O2363City Council Meeting 06-28-11
Santa Monica, California
ORDINANCE NUMBER 2363 (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTION 9.56.070
TO ADJUST THE TIME TO UNDERTAKE A COMPREHENSIVE STUDY OF
AFFORDABLE HOUSING FEES
WHEREAS, the City's Affordable Housing Production Program, Chapter 9.56 of
the Santa Monica Municipal Code (the "AHPP"), requires developers of multi-family
housing project to contribute to affordable housing production and thereby help the City
meet its affordable housing goals; and
WHEREAS, the requirements of the AHPP are based on a number of factors
including, but not limited to, the City's long-standing commitment to economic diversity;
the serious need for affordable housing as reflected in local, state, and federal housing
regulations and policies; the demand for affordable housing created by market rate
development; the depletion of potential affordable housing sites by market-rate
development; and the impact that the lack of affordable housing production has on the
health, safety, and welfare of the. City's residents including its impacts on traffic, transit
and related air quality impacts, and the demands placed on the regional transportation
infrastructure; and
WHEREAS, subject to certain exceptions, the requirements of the AHPP can be
met through various alternatives including providing affordable housing units on-site,
providing affordable housing units off-site, acquiring land for affordable housing, and
paying an affordable housing fee; and
WHEREAS, in establishing the appropriate affordable housing fee, the City
prepared a series of analyses of the relationship between new market rate apartment
and condominium development in the City and the need for affordable housing created
by this new development; and
WHEREAS, the initial study was prepared in July 1998 by HR&A Advisors, Inc.
("HR&A"); and
WHEREAS, HR&A updated this analysis in March 2000; and
WHEREAS, in July 2005, HR&A completed a new update of this analysis; and
WHEREAS, the July 2005 study, as did the earlier studies, focused on the
relationship between the demand for goods and services created by households who
occupy new market rate multi-family development in the City, the number of low-wage
workers in public agencies and businesses needed to satisfy this demand, and the
costs of producing the affordable housing needed by these workers; and
WHEREAS, this study demonstrated the range per square foot which could be
imposed on new market rate multi-family development to help finance the development
of affordable housing needed to meet the demand created by market rate development;
and
WHEREAS, on November 8, 2005, the City Council amended Santa Monica
Municipal Code Section 9.56.070 to provide that commencing on July 1, 2006, the
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Affordable Housing Unit Base Fee shall be automatically adjusted annually by City
Council resolution based on changes in construction costs and land costs; and
WHEREAS, in order to implement the Council's decision, staff formulated a
specific method of measuring changes in construction costs and land costs; and
WHEREAS, this proposed methodology was detailed in an April 24, 2006 letter
prepared by HR&A on behalf of the City and approved by the Council on June 13, 2006;
and
WHEREAS, on June 13, 2006, the City Council amended Santa Monica
Municipal Code Section 9.56.070 to provide that the City's affordable housing unit
development cost shall be established by resolution and that commencing on July 1,
2007, the affordable housing unit development cost shall be automatically adjusted
annually by City Council based on changes in construction costs and land costs; and
WHEREAS, Santa Monica Municipal Code Section 9.56.020 defines "affordable
housing unit development cost" as "the City's average costs to develop a unit of housing
affordable to low- and moderate-income households;" and
WHEREAS, in order to implement the Council's decision that the affordable
housing unit development cost be adjusted based on changes in development costs
and lands, staff formulated a specific method of measuring changes in construction
costs and land costs; and
WHEREAS, this proposed methodology was also detailed in the April 24, 2006
letter prepared by HR&A and approved by the Council on June 13, 2006; and
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WHEREAS, Section 9.56.070 provides that no later than July 1, 2010 and every
five years thereafter, the .City will conduct a comprehensive study of the affordable
housing unit development cost and the affordable housing unit base fee; and
WHEREAS, updating the Nexus Study would require about six months and
would cost approximately $50,000 for consultant analysis and hearings support,
assuming the same analytic approach used in previous Nexus Study updates were to
be employed; and
WHEREAS, this analytic approach, which has been a model for other California
cities, remains appropriate, particular given recent judicial decisions; and
WHEREAS, this is not the most suitable time to update the City's Nexus Study
due in large measure to the lingering adverse effects of the recent national recession;
and
WHEREAS, although general economic conditions in Santa Monica appear to be
somewhat more favorable than in other parts of the State, the statewide unemployment
rate is still in double digits and the housing market continues to languish; and
WHEREAS, an update of the Nexus Study would necessarily utilize data and
market conditions derived from this low point in the economic cycle, and would thereby
provide a questionable basis for setting long-term baseline standards for this essential
City program; and
WHERAS, an appropriate alternative approach would be to continue the annual
inflation adjustment of applicable housing fee and affordable housing cost factors for at
least another few years until market conditions are projected to have reached greater
stability and be more reflective of more typical economic conditions; and
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WHEREAS, as detailed above, the Nexus Study methodology is based on the
affordable housing need associated with a portion of the labor demand generated by
household spending in new market-rate multi-family development, with the amount of
new household spending imputed from the cost of this new market rate housing; and
WHEREAS, the affordable housing unit base fee and affordable housing unit
development cost annual adjustment is based on changes in construction costs and
land costs with the weighted average annual change in medium condominium sale
prices by ZIP Code similarly used as a proxy measure for land cost changes measured
for the immediately preceding calendar year; and
WHEREAS, .the. annual inflation adjustment accounts for annual changes in the
cost of such housing in the City; and
WHEREAS, in the short-term, this method serves as a reasonable basis for
ensuring that the amount of the AHPP Base Unit Fee and the AHPP Housing
Development Unit Cost maintain their association with the Nexus Study methodology
and remain consistent with annual changes in short-term market conditions,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Santa Monica Municipal Code Section 9.56.010 is hereby amended
to read as follows:
Section 9.56.070. Affordable housing fee.
