SR 07-25-2017 8B
Ci ty Council
Report
City Council Meeting : July 25, 2017
Agenda Item: 8.B
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To: Mayor and City Council
From: Andy Agle, Director , Housing and Economic Development, Housing Division
Subject: Preserving Our Diversity (POD) Subsidy Pilot Program
Recommended Action
Staff recommends that Council:
1. Approve the Program Model and Guide lines for the proposed Preserving Our
Diversity pilot program (Attachment A).
2. Authorize budget changes as outlined in the Financial Impacts & Budget Actions
section of this report.
Executive Summary
The Preserving Our Diversity program is a pilot that a ims to support the Council’s
strategic goal of maintaining an inclusive and diverse community by providing financial
assistance to low -income, long -term residents, aged 62 and older, who live in rent -
controlled apartments and whose inability to pay rent ma y result in displacement from
Santa Monica. Based on the proposed eligibility criteria recommended by the Housing
Commission, the one -year pilot program would serve 26 senior households, with the
goal of ensuring that the households have sufficient resourc es to meet their basic
needs. This report recommends that the Council approve program guidelines and
authorize budget changes.
Background
In December 2015, the Housing Commission presented a report to Council
recommending affordable housing strategies to preserve Santa Monica’s economic
diversity and bolster housing security for residents (Attachment B). One of the proposed
strategies aimed to assist lower -income Santa Monica residents to remain in their rent -
controlled homes by providing rental assistanc e.
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On May 10, 2016, Council directed staff to explore expanding affordable housing
policies to include a local rent -subsidy program to assist low -income residents who
currently live in rent -controlled apartments and who are severely rent -burdened
(Attac hment C). On June 14, 2016, Council allocated $300,000 of the FY2016 -17
budget toward the pilot program, with $100,000 allocated to administration and
$200,000 to rent assistance (Attachment D).
The goals of the Preserving Our Diversity (POD) program are to:
1) Help low -income senior residents avoid residential displacement by reducing
household rent burden;
2) Assist some of the City’s lowest -income and longest -term residents to live with
greater dignity by helping them meet their basic needs, such as rent, food,
medical care, and transportation, and by facilitating access to mainstream goods
and services;
3) Provide an opportunity for the City to gauge the effectiveness of POD as a
housing preservation and anti -displacement strategy and model; and
4) Identify ke y issues to address in conjunction with considering any program
expansion.
From June 24, 2016, to July 18, 2016, staff distributed a Renter Needs Survey to
approximately 27,500 Santa Monica households living in rent -controlled apartments to
assess the mag nitude of need among low -income residents. The Renter Needs Survey
also functioned as a pre -application for the POD pilot program. A total 814 surveys were
returned by the deadline. Analysis of the surveys was narrowed to 433 households
living in rent -cont rolled apartments not subject to government affordability covenants.
Refer to Attachment E for charts illustrating the demographics of survey households.
The survey confirmed that a subset of Santa Monica’s long -term residents in rent -
controlled housing ar e extremely low -income (earning less than 30 percent of the area
median income), rent -burdened (paying over 30 percent of income toward rent), seniors
(average age 68), mostly living alone (average household size of 1.2 people), and with
very little after -rent income to pay for basic needs (average $200 per month).
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At the Housing Commission’s June 16, 2016, meeting, staff presented draft guidelines
for the proposed POD Program (Attachment F) and obtained feedback.
On November 22, 2016, staff recommended a POD pilot model to Council
(Attachment G) based on analysis of the 433 survey households. Council discussed the
proposal and directed staff to consider the following, in consultation with the Housing
Commission:
Using residual income available after rent as the subsidy metric;
Obtaining expert opinion regarding basic living costs;
Prioritizing long -term residents of rent -controlled housing
Maximizing the reach of the pilot program;
Directing additional services and resources to pilot participants, includi ng
connecting participants to existing programs and services that are available to
low -income households, as well as connecting working -age participants with job
resources and education; and,
Considering a local nonprofit to administer the program.
