SR 07-24-2018 8D
City Council
Report
City Council Meeting: July 24, 2018
Agenda Item: 8.D
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To: Mayor and City Council
From: Andy Agle, Director, Housing and Economic Development, Housing Division
Subject: Approve the Proposed Housing Trust Funds Initial Plan
Recommended Action
Staff recommends that the City Council approve the proposed Housing Trust Funds
Initial Plan, as recommended by the Housing Commission, which would establish
priority goals and funding allocations among target populations for the use of housing
trust funds, as described in Attachment A.
Executive Summary
Maintaining a diverse and inclusive community is one of the Council’s top Strategic
Goals and is at the core of our community’s values. Santa Monica voters have
repeatedly confirmed their support for affordable housing policies and funding. Given
increasingly powerful market pressures, preserving Santa Monica’s affordability to
people from the full range of incomes is increasingly challenging. Along with rent
control, inclusionary zoning, and the programs of our Housing Authority, allocation of
resources from the Housing Trust Fund is one of the key drivers of preserving housing
affordability levels in Santa Monica. These funds come primarily from redevelopment
loan repayments and the stream of ongoing revenue provided by the voter-approved
sales tax, Measures GS/GSH.
Current City policy establishes criteria for eligible uses of Housing Trust Funds (HTF) for
affordable housing preservation and production targeted to lower income households .
However, the criteria does not provide direction regarding allocation of funds to target
specific populations in need of housing assistance. The proposed HTF Initial Plan
(Initial Plan) would establish an annual funding limit and goals for allocating funds
equally to benefit seniors, persons living with disabilities, large families, and small
families/individuals. The Initial Plan would also establish a priority of expanding the
Preserving Our Diversity basic-subsidy pilot program, as well as housing persons on the
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Santa Monica Homeless Registry who are living in shelters or are unsheltered. Finally,
the Initial Plan would direct staff to increase affordable housing opportunities for Santa
Monica workers. Though not directly related to the HTF, the Housing Commission also
recommended that the City prioritize studying the feasibility of revising the City’s
inclusionary housing policies to achieve a broader range of household income levels
within inclusionary housing, similar to the policy adopted in the Downtown Community
Plan. The Initial Plan furthers the City Council’s strategic goals of maintaining an
inclusive and diverse community and addressing homelessness.
Background
On July 25, 2017 (Attachment B), Council adopted revisions to the Housing Trust Fund
Guidelines, which included a provision that staff prepare a proposed initial plan
regarding the use of Housing Trust Funds (HTF), to cover the remaining period of the
Housing Element, through 2021.
Discussion
Following Council adoption of the revisions to the Housing Trust Fund Guidelines, s taff
prepared and released a Draft HTF Initial Plan (Draft Plan) on February 13, 2018 (see
Attachment C). The Draft Plan included background information about the history and
role of the HTF, the existing affordable housing stock, new sources of revenue for
affordable housing, the status of the Housing Element’s Quantified Objectives for
housing production, and recent years’ housing production results pursuant to
Proposition R. Additionally, the Draft Plan provided three options for prioritizing the use
of Housing Trust Funds, which are summarized below:
Option 1 - Prioritizes current Quantified Objectives deficit of low- and moderate-
income housing
Option 2 - Includes priorities of Option 1, and adds a priority for persons living
with disabilities and/or experiencing homelessness
Option 3 - Prioritizes households with incomes below 60 percent of area median
income, with equal priorities for housing seniors, large families, small
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families/individuals, and persons living with disabilities and/or experiencing
homelessness
At the conclusion of the public review process, as an alternative to approving one of the
three options in the Draft Plan, the Housing Commission developed and approved the
Initial Plan. An overview of the public review process of the Draft Plan, including the
public comment received, is provided in Attachment D.
Housing Commission Discussion
At the April and May 2018 Housing Commission meetings, Commissioners held a
robust discussion regarding the Draft Plan, considering the three options presented in
the Draft Plan, summarized above, and proposing additional options, including
expansion of the Preserving Our Diversity (POD) program (a cash-benefit program
approved by the City Council which increases household income to a predetermined,
basic-needs amount for participating households; see Council staff report regarding the
POD pilot program, provided as Attachment E) and setting an annual HTF spending
limitation of $15-18 million.
A significant portion of the Housing Commission discussion centered on possible
expansion of the POD program, including to what extent the program should be
expanded, as well as the tradeoffs of using HTFs to fund the POD program. The
Commission discussion noted that using HTFs for the POD subsidy to households does
not increase the supply of affordable housing or satisfy the Quantified Objectives
(“Quantified Objectives” refer to the amount of new housing production Santa Monica is
required to produce within a Housing Element cycle, as mandated by State law).
Another concern was that the POD program is still in its pilot phase, and the efficacy of
the pilot program should be determined before transitioning toward program expansion.
Others argued that a core element of POD’s success is that by enabling extremely low-
income seniors to stay in their homes through a relatively small amount of City
assistance, it effectively preserves existing affordable-housing resources in a very cost-
efficient manner. While doing so, Commissioners also noted that it enables participants
to live with dignity as integral members of our community.
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Commissioners proposed different amounts for the expansion of the POD program,
ranging from a modest expansion to increasing the funding thirty-fold. A majority of
Commissioners ultimately compromised on a recommendation to increas e the POD
program funding to $2 million per year and expand the program to additional
households. Two commissioners who voted not to support the Initial Plan indicated
their decision was based primarily on disagreement regarding the proposed expansion
of the POD program or the associated proposal to use HTFs, though both
commissioners indicated their general support for the concept and goals of the POD
program.
Significant discussion also occurred regarding setting an annual HTF spending limit of
$15-$18 million. Some commissioners questioned whether the imposition of an annual
funding limit when funding is otherwise available would be prudent, given an
assumption that the cost of purchasing land (or existing apartments) and constructing
new housing would likely increase in the future. A further aspect of the discussion
focused on the issue of whether any unused portion of an annual funding limit would
accrue to the budget for the following year. An alternative would be to set the $15-18
million figure as a “target” to provide greater flexibility.
Proposed Plan approved by Housing Commission
Ultimately, the Housing Commission developed and voted to approve the Initial Plan
provided in Attachment A and summarized in the following table, with 4 of the 7
Commissioners voting in favor.
Housing Commission Recommendation - Initial Plan
Annual Funding
Limit
$15 - $18 million, unless an “unusually advantageous
opportunity presents itself”, such as development on City-
owned land, a development which results in dee p construction
cost savings (compared to typical construction methods), or a
development representing a deep reduction in the amount of
HTFs needed
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Housing Commission Recommendation - Initial Plan
Equal Spending on
Target Populations
Create affordable housing opportunities for seniors, persons
living with disabilities, large families, and small families
(including individuals) by providing equal amounts of funding
for those four target populations
Priority Goals
Expand the current Preserving Our Diversity (POD) pilot
household subsidy program into a $2 million per year program;
Provide permanent housing for persons on the Santa Monica
Homeless Registry who are not already in permanent
affordable housing
Increase
Opportunities for
Santa Monica
Workers
Direct staff to prepare a proposal for Council consideration, in
consultation with the Housing Commission, which facilitates
affordable housing opportunities for low-income Santa Monica
workers equitably in comparison with residents. The approach
is predicated on two factors: 1) expanding the POD program
and housing Santa Monica homeless persons only benefits
existing Santa Monica residents; and 2) Santa Monica workers
are critical to the City’s economic success, which in turn
generates transaction and use tax receipts that support
affordable housing
Apply the
Downtown
Community Plan
Approach to
Inclusionary
Housing on a
Citywide basis
Although not directly related to investments from the HTF, the
Commission recommended that staff conduct a feasibility
study to determine whether the inclusionary housing
requirements of the Affordable Housing Production Program
can be revised in a manner similar to the policy established in
the Downtown Community Plan, which requires that affordable
housing within a particular development be targeted to range
of income levels – from extremely low-income to moderate-
income - rather than just one income level
Although adoption of the Initial Plan would occur more than halfway through the current
Housing Element cycle (2014-2021), the HTF Guidelines establish that future HTF Plan
periods run concurrently with future Housing Element cycles. The Housing Commission
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recommends that allocation of HTFs for the proposed initial period consider HTF
commitments which have occurred since 2014, the beginning of the Housing Element
cycle. The Initial Plan would establish a policy that equal funding, over the period of the
plan, be allocated to four target populations: seniors; persons living with disabilities;
large families; and small families/individuals. Furthermore, implementation of th e
proposed ‘equal distribution of funds’ policy would consider two priorities - expansion of
the POD program and housing for persons experiencing homelessness – consisting
primarily of seniors and persons living with disabilities.
The following table reflects the allocation of $26.3 million of HTFs by target population
since 2014.
Target Population HTF Amount % of Total
Persons Living with Disabilities and
Persons Experiencing Homelessness 6,823,735$ 26%
Large Families -$ 0%
Seniors 10,570,940$ 40%
Small Families / Individuals 8,926,059$ 34%
TOTAL: 26,320,734$ 100%
Summary of HTF Allocation: 2014 - June 2018
The existing HTF balance is approximately $81 million, and staff estimates $59 million
in HTF revenue through 2021, for total estimated funding resources of approximately
$140 million. However, the Housing Commission recommended the use of only $15 -
$18 million of HTF annually, which equates to an amount not to exceed $63 million over
the three and one-half year period of the Initial Plan (through 2021), except in situations
in which an “unusually advantageous opportunity presents itself”.
Considerations of the Initial Plan
Current HTF guidelines do not specify goals, priorities, or funding allocations for target
populations, such as persons living with disabilities, persons experiencing
homelessness, seniors, large families, small families, and individuals. The Initial Plan
would continue the City’s historical practice of investing HTFs in affordable housing that
serves those with the greatest need and the fewest options (i.e., households with
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incomes less than 60 percent of the AMI) to reside in Santa Monica. Inherent in the
Initial Plan is an assumption that inclusionary housing requirements associated with
market-rate residential development will satisfy the Housing Element’s Quantified
Objectives for new construction of low- and moderate-income housing, while HTFs
focus on targeting resources primarily to extremely low- and very low-income
households. Furthermore, the equal allocation approach in the Initial Plan recognizes
that:
seniors are a growing share of our population;
homelessness is at crisis levels;
both senior and homeless populations include persons living with disabilities;
affordable family housing provides opportunities for growing families priced out of
the housing market to live in Santa Monica and helps ensure low-income families
are included in the community; and
preservation of existing housing is a core community value.
The Initial Plan’s limitation on annual HTF spending of $15-$18 million could constrain
opportunities to preserve and produce affordable housing at a juncture when a
significant amount of funding is available - $81 million now and an estimated $59 million
over the next three years. Although the Initial Plan allows for exceeding the annual
funding spending limitation if an “unusually advantageous opportunity presents itself”,
the absence of criteria as to what qualifies for a departure from the proposed annual
HTF spending limit could result in missed opportunities. The existing HTF Guidelines
approved by Council establish per-apartment loan limits but have not previously
established an annual limit on overall HTF spending of available funding. If Council
wishes to ensure that all available funding for affordable housing is invested in a timely
manner as opportunities arise, then restricting the use of available funding would be
inconsistent with that goal.
