SR 11-22-2016 3A
Ci ty Council
Report
City Council Meeting : November 22, 2016
Agenda Item: 3.A
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To: Mayor and City Council
From: Andy Agle, Director , Housing and Economic Development, Housing Division
Subject: Proposed Rent Subsidy Pilot Program: Preserving Our Diversity
Recommended Actio n
Staff recommends that the City Council approve the propose d Preserving Our Diversity
pilot program (POD Program) Guidelines, as outlined in Attachment A to the report , to
provide rental assistance to extremely low -income residents experiencing severe rent
burden.
Executive Summary
Data from several hundred Santa Monica low -income households that participated in a
recent written survey indicates many residents are paying a disproportionate amount of
rent for their housing. At the lowest income levels, households paying unaffordable
rents are left with approximate ly $200 a month for household necessities, which can
result in long -term residents having to leave Santa Monica. To further one of the City
Council’s Strategic Goals of maintaining an inclusive and diverse community , Council
approved funding for a pilot pr ogram to provide rental assistance to a limited number of
existing residents. Implementing the proposed Preserving Our Diversity (POD) Pilot
Program provides an opportunity to gauge the efficacy of preserving housing
affordability through a locally design ed and funded rental -assistance program .
The primary goal of the proposed Program is to help extremely low -income residents
stay in their homes and mitigate economic displacement by reducing household rent
burden and achieving a feasible level of affordabi lity. Staff recommends implementing
the pilot POD Program prioritizing extremely low -income and severely rent -burdened
households.
Background
In December 2015, the Housing Commission presented a report to Council
recommending affordable housing strategies that could help preserve Santa Monica’s
economic diversity and bolster housing security for residents (see Attachment B).
One of the strategies discussed in the Commission’s report aims to “assist lower -
income Santa Monicans to remain in their rent -control led homes.” The report discusses
federal data indicating that 6,325 Santa Monica households with very low incomes are
spending more than half of their incomes on rent. A key rationale of the rental
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assistance strategy is stemming the ongoing loss of affor dable, rent -controlled
apartments, which occurs when long -term residents vacate their homes and rents
become decontrolled. Lower -income households are more likely than higher -income
households to be economically displaced due to unaffordable rent. In such cases,
existing affordability of rent -controlled residences is lost as rents for new tenants are set
at market rates.
Responsibility for aiding economically strained households has traditionally fallen on
Federal, State, and County governments. Santa M onica, however, has for more than
three decades been a leader in local government policy initiatives to support
affordability, particularly in regard to housing. The City was one of a handful of cities
statewide with a program of rent control for apartmen ts, which made a huge impact not
only on the ability of thousands of residents to continue to live here during times of
rapidly increasing rents, but also to ensure a far more economically diverse community
make -up. The City was also a pioneer in leveragi ng affordable housing funding,
particularly from redevelopment, and has aggressively pursued “inclusionary zoning”
policies. Yet with changes in State law affecting local rent control protections and the
demise of redevelopment, market forces are continui ng to place local residents in a tight
squeeze to afford rent and hang on to their homes. While there is risk in stepping into
that gap, the downside risks of not exploring new solutions leaves many Santa Monica
households vulnerable.
On May 10, 2016 (see Attachment B), Council directed staff to explore creating a local
rent -subsidy program to assist low -income Santa Monica residents who currently live in
rent -controlled apartments and are severely rent burdened. Additionally, as part of the
FY2016 -17 bud get approved on June 14, 2016, Council allocated $300,000 for a pilot
program providing rental assistance to rent -burdened households living in rent -
controlled apartments, for the purpose of preserving housing affordability (see
Attachment C.) ‘Rent -burden ed’ is a national affordable housing metric and describes a
household paying more than 30 percent of income for rent. ‘Severely rent -burdened’
designates a household paying more than 50 percent of income for rent.
Renter Needs Survey
To assess the magnitud e of rent burden among residents in rent -controlled residences,
staff conducted a Renter Needs Survey (Survey) from June 24, 2016 to July 18, 2016.
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The Survey also functioned as a pre -application for the POD rental -assistance
pilot program. Potential parti cipants were informed of the Survey/pre -application by a
flyer included in the annual June 2016 Rent Control Board mailing to approximately
27,500 rent -controlled tenants, as well as postings on City websites, advertisement in
local papers, and outreach to businesses, churches, libraries, supermarkets, and social
service agencies. The Survey asked ten questions about each household, including
size, income, rent, tenure in Santa Monica, and demographics (See Attachment D.)
As of July 18, 2016, 814 surveys we re received by mail or online via Survey Monkey.
Analysis of the surveys was narrowed to the 678 containing complete information, and
further narrowed to the 433 households living in rent -controlled residences not already
subsidized by the City, County, o r federal government, or subject to affordability
covenants. The survey data is self -reported and would be verified during the eligibility
verification process.
Key Findings
The key findings of the Renter Needs Survey include :
76% of the 433 (330) househol ds are rent -burdened
36% of the 433 (155) households are severely rent -burdened
o 79 of 155 households are extremely low -income
74 of 79 households have been residents for more than 10 years Of the 74 households, the average: age = 69 household size = 1.2
monthly rent = $925 income = $1,137 (monthly); $13,644 (annual) rent -to -income ratio is 81 %
‘Extremely low -income’ describes households with incomes less than 30 percent of the
median income (e.g., annual income of less than $18,250 for a 1 -person household).
Additionally, affordable rent is defined as 30 percent of gross income. To relieve the rent
burden of the average household mentioned above, the household needs $584 per
month in rental assistance, or $7,008 annually. The table below demonstrat es the rental
subsidy calculation for the average household :
Rent Subsidy Calculation
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Monthly Rent $925
Tenant’s Portion
(30% of monthly income of $1,137 ) ($341 )
Rent Assistance Needed $584
Annual Rent Assistance $7,008
Relieving rent burden for al l 74 extremely low -income households who are severely
rent -burdened would cost $518,983 annually (excluding program administration costs).
See Attachment E for charts illustrating detailed demographic characteristics of the 433
Survey -respondent households living in rent -controlled residences, including information
about household size, tenure in Santa Monica, senior status, rent, and income.
Discussion
Survey data from the 433 households experiencing rent burden indicates the scope of
need far exceeds the capacity of the proposed pilot POD Program, which has a
$300,000 budget ($200,000 for direct rental assistance and $100,000 for program
administration.) Completely relieving rent burden for the 74 households mentioned
above would require annual subsidies more than double ($518,983 ) the direct rental
assistance budget. In crafting the proposed POD Program, staff considered three main
factors for prioritizing assistance: 1) income level; 2) rent -burden level; and 3) length of
residency.
Extremely low -inco me households are economically vulnerable given minimal monthly
income available after paying rent. Survey responses indicate there are 84 extremely
low -income households who are rent -burdened (not just severely rent -burdened), with
$216 per month availab le on average. Similarly, this population is experiencing the
greatest rent burden, with 94 percent of the extremely low -income households also
classified as severely rent -burdened (i.e., 79 of the 84) and are likely at the greatest risk
of being displace d and possibly becoming homeless. Therefore, prioritizing extremely
low -income households would have a similar result to targeting severely rent -burdened
households, given the significant overlap between the two groups. Targeting long -term
residents with in this cohort , defined a s living in Santa Monica for more than 10 years,
would narrow the focus to 74 households.
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With respect to rent -burden level, the proposed POD Program could seek to eliminate
rent burden by providing assistance to reduce household rent payments to 30 percent of
income. Analyzing the same 74 households mentioned previously (i.e., extremely low -
income , severely rent -burdened , and residents for more than 10 years ), assisting the
most burdened households, and based upon the $200,000 ren tal assistance budget, 18
households could be served. Alternatively, the Program’s goal could be to reduce,
rather than eliminate, rent burden. For example, reducing rent burden to 40 percent of
household income would enable the Program to serve more hou seholds because the
rental assistance per household would be lower. Under the 40 percent scenario, 21
households could be served. Taking the approach one step further, reducing rent
burden to 50 percent of income level would allow the Program to serve 27 households .
Three options for the pilot POD Program are summarized below:
Option 1: Eliminate rent burden by reducing rent to 30 percent of household income
o projected number of households served: 18
Option 2: Reduce rent burden to 40 percent of household income
o projected number of households served: 21
Option 3: Reduce rent burden to 50 percent of household income
o projected number of households served: 27
A fourth option (Option 4) could be to provide a set amount of monthly rental assistance,
depending on qualifying income category. For example, a monthly subsidy based upon
the following income categories:
o extremely low income: $500
o very low income: $400
o low income: $300
The fixed -amount method differs from the other three options because it would serv e
households in all low -income categories rather than just those at the lowest income
level (i.e., extremely low -income). The number of households that could be assisted
would depend on the monthly subsidy allocated to each income group. Using the
exampl e provided above ($500 to $300), approximately 13 households in each of the
income categories could be assisted, for a total of 39 households. Using a lower
standard subsidy – for example, $400, $300, $200 - would increase the number of
households that co uld be assisted to approximately 18 in each income category, or 54
total households. Using a higher standard subsidy amount than presented in the
example would have the opposite effect.
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Staff recommends implementing the pilot POD Program using Option 2, a nd prioritizing
households that are extremely low -income and severely rent -burdened , and have been
Santa Monica residents for more than 10 years . Option 2 balances a significant
reduction in rent burden with assisting more households than Option 1. Additi onally, the
Survey data indicates that the households experiencing the most substantial economic
challenges are both extremely low -income and severely rent -burdened.
Threshold Eligibility Criteria
Staff recommends the following threshold household eligib ility criteria for the proposed
POD Program (household must meet all criteria below):
o Submitted a complete Renter Needs Survey by July 18, 2016 at 5 p.m. PST
o Living in a Santa Monica rent -control apartment for at least 10 years;
Excludes households livi ng in deed -restricted affordable housing, and
properties purchased, rehabilitated, or constructed with financial assistance
from the City, Los Angeles County, or the federal government, as well as
inclusionary affordable apartments subject to the Affordabl e Housing
Production Program;
o Not currently participating in, or previously terminated from, any Santa Monica
Housing Authority rental subsidy programs;
o No household members convicted of violent crime which occurred within the last 5
years, or are regi stered sex offenders.
Priority Criteria
o Extremely low income (less than 30 percent of median income; see Attachment F);
o Severely rent -burdened (rent exceeds 50 percent of gross household income)
Prioritization among the households would be implemented by serving
households in order of highest rent burden to lower rent burden. For
example, a household with a rent burden of 80 percent would have priority
over a household with a 75 percent rent burden.