Discuss ion
Pursuant to Council’s direction, staff conducted in -depth interviews with survey
participants, researched residual -income (after -rent) program models, and analyzed the
potential budget and participation figures. The Housing Commission held detailed
di scussions regarding the POD program on April 20, 2017 (Attachment H) and
May 18, 2017 (Attachment I), and approved recommendations regarding the pilot -
program design (Attachment J).
Expert Opinion Regarding Basic Living Costs
To conduct the analysis req uested by Council, staff needed a standard for basic needs
budgets. The Housing Commission Chair facilitated a meeting with the UCLA Center for
Health Policy Research team that created the Elder Economic Security Standard Index
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for California (Attachment K ) and its Basic Needs Budget. For specifics, see the Elder
Index Methodology Report (Attachment L).
Staff found the Elder Index Basic Needs Budget to be best suited to consider residual
income for the POD pilot program because it is tailored for seniors (the majority of
anticipated pilot participants), it includes data sets regarding seniors in Los Angeles
County, and it delineates rent and non -rent expenditures. Using the most recent data for
Los Angeles County (2013), the UCLA Elder Index calculates hou sehold Basic Needs
Budgets as follows:
HOUSING EXPENSES 1 person HH 2 person HH
Total Housing Expenses
(2013 Los Angeles County Fair Market Rent
+ Utilities Assumptions)
$1,171 $1,171
BASIC NON -RENT EXPENSES 1 person HH 2 person HH
Food $264 $490
H ealthcare $166 $332
Transportation $233 $326
Misc. (clothing, household expenses, etc.) $216 $313
Total Monthly Non -Rent Expenses $879 $1,461
Total Monthly Basic Needs Budget $2,050 $2,632
Total Annual Basic Needs Budget $24,600 $31,584
Comparativel y, and as shown on the following chart for one - and two -person
households, the Basic Needs Budget income levels are above Federal Poverty
Guidelines, above 30 percent of area median income (extremely low -income), and
below 50 percent of area median income (very low income) for Los Angeles County in
2017.
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To align the POD program with Santa Monica policies, the Housing Commission
recommended adjustment of two of the Elder Index Basic Needs Budget assumptions.
Utilities were adjusted to amounts that match the Santa Monica Housing Authority’s
average utility allowances for currently served tenants. To ensure that POD does not
subsidize private automobile usage, transportation was adjusted down from $233
(based on national averages of annual miles driven mul tiplied by the Internal Revenue
Service standard mileage reimbursement rate) to $52 (the rounded cost of a 30 -day
senior EZ Transit Pass for the Big Blue Bus and Metro).
The Housing Commission voted to recommend that the POD program use the Basic
Needs S ubsidy Method with the above -stated proposed budget adjustments. The
formula for household subsidy would be as follows:
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Total Annual Income less Rent = Annual Non -Rent Income
Difference Between Annual Non -Rent Income and Basic Needs Budget Non -
Rent Expense s = Annual Subsidy
Annual Subsidy divided by 12 = Monthly Subsidy
The Basic Needs Budget (BNB) for the POD pilot is proposed to include the following
expenses and amounts per household size.
POD Pilot Basic Needs Budget
Non -Rent Expenses
EXPENSE
1 pe rson
HH
2 person HH
Food $264 $490
Healthcare $166 $332
Transportation $52 $103
Utilities $42 $55
Misc. (clothing, hhld. expenses, etc.) $216 $313
Total Monthly Basic Non -Rent
Expenses $ 740 $1,2 93
Total Annual Non -Rent Expenses $8,880 $15,516
To ensure program consistency and ease of implementation during the pilot phase, no
other adjustments are proposed to be made to the BNB or subsidy allocations during
the pilot year, although staff would document any opportunities or challenges during the
pilot phase that could inform potential program expansion.
