SR 06-11-2019 3F
City Council
Report
City Council Meeting: June 11, 2019
Agenda Item: 3.F
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Adoption of SB2 Housing Grant Resolution
Recommended Action
Staff recommends that the City Council:
1. Adopt the attached resolution authorizing the application for grant funds in the
amount of $310,000 from the State of California Department of Housing and
Community Development
2. Authorize the City Manager to execute all necessary documents to apply for the
grant, and if awarded, accept and administer the grant, including any renewals.
3. Authorize budget changes as outlined in the Financial Impacts and Budget
Actions section of this report, in the event that the grant is awarded.
Summary
Santa Monica has an extensive history that prioritizes a range of housing types
(including affordable housing) to preserve and promote a diverse and sustainable
community. This report seeks authorization to submit an application for grant funds to
the State of California Department of Housing and Community Development for an
amount of up to $310,000. The grant would be used to analyze incentives or changes
to project requirements to stimulate housing production, which may include permit
streamlining, height and floor area adjustments, fee reductions and modifications to
affordable housing requirements in the Downtown and Citywide. Additionally, the grant
funds could be used to study policies, programs and ordinances to protect and support
tenants currently living in the city’s existing housing stock. This analysis would be used
to propose changes to City housing policy and regulations, and may involve
implementation through the citywide Zoning Ordinance and/or specific and area plans.
The State’s grant program is available to local jurisdictions, and is offered specifically for
the purpose of providing funding and technical assistance to help cities prepare, adopt,
and implement plans and process improvements that streamline housing approvals and
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accelerate housing production. Per HCD guidelines, grant funds may be subject to
repayment if the plan or process improvement developed with grant funds is not
ultimately adopted.
Discussion
In recent years, California’s ongoing housing shortage has underlined the need for local
jurisdictions to revisit their regulatory frameworks governing housing production. In
Santa Monica, the discussion has been particularly dynamic, as the community and
decision-makers have wrestled with a variety of local, regional and State -level factors
that contribute to production, affordability, and equity. From time to time, the City has
made changes to rules and regulations related to housing in response to these factors.
Two recent examples include the adoption of the Downtown Community Plan’s distinct
project requirements for affordable housing, and the recent removal of the Ex tremely
Low Income option from the list of options to satisfy the affordable housing obligation
citywide. Further, on March 26th 2019 the Council authorized an expenditure to fund a
feasibility study to analyze potential changes to the centerpiece of the City’s
inclusionary housing framework, the Affordable Housing Production Program.
In 2017, Governor Brown signed a 15-bill housing package aimed at addressing the
state’s housing shortage and high housing costs. This package included the Building
Homes and Jobs Act (SB2, 2017), which established a $75 recording fee on real estate
documents to increase the supply of affordable homes in California. Through the
subsequent SB2 grant program, $123M in funds collected from this fee have been set
aside to provide funding and technical assistance to all local governments in California
to help cities and counties prepare, adopt, and implement plans and process
improvements that streamline housing approvals and accelerate housing production.
This grant program is meant to facilitate planning activities that will foster an adequate
supply of homes affordable to Californians at all income levels.
Staff is preparing a grant application for submittal to the State’s Housing and
Community Development department to fund a range of economic analyses, physical
prototype modeling and policy and program evaluation that will better inform policy
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discussions about housing production in Santa Monica. This grant opportunity can
provide the City with objective market information and prototype analysis to potentially
adjust existing standards, regulations and project requirements as they pertain to
promoting development that is consistent with Santa Monica’s priorities and adopted
plans. This multi-pronged effort would be an opportunity for the City to look at the
mechanics behind housing production and conservation more holistically, and to tie
together the various internal and external factors that contribute to or prevent feasibility
and implementation. If awarded, staff anticipates returning to Council with a
recommendation to amend an existing contract with HR&A Advisors previously
authorized by Council to study modified AHPP requirements so that additional analysis
could be conducted on barriers and incentives to housing production across the board.
Additional sub-consultants to perform physical modeling, policy and program review as
it relates to housing conservation and tenant protections, and creation of revised
standards may also be necessary.
The maximum grant amount provided by SB2 for a jurisdiction of Santa Monica’s size is
$310,000. The outcomes of the analytical study may include the following eligible
activities:
1. Updates to general plans, community plans, specific plans, local planning
initiatives related to implementation of sustainable communities strategies, or
local coastal plans;
2. Updates to zoning ordinances;
3. Environmental analyses that eliminate the need for project-specific review; and
4. Local process improvements that improve and expedite local planning.
The SB2 program will not initially utilize a competitive process to award funds. Funds
will be available to eligible applicants upon request (“over the counter”) for an eight -
month over-the-counter period, commencing from the date of the NOFA, which was
released in late March 2019.
