SR-407-000-05 (4)
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City Council Meeting 1-14-86
Santa Monica, California
STAFF REPORT
TO:
Mayor and City Council
FROM:
City Attorney
SUBJECT:
Ordinance Establishing In-Lieu Fee Option
For Certain Programs of the Housing Element
and Land Use and Circulation Elements
At its meeting on March 26, 1985, the city Council directed
the City Attorney to prepare an ordinance providing for fees in
lieu of on-site inclusionary housing units for small-scale
residential projects.
In addition, on November 12, 1985, the
City council directed the City Attorney to prepare an ordinance
providing fees in lieu of project mitigation measures under the
Land Use and circulation Element of the General Plan. In
response to this direction, the accompanying ordinance was
prepared and presented to the City Council for consideration at
its November 26, 1985, meeting. At its meeting on November 26,
1985, the City Council continued consideration of the ordinance
to its first meeting in January, 1986.
At the present time I the City has been enforcing these
General Plan obligations by requiring the actual construction of
units or dedication of park lands in the specific manner detailed
in the General Plan elements.
(In connection with office
development mi tigation measures under the Land Use and
Circulation Elements, the planning commission has authorized
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developers to contract with non-profit corporations to satisfy
the mitigation measures.)
No mechanism currently exists for
satisfying these requirements by payment of fees to the city.
The amount of the in-lieu fees for inclusionary housing has
been calculated by the community and Economic Development
Department.
The fee was calculated by determining the current
market costs for land and construction necessary for development
of affordable residential housing units.
The ability of
households to pay for this housing was based upon a standard
methodology which uses specific HUD income categories and assumes
that such households could pay at least 25% of their gross
household income for housing.
This ability to make a monthly
payment was amortized over a thirty year term to correspond to
typical long-term financing loans.
The in-lieu fee represents
the difference between the current value of this projected
ability to pay and the actual costs of constructing the housing.
Program 12 of the Housing Element provides that the
inclusionary housing program should provide housing that is
affordable to households from 0% to 120% of median income ranges.
The proposed in-lieu fee was calculated on the basis of providing
housing affordable to households at 100% of median income. This
figure was selected because it is a reasonable midpoint for
developing a blend of housing Which would be affordable across
the low to moderate income spectrum.
The amount and method of payment of the in-lieu fees for
office development is based precisely on the terms and conditions
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set forth in the Land Use and Circulation Elements,which permits
office developers to satisfy the project mitigation program by
payment of in-lieu fees.
The following is a section by section analysis of the
proposed ordinance:
$ection 1. This section provides that market-rate housing
projects of between 3 and 9 units may satisfy Program 12 of the
Housing Element by paying a specific in-lieu fee. The amount of
the fee is $62,292.00 for projects of 3-5 units and $124,585 for
projects of 6-9 units. The amount of the fee must be adjusted
for inflation by the percentage change in the CPI between the
date of the adoption of this ordinance and the date of payment.
The payment is due in full prior to the issuance of a Certificate
of Occupancy for the project.
Payment must be secured by
delivering an irrevocable letter of credit to the city before a
building permit is issued.
section 2.
This section provides that new office
developments which are SUbject to the project Mitigation Program
of the Land Use Element may provide a fee in-lieu of the housing
and park obligations. The fee is based on a formula set forth in
the Land Use Element which is calculated based upon $2.25 for the
first 15,000 square feet of net rentable square footage and $5.00
for the remainder of the net rentable square footage.The fee is
based upon land and construction cost estimates as of the date
the Land Use Element was adopted in October, 1984. As a result,
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these fees must be adjusted by inflation to reflect intervening
changes in costs.
At least 25% of the fee is due prior to the certificate of
Occupancy with the balance due in equal annual installments
within 3 years of the issuance of the Certificate of Occupancy.
The fee must be secured by an irrevocable letter of credit which
must be filed with the city before a building permit will issue
for the project.
Section 3, 4 and 5. These sections are standard provisions
in all ordinances adopted by the City.
RECOMMENDATION
It is respectfully recommended that the attached ordinance
be introduced for first reading.
PREPARED BY:
Robert M. Myers, city Attorney
Jonathan S. Horne, Deputy city Attorney
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CA:RMM:JSH:jhord2d
City Council Meeting 1-14-86
Santa Monica, California
ORDINANCE NUMBER
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA ESTABLISHING
IN-LIEU FEES FOR COMPLIANCE WITH
CERTAIN PROGRAMS OF THE HOUSING ELEMENT AND
LAND USE AND CIRCULATION ELEMENTS
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS
FOLLOWS:
SECTION 1. In-Lieu Fees For Inclusionary Housinq.