Program Eligibility Criteria
From the larger group who completed the Renter Needs Survey, staff requested
interviews with 1 03 surveyed households whose self -reported income qualified them as
‘extremely low -income’ (earning less than $18,250 annually for a one -person
household). From January through March 2017, a total of 46 households participated in
the interviews (‘interview cohort’). Staff analyzed program designs and costs based on
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averages of the interview cohort’s self -reported income, assets, resources, and
expenses.
Staff applied the proposed Basic Needs Budget (with local adjustments) to the interview
cohort of 46 ho useholds, added the anticipated two percent rent increase as of
September 1, 2017, and then filtered for the Housing Commission’s recommended
Threshold Eligibility Criteria as outlined in the Guidelines and as follows:
Threshold Eligibility Criteria for the POD pilot (household must meet all criteria below):
1. Household submitted a complete Renter Needs Survey by July 18, 2016;
2. Household participated in follow -up interviews;
3. Head of household is a senior aged 62 or older;
4. Household has occupied current San ta Monica rent -controlled apartment since
before January 1, 2000;
5. Household’s apartment must not be deed -restricted affordable housing of any
kind, including:
Properties purchased, rehabilitated, or constructed with City funding;
Apartments subject to t he Affordable Housing Production Program;
Federally assisted properties; and
Los Angeles County -assisted or owned affordable housing properties.
6. Renter Needs Survey initially indicated that the household income was equal to
or less than 30 percent of a rea median income (Extremely low income) and
household final income verification confirms it is no more than 50 percent area
median income (Low Income);
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7. Household is not currently participating in, or previously terminated from, any
Santa Monica Housing A uthority rent -subsidy programs;
8. No household members convicted of violent crime which occurred within the last
5 years, or who are registered sex offenders; and
9. Household income documentation indicates that the household is in need of the
subsidy (i.e. e arning less than the approved Basic Needs Budget), pursuant to
the income and asset determinations and verifications outlined in Section III of
the Guidelines, including but not limited to:
Earned and unearned income for all household members from all sou rces,
such as employment, cash -equivalent government benefits, and family
support; and
Imputed income for assets calculated at a rate of 10 percent annually (the
formula for the City’s Affordable Housing Production Program).
From among the 46 interviewed households, 26 households met all of the above
criteria. If the Council approves the program model and guidelines, and once all
threshold criteria are verified by staff, the 26 households would comprise the ‘pilot
cohort.’ The following figure demonstrate s the selection process:
Figure 1: Participant Selection for Pilot Cohort
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Of the 26 potential ‘pilot cohort’ households, there are 22 one -person households and
4 two -person households. The average head of household age is 72 years.
Average annual inco me is $13,763 for a one -person household and $19,281 for a two -
person household. All 26 households experience ‘rent burden’ at more than 30 percent
of income paid toward rent, with 22 households ‘severely rent burdened’ at more than
50 percent of income pa id toward rent.
