necessary to ensure the protection of neighborhood aesthetics and pedestrian enjoyment through the Design Compatibility Permit process, which requires that physical development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. Extension of the emergency interim ordinance is also necessary to provide sufficient time to further evaluate the Construction Rate Program and the Design Compatibility Permit requirement and allow public participation in their development prior to Planning Commission and City Council hearings to adopt a permanent ordinance. DISCUSSION Construction Rate Program The construction rate program would remain unchanged under the proposed ordinance. The current construction rate program allows only one construction project, or substantial remodel project, within a five hundred-foot radius of another construction project subject to this program. This restriction applies for fifteen months after issuance of a building permit, after which time another project may begin construction in the defined area. This program applies to projects involving two or more units in multi-family districts. It also excludes certain types of projects including projects that will be developed on sites containing structures that are uninhabitable and which cannot be rendered habitable in an economically feasible manner. The construction rate program applies to applications deemed complete on or after March 7, 2000. The proposed interim ordinance is contained in Attachment A. Design Compatibility Permit The Design Compatibility Permit currently in place would remain unchanged. As adopted, all new or converted residential and commercial condominiums, community apartment projects, stock cooperatives, and cooperative apartments for which a development application was deemed complete on or after March 7, 2000 must obtain a Design Compatibility Permit. This Permit requirement establishes an appropriate level of design review so as to ensure that the physical development is compatible with, and relates harmoniously to, the surrounding neighborhood. Specifically, the Design Compatibility Permit controls the design and site layout to ensure compatibility to the surrounding residential area. CONCLUSION The recommended term of the extension is 12 months, or until November 11, 2002. A 12- month extension is necessary to complete the process required for implementing a permanent ordinance, which will affect a large area of the City and involve input from various neighborhood organizations. Further, given the City Planning Division's current workload and the high priorities of other projects, including revisions to both multifamily and single family citywide development standards, City's Noise Ordinance and the City's Antenna Ordinance, a 12-month time period is recommended. Additionally, each proposed development project will be individually subject to environmental analysis. CEQA The proposed interim ordinance extension is exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3). Section 15061(b)(3) provides that CEQA only applies to those projects that have the potential for causing a significant effect on the environment. Extension of the Construction Rate Program and Design Compatibility Permit process does not have this potential. Instead, the proposed interim ordinance extension is environmentally beneficial as it will ensure neighborhoods are protected from construction related impacts by limiting the number of projects in close proximity to each other through regulating the timing and distribution of construction projects through the building permit process. Additionally, the proposed interim ordinance extension ensures protection of neighborhood aesthetics and pedestrian orientation by establishing a Design Compatibility Permit process that requires that new condominium development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. PUBLIC NOTICE A legal advertisement was published in the Los Angeles Times at least ten consecutive calendar days prior to the hearing. A copy of the notice is contained in Attachment B. BUDGET/FISCAL IMPACT The recommendation presented in this report has no budget or financial impact. RECOMMENDATION Staff recommends that the Council adopt the attached emergency interim ordinance extending the emergency interim ordinance for 12 months. Prepared by: Suzanne Frick, Director Jay Trevino, AICP, Planning Manager Amanda Schachter, Principal Planner Bobby Ray, AICP, Senior Planner Tony Kim, Associate Planner Planning and Community Development Department Attachment: A: Proposed Interim Ordinance B. Public Notice C. March 7, 2000 City Council Staff Report f:\atty\muni\laws\barry\construction rate design.extnd1101-1.wpd City Council Meeting 9-25-01 Santa Monica, California ORDINANCE NUMBER (CCS) (City Council Series) AN INTERIM ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA EXTENDING THE CONSTRUCTION RATE PROGRAM FOR MULTI-FAMILY DEVELOPMENT IN ALL MULTIFAMILY RESIDENTIAL DISTRICTS AND THE DESIGN COMPATIBILITY PERMIT REQUIREMENT FOR THE DEVELOPMENT OF CONDOMINIUMS AND OTHER MULTI-FAMILY HOUSING THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Findinqs and Purpose. The City Council finds and declares: (a) On May 25, 1999, the City Council adopted a moratorium on multi-family development in the City's multi-family districts in response to dramatic changes in state law, a substantial increase in the rate of development, and an unprecedented loss of affordable housing. (b) The specific factors compelling the moratorium adoption are detailed in Ordinance Number 1944 (CCS) and Ordinance Number 1947 (CCS) and include the following: the unprecedented economic boon in which land values have skyrocketed and the rate of multi-family construction tripled, the detrimental consequences of this construction rate which impacted the City as a whole and the daily lives of residents who had to cope with the noise and interference caused by construction, the significant shift in the City's demographics occurring due to the vast majority of new, privately-built units only being affordable to upper income individuals, the adoption of the Costa-Hawkins Rental Housing Act of 1995 which has severely weakened local rent control and resulted in a dramatic reduction in the City's affordable housing stock, and the threat posed by these dramatic changes to the existing character of the City's neighborhoods and its unique natural environment. (c) The City Council adopted this moratorium to provide the City sufficient time to evaluate the effects of this high rate of development and the City's loss of affordable housing and to develop appropriate requirements and programs to preserve the City's character, diversity, and quality of life in this period of drastic change. (d) The City Council extended this moratorium twice. It expired on May 17, 2000. (e) In adopting the moratorium, the City Council directed staff, in part, to evaluate the growth in the rate of construction in multi-family neighborhoods and assess appropriate responses. (f) Program 7.f of the City's 1998-2003 Housing Element also requires that the City monitor the rate of development activity in multi-family residential districts so as to ensure that rapid development does not jeopardize the character of the neighborhoods and negatively impact the quality of life. (g) This program further provides that if the rate or pattern of development appears to negatively affect the quality of life or character of neighborhoods, the City Council should consider enacting a construction rate program. (h) A significant increase in the level of multi-family development activity has occurred in the City's multi-family residential districts. Monitoring the rate of development activity in multi-family residential districts reveals that the rate of development in 1999 (16 projects) represents a 246% increase over the rate in 1998/1997 (6 and 7 projects respectively) and a 533% increase over the rate in 1996 (3 projects). The rate of development in 2000 surpassed the development rate of 1999 with 18 projects obtaining building permits during this year. This substantial rate of development continues unabated. (i) It is not simply the rate of development which threatens the City's character and quality of life, but also the new development's lack of compatibility with and relationship to existing development and neighborhoods. (j) The City's Zoning Ordinance currently requires approval of a Conditional Use Permit ("CUP") for the development of condominiums. (k) A CUP is intended to allow the establishment of those uses which have some special impact or uniqueness such that their effect on the surrounding environment cannot be determined in advance of the proposed use and its particular location. (I) In conjunction with the preparation of the 1998-2003 Housing Element Update the City determined that it should eliminate the requirement that condominium projects obtain a CUP since it is generally not the condominium use that is at issue in the City's review of residential condominium applications; instead, the City determined it should evaluate other procedures which would achieve an appropriate level of design review so as to ensure that the physical development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. (m) In light of this policy and to ensure that condominium development does not threaten the existing character and scale of the City's neighborhoods, the City has determined that it should replace the conditional use permit requirement for condominium projects with a design compatibility permit. The cost of processing this permit will be the same as the costs of processing a CUP. Consequently, the fee for the design compatibility permit will be the same as the fee currently charged for a CUP. (n) In light of these concerns, the City Council adopted Ordinance Number 1966 (CCS) on March 7, 2000 which established the construction rate program, established a design compatibility permit and required a design compatibility permit for condominium development. On April 11, 2000, the City Council adopted Ordinance Number 1969 (CCS) extending Ordinance Number 1966 (CCS) for eighteen months. On August 1, 2000, the City Council adopted Ordinance Number 1984 (CCS) extending Ordinance Number 1966 (CCS) until November 11, 2001. (o) The City Council finds and declares that the public health, safety and general welfare require the extension of Ordinance 1966 (CCS), Ordinance 1969 (CCS) and Ordinance Number 1984 (CCS) to avert the negative impacts of construction such as traffic circulation, noise, neighborhood aesthetics and pedestrian enjoyment of City streets, to continue a construction rate program which minimizes the disruptive effects of the construction process on the neighborhood by limiting the number of projects in close proximity to each other which can be constructed at any one time through regulating both the timing and distribution of construction projects through the building permit approval process, and to establish a design compatibility review process for condominiums to ensure that the physical development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. (p) For these reasons, the City's zoning and planning regulations should be revised as they pertain to condominium design review and the rate of construction to