SR-06-11-2013-7CCity Council Meeting: June 11, 2013
Agenda Item: 7- C
From: Andy Agle, Director of Housing and Economic Development
Subject: Amendments to the Affordable Housing Production Program
Recommended Action
Staff recommends that the City Council introduce for first reading the attached
ordinance that would revise existing household income eligibility levels and rent limits
for the Affordable Housing Production Program (AHPP), add an option for developers to
provide affordable housing to households earning no more than 30 percent of the area
median income ( "AMI ") to satisfy AHPP obligations, and make technical changes to
reflect current ordinance administration.
Executive Summary
This report discusses proposed amendments to the AHPP for the purpose of achieving
greater affordability and maintaining Santa Monica's economic diversity. The proposed
revisions are consistent with Proposition R and include revising affordable housing
categories, income - eligibility limits, and rent limits to be consistent with a widely used
approach based on California state law. The proposed ordinance would also expand
AHPP income categories to include households at the lowest end of the income scale,
better replicate affordable housing options among for -sale and rental developments,
and make technical updates to reflect current practices.
The net effect of these proposed changes would result in increased targeting of lower
income households, lower rents, and conformity with federal and state income
categories. The proposed amendments to the AHPP would be applicable to future
multifamily housing developments. A copy of the proposed revisions to the AHPP is
provided in Attachment 1.
Background
On December 11, 2012, Council directed staff to amend the AHPP to include
opportunities for extremely low- income households, given that there are approximately
3,000 extremely low- income households who live or work in Santa Monica and whose
needs are not addressed by the current AHPP. On February 26 2013, Council directed
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staff to consult with the Legal Aid Foundation of Los Angeles ( LAFLA) and return with a
draft ordinance amending the AHPP rent limit standards to achieve greater affordability.
In preparation for Council's consideration, the Housing Commission held two public
meetings to discuss the relevant issues, including a panel discussion that featured legal
and administrative experts and non - profit and for - profit housing developers. In addition,
a variety of community stakeholders have played a key role in illuminating the issues
and options. Staff and the Housing Commission also worked with representatives of
LAFLA in preparing the proposed rent and income limits.
Discussion
Recommended changes to the AHPP include changes in income eligibility and rent
limits, expanded income categories to satisfy inclusionary requirements, and technical
changes, as discussed below.
Income Eligibility and Rent Limits
The proposed ordinance would establish rent and income levels that are consistent with
those established by the United States Department of Housing and Urban Development
( "HUD ") and the California Department of Housing and Community Development
( "HCD ") for state and federal affordable housing programs and the State density bonus
law. Most local jurisdictions with inclusionary housing programs use HUD and HCD
methodology to calculate eligible income levels, maximum affordable rent levels, and
maximum ownership housing costs. Under the proposed ordinance, income levels and
income categories would be adjusted to reflect those used by HUD and HCD.
Specifically, the proposed ordinance would revise existing AHPP household income
eligibility levels to target lower income households earning no more than 30 percent AMI
(commonly referenced under federal and state programs as "extremely low "),
50 percent AMI (commonly referenced under federal and state programs as "very low "),
and 80 percent AMI (commonly referenced under federal and state programs as "low ").
The proposed ordinance also revises the current AHPP moderate - income level so that it
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does not exceed the moderate - income level published by HCD. (HUD does not publish
a moderate - income level.) The proposed AHPP income levels would then match income
levels published annually by HUD and /or HCD. The proposed revised and existing
income eligibility levels are set forth in Attachment 2 for comparison purposes.
Using the HUD and HCD methodology, proposed rent levels for future developments
would be lower than those currently applied to AHPP housing. Revised AHPP rent limits
for all income levels would not exceed levels established by State law for maximum
affordable rents. The proposed revised and existing maximum rent levels are set forth in
Attachment 3 for comparison purposes.
Expanding Targeted Income Categories
As discussed in this report, the proposed ordinance would align the AHPP income
categories with HUD and HCD income categories. This includes adding the 30 percent
of AN category referred to as "extremely low- income" (ELI), pursuant to Council
direction, with the associated HUD and HCD income and rent levels. Additionally, the
proposal would provide a development with the option to satisfy its onsite affordable
housing obligation by restricting five percent of the apartments for ELI households.
Similarly, the proposed revisions would duplicate the current and proposed onsite
affordable housing options allowed for apartments, so that options for creating very low -
and extremely low- income rental housing in a condominium development are also
available. Finally, the current AHPP for -sale ownership formula would be revised to
match the for -sale formula established by State law for affordable ownership housing.
The revisions would also restrict eligibility of for -sale housing to moderate - income
households based upon established underwriting criteria.
Technical Changes
The consideration of amendments to the AHPP provides an opportunity to implement
technical changes to ensure maximum effectiveness in implementation of the program.
The proposed revisions do not represent changes in policy. The proposed changes are
listed and described in Attachment 4.
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Issues for Further Consideration
® Moderate - Income Housing: Staff previously questioned the need for
moderate - income rental housing because rent limits on smaller apartments were
similar to market rents. The revised rent and income levels recommended in this
report would mean that moderate - income rents (for example, $1,296 for a
one - bedroom apartment) for smaller apartments, as well as larger apartments,
would now fall below market -rate rents. Council may wish to consider whether
incentives to encourage such housing should be revived if Council adopts the staff
recommendation to lower rent limits and income - eligibility levels.