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Pilot Budget
Applying the adjusted Basic Needs Budget to the pilot cohort, the total annual 12 -month
POD subsidy budget for the qualified households at their current rent would equal
$149,844 as shown below:
HH
Size
Average
after -rent
inc ome
Basic
Needs
Budget
Non -
Rent
Monthly
Average
POD
Subsidy
Monthly
Program
Subsidy
Costs
Annual
Program
Subsidy
Costs
Qualified
HH
POD
rent
subsidy
meets
Basic
Needs
Budget
POD rent
subsidy
does not
fully meet
Basic
Needs
Budget
1 $273 $740 $467 $10,280 $123,360 22 21 1
2 $742 $1,293 $551 $2,207 $26,484 4 3 1
Total POD Costs $12,487 $149,844 26 24 2
Average Per Household $480 $5,763
Due to evaluatio n scheduled at the 12 -month mark, staff recommend s that the initial
pilot subsidies continue for 14 months. The additional two months would provide time to
analyze 12 -month program data and present the findings to the Housing Commission
and Council in orde r to inform the future of the POD program. A 14 -month subsidy
budget would total $182,210 as follows:
HH
Size
Average
after -rent
income
Basic
Needs
Budget
Non -
Rent
Monthly
Average
POD
Subsidy
Monthly
Program
Subsidy
Costs
Annual
Program
Subsidy
Costs
Qual ified
HH
POD
rent
subsid
y
meets
Basic
Needs
Budget
POD rent
subsidy
does not
fully meet
Basic
Needs
Budget
1 $280 $740 $460 $10,128 $141,792 22 21 1
2 $572 $1,293 $721 $2,887 $40,418 4 3 1
Total POD Costs $13,015 $182,210 26 24 2
Average Per Household $501 $7,008
There are several potential challenges in implementing the Basic Needs Subsidy
Method. First, for at least two of the households, the subsidy needed to meet basic
needs exceeds the household’s rent. As a result, the Housing Commission
rec ommended that the subsidies not be capped at the amount of rent. Second, some
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property owners may refuse to accept the POD subsidy. In such cases, the Housing
Commission recommends that the POD subsidy be paid directly to tenants. Third, as a
result of any direct payment to tenants, there could be both personal income tax
implications and deductions from the amount of assistance that participants receive
from other government programs. During the pilot phase, staff would document any
challenges associated with direct payments in order to inform potential program
expansion.
Comparing Costs of the Subsidy Method
For the POD pilot cohort, the Basic Needs Method costs less than the traditional rent
subsidy method that looks at rent burden only. If the Tradit ional Rent Subsidy (the
Section 8 model) were applied to the 26 households above for a 12 -month period, the
total subsidy budget would be almost $40,000 above the 12 -month POD subsidy budget
of $149,844 for a total of $184,788.
Traditional Rent Subsidy M ethod
Projected 12 -Month Subsidy Budget
HH Size Monthly
Average HH
Subsidy
Monthly
Total POD
Subsidies
Annual
Total POD
Subsidies
1 $616 $13,543 $162,516
2 $464 $1,856 $22,272
Totals $592 $15,399 $184,788
Directing Additional Services and Resources to Pilot Participants
Council directed staff to consider how to connect POD participants with existing
services and goods for which they are eligible, and whether a local non -profit could
administer the program.
In the interview cohort of 46, staff fou nd that many are not currently availing themselves
of programs and services for which they are qualified and that could reduce their living
expenses. Of the 46 households, 15 applied for Section 8 in January 2017, 25 receive
Rent Control Fee Waivers, and 2 0 access at least one source of food assistance (food
stamps, food banks, or meals from family members outside the household).
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The Housing Commission recommended that the POD program include public benefits
assessments for participants , support during th e public benefits application process,
referr als to community resources , and tracking of program outcomes. Six -month and
12 -month program assessments would be completed to identify the challenges and
impacts of the POD , in order to inform the City’s decisi on about the pilot’s future.
A combination of City staff and consultants or services providers , to be determined,
would complete the assessments .
Measuring outcomes is a way to ensure that POD participants are receiving the
services and resources that th ey need. The Housing Commission and staff recommend
that the pilot program track measurable outcomes that are aligned with the articulated
program goals and, given the focus on ‘living with dignity,’ that POD also incorporate
Wellbeing Survey questions int o the household assessments. For the POD program
goals, the initial measurable outcomes would be as follows:
Track number of households able to retain housing versus number of
households displaced due to economic reasons.
Calculate household rent burdens before and during program participation.
Document initial challenges experienced as a result of not being able to
access government benefits, community services and resources and
household outcomes achieved as a result of accessing benefits, services, and
goods.
Document initial challenges experienced as a result of not being able to meet
basic living expenses and household outcomes achieved as a result of being
able to meet basic living expenses.
Track POD achievements, challenges, and expenses.
Identi fy key issues for potential expansion.
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Additionally, Housing Division staff will collaborate with the Human Services Division
and the Office of Wellbeing to select and incorporate a small number of Wellbeing
Survey questions into periodic assessments. Sta ff would present the questions for
Housing Commission review in fall 2017.