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Expanding the POD pilot program from the current budget of $300,000 ($200,000 for
cash assistance and $100,000 for administration), which serves 22 households, to the
proposed annual (assistance) budget of $2 million would represent a ten -fold increase
in the size of the program. Staff has concerns that this commitment may be premature
despite the initially promising results of the test. The POD program is a 14-month pilot
which began in November 2017 and an assessment of its effectiveness will not be
completed until late 2018. The assessment will measure housing stability, impact on
and increases in entitlement benefits, access to local services, and wellbeing.
Additionally, because the effect of the POD program on participants’ federal, state, and
county entitlement benefits is not yet fully settled with the relevant governmental
agencies, program expansion without such resolution could create challenges for future
participants. Pursuant to the Housing Commission’s recommendation, prior to
implementing any expansion of the current pilot program, staff would prepare more
detailed administrative guidelines, estimate the administra tive resources (eligibility
qualification, program administration, social service agency support, etc.) required to
achieve any expansion, and return to the Housing Commission and Council for
direction. An alternative to the recommendation would be to consider “expanding the
pilot as results warrant to as much as $2 million per year.”
Financial Impacts and Budget Actions
As Housing Trust Funds are set aside in fund balance for affordable housing, t here is no
immediate financial impact or budget action necessary as a result of the recommended
action. Staff would return to Council if specific budget actions are required in the future.
Prepared By: Jim Kemper, Housing Program Manager
Approved
Forwarded to Council
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Attachments:
A. Housing Commission Proposed Initial HTF Plan
B. Council Staff Report - HTF Guidelines 7.25.2017 (Web Link)
C. Draft Housing Trust Fund Plan (February 2018)
D. Draft HTF Plan Review Process and Public Comment
E. City Council Staff Report - POD Program 7.25.2017 (Staff Report)
F. Written Comments
Attachment A
Housing Commission Recommendation to City Council – Proposed HTF Plan
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The Santa Monica Housing Commission recommends that the City Council include the
following elements in the initial Housing Trust Fund (“HTF”) plan for the 2013-2021
Housing Element cycle (“the Plan”):
1. Unless an unusually advantageous opportunity presents itself during a particular
fiscal year, the City should enter into HTF spending commitments totaling no more than
$15 million to $18 million during each fiscal year. This will help to assure that funds are
available when unusually advantageous opportunities arise. Examples of unusually
advantageous opportunities include, but are not limited to, (1) constructing affordable
housing on City owned land, (2) constructing affordable housing in a manner that
provides unusual and deep cost-savings, and (3) constructing affordable housing
financed in a manner that provides an unusual and deep reduction in the HTF
contribution required to complete the project.
2. A priority goal of the Plan is to ramp up the Preserving Our Diversity (“POD”)
local rent subsidy program to a range that requires a commitment of no more than $2
million per fiscal year in HTF funds. No actual expansion of the POD program will occur
unless and until a detailed plan for doing so is proposed by City staff, vetted by the
Housing Commission, and approved by the City Council. Any portion of the potential $2
million in annual HTF funding that is not actually used for the POD program in any
particular fiscal year shall remain available for commitment in future fiscal years to other
Plan priorities.
3. A priority goal of the Plan is to provide permanent housing in Santa Monica for
those among the population of homeless persons that the City Council determines the
City should take responsibility to permanently house in the City. This should include
“Santa Monicans” who are homeless. Subject to further refinement, this group is
deemed to include those persons on the Santa Monica Homeless Registry as of the
date the Plan is adopted who are not already in permanent housing. The City should
look to leverage as much as possible federal funds, State funds, County funds, other
City funds, or private funds, to accomplish this goal.
Attachment A
Housing Commission Recommendation to City Council – Proposed HTF Plan
2
4. The remainder of the HTF funds spent each fiscal year should be used to create
new affordable housing units for seniors, for physically and mentally challenged
persons, for large families, and for small families (including individuals). Unless one or
more unusually advantageous opportunities dictate a different result, a goal of the Plan
is to provide roughly equal HTF funding support for affordable housing targeted to each
of these four populations over the life of the Plan. The equal funding support
determination shall take into account HTF funding committed during the entire lifetime of
the 2013-2021 Housing Element, even if it occurred prior to the adoption of the Plan.
The equal funding support determination also shall take into account HTF funding
committed to the POD program (which is for senior housing) and to permanently
housing Santa Monicans who are homeless (who may be members of any of the four
populations).
5. The City’s existing affordable housing programs generally provide the highest
preference to persons displaced without fault from their existing homes in Santa
Monica, and provide the next highest preference to persons who either already live in
Santa Monica or who work full-time in Santa Monica. The two goals of the Plan
identified in paragraphs #2 and #3 above, however, only serve persons who already live
in Santa Monica. The City recognizes that the daily efforts of low income workers are
particularly critical to the businesses (including hotels, restaurants, and retail stores)
that generate the sales and use taxes supporting the HTF through Measures GS and
GSH, as well as the sales and use taxes and transit occupancy taxes that fund a
substantial portion of the City’s budget. City staff therefore is directed to develop, in
consultation with the Housing Commission, a proposal to increase —to the extent it is
necessary and feasible to do so in order to maintain an overall equal preference for
affordable housing opportunities in the City—the preference in other HTF funded
projects for low-income Santa Monica workers.
6. City staff is directed to develop as soon as possible, in consultation with the
Planning and Housing Commissions, a proposal to adjust the AHPP program that
applies outside of the Downtown Community Plan. The proposal shall be based on a
Attachment A
Housing Commission Recommendation to City Council – Proposed HTF Plan
3
feasibility study, and shall take into account past and projected future production of
housing through inclusionary zoning and HTF funded projects, as well as the quantified
objectives in the Housing Element and the requirements of Proposition R.
Draft Housing Trust Funds Initial Plan
February 13, 2018
1
INTRODUCTION
City Council adoption of revisions to the Housing Trust Fund Guidelines in July 2017
included a provision that staff prepare an “initial proposed plan” (Plan) regarding the use
of Housing Trust Funds (HTF), to cover the remaining period of the Housing Element
(through 2021). The proposed Plan should be made available for a 45 -day public
comment period, during which a public meeting is also held. Subsequently, the Housing
Commission will review the proposed Plan and public comments received , and make a
recommendation to the City Council, for final consideration and approval. The following
discussion considers opportunities to target City-funded housing based on income levels,
as well as population to be served by proposed housing.
BACKGROUND
In the last 25 years, the City has provided more than $350 million in housing trust funds
to preserve and produce approximately 2,700 affordable apartments. City housing trust
funds were established in the 1980’s, dedicating funds from various sources for the
purpose of preserving and producing affordable housing. Administrative guidelines for
the use of the funds were concurrently established, and approved by Council, to
streamline the process for funding affordable housing. The affordable housing created
with the trust funds has allowed residents with low-and moderate incomes to remain in
Santa Monica, and provided opportunities for Santa Monica workers to live close to their
jobs.
In August 2015, Council established maintaining an inclusive and diverse community as
one of five strategic goals. The strategic goal includes a focus on supporting economic
diversity by helping low- and moderate-income households to afford to live and thrive in
Santa Monica. The City’s Housing Trust Funds provide a mechanism to preserve and
produce affordable housing opportunities, by subsidizing the acquisition/rehabilitation of
existing housing, and newly constructed affordable housing. Affordable housing acts as
a safety net for low- and moderate-income residents priced-out of, or displaced from, their
current housing. Census data indicates that Santa Monica has 17,135 low- and
moderate-income renter households, and that 7,700 of those households pay more than
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
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one-half of their income toward rent. The 2017 Santa Monica homeless count found 921
individuals living on the street, in vehicles, and shelters.
Affordable Housing Stock
Existing affordable housing in Santa Monica comprises approximately 4,500 apartments
created through a combination of City housing trust funds, inclusionary zoning, and direct
federal assistance. Tables 1 – 3 present information regarding income targeting, housing
types, and target populations. The variety of housing types serve individuals, families,
seniors, persons living with disabilities, and persons experiencing homelessness.
Affordable rents range from $340 (studio) to $2,444 (3-bdrm), and eligible household
incomes range from extremely low-income ($18,950 for a 1-person household) to
moderate-income ($81,100 for a 3-person household). The following tables depict the
housing types, populations served, and income levels (# of Homes includes completed,
in-construction, and approved).
Table 1
Table 2
Income Level # of Homes Percent
Extremely Low 188 4%
Very Low 2,064 45%
Low-60 885 19%
Low-80 648 14%
Moderate-100 675 15%
Moderate-120 118 3%
4,578 100%
Affordable Housing Stock - Income Level Served
Type # of Homes % of Total
0-Bedroom 1,203 26%
1-Bedroom 1,716 37%
2-Bedroom 1,069 23%
3-Bedroom 466 10%
4-Bedroom 19 0.4%
Mobilehome 105 2.3%
4,578 100%
Affordable Housing Stock - Type
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
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Table 3
Note: “Extremely Low-Income” = 30% or less of Area Median Income (AMI); “Very Low-
Income” = 50% of AMI or less; “Low-60” = 60% of AMI or less; “Low-80” = 80% of AMI or
less; “Mod-100” = 100% of AMI or less; and “Mod-120” = 120% of AMI or less.
DISCUSSION
New Affordable Housing Revenue
Voter approval of Propositions GS and GSH in November 2016 established an ongoing
revenue source for the preservation and production of affordable housing, initially
estimated at eight million dollars annually. Additionally, Council allocated other funds
toward affordable housing, including the repayment of City loans to the former
redevelopment agency. Other revenue sources dedicated to affordable housing include
developer fees and affordable housing loan repayments. However, these other sources
do not represent a significant source of revenue and can fluctuate widely from year to
year.
Update on Quantified Objectives and Proposition R
State law (Government Code Section 65580 to 65589) requires that the City adopt a
Housing Element (part of the General Plan) which includes housing production goals,
known as quantified objectives, for a wide spectrum of income levels based on growth
projections and need. The income levels are grouped into five categories: 1) Extremely
Low-Income, 2) Very Low-Income, 3) Low-Income, 4) Moderate-Income, and 5) Above
Moderate-Income. The following table indicates the 2017 income levels for various
household sizes (Above Moderate-Income means incomes greater than listed for the
Type # of Homes % of Total
Seniors 1,077 24%
Singles 1,650 36%
Special Needs 263 6%
Small Family 1,005 22%
Large Family 478 10.4%
Mobilehome 105 2.3%
4,578 100%
Affordable Housing Stock - Population Served
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
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Moderate-Income category). The figures listed in the income categories are derived as
a percentage of the area median income (AMI) and adjusted for household size, as
published by the State of California. The 2017 AMI for Los Angeles County is $64,800.
The current Housing Elements covers the period of 2013 – 2021. The following table lists
Santa Monica’s Quantified Objectives and the current status of housing production.
Table 4
The quantified objectives tracking table (Table 4) indicates the housing production goals
for the Low-Income and Moderate-Income categories have not yet been met, with a
current deficit of 122 and 24 units, respectively.
