SR-407-000-05 (5)
, of
e
'10;?--ttJoo--os
e
\(-G
NOV 2 6 \9S5
CA:RMM:JSH:jhord2ds
city Council Meeting 11-26-85
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 l2, 1985, the
City Council directed the City Attorney to prepare an ordinance
providing fees in lieu of project mitigation measures under the
Land Cse and Circulation Element of the General Plan. In
response to this direction, the accompanying ordinance has been
prepared and is presented for City Council consideration.
At the present time, 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 mitigation
measures
unde:::-
the
Land
wse
and
Clrculation Elements, the Plannlng Commission has authorized
developers to contract '....ith non-profit corporations to satisfy
the mltigation measures.)
No mechanism currently exists for
satlsfying these requirements by payment of fees to the City.
9.c..
NOV 2 6 1995
- 1 -
... ...... -
~ '
It e
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
offlce development is based precisely on the terms and conditions
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.
- 2 -
............ -
~ ,
e
following is
e
a section by section analysis of the
The
proposed ordinance:
section 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 cpr 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 s~~are footage and $5.00
for the remainder of the net rentable square footage.The fee is
based upon land and constructlon cost esti~ates as of the date
the Land Use Element was adopted in October, 1984. As a result,
these fees must be adjusted by inflation to reflect intervening
changes in costs.
At least 25% of the fee is due prior to the ce~tificate of
Occupancy with the balance due in equal annual installments
- 3 -
. -~
e e
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
- 4 -
. ~ ,
. . +
e
e
CA:RMM:JSH:jhord2d
city council Meeting 11-26-85
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 conditlon 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 thlS Section.
(b)
The amount of the fee pursuant
.... .....,.
1..0 I..nlS
Section
shall be determined as follows: $ 6 2,292 .00 for pro] ects 0 f 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.
- 1 -
~ - ,
e e
(c) Any fee pursuant to this section shall be adjusted
. . '"
for inflation by the percentage change in the Consumer Price
Index ( II CPI II ) 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
C~ty and developer to provide for the inclusionary unit on-site.
SECTION 2. In-Lieu Fees for Offlce Develocment.
(a) Whenever the city requires as a condition of
approval for the development of any general office development,
- 2 -
.
, ..
e -
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
Sta~es Department of Labor, Bureau of Labor Statistics.
Cd) Any payment required by this Section shall be made
by payment of at least twenty-five percent (25%) of the total
obllgation prior to the issuance of a Certificate of Occupany for
the development. The balance of the fee is due in equal annual
- 3 -
. ,~
_.. i
e
installments with payment in full no later than three years after
e
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 permlt 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 Clty has approved an agreement between
the developer and a non-proflt corporation to satisfy the project
mitigation measures of the Land Use and Circulatlon Elements.
SECTION 3. Inconsistent Provisions. Any provlsion 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.
- 4 -
- ..... #
e
SECTION 4. Severability.
e
I f 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:
rL..,~ "'-- t I....--.- ~
ROBERT M. MYERS V
City Attorney
....
- 5 -
e
e
TRANSCRIPT OF NOVEMBER 26, 1985 ITEM 8-C
8-C: Ordinance for introduction and f1.rst read1.ng establish1.ng
in-lieu fee option for certain programs of the Housing Element
and Land Use and C1.rculation Elements.
Epste1.n: I rece1. ved numerous requests from interested parties
who would 11.ke to cont1nue thlS matter 1.n V1ew of the holiday
season and the full agenda it would be unrealistlc to contlnue it
to the 10th or the 17th, so I would move to cont1.nue the ltem to
the first meeting in January.
Reed: I would like to include 1n your motion for continuance a
referral to the Plann1ng Commission based on a request of the
Cha1r of that Commisslon.
Epstein: Of both parts of it?
Reed: Yes, of the whole ordlnance because they are already
review1.ng some aspects of this and would be happy to reVlew It.
Epsteln: Okay, but I would like it back the first meeting 1.n
January so if Planning Commls8ion can consider lt by then that8
flne. I would like at least the development fee part of it back
to us by the f1.rst meet1.ng 1.n January.
Reed: Okay, Mr. Epstelnts motion lS to defer Item 8-C until the
flrst meet1ng 1n January and to 1nc1ude 1n it a referral to the
Planning Commission advislng them of our schedule for the next
considerat1.on of the ordl.nance. That's the motion on the floor.
Epstein:
didn't.
I couldn't have put 1.t better myself, 1n fact, I
Reed: Rl.ght, that's one of my great skills rephras1.ng the
mot10ns.
H. Katz: Well, we have advertised this for a hear1.ng.
Reed: We do, and we have.
H. Katz: We have someone who wants to speak on it. I th1.nk 1t
18 important he be heard before we act on 1t.
Reed: A person who wishes to be heard. We have Mr. Phillip
Coombs seeklng to be heard on this item and you heard what the
Counell 1S considerlng dOlng, lS Mr. Coombs st1ll be present.
Now, do you des1re to be heard this moment, based on the fact
that we are about to refer this to this to the Planning
Comml.ssion and defer action on it unt1l the first meet1.ng in
January?
- 1 -
. .
e
e
Coombs: Yes.
Reed: Alrlght, name and address for the record please, you will
have flve ffilnutes.