Alternatives
The Council could consider an alternative design approach for the program, such as
using a traditional subsidy method rather than the basic needs approach. However,
analyzing another approach would delay the effort and the opportunity to learn from the
pilot cohort.
Next Steps
If Council approves the POD Guidelines, staff would begin implementation, with a goal
of beginning to provide financial assistance in Septemb er or October 2017. POD is
envisioned as a 14 -month pilot. Staff would prepare an evaluation report at the end of
the period, including the total number of households assisted and an evaluation of the
pilot’s impact on housing retention and addressing bas ic needs. Staff would provide
written materials to participants at the outset to make clear the temporary nature of the
rent assistance, including the stipulation that funding is authorized for only twelve
months, though discontinuing rent assistance to pi lot participants could be extremely
disruptive to those households. The Housing Commission recommended that the City
recognize a moral commitment to support the pilot program participants after the
pilot year.
Fin a nci a l Imp a c ts a n d Bu d get A c tions
The Pre serving Our Diversity Pilot Program will cost $300,000 with $200,000 allocated
to subsidies and $100,000 allocated to administration and service support. Funds for
the program were included in the FY 2016 -17 budget in the Housing and Economic
Development D epartment but were not utilized. Implementation of the program
requires the appropriation of $300,000 (re -appropriation of FY 2016 -17 unspent funds)
to the FY 2017 -18 budget in account 04264.577290. The $100,000 allocated to
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administration and service supp ort would be charged to account 04264.577290. Of
this amount, no outside contract would exceed $80,000 and the remainder would be
allocated to the Housing Division to partially support the Housing Division’s
administration of the pilot. Future -year funding is contingent on Council budget
approval.
Prepared By: Lisa Varon, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. Draft Program Model and Guidelines
B. Housing Commission Report to Council 12.17.2015
C. City Council Meeting Item 13A 05.10.2016 (Web link)
D. Proposed FY 2017 -18 Budget to Council 06.14.2016 (Web link)
E. Renter Needs Survey Data
F. Proposed POD Guidelines to Housing Commission 06.16.2016 (Web link)
G. Proposed POD Pilot to Council 11.22.2016 (Web link)
H. POD Pilot Report to Housing Commission 04.20.20 17 (Web link)
I. POD Pilot Report to Housing Commission 05.18.2017 (Web link)
J. Housing Commission Minutes 05.18.2017 (Web link)
K. The Elder Economic Security Index for California Website (Web link)
L. The Elder Index Methodology Report (Web link)
M. Written Comments
ATTACHMENT A
Preserving Our Diversity (POD) Pilot Program
Proposed Program Model and Guidelines
Draft
I. PURPOSE , GOALS AND BACKGROUND
A. 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. Program design was approved by City Council
on [Date Here].
B. Purpose
The purpose of the Preserving Our Diversity (POD) Pilot Program is maintain
economic diversity by providing financial assistance to low -income long -term
residents aged 62 and above, living in rent -controlled apartments and whose
inability to pay rent may r esult in displacement from Santa Monica.
C. Nature of Pilot
POD is a pilot program of the City of Santa Monica. There may be unanticipated
issues that arise, and from which staff can learn valuable information for future
program viability . If any issues arise that are not addressed by these Guidelines,
staff will conduct a peer review of the issue and then the Housing Manager will
review the resolution for approval. All issues and resolutions will be documented
for future consideration.
D . Goals
The goals of POD are to:
1. H elp a limited number of low -income senior residents avoid residential
displacement by reducing household rent burden ;
2. Assist some of the City’s lowest -income and longest -term residents to live
with greater dignity by helping them meet their basic needs, such as rent,
food, medical care, and transportation, and by facilitating access to
mainstream goods and services;
3. Prov ide an opportunity for the City to gauge the effectiveness of POD as a
housing preservation and anti -displacement strategy and model ; and
4. Identify key issues to address in conjunction with considering any program
expansion.