Household
Size
Extremely
Low (30%)
Very Low
(50%)
Low
(80%)
Moderate
(120%)
1 $18,950 $31,550 $50,500 $54,450
2 $21,650 $36,050 $57,700 $62,200
3 $24,350 $40,550 $64,900 $70,000
4 $27,050 $45,050 $72,100 $77,750
INCOME LIMITS (ANNUAL)
Income Category
Quantified
Objective
Units
Built
Units in
Construc-
tion
Units with
Planning
Approval Total
Quantified
Objective
Surplus/Deficit ( )
Extremely Low-Income (30% AMI)83 80 10 60 150 67
Very Low-Income (50% AMI)214 130 97 65 292 78
Low-Income (80% AMI)263 104 24 13 141 (122)
Moderate-Income (120% AMI)111 19 8 60 87 (24)
Above Moderate (Market Rate)700 555 548 1020 2,123 1,423
Totals:1,371 888 687 1,218 2,793 1,422
Affordable Housing Subset 671 333 139 198 670 (146)
* counts only negative #'s from above
QUANTIFIED OBJECTIVES TRACKING
Housing Element 2013-2021
*
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
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Proposition R, adopted by Santa Monica votes in 1990, requires that thirty percent (30%)
of all multifamily housing built annually be affordable to low- and moderate-income
households, and that at least one-half of the affordable housing be affordable to low-
income households. The following table represents years included in the current Housing
Element cycle and lists the annual affordable housing surplus/deficit. FY13/14 indicates
a surplus of 118 low- and moderate income homes, while the subsequent three years list
annual deficits of 17, 16, and 18, respectively. Alternatively, the data can be viewed as
indicating no deficit of low- and moderate-income homes, due to the cumulative surplus
(of 67 homes) produced during the four- year period.
Table 5
Reviewing the affordable housing production data in Tables 4 & 5 together, the quantified
objectives deficit of 146 low- and moderate-income homes (Table 4) exceeds the surplus
of 67 low- and moderate-income homes in the Proposition R tracking table (Table 5).
It should be noted that affordable housing created using City housing trust funds has
historically helped satisfy the Proposition R goals. Additionally, the housing production
represented in the annual Proposition R report reflects a snapshot of particular
development cycles, and is problematic for viewing as strategic guidance. Therefore,
when considering housing trust fund priorities, the unmet quantified objectives (i.e.,
deficits) indicated in Table 4 can be considered a key data source for strategic guidance.
Year
%
Affordable
Low/Mod-Income
Housing
Surplus/Deficit ( )
FY 2013/2014 56%118
FY 2014/2015 19%(17)
FY 2015/2016 21%(16)
FY 2016/2017 13%(18)
67Total:
Proposition R Tracking
Multifamily Housing Production
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
6
Recent HTF Funding Approvals
Since the most recent update to the Housing Trust Fund Guidelines in July 2017, the City
has issued three funding commitments for affordable housing. Two of the funding
commitments involve future new construction of 47 apartments and the other involves the
rehabilitation of 26 existing apartments. One of the future new construction developments
is targeted to seniors and the other is targeted to young adults who are at -risk of becoming
homeless. The affordable housing property pending rehabilitation is comprised almost
entirely of studio and one-bedroom apartments.
Proposed Housing Trust Fund Priorities
Assuming HTF average annual revenue of approximately $15 million for the years 2018-
2021 (i.e., $60 million), plus the existing HTF balance of approximately $45 million, and
an average HTF subsidy of $350,000 approximately 300 affordable homes could be
created through new construction. However, creating affordable housing through
acquiring, rehabilitating, and dedicating existing apartments typically requires a
significantly higher City HTF subsidy - recently more than $500,000 per home.
Opportunities for obtaining non-City funds to preserve existing housing is minimal,
resulting in the necessity for 100% HTF financing for acquisition/rehabilitation properties.
Newly constructed affordable housing developments obtain tax credit financing, which
typically covers 40%-60% of the total development cost. Under the two HTF subsidy
scenarios mentioned above, $110 million in HTF monies can produce approximately 315
newly constructed affordable homes, but only approximately 220 affordable homes
created through acquisition and rehabilitation. For the sake of developing funding plan
goals, a maximum projected production of 300 affordable homes is used.
Although the Quantified Objectives and Proposition R requirements set goals for the
affordability levels of housing, current HTF policies do not specify goals for target
populations, such as persons living with disabilities, persons experiencing homelessness,
seniors, large families, etc. Approaches to prioritizing the use of Housing Trust Funds
(HTF) during the term of this Plan could include goal-setting for affordability levels, target
populations, or both.
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
7
With respect to affordability levels, because the City has not yet reached its Quantified
Objectives for the current Housing Element period, the Initial Plan could include minimum
goals for the unsatisfied objectives for low-income and moderate-income housing.
However, because the City traditionally has not used its Housing Trust Funds to support
moderate-income housing, and has generally targeted housing for extremely low-income
and very low-income households, the focus on moderate- and low-income households
would represent a shift in strategy.
Given the tension between satisfying the Quantified Objectives and serving those with
the greatest need, three options are presented for consideration.
Option 1 (below) presents an approach to addressing the Quantified Objectives’ deficit in
low- and moderate-income housing. While the approach would help ensure that the City
meets its Quantified Objectives, it could create some unintended consequences. First, it
could limit the City’s ability to invest in housing for people with disabilities and people
experiencing homelessness, which typically targets extremely low-income households.
Secondly, it could reduce opportunities to leverage the City’s investments with other
funding, as tax credits, particularly the more competitive, high-yield tax credits, which are
allocated toward housing with deeper affordability targets.
OPTION 1
Quantified Objectives
# of Residences
Current
Deficit
Funding
Commitments1
Minimum
Goal
New Construction
Low Income (51%-80% of AMI) 122 19 103
New Construction Moderate Income
(81%-120% of AMI) 24 0 24
Acquisition/Rehabilitation
Very Low-Income (0% - 50% of AMI) 40 5 35
Acquisition/Rehabilitation
Low-Income (51% - 80% of AMI) 40 21 19
1. Number of homes for which funding commitments made since updates to HTF Guidelines
adopted on July 25, 2017.
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
8
Option 2 [below] presents an approach to addressing the Quantified Objectives’ deficit (in
the Low- and Moderate-Income categories), while working to ensure that housing is
created for special needs populations (people with disabilities and people experiencing
homelessness) who would not benefit from housing affordable to households at 80
percent or 120 percent of area median income.
OPTION 2
Quantified Objectives / Target
Population
# of Residences
Current
Deficit
Funding
Commitments1
Minimum
Goal
New Construction
Low Income (51%-80% of AMI) 122 19 103
New Construction
Moderate Income (81%-120% of AMI) 24 0 24
Acquisition/Rehabilitation
Very Low-Income (0% - 50% of AMI) 40 5 35
Acquisition/Rehabilitation
Low-Income (51% - 80% of AMI) 40 21 19
People Living with Disabilities and/or
Experiencing Homelessness N/A 8 50
1.Number of homes for which funding commitments made since updates to HTF Guidelines adopted
on July 25, 2017.
Option 3 (see next page) maintains the City’s historical practice of investing Housing Trust
Funds in affordable housing that serves those with the greatest need and the fewest
options, i.e. those households that typically make less than 60% of the area median
income or less. Support for Option 3 comes with an assumption that inclusionary housing
requirements associated with market-rate residential development will satisfy the
Quantified Objectives for (new construction of) low- and moderate-income housing.
Additionally, Housing Element regulations focus on creating housing for all income levels
but do not establish priorities among target populations. Therefore, Table 3 reflects equal
allocations among target populations of the Santa Monica community. Furthermore, the
equal allocation recognizes that: 1) seniors are a growing share of our population; 2)
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
9
homelessness is at crisis levels in the region and Santa Monica is limited in its ability to
provide supportive housing for persons living with disabilities, including mental health
disabilities; 3) affordable family housing provides opportunities for growing families who
are priced out of the housing market to live in Santa Monica and helps ensure low-income
families are included in the community; and 4) preservation of existing housing is a core
community value. Option 3 imposes maximums on each housing typology in an attempt
to ensure that the needs of all target populations are addressed and to avoid spending all
or the majority of funds on housing that serves one target population.
OPTION 3
Target Population
# of Residences
Maximum Funding
Commitments1
Remaining
Maximum
People Living with Disabilities and/or
Experiencing Homelessness 100 8 92
Seniors 100 39 61
Large Families 100 0 100
Small Families / Individuals2 100 26 74
1.Number of homes for which funding commitments made since updates to HTF Guidelines adopted on
July 25, 2017.
2. Acquisition, rehabilitation, and deed restriction of existing housing would generally fall into the “Small
Families / Individuals” category.
SUMMARY
The three options presented in this draft plan represent various strategies for achieving
affordable housing goals using housing trust funds. Option 1 focuses solely on income
targeting goals but does not specify target populations. Option 2 comprises a mix of
income targeting and special needs housing, and assumes some of the low-income
housing will be produced through inclusionary housing requirements. Option 3 aims to
serve a broad spectrum of target populations (which are extremely low-, very low-, and
low-income households).
Attachment C
Draft Housing Trust Funds Initial Plan
February 13, 2018
10
It is critical to note that the proposed Plan does not address the use of housing trust funds
for rental subsidies or similar household subsidy programs such as the Preserving Our
Diversity (POD) pilot program. Rental/household subsidies are not currently an eligible
use under the HTF Guidelines, and the proposed Plan is intended to complement the
existing Guidelines. In the event the Housing Commission recommends using a portion
of Housing Trust Funds for rental/household subsidies, Council consideration and
approval of revisions to the HTF Guidelines would be necessary and the Plan would be
revised accordingly.
Attachment C
Attachment D
Draft Plan Review Process and Public Comment Received
Draft Plan Review Process
The Draft Plan was release on February 13, 2018 and posted on the City’s website. A
45-day public comment period was open through March 30, 2018. During the public
comment period, on March 15, 2018, the Housing Commission sponsored a Public
Input Forum to provide an opportunity for public input on the Draft Plan. The Draft Plan
was considered by the Housing Commission at meetings of the Commission on April
19, 2018 and May 3, 2018, allowing for additional opportunities for public input on the
Draft Plan.
The written public comment received regarding the Draft Plan is summarized in the
following table. Copies of the written comment received are included following the
summary table.
Commenter Summary of Written Public Input
General Public
If Housing Trust Funds will be allocated to Community
Corporation of Santa Monica (CCSM), then CCSM should
revise its tenant selection process to prioritize Santa Monica
residents
Resident
More transparency is needed regarding the balance of Housing
Trust Funds, with regular updating and explanations of
increases/decreases; also, questions about where the funds are
held and how they are invested
Community
Corporation of
Santa Monica
Moderate-Income housing should be created by inclusionary
housing program, not HTF; HTF Plan should have goals based
on greatest need rather than minimum and maximum housing
production numbers, and allow flexibility when affordable
housing opportunities arise; land use policy could be revised to
facilitate more affordable housing; City-owned land could be
considered for affordable housing; strategies aimed at
achieving cost efficiency should be explored, such as greater
density, reduced parking requirements, new construction
technologies, and design approval streamlining; use of HTFs for
Preserving Our Diversity (POD) subsidy program should be
capped and limited, as POD does not increase supply of
affordable housing.