® Prop. R: As the AHPP implements Proposition R, it is important to monitor
Proposition R's provision that 30 percent of all multifamily housing built annually is
affordable to households at 100 percent AMI, of which at least half of the 30 percent
should be affordable to households at 60 percent AMI. With the dissolution of
redevelopment (the City's primary funding source for affordable housing), meeting
these goals while complying with state mandates regarding housing production will
be a great challenge. Lowering rent levels means that the "loss" on the production
of each affordable apartment will be greater, potentially reducing the total number of
affordable apartments that can be produced by the private market.
Alternatives
As the City has discretion in establishing rent and income levels for AHPP housing
within the parameters of Proposition R, Council could choose a variety of alternatives,
including selecting rent and income levels that vary from those that are customarily
used at the state level and among other jurisdictions. Staff's primary concern in
pursuing such a strategy is that locally calculated rent and income levels may exceed
HUD and HCD levels and, therefore, result in two tiers of affordability for those projects
seeking a state density bonus, which requires compliance with state law.
Housing Commission Action
On May 16, 2013, the Housing Commission recommended that the City Council amend
the AHPP and adopt the income and rent approach described in this report and
reflected in the staff recommendation. The Housing Commission held a wide - ranging
discussion of the variety of factors involved in setting rent and income levels.
Attachment 5 provides a primer on the associated technical issues.
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Financial Impacts & Budget Actions
The recommended action will not result in any financial impacts or budget implications.
Prepared by: Jim Kemper, Housing Administrator
Housing and Economic Development
ATTACHMENTS
Forwarded to Council:
Rod Gould
City Manager
Attachment 1:
Proposed Ordinance Amending AHPP
Attachment 2:
Current and Proposed 2013 Income Eligibility Levels
Attachment 3:
Current and Proposed Maximum Rent Levels for 2013
Attachment 4:
Summary of Proposed Technical AHPP Amendments
Attachment 5:
Primer on Income Eligibility and Rent Limits
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Attachment 1
(proposed ordinance provided on following pages)
F: \MunicipalLaw \Share \LAWS \SYC \SMMC 9.56 061113.doc
City Council Meeting: 6 -11 -13 Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE
CHAPTER 9.56, THE CITY'S AFFORDABLE HOUSING
PRODUCTION PROGRAM INCLUDING REVISING AFFORDABLE
HOUSING CATEGORIES, INCOME - ELIGIBILITY LIMITS, RENT LIMITS, AND
EXPANDING AHPP INCOME CATEGORIES
WHEREAS, the City Council desires to amend Chapter 9.56 of the Santa Monica
Municipal Code relating to the City's Affordable Housing Production Program ( "AHPP ");
MI
WHEREAS, the proposed amendments to the AHPP are intended to achieve
greater affordability and maintain Santa Monica's economic diversity; and
WHEREAS, the proposed amendments to the AHPP include revising affordable
housing categories, income - eligibility limits, and rent limits to be consistent with federal
and state affordable housing programs; and
WHEREAS, the proposed ordinance would also expand AHPP income
categories to include households at the lowest end of the income scale, and make
technical updates to reflect current practices; and
WHEREAS, the proposed changes to the AHPP would result in increased
targeting of lower income households, and lower rents; and
WHEREAS, the proposed amendments to the AHPP are consistent with
Proposition R; and
E
WHEREAS, if adopted, the proposed amendments to the AHPP would only apply
to future multi - family housing developments.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
Santa Monica Municipal Code Chapter 9.56 is hereby amended to read as
follows:
Chapter 9.56
AFFORDABLE HOUSING PRODUCTION PROGRAM
9.56.010 Findings and purpose.
The City's affordable housing production program requires
developers of market rate multi - family developments to contribute to
affordable housing production and thereby help the City meet its
affordable housing need. As detailed in the findings supporting the
ordinance codified in this Chapter, the requirements of this Chapter 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.
9.56.020 Definitions.
The following words or phrases as used in this Chapter shall have
the following meanings:
30% Income Household means a household whose gross income
does not exceed the 30% income limits applicable to the Los Angeles-
Long Beach Primary Metropolitan Statistical Area adjusted for household
size as published and periodically updated by HUD.
50% Income Household means a household whose gross income
does not exceed 50% of the area median income, adiusted for household
size as published and periodically updated by HUD 50% income
households include 30% income households.
80% Income Household means a household whose gross income
does not exceed 80% of the area median income adjusted for household
size as published and periodically updated by HUD 80% income
households include 50% income households.
Adjusted for Household Size means 70% adjustment for a
household of one person 80% adjustment for a household of two persons,
90% adjustment for a household of three persons, 100% adjustment for a
household of four persons 108% adjustment for a household of five
persons 116% adiustment for a household of six persons 124%
adiustment for a household of seven persons 132% adjustment a
household size of eight persons. For households of more than eight
persons adjustments shall be made in accordance with applicable HUD
regulations.
Adjusted for Household Size Appropriate for the Unit means for
a household of one person in the case of a studio unit two persons in the
case of a one - bedroom unit three persons in the case of a two- bedroom
unit four persons in the case of a three - bedroom unit, and five persons in
the case of a four - bedroom unit.
Affordable Housing Fee-.A means a fee paid to the City by a
multi - family project applicant pursuant to Section 9.56.070 of this Chapter
to assist the City in the production of housing affordable to verb low , low
30% income households 50% income households, 80% income
households, and moderate- income households.
Affordable Housing Unit-.A means a housing unit developed by a
multi - family project applicant pursuant to Section 9.56.050 or 9.56.060 of
this Chapter which will be affordable to very low- �-lew -30% income
households 50% income households 80% income households, or
moderate- income households.