Program Implementation
Staff has envisioned the prop osed POD program whereby a portion of each participant’s
rent would be paid directly to the participant’s property owner. The approach is
customary for rental subsidy programs to ensure the funding assistance is used for the
purpose it is being provided – a payment for rent. One concern with the customary
approach is that some property owners might refuse to accept the City’s payments, in
spite of local laws which prohibit housing discrimination on the basis of income. An
alternative approach would be to make payments directly to participating residents.
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Payments directly to residents presents several challenges, including that the program
assistance: 1) might not be used to pay rent; 2) could be considered additional income
when determining participant e ligibility for other public support programs and services;
and 3) may be treated as taxable income (which reduces the net value of the assistance
received). As a result, staff recommends initially implementing the proposed pilot POD
program as a direct pa yment to property owners on behalf of tenants.
The proposed POD program does not provide a long -term solution to Santa Monica’s
diversity challenges because existing residents will eventually have to give up their
existing housing for variety of reasons . Further, a pilot program runs the risk of raising
unrealistic expectations about the City’s ability to fill the widening gap between housing
costs and the income of lower -income residents. It will be important to stress that the
program is a genuine pilo t , not an assurance of ongoing funding for the recipient
households, nor a guarantee of the continuation of local rental subsidies. Rather, it is
an opportunity to assess the effectiveness of a new approach to maintaining housing
security . C ombined with the ca se management approach recommended by the Social
Service Commission, the pilot may assist in shaping local housing policies and
potentially offer a model for regional, State , or Federal policies and programs.
In the short term, the recommended pilo t is a relatively cost -effective test of new ways
to deal with a severe challenge for local residents . For example, if the program were to
reduce rent burden to 40 percent of income for the average pilot household, the total
cost of the subsidy (excluding program administration costs) over 55 years for the
household would be $310,860 ($471 monthly subsidy x 12 months x 55 years), which is
comparable to the City’s cost to produce one affordable residence that would be deed -
restricted for a minimum of 55 yea rs. On the other hand, rental assistance programs
are staff intensive and tend to be more expensive to administer than loan subsidy
programs because of the income qualification process that is required annually for each
participant.
Commission Input
As me ntioned earlier in this report, the Housing Commission’s December 2015 report to
the City Council regarding affordable housing strategies recommended implementing a
local rent subsidy program. Draft guidelines for the proposed POD Program were
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reviewed an d discussed by the Housing Commission at its June 16, 2016 meeting (see
Attachment G). Commissioners had a wide -ranging discussion and provided feedback
regarding various methods for prioritizing program participants and utilizing the available
funding. One approach discussed is to use the limited funds to reduce rent burden to a
level below 50 percent of income – such as 40 percent of income - rather than all the
way down to 30 percent of income, thereby allowing the program to assist more
households. A nother approach discussed was targeting low -income households rather
than extremely low -income households, also with the intent of assisting more
households (and based upon an assumption that reducing rent burden would require
less assistance for low -incom e households versus extremely low -income households).
Revised draft guidelines were presented to the Housing Commission at its
October 20, 2016 meeting, reflecting input received from the June meeting.
The Housing Commission voted 5 -2 to approve the re vised draft guidelines for the
proposed POD Program, which are identical to the proposed guidelines attached to this
staff report (except a minor language change regarding required income verification
documentation). The Commissioners who did not vote to support the proposed
guidelines expressed concern that prioritizing the most severely rent -burdened
households would diminish the Program’s financial capacity to assist the greatest
number of households. Additionally, the Social Services Commission at its
October 24, 2016 voted to support the proposed POD Program and suggested the
Program should assist participant households with accessing federal, state, county, and
local benefit programs and services for which they are eligible. The proposed
Guidelines have incorporated the Social Services Commission input.
Next Steps
With Council approval, staff would implement the Program and provide a subsequent
report to Council, including the total number of households assisted and an evaluation
of the Program’s imp act on housing retention. The pilot program is expected to help
inform considerations of a permanent rent -assistance program.
Once guidelines are approved, staff would provide written materials to Program
participants at the outset to make clear the tem porary (pilot) nature of the Program,
including the stipulation that rental assistance funding is authorized for only twelve
months. However, the Council and community should be aware that discontinuing
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rental assistance to initial participants of the POD Program could be disruptive to those
households.
Financial Impacts & Budget Actions
The Preserving Our Diversity Pilot Program will cost $300,000 with $200,000 allocated
to subsidies and $100,000 allocated to administration. Funds are available in the FY
2016 -17 budget in the Housing and Economic Development Department. Program
expenditures would be charged to account 04264.577290. Future -year funding is
contingent on Council budget approval.
Prepared By: James Kemper, Housing Administrator
Approved
Forwarded to Council
Attachments:
A. Proposed POD Guidelines
B. Housing Commission Report to Council - Dec. 2015
C. FY2016 -17 Budget Adjustments 6.14.2016
D. Renter Needs Survey
E. Analysis of Survey Data
F. Income Limit Chart - 2016
G. Draft Guidelines to Housing Commission 6.16.2016
H. Written Comments
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ATTACHMENT A
Preserving Our Diversity (POD) Pilot Program
Proposed Guidelines
I. PURPOSE, BACKGROUND AND SCOPE
A. Purpose
The purpose of the Preserving Our Diversity (POD) Program is maintain
economic diversity in the community by providing rental assistance to residents
in rent -controlled apartments whose inability to pay rent may result in
displacement from Santa Monica. A secondary benefit is that the Program will
collect data about the magnitude of rent -burden among lower income households
(including extremely low - and very low -income renter households ).
B. Background
The POD Program is the result of Council direction provided at its May 10, 2016
meeting and the affordable housing strategies recommended by the Housing
Commission in December 2015.
C. Scope
The POD Program is intended as a pilot program which would provide rental
assistance to rent -burdened residents living in rent -controlled apartments. The
number of assisted hous eholds will be determined based upon the Program
budget, priority households, and the extent of rental assistance needed to reduce
the rent burden.
II. IMPLEMENTATION
A. Outreach and Marketing
Potential applicants were informed about the Program opportunity in the June
2016 Rent Control Board mailing to all Rent Control tenants, along with postings
on various City websites, advertisement in local papers, and outreach to local
social service agen cies. Initial data collection consisted of a Renter Needs
Survey that asked for basic household composition, and rent and income
information. Respondents to the Renter Needs Survey will be assessed for
threshold eligibility criteria and priority. Survey pa rticipants are not guaranteed
rental subsidies.
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B. Fair Housing and Equal Opportunity
Fair housing and equal opportunity policies and practices outlined in Chapter 2 of
the Santa Monica Housing Authority Administrative Plan shall be the policies and
prac tices of the POD Program.
C. Budget and Administration
The POD Program is included in the proposed Second Year of the 2015 -17
Biennial Budget, approved by the City Council on June 14, 2016, with an initial
Program budget of $200,000 for rental assistance a nd $100,000 for
administration. Program administration may include engaging a consultant firm to
manage the collection, analysis, and sorting of application data to establish
priority households, as well as conducting the eligibility screening. The Housing
Division will oversee the Program.
The initial funding source is affordable housing set -aside funds resulting from
dissolution of the former Redevelopment Agency (‘boomerang funds’). Although
proposed as a (one -time) pilot program with one -year of fundin g, the City Council
may consider continuing th e Program for the initial group of participants, as
s tarting and then discontinuing rental assistance to participants could undermine
the housing stability aim of th e Program.
D. Annual Report
The Housing Division shall provide the Housing Commission and City Council
with an Annual Report on the POD Program. The report will provide the number
of households served, participant demographics, total budget expenditures, an
assessment of the Program’s success , a nd recommendations for Program
improvements.
E. Rent Control
All laws, rules, regulations and procedures associated with Rent Control shall
remain in effect for Program participants and their residences.
III. ELIGIBILITY AND PRIORITY
A. Threshold Eligibility Crit eria
o To qualify for the Program, households must have submitted a complete Renter
Needs Survey by July 18, 2016 at 5 p.m. PST and must be:
1. Extremely low -income (earn less than 30 percent of area median income);
and
2. Severely rent -burdened (pay more than 50 percent of gross household
income toward rent), and
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3. Santa Monica residents living in a Rent Control apartment for at least 10
years.
As funding permits, the Program may be extended to serve very low -income and
low -income households who meet the threshold eligibility criteria and priority.
B. Ineligible Households
The POD Program is intended to address an unmet need for housing affordability
involving residents living in rent -controlled residences. Therefore, households
participating in existing af fordable housing programs are ineligible for the POD
Program. Specifically:
1. Households living in deed -restricted affordable housing are ineligible,
including those living in:
Properties purchased, rehabilitated and/or constructed with City
Housing Trust Fu nds;
Apartments subject to the Affordable Housing Production Program;
Federally assisted properties; and
Los Angeles County -assisted or owned affordable housing
properties.
2. Households currently participating in, or who have been terminated
from, any Santa Monica Housing Authority rental subsidy program are
ineligible.
3. Household members with convictions of a violent crime that have
occurred within the last five years, or who are registered sex offenders
are ineligible.
C. Priority
1. Priority for the POD Program, within the Threshold Eligibility Criteria
indicated in Section III -A, will be established by serving households in
order of highest rent burden to lower rent burden. For example, a
household with a rent burden of 80 percent would have priority over a
household with a 75 percent rent burden.
2. When households are determined to have equal priority (based upon the
same level of rent burden), the tie -breaker will be the residen t household
who has lived in Santa Monica longer.
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IV. INCOME AND ASSETS
A. Gross Household Income Determination and Verification
Gross household income shall be based on documentation provided for the past
three months of income for all household members , incl uding the three most
recent and concurrent bank statements and the most recent calendar year
income tax return and/or credit report .
B. Assets Determination and Verification
The Housing Division staff will review household assets (liquid and non -liquid), if
any, and require potential participants to submit a plan for the use of the assets.
Staff will evaluate the plan in relation to participant age, disability status, medical
condition, dependents and other circumstances to deter mine the extent of
household assets available for paying rent.
V. AMOUNT OF RENTAL SUBSIDY
A. Rent Subsidy Amount
The rental subsidy amount for the POD Program participants shall be the
difference between the Rent Control Maximum Allowable Rent plus any pass -
through fees, and 40 percent of the Gross Household Income. The total rent paid
(tenant portion + rental subsidy) shall not exceed the Rent Control Maximum
Allowable Rent plus allowable pass -through fees.
B. Adjustments to Rent Subsidy Amount
No adjustm ents to rent subsidy amounts will be made during the first year of the
Program.
VI. PARTICIPATION IN GOOD FAITH
A. Participation in Good Faith Policy
All participant household members are required to review, agree to and sign a
Participation in Good Faith Policy which outlines responsibilities that the
participating household must fulfill as well as prohibited actions.
