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SR 09-10-2019 4B City Council Report City Council Meeting: September 10, 2019 Agenda Item: 4.B 1 of 22 To: Mayor and City Council From: David Martin, Director, City Planning Subject: Review Potential Goals and Policy Options for Existing Housing Stock and Consider Role of New Housing Models Recommended Action Staff recommends that the City Council review and discuss potential goals and policy options for protecting the City’s existing housing stock and consider what role new housing models may have in the production of housing that consists of both affordable and market rate units serving the full range of family and household sizes in the City. Executive Summary Southern California is experiencing a severe housing crisis that is driving the cost of living beyond the reach of an increasing share of the population. This is particularly acute in attractive areas like Santa Monica. Among the City’s highest priorities is the protection of the community’s existing housing stock, particularly rent-controlled housing, while also promoting the production of housing that consists of both affordable and market rate units serving the full range of family and household sizes. On December 18, 2018, Council held a study session on corporate housing in response to growing concerns about the erosion of the City’s supply of affordable housing due to market pressures. Council specifically expressed concerns about adverse impacts of renovation of rent-controlled housing and the construction of new housing that appeared to be designed to facilitate temporary occupancy. Council gave direction to bring back options for protecting existing rent-controlled units, amending the corporate housing definition, revising the Zoning Ordinance to address new housing models, and enhancing enforcement measures. This study session report provides an overview of staff’s analysis of new housing models and presents concepts for addressing new housing models in follow up to 2 of 22 Council’s corporate housing study session and discussions on SRO housing that occurred earlier this year. As part of this study session, staff recommends that Council discuss the following: 1. Policy Goals a. Confirm the City’s intent to encourage production of new housing to serve the full range of family and household sizes while protecting the City’s existing rental-housing stock, and particularly affordable / rent-controlled units, from negative impacts associated with new housing market trends. b. Reaffirm that the City’s residential neighborhoods should be protected from negative impacts associated with temporary occupancy and certain commercial uses. 2. Lease Duration a. Assess benefits of requiring property owners to offer minimum one-year leases for all rental units, or for existing rental units, including rent- controlled units. b. Consider whether to permit medium-term housing (tentatively defined as leases between 31 and 365 days) and, if yes, identify parameters for such use. c. Confirm requirement that leases be with natural persons for all rental units, or existing rental units, including rent-controlled units . 3. Unit Size a. Assess whether market-rate micro units are a desirable and necessary component of Santa Monica’s housing stock and, if yes, identify parameters for such use. 4. Consider whether there is support for new housing models not included above and, if yes, identify parameters for such uses. 3 of 22 Following Council discussion, staff will establish the parameters for an ordinance to amend the Municipal Code; gather feedback from the Planning Commission, Housing Commission, and Rent Control Board; and then return with a draft ordinance for Council consideration. Background Summary of Council Direction on Corporate Housing On August 14, 2018, as part of direction to examine statutory renter protections for outdated definitions and compensations, and in light of rapidly intensifying market pressures on local rents, Council directed staff to study what constitutes “corporate housing” and “short-term rentals” under the Municipal Code – both are currently prohibited land uses. On December 18, 2018, Council held a study session to review and discuss potential goals and policy options to guide preparation of an updated corporate housing ordinance. Council direction to staff was wide-ranging and included the following: • Provide recommendations on how to facilitate innovative housing types without displacing existing residents. • Require minimum one-year leases for rent-controlled units and a requirement that leases be made only to natural persons. • Return with an Interim Zoning Ordinance to create a new “medium -term housing” definition that is a commercial use prohibited in all residential zones. • Provide recommendations on how to protect all existing rental units from conversion to “medium-term housing,” including potential regulation of incremental permits for floor-plan changes that may lead to use as medium-term housing. 4 of 22 • Recommend increased fines and penalties for use of rent-controlled properties for unpermitted medium-term housing, including failure to submit buyout offers made to tenants occupying rent-controlled units to the City as required. Require that buyout offers be submitted to the Rent Control Board when presented to the tenant. • Consider new regulations to restrict advertising of unlawful corporate housing. • Review feasibility of a vacancy tax for leaving residential units vac ant. • Assess enforceability of potential new regulations. This staff report focuses on land use regulations directly related to medium-term housing and new housing models. Advertising prohibitions and penalties for violations of local law will be associated with any model adopted and included in any ordinance proposed. Consideration of a residential vacancy tax is a separate analysis not included here. Summary of Council Action on SRO Housing On May 14, 2019, Ordinance No. 2610 was adopted to establish a prohibition on Single - Room Occupancy uses that are not 100% Affordable Housing Projects or specialized housing in all Zoning Districts. Direction to staff was provided to expeditiously conduct comprehensive analysis of both new housing models and existing regulations and to provide options for instituting new or amended zoning regulations to support development of a diverse range of housing types for all income levels and household sizes, including consideration of whether smaller units should be included as part of the City’s overall housing stock. Links to the following Council discussions about Corporate Housing and Single-Room Occupancy Housing are provided in Attachment “A”: • City Council Study Session, Corporate Housing, December 18, 2018 • City Council Staff Report, SRO Housing, March 26, 2019 • City Council Staff Report, SRO Housing, April 23, 2019 5 of 22 • City Council Staff Report, SRO Housing, May 14, 2019 Housing Policy and the Need to Develop a Range of Housing Types The dimensions of the housing crisis extend far beyond Santa Monica. Californ ia Governor Gavin Newsome recently said, “The high price of housing and rent makes it almost impossible for many families to live in the communities where they work. Housing costs are a huge impediment to businesses finding and attracting workers. And families see how their paycheck doesn’t go nearly as far as it should. I’ve long said that California must use every tool in its toolbox to confront the housing affordability crisis.” Santa Monica has long been committed to doing its share and more to keep Sa nta Monica an inclusive and affordable community despite mounting market pressures. Through a variety of discussions over the years with community input at the Council, Planning Commission, and Housing Commission, a need has been identified for development of new affordable housing and specialized housing for all household sizes, as well as market-rate multi-family apartments for all household sizes near transit in Santa Monica. These discussions have occurred at Council, Planning Commission, and Housing Commission most recently in the context of discussions regarding market-rate Single Room Occupancy (SRO) uses, the 2017 Downtown Community Plan, the 2015 Zoning Ordinance update, various amendments to the City’s Affordable Housing Production Program (AHPP), and preparation of the City’s Housing Element. As documented in the December 18, 2018 Council staff report, there is a need for a variety of housing types to serve permanent residents and temporary residents, including residents in the city for the purposes of education, healthcare, or any other kind of business. Recently, several new housing trends have emerged that seek to address the housing affordability gap that exists in the Southern California region, and specifically, the westside. As rents have continued to increase, housing providers have proposed increasingly creative models to allow the opportunity to live in Santa Monica and immediately surrounding areas. 