Attachment D
Draft Plan Review Process and Public Comment Received
Commenter Summary of Written Public Input
Resident
Funds from Measure GS should be used for senior housing,
consistent with campaign literature; HTFs should be used to
create new affordable housing north of Wilshire, versus in the
Pico Neighborhood; more workforce housing for moderate -
income households is needed.
Commission for the
Senior Community
Endorses Option 3 from the initial Proposed HTF Plan, which
targets lower income senior households, as well as persons
living with disabilities and persons experiencing homelessness
– both groups which also include seniors; inclusionary housing
can create affordable housing for low- and moderate-income
households; supports use of HTFs for expansion of POD
program, if POD pilot program is deemed successful.
Disabilities
Commission
Majority of Commissioners support Option 3 from the initial
Proposed HTF Plan due to the focus on lower income
households with greatest need and fewest options for
affordable housing; two Commissioners support Option 2 due to
the focus on persons living with disabilities; none of the
Commissioners support Option 1, as that approach would focus
on household income levels but not specific target populations.
From: Zoë Muntaner
Sent: Tuesday, February 27, 2018 11:52 AM
To: Steven Aguilar <Steven.Aguilar@SMGOV.NET>
Cc: Rick Cole <Rick.Cole@SMGOV.NET>
Subject: Housing Trust Fund Plan Comment for Housing Commission
Mr. Aguilar,
Initially, we would like to express concern at the CCSM Affordable Housing
guidelines. According to City Manager Rick Cole, they do not prioritize Santa
Monica residents who have been displaced or at risk of displacement. It is my
understanding that the city does not agree with this guideline and oppose the
current practice.
If the Housing Trust Fund plan will go towards the funding of CCSM affordable
housing, we'd like to propose the Housing Commission discuss how to update
CCSM guidelines to benefit and prioritize Santa Monica residents that have been
affected by the affordable housing crisis.
We will supply further comments about the Plan later in March.
Kindly reply.
In GRACE,
Zoë Muntaner
Founder & Chief Compassion Officer
Building COMPASSIONATE Cities Since 2013
PUBLIC COMMENTS RECEIVED ON PROPOSED HOUSING TRUST FUND PLANAttachment D
From: Steven Weinraub
Sent: Wednesday, March 14, 2018 8:15 PM
To: Steven Aguilar <Steven.Aguilar@SMGOV.NET>
Subject: Housing Trust Fund Plan
How Much Money is in the Housing Trust Fund?
On February 4th, 2017, at a joint meeting of the Housing Commission and the
Social Services Commission at the SM Convention Center, it was mentioned
during a presentation by Barbara Collins that the Housing Trust Fund had about
$22 million as its present balance.
Later that year, at the City Council meeting on July 25th, 2017, in which the
Housing Authority staff presented the Revisions to the Housing Trust Fund
Guidelines, the City Council asked the staff how much money is in the Housing
Trust Fund, and both Andy Agle & Jim Kemper looked at their notes and replied
about $42 million.
At a recent Housing Commission meeting held on February 15th, 2018, co-chair
Richard Hilton read a report or statement from the Housing Authority which
said that the balance in the Housing Trust Fund is over $72 million.
And now, this most recent Proposed Housing Trust Funds Initial Plan, on page 6,
states the existing Housing Trust Fund Balance is approximately $45 million.
There needs to be more transparency in reporting the exact balance in the
Housing Trust Fund. The Housing Authority website, in its movement toward
transparency, now shows loan applications and other information, and this
website should also show the balance of the amount in the Housing Trust
Fund. This amount should be updated every month, and there should be a brief
accounting along with this balance showing the funding source as to why the
balance in the HTF went up and the expenditure reasons as to why the balance
went down from the previous month.
I am aware that the Housing Trust Fund receives its revenue from Mandates GS
& GSH and from matching funds from the City Council and possibly receives
funds from Proposition H from the County. But I was also told that the Housing
Trust Fund was receiving revenue from selling City owned units on Ocean
Avenue and from the repayment of outstanding loans.
Attachment D
In addition to transparency of the balance amount, there is a question as to
where exactly is the balance of the money in the HTF being held, or being
invested, and who oversees or controls these funds in the millions & millions of
dollars? Is there someone on the staff at the Housing Authority who controls
the funds in the Housing Trust Fund or is it someone else affiliated with the
City? And is the money in this fund invested in such a way that it earns
interest? Or is it invested in a brokerage account in which it earns interest &
dividends & capital gains? These are all issues which require some form of
transparency.
And, finally, on another topic, why is the head person of the Santa Monica
Housing & Economic Development Agency, Andy Agle, never present at these
Housing Commission meetings? The head person of the Santa Monica Planning
Division is David Martin and he routinely attends and speaks at monthly
Planning Commission meetings. So, why is it that the head person, Andy Agle,
never shows up at the monthly Housing Commission meetings? I have seen Mr.
Agle at City Council meetings when there are issues related to the Housing Trust
fund and he showed up at private meetings with the City Manager regarding
Step Up on 26th Street. So, my question is, why is it that Barbara Collins &
James Kemper, who are staff members of the Housing Authority, show up at
these monthly Housing Commission meetings to advise the Housing Commission
and not the lead person Andy Agle?
Steven Weinraub
Attachment D
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From: Mathew Millen
Sent: Thursday, March 29, 2018 11:15 AM
To: Steven Aguilar <Steven.Aguilar@SMGOV.NET>
Subject: Housing Trust Fund Comments
Attached is campaign material from the GS (great schools) and GSH (Great Senior
Housing) Promising if the voters raised the sales tax 1/2 would be for Great
Schools and 1/2 would be for Great Senior Housing.
1)SO ...the City has to use the GS sales tax money allocated to the Housing Trust
Fund for Great Senior Housing..If the CIty is not going to do that the City needs to
inform the voters of this deceit.
2) the City has a history of using housing money to perpetuate the segregation of
the minorities in the Pico Neighborhood To implement Pres Obama's
Affirmatively Furthering Fair Housing the next 500 units of city developed housing
have to be in the North of Wilshire neighborhood
3) We need work force housing..so non elderly senior units should be in the
Moderate 100% to 120% of median income range.
Thanks for your consideration
Mathew Millen
Attachment D
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Disabilities Commission
1685 Main Street, Room 212
PO Box 2200
Santa Monica, CA 90407-2200
Tel: 310-458-8701 | TDD: 310-458-8696 | Fax: 310-458-3380
humanservices@smgov.net
April 16, 2018
Santa Monica Housing Commission
RE: Disabilities Commission Response to Proposed Housing Trust Fund Plan
Dear Housing Commission:
The Disabilities Commission would like to recommend the following for your consideration
based on our review of the referenced plan describing opportunities to target City-funded
housing based on income levels, as well as the population to be served by proposed housing.
At the April 2nd Disabilities Commission meeting,
A majority of the Commission expressed support for Option 3 to continue the City’s
historical practice of investing Housing Trust Funds in affordable housing that serves
those with the greatest need and the fewest options, i.e. those households that typically
make less than 60% of the area median income or less.
Two Commissioners voted in support of Option 2, because of the focus on people with
disabilities.
The Commission does not support Option 1, which only focuses on tenant income and
does not specify target populations to benefit from the housing development.
In addition to supporting the City’s affordable housing objectives for people with disabilities, the
Commission also encourages continued focus on implementing universal design concepts in
future City construction and rehabilitation projects to create more accessible options and to
support inclusion of a wide range of individual preferences and abilities.
The Commission would like to thank you for considering the interests of the people with
disabilities during the planning and execution of City housing objectives impacting access,
affordability and diversity.
Sincerely,
Nanci Linke-Ellis, Chair, Santa Monica Disabilities Commission
/s/ Nancie Linke-Ellis
Marielle Kriesel, Vice Chair, Santa Monica Disabilities Commission
/s/ Marielle Kriesel
Attachment D
City Council
Report
City Council Meeting: July 25, 2017
Agenda Item: 8.B
1 of 14
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 Guidelines 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 aims 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 may 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 resources 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 assistance.
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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
(Attachment 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 key 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 magnitude 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-controlled 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 are 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:
x Using residual income available after rent as the subsidy metric;
x Obtaining expert opinion regarding basic living costs;
x Prioritizing long-term residents of rent-controlled housing
x Maximizing the reach of the pilot program;
x Directing additional services and resources to pilot participants, including
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,
x Considering a local nonprofit to administer the program.
Discussion
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
discussions 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 requested 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 household 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
Healthcare $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
Comparatively, 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 multiplied 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 Subsidy 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 Expenses = 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 person
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 $1,293
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 103 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 households, 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 Santa Monica rent-controlled apartment since
before January 1, 2000;
5. Household’s apartment must not be deed-restricted affordable housing of any
kind, including:
x Properties purchased, rehabilitated, or constructed with City funding;
x Apartments subject to the Affordable Housing Production Program;
x Federally assisted properties; and
x 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 area 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 Authority 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. earning 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:
x Earned and unearned income for all household members from all sources,
such as employment, cash-equivalent government benefits, and family
support; and
x 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 income 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 paid 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
income
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 evaluation scheduled at the 12-month mark, staff recommends 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 order 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
Qualified
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
recommended 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 Traditional 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 Method
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 found 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 20 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 the public benefits application process,
referrals 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 decision 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 they 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 into the household assessments. For the POD program
goals, the initial measurable outcomes would be as follows:
x Track number of households able to retain housing versus number of
households displaced due to economic reasons.
x Calculate household rent burdens before and during program participation.
x 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.
x 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.
x Track POD achievements, challenges, and expenses.
x Identify 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. Staff 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 September 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 basic 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 pilot 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.
Financial Impacts and Budget Actions
The Preserving 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 Department 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
14 of 14
administration and service support 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 04.20.2017 (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 result 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. Help 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. 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 key issues to address in conjunction with considering any program
expansion.
2
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
remaining amount of income each household retains after paying rent. As such,
household subsidies will not be capped at rent.
For the POD Program Model, utilities are adjusted from the UCLA Elder Index BNB
t o a m o u n t s t h a t m a t c h t h e S a n t a M o n i c a H o u s i n g Authority’s average utility
allowances for currently served tenants, and are based on Los Angeles County
averages. Additionally, to ensure that POD does not subsidize automobile usage,
transportation is adjusted down from $233 (based on national averages of 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 $1,293
Total Annual Non-Rent
Expenses $8,880 $15,516
3
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 calculated 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: initial
assessment, mid-program assessment (6-month) and post-program
assessment (12-month).
2. The initial measurable outcomes tracked will be as follows:
x Number of households able to retain housing versus number of
households displaced due to economic reasons
x Household rent burdens prior to and during program participation
x 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
x 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
x POD programmatic achievements, challenges and expenses
x 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.