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II. PROGRAM MODEL
A. Subsidy Formula
The formula for household subsidy will be as follows:
Total Annual Income less Rent = Annual Non -Rent Income
Difference Between Basic Needs Budget Non -Rent Expenses and Annual
Non -Rent Income = Annual Subsidy
Annual Subsidy divided by 12 = Monthly Subsidy
B. Basic Needs Budget
The household subsidy amount shall be determined using the Basic Needs
Subsidy Method. The Basic Needs Subsidy Method, which City staff created based
on the UCLA Elder Index Basic Needs Budget (BNB), aims to equalize the
remain ing amount of income each household retains after paying rent. As such,
household subsidies will not be capped at rent.
For the POD Program Model, u tilities a re adjusted from the UCLA Elder Index BNB
to amounts that match the Santa Monica Housing Authority’s average utility
allowances for currently served tenants , and are based on Los Angeles County
averages . Additionally, t o ensure that POD does not subsidize automobile usage,
transportation is adjusted down from $233 (based on national averages o f annual
miles driven multiplied by the Internal Revenue Service standard mileage
reimbursement rate ) to $52 (the rounded cost of a 30 -day senior EZ Transit Base
Pass/Zone 1 for the Big Blue Bus and Metro).
The Basic Needs Budget Method for the POD pilot will include the following
expenses and amounts per household size.
POD Pilot Basic Needs Budget
Non -Rent Expenses
EXPENSE
1 person HH
2 person HH
Food $264 $490
Healthcare $166 $332
Transportation $52 $103
Utilities $42 $55
Misc. (Phone, Cable,
Clothing, Etc.) $216 $313
Total Monthly Basic Non -
Housing Expenses $ 740 $1,2 93
Total Annual Non -Rent
Expenses $8,880 $15,516
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C. Definition of Rent
Household subsidy amounts are calculated with actual rents. Rent is defined as
the amount of money paid by the head of household to the landlord as evidenced
by a cancelled check or money order or verifiable receipt. As of September 1, 2017,
rent will be c alculated pursuant to the Annual Rent Control Board increase of two
percent.
D. Adjustments to Subsidy Amount
No adjustments to subsidy amounts will be made during the pilot year of POD
unless a tenant requests to withdraw, moves or becomes deceased .
E. Measuring Outcomes
Measuring outcomes is a way to ensure that POD participants are receiving the
services and resources that they need , and to determine the efficacy of program
expansion . The POD program will track measurable outcomes associated with the
articulated program goals as follows:
1. There will be three assessments during the 14 -month pilot: i nitial
assessment, mid -program assessment (6 -month) and post -program
assessment (12 -month).
2. The initial measurable outcomes tracked w ill be as follows:
N umber of households able to retain housing versus number of
households displaced due to economic reasons
H ousehold rent burdens prior to and during program participation
I nitial challenges experienced as a result of not being able to
access government bene fits, community services and resources,
and household o utcomes achieved as a result of accessing
benefits, services and goods
I nitial challenges experienced as a result of not being able to meet
basic living expenses and h ousehold outcomes achieved as a re sult
of being able to meet basic living expenses
POD programmatic achievements, challenges and expenses
Identify key issues for potential expansion
3. Given the City’s goal of offering POD rental subsidies so that participants
can ‘live with greater dignity’, Housing Division staff will collaborate with
the Human Services Division and the Office of Wellbeing to select and
incorporate five to ten Wellbeing Survey questions into the above -stated
assessments.