All participant households must apply for, and enroll in, federal, state, county and
local benefit programs an d services for which they are eligible , to e nhance the
overall financial capacity of the household and to obtain need ed services to
reduce the financial strain on the household s . POD Program staff will assist
participant households with a cc essing benefit programs and services for which
they may be eligible, including making appropriate referrals to government
agencies which administer the programs and n onprofit agencies which assist
with enrolling in programs , and provid ing other relevant information which may
result in accessing benefit programs.
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B. Notification to the City
Program participants are required to notify the City Housing Division ::
Immediately if the landlord is terminating the participant’s apartment rental
agreement.
Within f ive (5) business days of notice to owner if participant is
permanently vacating the apartment.
Within t en (10) business days prior to any temporary absence that will be
30 days or more.
VII. TENANCY AND RENTAL SUBSIDY
A. Payment of Rent and Rental Subsidy
Rental subsidy is provided to participants who are paying rent. Participants not
paying rent may be discontinued from the Program. Only one subsidy will be
provided per apartment.
B. Non -Transferability
The POD P rogram is targeted to in -place residents of Santa Monica rent -
controlled apartments. The Program promotes housing stability. As such, rental
subsidies are non -transferable and rights to rental subsidies cease when tenancy
of the apartment is terminated. Pa rticipation in the POD Program does not
establish rights to any other rental housing subsidy program operated by the City
of Santa Monica or the Santa Monica Housing Authority.
C. Rental Subsidy Payments
Rental subsidy payments will be made directly to Owne rs. Participating owners
will enter into written agreements with the City and will be asked to accept direct
deposit payments.
VIII. APPEALS
Appeals are permitted for income determination only. Appeals must be requested
in writing within 10 working days of the d ecision, and must include any
documentation or additional information to be considered. Appeals will be peer
reviewed. Decision notification will be issued within 10 working days.
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Date: December 17, 2015
To: Mayor and City Council
From: Housing Commission
Re: Affordable Housing Strategies
BACKGROUND
T he residents of Santa Monica long have sought to preserve our City’s
economic diversity. In 1979 the voters placed rent control into our City Charter.
In 1990 the voters amended the Charter to require that 30% of all new housing be
permanently affordable to and occupied by households earning no more than the
Los Angeles Cou nty median income, and that half of that 30% be permanently
affordable to and occupied by households earning no more than 60% of the median
income. In 1998 the voters amended the Charter to permit the expenditure of City
funds to create affordable housing units each year, equal to up to one half of one
percent of the existing housing stock (i.e., approximately 250 units per year).
The Santa Monica City Council, backed by the voters and resident groups,
has taken further important actions to provide affordable housing and so preserve
our economic diversity. Chief among these actions has been the dedication of City
land and the expenditure of City funds to help non -profit organizations create
1,845 new affordable h ousing units, and acquire 1,096 existing housing units for
use as affordable housing. In 1992 the City Council adopted an Affordable
Housing Production Program (“AHPP”) which requires developers of new for -
profit multi -family residential properties to deed restrict a portion of those units as
affordable housing units (either on -site or off -site), dedicate land, or make
monetary contributions to the City Housing Trust Fund. Private developers have
deed restricted an additional 1,008 units as affordable housing under this program.1
1 Data provided by staff indicates that 474 of these units (47%) have been or are
being created by for -profit developers in 1 00% affordable projects that were
approved under prior law (subsequently changed by the City Council) that
permitted rent levels for moderate income households that approached or equaled
market rents for small units at that time, and permitted expedited ap proval of 100%
affordable housing projects that consisted mostly of such moderate income
affordable units.
The City also has 529 units of deed restricted affordable housing that were created
using HUD funds only.
2
As a result of these and other efforts, the City of Santa Monica historically
has been a community that has welcomed and provided housing security to
residents at all economic levels. But this hallmark of our community is steadily
eroding. For example, whereas 60% of our housing stock was affordable to those
earning up to 120% of median family income in 1998, only 33% of our housing
stock remained affordable to such households in 2013.2
The principal cause of this erosion of affordability is California’s Costa
Hawkins Act, which precludes the City from imposing any control on the initial
rent charged to a new tenant upon moving into a rent controlled apartment
(“vacancy decontrol”).3 As a result of vacancy decontrol, more than 14,500 Santa
Monica rent control units that in 1998 were affordable to households earning just 80% of the median family income no longer are affordable even to households
earning 110% of the median family income (i.e., $70,280 for a family of four).4
This represents 29% of the City’s hou sing stock that was affordable 17 years ago
but no longer is affordable. Given these trends, and the continuing rise of market
rents in Santa Monica, virtually all of the 11,742 rent control units that remain
affordable to households earning up to 110% of the median family income will
become unaffordable once the current tenants leave.5 Once that fully occurs –
2 See Staff Report 1421presented at 8/25/15 City Council Study Session on
Affordable Housing at Fig. 7. HUD defines housing as affordable to a household
when it need not expend more than 30% of its income on that hous ing.
3 See 2014 Santa Monica Rent Control Board Annual Report at p. 19 & Fig. 16.
Rent control continues to limit the amount by which this initial rent can increase
each year, thereby assisting a new tenant who can afford the initial rent to remain a
long term member of our community.
4 See 2014 Santa Monica Rent Control Board Annual Report at p. 20 & Figs. 17 -
18; 7/16/15 Remarks to Housing Commission by Stephen Lewis, General Counsel
to Santa Monica Rent Control Board (confirming that Figure 18 uses median
income for family of four to calculate affordability).
5 See Staff Report 1421presented at 8/25/15 City Council Study Session on
Affordable Housing at Fig. 5. The 11,742 units exclud es the 1,096 deed restricted
acquisition/rehab units.
80% of all rent control units affordable in 1998 to those earning 110% (or less) of
median family income and thereafter subjected to vacancy decontrol no longer
were affordable in 2014. See 2014 Santa M onica Rent Control Board Annual
(footnote continued)
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which could take less than 20 years at present unit turnover rates 6 – the only Santa
Monica housing affordable to those in the bottom half of the economic distribution
will be ou r deed restricted affordable housing stock.
Unfortunately, the City’s ability to respond to this affordable housing crisis
experienced a serious setback when the State abolished redevelopment agencies in
2012. Prior to that time, Santa Monica had used over $15 million in
redevelopment funds each year either to create new affordable housing, or to
acquire existing rental units and preserve them as affordable housing.7
In this report the Housing Commission provides recommendations for
addressing the housing needs of those households earning the median income or
less. The threat to this portion of our community is dire, both because market rate
units no longer are affordable to such households, but also because HUD data
indicates that a large portion of the Santa Monica renter households earning less
than the median family income faces a severe housing cost burden (that is, they are
paying more than 50% of their income for housing).8
The Housing Commission also is concerned about the threat to households
earning up to 200% of median family income, and will conduct further
investigatory efforts and deliberations in the new year regarding possible courses
of action to prevent the loss of this group from the Ci ty. This threat is not as acute
as the threat to those households earning the median family income or less. This is
because Rent Control Board data indicates that a large portion of the rent
R eport at p. 20 & Fig. 1. Given that market rents continue to increase, that 80%
figure likely will be close to 100% in the future.
6 For example, 8,977 of the 11,742 rent control units that today remain affordable
to households earning up to 110% of the median family income are occupied by
the same tenant that occupied the unit prior to vacancy decontrol going into effect
in 1999. Between 400 and 550 such long -term rent controlled units were lost to
vacancy decontro l each year from 2009 through 2014. See Staff Report
1421presented at 8/25/15 City Council Study Session on Affordable Housing at
Fig. 5 and pp. 14 -15; 2014 Santa Monica Rent Control Board Annual Report at p.
11 & Fig. 5.
7 See Staff Report 1421presented a t 8/25/15 City Council Study Session on
Affordable Housing at p. 17.
8 See discussion at page 6 & note 14.
4
controlled units remain affordable at this time to households earning up to 200% of
median family income, even with vacancy deco ntrol,9 and because HUD data indicates that the existing burden of housing costs is not as severe for this group as
it is for residents at lower income levels.10 But this will change over time as rents continue to rise. And, based on anecdotal information, it appears that rents on
newer uncontrolled units already are unaffordable to households earning up to
200% of median family income. Further, home ownership of any kind currently is out of reach for any but the wealthie st of Santa Monicans.
PRIORITIES MOVING FORWARD
Assist Lower -Income Santa Monicans To Remain In Their Rent
Controlled Homes
At present, there are 11,742 rent controlled units that are affordable to
households earning 110% of the median family income or less. This represents
roughly 23.5% of our current housing stock. By contrast, there are just 4,436 deed restricted affordable housing units in the City, representing roughly 9% of the total
housing stock.11 Recent experience shows that it now costs the City roughly
9 For example, staff obtained data from the Rent Control Board regarding initial
rents for controlled units subject to vacancy decontrol during 2015. Using the
AHPP adjustments to median family income for household size and household size
occupancy standards, it appears that 86% of studio and one bedroom apartments,
and 73% of two bedroom apartments, remained affordable to households earning
200% of size -adjusted median family in come (.7 of median family income for
studios, .8 for one bedroom units, and .9 for two bedroom units). Using the same
approach, 71% of studio units, 58% of one bedroom units, and 22% of two
bedroom units remain affordable to households earning 155% of size -adjusted
median family income.
10 See discussion at page 6 & note 14.
11 See Staff Report 1421presented at 8/25/15 City Council Study Session on
Affordable Housing at Fig. 5. The City also administers 1,092 Section 8 tenant -
based vouchers. Because the holders of these vouchers almost all live in either
deed restricted or affordable rent control units, they do not add to the City’s current
overall supply of affordable housing (although they do facilitate the ability of those
with the least in come to remain a part of our community).
5
$115,000 per bedroom to assist a non -profit developer to create new affordable
housing, and roughly $300,000 per bedroom to assist a non -profit developer to
acquire, rehabilitate and preserv e an existing unit as affordable housing.12
The City should do everything practical to keep lower -income Santa
Monicans currently living in rent controlled apartments in their homes. This is the
most cost effective means of preserving Santa Monica’s existing economic
diversity because vacancy decontrol will make virtually all of the remaining
affordable rent controlled units unaffordable when the current tenants leave, and
because it is expensive to provide replacement affordable housing units.
The City recently has taken important legal actions to protect at -risk tenants. These include the strengthening of the tenant anti -harassment ordinance and the
funding of a second full time housing attorney at the Santa Monica office of the
Legal A id Foundation of Los Angeles (“LAFLA”). In order to determine the
efficacy of these measures, and to quickly identify any further actions needed, the
Housing Commission recommends that the City Council request and review
reports on a minimum of a quarterly basis from the City Attorney, LAFLA, Code
Enforcement, and the Rent Control Board – as well as receive public input – on
challenges to tenant retention, actions taken in response, adequacy of enforcement
resources, and potential improvements to existing t enant protection laws.