Affordable Housing Unit Development Cost.-The means the
City's average cost to develop a unit of housing affordable to low- and30%
income households 50% income households, 80% income households or
moderate income households.
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Affordable Ownership Housing Cost. Affordable ownership
housing cost means: For moderate income households whose gross
incomes exceed the maximum income limits for 80% income households,
affordable housing cost shall not be less than 28 percent of the gross
income of the household nor exceed the product of 35 percent times 110
percent of the area median income adjusted for household size
appropriate for the unit.
Affordable Rent. Affordable rent means:
(a) For 30% income households the product of 30 percent times 30
percent of the area median income adjusted for household size
appropriate for the unit.
(b) For 50% income households the product of 30 percent times 50
percent of the area median income adjusted for household size
appropriate for the unit.
(c) For 80% income households whose gross incomes exceed the
maximum incomes for 50% income households the product of 30 percent
times 60 percent of the area median income adjusted for household size
appropriate for the unit.
(d) For moderate income households the product of 30 percent
times 110 percent of the area median income adiusted for household size
appropriate for the unit.
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Area Median Income or AMI. Area median income or AMI means
the median familV income published from time to time by HUD for the Los
Angeles -Long Beach Metropolitan Statistical Area.
Dwelling Unit. One or more rooms, designed, occupied or
intended for occupancy as separate living quarters, with full cooking,
sleeping and bathroom facilities for the exclusive use of a single
household. Dwelling unit shall also include single -room occupancy units
as defined in Santa Monica Municipal Code Section 9.04.02.030.790 or
any successor thereto.
Floor Area. Floor area as defined in Santa Monica Municipal Code
Section 9.04.02.030.315 or any successor thereto.
Gross Income. Gross income has the same meaning as provided
in title 25 section 6914 of the California Code of Regulations, as amended
from time to time, in accordance with law.
HCD. The California Department of Housing and Community
Development or its successor.
Housing Cost Housing cost has the same meaning as provided
in title 25 section 6920 of the California Code of Regulations as amended
from time to time in accordance with law.
HUD. The United States Department of Housing and Urban
Development or its successor.
Income Eligibility. Thelncome eligibility is based upon the gross
C
�dend, including the income of all wage earners, elderly or disabled
family members, and all other sources of household income.
Industrial /Commercial District. Any district designated in the
Santa Monica Zoning Ordinance as a commercial or industrial district.
"Low," "Very » and
'PvPI's determined periediGally by the City based an the United St
Department of Heusing and Urban Deve'Gpment (HUD) estimat
f a feur erson h h I.d in the 1 A I Long R h
r
Primary Metrepelitan StatiStiGal Area. The major ORGome categories are;
"low income" (sixty perGeRt or n
(fifty peFG8Rt or less ef the area median), and "moderate income" (one
hundred percent er less of the area median). Adjustment shall be made by
househeldSize tabH h rd by the ("tv
Market Rate Unit. A dwelling unit as to which the rental rate or
sales price is not restricted by this Chapter.
A Affordable Rent- A monthly hn as charge h'ch Aces
charge �
VA
Moderate Income Household means a household whose ..
income exceeds the maximum income for a 80% income household and
whose gross income does not exceed the lesser of: (i) 120% of the area
median income adjusted for household size as published and periodically
updated by HCD or (ii) twice the income limit for 50% income households,
adjusted for household size, as published and periodically updated by
HUD.
Multi- family Project. A multi- family residential development,
including but not limited to apartments, condominiums, townhouses or the
multi - family residential component of a mixed use project, for which City
permits and approvals are sought.
Multi- family Project Applicant. Any person, firm, partnership,
association, joint venture, corporation, or any entity or combination of
entities which seeks City development permits or approvals to develop a
multi - family project.
Multi- family Residential District. Any district designated in the
Santa Monica Zoning Ordinance as a multi - family residential district.
Parcel. Parcel as defined in Santa Monica Municipal Code Section
9.04.02.030.570 or any successor thereto.
Rent Rent has the same meaning as provided in title 25 section
6918 of the California Code of Regulations as amended from time to time
in accordance with law.
Vacant Parcel. A parcel in a multi - family residential district that has
no residential structure located on it as of August 20, 1998 or which had a
residential structure located on it on that date which was subsequently
demolished pursuant to a demolition order of the City. No demolition of
structures shall be permitted except in accordance with Santa Monica
Municipal Code Section 9.04.10.16 et seq or any successor thereto.
9.56.030 Applicability of chapter.
(a) The obligations established by this Chapter shall apply to
each multi - family project for which a development application was
determined complete on or after May 2o,�y 25, 2406the effective date of this
ordinance (datel involving the construction of two or more market rate
multi - family units. No building permit shall be issued for any multi - family
project unless such construction has been approved in accordance with
the standards and procedures provided for by this Chapter.
Notwithstanding the above, a multi - family rental housing project that will
be developed by a nonprofit housing provider receiving financial
assistance through one of the City's housing trust fund programs shall not
be subject to the requirements of this Chapter so long as the project is an
7
affordable housing project meeting the requirements of Santa Monica
Municipal Code Section X9.04.02.030.025 or any
successor thereto and the project's affordability obligations will be secured
by a regulatory agreement, memorandum of agreement, or recorded
covenant with the City for a minimum period of fifty -five years.