ensure that development is consistent with the public health, safety and welfare. (q) Pending completion of these permanent revisions, in order to protect the public health, safety, and welfare, it is necessary to continue on an interim basis to change current development standards as they relate to the rate of construction in the City's multi- family districts and the review of condominiums projects. Consequently, this ordinance extends the provisions of Ordinance 1966 (CCS) up to and including November 11, 2002. (r) These interim standards will serve to preserve the existing character of the City's multi-family districts and prevent any further disruption caused by increasing development in these districts while allowing development consistent with these standards to occur. (s) As described above, there exists a current and immediate threat to the public safety, health, and welfare should the interim ordinance not be extended and should development inconsistent with the contemplated revisions to the development standards be allowed to occur. Approval of additional development inconsistent with the following proposed interim standards would result in a threat to public health, safety, or welfare. Therefore, it is necessary to establish on an interim basis the following development standards. SECTION 2. Construction rate proqram. (a) For projects involving the new construction or substantial remodel of two or more dwelling units in all multi-family residential districts in the City for which a development application was deemed complete on or after March 7, 2000, only one such construction project shall be allowed within a five hundred foot radius of another construction project subject to this Section. Except as provided in subsection (c) of this Section, this restriction shall apply for fifteen months after issuance of a building permit, after which time another project may begin construction in the defined area. The multi- family residential districts in the City are: R2R, R2, R3, R4, RVC, RMH, OPDuplex, OP2, OP3, OP4, NWOverlay, R2B, and R3R. (b) Building permits shall be provided on a first come first served basis in accordance with the terms of this Section. No application for a building permit shall be accepted for filing or otherwise processed by the Building and Safety Division unless the applicant provides documentation on forms provided by the City that the project has received all other city or state approvals or permits necessary to commence the project, with the exception of building and sewer allocation permits. (c) During the plan-check process, the Building and Safety Division shall determine the status of other building permits for projects in the area. A building permit shall not be issued when the Building Officer determines that a building permit has been issued in the previous fifteen months for any other project within a five hundred foot radius of the subject property unless the owner of the previously permitted project has formally relinquished the building permit for that project or obtained a certificate of occupancy for the project . (d) If the Building Officer determines that another building permit has been issued less than fifteen months prior to the date on which the building permit has received all plan-check approvals and the exceptions specified in subsections (c) and (e) do not apply, the Building Officer shall place the project on a waiting list in order of the date and time of day that the permit application received all plan-check approvals. The life of other City approvals or permits necessary to commence the project shall be automatically extended by the amount of time that a project remains on the waiting list. The Building Officer shall approve the project in accordance with the Uniform Technical Code in effect at the time of the plan check. (e) The following projects shall be exempt from the construction rate program: (1) Affordable housing projects in which one hundred percent of the units are deed- restricted for very low, low, middle, and/or moderate income housing. (2) Structures identified by the Building and Safety Division as unreinforced masonry construction and subject to City-mandated seismic upgrading. (3) The project will be developed on a site that is vacant. (4) The project will be developed on a site in which either: (a) the structures on the site are uninhabitable, not as a result of the owner's failure to maintain the structure, orthe property of which the structure is a part, in good repair, and the structures cannot be rendered habitable in an economically feasible manner or (b) the current use of the property is not otherwise economically viable. The City shall prepare an exemption application form which delineates all submission requirements. An owner shall not be required to file a project application with the exemption application. City staff shall make a final determination whether a project meets the requirements of this subdivision (4) within ninety (90) days after the owner's exemption application for the project is deemed complete. (f) The Planning and Community Development Department may develop administrative guidelines implementing this Section. SECTION 3. Permits Required for Condominium Proiects. All new or converted residential and commercial condominiums, community apartment projects, stock cooperatives, and cooperative apartments for which a development application was deemed complete on or after March 7, 2000 shall conform to the provisions of this Section establishing a Design Compatibility Permit, Santa Monica Municipal Code Section 9.04.16.01.030 establishing additional minimum requirementsfor condominiums and Santa Monica Municipal Code Chapter 9.20 establishing the requirements for preparation, review, and approval of a subdivision map. (a) Purpose of Desiqn Compatibility Permit. A Design Compatibility Permit is intended to allow the construction of condominiums and other multi-family ownership housing to ensure the design and siting of the projects do not result in an adverse impact on the surrounding neighborhood. The permit allows for: (1) Review of the location, size, massing, and placement of the proposed structure on the site and in relation to the surrounding neighborhood; (2) Review of the location of proposed amenities within the project. (3) An evaluation of the project with regard to fixed and established standards. (b) Application for a Desiqn Compatibility Permit. An application for a Design Compatibility Permit shall be filed in a manner consistent with the requirements contained in Santa Monica Municipal Code Part 9.04.20.20, Sections 9.04.20.20.010 through 9.04.20.20.080. (c) Hearinq and Notice. Upon receipt in proper form of a Design Compatibility Permit application, a public hearing before the Planning Commission shall be set and notice of such hearing given in a manner consistent with Santa Monica Municipal Code Part 9.04.20.22, Sections 9.04.20.22.010 through 9.04.20.22.140. (d) Findinqs. Following a public hearing, the Zoning Administrator shall prepare a written decision which shall contain the Planning Commission's findings of fact upon which such decision is based. The Commission, or City Council on appeal, shall approve or conditionally approve a Design Compatibility Permit application in whole or in part if all of the following findings of fact can be made in an affirmative manner: (1) The physical location, size, massing, and placement of proposed structures on the site and the location of proposed amenities within the project are compatible with and relate harmoniously to surrounding sites and neighborhoods. (2) The physical location, size, massing, placement of proposed structures on the site, and parking access and the location of proposed amenities within the project would not be detrimental to the public interest, health, safety, convenience, or general welfare. (3) The rights-of-way can accommodate autos and pedestrians, including adequate parking and access. (4) The health and safety services (police, fire etc.) and public infrastructure (e.g., utilities)are sufficient to accommodate the new development. (5) Reasonable mitigation measures have been included for all adverse impacts identified in an Initial Study or Environmental Impact Report. (6) The proposed use conforms precisely to the minimum requirements outlined in Section 9.04.16, Subchapter 9.04.16.01.030. (e) Term of Permit. The Design Compatibility Permit shall expire if the rights granted are not exercised within the period established by the Planning Commission or City Council on appeal as a condition of granting the Design Compatibility Permit, or, in the absence of such established time period, either within one year, or if located in the Coastal Zone, eighteen months, from the effective date of permit approval. However, if the permit is for affordable housing or a mixed use project where housing units comprise at least seventy-five percent of the floor area of the project (collectively "housing project"), and the housing project has received City, State or Federal funding or is comprised of units at least fifty percent of which are deed-restricted to be affordable to low income households and the remainder of which are deed-restricted to be affordable to low or moderate income households, in the absence of a time period established by the Planning Commission or City Council on appeal as a condition of granting the permit, the Design Compatibility Permit shall expire if the rights granted are not exercised within three years, or if located in the Coastal Zone, three and one-half years from the effective date of permit approval. (1) Exercise of Riqhts. "Exercise of rights" shall mean actual commencement of the use granted by the permit, unless the permit is granted in conjunction with approval of new construction. If the Design Compatibility Permit is granted in conjunction with approval of new construction, issuance of a building permit shall constitute exercise of rights under the Design Compatibility Permit; provided, however, that, unless otherwise specified as a condition of project approval, the Design Compatibility Permit shall expire if: (A) The building permit expires; or (B) The rights granted under the Design Compatibility Permit are not exercised within one year following the earliest to occur of the following: issuance of a Certificate of Occupancy; or if no Certificate of Occupancy is required, the last required final inspection for the new construction. (2) Extension. If the applicant files an extension request with the Zoning Administrator in writing prior to expiration of the permit, the Zoning Administrator may administratively grant a one-year extension of the term of the Design Compatibility Permit. The applicant may apply to the Planning Commission for any further extension if such request is filed at least one month prior to the permit's expiration. Such extension request shall be processed in the same manner and for the same fee as a new Design Compatibility Permit. The Planning Commission may grant an extension request for good cause, and may consider in this review the extent to which the project is consistent with current development standards and policies, whether the project is consistent in principle with the goals, objectives, policies, land uses, and