4
III. GUIDELINES: ELIGIBILITY AND PRIORITY
A. Threshold Eligibility Criteria
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
by 5 p.m. PST; and
2. Household participated 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:
x Properties purchased, rehabilitated and/or constructed with City
Housing Trust Funds;
x Apartments subject to the Affordable Housing Production Program;
x Federally assisted properties; and
x 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 Income); and
7. Household is not 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.
5
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 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 resident
household who has lived in their current Santa Monica apartment the
longest.
IV. GUIDELINES: ELIGIBILITY SCREENING
A. Identification
Screening for eligibility will require that all household members provide
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 adults.
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 wellbeing 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. Participants must provide 10 business days written notice of a potential
household 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 income from all household members; and
2. Earned and unearned income from all sources, such as employment,
self-employment, cash-equivalent government benefits, pension, and
family support;
3. Imputed income from assets calculated at a rate of 10 percent annually
(the formula for the City’s Affordable Housing Production Program); and
6
4. Income for live-in aides is not included in the household income
determination.
D. Household Income Verification
For household income applicant will provide the following:
1. Wages – Two 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 provided 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 from 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 – Two current consecutive bank
statements for all accounts
2. CD/Stock/Bonds/Retirement Acct/IRA/Money Market Funds – Most
recent annual investment value report and/or two consecutive
statements. Some assets may also be considered as income
depending on the frequency of distributions.
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
only
7. Annuity – Monthly/quarterly/annual statements
8. Asset Transfers – Self-certification 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.
7
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. The Housing Manager will sign off to
concur.
V. GUIDELINES: 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 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
households. A nonprofit partner will assist participant households with accessing
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 social 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:
x Immediately if the landlord or participant is terminating the participant’s
apartment rental agreement.
x Within five (5) business days of notice to owner if participant is
permanently vacating the apartment.
x Within ten (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-Transferability
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
Subsidy 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 agreements 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. GUIDELINES: 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
The 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 mo re than the
Los Angeles County 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 housing 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 100% affordable projec ts 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 approval of 100%
affordable housing projectsthat consistedmostlyof 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 afford able 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’sC o s t a
Hawkins Act, which precludes the City from imposing any control o n 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 controlunits that in 1998 were affordable to househo lds 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 housing stock that was affordab le 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 i ncom ew i l l
becomeunaffordable 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 housing.
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 excludes 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 Monica Rent Control Board Annual
(footnote continued)
3
which could take less than 20 years at present unit turnover rates 6 –t h eonly Santa
Monica housing affordable to those in the bottom half of the economicdistribution
will be our deed restricted affordable housing stock.
Unfortunately, the City’s ability to respond to this affordable ho using crisis
experienced a serious setbackwhen 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 reportthe Housing Commissionprovidesrecommendations 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 becaus e HUD data
indicates that a large portion of the Santa Monica renter households earning less
than the median family income faces a severe housing costburden (that is, they are
paying more than 50% of their income for housing).8
The Housing Commissionalso is concerned about the threat to households
earning up to 200% of median family income, and will conductfurther
investigatory efforts and deliberations in the new year regarding possible courses
of action to prevent the loss of this group from the City. This threat is not as acute
as the threat to those households earning the median family inc ome or less. This is
because Rent Control Board data indicates that a large portion of the rent
Report at p. 20 & Fig. 1. Given that market rents continue to inc rease, 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 decontro l going into effect
in 1999. Between 400 and 550 such long-term rent controlled units were lost to
vacancy decontrol each year from 2009 through 2014. See Staff Report
1421presented at 8/25/15 City Council Study Session on Affordab le 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 at 8/25/15 City Council Study Session on
Affordable Housing at p. 17.
8 See discussion at page 6 ¬e 14.
4
controlled units remain affordable at this time to households e arning up to 200% of
median family income, even with vacancy decontrol,9 and because HUD data
indicates that the existing burden of housing costs is not as s evere 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 c urrently is
out of reach for any but the wealthiest of Santa Monicans.
PRIORITIES MOVING FORWARD
AssistLower-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 income (.7 of median family i ncom e 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
bedroomunits remain affordable to households earning 155% of size-adjusted
median family income.
10 See discussion at page 6 ¬e 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 income 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 preserve an existing unit as affordab le 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
mostcost 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-ris k tenants.
These include the strengthening of the tenant anti-harassment ord inance and the
funding of a second full time housing attorney at the Santa Monica office of the
Legal Aid Foundationof 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 tenant protec tion laws.
In making this recommendation, the Housing Commission recognizes that
mostowners of rent controlled buildings comply with the law and are providing a
vital service to the City in maintaining its economic diversity. The Housing
Commissionpublicly recognizes and honorsthese 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 develop 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 assistancewhen 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 controlled 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 – includ ing inquires to
staff fromrenters 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 p ilot 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-RestrictedAffordable
Housing
Given vacancy decontrol and the realities of the rental market, S anta
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 stock and produce new affordable housing units. The Housing
Commission recommends:
x 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_c has.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 hous eholds), 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.
x Proactive and more comprehensive efforts to connect qualified
residents and workers with all existing and future deed restric ted
affordable housing units in the City.
x A return over time to at least the $15 million annual affordable
housing funding levels fromlocal 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 sectionsof
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 supportsusing a portion of the Big Blue Bus
site for affordable housing, subject to a feasibility study.14
x 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 .
x Continue to monitor and develop plans to maintain the affordability of
units subject to City and non-City deed 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“AffordableSecond Dwelling Unit Program,”SonomaCounty Permit and
Resource Management Department and Sonoma County Community Development
Commission
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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 programgenerate 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 produc tion), without
displacing existing residents.
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 Commissiondoes
not believe any new market rate or mixed use development projec t 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 affordable housing.
Projects requiring DAs should provide affordable housing substantially in
excess of the current AHPP minimum requirements for Tier 2.17 The Housing
Commissionrecommends that the City Council require Tier 3 projectsa t 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 City 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 ho useholds.
16 See“Thisinvestment fund has asocial agenda —andhigh-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.
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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 econo mically 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 considerthe new emphasis by HUD and others on deconcentrating
poverty.18 Santa Monica should further enhance its caseto 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 ofputting its own resources where its values are, and
soshould develop new and stable local funding sources for affordable housing
sufficient to at least restore the $15 million per year from lo cal sourcesspenton
affordable housing prior to the dissolution of redevelopment in 2012.
The Staff Report for the August 25, 2015 City Council study sess ionon
affordable housing identifies and discusses the following potential local funding
sources:
1. Monies allocated from the City’s General Fund;
2. General obligation bonds;
3. An increase in the transient occupancytax;
18 See HUD Final Rule “Affirmatively Furthering Fair Housing” (June 30, 2015).
For example, a recent Harvard study found that children who leave c oncentrated
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, “TheEffects 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 fee.19
Existing General Fund Revenues
The Housing Commission believes that any approach to local fundingf o r
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 diversity 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 repurpo se 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
spend 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 Housin g
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.
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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 vot ers 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
constructiontax 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 companionadvisory measure asking the voters whether they want the City to
spend the general funds raised on affordable housing. Because the sales tax
proposalrequires 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
purchases 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 who le indicates
(footnote continued)
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is consistent with the belief that maintaining Santa Monica’s economic diversity is
central to its character and a benefit to everyone who participates 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 o f the voters
will have the final say on any proposedtax increase, and therefore recommends
that the City Council engage in polling and take still further public input before
deciding on afinal course ofaction.
PROPOSEDUSES 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
Commissionoffers several general recommendations.
Income Targeting
The Housing Commission recommends that locally raised affordable
housing funds be used in a manner consistent with historical inc ome 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 res idents on
average would pay less than 10 cents per day of additional sales tax under the
proposal.
22 See “PopulationServed – Income Level (Maximum Income)” Table for “City-
Funded Housing Stock” on Affordable Housing Information Summary provided by
Barbara Collins 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 ofarea
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 les s 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 ControlledTenants
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 pilo t results confirm a
greater need exists and that the programat scale would be cost effective.
Property Acquisitions
The Housing Commission recommends that the City strongly consider
issuing lease-revenue bonds backed byat least a portion ofthe 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 histo ric
commitment to funding non-profit housing providers for boththe ac quisition 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/datasets/il/il15/index.html.
24 See Santa Monica Housing Division, Local Waiting List (Aug. 15, 2011).
14
affordable housing.25 The City’s non-profithousing providers historically have
delivered more affordable units, and much deeper 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 createadditional supportive housing units in
Santa Monica.
Finally, the City should work with its non-profit housing providers to
determine whether there are cost-effectiveopportunities for acquisition and
rehabilitation of non-occupiedproperties (such as older commercial buildings) that
could qualify for tax credits (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 Seediscussionat pages 4-5 ¬e 13.
APPENDIX C: Charts and Graphs Analyzing Renter Survey Data
Figure 1: Overview of Survey Respondents’ Rent Burden Categories. This shows the size of the final data
set used in the staff report analysis and all other graphs in this appendix.
Figure 2: Survey Respondent’s Rent Burden by Monthly Income and Rent. This graph represents the same
data as Figure 1 but illustrates the relationship between the two components of rent burden ratio.
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
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t
h
l
y
I
n
c
o
m
e
Rent
Severely Burdened
Burdened
Not Burdened
30% Burden
50% Burden
Figure 3: Survey Respondents’ Rent Burden Categories by Income Levels. 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 are severely
rent burdened (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
Figure 5: Survey Respondents’ Rent Burden by Age and Income. The graph shows the distribution of the
three burden groups from Figure 4, plotted by age and income. The senior (green) line is at age 62. The
extremely low-income (gold) line is at $1,521 (the monthly income limit for a 1-person household to be
considered extremely low-income). The concentration of severely burdened households below the
extremely low-income line corresponds to the data seen in Figure 3. There is a general trend of
decreasing income as age increases, with clustering of severely burdened households in the 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
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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 Households Highlighted. Same base chart
as Figure 2 with the households that are proposed for rental assistance based upon survey response data
(which will be subject 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 Severely Burdened 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 would effectively
reduce the households’ (portion of) rents. 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 Preserving 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.”
Insofar 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 proposed guidelines.
The commitment to “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,” an effort 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 with the Social Services Commission and other stakeholders,
such as the Commission for the Senior Community. If successful, the effort could become a model for improving
experiences and outcomes for a wide variety of vulnerable populations.
In view of the national 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 improvements, the new wraparound
service provisions will make a substantial positive difference.
Sincerely,
Shawn Landres
Chair, Social Services Commission
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Vernice Hankins
From:PNA SM <pna90404@gmail.com>
Sent:Monday, July 23, 2018 9:37 PM
To:councilmtgitems; Clerk Mailbox
Subject:Agenda Item:8:D,e. P.O.D Pilot Program
Dear Mayor Ted Winterer and City Councilors Please Support Staffs Recommended and approve the funding
for the Preserve Our Diversity Pilot program.
The POD program can preserve Santa Monica's low income elderly residents tenancies and allow them to age in
place, Thank you for your consideration.
Yours Sincerely Cris McLeod Pico Neighborhood Association Chair.