(a) Whenever the City requires as a condition of
approval of a market-rate housing development of between three
units and nine units, inclusive, that the development include
inclusionary housing units pursuant to Program 12 of the Housing
Element of the General Plan, the developer may in lieu of
providing such inclusionary housing pay a fee to the city in
accordance with the provisions of this Section.
(b) The amount of the fee pursuant to this section
shall be determined as follows: $62,292.00 for proj ects of 3-5
units and $124,585.00 for projects of 6-9 units. Project size
does not include any density bonus provided pursuant to
Government Code section 65915.
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(c) Any fee pursuant to this section shall be adjusted
for inflation by the percentage change in the Consumer Price
Index ("CPI") between January, 1986 through the month in which
payment is made. For purposes of this section, CPI shall mean
the index for Urban Wage Earners and Clerical Workers for the Los
Angeles/Long Beach statistical area, as published by the united
States Department of Labor, Bureau of Labor Statistics.
(d) Any fee pursuant to this section shall be paid in
full before a Certificate of Occupancy is issued for the housing
project.
(e) Any fee required by this section shall be secured
by execution of an irrevocable letter of credit in favor of the
City or other security acceptable to the City for the total
amount of the obligation. The letter of credit or other
acceptable security shall be delivered to the City prior to the
issuance of a building permit for the development.
(f) Any payment made pursuant to this Section shall be
deposited in a Reserve Account in the General Fund to be used
only for development of low and moderate income housing.
(g) This Section shall not apply to any housing
development for which an agreement has been executed between the
city and developer to provide for the inclusionary unit on-site.
SECTION 2. In-Lieu Fees for Office Development.
(a) Whenever the city requires as a condition of
approval for the development of any general office development,
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including medical office buildings, in excess of 15,000 square
feet of new construction or 10,000 square feet of additions to
existing development, that such development satisfy the Project
Mitigation Measures of the Land Use and Circulation Elements of
the General Plan, the developer may satisfy this requirement by
payment of a lieu fee to the City in accordance with the
provisions of this section.
(b) The amount of the fee pursuant to this Section
shall be determined as follows: $2.25 per square foot for the
first 15,000 square feet of net rental square footage and $5.00
per square foot for the remainder of the net rentable square
footage. The net rentable square footage of a building shall be
the total square footage of the projects minus the exterior and
load bearing walls, elevator shafts, stairwells, equipment rooms,
and parking.
(c) Any fee pursuant to this section shall be adjusted
for inflation by the percentage change in the Consumer Price
Index ("CPI") between October, 1984 through the month in which
payment is made. For purposes of this section, CPI shall mean
the index for Urban Wage Earners and Clerical Workers for the Los
Angeles/Long Beach statistical area, as published by the United
states Department of Labor, Bureau of Labor Statistics.
(d) Any payment required by this Section shall be made
by payment of at least twenty-five percent (25%) of the total
Obligation prior to the issuance of a Certificate of occupany for
the development. The balance of the fee is due in equal annual
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installments with payment in full no later than three years after
the issuance of the Certificate of Occupancy. All payments are
subject to the adjustment for inflation as provided in subsection
(c) .
(e) Any fee required by this section shall be secured
by execution of an irrevocable letter of credit or other form of
security acceptable to the City in favor of the City for the full
amount of the obligation. The letter of credit or other
acceptable security shall be delivered to the City prior to the
issuance of a building permit for the development.
(f) Seventy-two percent of each payment made pursuant
to this section shall be deposited in a Reserve Account in the
General Fund to be used exclusively to develop low and moderate
income housing and twenty-eight percent of each payment made
pursuant to this Section shall be deposited in a Reserve Account
in the General Fund to be used exclusively for park acquisition
and development.
(g) This Section shall not apply to any office
development for which the City has approved an agreement between
the developer and a non-profit corporation to satisfy the project
mitigation measures of the Land Use and Circulation Elements.
SECTION 3. Inconsistent provisions. Any provision of the
Municipal Code or appendices thereto inconsistent with the
provisions of this ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to
that extent necessary to effect the provisions of this ordinance.
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SECTION 4 .
Severability.
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 the ordinance.
The City
council hereby declares that it would have passed this ordinance
and each and every section, subsection, sentence, clause or
phrase not declared invalid or unconstitutional without regard to
whether any portion of the ordinance would be subsequently
declared invalid or unconstitutional.
SECTION 5. Execution. The Mayor shall sign and the City
Clerk shall cause the same to be published once in the official
newspaper within 15 days after its adoption. The ordinance shall
become effective 30 days from its adoption.
APPROVED AS TO FORM:
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ROBERT M. MYERS
city Attorney
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