(b) Multi- family projects for which a development application
was determined complete prior to May 25, 200 the effective date of this
ordinance fdatel shall be subject to the provisions of Santa Monica
Municipal Code Section 9.56.010 et seq., as they existed on the date the
application for the project was determined complete.
(c) A designated landmark building or contributing structure to
an adopted Historic District that is retained and preserved on -site as part
of a multi - family project shall not be considered or included in assessing
any of the requirements under this Chapter.
9.56.040 Affordable housing obligation.
All multi - family project applicants shall comply with the
requirements of this Chapter in the following manner:
(a) Multi- family project applicants for multi - family ownership
projects of four or more units in multi - family residential districts shall
choose one of the two following options:
(1) Providing affordable housing units on -site in accordance with
Section 9.56.050;
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(2) Providing affordable housing units off -site in accordance with
Section 9.56.060.
(b) In addition to the options established in subsections (a)(1)
and (2), all other multi - family project applicants may also choose one of
the following options:
(1) Paying an affordable housing fee in accordance with Section
9.56.070;
(2) Acquiring land for affordable housing in accordance with
Section 9.56.080.
A multi - family project application will not be determined complete
until the applicant has submitted a written proposal which demonstrates
the manner in which the requirements of this Chapter will be met.
9.56.050 On -site option.
The following requirements must be met to satisfy the on -site
provisions of this Chapter:
(a) For ownership projects of at least four units but not more
than fifteen units in multi - family residential districts, the multi - family project
applicant agrees to construct at least: (1) twenty percent of the total units
as ownership units for moderate - income households, or as an alternative;
(2) twenty percent of the total units as rental units for low -80% income
households if these rental units are provided by the applicant in
accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); (3)
ten percent of the total units as rental units for 50% income households if
11
these rental units are provided bV the applicant in accordance with Civil
Code Sections 1954.52(b) and 1954.53(a)(2); or (4) five percent of the
total units as rental units for 30% income households if these rental units
are provided by the applicant in accordance with Civil Code Sections
1954.52(b) and 1954.53(a)(2).
(b) For ownership projects of sixteen units or more in multi-
family residential districts, the multi - family project applicant agrees to
construct at least: (1) twenty -five percent of the total units as ownership
units for moderate - income households, or as an alternative; (2) twenty -five
percent of the total units as rental units for low -80% income households if
these rental units are provided bV the applicant in accordance with Civil
Code Sections 1954.52(b) and 1954.53(a)(2); fifteen percent of the total
units as rental units for 50% income households if these rental units are
provided bV the applicant in accordance with Civil Code Sections
1954.52(b) and 1954.53(a)(2); or (4) ten percent of the total units as rental
units for 30% income households if these rental units are provided by the
applicant in accordance with Civil Code Sections 1954.52(b) and
1954.53(a)(2).
(c) For all other multi - family applicants, the multi - family project
applicant agrees to construct at least: (1) five percent of the total units of
the protect for 30% income households: (2) ten percent of the total units of
the project for vept4Gw500/o income households; cr -(23) twenty percent of
the total units of the project for low 80% income households; or (34) one
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hundred percent of the total units of a project for moderate income
households in an Industrial /Commercial District..
(d) Any fractional affordable housing unit that results from the
formulas of this Section that is 0.75 or more shall be treated as a whole
affordable housing unit (i.e., any resulting fraction shall be rounded up to
the next larger integer) and that unit shall also be built pursuant to the
provisions of this Section. Any fractional affordable housing unit that is
less than 0.75 can be satisfied by the payment of an affordable housing
fee for that fractional unit only pursuant to Section 9.56.070(a)(4) or by
constructing all the mandatory on -site affordable units with three or more
bedrooms. The Planning and Community Development DepartrnentCity
shall make available a list of very -lew, lewincome levels for 30% income
households 50% income households. 80% income households, and
moderate income levelshouseholds, adjusted for household size, the
corresponding maximum affordable rents adjusted by number e#
bedrserns household size appropriate for the unit, and the minimum
number of very low GF IGw inGorne units required for 30% income
households 50% income households or 80% income households
required for typical sizes of multi - family projects, which list shall be
updated periodically.
(e) The multi- family project applicant may reduce either the size
or interior amenities of the affordable housing units as long as there are
not significant identifiable differences between affordable housing units
13
and market rate units visible from the exterior of the dwelling units;
provided, that all dwelling units conform to the requirements of the
applicable Building and Housing Codes. However, each affordable
housing unit provided shall have at least two bedrooms unless: (1) the
proposed project comprises at least ninety -five percent one bedroom
units, excluding the manager's unit, in which case the affordable housing
units may be one bedroom; (2) the proposed project comprises at least
ninety -five percent zero bedroom units, excluding the manager's unit, in
which case the affordable housing units may be zero bedroom units; (3)
the proposed project comprises zero and one bedroom units, excluding
the manager's unit, in which case the affordable housing units must be at
least one bedroom units; or (4) the multi - family project applicant has
elected not to pay the affordable housing fee pursuant to Section
9.56.070(a)(4), in which case the affordable housing units must be at least
three bedroom units. The design of the affordable housing units shall be
reasonably consistent with the market rate units in the project. An
affordable housing unit shall have a minimum total floor area, depending
upon the number of bedrooms provided, no less than the following:
0 bedrooms 500 square feet
1 bedroom 600 square feet
2 bedrooms 850 square feet
3 bedrooms 1,080 square feet
4 bedrooms 1,200 square feet
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Affordable housing units in multi - family projects of one hundred
units or more must be evenly disbursed throughout the multi - family project
to prevent undue concentrations of affordable housing units.