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Peronal Individual Views Of Housing Commission Chair Michael E. Soloff
HOUSING TRUST FUND PLAN FOR 2013-2021 HOUSING ELEMENT CYCLE
(Item 8.D for July 24, 2018 City Council Meeting)
I. SUMMARY OF DATA GATHERED AND CONCLUSIONS DRAWN
1. The Housing Trust Fund (“HTF”) planning process adopted by City Council in July of
2017 provides a mechanism for the City Council—after input from Staff, the public, and the
Housing Commission—to set priorities for expenditure of scarce HTF funds during each
Housing Element. That process begins with an initial HTF plan that is to be adopted at the
beginning of each Housing Element. Each of the subsequent annual reports required by that
planning process (1) allows tracking of the City’s progress toward its goals under the Housing
Element, Proposition R, and the initial HTF plan, (2) provides an opportunity for the City
Council—after input from Staff, the public, and the Housing Commission—to modify the initial
plan and/or the AHPP program in light of new developments, and (3) provides transparency
regarding the sources and uses of HTF funds. See Part II.A below.
2. The current Housing Element was adopted in December of 2013, and runs through 2021.
Thus, the initial HTF plan for the current Housing Element must take account of what already
has transpired during the first half of the Housing Element:
a. Without doing anything more, Santa Monica is projected to produce (i.e.,
complete or issue building permits for) more than three times the number of market-rate units
called for by the current Housing Element; See Part II.B.1 below.
b. Without doing anything more, Santa Monica is projected to produce (i.e.,
complete or issue building permits for) more than the overall number of deed-restricted
affordable housing units called for by the current Housing Element. However, the unit mix will
deviate from the mix called for by the current Housing Element in that it will include many more
extremely-low (30% AMI) and very-low income (50% AMI) units, but considerably fewer low-
income (80% AMI) units. See Part II.B.2 below.
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c. Without doing anything more, Santa Monica is projected to fall short of
Proposition R’s requirements by approximately 130 affordable housing units. Proposition R
requires 30% of all new housing completed each year be affordable housing, with at least half of
that 30% (i.e., at least 15% of all new housing) affordable to those earning 60% or less of the Los
Angeles County median income. It is projected that more than 15% of the new housing that will
be completed during the 2013-2021 Housing Element will be affordable to those earning 60% or
less of the Los Angeles County median income, thus meeting one of Proposition R’s two
requirements. But only 25% of the new housing overall will be some form of affordable
housing, rather than the required 30%. See Part II.C below.
3. The initial HTF plan also must take into account existing and expected future revenues
(see Part II.E below):
a. As of May 2017, Staff reported that the HTF had ~$57 million in funds not yet
committed to any particular affordable housing project or program.1 This includes a variety of
one-time funds provided by City Council, prior tax increment “boomerang” funds provided by
City Council, and initial GS/GSH funds;
b. Staff projects that the HTF will receive an additional ~$8-$9 million annually in
GS/GSH funds, and an additional ~$1.2 million annually in tax increment “boomerang” funds;
c. Staff projects that the HTF will receive during the period from 2018-2022 an
additional ~$49.3 million in one-time RDA loan repayments. These funds will bring the total
amount of one-time RDA loan repayments committed by City Council to the HTF to ~$71.2
million. These one-time funds, together with the ~$1.2 million annually in “boomerang” funds
that the City Council also has committed to the HTF, represents the City Council keeping faith
1 The Staff report for this Item states that $81 million is currently on hand in the HTF. Staff
advises that this simply is an updated figure that includes receipt of the next tranche of GS/GSH
monies discussed in paragraph 3.b, and part of the one-time RDA loan repayments discussed in
paragraph 3.c.
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with the voters and matching from City funds the first nine or ten years of projected GS/GSH
monies.
d. The currently available funds, together with the projected future revenues outlined
above, should be sufficient by themselves to sustain $16 million in annual Housing Trust Fund
expenditures for at least the next fifteen years.
4. In light of the foregoing, the Housing Commission voted to recommend that the City
Council include the following six elements in its initial HTF plan for the 2013-2021 Housing
Element (every one of which will be subject to annual review and potential adjustment in
accordance with the planning process adopted by City Council in July 2017):
a. “Unless an unusually advantageous opportunity presents itself during a
particular fiscal year, the City should enter into HTF spending commitments totaling no
more than $15 million to $18 million during each fiscal year. This will help to assure that
funds are available when unusually advantageous opportunities arise. Examples of
unusually advantageous opportunities include, but are not limited to, (1) constructing
affordable housing on City owned land, (2) constructing affordable housing in a manner
that provides unusual and deep cost-savings, and (3) constructing affordable housing
financed in a manner that provides an unusual and deep reduction in the HTF contribution
required to complete the project.”
This recommendation is for City Council to set a soft annual cap on new HTF commitments
(roughly equal to the highest historical annual funding averages) that Staff should exceed only if
particularly cost-effective or otherwise particularly advantageous opportunities are presented in
any fiscal year.
The first purpose of this recommendation is for City Council to direct Staff—and assure the
public—that finding the most cost-effective projects is a priority. This is important because in
2015-2016 Staff approved two acquisition rehabilitation projects, each of which spent more than
$500,000 of the limited HTF funds per unit (including one project expressly designed to put just
a single individual in each unit). By contrast, it currently costs the HTF itself about half as much
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to create a new unit in a new construction tax credit project (an example of “constructing
affordable housing financed in a manner that provides an unusual and deep reduction in the HTF
contribution required to complete the project.”). See Part II.D below.
The second purpose is for City Council to direct Staff that—absent unusually advantageous
opportunities—it should not immediately spend all the money on-hand (given that doing so
would potentially leave the HTF without resources when particularly cost-effective opportunities
do come, such as the opportunity to build on public land, the opportunity to acquire land during a
real estate recession, or the opportunity to do tax credit projects). This is important because the
way City Council has matched GS/GSH so far is principally by depositing certain one-time RDA
loan repayments into the Housing Trust Fund, thereby creating a bulge of funds up front. In
addition, the Housing Commission—with the assistance of CCSM, Step Up, and Staff—has
embarked on an effort to identify ways to reduce the cost of delivering new units.
The Staff report on this Item at page 7 raises the following concern regarding this
recommendation (emphasis added):
The Initial Plan’s limitation on annual HTF spending of $15-$18 million could
constrain opportunities to preserve and produce affordable housing at a juncture
when a significant amount of funding is available . . . . Although the Initial Plan
allows for exceeding the annual funding spending limitation if an “unusually
advantageous opportunity presents itself”, the absence of criteria as to what
qualifies for a departure from the proposed annual HTF spending limit could
result in missed opportunities. The existing HTF Guidelines approved by Council
establish per-apartment loan limits but have not previously established an annual
limit on overall HTF spending of available funding. If Council wishes to ensure
that all available funding for affordable housing is invested in a timely manner as
opportunities arise, then restricting the use of available funding would be
inconsistent with that goal.
However, the Housing Commission recommendation does contain illustrative guidance:
Examples of unusually advantageous opportunities include, but are not limited to,
(1) constructing affordable housing on City owned land, (2) constructing
affordable housing in a manner that provides unusual and deep cost-savings, and
(3) constructing affordable housing financed in a manner that provides an unusual
and deep reduction in the HTF contribution required to complete the project.
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The Housing Commission intentionally adopted this illustrative guidance approach to avoid
overly constraining Staff and missing out on usually advantageous opportunities simply because
of an inability to list all such opportunities in advance. The Housing Commission further
anticipated that the annual HTF plan review process would provide an ongoing opportunity for
Staff, the public, the Housing Commission and ultimately City Council to provide more refined
guidance in light of actual experience. The Housing Commission did not accept, however, that
the existing HTF per unit spending limits (which, for example, now exceed $600,000 for the
acquisition / rehabilitation of a studio or one-bedroom apartment) constitutes adequate guidance
to Staff regarding the cost-effective and wise expenditure of scarce HTF funds.
City Council now must decide—subject to review in a year—whether the City’s goals and the
public’s expectations for the expenditure of tens of millions of public dollars are best served by
the existing approach of almost completely unfettered Staff discretion, the alternative approach
recommended by the Housing Commission, or some other alternative approach (for example,
calling the $15-$18 million a “target” rather than a “soft cap”, and/or making either subject to the
same or different exceptions).
b. “A priority goal of the Plan is to ramp up the Preserving Our Diversity
(“POD”) local rent subsidy program to a range that requires a commitment of no more
than $2 million per fiscal year in HTF funds. No actual expansion of the POD program
will occur unless and until a detailed plan for doing so is proposed by City staff, vetted by
the Housing Commission, and approved by the City Council. Any portion of the potential
$2 million in annual HTF funding that is not actually used for the POD program in any
particular fiscal year shall remain available for commitment in future fiscal years to other
Plan priorities.”
This recommendation is for City Council to set the scaling up of the Preserve Our Diversity
(“POD”) program as a priority goal for achievement during the 2013-2021 Housing Element.
Actual scaling up would occur only after a plan for doing so is created by Staff, vetted by the
Housing Commission , and approved by City Council. This recommendation was the focus of
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all—or virtually all—of the division between the majority of Housing Commissioners and the
dissenting Housing Commissioners.
Between December 2015 and the present, the Housing Commission recommended, the City
Council approved, and the City designed and launched a highly innovative rent subsidy pilot
program to help our extremely low income seniors remain in their long-term rent controlled
apartments with dignity. See Part II.G below.
HUD estimates that more than 4,000 Santa Monica renter households are extremely low
income—for example, seniors with no income other than basic social security—and pay more
than 50% of their meagre incomes in rent. Another close to 2,000 Santa Monica renter
households are very low income—just slightly better off but still, for example, individual seniors
with about $20,000 a year in income—who likewise pay more than 50% of their meagre incomes
in rent. See Part II.F below.
The pilot program consists mostly of single person households surviving on less than $300 per
month after rent for every other expense of life. Extrapolating from the average pilot program
subsidy, the $2 million maximum annual budget recommended by a majority of the Housing
Commission would allow the City to assist 345 senior households to remain in their long-term
rent controlled homes with dignity. See Part II.G below.
Of course, every dollar we spend on rent subsidy is one less dollar we have to spend on new
affordable housing construction. And it is true that when the POD participants pass on or move
on, there is no new unit to help a new household. But at current costs, for $2 million per year the
City only can add fewer than four new affordable housing units at worst, and fewer than eight
new affordable housing units at best. For me the better public policy choice is to help many,
many more current Santa Monica seniors remain with dignity in their long-time homes for the
rest of their lives—even at the cost of some less affordable units in the future. Indeed, I
personally advocated for setting the maximum funding level at $6 million per year.
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The real answer is to create more resources for both rent subsidy and for new construction, as
well as to find ways to lower the costs of each. The Housing Commission is committed to
continuing to work to provide City Council with ideas to accomplish these goals.
Two Commissioners disagreed with this recommendation, and therefore voted no.
Commissioner Buchanan stated for the record: “My no vote is not because I do not think that the
POD program is a priority goal overall, but I do not think that it is a program that should be
funded by the Housing Trust Fund and so that’s the reason for my no vote.”