6 of 22 Changing Regional Housing Trends Housing development trends in the local and regional context show a shift toward higher density multi-family projects intended to offset rising land value and construction costs. Regionally, development trends illustrate movement toward smaller average unit size, including movement toward micro-units, particularly in high-density, expensive metropolitan markets where proximity to work and school, neighborhood amenities, and public transportation, are key factors. While housing models have long included SRO housing micro unit housing concepts that provide affordable housing in urban centers, or serve as a housing type for supportive and transitional housing, emerging trends show that in higher density metropolitan areas, a focus has been on development of market-rate rental apartment projects with smaller-sized units that reflect a balance between location, overall unit square footage, and building amenities. In addition to the trend toward smaller units, there has been a move towards co -living models that are based on smaller living spaces, whether individual or shared. Discussion In order to be responsive to Council’s direction to ensure the protection of existing rent - controlled units while also providing options for innovative housing models that do not displace existing tenants, the following sections present policy options for Council’s consideration. This section concludes with a proposed framework to address this multi- faceted issue. Protection of Existing Housing Stock As a city with approximately 71% of its residents in rental housing, the City has maintained a long-standing commitment to protecting tenants and existing housing stock, particularly in rent-controlled housing. Within the context of a statewide housing shortage and associated impacts on housing affordability, the City has an interest in ensuring that this valuable resource is retained for permanent housing to the greatest extent possible. As such, the following policy options, or any combination of options, are presented for Council consideration: 7 of 22 A. Prohibit medium-term housing (tentatively defined as leases between 31 and 365 days) and new housing models in existing rent-controlled units. This option would provide land use protections for tenants of existing rent - controlled units by explicitly addressing Council’s concerns regarding the loss of rent-controlled housing due to a combination of market pressures and outdated definitions in the Municipal Code. As a point of reference, according to the 2010 American Community Survey, there were approximately 51,000 housing units in Santa Monica, of which approximately 13,000 units were owner-occupied. The Santa Monica Rent Control Board’s most recent annual report indicated there were 27,445 units subject to rent control law at the end of 2018. B. Prohibit medium-term housing and new housing models in all existing rental housing units. This option would apply to all existing rental housing stock, including multi-unit rental housing and ownership units, such as single unit dwellings and condominiums, that are being rented to tenants. Staff has observed changes in floor plans for recently approved housing projects that appear to be a precursor to dividing units for multiple tenants/leases. Extending protections to all existing rental housing would be consistent with Council’s policy intent to offer incentives for housing production that is available for permanent, long-term residents. C. Either Option A or B plus regulations to protect residential neighborhoods from the impacts of new housing trends. This option is intended to provide broader protections for the City’s residential neighborhoods, particularly Ellised units to the extent allowed by law, which are potentially vulnerable to conversion to other uses that may not be in keeping with the purpose of residential neighborhoods for long-term, permanent housing stock. Concepts for Consideration: Duration of Lease As detailed in the December 18, 2018 Council staff report, there is a segment of the housing market seeking “medium-term” housing options of between 31 days and 365 8 of 22 days (consumers of this housing model include relocated employees; younger workers holding jobs for shorter durations and/or workers who are working under more flexible employment models and therefore seeking housing with greater durational flexibility; those looking for interim housing while they search for permanent housing, and those seeking extended vacations in home-like settings). Council should consider the following policy options: A. Require property owners to offer minimum leases of one year This option will affirm that the City’s housing stock is intended for the provision of long-term permanent housing. Council should consider whether this option should apply to all rental units, including new construction, or existing rental units, including rent-controlled units. B. Allow property owners more flexibility in duration of lease There are circumstances where requiring a one-year lease may not be practical given the varying needs of tenants. As a result, Council may want to consider providing flexibility in duration of lease by lowering the minimum lease term to a time period of less than a year. Another possibility may be a hybrid approach where initial leases are required to be one-year but reduce to minimum of 31 days after the first year. Create New Medium-Term Housing Definition Regardless of whether Council is interested in medium-term housing, the existing definition of “corporate housing” is too specific and presents challenges in enforcement. As a result, a new definition for “medium-term housing” will need to be created in the place of “corporate housing”. The duration of lease for medium-term housing should be considered by Council. As context, the Municipal Code already defines short -term vacation rentals as 30 days or less. If there is interest in defining long-term permanent housing with lease duration of at least one year, a logical definition for medium -term housing would be leases between 31 and 365 days. However, Council may also choose to define the maximum duration of lease as something less than 36 5 days. 9 of 22 Leasing to Natural Persons An associated concept to duration of lease is regarding who may sign a lease. Similar to regulations adopted by the Rent Control Board in August 2018, Council could consider requiring that leases for rental units only b e to natural persons. This would further re-affirm that the City’s housing supply is largely intended for long-term, permanent housing and not corporate entities, which may encourage use of rental units for other than long-term housing. Council should consider whether this option should apply to all rental units, including new construction, or existing rental units, including rent-controlled units. Concepts for Consideration: Medium-Term Housing Parameters As a policy matter, the City provides process and development standard incentives for housing projects. If is the intent of Council to encourage housing production while providing flexibility in lease terms, there are limitations that Council may wish to consider in order to ensure that new construction includes a mix of both medium-term and longer-term housing. If there is interest in allowing medium -term housing in new construction, the following are presented as policy options for Council consideration: A. Allow medium-term housing in new construction in certain commercial zones or all commercial zones citywide. With a base assumption that medium-term housing would be prohibited in residential neighborhoods to protect from negative impacts associated with temporary occupancy and certain commercial uses, if Council was interested in allowing medium-term housing, an option would be either allowing this kind of housing in all commercial areas citywide or only in certain zones. Providing limitations as to location would provide a relief valve for pressure t o locate medium-term housing in residential neighborhoods. As such, there may be circumstances that Council believes is appropriate to allow this kind of housing if consistent with policy objectives. B. Allow medium-term housing in a percentage of units in new construction, or no limit on number. 