In making this recommendation, the Housing Commission recognizes that
most owners of rent controlled buildings comply with the law and are providing a
vital service to the City in maintaining its economic diversity. The Housing
Commission publicly recognizes and honors these landlords, most especially those
who owned their buildings continuously since the enactment of rent control, and
those who rent to Section 8 tenants. The Housing Commission supports staff’s
intention to devel op a recommendation to the City Council for further public
recognition of these landlords by the City.
The Housing Commission further recommends that the City develop a fund
to provide rental assistance when doing so will keep low income Santa Monicans
12 See Exhibit A hereto (10/19/15 spreadsheet of project costs and City costs from
Andy Agle). Acquisition and rehabilitation – although generally less expensive
overall – is more expensive to the City because the projects do not qualify for State
or federal tax credits. See Staff Report 1421presented at 8/25/15 City Council
Study Session on Affordable Housing at p. 5.
6
currently living in rent contro lled units in their homes, such as seniors and totally
disabled individuals with fixed incomes, and low wage families. The size of this
population is not known at present. Anecdotal information – including inquires to
staff from renters seeking assistance – indicates that such a population exists. And
this population might be a large one, given that the most recent HUD data available
estimates that there are 6,325 Santa Monica renter households earning 50% or less
of the median family income that are paying more than 50% of their income for
housing.13 Given the uncertainties surrounding the scope of the need, and the best
design for administering such a fund, we recommend that the City develop a pilot
program with initial funding of $250,000. If the results of the pilot program
confirm that the need is greater and that the program at scale would be cost
effective, then greater funding resources should be devoted to the program.
Protect And Expand The Supply Of Deed -Restricted Affordable
Housin g
Given vacancy decontrol and the realities of the rental market, Santa
Monica’s long term ability to maintain economic diversity will depend upon its
supply of deed -restricted affordable housing units. Consequently, the City should
protect its current st ock and produce new affordable housing units. The Housing
Commission recommends:
• Proactive and more comprehensive monitoring of compliance with
AHPP and development agreement (DA) requirements for tenant
13 See HUD CHAS Data for Santa Monica, California (based on 2008 -2012 ACS
Survey) at Chart entitled “Income by Cost Burden (Renters only)”, available at
http://www.huduser.gov/portal/datasets/cp/CHAS/data_querytool_chas.html . This
group consists of 4,375 Santa Monica renter households earning 30% or less of the
median family income (some 65% of all such households), and 1,950 Santa
Monica renter households earning from 30% to 50% of the median family income
(some 58.6% of all such households). This same HUD data estimates that more
than 50% of household income is spent on housing by 1,315 Santa Monica renter
households earning from 50% to 80% of the median family income (some 27.1%
of all such households), by 285 Santa Monica renter households earning from 80%
to 100% of the median family income (some 9.7% of all such households), and by
90 Santa Monica renter households earning from more than 100% of the median
family income (some 0.6% of all such households),
7
income qualifications and rent levels in existing and future deed -
restricted affordable housing units.
• Proactive and more comprehensive efforts to connect qualified
residents and workers with all existing and future deed restricted
affordable housing units in the City.
• A return over time to at least the $15 million annual affordable
housing funding levels f rom local sources that existed prior to the
dissolution of redevelopment in 2012. The Housing Commission’s
specific recommendations regarding local funding mechanisms and
the uses for those funds are set out in the next section two sections of
this report.
In order to maximize the impact of funds raised, the City should
review its existing inventory of land to identify sites than can be
devoted to the development of affordable housing. For example, the
Housing Commission supports using a portion of the Big Blue Bus
site for affordable housing, subject to a feasibility study.14
• Incentivize homeowners to add auxiliary dwelling units as deed
restricted affordable housing. The City of Los Angeles is studying the
concept, and such a program already is in place in Sonoma County.15
We believe the City should develop such an affordable auxiliary
dwelling unit program appropriately tailored to our circumstances.
• Continue to monitor and develop plans to maintain the affordability of
units subject to City and non -City d eed restrictions as these
restrictions approach termination.
14 Because the site at 2018 19th Street was identified by a local architect as another
potential site for affordable housing, the Housing Commission recommends that
the City Council consider anew whether a proposed sale of that property is
advisable in light of the issues raised at the August 25, 2015 affordable housing
study session and/or in this report.
15 See “Affordable Second Dwelling Unit Program ,” Sonoma County Permit and
Resource Management Department and Sonoma County Community Development
Commission
8
In addition, it appears some for -profit developers are involved in acquiring
and preserving existing units as housing affordable to renters earning 80% of
median neighborhood income.16 The Housing Commission recommends that the
City reach out to these developers to determine what incentives (if any) would be
required to make such a program generate affordable housing in Santa Monica for
those earning the Los Angeles County median family income or less (the
benchmark set in the City Charter for affordable housing production), without
displacing existing reside nts.
Further, development projects should be approved only when, in their own
right, they make a positive contribution to our community, and they also make very
substantial contributions to affordable housing. The Housing Commission does
not believe any n ew market rate or mixed use development project should be
approved solely because it provides new inclusionary affordable housing units.
The Housing Commission is concerned that any failure to follow this approach
undermines community support for affordabl e housing.
Projects requiring DAs should provide affordable housing substantially in
excess of the current AHPP minimum requirements for Tier 2.17 The Housing
Commission recommends that the City Council require Tier 3 projects at a
minimum satisfy the City Charter requirements by providing 30% of units
affordable to households earning 80% of median family income or less, with at
least half of that 30% affordable to households earning 60% of median family
income or less. Alternatively, the Ci ty Council should consider requiring Tier 3
projects to provide at a minimum double the current AHPP minimum requirements
for Tier 2 projects.
Finally, the Housing Commission supports the staff’s intention to evaluate
and, if feasible and cost -effective, develop a program to provide financial and other
incentives to landlords to rent existing units to low income households.
16 See “This investment fund has a social agenda — and high -profile backers ,”
9/18/15 Los Angeles Times.
17 See Santa Monica Municipal Code §§ 9.23.030(A), 9.64.040 to 9.64.060.
9
PROPOSED FUNDING SOURCES
The City should assertively pursue all options for accessing funding from
County, State and federal programs. In doing so, the City should work with our
County, State and federal elected representatives to press the case for using Santa
Monica as a demonstration project on the viability and benefits of deconcentrating
poverty. Our City’s historical dedication to maintaining an economically diverse
population, our outstanding social services and public schools, and our national
name recognition make us an ideal location for such a demonstration project if
officials consider the new emphasis by HUD and others on deconcentrating
poverty.18 Santa Monica should further enhance its case to County officials by
targeting affordable housing for populations on which the County otherwise is
required to spend money (such as the homeless, the disabled, veterans, formerly
incarcerated persons, and family reunification populations, among others). The
Housing Commission recommends that the City Council request and review
reports regarding the progress of these efforts at a minimum on a semi -annual
basis.
The Housing Commission recognizes that these external funding sources are
uncertain and will require long term effort to access. The City can and should
continue its proud tradition of putting its own resources where its values are, and
so should develop new and stable local funding sources for affordable housing
sufficient to at least restore the $15 million per year from local sources spent on
affordable housing prior to the dissolution of redevelopment in 2012.
The Staff Report for the August 25, 2015 City Council study session on
affordable housing identifies and discusses the following potential local funding
sources:
1. Monies allocat ed from the City’s General Fund;
2. General obligation bonds; 3. An increase in the transient occupancy tax;
18 See HUD Final Rule “Affirmatively Furthering Fair Housing” (June 30, 2015).
For example, a recent Harvard study found that children who leave concentrated
areas of poverty before they are 13 reap lifetime benefits in terms of educational
attainment, income, and family stability. See Raj Chetty, Nathaniel Hendren, and
Lawrence F. Katz, “The Ef fects of Exposure to Better Neighborhoods on Children:
New Evidence from the Moving to Opportunity Experiment ” (May 2015).
10
4. An increase in the sales tax;
5. An increase in the real property transfer tax;
6. A parking tax; 7. A utility user tax; and
8. A parcel tax.
The Housing Commission considered each of these sources, as well as (1) a
construction tax, (2) an increase in the commercial linkage fee for affordable
housing, and (3) locally imposing a $75 per document recording fe e.19
Existing General Fund Revenues
The Housing Commission believes that any approach to local funding for
affordable housing (including funding to retain current low income Santa
Monicans in their rent controlled apartments) should combine the repurposing of
some existing General Fund revenues with the creation of new local funding
sources. Given the level of the threat to our core City value of economic diversity,
and the City Council’s designation of maintaining that diversi ty as one of the top
three City goals, the expenditure of funds for affordable housing should be a higher
priority than some existing uses of funds. The City Manager and the City Council
should determine where to adjust the existing budget to repurpose those funds for
affordable housing.
The Housing Commission believes that at least $7.5 million for affordable
housing should come from new general revenue taxes, and that the City should
sp end up to another $7.5 million of existing general revenues (roughly 2% of the
current General Fund), in order to meet or exceed a total of $15 million per year in
local funding for affordable housing.
New General Fund Revenues
In order to raise at least $7.5 million in new revenues, the Housing
Commission gave primary consideration to the following proposals:
19 This proposal is for a local version of the bill Assembly Speaker Atkins
introduced in Sacramento. It has been suggested that, unlike the other local
funding sources identified, this source may not require voter approval. That is a
question for the City Attorney.
11
1. Real Estate Transfer Tax :
Place on the 2016 ballot the equivalent of Measures H and HH from the
2014 ballot. Measure H would have imposed an increase in the real estate transfer
tax from $3 to $9 per $1000 of sales price for commercial, multi -family and single
family properties sold for over $1 million. Measure HH asked the voters whether
they wanted the City to spend the general funds raised by Measure H on affordable
housing. The Housing Commission endorsed Measures H and HH in 2014, but
Measure H was rejected by the voters. Staff estimates that the tax increase, if
approved in 2016, would raise $9.6 million per year ($2.4 million for each $1.50
increase in the tax).