Vice-Chair Hilton stated for the record: “The Housing Commission should continue to review
the Preserving Our Diversity (POD) pilot rental subsidy program, approve a program expansion
from 22 to 60-66 participants with associated costs not to exceed $500,000 annually, that POD’s
total budget and cost effectiveness be evaluated each year in a public report, and that any POD
budget increase should consider the financial impact on our Trust Fund and our production
requirement successes.” Vice-Chair Hilton also stated for the record at a prior meeting:
“Preserving Our Diversity (POD) is an ongoing budget; $2 Million a year in the first year and in
successive years is excessive and poses challenges to our Trust Fund's health and the Trust
Fund's contribution to production.”
Vice-Chair Hilton further amplified his views in a July 18, 2018 letter to City Council. In that
letter he suggests that as early as 2022 the annual funds available for affordable housing will be
only $9-$11 million, and he expresses concern about spending $2 million of that limited sum on
the POD program. However, Vice Chair Hilton is assuming that Staff will spend all of the $140
million that will be available in the HTF from now through 2021 in just those three years. If one
assumes instead that Staff spends at a rate of $16 million per year (the amount available prior to
the dissolution of redevelopment during the Great Recession), existing and projected resources
can sustain spending at that rate through at least 2032. And if the City Council continues to keep
faith with the voters and continues to match the GS/GSH monies with other City monies, the
City can continue to spend at least $16 million per year thereafter. See Part II.E below.
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The Staff report for this Item at page 8 states:
Expanding the POD pilot program from the current budget of $300,000 ($200,000
for cash assistance and $100,000 for administration), which serves 22 households,
to the proposed annual (assistance) budget of $2 million would represent a ten-
fold increase in the size of the program. Staff has concerns that this commitment
may be premature despite the initially promising results of the test. The POD
program is a 14-month pilot which began in November 2017 and an assessment of
its effectiveness will not be completed until late 2018. The assessment will
measure housing stability, impact on and increases in entitlement benefits, access
to local services, and wellbeing. Additionally, because the effect of the POD
program on participants’ federal, state, and county entitlement benefits is not yet
fully settled with the relevant governmental agencies, program expansion without
such resolution could create challenges for future participants. Pursuant to the
Housing Commission’s recommendation, prior to implementing any expansion of
the current pilot program, staff would prepare more detailed administrative
guidelines, estimate the administrative resources (eligibility qualification,
program administration, social service agency support, etc.) required to achieve
any expansion, and return to the Housing Commission and Council for direction.
An alternative to the recommendation would be to consider “expanding the pilot
as results warrant to as much as $2 million per year.”
The Housing Commission’s recommendation is simply that City Council set as a priority goal
the expansion of the POD program to a range that requires the expenditure of no more than $2
million of HTF funds per fiscal year. While there may still be lessons to be learned about how
best to structure an expanded program, completion of the pilot program is not necessary to
determine that expansion is a priority goal. It does not take completion of the pilot program to
know that it will greatly benefit severely a severely rent-burdened senior to go from less than
$300 per month in after rent income to cover every other expense of life to the over $700 per
month that the UCLA School of Public Health says is required to meet the basic needs of such a
senior living on the Westside of Los Angeles. As the Staff report acknowledges, the Housing
Commission recommendation already states that the expansion will not take place until a specific
plan for that expansion is developed, vetted and approved by City Council. But given the HUD
data regarding the more than six thousand very low and extremely low income Santa Monica
renter households paying more than 50% of their meagre incomes in rent, it is important for City
Council to send a strong signal that expansion of the POD program is a priority. See Part II.F.
Finally, some representatives of the landlord community dispute whether there is any need for
the POD program. In particular, they assert such a program is unnecessary because purportedly
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few if any Santa Monica renters lost their homes in 2017 because they did not pay the rent. But
even if the asserted factual premise turns out to be true 2, it would not change the need for the
POD program. Every affordable housing program—from the City’s inclusionary housing
program, to the City’s housing trust fund guidelines, to the federal and state tax credit programs,
to the federal Section 8 program—seeks not only to provide a place for low income persons to
live, but also seeks to set the rent levels at sufficiently low levels that the benefited households
can afford the other necessities of life. No one can seriously dispute that the POD pilot program
participants (whose other assets, if any, were considered when determining their eligibility just
as they are in other affordable housing programs) had rents that did not permit them to afford the
other necessities of life. And if just one out of every twenty (5%) of the more than six thousand
severely rent burdened and extremely low or very low income Santa Monica renter households is
similarly situated, that alone would justify expansion of the POD program to $2 million per year.
c. “A priority goal of the Plan is to provide permanent housing in Santa Monica
for those among the population of homeless persons that the City Council determines the
City should take responsibility to permanently house in the City. This should include
“Santa Monicans” who are homeless. Subject to further refinement, this group is deemed
to include those persons on the Santa Monica Homeless Registry as of the date the Plan is
adopted who are not already in permanent housing. The City should look to leverage as
much as possible federal funds, State funds, County funds, other City funds, or private
funds, to accomplish this goal.”
The City should take responsibility for housing in Santa Monica some portion of the homeless
population currently in Santa Monica. City Council ultimately should determine who falls
within this group, and what type of permanent housing is appropriate and cost-effective.
At this point the Housing Commission recommends that City Council direct Staff that a priority
goal of the HTF plan for the 2013-2021 Housing Element cycle is to permanently house
2 The representatives of the landlord community purport to support this assertion based on the
claimed number of Santa Monica evictions for non-payment of rent. But not everyone forced out
of their homes by excessive rents leaves after (as opposed to before) a completed eviction action.
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homeless “Santa Monicans”, leveraging as much as possible federal funds, State funds, County
funds, other City funds and private funds. Such leveraging is particularly appropriate because
both the County and the City actually will save money in other areas (healthcare costs, law
enforcement and criminal justice costs) by moving chronically homeless individuals into
permanent supportive housing. But the HTF also should play a part in solving this issue.
Subject to further refinement by City Council, the Housing Commission recommends that City
Council initially deem the individuals currently on the City’s service registry who are not
permanently housed already as such homeless “Santa Monicans”. Staff advises that this includes
51 individuals living in temporary housing and 44 individuals known to be unsheltered. It may
also include an additional 44 individuals whose status is unknown because the City has not had
contact with them in the last six months. See Part II.H below.
Subsequent to the Housing Commission’s deliberations, Santa Monicans for Renters’ Rights
recommended that homeless “Santa Monicans” include all homeless families with children living
in Santa Monica, and all homeless persons who work in Santa Monica. In my personal capacity
I now support this SMRR recommendation, particularly given the social science research
demonstrating that low income children obtain life-long benefits when they are raised in
communities like Santa Monica with excellent schools, services, and job opportunities.
d. “The remainder of the HTF funds spent each fiscal year should be used to
create new affordable housing units for seniors, for physically and mentally challenged
persons, for large families, and for small families (including individuals). Unless one or
more unusually advantageous opportunities dictate a different result, a goal of the Plan is
to provide roughly equal HTF funding support for affordable housing targeted to each of
these four populations over the life of the Plan. The equal funding support determination
shall take into account HTF funding committed during the entire lifetime of the 2013-2021
Housing Element, even if it occurred prior to the adoption of the Plan. The equal funding
support determination also shall take into account HTF funding committed to the POD
program (which is for senior housing) and to permanently housing Santa Monicans who
are homeless (who may be members of any of the four populations).”
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The draft of the initial HTF plan provided by Staff to the Housing Commission identified the
four target populations discussed in this recommendation. Recognizing that the need for
affordable housing for each target population identified exceeds the City’s HTF resources, the
Housing Commission recommended that City Council direct Staff to adopt a roughly equal
prioritization over the course of the entire 2013-2021 Housing Element cycle. However, as with
the soft annual cap on entering into new spending commitments, the Housing Commission
recommended that this direction be subject to exception when a different result is dictated by
unusually advantageous opportunities.
Subsequent to the Housing Commission’s deliberations, Santa Monicans for Renters’ Rights
recommended instead that half of the HTF funds go to housing for families with children, with
the remaining half available for affordable housing for either seniors, for persons with mental or
physical challenges, or live-work space for artists (primarily on the ground floor). In my
personal capacity I now support this SMRR recommendation, particularly given the social
science research demonstrating that low income children obtain life-long benefits when they are
raised in communities like Santa Monica with excellent schools, services, and job opportunities.
e. “The City’s existing affordable housing programs generally provide the
highest preference to persons displaced without fault from their existing homes in Santa
Monica, and provide the next highest preference to persons who either already live in
Santa Monica or who work full-time in Santa Monica. The two goals of the Plan identified
in paragraphs #2 and #3 above, however, only serve persons who already live in Santa
Monica. The City recognizes that the daily efforts of low income workers are particularly
critical to the businesses (including hotels, restaurants, and retail stores) that generate the
sales and use taxes supporting the HTF through Measures GS and GSH, as well as the sales
and use taxes and transit occupancy taxes that fund a substantial portion of the City’s
budget. City staff therefore is directed to develop, in consultation with the Housing
Commission, a proposal to increase—to the extent it is necessary and feasible to do so in
order to maintain an overall equal preference for affordable housing opportunities in the
City—the preference in other HTF funded projects for low-income Santa Monica
workers.”
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This recommendation speaks for itself. All Santa Monicans benefit greatly from the daily efforts
of low income workers that are particularly critical to the businesses (including hotels,
restaurants, and retail stores) that generate the sales and use taxes supporting the HTF through
Measures GS and GSH, as well as the sales and use taxes and transit occupancy taxes that fund a
substantial portion of the City’s budget. The Housing Commission recommends that City
Council acknowledge these workers in the initial HTF plan, and direct Staff and the Housing
Commission to take any necessary and feasible steps to assure they too continue to have an equal
preference to and continue to benefit from the City’s affordable housing programs as financed
through the HTF.
f. “City staff is directed to develop as soon as possible, in consultation with the
Planning and Housing Commissions, a proposal to adjust the AHPP program that applies
outside of the Downtown Community Plan. The proposal shall be based on a feasibility
study, and shall take into account past and projected future production of housing through
inclusionary zoning and HTF funded projects, as well as the quantified objectives in the
Housing Element and the requirements of Proposition R.”
While it is projected that the City will meet or exceed all of its other housing production goals
during the 2013-2021 Housing Element cycle, it is projected that only 25% of all new housing
completed during that time period will be affordable housing, rather than 30% as mandated by
Proposition R. While the lack of an HTF funding source for the first half of that time period
undoubtedly played a role, so too did the over-incentivization in the Affordable Housing
Production Program for developers to choose to provide a very small number of extremely low
income units in complete satisfaction of their inclusionary housing obligations.