10 of 22 If medium-term housing is allowed, a consideration is parameters on how much should be allowed in a project. If viewed within the context of Council’s support of housing production intended to increase the City’s housing supply, it may be appropriate to limit the number of units in a project that could be reserved for medium-term housing. As an alternative, if Council believes that prohibiting medium-term housing in all existing rental housing units – including multi-unit rental units and ownership units, such as condominiums and single -unit dwellings – that are being rented to tenants is sufficient, then there could also be no limit on how much of a new project could have medium-term housing units. As a point of reference, according to the 2010 American Community Survey, there were approximately 51,000 housing units in Santa Monica, of which approximately 13,000 units were owner-occupied. The Santa Monica Rent Control Board’s most recent annual report indicated there were 27,445 units subject to rent control law at the end of 2018. C. Allow medium-term housing in new construction, but with higher affordable housing obligations, or keep affordable housing obligations the same. Due to the shorter lease duration, it stands to reason that the economics of a project that includes some or all medium-term housing are different than a project that may have lower turnover in units. As a result, Council should consider whether it would be appropriate to study whether such proje cts could withstand higher affordable housing obligations. As an alternative, Council could also choose to keep affordable housing obligations the same (i.e. not taking medium - term housing into consideration). Changes to affordable housing obligations would require a new nexus study. Concepts for Consideration: Market-Rate Micro units with Common Area Amenities On March 26, April 23, and May 14, 2019, Council discussed the issue of Single-Room Occupancy (“SRO”) Housing projects in the context of several applications in the Downtown that had been submitted. Ultimately, Council voted to enact an ordinance prohibiting market-rate SRO projects pending further study of the issue. The SRO Housing definition in the Zoning Ordinance contemplated transitional ho using and 11 of 22 similar projects as evidenced by the specific standards in SMMC Section 9.31.330. This use classification was not intended to allow entire buildings of market-rate units without certain common area amenities. As noted above, addressing the regional housing crisis requires some flexibility in unit types, size of living spaces, and amenities. Within metropolitan housing markets, trends have developed that include smaller units associated with common area amenities. Staff reviewed of peer cities’ approach to micro-units, specifically, ordinances for San Francisco, Los Angeles, Berkeley, and West Hollywood. The ordinances were instructive in shaping the concepts presented herein for unit size and common area amenities. Most of the ordinances refer to the Building Code to establish a minimum unit size (150 SF) and also do not require common area amenities. San Francisco was an exception in that their ordinance defines a micro-unit with reduced square footage (fully contained units with bathroom and kitchen) with living area of less than 220 SF. These micro-units are allowed in very limited circumstances (e.g. student housing, affordable housing). The term micro-unit for purposes of this report will refer to fully contained units with bathroom and kitchen in order to distinguish between living units that may not contain individual kitchen and bathroom facilities that is traditionally associated with Single-Room Occupancy units or housing and the City’s current use classification for SRO housing projects. Micro-units, if developed with complimentary amenities, could provide a more affordable market rate response to the shortage of housing. If Council supports incorporating this emerging housing type into the range of permissible unit types, staff would bring back an ordinance at a future meeting to add this new use classification and associated standards. The following options regarding micro-units are presented for Council’s consideration: A. Allow micro-units in new construction or not at all If Council believes that micro-units are a desired component of Santa Monica’s housing stock, allowing micro-units would create opportunities for a diversity of households to live in Santa Monica. As a starting point and within the context of 12 of 22 protecting existing housing supply, Council could consider allowing micro-units only in new construction projects or within changes of use from commercial use to residential use. As an alternative, micro-units could also be prohibited. B. If micro-units are allowed, permit as a singular use type or part of a mix of units. If micro-units are allowed, Council should consider in what manner they would be allowed – as a single building type or as part of a mix. Micro-units allowed as a single building type would allow flexibility for innovative housing types without the restriction of typical physical layouts and also increase the number of overall housing units produced due to their smaller size. However, allowing micro-units as part of a mix of units would also provide a greater diversity of housing units within individual projects to meet the diverse housing needs of the City and allow developers to meet market demand in a variety of ways. As background information, the requirement for a unit mix for Tier 2 projects has been in place since the 2015 Zoning Ordinance Update and the 2017 Downtown Community Plan. Prior to that, there were relatively few two- and three-bedroom units produced in the city. C. If micro-units are allowed, require special standards such as minimum and maximum unit size, required amenities within the unit, and required common area amenities. If micro-units are allowed, Council should consider special standards that may apply. In researching peer cities’ ordinances and as a starting point, staff has identified parameters that may be of interest to Council including minimum and maximum unit size, required amenities within the unit, and required common area amenities. The primary concern regarding micro-units has been quality of life for tenant, specifically the lack of community socializing space and minimal amenities in the unit. Special standards would address the inherent micro-unit tradeoff of private living space to common living area with a focus on livability. D. If micro-units are allowed, allow in certain zones or citywide. 13 of 22 Council should consider in which zones micro-units would be appropriate within the context of protecting existing housing supply in residential neighborhoods. Commercial zones are largely where the greatest amount of development activity is occurring and where the majority of future housing production is likely to occur. In providing direction on geographic limitations on locating micro-units, Council should also consider the likely tenant profile of micro-unit occupants especially with large healthcare and educational employers in the city, in addition to the tech industry. Concepts for Consideration: New Housing Models Staff has researched co-living models in the region and also in other jurisdictions to evaluate how co-living could potentially be introduced as a housing model with defined rules and regulations in order to create more housing options and in turn create more diversity in the city’s housing stock. While there are different corporate entities that offer or market co-living situations, these kinds of projects are typically distinguished by a greater number of bedroom than in traditional multi-family units, particularly in a new construction context, allowance for leasable bedrooms, and flexibility in lease term. Peer Cities Research – Co-Living Staff conducted a review of peer cities’ approach to the co -living concept, which centers around renting bedrooms in a larger multi-unit residential or mixed-use project; where one or two individuals can enter a lease agreement for a single bedroom (with or without a private bath) and use shared kitchen and bath facilities, and common living spaces with other tenants who typically each enter into separate leases. Specifically, staff reviewed ordinances for a number of cities that rely on “group housing” or “group residential” definitions and do not currently have special development or use standards that would differentiate it from traditional multi-unit dwelling units. In contrast, San Francisco and San Jose both have regulations that provide more specific parameters for co-living. San Jose adopted regulations earlier this year as a way to test whether this housing type helps the municipality address the housing crisis in the Bay Area. The following summarizes several of the key components of these cities’ ordinances: 14 of 22 City of San Jose defines “Co-Living Community” as a residential community where individual secure bedrooms are rented to one or two persons. Special standards include the following: • Co-living communities contain bedrooms that are provided for an established duration with a lease agreement. Individual bedrooms that contain a full kitchen facility are not considered a co-living community. • A co-living community must have common open space and shared full kitchen facilities must serve a minimum of six bedrooms and must include interior common space. • Minimum amount of common area required per bedroom. An individual bedroom may not have an external entryway. • Bedrooms are minimum 100 SF in size; average 275 SF in size; and maximum 400 SF in size. • Increased bicycle parking requirements; reduced vehicle parking requirements; and stipulation for Transportation Demand Management program requirements. • Each bedroom within a Co-Living Community is considered a separate living quarter to be occupied by permanent residents (lease terms are not stipulated). • Each bedroom is intended to be a unit for Regional Housing Need Allocation purposes, and will, subject to further study, be equivalent to dwelling units under the city’s Inclusionary Housing Ordinance. • Co-Living Community established as a permitted use in San Jose’s Downtown subject to a Special Use Permit for new development. San Francisco’s zoning ordinance permits co-living, subject to its group housing definition: “A Residential Use that provides lodging or both meals and lodging, without individual cooking facilities, by prearrangement for a week or more at a time, in a space not defined by this Code as a dwelling unit. Such group housing shall include, but not necessarily be limited to, a Residential Hotel, boardinghouse, 15 of 22 guesthouse, rooming house, lodging house, residence club, commune, fraternity or sorority house, monastery, nunnery, convent, or ashram. It shall also include group housing affiliated with and operated b y a medical or educational institution, when not located on the same lot as such institution…” • Residential Use is defined as a use category that provides housing for San Francisco residents, rather than visitors, including dwelling units, group housing, senior housing, homeless shelters, etc. • Density limitations are established to regulate the number of bedrooms in a group housing project and limitations vary by zoning district. • Group housing can also be defined as student housing or 100% affordable housing and in certain zoning districts, group housing is not permitted unless it is a student housing or 100% affordable housing subtype. Research - Membership-Based Transitory Housing Staff has received inquiries from companies that are proposing housing m odels that are neither permanent housing nor hotels and as such, the Zoning Ordinance does not perfectly address the proposed use. These hybrid models are being proposed in commercial zoning districts (as opposed to residential neighborhoods) and typically involve persons renting a bed in a large common area with shared kitchens and bathrooms. The model is an evolution of existing subscription-based extended stay hotels. Members pay a monthly fee and can choose to stay in any available location for a few days, a week, or extend to several weeks but it is clear that these models are not intended for long-term permanent housing. Under the City’s current regulations, stays of less than 30 days could potentially be considered a violation as the use might be more akin to lodging or vacation rentals. The companies have shared that the average length of stay is typically several weeks. However, these kinds of uses have both residential and commercial elements as the model evolves to accommodate travelers, tenants transitioning between employment, and others looking for medium -term accommodations. As a result, this kind of use appears to be an evolution of hostels and similar lodging facilities and are more in line with commercial instead of residential uses. 16 of 22 If there is interest, Council could direct staff to further explore accommodating and simplifying the process for these kinds of accommodations, which could potentially alleviate some of the pressure for temporary housing in residential neighborhoods. Policy Options – New Housing Models If Council is interested in accommodating new housing models as a desirable component of Santa Monica’s housing stock, the following are policy options for Council consideration: A. Allow new housing models in new construction or not at all. In order to protect existing housing supply, Council should consider limiting new housing models to within new construction, or within changes of use from commercial to residential uses. However, if Council would prefer to reaffirm that existing and future housing rental units are intended only for long-term, permanent housing, it would not be appropriate to accommodate new housing models that largely have an emphasis on flexibility in duration of lease and options for shared living quarters. B. If new housing models are allowed, consider certain zones or citywide. If new housing models are allowed, similar to micro-units, there may be value in providing geographic limitations as to where this land use may be located. Given that these new housing models can have varying impacts on adjacent residential neighborhoods and within the context of the City’s incentives for housing production in areas with access to high frequency transit and access to daily needs, Council should consider limiting these uses to certain commercial zones, or all commercial zones citywide only and prohibiting such uses in residential zones. C. If new housing models are allowed, consider special limitations. If new housing models are allowed, some limitations on the use may b e considered including limitations on occupancy, requirements for amenities within units and in common areas, and other considerations that increase livability in a 17 of 22 co-living or membership-based transitory housing setting. Since the living quarters may only include leasing of beds with shared kitchens, bathrooms, and living areas, it is important that there are requirements in place that ensure the livability of such housing types. Staff Recommendation Table 1 summarizes staff’s recommendation on all of th e above concepts with respect to duration of lease, whether micro units should be allowed, and whether new housing models should be allowed. This recommendation also provides staff’s recommendation as to how these concepts could be addressed in existing and future housing supply with recommendations on geographic limitations. 18 of 22 **Subject to special standards Duration of Lease Micro-Units**New Housing Models** EXISTING HOUSING STOCK Existing Units - (Rent-Controlled)1- YEAR MINIMUM NO NO Existing Units - (Not Rent-Controlled) Residential Zones 1- YEAR MINIMUM NO NO Existing Units - (Not Rent-Controlled) Commercial/Mixed-Use Zones 1-YEAR MINIMUM OR 31-->365 DAYS FOR PERCENTAGE OF UNITS MAYBE MAYBE NEW CONSTRUCTION Table 1. Summary of Potential Use Regulations YES WITH LIMITATIONS YES WITH LIMITATIONS YES WITH LIMITATIONS YES WITH LIMITATIONS YES WITH LIMITATIONSNO New Construction / Change of Use - Healthcare Mixed-Use Zone New Constuction - Residential Zones 31-->365 DAYS FOR PERCENTAGE OF UNITS New Construction / Change of Use - Commercial/Mixed-Use Zones 31-->365 DAYS FOR PERCENTAGE OF UNITS 31-->365 DAYS FOR PERCENTAGE OF UNITS 19 of 22 Regulating Advertising of Medium-Term Housing Council can also prohibit advertising of leasing activity that is in violation of local law. Remedies 20 of 22 Regardless of the regulatory policy choice ultimately chosen, it is equally important to further buttress available remedies to ensure that violations are appropriately deterred. While a significant set of remedies are currently available for violations of the Zoning Ordinance, each remedy has its limitations. Currently, violations of the Zoning Ordinance are subject to all of the following remedies: 1. Administrative Enforcement by Citations (SMMC Chapter 1.09) or Compliance Order (SMMC Chapter 1.10). 