2. Construction Tax :
Place on the 2016 ballot a commercial and for -profit multi -family
construction tax equal to 5% of calculated value, with a companion advisory
measure asking the voters whether they want the City to spend the general funds
raised on affordable housing. This tax falls on commercial enterprises that create
additional need for affordable housing and benefit economically from the changing
economic demographics of our City. Staff is continuing to analyze the likely
revenues to be generated by such a tax, but estimates that it is not less than $7.5
million per year based on recent annual permitted value .20
3. Sales Tax :
Place on the 2016 ballot a one quarter of one percent sales tax increase, with a companion advisory measure asking the voters whether they want the City to
spend the general funds raised on affordable housing. Because the sales tax
proposal requires a contribution from every person and business entity that resides
in, works in, or visits Santa Monica, the individual burden is modest (25 cents for
every $100 spent in the City on non -exempt purchases 21 ). Universal funding also
20 We understand that the City Attorney is reviewing whether there are any legal
impediments to this proposed tax.
21 California law exempts various necessary purchases from sales taxes, such as
purcha ses of food (including pet food) and medicine. See California State Board
of Equalization, “Sales and Use Taxes: Exemptions and Exclusions” (July 2014).
Former Mayor Denny Zane advised the Housing Commission at its December 5,
2015 meeting that sales tax data from Los Angeles County as a whole indicates
(footnote continued)
12
is consistent with the belief that maintaining Santa Monica’s economic diversity is
central to its character and a benefit to everyone who partic ipates in our City’s life.
Staff estimates that such an increase in the sale tax would raise $7.5 million per
year.
The Housing Commission unanimously expresses its preference for the sales
tax. The Housing Commission recognizes, however, that a majority of the voters
will have the final say on any proposed tax increase, and therefore recommends
that the City Council engage in polling and take still further public input before
deciding on a final course of action.
PROPOSED USES OF FUNDS
The best use of affordable housing funds will depend in part on the amount
of funds available and conditions at the time funding is restored. The Housing
Commission offers several general recommendations.
Income Targeting
The Housing Commission recommends that locally raised affordable
housing funds be used in a manner consistent with historical income targeting
patterns (that is, that three -quarters of total households served be those earning
60% or less of the area median income, including at least 50% of total households
served be those earning 50% or less of the area median income).22 The need
appears most extreme at these lower income levels. For example, the most recent
HUD data available estimates that almost 80% of the more than 8,000 Santa
Monica renter households that are severely cost burdened (i.e., paying more than
that businesses and visitors pay 58% of the sales tax, and residents pay 42%. Even
if residents in Santa Monica pay this same 42% of City sales tax (and Santa
Monica residents might pay a lesser percentage given the City’s very high levels of
tourism and business activity), each of the 93,000 Santa Monica residents on
average would pay less than 10 cents per day of additional sales tax under the
proposal.
22 See “Population Served – Income Level (Maximum Income)” Table for “City -
Funded Housing Stock” on Affordable Housing Information Summary provided by
Barbara Colli ns at the Commission’s June 2015 meeting.
13
50% of their income for housing) are households earning 50% or less of the area
median family income (the large majority of whom earn 30% of less of area
median family income).23 And 95% of the more than 3,000 applicants on the City’s local affordable housing Waiting List who work or live in Santa Monica
identified themselves as members of households earning 50% or less of the area median family income when they applied in 2011 (including 80% earning less than
30% of area median family income).24 No funds should be used for households earning in excess of 80% of area median income.
Community / Program Targeting
Protection Of Lower -Income Rent Contro lled Tenants
As discussed, the Housing Commission favors development of a $250,000
pilot rental assistance program to keep low -income Santa Monicans in their rent
controlled unit, followed by expansion of the program if the pilot results confirm a
greater need exists and that the program at scale would be cost effective.
Property Acquisitions
The Housing Commission recommends that the City strongly consider
issuing lease -revenue bonds backed by at least a portion of the new revenue
streams generated, and using the bond proceeds to acquire land or buildings
suitable for affordable housing. There is little doubt that the cost of acquisition
will only rise in the future.
Non -Profit Funding
The Housing Commission recommends that the City continue its histor ic
commitment to funding non -profit housing providers for both the acquisition and
rehabilitation of existing units and the construction of new units as deed -restricted
23 See HUD CHAS Data for Santa Monica, California (based on 2008 -2012 ACS
Survey) at Chart entitled “Income by Cost Burden (Renters only)”, available at
http://www.huduser.gov/portal/data sets/il/il15/index.html .
24 See Santa Monica Housing Division, Local Waiting List (Aug. 15, 2011).
14
affordable housing.25 The City’s non -profit housing providers historically have
delivered more affordable units, and much deepe r affordability, than for -profit
developers of inclusionary affordable units.26
The City’s excellent social services programs which serve seniors, persons
with disabilities, veterans and chronically homeless individuals, leverage County,
State and federal funds for supportive housing. As new affordable housing
revenues become available, the City should continue its proud tradition of
providing a share of that funding to create additional supportive housing units in
Santa Monica.
Finally, the City should work with its non -profit housing providers to
determine whether there are cost -effective opportunities for acquisition and
rehabilitation of non -occupied properties (such as older commercial buildings) that
could qualify for tax cr edits (thereby lowering the cost to the City of adaptive
reuse). 27
25 41% of City loans to affordable housing non -profits have been for acquisition
and rehabilitation of existing rental units. See Staff Report 1421presented at
8/25/15 City Council Study Session on Affordable Housing at p. 5.
26 Compare “Population Served – Income Level (Maximum Income)” Table for
“City -Funded Housing Stock” with “Population Served – Income Level” Table for
“Inclusionary Housing Stock” on Affordable Housing Information Summary
provided by Barbara Collins at the Commission’s June 2015 meeting.
27 See discussion at pages 4 -5 & note 13.
2016 SANTA MONICA RENTER NEEDS SURVEY
SMRENTERNEEDS.NET
WHY SHOULD I FILL OU T A SURVEY?
By c ompleting a Renter Needs Survey , you will:
Provide valuable information that inform s the City’s
affordable housing programs
Be considered for a pilot rental assistance program
R eceive notifications about future housing programs
WHO CAN PARTICIPATE?
Santa Monica r esidents living in Rent Control apartments.
HOW CAN I PARTICIPAT E?
There are two ways for you to participate in this short
confidential survey :
1. Complete a Renter Needs Survey online at
smrenterneeds.net
-or -
2. Complete the attached form and mail it in or drop it
off at the Housing Division, 1901 Main Street, Suite B
WHEN IS THE DEADLINE?
Monday, July 1 8 , 2016 at 5 p.m.
WHERE CAN I GET MORE INFORMATION
ABOUT THE PILOT PROG RAM ?
For updates, check the smrenterneeds.net website or call
the information phone line at 310 -458 -2201 ext. 2232
IS THIS THE SECTION 8 WAITING LIST?
No. The Section 8 waiting list is currently closed.
Santa Monica City
Council wants to find
ways to sustain
residents living in
Rent Control
apartments.
By completing this
survey, you may be
considered for the
pilot program and
you will inform the
Housing Division
about currently
unknown renter
needs.
WEBSITE smrenterneeds.net
INFO LINE 310 -458 -2201
ext. 2232
LANGUAGE
ASSISTANCE Available on website
DISABILITIES
ASSISTANCE Available on Info Line
Thank you for your participation in the 2016 Renter Needs Survey! For updates, please check the
program website smrenterneeds.com or call the Information Phone Line 310 -458 -2201 ext. 2232
2016 SANTA MONICA RENTER NEEDS SURVEY
ALL RESPONSES ARE CONFIDENTIAL
Renter Information
Renter Name:
Last First M.I.
Address:
Street Address Apartment/Unit #
City State ZIP Code
Home Phone: ( ) Email:
Household Information
1. How many people currently live in your apartment including you? ________
2. Does your household include a live -in aide ? ☐ Yes ☐ No
3. How much is the monthly rent for your apartment? ____________________
4. How much is your household ’s monthly income? ____________________
5. Do you receive help to pay the rent? ☐ Yes ☐ No
6. If you do receive help to pay rent, who helps you?
☐ N/A ☐ Relative ☐ Friend ☐ Roommate
☐ Other: _________________________________________
7. When did you move into your apartment? ___________________________ (Month, Day, Year)
8. How long have you lived in Santa Monica? _________________________ (Year s )
9. What is your date of birth ? ___________________________ (Month, Day, Year)
10. What is your racial/ethnic group? Optional
☐ American Indian/Alaskan ☐ Asian/Pacific Islander ☐ Black/African American
☐ Hispanic/Latino ☐ White/Caucasian ☐ Other
Participate in one of two ways:
1. Complete the survey online at
SMRENTERNEEDS.NET
2. Complete this form and mail it to or
drop it off at the Housing Division :
1901 Main Street, Suite B
Santa Monica, CA 90405
APPENDIX C : Charts and Graphs Analyzing Renter Survey Data
Figure 1 : OverviewAofASurveyARespondents’ARentABurdenACategories . This shows the size of the final data
set used in the staff report analysis and all other graphs in this appendix.
Figure 2 : SurveyARespondent’sARentABurdenAbyAMonthlyAIncomeAandARent. Th is graph r epresents the same
d ata as Figure 1 but i llustrates the relationship betwee n the two components of r e n t b u r d e n r a t i o .
155 , 36%
175 , 40%
103 , 24%
Severely Burdened
Burdened
Not Burdened
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Mo
n
t
h
l
y
I
n
c
o
m
e
Rent
Severely Burdened
Burdened
Not Burdened
30% Burden
50% Burden
F igure 3 : SurveyARespondents’ARentABurdenACategoriesAbyAIncomeALevels. The correlation between lower
incomes and higher rent burden, observable in Figure 2, is illustrated here.
Figure 4 : Rent Burden of Non -Senior vs Senior Respondents. Senior is defined as 62 years old, the
standard for federal housing programs . Survey results indicate significantly more seniors a re severely
rent b urdened (compare blue columns) and significantly more non -seniors are not rent burdened
(compare gray columns).
0%20%40%60%80%100%
Extremely Low
Very Low
Low
Moderate/Upper
Severely Burdened
Burdened
Not Burdened
60%
40%42%
58%
27%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Senior Non-Senior
Severely Burdened
Burdened
Not Burdened
Fig ure 5 : SurveyARespondents’ARentABurdenAbyA geAandAIncome. The graph shows t he distribution of the
three burden groups from Figure 4 , plotted by age and income . The s enior (green) line is at age 62 . T he
e xtremely l ow -i ncome (gold) line is at $1 ,521 (the monthly income limit f or a 1 -person household to be
considered extremely low -income). The concentration of severely burdened households below the
extremely low -inco me line corresponds to the data seen in Figure 3. T here is a general trend of
decr easing income as age increases, with clustering of severely burdened households in th e area bound
by the extremely low income and senior bars.
