SR-407-000-03 (3)
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F:\HOUSING\SHARE\Word\Staff Reports\Amend Ord 1918 Admin Guidlines.doc
Council Meeting: December 11, 2001 Santa Monica, California
To: Mayor and City Council
From: City Staff
Subject: Amendment to the Administrative Guidelines for the Affordable Housing
Production Program Regarding Concurrent Development of Market Rate
Housing Units and their Corresponding Off-Site Affordable Housing Units
INTRODUCTION
This report recommends that the City Council approve an amendment to the Administrative
Guidelines for the Affordable Housing Production Program (“Program”) that extends the
time period during which off-site affordable housing units, built in conjunction with market
rate housing units, may be completed.
BACKGROUND
On July 21, 1998 the City Council adopted Ordinance 1918, creating the Affordable
Housing Production Program (codified as Chapter 9.56 of the Santa Monica Municipal
Code). On October 5, 1999 the City Council adopted the Administrative Guidelines for the
Affordable Housing Production Program (“Administrative Guidelines) establishing
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administrative rules and regulations for the Program.
The Program provides several options for satisfying the Citys affordable housing
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obligation, including constructing affordable units on a site other than the site of the market
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rate housing project (i.e. off-site units). Section 9.56.050(c) of the Municipal Code
requires that: All {off-site} affordable housing units in a multi-family project or a phase of a
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multi-family project shall be constructed concurrently with the construction of the market
rate units in the multi-family project or phase of that project.
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To implement and further define Section 9.56.050(c) of the Municipal Code, Section 4(D)
of the Administrative Guidelines states that,
“Construction of the Off-Site Affordable Units shall precede or commence at
the same time as construction of the market rate units. No final City
construction permit sign-off or occupancy permit shall be granted for the
market rate units until a final construction permit sign off or occupancy permit
has been granted for the Off-Site Affordable Units. Off -Site Affordable Units
shall be offered for rent or sale, as applicable, prior to or concurrently with
rental or sale of the market rate units.
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DISCUSSION
There is a project currently pending Planning Commission approval in which the developer
desires to build off-site affordable units to satisfy his affordable housing obligation, but will
not be able to complete them prior to their corresponding market rate units. Staff believes
that the creation of affordable units by developers may often be of greater value to the City
than receipt of affordable housing fees. Further, staff believes that it should be the
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objective of the Affordable Housing Production Program to facilitate the construction of
affordable units. Accordingly, staff recommends that Section 4 (D) of the Administrative
Guidelines regarding off-site units be amended as follows:
All affordable housing units in a multi-family project or a phase of a multi-
family project shall be constructed concurrently with the construction of
market rate units in the multi-family project or phase of that project. No final
City construction permit sign-off or occupancy permit shall be granted for the
market rate units until either:
1) A final construction permit sign-off or occupancy permit has
been granted for the Off-Site Affordable Units. Off-Site
Affordable Units shall be offered for rent or sale, as applicable,
prior to or concurrently with rental or sale of the market rate
units; or,
2) All of the following conditions have been met: i) the Off-Site
Affordable Units have been issued a building permit; ii) all
equipment and facilities necessary to commence construction
of the Off-Site Affordable Units have been mobilized on site
and construction has commenced; and, iii) the developer
provides the City with an irrevocable letter of credit or similar
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financial instrument deemed acceptable by the City in an
amount at least equal to the in-lieu fee that would otherwise be
required to meet the obligation for the market rate project(s),
plus advance interest on that amount equal to the most recent
yield listed in the City Treasurer's Monthly Cash and
Investments Report. If the off-site affordable housing units are
not issued a final City construction permit sign-off or
occupancy permit within 18 months of a final City construction
permit sign-off or occupancy permit for the market rate units
which produced the affordable housing obligation, the letter of
credit or other approved financial instrument shall contain a
provision allowing the City, in its discretion, to draw down on
the letter of credit (i.e. convert the letter of credit to cash). The
City Manager shall have the discretion to extend the 18 month
period by not more than an additional 6 months.
The amended language requires that construction begin on any off-site affordable project
prior to the final City building permit sign-off of its corresponding market rate project. The
amended language also requires completion of the off-site affordable project within 18
months of completion of the market rate project. Finally, the amended language includes a
guarantee that if the developer is unable to complete the construction of the off-site
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affordable project within the 18 month time period, the City still collects the applicable
Program fee (via the letter of credit) plus interest.
BUDGETARY IMPACT
There is no budget/financial impact.
RECOMMENDATION
It is recommended that the City Council approve the proposed amendment to Section 4(D)
of the Administrative Guidelines to extend the time period during which off-site affordable
housing units, built in conjunction with market rate housing units, may be completed.
Prepared by: Jeff Mathieu, Director of Resource Management
Bob Moncrief, Housing and Redevelopment Manager
Tad Read, Housing Coordinator
Jim Kemper, Senior Administrative Analyst
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