SR-072308-1N~~~
~;tYO, City Council Report
Santa Monica
City Council Meeting: July 23, 2008
Agenda Item:
To: Mayor and City Council
From: Marsha Jones Moutrie, City Attorney
Subject: Resolution Automatically Adjusting the Affordable Housing Unit
Development Cost Pursuant to Municipal Code Section 9.56.070(c)
Recommended Action
Staff recommends that the City Council adopt the attached Resolution which would
automatically adjust the Affordable Housing Unit Development Cost for new market rate
apartments and condominiums. More specifically, the current Affordable .Housing Unit
Development Cost of $265,632 would be increased by $11,953, effective on October 1,
2008. The adjusted Affordable Housing Unit Development Cost would be $277,585.
Executive Summary
Santa Monica Municipal Code Section 9.56.070(c) provides that the Affordable Housing
Unit Development Cost shall be adjusted annually by resolution based on changes in
construction and land costs. On June 13, 2006, the City Council approved the
methodology for ascertaining changes in these costs and thereby for calculating the
adjustment. This _resolution has been prepared in accordance with the approved
methodology and is attached as Exhibit A.
Discussion
Santa Monica Municipal Code Sections 9.56.050(d) and 9.56.060(e) provide that when
developers of market :rate multi-family housing are providing affordable housing units on
or off-site respectively and the calculation of the number of affordable housing units
required results in a fractional unit, these developers are eligible to pay a fee equal to
the cost of producing that fractional unit if that fraction is less .than .75. Section
9.56.020 defines the affordable housing unit development cost as the City's average
cost to develop a unit of housing affordable to low- and moderate income households.
Section 9.56.070(c) of the City's Affordable Housing Production. Program provides that
the Affordable Housing Unit Development Cost shall be adjusted annually by City
Council resolution based on changes in construction costs and land costs. In order to
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implement the Council's decision, staff formulated a proposed method of computation to
reflect changes in construction costs and land costs. This methodology was detailed in
an April 24, 2006 letter prepared by Paul S. Silvern of HR&A Advisors, Inc. (°HR&A") on
behalf of the City. This methodology was. approved by the City Council at its June 13,
2006 meeting. At its July 24, 2007 meeting, the City Council utilized this methodology
when it adopted Resolution No. 10230 (CCS) which establishes the current Affordable
Housing Unit Development Cost.
HR&A has calculated the appropriate adjustment to the Affordable Housing Unit
Development Cost for FY 2008-09 based on this established methodology. HR&A's
analysis demonstrates that the current Affordable Housing Unit .Development Cost of
$265,632 should be increased by $11,953. The proposed resolution would revise the
Affordable Housing Unit Development Cost accordingly, effective on October 1, 2008.
The adjusted Affordable Housing Unit Development Cost would be $277,585.
On July 12; 2008, the City published notice of this hearing and the availability of the
HR&A analysis. The City republished this notice on July 18, 2008.. A copy of this
analysis has been available in the City Clerk's Office for public review since July 11,
2008 and is attached hereto as Exhibit B.
Financial Impacts & Budget Actions
There is no financial impact.
Prepared by: Marsha Jones Moutrie, City Attorney
Approved: Forwarded to Council:
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Reference Resolution No.
10329 (CCS).