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
25 35 45 55 65 75 85 95 105
Mo
n
t
h
l
y
I
n
c
o
m
e
Age
Severely Burdened
Burdened
Not Burdened
Extremely Low Income
Senior
Figure 6 : Burden by Rent and Income with Proposed Pilot Target H ouseholds H ighlighted. Same base chart
as Figure 2 with the households that are proposed for rental assist ance based upon survey response data
(which will be sub ject to verification ). The highlighted households (Pilot Target) represent the households
to be served under staff’s recommendation per Option 2. These households have the highest rent burden
within the S everely B ur dened group , and are also extremely low income and residents of Santa Monica
for over 10 years .
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Mo
n
t
h
l
y
I
n
c
o
m
e
Rent
Pilot Target
Severely Burdened
Burdened
Not Burdened
40% Burden
Figure 7 : Burden by Rent and Income with Pilot Target Households Adjusted After Receiving Assistance .
Since the assistance the pilot program would p is rent subsidy direct to the owner , it w ould effectively
reduce the households’ (portion of) rent s . On the chart this results in the (Pilot Target) dots moving to
the left in line with the rent burden of 40%, as recommended by staff in Option 2 .
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
Mo
n
t
h
l
y
I
n
c
o
m
e
Rent
Pilot Target
Severely Burdened
Burdened
Not Burdened
40% Burden
1
November 21, 2016
To the Honorable Members of the Santa Monica City Council:
Please find attached hereto my comments regardi ng Item 3A on your agenda for the City Council
meeting of November 22, 2016 (Proposed Rent Subsidy Pilot Program: Preserving Our
Diversity). I greatly appreciate your willingness to consider these comments, and look forward
to discussing them further with you at your meeting.
Sincerely,
Michael E. Soloff
337 14th Street
Santa Monica, CA 90402
Item 3-A
11/22/16
1 Item 3-A
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OBJECTIONS AND SUGGESTED REVISIONS BY MICHAEL SOLOFF 1
TO STAFF’S PROPOSED GUIDELINES FOR THE POD PILOT PROGRAM
I. INTRODUCTION AND EXECUTIVE SUMMARY
Development of a cost-effective re nt subsidy program to help our extremely low income seniors
remain with dignity in their l ong-term rent controlled apartments is an important public policy
objective for the City of Santa Monica. The pros pect of developing such a program played a key
role in the successful campaign to pass Measures GS and GSH. Unfortunately, while born of
good intentions, staff’s proposed guidelines for th e POD pilot program are not well-designed to
serve that goal. And the Hous ing Commission’s divided vote to approve those seriously flawed
guidelines occurred after the presentation of what staff now acknowledges was unintentionally
inaccurate information regarding the cost eff ectiveness of the proposed pilot program as
currently designed, as well as the assertion that some members of the City Council were anxious
for the pilot program to begin.
I respectfully request that the City Council pull approval of the propos ed guidelines from its
consent calendar, give careful consideration to the problems with the current proposal that I
identify herein, and direct staff to make re visions in the proposed guidelines. In short the
proposed program design helps too few households in too uneven a manner. An alternative
design should allow the City to assist many more of our extremely low income neighbors remain
in place with dignity for the same cost.
Affordable housing funds are not now and never will be unlimited. This means that staff’s
proposed automatic prioritization of households with the greatest existing rent burdens—and
who therefore require the larg est individual rent subsidies—necessarily w ill undermine the
City’s ability to assist instead a much greater number of households in the target population that
require less extreme individual subsidization. Moreover, use of staff’s proposed 40% rent
burden methodology will result in the assisted households having widely divergent amounts of
after-rent income available to spend on life’s other n ecessities—amounts that ar e not tethered in
any way to an assessment of whether more or less after-rent income is necessary to keep the
household in place. It is because of these two pr oposed features that staff now projects the pilot
program will serve only 21 households (a mere 28.4% of the 74 households in the overall pilot
population), and that those 21 households will be left with after-rent incomes ranging from as
little as $270 per month to as much as $960 per month. Indeed, as proposed by staff, the pilot
program potentially will spend $21,319.44 (more than 10% of its entire non-administrative
budget) in order to subsidize just two individuals, one of whom w ould still have to survive each
month on just $270 of after-rent income, and the other on just $300 of after-rent income.
A more sensible alternative approach (1) would pr ovide staff with the ability to exclude the most
severely rent burdened households when it is mo re cost-effective to do so (and the ability to
1 Although I serve as the Chair of the Santa Monica Housing Commission, the views expressed
herein are my personal opinions and are expresse d solely in my capacity as a deeply concerned
Santa Monica resident.
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work instead to prioritize these most-burdened households for either Section 8 vouchers or deed
restricted affordable housing, including (if n ecessary) by specifically providing for such
prioritization in the SMHA Administrative Plan), and (2) would calculate the subsidies provided
to the remaining households so as to assure they likely have a sufficient number of after-rent
dollars to remain in place. This alternative approach would allo w for a much more cost-effective
program serving many more severely rent-bur dened residents. For example, under the
alternative approach staff could exclude the 10 most severely rent burdened households in the
pilot population; the pilot program’s existing budget then would be sufficient to ensure that all
64 of the remaining pilot households will have at least $550 per month in after-rent income by
providing subsidies to the 56 rema ining pilot households (75.7% of the overall pilot population)
that currently live on less than that amount of after-rent income (8 of the pilot households
currently have after-rent incomes greater than $5 50, without any subsidy).2 Accordingly, a key
question the POD pilot program could and should be designed to help answer is what level of
after-rent income likely is suffi cient to allow most households in the target popula tion to remain
in place with dignity, particularly in combina tion with all other government assistance programs
available to these same households (programs th at housing and social services staff should—and
as staff helpfully propose now will —work to assure are accessed).
II. THE PILOT POPULATION
The pilot population consists of 74 households who—according to the currently unverified data
they provided last July in re sponse to a voluntary renter needs survey—are both “extremely low
income” (i.e., make 30% or less of the area median income, adjusted for household size) and are
“severely rent burdened” (i.e., pay more than 50% of their income for rent). 62 of the
households consist of just one pe rson, 11 consist of two persons, and 1 consists of four persons.
The single person households have annual incomes ranging from $5,400 to just over $18,000,
and rent burdens ranging from approximately 53% to 231%. The two person households have
annual incomes ranging from $10,600 to $19,200, and rent burdens ranging from approximately
53% to 126%. The lone four person household has an annual income of just under $14,000, and a
rent burden of approximately 65%. Per the staff report, the average age of the head of these
households is 69 years old.
III. SUBSTANTIVE OBJECTIONS AND RE CCOMENDED REVISIONS TO THE
PROPOSED POD PILOT PROGRAM GUIDELINES
The purpose of the POD pilot program is to determine whether and how we can design and
implement a cost-effective rent subsidy program th at will keep in their long-term rent controlled
homes those extremely low income Santa Monica residents who are severe ly rent-burdened. The
current staff proposal is not we ll-suited to this purpose.
2 This after-rent income approach is different from the fixed-payment approach discussed in the
staff report, whereby staff sugge sts the option of providing each assisted household a fixed
payment each month irrespective of its existing after-rent income.
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A. The 40% Rent Burden Methodology For Calculating Subsidies Is Not The
Most Effective, Cost-Efficient Or Fair Methodology, And It Should Be
Changed To An Income After Rent Methodology
Staff proposes that each assisted household receive whatever subsidy is necessary so that it pays
exactly 40% of its gross household income as re nt each month. Under this percentage-based
approach, the actual dollars each household will ha ve left after paying rent each month will vary
widely among the 21 households projected to re ceive assistance—ranging from a low of just
$270 per month to as high as $960 per month.3 Under staff’s methodol ogy, assisted households
with higher gross incomes to begi n with automatically will have higher after-rent gross incomes.
A more sensible alternative approach (first sugg ested by Patricia Hoffman in connection with the
August 2016 Housing Commission meeting) is to fix the after-rent income of each assisted
household at a dollar amount sufficient to allow the a ssisted household to remain in place. This
approach is more closely tail ored to the rent subsidy progr am’s goal of keeping our most
vulnerable neighbors in their homes (which result depends on the actual do llars available after
rent to meet other household needs, rather than on the percentage of income those dollars
represent). It also is more cost-efficient in that (1) it avoids wasti ng money subsidizing some
participants to a level too low to keep them in place, and (2) avoids wasting money subsidizing
other participants to a level be yond what is need to keep them in place. This alternative
approach further promotes greater equa lity among assisted households.
For illustrative purposes only, assume that $550 in afte r-rent income is likely sufficient to keep a
pilot household in place. It would cost $308,745.60 to assure that each of the 74 pilot
households has at least $550 of after-rent income each month. By contrast, it would cost
$418,057.56 to provide all 74 pilot households with subsidies using staff’s 40% rent burden
methodology, and 18 of the pilot house holds still would have less than $550 of after-rent income.
What level of after-rent income is sufficient to make it likely that the target households will
remain in place is something that could and should be carefully studied in the POD pilot
program.4 Staff’s proposed effort to assure th at participating households already are
participating in all other avai lable government benefit program s—and to provide assistance to
them to access any such programs in which they are not already enrolled—also will be critical to
helping to answer this question.
3 The after-rent gross income each month for the seventeen single person households within this
group ranges from $270 to $780,with one assist ed household at $270, two more at $300-$399,
two more at $400-$499, four more at $500-$599, fi ve more at $600-$699, and three more at
$700-$780. The after-rent gross income each mont h for the four two-person households within
this group ranges from $530 to $960.
4 A sophisticated program would look at the eligible household’s expenses and try to provide
subsidies sufficient to keep a household in place af ter all necessities of life are covered. The
administrative burden of such a sophisticated program likely would be cost prohibitive It
therefore likely is necessary to settle on a fixed dollar amount of after-rent income that
experience shows is sufficient to keep most households in place.
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B. Prioritizing The Most Severely Rent Burdened Households Is Not A Cost
Effective Approach And Should Be Revi sed To Provide For Discretion To
Set Maximum Rent Burden Cutoffs
Staff proposes automatically to pr ioritize the most severely rent-burdened households (i.e., those
eligible households that currently pay the highest percen tage of their gross income toward rent
will have the first call on the limited rental as sistance dollars available). As noted above, under
this approach staff projects that only 21 of th e 74 pilot households (just 28.4%) will receive any
assistance at all given that th e current budget for the non-administ rative portion of the one-year
long pilot program is $200,000. As also noted above, the pilot program as proposed by staff
potentially will spend $21,319.44 (more than 10% of its entire non-administrative budget) in
order to subsidize just two individuals, one of whom would still have to survive each month on
just $270 of after-rent income, and the other on just $300 of after-rent income.