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III. GUIDELINES: ELIGIBILITY AND PRIORITY
A. Threshold Eligibility Criteria
Threshold Eligibility Criteria for the POD pilot (household must meet all criteria
below):
1. Household s ubmitted a complete Renter Needs Survey by July 18, 2016
by 5 p.m. PST ; and
2. Household p articipated in follow -up interviews ; and
3. Head of household is a senior aged 62 or older; and
4. Household must have occupied current Santa Monica rent -control
apartment since before January 1, 2000 ; and
5. Household’s apartment must not be deed -restricted affordable housing
of any kind , including:
Propertie s purchased, rehabilitated and/or constructed with City
Housing Trust Funds;
Apartments subject to the Affordable Housing Production Program;
Federally assisted properties; and
Los Angeles County -assisted or owned affordable housing
properties ; and
6. Renter Needs Survey initially indicated that the household income was
equal to or less than 30 percent of area median income (Extremely low
income) and household final income verification confirms it is no more
than 50 percent area median income (Low Incom e); and
7. Household is n ot currently participating in, or previously terminated from,
any Santa Monica Housing Authority rent subsidy programs; and
8. No household members convicted of violent crime which occurred within
the last 5 years, or who are registered sex offenders ; and
9. Household income documentation indicates that the household is in
need of the subsidy (e.g. earning less than the approved Basic Needs
Budget), pursuant to the income and asset determinations and
verifications described in Section III .
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B. 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 8 0 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 resident
household who has lived in their current S anta Monica apartment the
longest .
IV. GUIDELINES: ELIGIBILITY SCREENING
A. Identification
Screening for eligibility will require that all household members provid e
acceptable identification to the City. Two forms of identification will be required:
1. California Driver’s License or California Identification or United States
Passport; and
2. Social Security Card or current Social Security Administration
Statement
B. Household Members
1. Household members are defined as the individuals living in the unit ,
including spouses , dependents and other adult s .
2. Live -in aides are not considered household members. A live -in aide is
defined as person who resides with one or more elderly persons or
persons with disabilities, and who : a) is determined to be essential to
the care and wel lbeing of the person; b) is not obligated for the
financial support of the person; and c) would not be living in the unit
except to provide the necessary supportive services.
3. P articipants must provide 10 business days written notice of a potential
househol d member change (removed or added). Staff may provide
exceptions for emergency medical situations .
C. Household Income Determination
Household Income will be calculated as follows:
1. Earned and unearned i ncome from all household members; and
2. Earned and unearned i ncome from all sources, such as employment,
self -employment, cash -equivalent government benefits, pension, and
family support ;
3. Imputed income fr om assets calculated at a rate of 10 percent annually
(the formula for the City’s Affordable Housing Production Program); and
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4. Income for live -in aides is not included in the household income
determination.
D. Household Income Verification
For household income ap plicant will provide the following :
1. Wages – T wo consecutive months of stubs and/or W -2 Forms ; and
2. Taxes – Most current Federal Tax Forms if earned income reported , if
completed, or self -certification that forms are not required ; and
3. Public Benefits Statements – 2017 Benefits Statements from all
sources currently received ; and
4. Family Support Statement – Complete SMHA Verification of Support
Form ; and
5. Pension/Retirement Account Distributions – Three consecutive
monthly, quarterly or annual statements ; and
6. Temporary, Sporadic and Nonrecurring Income – Will not be counted
and is defined as provid ed in the Santa Monica Housing Authority
Administrative Plan.
E. Assets Determination and Verification
The Housing Division staff will review household assets (liquid and non -liquid).
Imputed income fr om assets will be calculated at a rate of 10 percent annually
(the formula for the City’s Affordable Housing Production Program). Applicant will
provide the following for all solely -owned assets as follows :
1. Checking and Savings Bank Accounts – T wo current co nsecutive bank
statements for all accounts
2. CD/Stock/Bonds/Retirement Acct/IRA /Money Market Funds – Most
recent annual investment value report and /or t wo consecutive
statements . Some assets may also be considered as income
depending on the frequency of dist ributions.
3. Real Estate – Deed or tax statement to verify ownership
4. Trusts – Copy of Trust
5. Personal Property – Personal property held as an investment and
valued more than $30,000
6. Life Insurance – Life Insurance Policy for whole life insurance policies
on ly
7. Annuity – Monthly/quarterly/annual statements
8. Asset Transfers – Self -c ertification that applicant has not transferred or
disposed of assets in the past 24 months
If a tenant does not have adequate documentation, staff may accept self -
certification pending the review described below.