programs specified in the adopted General Plan, conditions surrounding the project site and whether the project will adversely effect public health, safety and general welfare. (f) Revocation. The Planning Commission may, or upon direction from the City Council, revoke any approved Design Compatibility Permit in accordance with the following procedure: (1) A revocation hearing shall be held by the Planning Commission. Notice of the hearing shall be published once in a newspaper of general circulation within the City and shall be served either in person or by registered mail on the owner of the property and on the permit holder at least 10 days prior to such hearing. The notice of hearing shall contain a statement of the specific reasons for revocation. (2) After the hearing, a Design Compatibility Permit may be revoked by the Planning Commission, or by the City Council on appeal or review, if any one of the following findings are made: (A) That the Design Compatibility Permit was obtained by misrepresentation or fraud. (B) That the use for which the Design Compatibility Permit was granted has ceased or has been suspended for six or more consecutive calendar months. (C) That the conditions of the permit have not been met, or the permit granted is being or has recently been exercised contrary to the terms of the approval or in violation of a specific statute, ordinance, law or regulation. (3) A written determination of revocation of a Design Compatibility Permit shall be mailed to the property owner and the permit holder within 10 days of such determination. (g) Appeals. The approval, conditions of approval, denial, or revocation of a Design Compatibility Permit may be appealed within fourteen consecutive calendar days of the date the decision is made in the manner provided in Santa Monica Municipal Code Part 9.04.20.24, Sections 9.04.20.24.010 through 9.04.20.24.040. (h) Hearinqs. Notice of public hearings shall be given in accordance with Santa Monica Municipal Code Section 9.04.20.22.050 to all owners and residential and commercial tenants of property within a radius of 500 feet for a Design Compatibility Permit. (i) Fee. The fee for a Design Compatibility Permit shall be the same as the fee established for a conditional use permit. (j) CUP Requirement. No project subject to this Section shall also be required to obtain a CUP, unless the project is located in the M1 (industrial Conservation) District or the C5 (Special Office Commercial) District. SECTION 4. This Ordinance shall apply to any application for the development of multi-family housing deemed complete on or after March 7, 2000. SECTION 5. This Ordinance shall be of no further force or effect after November 11, 2002, unless prior to that date, after a public hearing, noticed pursuant to Santa Monica Municipal Code Section 9.04.20.22.050, the City Council, by majority vote, extends this interim ordinance. SECTION 6. 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 further, is hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance. SECTION 7. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional 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 itwould have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 8. 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 thirty days following its adoption. APPROVED AS TO FORM: MARSHA JONES MOUTRIE City Attorney NOTICE OF A PUBLIC HEARING BEFORE THE SANTA MONICA CITY COUNCIL SUBJECT: A Public Hearing will be held by the City Council on the following request: An Interim Ordinance of the City Council of the City of Santa Monica Amending and Extending Until November 11, 2002 the Construction Rate Program for Multi-Family Development in all Multifamily Residential Districts and the Design Compatibility Permit Requirement for the Development of Condominiums and Other Multi-Family Housing. APPLICANT: City of Santa Monica WHEN: Tuesday, September 25, 2001 6:45 p. m. WHERE: Council Chambers Room 213 1685 Main Street Santa Monica, California PROJECT DESCRIPTION The City Council will conduct a public hearing to consider extending for 12 months the term of Ordinance 1984 (CCS), the Interim Emergency Ordinance that established a Design Compatibility Permit for Condominiums and imposed a Construction Rate Program in the Multi-family Zoning Districts. The current Interim Emergency Ordinance would expire November 11, 2001 unless the City Council extends the Ordinance until November 11, 2002. HOW TO COMMENT You may comment at the City Council public hearing, or by writing a letter. Written information received before 3:00 p.m. on the Wednesday before the hearing will be given to the City Council in their packet. Information received after that time will be given to the City Council prior to the meeting. Address your letters to: City Clerk Construction Rate Ordinance 1685 Main Street, Room 102 Santa Monica, CA 90401 MORE INFORMATION If you want more information about this project, please call Tony Kim, at (310) 458-8341. Santa Monica Bus Lines #1, #2, #3, #7 and #8 serve City Hall. The meeting facility is handicapped accessible. If you have any special needs such as sign language interpreting, please contact the Office of the Disabled at (310) 458-8701. Pursuant to California Government Code Section 65009(b), if this matter is subsequently challenged in Court, the challenge may be limited to only those issues raised at the Public Hearing described in this notice, or in written correspondence delivered to the City of Santa Monica at, or prior to, the Public Hearing. ESPAIVOL EI Concilio Municipal de la ciudad de Santa Monica tendra una audencia publica para revisar applicaciones proponiendo desarrollo en Santa Monica. Para mas informacion, Ilame a Carmen Gutierrez al numero (310) 458-8341. APPROVED AS TO FORM JAY TREVINO Planning Manager f:\atty\muni\laws\barry\construction rate design.extnd1101-1.wpd City Council Meeting 9-25-01 Santa Monica, California ORDINANCE NUMBER (CCS) (City Council Series) AN INTERIM ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA EXTENDING THE CONSTRUCTION RATE PROGRAM FOR MULTI-FAMILY DEVELOPMENT IN ALL MULTIFAMILY RESIDENTIAL DISTRICTS AND THE DESIGN COMPATIBILITY PERMIT REQUIREMENT FOR THE DEVELOPMENT OF CONDOMINIUMS AND OTHER MULTI-FAMILY HOUSING THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Findinqs and Purpose. The City Council finds and declares: (a) On May 25, 1999, the City Council adopted a moratorium on multi-family development in the City's multi-family districts in response to dramatic changes in state law, a substantial increase in the rate of development, and an unprecedented loss of affordable housing. (b) The specific factors compelling the moratorium adoption are detailed in Ordinance Number 1944 (CCS) and Ordinance Number 1947 (CCS) and include the following: the unprecedented economic boon in which land values have skyrocketed and the rate of multi-family construction tripled, the detrimental consequences of this construction rate which impacted the City as a whole and the daily lives of residents who had to cope with the noise and interference caused by construction, the significant shift in the City's demographics occurring due to the vast majority of new, privately-built units only being affordable to upper income individuals, the adoption of the Costa-Hawkins Rental Housing Act of 1995 which has severely weakened local rent control and resulted in a dramatic reduction in the City's affordable housing stock, and the threat posed by these dramatic changes to the existing character of the City's neighborhoods and its unique natural environment. (c) The City Council adopted this moratorium to provide the City sufficient time to evaluate the effects of this high rate of development and the City's loss of affordable housing and to develop appropriate requirements and programs to preserve the City's character, diversity, and quality of life in this period of drastic change. (d) The City Council extended this moratorium twice. It expired on May 17, 2000. (e) In adopting the moratorium, the City Council directed staff, in part, to evaluate the growth in the rate of construction in multi-family neighborhoods and assess appropriate responses. (f) Program 7.f of the City's 1998-2003 Housing Element also requires that the City monitor the rate of development activity in multi-family residential districts so as to ensure that rapid development does not jeopardize the character of the neighborhoods and negatively impact the quality of life. (g) This program further provides that if the rate or pattern of development appears to negatively affect the quality of life or character of neighborhoods, the City Council should consider enacting a construction rate program. (h) A significant increase in the level of multi-family development activity has occurred in the City's multi-family residential districts. Monitoring the rate of development activity in multi-family residential districts reveals that the rate of development in 1999 (16 projects) represents a 246% increase over the rate in 1998/1997 (6 and 7 projects respectively) and a 533% increase over the rate in 1996 (3 projects). The rate of development in 2000 surpassed the development rate of 1999 with 18 projects obtaining building permits during this year. This substantial rate of development continues unabated. (i) It is not simply the rate of development which threatens the City's character and quality of life, but also the new development's lack of compatibility with and relationship to existing development and neighborhoods. (j) The City's Zoning Ordinance currently requires approval of a Conditional Use Permit ("CUP") for the development of condominiums. (k) A CUP is intended to allow the establishment of those uses which have some special impact or uniqueness such that their effect on the surrounding environment cannot be determined in advance of the proposed use and its particular location. (I) In conjunction with the preparation of the 1998-2003 Housing Element Update the City determined that it should eliminate the requirement that condominium projects obtain a CUP since it is generally not the condominium use that is at issue in the City's review of residential condominium applications; instead, the City determined it should evaluate other procedures which would achieve an appropriate level of design review so as to ensure that the physical development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. (m) In light of this policy and to ensure that condominium development does not threaten the existing character and scale of the City's neighborhoods, the City has determined that it should replace the conditional use permit requirement for condominium projects with a design compatibility permit. The cost of processing this permit will be the same as the costs of processing a CUP. Consequently, the fee for the design compatibility permit will be the same as the fee currently charged for a CUP. (n) In light of these concerns, the City Council adopted Ordinance Number 1966 (CCS) on March 7, 2000 which established the construction rate program, established a design compatibility permit and required a design compatibility permit for condominium development. On April 11, 2000, the City Council adopted Ordinance Number 1969 (CCS) extending Ordinance Number 