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SR-407-000-07 (3) .. . . if ().., ~OOO-{J 7- i-C rr-,..,., .A .. 4r:.",,^ t-L. LJ --l- V i.......,V CA:RMM:11480/hpc city Council Meeting 2-13-90 Santa Monica, callt~rki~ 1990 STAFF REPORT TO: Mayor and City Council FROM: City Attorney SUBJECT: Ordinance Implementing Policy 45 of the City's Draft Local Coastal Program Establishing Mitigation Fees for the Removal of Low Cost Lodging Accommoda- tions in the Santa Monica Coastal Zone At its December 12, 1989 meeting, the City Council directed the City Attorney to prepare an ordinance establishing a fee to mitigate the loss of affordable hotel and motel rooms within the Coastal Zone, as required by the city's Draft Local Coastal Program. The City Council directed that a hardship provision be drafted which would allow for the exemption of certain properties from the ordinance upon a Showing of uninhabitability and irreparability of the accommodations sought to be demolished. The city Council, however, asked for staff analysis regarding the appropriateness and feasibility of such a provision. The accompanying ordinance has been prepared pursuant to that direction. It is staff's opinion that a hardship provision should not be included in the proposed Ordinance. Its existence will operate as a disincentive for maintenance of low cost accommodations until such time as it is opportune to redevelop or sell such properties. The hardship provision also serves, in ~-c - 1 - ;~B 1 J ITIO ~n:~, ry f\ 'AU . . effect, to reward past neglect of maintenance needs of low cost lodging accommodations. Should the city council determine that a hardship provision is appropriate, the following language should be inserted as Section 8 of the Ordinance and all subsequent sections of the proposed Ordinance should be re-numbered: SECTION 8. Hardship Exemption. (a) Any person claiming a hardship exemption from this Ordinance must substantiate the claims in a proceeding under this Section. In such a proceeding, the person seeking the hardship exemption shall have the burden of proof. (b) Claims of hardship shall be determined by the city Council. Claims shall be filed on a form approved by the ci ty Attorney. The Ci ty Council shall, within sixty (60) days of the date of filing of a claim, hear and determine whether to grant or deny the claim. Decisions of the City council shall be reviewable by writ of mandate, subject to the ninety (90) day time limitation set forth in Santa Monica Municipal Code section 1400. (c) In order to obtain a hardship exemption, the claimant must show each of the following: (1) That a reasonable economic return will be denied unless removal of the existing units is accomplished. - 2 - . . (2) That the proposed replacement project will not generate a reasonable economic return upon application of this Ordinance where such project would otherwise generate such a return. (d) The City shall retain the services of a professional appraiser and cost analyst in order to evaluate an applicant's claim of hardship. The reasonable cost of such services shall be paid by the applicant. SECTION-BY-SECTION ANALYSIS Section 1. This section sets forth the findings which support the low cost accommodation mitigation fee established by the ordinance. section 2. This section sets forth definitions of certain terms as they are used in the ordinance. section 3. This section establishes that no low cost lodging accommodations in the Coastal Zone shall be permitted to be removed unless the person seeking to do so has complied with the mitigation fee requirements of the ordinance. section 4. This section establishes the applicability of the ordinance to any development activity in the Coastal Zone from which low cost lodging accommodations are to be removed. section 5. This section establishes the mitigation fee at eight thousand dollars ($8,000.00) per low cost lodging unit removed. This section also requires that any fee payment be adjusted for inflation. - 3 - . . section 6. This section requires any person who is required to pay a fee pursuant to this ordinance to enter into a compliance agreement with the city. The agreement shall require that at least fifty percent of the fee be paid prior to issuance of a demolition or building permit and that the balance be paid prior to issuance of a certificate of occupancy for the new development. The compliance agreement will create a lien on the property and shall be recorded. section 7. This section requires that all fees collected pursuant to this ordinance shall be deposited in a separate account from the general fund account and shall be used solely for development of low cost lodging accommodations. Section 8. This section states that none of the provisions in this ordinance are intended to supersede other City ordinances or regulations. Sections 9, 10, 11. These sections are the standard sections that are contained in all ordinances. RECOMMENDATION It is respectfully recommended that the accompanying ordinance be introduced for first reading after deleting section 8 and re-numbering all subsequent Sections. PREPARED BY: Robert M. Myers, City Attorney Laurie Lieberman, Deputy City Attorney - 4 - . . CA:RMM:lld5BOjhpc City Council Meeting 2-13-90 Santa Monica, California ORDINANCE NUMBER (city council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA IMPLEMENTING POLICY 45 OF THE CITY OF SANTA MONICA DRAFT LOCAL COASTAL PROGRAM ESTABLISHING MITIGATION FEES FOR THE REMOVAL OF LOW COST LODGING ACCOMMODATIONS IN THE SANTA MONICA COASTAL ZONE THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS: SECTION 1. Findinqs and Purpose. The city Council finds and declares: (a) In recent years, there has been a significant shift in the development of visitor accommodations within the Santa Monica Coastal Zone from low cost lodging accommodations to luxury lodging accommodations. Since 1984, six luxury hotels containing 1,109 rooms have received City approvals within the Coastal Zone while no new low cost rooms have been proposed in this area. (b) The City of Santa Monica has experienced a significant reduction in the number of low cost lodging accommodations due to demolition and conversion of existing units and construction of office development and luxury lodging accommodations. Since 1984, approximately 355 low cost rooms in the Coastal Zone have been demolished and not replaced, representing a loss of forty-five percent (45%) of the low cost rooms existing in the Coastal Zone as of 1984. - 1 - . . (c) The vast majority of visitor accommodations in the Coastal Zone removed from the market due to demolltion are low cost lodging accommodations. (d) The demolition of low cost lodging accommodations in combination with the replacement by, and new construction of, luxury lodging accommodations has altered the balance and has contributed to the scarcity of affordable visitor accommodations ln the City. Only fifteen percent (15%) of the total hotel-motel accommodations which will exist in the Coastal Zone once the new City-approved accommodations are completed, will be low cost accommodations. (e) Policy 45 of the Draft Local Coastal Program provides for a mitigation fee where new development removes low cost lodging accommodations. (f) Pursuant to the police power, the City has the authority to address both the imbalance created by the removal of existing low cost lodging accommodations and the overall need for affordable visitor accommodations in the city. (g) The purpose of this Ordinance is to reduce the negative impact on affordable visitor accommodations caused by new commercial and new hotel and motel development which requires demolition of existing visitor accommodations. (h) New commercial and new hotel and motel development which requires demolition of existing low cost lodging accommodations is generating a reduction in the City's affordable visitor accommodations, and increases the imbalance between coastal activities and affordable visitor accommodations in the city. - 2 - . . (i) The City has a continuing need for low cost visitor accommodations and such need is exacerbated by the demolition and conversion of such units and construction of new commercial developments. (j) Any fees collected pursuant to this Ordinance shall be used only to finance the construction of low cost lodging accommodations. (k) The fee requirements of this Ordinance will help diminish the overall loss of low cost lodging accommodations ln the city and to mitigate the adverse consequences of removal of low cost lodging accommodations in the coastal Zone. (1) The facts and evidence presented in the Draft Local Coastal Program dated October, 1989, in the "Santa Monica Coastal Zone Motel and Hotel Room Survey" prepared by Willdan Associates, dated January 18, 1990, and in the California Coastal Act of 1976, establish that there is a reasonable relationship between the need for the replacement of low cost visitor accommodatlons which is removed by demolition and the fee established by this Ordinance, and also that there is a reasonable relationship between the use of the fee and the type of development for which the fee is charged. (m) The fees required by this ordinance do not exceed the reasonable costs of constructing replacement units as demonstrated by the "Evaluation of Financial Assistance Requirements for the City of Santa Monica's overnight Affordable Accommodations program," a studied prepared by Natelson Levander Whitney, Inc., dated December 11, 1989. - 3 - . . SECTION 2. Definitions. The following words or phrases as used in this Ordinance shall have the following meanings: (a) Fee. A fee paid to the city by a developer pursuant to this Ordinance to mitigate the removal of low cost lodging accommodations. (b) Low Cost Lodqinq Accommodation. Any hotel or motel unit designed, occupied, or intended for occupancy, as a temporary lodging place for individuals for less than thirty (30) consecutive calendar days for which the room rate was Eighty Dollars ($80.00) or less as of December 12, 1989, or as of the last day of operation if the hotel or motel was not in operation as of that date. (c) Remove or Removal. The demolition of low cost lodging accommodations or the conversion of such units to other use. (d) Santa Monica Coastal Zone. The approximately 1. 