2. Criminal Prosecution, with a maximum fine of $500 and/or imprisonment of up to 6 months for each violation. 3. Permit Suspension or Revocation. 4. Civil Lawsuit to enjoin the violation. Historically, the City has principally relied upon Administrative and Criminal enforcement tools. While such tools are effective in many situations, each contains limitations. Administrative remedies – generally up to $1,000 per violation – are relatively quick and easy to impose; however, due to the limitations in fine amounts and the limited judicial process available to enforce such fines, they are less effective against entrenched violators. Criminal prosecution can be a powerful remedy; however, the serious congestion in the criminal courts system creates significant delays and, at times, inadequate judicial attention to even serious cases. While permit suspensions and revocations can have powerful consequences (e.g. a business operating without a permit), such consequences still need to be enforced by administrative, criminal or civil means. Civil remedies have not historically been a favored tool by enforcement staff because it can be a much slower process, comparatively far more staff -time intensive, and, generally, a win only results in a court enjoining the violation. Such an outcome does not provide meaningful deterrence against serious and entrenched violators. Staff recommends that the Council consider meaningfully enhancing the City’s civil remedies in the two following ways. First, staff recommends that the Council consider adoption of significant civil penalties. While administrative penalties are limited by state 21 of 22 law, and criminal penalties are limited by both state law and the City Charter, far less limitations apply to the adoption of civil penalties. A significant civil penalty could provide meaningful deterrence against violations, especially against violations largely motivated by economic incentives. Second, the City Attorney’s Office will examine and consider the appropriateness of receivership and forfeiture processes as remedies for very serious and entrenched violations. In situations involving, among other things, serious health and safety violations (e.g. slum housing), state law authorizes local enforcement agencies to request a court-appointed receiver to take over a property, remedy the violations, and, if necessary, sell the property to pay for the remediation costs, administrative costs and fines. See California Health & Safety Code §§ 17980 – 17992. While this remedy is available in only rare and extreme cases, the City Attorney’s Office will also explore ways to expand the availability and use of this remedy to address serious violations of local law that harm the community’s general welfare. Next Steps Once staff receives clear policy direction from Council, staff will draft redline changes and seek input from the Planning Commission, Housing Commission, and Rent Control Board prior to bringing back an ordinance for adoption at a future Council Meeting. Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. 22 of 22 Prepared By: Roxanne Tanemori, Principal Planner Approved Forwarded to Council Attachments: A. Attachment A Links to Prior Council Reports B. Written Comments C. PowerPoint Presentation Attachment A Links to prior City Council Staff Reports City Council Study Session, Corporate Housing, December 18, 2018 City Council Staff Report, SRO Housing, March 26, 2019 City Council Staff Report, SRO Housing, April 23, 2019 City Council Staff Report, SRO Housing, May 14, 2019 1 Vernice Hankins From:Andrew Wilder <andrew@andrewwilder.com> Sent:Monday, September 9, 2019 6:27 PM To:councilmtgitems Cc:Stacey AS; Council Mailbox; Ted Winterer; Councilmember Kevin McKeown; Sue Himmelrich - Western Center on Law and Poverty (suehimmelrich@suehimmelrich.net; Lane Dilg; Rick Cole; David Martin; Rahim Kanji; Wendy Trager; Danny Mayorga; Donna Rosecu; William Reed; zinajosephs; Maurice Cochee; Denise Smith; gold.eliza@yahoo.com Subject:Agenda Item 4B (Disruptive dormitories in R1 zones) Dear Council Members, I very much appreciate Stacey's email to you earlier today -- she outlined the situation at 2222 Pier (and other homes in Santa Monica) very nicely, so please see below if you haven't read her email yet. Corporations should not be allowed to lease homes in R1 neighborhoods, turn them into dormitories, and sub-lease them to individuals. Even without changes to the current laws, Bungalow Living is already in violation of the current R1 Zoning ordinance. Here is an excerpt (emphasis added): The purposes of the “Single-Unit Residential” District are to:   B. Preserve and protect the existing character and state of the City’s different residential neighborhoods and the quality of life of City residents against potential deleterious impacts related to development—traffic, noise, air quality, and the encroachment of commercial activities. D.Avoid overburdening public facilities, including sewer, water, electricity, and schools by an influx and increase of people to a degree larger than the City’s geographic limits, tax base, or financial capabilities can reasonably and responsibly accommodate. Street parking and trash/recycling pickup are both Public Facilities, and they are both overburdened by this commercial real estate venture. Their trash and recycle bins are overflowing every single week.  Additionally, I have searched the City's Business License Directory to see if Bungalow Living has a business license to operate in Santa Monica, and none of the names that match the search "Bungalow" match the corporation's name on their website ("Bungalow Living, Inc.")... so they may very well be operating without a business license, too! I also think the idea proposed in the Staff Report to allow leases to be signed only by natural persons -- no corporations! -- is a great suggestion to help improve this situation. Thank you for moving forward to remedy this situation! Best, Andrew On Mon, Sep 9, 2019 at 11:46 AM Stacey AS <sjaconsulting@gmail.com> wrote:  All,  Item 4-B 09/10/19 1 of 5 Item 4-B 09/10/19 2   While I appreciate the Council looking at the issue of vacation rentals in our City, previous legislation on home‐sharing,  and current staff recommendations, do not address "medium term" rentals (rentals that are 31 days or more,)  specifically related to companies such as Bungalow (Bungalow.com) invading our residential neighborhoods.     Bungalow is a COMMERCIAL ENTERPRISE, IN THE BUSINESS OF HOME‐SHARING. Home‐sharing is not an allowed  business in an R1 zoned neighborhood. (Bungalow is not the owner of the houses it uses for its business; however, the  following would still apply, as Bungalow is a business running out of the properties.) Section 9.07 of the Santa Monica  Municipal Code states that any land uses not specifically listed in Chapter 9.51, Use Classifications, are prohibited. A  home sharing business is not a permitted use in an R1 zoned area, in accordance with the existing language of the  Santa Monica Municipal Code. Note that  the owners of 2222 Pier Avenue whom leased the property to Bungalow have  never lived in the house, not have they ever lived in Santa Monica.      Bungalow is a commercial enterprise which has raised $64 million dollars to build a business of home sharing. Its  business model is to lease homes, put up false walls to create additional private spaces, then rent out each space to an  individual for a period of more than 31 days (thus not be regulated as a vacation rental) as a "bedroom", creating  dormitory style housing in residential neighborhoods (https://www.globenewswire.com/news‐ release/2018/08/23/1555854/0/en/Bungalow‐a‐New‐Residential‐Real‐Estate‐Platform‐Launches‐and‐Raises‐64‐ Million‐to‐Build‐a‐Better‐Rental‐Experience.html).    Bungalow puts up false walls to create additional private spaces (i.e., around a dining room, or bifurcating a living  room), which it then leases out as bedrooms. Where the new model of home sharing creates a burden on a  neighborhood zoned for single family homes, Bungalow’s model takes the burden to an extreme. Among the stated  purposes of Section 9.07 is to “Preserve and protect the existing character and state of the City’s different residential  neighborhoods and the quality of life of City residents against potential deleterious impacts related to development— traffic, noise, air quality, and the encroachment of commercial activities.”     