1966 (CCS) for eighteen months. On August 1, 2000, the City Council adopted Ordinance Number 1984 (CCS) extending Ordinance Number 1966 (CCS) until November 11, 2001. (o) The City Council finds and declares that the public health, safety and general welfare require the extension of Ordinance 1966 (CCS), Ordinance 1969 (CCS) and Ordinance Number 1984 (CCS) to avert the negative impacts of construction such as traffic circulation, noise, neighborhood aesthetics and pedestrian enjoyment of City streets, to continue a construction rate program which minimizes the disruptive effects of the construction process on the neighborhood by limiting the number of projects in close proximity to each other which can be constructed at any one time through regulating both the timing and distribution of construction projects through the building permit approval process, and to establish a design compatibility review process for condominiums to ensure that the physical development is compatible with and relates harmoniously to the surrounding sites and neighborhoods. (p) For these reasons, the City's zoning and planning regulations should be revised as they pertain to condominium design review and the rate of construction to ensure that development is consistent with the public health, safety and welfare. (q) Pending completion of these permanent revisions, in order to protect the public health, safety, and welfare, it is necessary to continue on an interim basis to change current development standards as they relate to the rate of construction in the City's multi- family districts and the review of condominiums projects. Consequently, this ordinance extends the provisions of Ordinance 1966 (CCS) up to and including November 11, 2002. (r) These interim standards will serve to preserve the existing character of the City's multi-family districts and prevent any further disruption caused by increasing development in these districts while allowing development consistent with these standards to occur. (s) As described above, there exists a current and immediate threat to the public safety, health, and welfare should the interim ordinance not be extended and should development inconsistent with the contemplated revisions to the development standards be allowed to occur. Approval of additional development inconsistent with the following proposed interim standards would result in a threat to public health, safety, or welfare. Therefore, it is necessary to establish on an interim basis the following development standards. SECTION 2. Construction rate proqram. (a) For projects involving the new construction or substantial remodel of two or more dwelling units in all multi-family residential districts in the City for which a development application was deemed complete on or after March 7, 2000, only one such construction project shall be allowed within a five hundred foot radius of another construction project subject to this Section. Except as provided in subsection (c) of this Section, this restriction shall apply for fifteen months after issuance of a building permit, after which time another project may begin construction in the defined area. The multi- family residential districts in the City are: R2R, R2, R3, R4, RVC, RMH, OPDuplex, OP2, OP3, OP4, NWOverlay, R2B, and R3R. (b) Building permits shall be provided on a first come first served basis in accordance with the terms of this Section. No application for a building permit shall be accepted for filing or otherwise processed by the Building and Safety Division unless the applicant provides documentation on forms provided by the City that the project has received all other city or state approvals or permits necessary to commence the project, with the exception of building and sewer allocation permits. (c) During the plan-check process, the Building and Safety Division shall determine the status of other building permits for projects in the area. A building permit shall not be issued when the Building Officer determines that a building permit has been issued in the previous fifteen months for any other project within a five hundred foot radius of the subject property unless the owner of the previously permitted project has formally relinquished the building permit for that project or obtained a certificate of occupancy for the project . (d) If the Building Officer determines that another building permit has been issued less than fifteen months prior to the date on which the building permit has received all plan-check approvals and the exceptions specified in subsections (c) and (e) do not apply, the Building Officer shall place the project on a waiting list in order of the date and time of day that the permit application received all plan-check approvals. The life of other City approvals or permits necessary to commence the project shall be automatically extended by the amount of time that a project remains on the waiting list. The Building Officer shall approve the project in accordance with the Uniform Technical Code in effect at the time of the plan check. (e) The following projects shall be exempt from the construction rate program: (1) Affordable housing projects in which one hundred percent of the units are deed- restricted for very low, low, middle, and/or moderate income housing. (2) Structures identified by the Building and Safety Division as unreinforced masonry construction and subject to City-mandated seismic upgrading. (3) The project will be developed on a site that is vacant. (4) The project will be developed on a site in which either: (a) the structures on the site are uninhabitable, not as a result of the owner's failure to maintain the structure, orthe property of which the structure is a part, in good repair, and the structures cannot be rendered habitable in an economically feasible manner or (b) the current use of the property is not otherwise economically viable. The City shall prepare an exemption application form which delineates all submission requirements. An owner shall not be required to file a project application with the exemption application. City staff shall make a final determination whether a project meets the requirements of this subdivision (4) within ninety (90) days after the owner's exemption application for the project is deemed complete. (f) The Planning and Community Development Department may develop administrative guidelines implementing this Section. SECTION 3. Permits Required for Condominium Proiects. All new or converted residential and commercial condominiums, community apartment projects, stock cooperatives, and cooperative apartments for which a development application was deemed complete on or after March 7, 2000 shall conform to the provisions of this Section establishing a Design Compatibility Permit, Santa Monica Municipal Code Section 9.04.16.01.030 establishing additional minimum requirementsfor condominiums and Santa Monica Municipal Code Chapter 9.20 establishing the requirements for preparation, review, and approval of a subdivision map. (a) Purpose of Desiqn Compatibility Permit. A Design Compatibility Permit is intended to allow the construction of condominiums and other multi-family ownership housing to ensure the design and siting of the projects do not result in an adverse impact on the surrounding neighborhood. The permit allows for: (1) Review of the location, size, massing, and placement of the proposed structure on the site and in relation to the surrounding neighborhood; (2) Review of the location of proposed amenities within the project. (3) An evaluation of the project with regard to fixed and established standards. (b) Application for a Desiqn Compatibility Permit. An application for a Design Compatibility Permit shall be filed in a manner consistent with the requirements contained in Santa Monica Municipal Code Part 9.04.20.20, Sections 9.04.20.20.010 through 9.04.20.20.080. (c) Hearinq and Notice. Upon receipt in proper form of a Design Compatibility Permit application, a public hearing before the Planning Commission shall be set and notice of such hearing given in a manner consistent with Santa Monica Municipal Code Part 9.04.20.22, Sections 9.04.20.22.010 through 9.04.20.22.140. (d) Findinqs. Following a public hearing, the Zoning Administrator shall prepare a written decision which shall contain the Planning Commission's findings of fact upon which such decision is based. The Commission, or City Council on appeal, shall approve or conditionally approve a Design Compatibility Permit application in whole or in part if all of the following findings of fact can be made in an affirmative manner: (1) The physical location, size, massing, and placement of proposed structures on the site and the location of proposed amenities within the project are compatible with and relate harmoniously to surrounding sites and neighborhoods. (2) The physical location, size, massing, placement of proposed structures on the site, and parking access and the location of proposed amenities within the project would not be detrimental to the public interest, health, safety, convenience, or general welfare. (3) The rights-of-way can accommodate autos and pedestrians, including adequate parking and access. (4) The health and safety services (police, fire etc.) and public infrastructure (e.g., utilities)are sufficient to accommodate the new development. (5) Reasonable mitigation measures have been included for all adverse impacts identified in an Initial Study or Environmental Impact Report. (6) The proposed use conforms precisely to the minimum requirements outlined in Section 9.04.16, Subchapter 9.04.16.01.030. (e) Term of Permit. The Design Compatibility Permit shall expire if the rights granted are not exercised within the period established by the Planning Commission or City Council on appeal as a condition of granting the Design Compatibility Permit, or, in the absence of such established time period, either within one year, or if located in the Coastal Zone, eighteen months, from the effective date of permit approval. However, if the permit is for affordable housing or a mixed use project where housing units comprise at least seventy-five percent of the floor area of the project (collectively "housing project"), and the housing project has received City, State or Federal funding or is comprised of units at least fifty percent of which are deed-restricted to be affordable to low income households and the remainder of which are deed-restricted to be affordable to low or moderate income households, in the absence of a time period established by the Planning Commission or City Council on appeal as a condition of granting the permit, the Design Compatibility Permit shall expire if the rights granted are not exercised within three years, or if located in the Coastal Zone, three and one-half years from the effective date of permit approval. (1) Exercise of Riqhts. "Exercise of rights" shall mean actual commencement of the use granted by the permit, unless the permit is granted in conjunction with approval of new construction. If the Design Compatibility Permit is granted in conjunction with approval of new construction, issuance of a building permit shall constitute exercise of rights under the Design Compatibility Permit; provided, however, that, unless otherwise specified as a condition of