(f) All affordable housing units in a multi - family project or a
phase of a multi - family project shall be constructed concurrently with the
construction of market rate units in the multi - family project or phase of that
project.
(g) On -site affordable housing units must be rental units in rental
projects. In ownership projects, these affordable housing units may be
either rental units or ownership units. Af'o,rdablp hoi-i g : nership un
shall GGMpIy with requiremeRts conGemiRg sales PFiGe, menthly payment,
and limited equity and resale reStFiGtOGRs as established by resolutieR o
the City GeunGil tG eR6ure that subsequent purchasers are also Mceme
qualified households.
(h) Each multi - family project applicant, or his or her successor,
shall submit an annual report to the City identifying which units are
affordable units, the monthly rent (or total housing cost if an ownership
unit), vacancy information for each affordable unit for the prior year,
verification of income of the household occupying each affordable unit
throughout the prior year, and such other information as may be required
by City staff.
(i) A multi- family project applicant in a residential district who
meets the requirements of this Section shall be entitled to the density
15
bonuses and incentives provided by Sections
9.04. 10.148509.04.10.14.040 or anv successor thereto and
9- 8410. 14.0609.04.10.14.050 or any successor thereto and the
waiver /modification of development standards provided by Section
9.04.40.14.07-99 04.10.14.060 or any successor thereto. A multi - family
project applicant in a commercial or industrial district shall be entitled to
the development bonuses and incentives provided in the Land Use and
Circulation Element and implementing ordinances.
0) All residential developments providing affordable housing
on -site pursuant to the provisions of this Section shall receive priority
building department plan check processing by which housing
developments shall have plan check review in advance of other pending
developments to the extent authorized by law.
(k) The City Council may by resolution establish compliance
monitoring fees which reflect the reasonable regulatory cost to the City of
ensuring compliance with this Section when affordable housing units are
being initially rented or sold, when the required annual reports are
submitted to the City, and when the units are being re -sold or re- leased.
9.56.060 Off -site option.
The following requirements must be met to satisfy the off -site option
of this Chapter:
(a) The multi - family project applicant for ownership projects of
four or more units in multi - family residential districts shall agree to
W.
construct twenty -five percent more affordable housing units than number
of affordable housing units required by Section 9.56.050(a) and (b).
(b) For all other multi - family project applicants, the applicant
shall agree to construct the same number of affordable housing units as
specified in Section 9.56.050(c).
(c) The multi - family project applicant shall identify an alternate
site suitable for residential housing which the project applicant either owns
or has site control over (e.g., purchase agreement, option to purchase,
lease) subject to City review to ensure that the proposed development is
consistent with the City's housing objectives and projects.
(d) The off -site units shall be located within a one - quarter mile
radius of the market rate units.
(e) The off -site units shall satisfy the requirements of
subsections (d) through 0) of Section 9.56.050.
(f) The off -site units shall not count towards the satisfaction of
any affordable housing obligation that development of the alternative site
with market rate units would otherwise be subject to pursuant to this
Chapter.
(g) Exceptions to the location of the off -site units specified in this
Section may be granted by the Planning Commission on a case -by -case
basis upon a showing by the multi - family project applicant, based upon
substantial evidence, that the location of off -site units in a location different
from that specified in this Section better accomplishes the goals of this
17
Chapter, including maximizing affordable housing production and
dispersing affordable housing throughout the City.
MOW IMM ■
Department shall prepare administrative guidelines to implement this
Section -<)The City Council may by resolution establish compliance
monitoring fees which reflect the reasonable regulatory cost to the City of
ensuring compliance with this Section when affordable housing units are
initially being rented or sold, when the required annual reports are
submitted to the City, and when the units are being re -sold or re- leased.
9.56.070 Affordable housing fee.
A multi - family project applicant eligible to meet the affordable
housing obligations established by this Chapter by 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) Affordable housing unit base fee x floor area of multi - family
project;
(2) Multi- family projects with fractional affordable housing units
of less than 0.75 based on the formula established in Section 9.56.050:
City's affordable housing
unit development cost
Ir
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 1 st 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 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 the General Fund to be used
only for development of very low and low affordable 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.
f
9.56.080 Land acquisition.
A multi - family project applicant may meet the affordable housing
obligations established by this Chapter by making an irrevocable offer: (a)
dedicating land to the City or a non - profit housing provider; (b) selling of
land to the City or a non - profit housing provider at below market value; or
(c) optioning of land on behalf of the City or a non - profit housing provider.
Each of these options must be for a value at least equivalent to the
affordable housing obligation otherwise required pursuant to this Section.
The multi - family project applicant must identify the land at the time that the
development application is filed with the City. Any land offered pursuant to
this Section must be located within one - quarter mile radius of the market
rate units unless the multi - family project applicant demonstrates that
locating the land outside of this radius better accomplishes the goals of
this Chapter, including maximizing affordable housing production and
dispersing affordable housing throughout the City. The City may approve,
conditionally approve or reject such offers subject to administrative
guidelines to be prepared by the Housing Division ef the ReseYFGe
Management Departmer +City Manager or designee. If the City rejects
such offer, the multi - family project applicant shall be required to meet the
affordable housing obligation by other means set forth in this Chapter.