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F. Staff Review
If an applicant is unable to provide the verification listed above, and instead
provides different documentation or information, a peer staff review will
determine if documentation is sufficient. T he Hous ing Manager will sign off to
concur.
V. GUIDELINES: P ARTICIPATION 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 participate in program surveys. 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
household s . A nonprofit partner w ill assist participant households with a cc essing
benefit programs and services for which they may be eligible . Participants will be
provided with confidentiality information and releases , as appropriate and in
keeping with standard soc ial service practices , and in regard to information -
sharing between the City and its non -profit partner for POD .
B. Notification to the City
Program participants are required to notify the City Housing Division :
Immediately if the landlord o r participant is t erminating 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.
VI. GUIDELINES: RENTAL SUBSIDY PAYMENT
A. Payment of POD Subsidy
The City will only pay the POD subsidy via direct deposit to a bank account.
Therefore, all participants are required to have a bank account and accept direct
deposits of the POD subsidy.
B. Non -Tra nsferability
The POD Program subsidies are non -transferable and rights to rental subsidies
cease when tenancy of the apartment is terminated. Participation 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.
8
C. Rental Subsidy Payments
S ubsidy payments will be made directly to Owners where Owners agree to
participate and where the POD subsidy does not exceed rent . Participating
owners will enter into written ag reements with the City and will be required to
accept direct deposit payments. Where legally feasible, and in cases where
Owners are not willing to participate in the POD program, POD subsidies will be
paid directly to participants via direct deposit.
VII. GUI DELINES: APPEALS
Appeals are permitted for income determination only. Appeals must be requested in
writing within 10 business days of the decision, and must include any documentation or
additional information to be considered. Appeals will be peer reviewed. Decision
notification will be issued within 10 business days.
1
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)
3
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.
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
July 24, 2017
The Honorable Ted Winterer , Mayor
The Honorable Gleam Davis , Mayor Pro Tempore
The Honorable Sue Himmelrich, Kevin McKeown, Pam O'Connor, Terry O'Day, and Tony Vazquez,
Councilmembers
City of Santa Monica
1685 Main Street
Santa Monica, CA 90401
Dear Mayor Winterer , Mayor Pro Tempore Davis , and Councilmembers Himmelrich, McKeown, O'Connor,
O'Day, and Vazquez,
As you may be aware, at its October 24 , 2016, meeting, the Social Services Commission voted unanimously to
recommend that the Preser ving Our Diversity program “include provisions (1) to determine whether prospective
beneficiaries 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.”
I nsofar as the Commission has not had the opportunity to review the current staff recommendations, I am writing
in an individual capacity to support the current staff recommendations and propose d guidelines.
The commitment to “d ocument initial challenges experienced as a result of not being able to access government
benefits, community services and resources and household outcomes achieved as a result of accessing benefits,
services, and goods ,” an ef fort to be undertaken collaboratively with the Human Services Division and the Office
of Civic Wellbeing, appears particularly promising. Indeed, I hope that staff will share its findings and analyses
not only with the Housing Commission but also wi th the Social Services Commission and other stakeholders,
such as the Commission for the Senior Community. If successful, t he effort could become a model for improving
experiences and outcomes for a wide variety of vulnerable populations.
In view of the n ational situation (sadly now echoing locally), I also would draw attention to a recommendation
submitted jointly last November by Michael Soloff and myself that appropriate allowances be made for POD
participants who may have reasonable concerns about making certain personal and/or family data available to the
federal government as a condition of applying for specific benefits , to the extent that such concerns may arise.
Thank you for continuing to develop the POD pilot program. Among other improvement s, the new wraparound
service provisions will make a substantial positive difference.
Sincerely,
Shawn Landres
Chair, Social Services Commission
Item 8-B
7/25/17
1 of 1 Item 8-B
7/25/17