project approval, the Design Compatibility Permit shall expire if: (A) The building permit expires; or (B) The rights granted under the Design Compatibility Permit are not exercised within one year following the earliest to occur of the following: issuance of a Certificate of Occupancy; or if no Certificate of Occupancy is required, the last required final inspection for the new construction. (2) Extension. If the applicant files an extension request with the Zoning Administrator in writing prior to expiration of the permit, the Zoning Administrator may administratively grant a one-year extension of the term of the Design Compatibility Permit. The applicant may apply to the Planning Commission for any further extension if such request is filed at least one month prior to the permit's expiration. Such extension request shall be processed in the same manner and for the same fee as a new Design Compatibility Permit. The Planning Commission may grant an extension request for good cause, and may consider in this review the extent to which the project is consistent with current development standards and policies, whether the project is consistent in principle with the goals, objectives, policies, land uses, and programs specified in the adopted General Plan, conditions surrounding the project site and whether the project will adversely effect public health, safety and general welfare. (f) Revocation. The Planning Commission may, or upon direction from the City Council, revoke any approved Design Compatibility Permit in accordance with the following procedure: (1) A revocation hearing shall be held by the Planning Commission. Notice of the hearing shall be published once in a newspaper of general circulation within the City and shall be served either in person or by registered mail on the owner of the property and on the permit holder at least 10 days prior to such hearing. The notice of hearing shall contain a statement of the specific reasons for revocation. (2) After the hearing, a Design Compatibility Permit may be revoked by the Planning Commission, or by the City Council on appeal or review, if any one of the following findings are made: (A) That the Design Compatibility Permit was obtained by misrepresentation or fraud. (B) That the use for which the Design Compatibility Permit was granted has ceased or has been suspended for six or more consecutive calendar months. (C) That the conditions of the permit have not been met, or the permit granted is being or has recently been exercised contrary to the terms of the approval or in violation of a specific statute, ordinance, law or regulation. (3) A written determination of revocation of a Design Compatibility Permit shall be mailed to the property owner and the permit holder within 10 days of such determination. (g) Appeals. The approval, conditions of approval, denial, or revocation of a Design Compatibility Permit may be appealed within fourteen consecutive calendar days of the date the decision is made in the manner provided in Santa Monica Municipal Code Part 9.04.20.24, Sections 9.04.20.24.010 through 9.04.20.24.040. (h) Hearinqs. Notice of public hearings shall be given in accordance with Santa Monica Municipal Code Section 9.04.20.22.050 to all owners and residential and commercial tenants of property within a radius of 500 feet for a Design Compatibility Permit. (i) Fee. The fee for a Design Compatibility Permit shall be the same as the fee established for a conditional use permit. (j) CUP Requirement. No project subject to this Section shall also be required to obtain a CUP, unless the project is located in the M1 (industrial Conservation) District or the C5 (Special Office Commercial) District. SECTION 4. This Ordinance shall apply to any application for the development of multi-family housing deemed complete on or after March 7, 2000. SECTION 5. This Ordinance shall be of no further force or effect after November 11, 2002, unless prior to that date, after a public hearing, noticed pursuant to Santa Monica Municipal Code Section 9.04.20.22.050, the City Council, by majority vote, extends this interim ordinance. SECTION 6. 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 further, is hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance. SECTION 7. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional 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 itwould have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 8. 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 thirty days following its adoption. APPROVED AS TO FORM: MARSHA JONES MOUTRIE City Attorney F:\PLAN\SHARE\COUNCIL\NOTICES\CONSTDESIGN.sept25.DOC NOTICE OF A PUBLIC HEARING BEFORE THE SANTA MONICA CITY COUNCIL SUBJECT: A Public Hearing will be held by the City Council on the following request: An Interim Ordinance of the City Council of the City of Santa Monica Amending and Extending Until November 11, 2002 the Construction Rate Program for Multi-Family Development in all Multifamily Residential Districts and the Design Compatibility Permit Requirement for the Development of Condominiums and Other Multi-Family Housing. APPLICANT: City of Santa Monica WHEN: Tuesday, September 25, 2001 6:45 p. m. WHERE: Council Chambers Room 213 1685 Main Street Santa Monica, California PROJECT DESCRIPTION The City Council will conduct a public hearing to consider extending for 12 months the term of Ordinance 1984 (CCS), the Interim Emergency Ordinance that established a Design Compatibility Permit for Condominiums and imposed a Construction Rate Program in the Multi-family Zoning Districts. The current Interim Emergency Ordinance would expire November 11, 2001 unless the City Council extends the Ordinance until November 11, 2002. HOW TO COMMENT You may comment at the City Council public hearing, or by writing a letter. Written information received before 3:00 p.m. on the Wednesday before the hearing will be given to the City Council in their packet. Information received after that time will be given to the City Council prior to the meeting. Address your letters to: City Clerk Construction Rate Ordinance 1685 Main Street, Room 102 Santa Monica, CA 90401 MORE INFORMATION If you want more information about this project, please call Tony Kim, at (310) 458-8341. Santa Monica Bus Lines #1, #2, #3, #7 and #8 serve City Hall. The meeting facility is handicapped accessible. If you have any special needs such as sign language interpreting, please contact the Office of the Disabled at (310) 458-8701. Pursuant to California Government Code Section 65009(b), if this matter is subsequently challenged in Court, the challenge may be limited to only those issues raised at the Public Hearing described in this notice, or in written correspondence delivered to the City of Santa Monica at, or prior to, the Public Hearing. ESPAIVOL EI Concilio Municipal de la ciudad de Santa Monica tendra una audencia publica para revisar applicaciones proponiendo desarrollo en Santa Monica. Para mas informacion, Ilame a Carmen Gutierrez al numero (310) 458-8341. APPROVED AS TO FORM JAY TREVINO Planning Manager F:\PLAN\SHARE\COUNCIL\NOTICES\CONSTDESIGN.sept25.DOC PCD:SFJT:SHK:LB\F:\plan\share\council\strpt\March7CCreport.wpd Council Mtg: March 7, 2000 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation to Adopt an Emergency Interim Ordinance to Establish a Design Compatibility Permit for Condominiums and to Impose a Construction Rate Program in the Multi-family Zoning Districts; Recommendation to Review Proposed Revisions to the Residential Development Standards in the R2 and R3 Districts Pertaining to the Development of Projects with State Density Bonus Units; Recommendation to Support State Assembly Bill 1744 (Longville) Which Provides for a Six-month Extension for Completion of Local Housing Element Revisions; Review Analysis of Provisions of AB 438 with Regard to the 1998 - 2005 Housing Element Technical Update; and Recommendation to Review the Updated Affordable Housing Production Program Fee Analyses and Direct City Staff to Prepare a Fee Resolution to Reflect the Updated Fee Analyses. INTRODUCTION This report recommends City Council review and take action on several issues related to the City's moratorium on multi-family housing and the Housing Element of the General Plan. First, this report recommends that the City Council introduce for first reading an emergency interim ordinance to require a design compatibility permit for residential condominium projects and to implement a construction rate management program in all multi-family residential districts with limited exceptions. Second, this report recommends that the City Council review proposed revisions to the R2 and R3 Districts' residential development standards in order to facilitate the development of projects with State Density Bonus Units, and direct staff to prepare a Resolution of Intention to amend the Zoning Ordinance in accordance with these recommendations. Third, this report provides the City Council with an analysis of Assembly Bill 438 and the ability to count rehabilitated units toward the City's Regional Housing Needs Assessment allocation in the upcoming Housing Element technical update. Fourth, this report recommends that the City Council support Assembly Bill 1744 (Longville) which provides for a six-month extension of the due date for completion of local housing element revisions. Finally, this report recommends that the City Council review the updated Affordable Housing Production fee analyses and direct staff to prepare a fee resolution to reflect the amended conclusions of the fee analyses. BACKGROUND The 1998-2003 Housing Element Update of the General Plan was adopted by the City Council on April 21, 1998, and subsequently approved by the State Department of Housing and Community Development (HCD). The proposed emergency interim ordinance implements portions of two programs included in the 1998-2003 Housing Element Update: Program 1.a. of the Housing Element to eliminate the Conditional Use Permit (CUP) requirement for condominiums and evaluate other procedures which achieve an appropriate level of design review, and Program 7.f. to monitor the rate of development activity in multifamily residential districts, and consider enacting measures which may include a construction rate program if the rate or pattern of development appears to negatively affect the quality of life or character of the neighborhood. On May 25, 1999 the City Council adopted an emergency ordinance establishing a moratorium on multi-family development. The purpose of the moratorium was to allow time for the City to evaluate and develop requirements and programs to preserve the City's character, diversity, and quality of life as they relate to multi-family neighborhoods and affordable housing. City Council directed staff to: (1) evaluate the growth in the rate of construction within multi-family neighborhoods; (2) assess the possibilities for providing incentives to encourage preservation of existing affordable housing stock; (3) analyze housing economics in relation to the City's affordable housing fee; (4) evaluate housing policies in the context of newly enacted State legislation that allows cities, under certain circumstances, to count rehabilitated units toward their Regional Housing Needs Assessment (RHNA) allocation and in