5 square miles bounded on the west by the Pacific ocean, on the south by the Ci ty I s southern boundary, on the east by Lincoln Boulevard south of pico Boulevard, and by 4th street north of pica Boulevard as far north as San Vicente Boulevard. Along the San Vicente Boulevard centerline, the boundary goes inland to 7th street to the northern city boundary. (e) Site. One or more contiguous parcels under common ownership which have been used, developed, or built upon as a unit. - 4 - . . SECTION 3. Mitiqation Fee Requirement. (a) No person shall remove low cost lodging accommodations in the Santa Monica Coastal Zone unless the person has complied with the provisions of this Ordinance. (b) No permit, license, or other approval shall be issued or granted by the city for the development or use of any property from which any low cost lodging accommodations have been removed until the person seeking the license, permit, or other approval has complied with this Ordinance. SECTION 4. Applicability. This Ordinance shall apply to: (a) Any development, project, or other activity involving the removal of any low cost lodging accommodations in the Santa Monica Coastal Zone. For purposes of this Ordinance, development, project, or other activity shall include the creation of a parking lot, open space, or vacant land on a site previously occupied by low cost lodging accommodations. (b) Any site located in the Santa Monica Coastal Zone from which the removal of low cost lodging accommodations has b~en approved and as to which a condition requiring the payment of a mitigation fee has been imposed by the California Coastal Commission. SECTION 5. Fee. (a) The low cost lodging mitigation fee required by this Ordinance shall be satisfied by payment of a fee to the city in the amount required by this Section. (b) The amount of fee required pursuant to this Section shall be based on the number of units to be removed. For each - 5 - . . low cost lodging unit removed, a fee of Eight Thousand Dollars ($8,000.00) shall be required. (c) Any fee payment required pursuant to this section shall be adjusted for inflation by the percentage change in the Consumer Price Index ("CPI") multiplied by .65 plus the percentage change in land cost multiplied by .35 between the date of adoption of this Ordinance through the month in which payment 1S made. (1) For purposes of this Section, cpr shall mean the index for Urban Wage Earners and Clerical Workers for the Los Angeles/Long Beach/Anaheim statistical area, as published by the United states Department of Labor, Bureau of Labor statistics. (2) For purposes of this Section, "land cost" shall mean the average purchase price per square foot for commercially zoned property, as determined through an independent survey performed for the Community and Economic Development Department by a qualified real estate consultant and adjusted on an annual basis. SECTION 6. payment of Fee. (a) At the time of application for a demolition permit or other approval necessary for the removal of low cost lodging accommodations located in the Santa Monica Coastal Zone, the developer shall enter into a compliance agreement for payment of the fee in accordance with the provisions of this Section. (b) The compliance agreement shall contain the following requirements: - 6 - . . (1) At least fifty percent (50%) of the fee shall be paid prior to issuance of a demolition or building permit for a project on the site. (2) The balance of the fee shall be paid prior to issuance of the certificate of occupancy for any development or conversion on the subject site. If no certificate of occupancy is required for the conversion or other new activity on the sUbJect site, the balance of the fee shall be due upon cOInmencement of the new activity or within one year, whichever occurs sooner. (3) The agreement shall create a lien on the property which shall be binding on the developer and any successor of the developer, including any person acquiring an interest in the property by foreclosure, trust sale, or other proceeding. (4) Payments shall be adjusted annually for inflation pursuant to Section 5. (5) The compliance agreement shall be recorded. (6) Such other provisions as are reasonably deemed necessary by the City to ensure payment of the fees required by this Ordinance. (c) The fee required by this Ordinance shall not become effective until sixty (60) days from its adoption, pursuant to Government Code Section 65962(a). SECTION 7. pursuant to this Account separate Deposit and Use Ordinance shall from the General of Fee. Any payment made be deposited in a Reserve Fund to be used only for - 7 - . . development of low cost lodging accommodations in the Santa Monica Coastal Zone. Any interest income earned by monies in such account shall be expended only for development of low cost lodging accommodations in the Santa Monica Coastal Zone. SECTION 8. Applicabili ty of other City Ordinances and Regulations. None of the provisions in this Ordinance are intended to supersede any provisions of the City Charter, ordinances, regulations, or resolutions concerning demolition of residential housing, relocation of displaced tenants, rent control removal within fifteen (15) days after its adoption. SECTION 9. 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, are hereby repealed or modified to that extent necessary to affect the provisions of this Ordinance. SECTION 10. 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 any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this 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. - 8 - . . ~ SECTION ll. 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 30 days from the date of its adoption. APPROVED AS TO FORM: ~ w.... ~ ROBERT M. MYERS U City Attorney - 9 -