There are currently NINE ever revolving tenants at 2222 Pier Avenue. Permanent residents, some elderly, and many of  whom have been living in Santa Monica for fifty years or more, are forced to park blocks away from their homes. We  are forced to endure the frequent “community parties” Bungalow actually advertises as part of its marketing, which  often violate noise ordinances. The alley is always littered with the trash of nine residents, whom do not have enough  of a vested interest in the property to dispose of trash properly.  Last week, the residents of 2222 Pier had a party,  which did not end until 3:00 am, and several residents ended up calling the police. The next day all of the trash/green  bins of at least six houses on the block were filled with pizza boxes.     The owners of 2222 Pier Avenue have been cited once for Code violations in the year since Bungalow has established  its home‐sharing business at the property. However, Code Enforcement has informed me that any new case must begin  all over again, rather than exist as a continuation of any violations. Why? Because none of the tenants interviewed for  the initial case still live at 2222 Pier Avenue ‐ everyone there is new!     Bungalow clearly has deleterious impacts on our neighborhood.  It is a commercial enterprise which is not permitted in  R1 neighborhoods.    More so, Bungalow is a new kind of unregulated real estate development. Without legislative language directed at  this new model of commercial enterprises establishing home‐sharing businesses, Bungalow will succeed in changing  our single family home, R1 zoned area into a neighborhood of home‐sharing businesses and dormitories.    Best,  Stacey Abrams‐Sherick  90405      Item 4-B 09/10/19 2 of 5 Item 4-B 09/10/19 1 Vernice Hankins From:Clerk Mailbox Sent:Tuesday, September 10, 2019 8:32 AM To:councilmtgitems Subject:FW: Item 4 B tUESDAY SM Council agenda From: Mathew Millen <matmillen@msn.com>   Sent: Monday, September 9, 2019 9:02 PM  To: Clerk Mailbox <Clerk.Mailbox@SMGOV.NET>; Sue Himmelrich <Sue.Himmelrich@SMGOV.NET>  Subject: Item 4 B tUESDAY SM Council agenda   The proposed 1 year minimum lease and prohibiting leasing to corporations has problems  The City Temporary Relocation ordinance requires a rental housing provider to rent an apt. for a tenant if  repairs will exceed 30 days...  1.If the apt. building is owned by a corporation ( and I own my apt. building in my family trust NOT a corp) how will the apt. owner ,a corporation lease the unit for the tenant if Corporations  are denied the opportunity to lease? 2. If the repairs are scheduled to be completed in 90 days owners cannot afford to lease the tenant an apt. for 1 year if the tenant will be returning to their apt. in 90 days.  Forcing the apt. owner to pay rent for the other 9 months is A. is expensive and B.. keeps a unit vacant that could be rented. THIS PROPOSAL NEEDS MORE THOUGHT  Mathew Millen  Item 4-B 09/10/19 3 of 5 Item 4-B 09/10/19 1 Vernice Hankins From:William Robertson <william@designbuildlabs.com> Sent:Tuesday, September 10, 2019 8:59 AM To:councilmtgitems Subject:Fwd: Santa Monica R1 - proposed To whom it concerns,    I’d like the below email to be part of the review package for the september 24th hearing.  William Robertson william@designbuildlabs.com 310.985.3969 www.linkedin.com/in/williamrobertson2 www.designbuildlabs.com     Begin forwarded message:    From: William Robertson <william@designbuildlabs.com>  Subject: Santa Monica R1 - proposed   Date: September 9, 2019 at 2:07:52 PM PDT  To: ross.fehrman@smgov.net, tony.kim@smgov.net, planning@smgov.net    Ross and Tony,    I own and operate an architectural design firm here in santa monica.  We are also a general  contractor.  I’ve been following the R1 development standards topic for a while and thought i’d chime in  a bit.    We are also getting ready to submit plans for our own house, so it's especially personal for us right now.    We’ve seen a number of colossal structures go up in recent years, many that are poorly proportioned  and out of step with the size of the lots in the area.  We are keen to see a better system but we want to  make sure this happens with eye to practicality.    Generally I think the following:    1. setback, layback and building envelope standards should be very restrictive  2. parcel coverage and garage requirements however should be less restrictive  3. Plan check priority and lower fees should be given for designs below incremental parcel  coverage thresholds, for electing to add a garage and for maximizing green building elements.    Thank you.  See you later in the month at the council hearing.  Item 4-B 09/10/19 4 of 5 Item 4-B 09/10/19 2 William Robertson 2401 22nd St. Santa Monica, CA 90405     Item 4-B 09/10/19 5 of 5 Item 4-B 09/10/19 1 Vernice Hankins From:zinajosephs@aol.com Sent:Tuesday, September 10, 2019 11:27 AM To:councilmtgitems; Gleam Davis; Greg Morena; Sue Himmelrich; Ana Maria Jara; Councilmember Kevin McKeown; Ted Winterer; Terry O’Day; Lane Dilg; David Martin; Sharon Guidry; Rick Cole Cc:zinajosephs@aol.com Subject:City Council 9/10/19 items 4B and 7D -- ongoing illegal multi-family use in R1 in Sunset Park City Council 9/10/19 items 4B and 7D Home-sharing vs. illegal ongoing multi-family use in Sunset Park R1 district Dear Council members, The City Council discussion of new housing models should include the dormitory-style housing that Bungalow.com has been doing in Sunset Park at 2222 Pier Avenue for some time. Complaints have been filed with the city since at least August 2018, and still the problem persists. 2222 Pier Avenue -- Bungalow Living just got a $64 Million Venture Capital investment....Big Business operating in our R1 neighborhood. From a nearby resident: “It's gotten really bad -- I had to call SMPD a couple of weeks ago because of a loud, disruptive party at 1 o'clock in the morning. After the party, they filled our green bin and our neighbor's recycle bin with pizza boxes, to the brim....There are frequently smaller parties that we can hear from inside our house. And they leave a ton of trash in the alley. The list goes on and on....This sub-rental of 9 individuals inside an R1 home should not be allowed to continue.” Another neighbor filed a complaint with the city in August 2018, and I followed up with a GO complaint. An email thread below with the head of Code Enforcement shows that the city apparently can do nothing to end this ongoing practice with the current city regulations, as the illegal multi-unit use of 2222 Pier Avenue in an R1 zone in the Sunset Park neighborhood is still apparently "under investigation" after all this time. Zina Josephs From: Sharon.Guidry@SMGOV.NET To: zinajosephs@aol.com 2 Cc: Efren.Galindo@SMGOV.NET Sent: 9/6/2019 2:55:31 PM Pacific Standard Time Subject: RE: Closed Request # 3897337 [6664656633383066] -- code enforcement Hi Ms. Josephs, unfortunately the case is ongoing and I am not able to provide you with specific information regarding the case at this time. In our previous communication, I hoped that I would be able to do so soon however, due to the nature of enforcement investigations, I have been unable to do so. With that, when the case is closed, we will be happy to give you an update on the case with any information that is disclosable to the public. I cannot at time give you an estimate of when that will be but I can assure you, the case is still very active. Efren Galindo, Lead Cod Enforcement Officer is assigned to this case, while he too can’t provide any specific information regarding the case, feel free to check in with him periodically as he will be able to inform you when the case reaches completion. I have added Lead Officer Galindo to this response so you have is contact information. Best, Sharon L. Guidry Code Enforcement Manager City of Santa Monica | Planning & Community Development Code Enforcement Division 1685 Main Street, Room 111 | Santa Monica, CA 90401 sharon.guidry@smgov.net 310-458-4984 ********************************************************* From: zinajosephs@aol.com <zinajosephs@aol.com> Sent: Friday, September 6, 2019 1:45 PM To: Sharon Guidry <Sharon.Guidry@SMGOV.NET> Subject: Re: Closed Request # 3897337 [6664656633383066] -- code enforcement Sharon, I don't seem to have heard from you since March 20th about 2222 Pier Avenue. Nearby residents have expressed concern about this since August 2018. More and more FOSP members are complaining. What is the current status of code enforcement? Sincerely, Zina Josephs Friends