the context of SCAG's recent RHNA projections. This moratorium is due to expire on March 28, 2000. In response to the concerns Council raised in adopting the multi-family moratorium, staff recommends that the CUP requirement be eliminated and a new permit be required for condominiums and that a construction rate program be established by emergency interim ordinance. Staff recommends that the emergency interim ordinance be adopted prior to the moratorium expiration. This will ensure that all new condominium development applications are reviewed in a manner consistent with Housing Element Program 1.a., and, in the event that multiple applications for new multi-family residential development are submitted immediately following the moratorium expiration, the construction rate program will limit the noise, dust, and traffic caused by construction that negatively impacts residential neighborhoods. The construction rate provisions of the proposed interim ordinance will minimize the disruptive effects of the construction process by limiting the number of projects in close proximity to each other that can be under construction at any one time. The proposed interim ordinance is contained in Attachment A. The proposed provisions are discussed in detail within the discussion portion of this staff report. The proposed revisions to the residential development standards in the R2 and R3 Districts pertaining to the development of projects with State Density Bonus Units reflect the action plans for Housing Element Programs 1.a. and 2.b. to revise existing development standards as necessary to assure the building envelope adequately accommodates the construction of density bonus units while maintaining neighborhood character. The analysis supporting the staff recommendations was conducted in 1998 in conjunction with preparation of the 1998-2003 Housing Element Update. The City Council postponed review of this proposal at that time pending revisions to the City's Inclusionary Housing Program and the development of the Affordable Housing Production Program (SMMC Chapter 9.56). Consistent with the City's current efforts to provide incentives for the production of affordable housing units, staff recommends that the City Council review the proposed modifications that would increase the building envelope for projects with State Density Bonus Units located in the R2 and R3 districts. Assembly Bill 438 modified the Housing Element statutes to provide options to fulfill a portion of the Element's residential sites requirement through means other than new construction. The City's consultant, Cotton/Beland/Associates (CBA), reviewed the three assistance options under AB438 for potential application in Santa Monica and prepared a brief summary of their findings (Attachment B). CBA concluded that the provisions of AB438 that give credit for 1) the substantial rehabilitation of severely substandard housing; 2) the purchase of affordability covenants on market rate housing, and 3) the preservation of at-risk housing, cannot be used in Santa Monica for this Housing Element cycle. Based on CBA's preliminary assessment, the City will be able to provide adequate sites to address its regional housing needs requirement (RHNA) without reliance on the special provisions of AB438. Following the preparation of the City's Regional Housing Needs Assessment (RHNA) allocation by the Southern California Association of Governments, the City is required to prepare a technical update to the Housing Element. Assembly Bill 1744 (Longville) provides for a six-month extension of the due date for completion of local housing element revisions. Under existing law the City must complete Housing Element revisions by June 30, 2000. Assembly Bill 1744 proposes to extend the completion date by six months to December 31, 2000. The Southern California Association of Governments requests that the City of Santa Monica support this legislation. Attached is a proposed Resolution of support for Council approval (Attachment C) On July 21, 1998, the City Council adopted a new housing program called the Affordable Housing Production Program. This program requires developers of market rate multi-family development to help meet the need for housing affordable to low- income households. The program allows developers to include units in their projects that are affordable to low- income households, pay a fee to the City that will be used to help finance new affordable housing, or take other specified actions. On July 28, 1998, the Council adopted Resolution 9295 establishing base fees of $6.14 per square foot of floor area for apartments and $7.13 per square foot for condominiums. These fee amounts were based on two studies; the "Constraints Analysis" which established a fee threshold based upon the financial impact of the fee upon new multifamily development and the "Nexus Study" which established a fee threshold based upon the relationship between new market rate multifamily development and the demand for affordable housing created by that development. As part of the moratorium work program, the City Council directed staff to further analyze the changes in market conditions in relation to the City affordable housing fee. Also, the Affordable Housing Production Program (Ordinance 1918) states that, "the affordable housing unit base fee may be established at least every two years by resolution of the City Council" (Ordinance 1918, Section 9.56.070 (b)). Accordingly, the City's consultant has updated the Constraints Analysis and Nexus Study. A summary of study findings is provided and discussed in the discussion portion of this staff report. DISCUSSION PERMITS REQUIRED FOR CONDOMINIUMS The Zoning Ordinance currently requires approval of a Conditional Use Permit (CUP) for all new or converted residential and commercial condominiums, community apartment projects, stock cooperatives and cooperative apartments in addition to compliance with the requirements for preparation, review, and approval of a Subdivision Map. (SMMC 9.04.16.01) The CUP requires a separate permit application and a public hearing before the City's Planning Commission, whose decision may be appealed by any interested party to the City Council. In accordance with the adopted 1998-2003 Housing Element Update, the proposed Interim Emergency Ordinance would eliminate the Conditional Use Permit requirement for condominiums and establish a Design Compatibility Permit. Multi-family residential uses are permitted by right within all zoning districts except in the M1 (Industrial Conservation District) and C5 (Special Office Commercial District) where a Conditional Use Permit is required and within the LMSD (Light Manufacturing Studio District) where multi-family residential uses are not permitted. Since discretionary review is not required to determine whether or not the land use is appropriate, a Design Compatibility Permit would control the design and site layout of condominium projects to ensure their compatibility with the surrounding neighborhood. In addition, special conditions that were established to protect the community and purchasers or renters of condominium projects will remain in place (SMMC Section 9.04.16.01.030). In those districts where a Conditional Use Permit is required for multi-family residential uses, such a permit will still be required of condominium projects in addition to the proposed Design Compatibility Permit. The Planning Commission would review these permits concurrently. The proposed findings for a Design Compatibility Permit are similar to those for a Development Review Permit as follows: 1. The physical location, size, massing, and placement of proposed structures on the site and the location of proposed amenities within the project, are compatible with and relate harmoniously to surrounding sites and neighborhoods. 2. The physical location, size, massing, placement of proposed structures, and parking access on the site and the location of proposed amenities within the project would not be detrimental to the public interest, health, safety, convenience, or general welfare. 3. The rights-of-way can accommodate autos and pedestrians, including adequate parking and access. 4. The health and safety services (police, fire etc.) and public infrastructure (e.g., utilities) are sufficient to accommodate the new development. 5. Reasonable mitigation measures have been included for all adverse impacts identified in an Initial Study or Environmental Impact Report. 6. The proposed use conforms precisely to the minimum requirements outlined in Section 9.04.16, Subchapter 9.04.16.01.030. Although the proposed findings required to approve a condominium projectwould change, the application process for the development of a residential condominium project will remain the same as for a CUP application, including the required fee. The minimum requirements for condominiums, regarding off-street parking, yard and height requirements, Covenants, Conditions and Restrictions (CC&Rs), and building management and maintenance pursuant to SMMC Section 9.01.16.01.030 would remain in effect. The Design Compatibility Permit will be reviewed by the Planning Commission, or the City Council on appeal, in conjunction with the Vesting Tentative Tract Map or Parcel Map. The noticing and hearing requirements are the same as for a Conditional Use Permit. These provisions will ensure that the Planning Commission focus is on the physical compatibility of each residential condominium project within the context of the neighborhood. Staff recommends that these provisions be enacted by emergency interim ordinance to ensure that all new residential condominium projects that are accepted following the expiration of the moratorium are considered via a permit and procedure contemplated by Program 1.a. of the 1998-2003 Housing Element. CONSTRUCTION RATE MANAGEMENT PROGRAM The moratorium ordinance identified the possible adverse impacts of accelerated development in residential districts, including noise, construction materials and equipment obstructing pedestrian and vehicular traffic, and aesthetic impacts. In response, staff has analyzed a number of Citywide construction rate program alternatives to determine if establishment of such a program would minimize the disruptive effects of construction in residential areas. A construction rate program limits the number of projects in close proximity to each other which can be constructed during the same time period. The timing and distribution of construction projects would be regulated through the building permit approval process. North of Wilshire Construction Rate Program In 1990, the City established a construction rate program in the North of Wilshire Overlay District, which is bounded by Ocean Avenue, 14t" Street, Wilshire Boulevard, and Montana Avenue. This program states: For projects of two or more dwelling units, one construction project shall be allowed per block, or within 300 linear feet in the north and south direction of a project. This restriction shall apply for eight months after issuance of a building permit, after which time another project may begin construction in the defined area. For purposes of this Part, a block is defined as parcels on both sides of the street in the same block face, and includes adjacent parcels separated by