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Financial Impacts and Budget Actions
Staff seeks authority to apply for a grant of up to $310,000 from the State of California
Housing and Community Development Department. If awarded, staff recommends the
following budget changes to the miscellaneous grants fund.
FY 2019-2020 Grant Budget Changes
Establish Revenue Budget Appropriate Funds
Account Number(s) Amount Account Number(s) Amount
TBD $310,000 TBD $310,000
Total $310,000 Total $310,000
If awarded, the grant would, upon Council approval, augment economic analysis being
conducted by HR&A Advisors on the feasibility of modifying the citywide Affordable
Housing Production Program (AHPP). This increase in scope to analyze development
standards, fee structures, permit streamlining and other mechanics of housing
production would necessitate a contract modification. Additional, but separate, analysis
on preserving existing housing stock would require a separate contract with qualified
housing policy professionals.
Per HCD guidelines, grant funds may be subject to repayment if the plan or process
developed using grant funds is not ultimately adopted.
If renewals are awarded, budget changes will be included in subsequent year budgets,
contingent on Council budget approval.
Prepared By: Peter James, Principal Planner
Approved
Forwarded to Council
Attachments:
A. Reso - PCD - SB2 Grant Funds - 06.11.2019
B. Written Comments
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City Council Meeting: June 11, 2019 Santa Monica, California
RESOLUTION NUMBER _________ (CCS)
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA AUTHORIZING THE SUBMITTAL OF AN
APPLICATION TO THE STATE OF CALIFORNIA , DEPARTMENT OF HOUSING AND
COMMUNITY DEVELOPMENT, FOR SB 2 PLANNING GRANT PROGRAM FUNDS IN
AN AMOUNT NOT TO EXCEED $310,000 AND AUTHORIZING THE CITY MANAGER
TO TAKE IMPLEMENTING ACTIONS TO OBTAIN SUCH ADDITIONAL GRANT
FUNDS
WHEREAS, the State of California, Department of Housing and Community
Development (“Department”) is authorized to provide up to one hundred twenty-three
million dollars ($123,000,000) under the SB 2 Planning Grants Program (“PGP”) from the
Building Homes and Jobs Trust Fund for assistance to cities to accelerate and streamline
housing production by updating planning documents and zoning ordinances; and
WHEREAS, the Department has issued a Notice of Funding Availability (“NOFA”)
dated March 28, 2019, for its PGP; and
WHEREAS, the City Council of the City of Santa Monica desires to submit a project
application for the PGP to accelerate and streamline the production of housing and will
submit a 2019 PGP grant application as described in the NOFA and SB 2 Planning Grant
Program Guidelines released by the Department for its PGP.
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
SECTION 1. The City Manager, or his or her designee, is authorized to submit to
the Department an application for PGP program funds in an amount not to exceed three
hundred ten thousand dollars ($310,000) in accordance with the 2019 SB 2 Planning
Grant Program Application issued on March 28, 2019, and, if awarded, to use such funds
for eligible activities in the manner presented in the grant application, as approved by the
Department and in accordance with the SB2 Planning Grant Program Guidelines issued
by the Department.
SECTION 2. In connection with the PGP grant, if the application is approved by
the Department, the City Manager, or his or her designee, is authorized to negotiate, enter
into, execute, and deliver a State of California Standard Agreement (“Standard
Agreement”) in an amount not to exceed three hundred ten thousand dollars ($310,000),
and any and all other documents deemed necessary or appropriate to evidence and
secure the PGP grant, the City’s obligations related thereto, and all amendments thereto
(collectively, the “PGP Grant Documents”).
SECTION 3. The City shall be subject to the terms and conditions as specified in
the Standard Agreement, the SB 2 Planning Grant Program Guidelines, and any
applicable PGP guidelines published by the Department. Funds are to be used for
allowable expenditures as specifically identified in the Standard Agreement. The
application in full is incorporated as part of the Standard Agreement. Any and all activities
funded, information provided, and time lines represented in the application will be
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enforceable through the executed Standard Agreement. The City hereby agrees to use
the funds for eligible uses in the manner presented in the application as approved by the
Department and in accordance with the NOFA, the SB 2 Planning Grants Program
Guidelines, and 2019 Planning Grants Program Application.
SECTION 4. The City Manager, or his or her designee, is authorized to execute
the City of Santa Monica Planning Grants Program Application, the PGP Grant
Documents, and any amendments thereto, on behalf of the City of Santa Monica as
required by the Department for receipt of the PGP Grant.
SECTION 5. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
_________________________
LANE DILG
City Attorney
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Vernice Hankins
From:Soloff, Michael <Mike.Soloff@mto.com>
Sent:Tuesday, June 11, 2019 7:42 AM
To:councilmtgitems
Cc:Gleam Davis; Terry O’Day; Councilmember Kevin McKeown; Ted Winterer; Sue Himmelrich; Greg
Morena; Ana Maria Jara
Subject:RE: Agenda Item 3F (June 11, 2019) -- Adoption of SB2 Housing Grant Resolution
To the Honorable Members of the Santa Monica City Council:
I am the Chair of the Santa Monica Housing Commission and write to express the Housing
Commission’s opposition to Item 3F as currently drafted.