A somewhat more sensible alternative approach w ould consider whether certain of the most rent-
burdened households are so far underwater that they instead s hould be prioritized for either
Section 8 vouchers or deed-restricted affordab le housing, thereby freeing rent-subsidy funds to
help a much greater number of somewhat less seve rely rent-burdened households. For example,
the 10 most rent burdened of the 74 pilot program eligible households pay between 109.5% and
231% of their monthly income toward rent. If th ey were deemed ineligible for a rent subsidy
under the pilot program, a total of 32 of the rema ining households (11 more than the 21 total
households that are assisted under staff’s proposal ) would receive assistance even using staff’s
own 40% rent burden methodology.5 These 32 households have rent burdens ranging from
approximately 73% to 109%.
But a much more sensible alternative approach would both deem ineligible a certain number of
the most severely rent-burdened households as necessary, and reject the 40% rent burden
methodology altogether in favor of paying subsidie s sufficient to assure each assisted household
has a minimum fixed sum of after-rent gross inco me. For example, if the same 10 most rent-
burdened households are excluded, the POD pilot program has a sufficient budget to assure that
every single one of the 64 remain ing eligible households has at le ast $550 per month in after-rent
gross income.6 This is because (1) 56 eligible households (75.7% of the original 74) would
5 Each of these 32 households is very severely rent burdened in its own right, paying between
79% and 109% of its gross income as rent.
6 This example is over-simplified in that some upward adjustment would seem proper for the
small number of households with more than a single member. For illustrative purposes only, an
example adjustment might be to exclude the 11 mo st severely rent burdened households from the
POD pilot program (instead of just 10), and th en to use the $200,000 budget to assure that all 52
of the remaining single person households have at least $545 after-rent gross income each month
(44 after receiving a rent subs idy), all 10 of the two person households have $640 after receiving
a rent subsidy, and the lone four person house hold has $835 after receiving a rent subsidy.
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receive a subsidy sufficien t to lift their after-rent gross income to $550,7 and (2) even without
any subsidy, 8 pilot households already have at least $550 after-rent gross income. Whether $550
per month or some other number is generally suffi cient to keep in place with dignity the target
households (principally seniors living alone) is something that the POD pilot program could and
should test.
The cost-effectiveness of any rent subsidy program design will have a huge impact on the City’s
ability to bring the program to scale. HUD esti mates that there are just over 4,000 extremely low
income Santa Monica renter households that are severely rent burdened. For illustrative
purposes only, assume that half this nu mber—2,000 households—would both seek rental
assistance if a program existed a nd meet the eligibility requirements described in the proposed
POD guidelines. Further assume for illustrative purposes only that the 74 pilot program eligible
households are representative of this larger population. In these purely illustrative
circumstances, it would cost the City roughly $5.5 million annually to subsidize the 567 of the
2,000 eligible households (just 28.4 %) who are similarly situated to the 21 households staff
projects assisting under its proposed version of the POD pilot program. By contrast, under the
alternative $550 after-rent gross income program design, the same $5.5 million annual
expenditure would allow the City to subsidize each of the 1513 out of 2,000 eligible households
(75.7%) who are similarly situated to the 56 households projected fo r assistance in the POD pilot
program under that program design.
C. The Screening Of Applicants’ Existing Resources Should Be Broadened And
All Applicants Should Be Assisted Wi th Access To Additional Benefits
Staff proposes to screen applicants for both inco me and assets. In response to a resolution
adopted by the Social Services Commission at it s October meeting, staff also now proposes to
determine whether “program participants” receive other benefits for which they are eligible, and
to assist them in obtaining any bene fits they are not already receiving.
These steps acknowledge the need to make the City the subsidizer of last resort, and to assure
that available City dollars go to those who do not have alternative means to remain in place.
What is missing is an investigati on into and analysis of other res ources the applicant may have to
remain in place. For example, some applican ts may have adult children who have been
subsidizing their aged parent(s) to date, and such historical assistance should be investigated as
part of the application process. Some applican ts also may have an extra bedroom that would
allow them to take a roommate and remain in pl ace without City subsidies. Limited City rent
subsidy dollars should go first to those who do not otherwise have an ability to stay in place.
During the pilot program, at an absolute mini mum the City should gather information about
these additional potential resources from each app licant so that policy judgments can be made
about how to include these additional resources when determining eligibility and priorities in
connection with any future extensio n or expansion of the POD program.
7 These 56 households currently have after-rent incomes ranging from $63 to $533 per month.
The average of their current afte r-rent incomes is $320 per month.
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What also appears to be missing is a commitment to assess whether all applicants are accessing
other benefits, and assisting all applicants to obtain these benefits, which is what the Social
Services Commission recommended.8 This is appropriate because the pilot program will not end
up providing a rent subsidy to all who have app lied and apparently qualify. Whether the existing
pilot program administrative budget of $100,000 is sufficient, or City Council instead needs to
provide additional resources for bene fits assistance to all applican ts, having identified 74 of our
extremely low income neighbors who are severely rent-burdened we ought to proactively seek to
determine how many have failed to access other benefit programs, and what is the cost-
effectiveness of providing those who have not accessed all potential benefit programs with
assistance in doing so. Indeed, staff and C ity Council should consider extending such
assessment and assistance to the broader population of respondents to the renter needs survey.
D. The 10 Year Minimum Residency Requirement Is Too Short And Should
Instead Be Tethered To The Implementation Of Costa Hawkins
Staff proposes to use 10 years as the minimum Santa Monica residency requirement. Although
this criterion has almost no impact on the population of households eligible for the pilot program
(only 2 eligible households have lived in Sa nta Monica for less than 20 years), it appears
inconsistent with the general intent of the rent subsidy program to preser ve those long term rent
control tenancies that commen ced prior to Costa Hawkins’ vacancy decontrol provisions
becoming effective in 1999 (17 years ago). A resi dency requirement consistent with that general
intent should be developed and imposed going forward.
E. The POD Pilot Program Should Not Simply Accept A Landlord’s Veto
Staff proposes that the pilot prog ram only subsidize tenants when th e landlord is willing to enter
into an agreement with the City to directly receive the monthly rent subsidy. But, as a
constructive landlords’ advocate candidly explai ned at the June Hous ing Commission meeting,
some owners will not enter into any such agreement because, among other reasons, the rent
subsidy program will prolong the tenancy of renters who the landlords would pr efer to leave (i.e.,
to trigger vacancy decontrol).9 While that same landlords’ advo cate subsequently asserted that
many landlords try to work with their long-term elderly tenants, staff’s approach provides less
scrupulous landlords with a poten tial veto over their tenant’s participation in the POD pilot
8 The Social Services Commission re solution states (italics added):
The Social Services Commission recomme nds that the Proposed Local Rental
Subsidy Pilot Program: Preserving Our Dive rsity (POD) include provisions (1) to
determine whether prospective beneficiaries are eligible for and/or receiving all
appropriate City, County, Stat e, and Federal services and benefits, and (2) to
actively assist them in gaining access to all benefits and services for which they
may be eligible. The Social Services Co mmission further authorizes the Chair to
communicate to the City Council in suppor t of this position, including through a
joint communication with the Chair of the Housing Commission.
9 Audio of 6/16/16 Housing Co mmission Meeting at ~1:52.
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program (unless and until Santa Monica’s recent source of income discrimination ordinance is
successfully enforced against any such landlord).
As staff points out, the alternativ e in such situations —providing the rent subsidy directly to the
assisted household—presents certai n potential challenges. But th ere are potential solutions to
these challenges, and the very purpose of a pilot program is to develop those solutions.
F. Staff’s Comparison Of 55 Years Of Subsid ies With The Cost Of Creating An
Affordable Housing Unit Misframes The Public Policy Questions In Play
As a cost-effectiveness check, staff includes in its report a comparison be tween the cost on the
one hand of subsidizing for 55 years the averag e member of the 74 hous ehold pilot population,
and the cost on the other hand of creating a deed-restricted afford able housing unit. While staff
concludes the costs are comparable, I believe this comparison misframes the public policy
questions surrounding the loca l rent subsidy program that the Housing Commission
recommended to Council last December, and which the POD pilot program is intended to test
and develop.
First, even if such a comparison accurately refl ected the competing public policy issues in play
(but see my second point below), the compar ison provided continues to reflect staff’s
unwillingness to consider the exclusion of the mo st severely rent-burdened households in order
to permit a cost effective effort to help the more numerous, somewhat less severely rent-
burdened portion of the target population. For example, the roughly $311,000 average cost for a
55 year subsidy calculated by staff—and deemed roughly equal to the cost of creating an
affordable housing unit—far exceeds the rough ly $192,000 average cost of providing for 55
years the average subsidy needed to assure $550 of after-rent income to 75% of the pilot
population (as described in de tail in Part III.B above).
Second, and more importantly, the public policy tr adeoff is not whether to subsidize each target
household for 55 years, or instead to build an a ffordable housing unit (which, even if it could be
done, almost certainly will not provide housing fo r extremely low income tenants, at least
without additional ongoing subsidies). As staff rightly notes, and as the Housing Commission
explained in great detail in its December 2015 report, the targ et population of extremely low
income tenants in long-term rent controlled units—whose average age, at least in the pilot
population, is 69 years old—will diminish over time as its members depart their current homes
for a variety of reasons, and are replaced by much higher income tenants due to vacancy
decontrol. The real pub lic policy tradeoff is whether it is be tter to use a portion of our housing
money today to help a large number of our exis ting extremely low income neighbors remain in
their long-term rent controlled homes for as long as possible with dignity, or to use those same
funds instead to create a small number of additional affordable housing units.
Just to illustrate this potential tradeoff, take the solely illustrative example set out in Part III.B
above whereby the City spends $5.5 million annually on a scaled up rent subsidy program that is
assumed to mirror the projected economics of th e POD pilot program. Assume further that the
program runs for the next 20 years. Under th e $550 per month after-rent income approach
(which is illustrative of the program design I am advocating), the City could help keep more than
1500 of our extremely low income neighbors housed with dignity for each of the next 20 years.
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By contrast, at the m ore than $500,000 per unit ac quisition and rehabilitati on cost of the most
recent affordable housing units approved by sta ff for City funding, the same $5.5 million annual
expenditure by the City only could create 10 new affordable housing units per year, and thereby
help 10 households in year one, 20 households in year two, etc. (households that are unlikely to
be extremely low income households, at least without additional ongoing subsidies). While at
the end of 20 years the City w ould have an additional 200 afford able housing units under this
alternative that would continue to serve future low income households for a minimum of 35
more years, for me it is an easy public policy choi ce that it is better to help a vastly larger
number of our existing extremely low income neighbors remain in place for the next 20 years
with dignity. And my conclusion wo uld not change in that regard ev en if we engage in the rather
optimistic assumption that we could generate tw ice or perhaps even up to three times that
number of new affordable housing units per year (again, not for extremely low income residents,
at least without additional ongoing subsidies) us ing the same $5.5. million to do a mixture of tax
credit projects and some less expensive acquisition and reha bilitation projects.