The City Council remedied this issue in the Downtown Community Plan in July of 2017 based
on the HRA feasibility analysis. The Housing Commission previously has recommended that a
review take place of the AHPP outside the DCP, and the Housing Commission now recommends
that the City Council put into the initial HTF plan a direction to Staff to do so as soon as
possible. This is appropriate because one of the express purposes of the HTF planning process,
as stated in the HTF guidelines adopted by City Council in July 2017, is “to help assure . . . (2)
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compliance with Prop R’s requirement that 30% of annual new housing production meet certain
affordability targets,”
II. SUPPORTING MATERIALS AND DATA
A. The HTF Planning Process And Its Intended Purposes
In 2017, the Housing Commission recommended to City Council that it amend the HTF
guidelines to include a planning process. The Housing Commission supported this
recommendation in its report to the City Council as follows:
While the Housing Element establishes certain overall quantified objectives for
affordable housing production, it does not establish clear guidance as to proper
uses of City affordable housing funding resources. The Housing Element is at a
very high level both as to the nature of the units to be produced, and as to the
mechanisms to assure their production. No objectives are established as to the
size of the units to be produced, the nature of the units (e.g., family, supportive,
senior), or their locations within the City. Moreover, no particular mechanism is
provided for tracking progress toward even these high-level goals, and for
adjusting City policies (both in terms of inclusionary units and expenditures of
City resources) as necessary to achieve these goals. Finally, there is no formal
mechanism for the public and the City Council to weigh in on spending priorities
on an ongoing basis .
Therefore, to help assure (1) compliance with the affordable housing production
goals set forth in the approved Housing Element, (2) compliance with Prop R’s
requirement that 30% of annual new housing production meet certain affordability
targets, (3) maximization of the return on scarce Housing Trust Fund monies, and
(4) robust opportunities for input on spending priorities by the City Council,
Housing Commission, and the public, the Housing Commission recommends the
inclusion within the Housing Trust Fund Guidelines of the following planning and
reporting process . . . .
In accordance with the recommendation of the Housing Commission, the City Council in July of
2017 adopted the proposed HTF planning process as follows:
Annual Reporting by the Housing Division
The City Manager shall prepare an initial proposed plan, called Housing Trust Funds
Plan (“Plan”), for affordable housing development in the City for the remaining
period covered by the current Housing Element (i.e., through 2021). The Plan shall be
made available online and the Housing Division shall conduct a 45-day public
comment period. A public meeting hosted by the Housing Commission shall be held
by the Housing Division between the 30th and 45th day of the public comment period.
Once the public comment period is completed, the Plan with any public comments
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shall be submitted to the Housing Commission for review and recommendation to the
City Council for review and its approval. A Housing Trust Funds Plan shall be
prepared and adopted for each Housing Element cycle.
Thereafter, on an annual basis, the Housing Division shall prepare a report to the
Housing Commission for its review and recommendation for City Council approval.
The annual report shall include details on the following items:
(1) The source and amounts of funding for each Housing Trust Fund received
during the prior year;
(2) The amount and uses of funds, including the amount and source of funding
commitments issued, from each Housing Trust Fund during the prior year;
(3) The quantity and type of affordable housing made available for occupancy
during the prior year;
(4) The quantity and type of housing which exceeded or fell below the annual
production mandate of Proposition R during the prior year;
(5) Cumulative figures of source/amount of Housing Trust Funds, quantity/type of
affordable housing made available, and exceeded/missed Proposition R
requirement, covering the Housing Element period, as well as comparison with the
Quantified Objectives set forth in the Housing Element; and
(6) A comparison of the actual cumulative affordable housing production covering
the period of the adopted Housing Trust Funds Plan with the goals set forth in that
plan.
Once approved by City Council, both reports shall be posted on the Housing
Division’s website.
B. Progress To Date Toward Meeting The Quantified Objectives Of The
Current Housing Element And Toward Satisfying SB35 Requirements
1. Progress Toward Meeting The Current Housing Element’s Quantified
Objectives
The State-approved Housing Element contains “Quantified Objectives”. Staff advises that (1) a
unit counts toward satisfying the Quantified Objective once a building permit is issued, and (2)
at present, all of the units on the chart below are projected to obtain building permits within the
current Housing Element period:
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Staff also advises that there are 47 additional units in the two new construction projects that
recently obtained HTF loans. These 47 additional units include 4 Extremely Low Income units,
32 Very Low Income units, and 11 Low Income units. A representative of CCSM—the non-
profit developer for these two projects—believes these projects likely will be completed by the
end of the current Housing Element.
Staff further advises that there are additional projects on Lincoln Boulevard that are converting
to development review permits, and a project on 5th Street that is seeking administrative
approval, that also are projected at present to obtain building permits during the current Housing
Element. Staff did not provide data regarding the number and affordability mix of units in these
projects.
The foregoing data supports the following conclusions:
1. Without doing anything more, Santa Monica should produce during this Housing
Element more than three times its Quantified Objective for market rate units;
2. Without doing anything more, Santa Monica should produce during this Housing
Element more than its overall Quantified Objective for deed-restricted affordable housing units.
However, the unit mix will deviate from the Quantified Objectives in that it will include many
more extremely-low and very-low income units than called for in the Housing Element, but
considerably fewer low income units.
2. Progress Toward Meeting SB 35 Requirements
SB 35 provides for tracking by the State of California of progress by each local jurisdiction
toward the Quantified Objectives in its Housing Element. Failure to attain sufficient progress
toward market rate housing triggers streamlining of projects that meet the higher of 10%
affordable housing or whatever is required by local inclusionary housing law. Failure to attain
sufficient progress toward both low and very low income housing (which subsumes extremely
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low housing as well) also triggers streamlining for projects that have 50% affordable housing
units. Streamlining consists of administrative approval and no parking requirements.
Santa Monica is one of only 12 local jurisdictions in California that are not subject to any SB 35
streamlining. Staff advises that they do not anticipate that Santa Monica will face any SB 35
streamlining during this Housing Element.
C. Progress To Date Toward Meeting Proposition R
Proposition R, adopted by Santa Monica voters, amended the City Charter to require that the
City Council act to ensure that at least 30% of all new housing constructed each year be
affordable to and permanently occupied by persons earning 100% or less of the Los Angeles
County median income, and that at least half of that that 30% (i.e., 15% of all new housing) be
affordable to and permanently occupied by persons earning 60% or less. A unit is counted under
Proposition R when construction is complete (not when a building permit is issued).
Staff advises that the following chart reflects the status of compliance with Proposition R during
the current Housing Element through FY 2016/2017:
Staff further has advised that (1) all of the units that are “in construction” per Table 4 above
should be completed by the end of this Housing Element, and (2) the current best estimate is that
the following units identified as “approved” per Table 4 above likely will completed in by the
end of this Housing Element:
43 Extremely Low-Income
39 Very Low-Income
11 Low-Income
26 Moderate-Income
804 Above Moderate (Market)
923 Total
Table 5
Proposition R Tracking
Multifamily Housing Production
Low/Mod-Income
Year
FY 2013/2014
FY 2014/2015
FY 2015/2016
FY 2016/2017
%
Affordable
56%
19%
21%
13%
Total:
Housing
Surplus/Deficit ( )
118
(17)
(16)
(18)
67
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And, as noted above, a representative of CCSM believes that the two new construction projects
recently approved for HTF loans likely will be completed by the end of the current Housing
Element, thereby yielding an additional 4 Extremely Low Income units, 32 Very Low Income
units, and 11 Low Income units.
Combining all of this data, it appears that if nothing more is done, Santa Monica will fall 132
affordable units below the 30% affordable housing mandate of Proposition R on an aggregate
basis during the current Housing Element. This means only 25% of all new housing completed
during the 2013-2021 Housing Element will be some form of affordable housing, rather than the
required 30%. However, more than 15% of the new housing completed will be affordable to
those earning 60% or less of the Los Angeles County median income, thereby satisfying one of
the two requirements of Proposition R.
D. Projects With HTF Funding Commitments
Staff advises the following:
1. The first project to which the HTF committed funds during the 2013-2021 Housing
Element cycle was an acquisition / rehabilitation project. The commitment was entered into in
June 2015. The cost to the HTF was $550,000 per unit, and $305,556 per bedroom.
2. The next project to which the HTF committed funds during the 2013-2021 Housing
Element cycle was the following project (with the commitment issued in 2016):
3. After the City Council adopted new Housing Trust Fund guidelines in July 2017, and
prior to the Housing Commission deliberations on the initial HTF plan, the HTF has approved
loans for three additional projects as follows:
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E. Funds Available In The Redevelopment Replacement Housing Trust Fund
Staff advises the following:
1. As of the Housing Commissions deliberations in May of 2018, the HTF had
approximately $57 million that is not currently committed to approved projects. This includes
the following one-time RDA loan repayments already received by the City:
3. The following additional one-time RDA loan repayments were anticipated at the time of
the Housing Commission deliberations (and the first of these has now been received):
4. Staff estimates that Measures GS/GSH will provide $8-$9 million per fiscal year on a
going forward basis.
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5. Staff estimates that boomerang funds will provide $1.2 million per fiscal year on a going
forward basis.
This data supports the following conclusions:
1. By either providing to date or committing ~$71.2 million in expected one-time RDA loan
repayments and ~$1.2 million annually in “boomerang” funds, the City Council has matched
from City funds the first nine or ten years of projected GS/GSH monies.
2. The currently available funds, together with the projected future revenues outlined above,
should be sufficient by themselves to sustain $16 million in annual Housing Trust Fund
expenditures for at least the next fifteen years.
Fiscal Yr. Initial Bal. RDA Ln. Repay. GSH/Boomerang End Bal. (-$16 mil.)
2018-19 $57 million $15.7 million $9.2 million (min.) $65.9 million
2019-20 $65.9 million $10.7 million $9.2 million (min.) $69.8 million
2020-21 $69.8 million $14.3 million $9.2 million (min.) $77.3 million
2021-22 $77.3 million $8.7 million $9.2 million (min.) $79.2 million
2022-23 $79.2 million $0 $9.2 million (min.) $72.4 million
2023-24 $72.4 million $0 $9.2 million (min.) $65.6 million
2024-25 $65.6 million $0 $9.2 million (min.) $58.8 million
2025-26 $58.8 million $0 $9.2 million (min.) $52.0 million
2026-27 $52.0 million $0 $9.2 million (min.) $45.2 million
2027-28 $45.2 million $0 $9.2 million (min.) $38.4 million
2028-29 $38.4 million $0 $9.2 million (min.) $31.6 million
2029-30 $31.6 million $0 $9.2 million (min.) $24.8 million
2030-31 $24.8 million $0 $9.2 million (min.) $18.0 million
2031-32 $18.0 million $0 $9.2 million (min.) $11.2 million
2032-33 $11.2 million $0 $9.2 million (min.) $5.4 million
F. HUD Data Regarding Severely Rent Burdened Santa Monica Renter
Households
Staff advises that the following is the most recent available HUD data regarding the estimated
number of severely rent burdened Santa Monica renter households:
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G. The Preserve Our Diversity (“POD”) Pilot Program
Staff advises:
1. The following criteria were applied to participants in the POD pilot program:
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 Santa 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 the 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 area median income (Extremely low income) and
household final income verification confirms it is no more than 50 percent area
median income (Low Income);
7. Household is not currently participating in, or previously terminated from, any
Santa Monica Housing Authority 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
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subsidy (i.e. earning 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 sources,
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).
3. The following data describes the average after rent income, the POD subsidy, and the
basic needs budget for the 22 POD pilot program senior renter households:
H. Santa Monica Homeless Services Registry
Staff advises:
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