Coombs: My name lS PhilllP Coombs, my address lS 2218 Maln
Street. The reason this lS lmportant to me is because I have got
a five unit condominium project that I just took before the
Plannlng Commisslon last week. I met with the City Planner back
10 May and discussed this proJect with them. At that tlme I was
told that lt would be approxlmately 6 months before the ordlnance
was brought up or resolved and I have waited my time for that and
come close but the two aren't quite meshlng so now I have got an
approval from the City Planning Commission for my project wlth
the lnclusJ.onary houslng unl t as a condJ. tion and I am in a
position now where I don't feel I can provide that unit I'm very
much concerned with providing in IJ.eu of fees and I am kJ.nd of in
a tough spot right now I would like to discuss other aspects of
that in lieu fee program dealing with costs but my real problem
right now lS time.
Reed: Mr. Zane do you have a questlon?
Zane: Well, I was gOlng to ask whether there remedies avallable,
for example, simply delay of approval is one optlon or the
Council could consider acting on a speciflc project ln
anticlpation.
Reed: My understanding of the current state of the law is that
the housing element and land use plan requlre the included units
to be on site and that there is no alternative to that
requJ.rement absent our adopting one, what 8-C 1S, part of 1 t
anyway, is that alternative, however, the Chalr of the Planning
Comm1ssion has communicated to me that they would like to have an
opportunity to be heard on th1S ordinance. They have th1S matter
of the included housing and the small projects under review at a
committee level of the commJ.SS10n and they feel that they would
llke to be a part of the process 1n a pos1tJ.ve way and give us
the benefit of their review and advlce and so that's why they
have asked for us to refer this to them, that does not help Mr.
Coombs at all and I am not sure there is any way to he Ip Mr.
Coombs. Mr. Myers.
Myers: The only way that I believe short of adopting this
ordinance that th1S gentleman can be helped would be for us to
add language to our standard deed restriction WhlCh isn't going
to be of any relevance until the project 1S actually constructed
to say that in....we wlll prepare the standard deed restriction
for Mr. Coombs to sl.gn, however, it will have a clause that in
lleu of performance under that agreement he can pay the in lieu
fee pursuant to any ordinance that's subsequently establlshed so
he can temporarily sa tlsfy the condJ. tlon and proceed with his
project and then pay the fee at a subsequent date.
- 2 -
e
e
A. Katz: So move.
H. Katz: I'll second lt, but I want to ask Mr. Coombs would that
be satlsfactory.
Coombs: That would be satlsfactory.
Zane: What we want to move lS for staff to develop a procedure
as suggested by the City Attorney. His project isn't before us
etc.
Reed: Alrlght, we have a motlon on the floor which 15 to defer
actlon on the ordinance ltself to refer it back to the Plannlng
Commlssion and now we have interest for another action by the
Councl1 so we wll1 have to flgure the rlght order to do this In.
Myers: ThlS person's project would not normally come back before
the Council because its been before the Plannlng Commlssion not
appealed to the City Council and the deed restriction 1S simply
an administratlve matter that our office does ln connection wlth
the Planning Department so if you want thlS new clause added I
would suggest that you direct us to add the clause and we wlll
just take care of it and you will never see the matter agaln.
Reed: Okay then we can make that direction to your offlce after
we dispose of Mr. Epstein's motlon.
Epstein: Well, I will make lt simple, I w1ll amend my motion if
the second concurs to dlrect the Clty Attorney to lnclude 1n deed
restrlctlons on these small houslng proJects, appropriate
language to allow applicants to benefit from the ordinance if it
is adopted next year. Plannlng Comm1ssion did do that on one
proJect.
Reed: Are we definlng small as 10 unlts or less for the purposes
of this lnter1ID procedure for the benefit of the C1ty Attorney.
Epsteln: Nine un1ts or less.
A. Katz: Could I ask a question or clar1f1catlon. What you are
bas1cally d01ng is making the ordlnance, 1f lt 1S passed,
retroactive?
H. Katz: That's r1ght.
Epste1n: W1th respect to projects
Reed: Only as they come through for now forward, right?
Zane: R1ght.
- 3 -
e
e
Reed: Until we adopt the ordinance, so that startlng with Mr.
Coombs proJect, startlng with whatever got approved at the
Plannlng Commission on Monday night, I guess to be fair.
Zane: And they are bas1cally tak1ng a risk that whatever 18
adopted is similar to what is before us now. They all need to
understand the caveat that all sorts of things could concelvable
happen in which case the 1ncluslonary requlrement would st1ll
apply.
Coombs: But I would be able to speak at that next hearing and
add my two cents to that hearing.
Reed: Yes, you may. Okay, now we have. Mr. Myers did you have
something else, alright, is there anyone else who would like to
add to this discussl.on. Mr. Jennings.
J ennlngs: Is it correct the way 1 t stands now for projects of
the size Mr. Coombs is talklng about they have to include a unit.
There is no buyout.
Reed: That is correct.
Myers: Under our current law a deed restr1ction is required to
provlde a unit on site pursuant to the Housing Element and
absence an ordinance a fee to the Clty is not posslble.
Reed: Okay, so the current law si tua tlon 1S clear and th1S
motion wlll make an adjustment to that s1tuatlon. Alright, then
everyone in favor of the motlon Mr. Epste1n made to defer the
ordinance, refer to the Plannlng Commission and authorize the
Ci ty Attorney which regard to the administrative procedure he
suggested, please say Aye.
All Aye
Reed: Thank you very much. Thank you for comlng Mr. Coombs.
- ~ -