a street or alley. A building permit shall be issued only when the Building Officer determines that a building permit has not been issued in the previous eight months for any other project on the same block or within 300 linear feet to the north or south of the project. In developing the North of Wilshire rate program a range of alternatives were considered including: Two years between construction projects within a radius of 1000 feet. 1. No program at all. 1. Upon completion of framing or six months, whichever occurs first, another project could begin within the "block" 1. One project every four blocks per year. The adopted construction rate program was developed with the efforts of a special task force. The resulting rate program was a compromise between those who objected a rate program and those who advocated even greater restrictions. Proposed Construction Rate Program Alternatives The analysis considered four citywide construction rate program alternatives as follows: 1. Apply the North of Wilshire program citywide 2. Apply the North of Wilshire program citywide with adjustments to the time period (increase from 8 months to either 12 or 18 months) 2. Apply the North of Wilshire program citywide with adjustments to the time period and adding a 300 foot radius 2. Apply the North of Wilshire program citywide with adjustments to the time period and adding a 500 foot radius The alternatives were applied citywide to show the number of projects that could have been subject to various construction rate programs each year from 1989 through 1999. The 300 and 500 foot radii were used in the analyses because these same distances are required by code for notifying tenants and property owners regarding public hearings. The analysis considered building permits issued for multifamily projects (2 or more units) on multifamily zoning districts. The data shows that the greatest number of projects that would be subject to any of the construction rate program alternatives occurred between 1989 and 1991 reflecting the highest number of permits. The more building permits issued the greater the chance that projects would be subject to a rate program. For example, out of 22 building permits issued in 1991, three would have been subject to the North of Wilshire program, two additional projects would have been subject to a 12 month program, and another two projects would have been subject to an 18 month program. (See Attachment D.) The recession of the early and mid-1990s is reflected in the relatively small number of projects during those years. For example, in 1994 only two projects were issued building permits. These projects would not be subject to any of the alternative programs. The fewer permits issued the less likely that projects would be subject to a rate program. In addition, the longer the rate period, (i.e. 8, 12 or 18 months), the more projects are likely to be subject to a rate program. Similarly, the larger the block or geographic area, the more projects are likely to be subject to a rate program. During 1993, nine projects received building permits, compared to six in 1998. However, these projects would not be subject to Alternative Rate Program 1, 2 and 3 because of the great distance between these particular projects. Applying the 500 foot radius resulted in two projects subject to the 8 month rate period for 1993. For illustration the table below shows the number of parcels that are covered by the three different block/geographic areas: Area affected by Rate Program Number of Parcels * North of Wilshire block ± 35 North of Wilshire block plus 300' radius ± 52 North of Wilshire block plus 500' radius ± 112 *When subject parcel is located mid block. All parcels are 50'x150'. It is difficult to predict the total number building permits that will be issued in any year. It is more difficult to predict the number of projects that could be subject to a particular construction rate program. As of January 27, 2000, there were 32 projects in the permitting process. Based on the geographic distribution of these projects and their status (pending, approved, complete), once building permits are issued, staff estimates that four projects could be subject to the North of Wilshire rate program, two to the North of Wilshire Program with the 12 month time period, one to the North of Wilshire with the 18 month time period, two to the 8 month/300-foot radius program and two to the 8 month/500-foot radius program. If the current North of Wilshire Rate Program was applied citywide during 1998 and 1999, it would have affected a total of four projects, two in 1998 and two in 1999. Applying the most restrictive rate program (500' radius/18 months), eight projects would have been subject to the rate program within the last two years. Staff believes a construction rate program based on a block area plus a 500-foot radius with a 12 month time period would most effectively control the pace of construction in residential areas. A rate program based on a longer time period and a larger geographic area would be more effective in reducing the number of construction projects. However, such a program (i.e. 1000 foot radius and a two year time period) could be very restrictive and could involve construction delays for property owners. Conversely, the adopted rate program for North of Wilshire does not effectively control the pace of development within the district given the lack of projects that have been subject to the program since its adoption. The block area plus a 500-foot radius is recommended because that is the radius used for public notification of proposed development and covers the geographic area likely to be impacted by development. The 12 month time period was chosen based on the average amount of time it takes for a project to receive its final inspection from the date the permit was issued. The data shows the average construction term is 14 months (range is 9-26 months). The 12 month period, therefore, will cover the most disruptive period of construction, excavation and framing. If this rate program was applied citywide during 1998 and 1999, six projects would have been subject to the program, two in 1998 and four in 1999. (See Attachment D.) Staff recommends that a construction rate program be enacted citywide as an emergency interim ordinance to ensure that the rate or pattern of development within the City's multi- family residential districts will not negatively affect the quality of life or character of the neighborhood following the expiration of the moratorium. It is anticipated that multiple applications will be filed upon expiration of the moratorium; the construction rate program will ensure that these projects will not undergo construction simultaneouslywithin proximity of one another. Based on the number of projects in the pipeline staff estimates the issuance of 22 building permits this year (2000). Given the robust economy, rising property values and the lifting of the moratorium, staff anticipates that even more building permits could be issued in 2001. The rapid pace of development warrants the construction rate program as proposed. PROPOSED REVISIONS TO THE RESIDENTIAL DEVELOPMENT STANDARDS FOR PROJECTS WITH STATE DENSITY BONUS UNITS The proposed revisions to the residential development standards in the R2 and R3 Districts reflect the Action Plans for Housing Element Programs 1.a. and 2.b. to revise existing development standards as necessary to assure the building envelope adequately accommodates the construction of State density bonus units while maintaining neighborhood character. This analysis was conducted in 1998 in conjunction with preparation of the 1998-2003 Housing Element Update. The City Council postponed review of this proposal at that time since the City was in the process of developing another Housing Element related program - the Affordable Housing Production Program. In consideration of the City's efforts to provide incentives for the production of affordable housing units, staff recommends that the City Council review the proposed modifications that would increase the building envelope for projects with State Density Bonus Units located in the R2 and R3 districts. The changes are being considered to ensure that the zoning standards in these districts do not act as a potential constraint on the construction of density bonus units. In April 1995, the City initiated the 1998-2003 Housing Element Update. As part of this Update, Hamilton, Rabinovitz & Alschuler, Inc. (HR&A) analyzed whether certain of the City's programs operated as actual or potential governmental constraints on new housing development within the meaning of Government Code Section 65583(a)(4). As one aspect of this review, an analysis was conducted related to the maximum achievable building envelope in the City's R2 District. The standard R2 lot in Santa Monica is 7,500 square feet, providing five dwelling units by right. When a developer proposes to include a low income unit as one of these five units, this triggers State and local density bonus provisions authorizing an increased density of 25 percent in addition to the five base units. Consequently, a total of seven units would be authorized on the site. However, HR&A's analysis demonstrated that under certain development scenarios the current building envelope and parking standards effectively limit the maximum achievable number of units below the number that are authorized. This analysis assumed a development comprised of six two bedroom market rate units of about 1,200 square feet, if apartments, or 1,400 square feet, of condominiums, and one low-income unit. The bedroom size and square footage assumptions were based on the typical development project in the City and HR&A's assessment that the average experienced developer would choose to not take advantage of the full density bonus, and therefore not develop all the units authorized. As a means of eliminating the potential constraint imposed on projects with State Density Bonus Units, the recently adopted 1998-2003 Housing Element includes policies recommending revisions to the development standards as necessary to accommodate the State Density Bonus Units. (See Attachment E.) Proposed Modifications The City enlisted the professional services of the following four architects to evaluate the existing development standards and propose modifications: William D. Brantley Architects; Kanner Architects; Koning Eizenberg Architecture; and Ralph Mechur Architects. These architects worked independently in developing their initial schematic designs for multifamily residential buildings to maximize the density permitted under existing zoning standards including State Density Bonus units. The architects and City staff then worked together to develop the proposed modifications to the development standards. The analyses concentrated on modifications to multifamily residential (R2, R3 and R4 Districts) development and parking standards which would facilitate utilization of the State Density Bonus provisions on a typical single lot (50' x 150'). The consultant architects assessed proposed changes to parking standards (e.g., parking stall size, deletion of the guest parking requirement) and/or the development envelope (e.g., larger lot coverage, reduced unexcavated side yards, third floor with additional setbacks) as applied to seven 2-bedroom units on a standard R-2 site (i.e., 5 by right, one of which is a low-income unit, and two density bonus units) The consultant architects also reviewed existing R3 and R4 zoning standards and prepared schematic designs similar to that prepared for the R2 scenario for a prototypical development on a R3 and R4 lot. Their analysis indicated that modifications are necessary in the R3 District. Revisions to the development standards affecting single lot sites in the R4 District were evaluated, but not developed further because of the limited number of sites involved. Attachment F provides a summary of the proposed modifications which are described below. Proposed Modifications to Building Envelope 0 Stories and Height. 