9.56.090 Fee waivers.
The Condominium and Cooperative Tax described in Section
6.76.010 of the Santa Monica Municipal Code or any successor thereto
211
and the Park and Recreation Facilities Tax established in Chapter 6.80 of
Article 6 of the Santa Monica Municipal Code or any successor thereto
shall be waived for required affordable housing units and for tsw -; -verb
tow -30 %, 50% 80% and moderate - income dwelling units developed by
the City or its designee using affordable housing fees. However, any multi-
family project applicant who elects to pay an affordable housing fee shall
not be eligible for any fee waiver under this Section.
9.56.100 Pricing requirements for affordable housing units.
The City-Geu4;a shall, y resokMGn up blish, on an annual basis,
and affordable rents and Maximum affGrdable pWFGha&e-pfiGes-for
affordable housing units, adjusted by4he
• - - -
be
22
qualified OGGUpants for low incepne units pay total monthly housing GGGtG
(mortgage .. } n ran homeowners' ei4y taxes omeowninsurance, nreperty
noa ro
mertgage ORSHPaRGe, h iat'nn foes) that dG of exceed
payment. earning sixty peFGent Gf the median OnGGme and that qualified OGGupants
prePerty taxes, h ns rannn propei4y mgrtgaW
homeowners' Giatio fees) that do not evne8d thirty eight
peFGent of the gross monthly heusehold ;RGOM8 for households
6_.._...__, homeowners' '..t'___ fees) that de not ovneert thirty eight
percent of the gress monthly heusehold inGeme for households
one nt of the median 'n
9.56.110 Eligibility requirements.
(a) Only low inGOFne, very 30% 50 %, 80% and
moderate- income households shall be eligible to occupy or own and
occupy affordable housing units. The City shall develop a list of income -
qualified households. Multi- family project applicants shall be required to
select households from the City - developed list of income - qualified
households, except applicants of ownership projects of four or more units
in the City's multi - family residential zones may themselves select income-
23
qualified households which shall be subject to eligibility certification by the
City.
(b) The City shall deve!Gp administrative guideliRe6 for the
tenant and purchaser se!eGt'GR process detailed in this SeGtion, wh'nh
shall establish, at a miRimum, the timing by which affGrdable hausing units-
subsequent vaGanGies in the affordable heusing unit. The es may
alse establish prioritie6 fer income qualified tenants. (G) The following
individuals, by virtue of their position or relationship, are ineligible to
occupy an affordable housing unit:
(1) All employees and officials of the City of Santa Monica or its
agencies, authorities, or commissions who have, by the authority of their
position, policy- making authority or influence over the implementation of
this Chapter and the immediate relatives and employees of such City
employees and officials;
(2) The immediate relatives of the applicant or owner, including
spouse, children, parents, grandparents, brother, sister, father -in -law,
mother -in -law, son -in -law, daughter -in -law, aunt, uncle, niece, nephew,
sister -in -law, and brother -in -law.
9.56.120 Relation to units required by Rent Control Board.
Very low 'nneme iow wnnn,e,30 %. 50% 80% and moderate -
income dwelling units developed as part of a market rate project, pursuant
24
to replacement requirements of the Santa Monica Rent Control Board,
shall count towards the satisfaction of this Chapter if they otherwise meet
applicable requirements for this Chapter including, but not limited to, the
income eligibility requirements, deed restriction requirements, and pricing
requirements. New inclusionary units required by the Rent Control Board
which meet the standards of this Chapter shall count towards the
satisfaction of this Chapter.
9.56.130 Deed restrictions.
Prior to issuance of a building permit for a project meeting the
requirements of this Chapter by providing affordable units on -site or off -
site, the multi - family project applicant shall submit deed restrictions or
other legal instruments setting forth the obligation of the applicant under
this Chapter for City review and approval. Such restrictions shall be
effective for at least fifty -five years. In addition to the administrative
guidelines specifically required by other provisions of this Chapter, the City
Manager or designee shall be the designated authority to enter into
recorded agreements with multi - family project applicants.
9.56.140 Enforcement.
No building permit or occupancy permit shall be issued, nor any
development approval granted, for a project which is not exempt and does
not meet the requirement of this Chapter. All affordable housing units shall
be rented or owned in accordance with this Chapter.
9.56.150 Annual report.
25
The Housing Division of the Resn a Managemen+
Depa=tmentCity Manager or designee, shall submit a report to the City
Council on an annual basis which shall contain information concerning the
implementation of this Chapter. This report shall also detail the projects
that have received planning approval during the previous year and the
manner in which the provisions of this Chapter were satisfied. This report
shall further assess whether the provisions of Proposition R have been
met and whether changes to this Chapter or its implementation
procedures are warranted. In the event the provisions of Proposition R
have not been met, the City Council shall take such action as is necessary
to ensure that the provisions will be met in the future. This action may
include, but not be limited to, amending the provisions of this Chapter or
its implementation.
9.56.160 Principles and guidelines.
(a) in addition to the administrative ..ems speGifiGally
- _
shall be the designated authority to deve!Gp and implement rules and
regulations pertaining to this Chapter, to enter inte reGGrded agreements
... A Fn .... .. —Mily PFGjeGt applicants, and te take other appFGpriate steps
necessary to assure that the required affordable heu6ing units are
provided and are occupied by very !Gw , low , and moderate inGGme
ho, useholds - The City Manager or desiqnee, shall develop guidelines to
implement this chapter, which guidelines shall be subiect to approval of
26
the City Council. The guidelines shall include but not be limited to, the
methodology for the establishment and periodic adiustment of the base
fee and the affordable housing unit development cost; for -sale affordable
unit requirements tenant and purchaser eligibility procedures; and
additional requirements for exercise of the off -site option and land
acquisition option.