Staff is completely right to stat e that the purpose of the pilot progr am should be to test our ability
to do a cost-effective rent subsidy program, and that we must not create false expectations. It is
equally important to recognize that we similarly face enormous challenges with respect to the
creation of affordable housing units, and we must not create false expectations. The Housing
Commission provided a sobering as sessment of all of these challenges in its report last
December. But we also all must work to preser ve as much diversity in as cost-effective manner
as we can with the resources and tools at hand. I believe the revisions I am suggesting to the
proposed POD pilot program guidelines are an important step in that direction.
IV.THE PROVISION OF INACCURATE INFORMATION REGARDING COST
EFFECTIVENESS AT THE HOUSING COMMISSION’S OCTOBER MEETING
Staff originally brought a draft set of POD p ilot program guidelines to the Housing Commission
in June as a potential action item, at which time it advised the Commissioners that the matter
would go to Council before the Commission’s next meeting. These proposed guidelines
provided for automatic prioritization of the most severely rent-burdened households, and use of a
30% rent burden methodology for calculating the s ubsidies. Various Commissioners raised cost-
effectiveness and other concerns about the propo sed pilot project design, and discussed possible
alternative structures, but no vote was taken. Th e Commissioners advised that they would be
happy to review any revised guidelines in the even t the program did not go to City Council prior
to future Commission meetings.
In August, staff reported to the Housing Commi ssion (as a discussion item) about the results of
recently concluded renter needs survey. Staff advised that based on this data, and using the same
methodology as presented in June, the POD pilot program would assist only 16 of 78 purportedly
eligible households. In response I raised the concept of not subsidizing the most rent-burdened
households in order to help a much larger num ber of somewhat less severely rent burdened
households. Using the underlying data provided to me at my request in advance by staff, I
pointed out that by excluding all households already paying more than 105% of their monthly
income as rent, the existing pilot budget was suffi cient to help the remaining 61 severely rent-
burdened households pay no more th an 50% of their income in rent. I also raised Patricia
Hoffman’s suggestion that we should use an af ter-rent income met hodology rather than a
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percentage rent burden m ethodology, and I requested that we further discuss both of these issues
at a future meeting. When advised later in th e meeting that rent bur den was on the Council’s
agenda in September, I asked whether that was merely a report or in stead was a request for
Council action. Staff advised th at it was just a report.
In September staff advised that the POD pilot pr ogram was on City Council’s September agenda
for action, based on the Housing Commission’s review at the J une meeting. After further
communications after the meeting, st aff advised it would instead br ing the pilot program back to
the Housing Commission for action at its October meeting.
In the staff report on the POD pilot program fo r the October Housing Commission meeting, staff
included at page 5 of 7 the following unintentio nally inaccurate discussion about the number
households the pilot program as designed by staff would serve:
With respect to rent-burden level, the proposed pilot POD Program could
seek to eliminate rent burden by providing assistance to reduce household
rent payments to 30 percent of income. Analyzing the same 79 households
mentioned previously, and based upon the $200,000 rental assistance
budget, approximately 27 households could be served (average monthly
subsidy of $611). Alternatively, the Program’s goal could be to reduce, rather
than eliminate, rent burden. For example, reducing rent burden to 40 percent
of household income would enable the Program to serve more households
because the rental assistance per household would be lower. Under the 40
percent scenario, approximately 33 households could be served (average
monthly subsidy of $496). Taking the approach one step further, reducing
rent burden to 50 percent of income level would allow the Program to serve
approximately 43 households. Three options for the pilot POD Program are
summarized below:
Option 1: Eliminate rent burden by reducing rent to 30 percent of
household income
o estimated number of households served: 27
Option 2: Reduce rent burden to 40 percent of household income
o estimated number of households served: 33
Option 3: Reduce rent burden to 50 percent of household income
o estimated number of households served: 43
As the staff report now before Council conf irm s, the figures provided to the Housing
Commission regarding the number of households projected to be served under staff’s proposal
was substantially overstated (by 50% under each op tion), as summarized in the chart below:
Option Report to HC Report to CC
30% 27 households 18 households
40% 33 households 21 households
50% 43 households 27 households
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On the day of the October meeting I contacted st aff to advise that I could not recreate the
numbers in the staff report ba sed on the underlying data I had received in August. Staff
reminded me that it had advised me that ther e had been some subsequent cleanup of the
underlying data, and at my request promptly provid ed the revised data. Although I still could not
recreate the figures in the report, I was able to review the revise d data for too brief a time in
advance of the Housing Commission meeting to be certain of my conclusion that the staff report
was wrong. I therefore advised my fellow Comm issioners that I could not recreate these
numbers from even the revised underlying data, but th at I could not be certain of my conclusions.
Otherwise, I orally provided in substance the sa me objections and suggestions for change that I
have set forth in this report (without the precise numerical content that is now based on the
revised underlying data and additional review). I advised that I would need additional time to
draft an alternative set of guidelines fo r the Housing Commissi on’s consideration.
I attended the subsequent October meeting of th e Social Services Commission. The only issue
regarding the POD pilot program considered by that Commission was whether the pilot program
should affirmatively assist applicant households in identifying and accessing additional benefit
programs for which they are eligible but in which they do not yet participate.
V. CONCLUSION
Any long term rent subsidy progr am developed by the City shoul d be designed both to assure
that it is the subsidizer of last resort, and to maximize the number of households it effectively can
assist to remain in place with whatever budge t it has. The POD pilot program should be
designed to gather information th at can assist in determining wh ether and how to develop such a
program. Absent a professionally designed pilot pr ogram that will seek answers to the critical
questions based on random sampling and tracking ove r time of assisted and unassisted tenants of
different types, there is little doubt that we w ill learn more about the po tential for such a long
term program by implementing a pilot program that is designed in the first instance with these
goals in mind, and by obtaining data about as ma ny households as possible. Both of these
considerations support rejection of the pilot program guidelines pr oposed by staff in favor of an
alternative design.
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Social Services Commission
1685 Main Street, Room 212
PO Box 2200
Santa Monica, CA 90407 -2200
November 21, 2016
The Honorable Tony Vasquez, Mayor
The Honorable Ted Winterer, Mayor Pro Tempore
The Honorable Gleam Davis, Sue Himmelrich, Kevin McKeown, Pam O'Connor, and Terry O'Day,
Councilmembers
City of Santa Monica
1685 Main Street
Santa Monica, CA 90401
Dear Mayor Vasquez, Mayor Pro Tempore Winterer, and Councilmembers Davis, Himmelrich, McKeown,
O'Connor, and O'Day,
We are the Chairs, respectively, of the Social Services Commission and the Housing Commission. We
write regarding the incorporation of wraparound social services into the Preserving Our Diversity (POD)
pilot program guidelines.
First, this letter serves as the official transmittal by Chair Landres of the Soci al Services Commission
resolution regarding wraparound social services and the POD. At its October 24 meeting, the Social
Services Commission voted unanimously to recommend that the POD “include provisions (1) to
determine whether prospective beneficiarie s are eligible for and/or receiving all appropriate City,
County, State, and Federal services and benefits, and (2) to actively assist them in gaining access to all
benefits and services for which they may be eligible.”
Second, we write jointly in our ind ividual capacities as Santa Monica residents who support the provision
of assistance to our most vulnerable neighbors, including through a City rent subsidy program. The
purpose of this letter is to express our personal views regarding the constructive bu t not yet complete
efforts made by staff to date to incorporate the Social Service Commission’s specific recommendations
into the POD pilot program guidelines.
To be sure, w e are pleased that that the staff report of November 17, 2016 partially incorporat es the
Social Services Commission’s recommendations. Specifically, the draft guidelines state:
“All participant households must apply for, and enroll in, federal, state, county and local benefit
programs and services for which they are eligible, to enhance the overall financial capacity of the
household and to obtain needed services to reduce the financial strain on the households. POD
Program staff will assist participant households with accessing benefit programs and services for
which they may be eligible, including making appropriate referrals to government agencies which
administer the programs and nonprofit agencies which assist with enrolling in programs, and
providing other relevant information which may result in accessing benefit programs.”
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Indeed, this will help ensure not only that vulnerable residents receive the full panoply of support, but
also that the City’s limited funds will be leveraged for the greatest possible positive impact.
However, w e wish to reiterate that no prospective PO D participant should be excluded from the program
simply due to an individual’s inability to navigate the process of determining eligibility and/or completing
the relevant applications without assistance. Cold referrals to other governmental and nonprofit
agencies may not be adequate in all cases, and the City should adopt a more proactive approach.
Furthermore, in view of recent national developments, we also encourage Council to direct that the
Housing and Economic Development Department and Human Servic es Division make appropriate
allowances for prospective POD participants who may have reasonable concerns about making certain
personal and/or family data available to the federal government.
We further urge that the assistance in accessing benefits be ex tended not only to program participants,
but to all households that apply to the program and meet the income and rent burden eligibility criteria
(irrespective of whether they otherwise will receive benefits under the POD program ). To the extent the
exist ing administrative budget is not adequate to permit such an expansion, City Council should provide
supplemental budget authority. Staff and Council also should consider extending this assistance to all
who responded to the renter needs survey, depending u pon what it learns from its experience with the
74 POD pilot households.
Taking all of the foregoing into consideration, we recommend that the portion of the proposed
guidelines quoted above be revised as follows (additions are capitalized and deletions s truck through ):
“All participant households must apply for, and enroll in, federal, state, county and local benefit
programs and services for which they are eligible, to enhance the overall financial capacity of the
household and to obtain needed services to reduce the financial strain on the households. POD
Program staff will assist ALL POD -ELIGIBLE APPLICANT HOUSEHOLDS participant households with
accessing OTHER benefit programs and services for which they may be eligible, including BUT
NOT LIMITED TO ma king appropriate INTRODUCTIONS AND referrals to government agencies
which administer the programs and nonprofit agencies which assist with enrolling in programs,
and providing other relevant information AND CONNECTIONS which may result in accessing
benefit programs. NO HOUSEHOLD THAT HAS MADE A GOOD FAITH EFFORT TO ACCESS
APPROPRIATE PROGRAMS FOR WHICH IT MAY BE E LIGIBLE SHALL BE EXCLUDED FROM POD
PARTICIPATION FOR FAILURE TO RECEIVE BENEFITS.”
We look forward to discussing these matters with you at your November 22 meeting. Please do not
hesitate to contact us in advance with any questions.
Sincerely,
Shawn Landres Michael Soloff
Chair, Social Services Commission Chair, Housing Commission
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