0 No limit on the number of stories in projects which include State Density Bonus units. 0 Existing R2 height limit of 30 ft. be raised to 34 ft. (for walls and flat roofs), and the existing R3 height limit of 40 ft. be raised to 44 ft. 0 Additional Height Allowance to Accommodate Pitched Roofs and Mezzanines. 0 Maximum height for a curved or pitched roof to be 40 ft. with a provision that no portion of the building shall intersect a plane commencing at 34 ft in height at the minimum side yard setback and extending at a 20 degree angle from the vertical toward the interior of the site. 0 Setback any portion of the building above 34 ft. in height an additional 20 ft. from the front setback line. 0 No additional height for a pitched or curved roof is proposed for the R3 District. 0 Lot Coverage. 0 Increase maximum parcel coverage from 50% to 60% by right for all projects with State Density Bonus units in the R2 and R3 Districts. 0 Apply this provision to 100% affordable projects in these zones. 0 Side yard Setbacks. 0 Allow the side yards for lots with widths between 50 and 75 feet to be combined and distributed unevenly along either side, with an absolute minimum and a combined minimum equal to that currently required. 0 Upper Level Stepbacks. 0 Require that the building be set back at the upper levels to a minimum which is equal to half the total side yard requirement. 0 No portion of the building be allowed to cantilever over the ground floor, except within the rear yard. 0 Parking Requirements 0 Eliminate requirement for guest parking spaces for projects in the R2 District which include State Density Bonus units. Housing Commission Review of Modifications to Development Standards The Housing Commission reviewed the proposed modifications to the residential development standards at a public hearing on February 19, 1998. The Housing Commission supports the proposed modifications as presented by staff and suggested that staff continue to educate community members concerning these proposed modifications. In response a public workshop was held as further described below. Planning Commission Review of Modifications to Development Standards The Planning Commission reviewed the proposed modifications to the residential development standards at a public hearing on February 25, 1998. The Commission considered the comments of the Housing Commission and public testimony in their deliberations and recommend that the modifications to the development standards be considered by the City Council as presented by staff. The Planning Commission also recommended that a public workshop be held to respond to public inquiries and to allow additional public input on this and other related Housing Element issues. The Public Workshop was held on March 26, 1998 and was attended by approximately forty people. Questions and issues raised at the workshop are summarized in Attachment G. AFFORDABLE HOUSING PROGRAM UPDATED "CONSTRAINTS" AND "NEXUS" STUDY FINDINGS The City has retained Hamilton, Rabinovitz & Alschuler (HR&A) to update the Constraints Analysis and Nexus Study (see Attachments I and J) . The update included a review of condominium project characteristics based on 30 new condominium projects submitted to the City during late 1998 and early 1999, recalculation of the "constraints" threshold and affordable housing fee for condominiums, and proposal of an alternative fee formula for condominiums. HR&A's findings are summarized below. Changed Market Conditions - Sa/e Prices for Newly Constructed Condominiums Have Increased Significantly During the Past Two Years. The increases range from a low of 13 percent on the south side of the City to a high of 46 percent in the Mid-City area. North of Wilshire, where the highest average prices are found, the increase was 33 percent. - Competition to Purchase New Apartment Buildings and General lmprovement in the Rea/ Estate Market Have Significantly Increased Land Costs for Multi-Family Development. Estimates derived from closed sales of condominium projects built since 1990 indicate that land values have increased over 20% since 1997. - An Increase in the General Volume of Construction Activity, and Recent Changes in Building Codes, Have Caused an Increase in Condominium Project Construction Costs. Hard construction costs are up about 15% over the last two years. Implications for Condominium Project Feasibility - The New Balance Between Higher Sa/e Prices and Higher Costs Renders New, Small Condominium Projects in Higher Cost Areas of the City Feasible. But, They Remain Infeasible for Large Projects and Projects in Lower Cost Areas. Using the rate of return and gross margin threshold employed in previous HR&A analyses, only one prototype appears to be "feasible". This is the prototype (five units in a higher cost area) that predominates among the 30 new condominium projects submitted to the City during late 1998 and early 1999. - Feasible New Condominium Projects Can Now Support a Higher Affordable Housing Fee Without Acting as a"Constraint". Using the analysis approach employed in the Housing Element Update, and related work, the prototypical condominium projects charging prices that render the project "feasible" can sustain a fee in the range of up to $16, depending on the prototype. For the one prototype that is feasible today (five units on a higher cost area), the permissible range is up to $12 per square foot. Recommendation for an Updated Affordable Housing Fee - A Recalculation Using the 1998 Nexus Study Approach Results in a New Affordable Housing Fee of $11.01 Per Square Foot for New Condominiums. This represents a simple average between values that define a range of typical circumstances. The revised fee generally falls within the upper limit of the range that would avoid imposing a"constraint" on new condominium development. The new fee is 54 percent higher than the original fee estimate prepared in 1998. The increase is due to higher household income needed to afford more costly units, and the greater need for housing affordable to workers whose labor demand is implied by household spending. The increase also reflects a 20 percent increase in the City's subsidy cost to produce affordable housing, which is due primarily to the same higher land and construction costs that affect market rate development. The City asked HR&A to consider the feasibility of another approach to calculating the affordable housing fee for condominiums based on a percentage of sales price. The HR&A analysis contained in Attachment J explores this alternative and concludes that a fee based on 3.5 percent of the sales price might be a more market sensitive fee calculation approach. The City of Palo Alto has used a similar approach for over two decades. However, City staff has not yet fully evaluated this approach. The City Council may wish to direct staff to evaluate this option and return with conclusions and a recommendation. In summary, staff currently recommends adoption of the higher affordable housing condominium fee of $11.01 per square foot which is based on a per square foot methodology. If City Council wishes to pursue an alternative methodology based on the sales price approach, City Council may direct staff to research this option and return with further recommendations in the future. CONCLUSION The purpose of the proposed emergency interim ordinance is to eliminate the conditional use permit procedure for condominiums and implement a more appropriate permit procedure and to implement a construction rate management program to ensure that the adverse physical impacts of development within the City's multi-family residential districts are minimized. The emergency interim ordinance is necessary because it allows for the elimination of a discretionary review procedure that focuses on the land use where such multi-family uses are permitted by right and allows for an appropriate level of discretionary review by the Planning Commission by establishing a new permit procedure. The emergency interim ordinance is necessary because approval of development incompatible with the standards of this interim ordinance would result in a threat to public health, safety, or welfare. BUDGET/FINANCIAL IMPACT The recommendation presented in this report will have no budget or financial impacts. RECOMMENDATION It is respectfully recommended that the City Council take the following actions: 1. Enact the attached emergency interim ordinance establishing and requiring a Design Compatibility Permit for multi-family residential condominiums, and enacting a construction rate program within the City's multi-family residential districts for a period up to and including April 21, 2000. 2. Review the proposed modifications to the R2 and R3 development standards for projects with State Density Bonus Units and direct staff to prepare a Resolution of Intention to amend the zoning ordinance in accordance with the recommendations. 3. Review the analysis of AB438 and direct staff to prepare the 1998-2005 Housing Element Update in accord with the analysis. 4. Approve the Resolution supporting of Assembly Bill 1744 and direct staff to transmit said Resolution to the Southern California Association of Governments and to State legislators. 5. Review the updated Affordable Housing Production Program fee analyses and direct staff to prepare a fee resolution to reflect the conclusions of the fee analyses. Prepared by: Suzanne Frick, Director Jay M. Trevino, AICP, Planning Manager Susan Healy Keene, AICP, Acting Senior Planner Laura Beck, AICP, Associate Planner Art Bashmakian, Associate Planner Planning and Community Development Department Jeff Mathieu, Director Bob Moncrief, Housing Manager Tad Read, Housing Coordinator Ellen Alderman Comis, Senior Administrative Analyst Resource Management Department Attachment A: Proposed Emergency Interim Ordinance B: Review of AB 438 Options C: Resolution of Support for AB1744 D: Analysis of Construction Rate Program Alternatives E: Housing Element Policies F: Summary of Proposed R2 and R3 Modifications G: Comments from 3/26/98 Residential Development Standards Workshops H: Notice of Public Hearing I: Constraints Analysis and Nexus Study; Condominium Review B: Constraints Analysis and Nexus Study; Update ATTACHMENTI Electronic version of attachment is not available for review. Document is available for review at the City Clerk's Office and the Libraries. ATTACHMENTJ Electronic version of attachment is not available for review. Document is available for review at the City Clerk's Office and the Libraries.