of Sunset Park ****************************************************************************** In a message dated 3/20/2019 4:05:58 PM Pacific Standard Time, Sharon.Guidry@SMGOV.NET writes: Thank you Ms. Josephs, and you are most welcome. I can certainly understand where frustration can arise when limited information can be provided while it appears the violations continues. I assure you that this case is moving through the process in accordance with established policy and the law and we will reach a conclusion using all available enforcement remedies available to us. As I mentioned previously, I expect that we will be able to share some information with you soon. Best, 3 Sharon L. Guidry Code Enforcement Manager City of Santa Monica | Planning & Community Development Code Enforcement Division 1685 Main Street, Room 111 | Santa Monica, CA 90401 sharon.guidry@smgov.net 310-458-4984 *************************************************************** From: zinajosephs@aol.com <zinajosephs@aol.com> Sent: Wednesday, March 20, 2019 3:05 PM To: Sharon Guidry <Sharon.Guidry@SMGOV.NET> Cc: zinajosephs@aol.com Subject: Re: Closed Request # 3897337 [6664656633383066] -- code enforcement Ms. Guidry, Thank you for your response. I don't recall speaking with anyone in your department about this matter. Bill Reed (see below), a longtime member of Friends of Sunset Park, doesn't understand why it's taking so long to resolve the matter. Neither do I, as Mr. Reed first emailed me about this matter on August 2, 2018. Zina Josephs President, Friends of Sunset Park ****************************************************************************** In a message dated 3/20/2019 2:54:24 PM Pacific Standard Time, Sharon.Guidry@SMGOV.NET writes: Good afternoon Ms. Josephs, thank you for offering your assistance with the enforcement on this property. I understand that you have spoken with Code Enforcement Supervisor Maurice Cochee who shared that we have an active enforcement case on this property and therefore cannot provide any specific information on the status except to say that our enforcement is active and we will continue our case until full compliance with the law. When the case is satisfactorily resolved, we will be able to share more information at that time. We hope to have information to share in the near future. Best, Sharon L. Guidry Code Enforcement Manager City of Santa Monica | Planning & Community Development Code Enforcement Division 1685 Main Street, Room 111 | Santa Monica, CA 90401 sharon.guidry@smgov.net 310-458-4984 *************************************************************** From: zinajosephs@aol.com <zinajosephs@aol.com> Sent: Saturday, March 16, 2019 6:31 PM To: Sharon Guidry <Sharon.Guidry@SMGOV.NET> Cc: billreed1@aol.com; zinajosephs@aol.com Subject: Re: Closed Request # 3897337 [6664656633383066] 4 Dear Sharon, Seven months after the initial complaint in August 2018 on the GO system, the problem below (illegal multi-unit use of 2222 Pier Avenue in an R1 zone in the Sunset Park neighborhood) has apparently not been dealt with effectively. Is there anything else residents can do to get the municipal code enforced? Zina Josephs Friends of Sunset Park ****************************************************************************** Hi Bill, Jing is out on maternity leave. I'm forwarding this to Sharon Guidry, who is the head of Code Enforcement. Zina. https://www.smgov.net/Departments/PCD/Code-Enforcement/Code-Enforcement-Division-Staff/ ****************************************************************************** In a message dated 3/16/2019 11:05:33 AM Pacific Standard Time, billreed1@aol.com writes: You told Zina Josephs on August 10, 2018 in an E-mail that the multi-unit use of 2222 Pier Ave in an R1 zone was not legal (see below). However, after filing a complaint (August 2018), and dozens of follow-ups with code enforcement, city council members, etc. by multiple residents nothing has happened. Justice is only useful if it is 'speedy'. I do not think after seven (7) months we are asking for too much for either the city of Santa Monica to stop what is happening at 2222 Pier Ave or you do not enforce your own residency codes. Sincerely, William Reed 2215 Pier Ave. Santa Monica ************************************************************* -----Original Message----- From: zinajosephs <zinajosephs@aol.com> To: billreed1 <billreed1@aol.com> Sent: Fri, Aug 10, 2018 11:17 am Subject: Fwd: Closed Request # 3897337 [6664656633383066] From:santamonica@user.govoutreach.com To: zinajosephs@aol.com Sent: 8/10/2018 8:29:43 AM Pacific Standard Time Subject: Closed Request # 3897337 [6664656633383066] ---If replying by email, enter your reply above this line--- (Please allow up to 15 minutes to update your request record when replying by email) 5 Your request # 3897337 has been closed in the Santa Monica Works system for the following reason: Hi Zina, What you are describing sounds like a multi-unit use, which is not permitted in the R1 zone. If you are concerned about the use of the property, please file a complaint with Code Enforcement so that we may investigate what is occurring at the property. Complaints may be filed by submitting a GO complaint with the specific address, or filling out a Code Enforcement complaint form found here:https://www.smgov.net/uploadedFiles/Departments/PCD/Applications-Forms/Code- Compliance-Complaint-Form.pdf You may e-mail to code.enforcement@smgov.net or drop it off at the Planning desk in City Hall. Thanks, Jing Jing Yeo, AICP Planning Manager City of Santa Monica Planning and Community Development 1685 Main Street Santa Monica, CA 90401 tel: (310) 458-8203 e-mail: jing.yeo@smgov.net | smgov.net/pcd facebook | youtube | twitter This is in reference to the request you submitted on 08/02/2018 11:50 PM Description: An R1 property in the Sunset Park neighborhood used to have a 5-bedroom house in the front and a 1- bedroom cottage in the rear. Construction began several months ago to add another bedroom to the rear cottage. It seems that as of August 1, 2018, the house and the cottage are now being leased as 9 1-bedroom units. Each unit has its own lease. Is the property owner allowed to do this in an R1 zone? September 9, 2019 Re: Item 4-B Goals and Policy regarding Existing Housing Stock/New Rent Models Dear Mayor and Councilmembers: We are writing to lend our support, and share our experiences, as you conduct your study session to solidify goals and policies that will help protect Santa Monica’s residential rental housing while considering the effects of the proliferation of new short- term rental models. More and more property owners of rent-controlled, non-rent-controlled, and deed-restricted rental housing units have been renting their apartments as short-term rentals to tourists and other temporary occupants, instead of to tenants who use the unit as their permanent, or long-term, domicile. Long-term residents of Santa Monica are being forced out of their apartments. Some owners reconfigure the walls and doors of their units, or furnish them with services and amenities, to attract and accommodate a succession of short-term visitors. Our well-intended laws prohibiting short-term rentals and vacation rentals to protect residents are being circumvented in favor of tourists, businesspersons, professors, relatives of city residents, and roommates in “co-living” arrangements, as owners avoid renting unfurnished units as long-term tenancies. Short-term accommodation operators have gone to extraordinary lengths to brand themselves as housing. Please keep in mind that for every existing apartment that is lost to a short-term-accommodation business model, the new tourist business takes a residence out of our home town. Owners are not paying temporary occupancy taxes on these rentals. In fact, residents of Santa Monica are the ones paying for the city to handle the plethora of problems that arise such as eviction, harassment, and municipal code violations. We’re concerned that workers who service the units may not have the same wage protections as other hotel workers. Units are usually managed off- site using booking software that enables owners and managers to rotate tenants frequently and with ease, like hotel rooms. Most cater to tourists, or single, affluent college graduates, and leave working families and those needing supportive or affordable housing without housing opportunities during our housing crisis. These new commercial rent models need to be controlled in our popular tourist city so we can continue to preserve housing stock and