A multi-family project applicant eligible to meet the
affordable housing obligations established by this Chapter by
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paying an affordable housing fee shall pay the fee in
accordance with the following requirements:
(a) An affordable housing fee may be paid in
accordance with the following formulas:
(1) Multi-family projects in Multi-family Residential
Districts:
Affordable housing unit base fee x floor area of multi-
family project;
(2) Multi-family projects in Multi-family Residential
Districts on vacant parcels:
Affordable housing uriit base fee x floor area of multi-
family project xseventy-five percent;
(3) Multi-family projects in Industrial/Commercial
Districts on parcels that are either not already developed
with multi-family housing or are already developed with
multi-family housing, but the multi-family project preserves
the existing multi-family housing or a Category C removal
permit has been obtained for .the existing multi-family
housing:
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Affordable housing unit base fee x floor area of
project devoted to residential uses x fifty percent.
(4) Multi-family projects with fractional affordable
housing units of less than 0.75 based on the formula
established in Section 9.56.050(d):
City's affordable housing unit development cdst x
fractional percentage.
(b) For purposes of this Section, the affordable
housing unit base fee shall be established by resolution of
the City Council. Commencing on July 1, 2006 and on July
1st of each fiscal year thereafter, the affordable housing unit
base fee shall be adjusted based on changes in construction
costs and land costs. No later than July 1, 2015, and
approximately every five year period thereafter, the City will
conduct a comprehensive study of these fees and the results
of the comprehensive study shall be reported to the City
Council. The amount of the affordable housing fee that the
multi-family project applicant must pay shall be based on the
affordable housing unit base fee resolution in effect at the
time that the affordable housing fee is paid to the City.
(c) For purposes of this Section, the City's affordable
housing unit development cost shall be established by
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resolution of the City Council. Commencing on July 1, 2007
and on July 1st of each fiscal year thereafter, the City's
affordable housing unit development cost shall be adjusted
based on changes in construction costs and land costs. No
later than July 1, 2015, and approximately every five year
period thereafter, the City will conduct a comprehensive
study of these fees and the results of the comprehensive
study shall be reported to the City Council. The affordable
housing fee that the multi-family project applicant must pay
shall be based on the affordable housing unit development
cost resolution in effect at the time of payment to the City.
(d) The amount of the affordable housing unit base
fee may vary by product type (apartment or condominium)
and shall reflect, among other factors, the relationship
between new market rate multi-family development and the
need for affordable housing.
(e) The affordable housing fee shall be paid in full to
the City prior to the City granting any approval for the
occupancy of the project, but no earlier than the time of
building permit issuance.
(f) The City shall deposit any payment made
pursuant to this Section in a reserve account separate from
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the General Fund to be used only for development of very
low- and low-income housing, administrative costs related to
the production of this housing, and monitoring and
evaluation of this affordable housing production program.
Any monies collected and interest accrued pursuant to this
Chapter shall be committed within five years after the
payment of such fees or the approval of the multi-family
project, whichever occurs later. Funds that have not been
appropriated within this five-year period shall be refunded on
a pro rata share to those multi-family project applicants who
have paid fees during the period. Expenditures and
commitments of funds shall be reported to the City Council
annually as part of the City budget process.
(g) An affordable housing fee payment pursuant to
this Section shall not be considered provision of affordable
housing units for purposes of determining whether the multi-
family project qualifies for a density bonus pursuant to
Government Code Section 65915.
SECTION 2. 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, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
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SECTION 3. 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 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.
SECTION 4. 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 its adoption.
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APPROVED AS TO FORM:
Approved and adopted this 28th day of June, 2011.
Richard Bloom, Mayor
State of California }
County of Los Angeles ) ss.
City of Santa Monica )
I, Denise Anderson-Warren, Acting City Clerk of the City of Santa Monica, do
hereby certify that the foregoing Ordinance No. 2363 (CCS) had its introduction
on June 14, 2011, and was adopted at the Santa Monica City Council meeting
held on June 28, 2011, by the following vote:
Ayes: Council members: Holbrook, O'Connor, O'Day,
Mayor Pro Tem Davis, Mayor Bloom
Noes: Council members: None
Absent: Council members: McKeown, Shriver
A summary of Ordinance No. 2363 (CCS) was duly published pursuant to
California Government Code Section 40806.
ATTEST:
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Denise Anderson-Warren, Acting City Clerk