(b) With' one year frem then see of this Chapter,
administrative rules a d regulations pertaining to this Chapter shall be
brought before the City Geuncil for adGpt'GR.
9.56.170 Adjustments or waivers.
(a) A multi - family project applicant may request that the
requirements of this Chapter be adjusted or waived based on a showing
that applying the requirements of this Chapter would effectuate an
unconstitutional taking of property or otherwise have an unconstitutional
application to the property.
(b) To receive an adjustment or waiver, the applicant must
submit an application to the DireGtor of Resource MaRagemepf C
LY
Manager or designee, at the time the applicant files a multi - family project
application. The applicant shall bear the burden of presenting substantial
evidence to support the request and set forth in detail the factual and legal
basis for the claim, including all supporting technical documentation.
(c) In making a determination on an application to adjust or
waive the requirements of this Chapter, the Director
fP *l
ManagementCity Manager or designee, or City Council on appeal, may
assume each of the following when applicable:
(1) The applicant is subject to the affordable housing
requirement of this Chapter;
(2) The applicant will benefit from the inclusionary incentives set
forth in this Chapter and the City's Municipal Code;
(3) The applicant will be obligated to provide the most
economical affordable housing units feasible in terms of construction,
design, location and tenure.
(d) The Dire ^f^• of oese r e en.,.,.,,.emen +City Manager or
designee shall render a written decision within ninety days after a
complete application is filed. The 8+resteF'City Manager's or designee's
decision may be appealed to the City Council if such appeal is filed within
fourteen consecutive calendar days from the date that the decision is
made in the manner provided in Part 9.04.20.24, Sections 9.04.20.24.010
through °.^^.'� -o =Oi4.-9499.04.20.24.050 of this Code or any successor
thereto.
(e) If the n'FeGtGF Gf oe6, r e Mara .emen*City Manager or
designee, or City Council on appeal, upon legal advice provided by or at
the behest of the City Attorney, determines that applying the requirements
of this Chapter would effectuate an unconstitutional taking of property or
otherwise have an unconstitutional application to the property, the
affordable housing requirements shall be adjusted or waived to reduce the
W-1
obligations under this Chapter to the extent necessary to avoid an
unconstitutional result. If an adjustment or waiver is granted, any change
in the use within the project shall invalidate the adjustment or waiver. If the
9irecterCity Manager or designee, or City Council on appeal, determines
that no violation of the United States or California Constitutions would
occur through application of this Chapter, the requirements of this Chapter
remain fully applicable. , adopted
11/8105; amended by Ord. No. 2207GGS § 10, adopted 1019106)
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.
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
29
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
RIB:
Attachment 2
CURRENT AND PROPOSED 2013 INCOME ELIGIBILITY LEVELS
Income Limits Comparison:
2013
Household Size
$61,500
1- person `2- person 3- person
4- person
Extremely Low Income (30% of AMI)
Proposed $17,950 $20,500 $23,050
$25,600
Current
n/a
n/a
n/a
n/a
Proposed
Current
Proposed
Current 2
Proposed 3
Current 4
Very Low Inc
$29,900 $34,200
$29,900 $34,200
ie (50% of AMI)
$38,450 $42,700
$38,450 $42,700
Low Income
$47,850
$54,650
$61,500
$68,300
$35,880
$41,040
$46,140
$51,240
Moderate Income
$54,450
$62,200
$70,000
$77,750
$59,800
$68,400
$76,900
$85,400
1: These income limits are the State - published limits for Low Income
(80% of AMI).
2: These income limits are calculated by taking 60% of the imputed
Area Median Income of $85,400 (2 x 50% of the AMI).
3: These income limits are the State - published limits for Moderate
Income (120 %ofAM1).
4: These income limits are calculated from an imputed Area Median
Income of $85,400 (2 x 50% of the AMI).
Attachment 3
Rent Limits Comparison: 2013
Extremely Low Income (30 % of AMI)
O -Bdrm 1 -Bdrm 2 -Bdrm 3 -Bdrm
Proposed $340 $389 $437 $486
Current
Proposed
n/a
n/a
n/a
n/a
Very Low Income (50 % of AMI)
0 -Bdrm 1 -Bdrm 2 -Bdrm 3 -Bdrm
$567 $648 $729 $810
Current
Proposed
$747
$854
$1,014
$1,158
Low Income
0 -Bdrm 1 -Bdrm 2 -Bdrm 3 -Bdrm
$680 $778 $875 $972
Current
Proposed
$897
$1,025
$1,217
$1,390
Moderate Income
O -Bdrm 1 -Bdrm 2 -Bdrm 3 -Bdrm
$1,247 $1,426 $1,604 $1,782
Currents $1,495 $1,708 1 $2,028 1 $2,316
1: These rent limits are calculated using 50% of the State - published Area Median
Income of $64,800, per State methodology.
2: These rent limits represent the current 50% rent limits for the AHPP, calculated
from an imputed Area Median Income of $85,400 (2 x 50% of the AMI).
3: These rent limits are calculated using 60% of the State - published Area Median
Income of $64,800, per State methodology.
4: These rent limits represent the current 60% rent limits for the AHPP, calculated
from an imputed Area Median Income of $85,400 (2 x 50% of the AMI).
5: These rent limits are calculated using 110% of the State - published Area Median
Income of $64,800, per State methodology.
6: These rent limits are calculated from an imputed Area Median Income of
$85,400 (2 x 50% of the AMI).