Item 3F asks you to provide Planning Department Staff the right to apply for a $310,000 SB-2 grant to
perform wholly unknown and unspecified studies “to accelerate and streamline the production of
housing.” There is no provision for consultation with the Housing Commission and the Planning
Commission regarding the contents of the proposed grant application and the proposed study. There
likewise is no provision for consultation with and approval by the City Council. Yet, as stated in the
Staff Report at p. 4, if the City does not ultimately adopt whatever is studied, it may be on the hook to
repay the State the $310,000 from the City’s General Fund.
The City’s housing goals are broader than simply producing any housing as quickly as possible. Voter
approved Proposition R in the City Charter provides that “The City Council by ordinance shall at all
times require that not less than thirty percent (30%) of all multifamily-residential housing newly
constructed in the City on an annual basis is permanently affordable to and occupied by low and
moderate income households.” While the City will produce three-times is quantified objective for
market rate housing over the course of the 2013-2021 Housing Element, the City will not comply with
Proposition R (even in the aggregate) over that same period. Similarly, the Council previously directed
Planning Staff to explore ways to minimize the gentrification pressures in the Pico
neighborhood. These are just examples.
No effort was made by Planning Staff to consult with the Housing Commission prior to submitting this
item. However, I personally learned of this proposal in connection with the public walk with Planning
Staff in the Pico neighborhood I attended as part of the Pico Wellbeing project, and so I placed
discussion of this item on the May Housing Commission agenda. At that meeting the Housing
Commission approved the following resolution by unanimous vote of all members present:
The Housing Commission recommends that City Council instruct Planning Staff that it
only submit an SB-2 grant request if the items to be studied—if implemented—will
assure the City will be in compliance with Prop R’s requirements and other City housing
goals.
In this regard, you will recall that you recently approved an amendment to the AHPP to permit for-
profit developers to meet their inclusionary housing requirements offsite by partnering with a non-
profit to do tax-credit financed affordable housing projects that will deliver more affordable housing
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than otherwise would be required. You will recall doing so permitted CCSM to move forward in
partnership with a developer in the Downtown to deliver more than 34% affordable housing for the
project, as well as more housing overall, with the City having to deliver fewer additional units to meet
Prop R than it otherwise would have had to provide.
M a r k e t
Units
Inclusionary
Affordable
Units
Percentage
Inclusionary
Units
City
Affordable
Units
Required
To Meet
Prop R
Total
Affordable
Units
After Prop
R
Met
Total
Housing
Units
After
Prop R
Met
DCP
Onsite
Option
84
21
20.0%
15
36
120
DCP
Offsite
Option
105
27
25.0%
18
45
150
TCAC
Partnership
w/CCSM
105
36
34.3%
9
45
150
This stood in stark contrast to the results obtained under the AHPP outside the Downtown, where
developers were taking advantage of the very minimal number of Extremely Low Income units
required. The recent mixed use project at 216-234 Pico Boulevard illustrates the problem. That project
adds 105 new residential units. In order to meet Proposition R’s 30% mandate, 32 of those units would
have to be deed-restricted affordable units. As only eight will be deed-restricted affordable units, the
City will have to spend its own funds to generate 35 additional affordable housing units just to meet
Proposition R’s Charter mandate created by this project (105 private units plus 34 City financed units is
139 total units; 30% of 139 units is 41.7 units; 8 inclusionary units and 34 City financed units is 42
affordable units). Even if the City financed units only require $275,000 per unit in HTF funds because
they will be part of a tax credit project, the 34 units will cost the City just under $9.4 million.
You recently put into temporary suspension the Extremely Low Income option outside the Downtown
while HR&A conducted a feasibility analysis (although such units continue to be a required part of the
DCP inclusionary unit mix, as well as recently approved projects funded by the Housing Trust
Fund). In light of the foregoing, the Housing Commission approved the following motion at its April
meeting by unanimous vote of all members present:
The Housing Commission recommends to City Council that it direct that the HR&A
study that City Council has already told Staff to commission for purposes of evaluating
the Affordable Housing Production Program (“AHPP”) outside of the Downtown should
include among its scenarios the scenario where the for-profit developer partners with a
nonprofit developer to build an offsite tax credit affordable housing development project
in order to meet the AHPP.
Unfortunately, I will not be able to be present this evening to discuss these issues—assuming such
fundamental matters of housing policy and fiscal responsibility do not remain on the Consent
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Calendar. I am in NYC for my job. My absence should not be misunderstood as reflecting a lack of
serious concern about this item by either the Housing Commission or me personally.
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REFERENCE:
Resolution No. 11177
(CCS)