Attachment 4
SUMMARY OF PROPOSED TECHNICAL AHPP AMENDMENTS Technical Updates
• Adds definition of "Affordable Housing Cost" by moving language from Section
9.56.100 regarding ownership /for -sale housing, and revising somewhat to be
consistent with State law and existing AHPP Administrative Guidelines; may result
in slightly lower affordable condominium sales prices for future developments;
• Eliminates redundant language in Sections 9.56.050(g) and 9.56.110(b);
• Moves language from Section 9.56.160(a) to 9.56.130;
• Adds the phrase "or any successor thereto" regarding references to specific sections
of the Zoning Code;
• Adds the phrase "or its successor" regarding references to the California
Department of Housing and Community Development;
• Requires annual publishing of income and rent limits rather than Council approval by
resolution; and
• Rephrases references involving specific City Departments or Divisions to "the City
Manager or designee ".
Attachment 5
PRIMER ON INCOME ELIGIBILITY AND RENT LIMITS
Revising the current methodology for calculating rents will lower maximum rents for
future developments and therefore create new affordable housing opportunities for
households at lower incomes. Using the income levels published annually by HUD and
HCD as the AHPP income eligibility limits, and adopting the State's rent calculation
methodology to establish AHPP rent limits is consistent with Housing Element goals,
local affordable housing provisions (i.e., Proposition R) and federal programs. The
proposed amendments reflect input from the Legal Aid Foundation of Los Angeles as
well as advisory direction from the Housing Commission.
Two critical elements in implementing an affordable housing program are income -
eligibility levels and rent amounts. Most income - eligibility levels are established by the
federal government, while California determines its own levels in certain instances.
Santa Monica has broad discretion in establishing rent limits for the AHPP due to the
local nature of its program, though there are compelling reasons for aligning AHPP
rents with rents of other programs, as discussed in this report. The selection of income
and rent levels also has policy implications related to affordability, program reach,
housing production and subsidy levels.
Income Eligibility Levels
Affordable housing programs serve a wide range of household incomes, ranging from
those living on Social Security (i.e., extremely low income), to workers earning low
wages (i.e., very low income and low income), to workers in entry-level and lower -paid
professional jobs (i.e., low income and moderate income). Publicly subsidized
affordable housing developments generally target households on the lower end of the
income scales, reflecting policy which favors directing limited public resources to
persons and families with the greatest need. Regulatory approaches, often referred to
as inclusionary housing or inclusionary zoning, aim to produce affordable housing
without public subsidies and tend to reach both low- and moderate - income households.
Attachment 5 (cont.)
PRIMER ON INCOME ELIGIBILITY AND RENT LIMITS
An underlying assumption is that publicly- financed housing in combination with
inclusionary housing produce housing affordable to households at or below the area
median income (AMI), while households earning above the AMI can afford housing in
the open market.
As discussed earlier, lower income levels (up to 80% AMI) are established by HUD.
HCD uses the HUD levels and adds a moderate income level that is 120% of the AMI
due to the fact that Los Angeles County is a "high cost" area. High cost areas result in
an anomaly where the 80% AMI income level category (which is established as a
maximum for lower income households by HUD and HCD) exceeds 100% of the
statistical area median income ( "AMI ") for Los Angeles County households.
Consequently, HCD has adopted 120% of the AMI as the maximum income level for
moderate income households.
The AHPP ordinance is currently being implemented by using the lower income levels
published by HUD and HCD, but using a different method to calculate the moderate
income level, which is established by multiplying two times the 50% AMI income level.
As can be seen in Attachment 2, the current AHPP moderate income level exceeds
HCD's moderate income level.
Rent Limits
Methodologies for calculating affordable rents are based on the area median income,
which is then adjusted for the targeted income category (low, moderate, etc.) and the
number of bedrooms in the apartment. Also embedded in the formula is the standard
that rent is affordable if it does not exceed 30 percent of gross household income. In
spite of using similar methodologies to calculate affordable rent, various affordable
housing programs establish different rent levels. The key factor involves the median
Attachment 5 (cont.)
PRIMER ON INCOME ELIGIBILITY AND RENT LIMITS
income figure used, which has a significant effect on the outcome of the calculation of
rent limits. The policy issue described in this report for consideration by the City Council
involves a choice between one approach that establishes rent limits toward the lower
end of a range or one that establishes rent limits at the higher end of a range.
HCD uses a rent formula that is based upon the unadjusted statistical AMI ($64,800 for
2013). The AHPP ordinance is currently being implemented by using a maximum rent
formula that is based upon two times the 50% AMI income level ($85,400 for 2013). As
can be seen in Attachment 3, current AHPP maximum rents are higher than HCD
maximum rents.
Market Rents
Another important consideration is how affordable rents compare to market rents.
On February 28 2012, staff questioned the value of promoting moderate - income rental
housing by presented data demonstrating the confluence between market rents and
AHPP moderate - income rents. A review of data from the Rent Control Board involving
more than 2,500 apartments re- rented during 2012 indicates that current AHPP rents for
moderate - income apartments continue to exceed market rents for studio and one -
bedroom apartments, while market rents for two- and three - bedroom apartments
exceed the AHPP moderate - income rents, as shown below:
2012 Rent Comparison
Description
0 -Bdrm
1 -Bdrm
I `2 -Bdrm
I 3 -Bdrm
AHPP Moderate - Income Rent Limits
$1,495
$1,7081
$2,0281
$2,316
Rent Control Units Re- Rented
$1,250
_$1,6751
$2,3001
$3,078