affordability. During your study session you will consider a wide variety of issues, review existing and new definitions and ordinances, and address the impacts of new rental market trends. Existing residential rental units o Confirm the City’s intent to protect our existing rental housing stock including rent-controlled, non-rent controlled, deed restricted, in both residential and commercial zones o Protect the ability to obtain and maintain long-term tenancies. This could be done with a requirement for 12-month leases, for example o Prohibit short-term and medium-term rentals, and similar new rent models, in existing rental housing stock including rent-controlled, non-rent-controlled, or deed-restricted, in both residential and commercial zones o Reaffirm that the City’s residential neighborhoods should be protected from negative impacts of these new rental models o Classify these new rental models as commercial uses, not residential uses o Recognize that residentially or commercially zoned rental housing units for long- term residential occupancy are a primary need in our city o Recognize that many existing, newer, rental housing units in commercial zones were approved with permits and incentives to build residential housing units and that prohibiting these new rental models in these units will help return them to long-term tenancy housing stock o Re-affirm your commitment to enforcing violations o Prohibit owners from “carving up”, re-configuring or re-sizing, existing rental housing stock, whether rent-controlled, non-rent-controlled, or deed-restricted, in both residential and commercial zones Future new construction of rental units Your staff report asks you to consider SROs and Micro Units. Very small units can have various characteristics and uses. For example, they may or may not have bedrooms, kitchens, or full bathroom facilities. They may be used for individuals transitioning out of homelessness, used as domiciles with long-term leases, or as “co- living” rentals or other temporary occupancies for people who live elsewhere. The bottom line is that ‘small and kitchenless’ should not automatically mean ‘luxury co-living rental’. In many worthy innovations, Santa Monica has and should lead, but accommodations for short-term occupancy should be at the bottom of the list. o Classify short-term, medium-term, co-living or similar new rent models for temporary occupancy, as commercial uses in residential and commercial zones o Prohibit short-term, medium-term, co-living or similar new rent models for temporary occupancy in residential zones for any new construction o Recognize that residentially or commercially zoned rental housing units for long- term residential occupancy, not accommodations for short-term occupancy, are a paramount need in our city and a better use of limited land in a housing crisis o Limiting furnished units and/or requiring 12-month leases in new construction can help control new rental models o Prohibit incentives or density bonus (or similar concessions) for new construction of units for short or medium-term occupancy o Require TOT for new construction of units for short or medium-term occupancy o Short-term, medium-term, co-living or similar new rent models restrict to commercial zones only Housing is for residents, not tourists or visitors. Please ensure that your discussion includes controls on these new housing models in other zones in order to address issues that have come to light in single-family homes or condos. Thank you. Sincerely, Patricia Hoffman Denny Zane Co-Chair, Santa Monicans for Renters’ Rights Co-Chair, Santa Monicans for Renters’ Rights Anastasia Foster Jennifer Kennedy SMRR Housing Committee SMRR Housing Committee City Council September 10, 2019 Review Goals and Policy Options for Existing Housing Stock and Consider Role of New Housing Models Purpose of Study Session Follow up on Council Direction –December 2018 / March-May 2019 •Corporate Housing & SRO Housing Discussions •Protect City ’s housing stock, in particular rent-controlled units. •“Medium-Te rm Housing ” to replace corporate housing definition •Consider role of market-rate micro-units & new housing models •Eva luate ways to enhance enforcement measures. Purpose of Study Session Council Direction on Concepts to Inform Ordinance Amendments •Protect City ’s Existing Housing Stock •Lease Duration •Medium Term Housing •Unit Size •New Housing Models Introduce Staff Recommendations for Consideration •Potential framework for protecting existing housing stock and accommodating Medium-Te rm Housing and new housing models tied to policy goals. The Need to Address This Issue Changing Regional Housing Tr ends and Increasing Pressures on Housing Stock §Need housing to accommodate variety of household sizes. §Demand for variety of housing types to serve permanent and temporary residents. •Affo rdability gap and changing nature of work and living situations. Local Context §~71% of Santa Monica residents are renters §Affo rdability –One of six Framework Priorities –strive to provide opportunities for people to afford to live within the City ’s boundaries Policy Goals for City ’s Housing Stock q Encourage production of new housing to serve full range of family and household sizes q Protect existing rental housing stock, in particular rent-controlled units, from negative impacts associated with new housing market trends q Protect City ’s residential neighborhoods from negative impacts associated with temporary occupancy Applicability Definitions as Introduced in Concepts q Existing Rental Units §ALL multi-unit rental housing (controlled and not) and ownership units rented to tenants §Includes apartments, single-unit dwellings, condos q Re nt Controlled Units §As defined in Charter q New Construction §Future housing units Protect Existing Housing Stock –Policy Options Why? Protect existing housing units from conversion to multiple leases and/or shorter-term housing. A.Prohibit medium-term housing and new housing models (co-living /group housing, etc.) in rent- controlled units B.Prohibit medium-term housing and new housing models (co-living /group housing, etc.) in all existing rental housing stock Option Option Existing Housing Inventory (2010 ACS) ~51,000 units total ~13,000 units owner-occupied Existing Rent Control Units (2018) 27,445 units Option C.Either Option A or B –plus –regulations to protect residential neighborhoods from impacts of new housing trends •Impose additional restrictions on former rent-controlled units that are vulnerable to conversion to other uses, to the extent allowed by law. Protecting Existing Housing Stock –Policy Options Duration of Lease –Concepts for Consideration Why? Distinguish between “medium-term” and “long-term” housing Prioritize longer-term residents with need for ‘medium-term’ housing options §Jobs with shorter duration, flexible employment models, interim housing while remodeling /s earching for permanent housing, etc. ü Define duration of lease for Medium-Te rm Housing •Proposed as lease between 31-365 days •Consider if a term less than 365 days is desirable (i.e., 31-180 days) ü Leasing to Natural Persons •Enact parallel regulation to Rent Control Board August 2018 action •Applicable to all units? Duration of Lease –Policy Options A.Require property owners to offer minimum one-year leases •Re quires that tenants and landlords may only sign a one-year lease B.Allow property owners more flexibility in lease duration •Consider varying needs of tenants; consider shorter minimum lease term or initial one-year lease and minimum 31-days after first year Applicability Option Option Rent Controlled Units Existing Rental Units New ConstructionOROR Medium-Te rm Housing & New Construction –Concepts for Consideration City provides process and development standards incentives for housing projects. Is there interest in encouraging housing production while providing flexibility in lease terms? •Relief Valve: consider whether or not new construction should be primarily fo r long-term housing. •Should new construction include a mix of medium-term and long-term housing? •If yes, identify conceptual options / parameters. Medium-Te rm Housing & New Construction –Conceptual Parameters Allow Medium-Te rm Housing in New Construction •Consider allowing in commercial zones to take pressure off residential neighborhoods. •Consider allowing in a percentage of units (e.g., up to 30% of units) –or no limit. •Consider whether to study potential affordable housing obligation increase. Applicability & Options All Commercial Zones Citywide Certain Commercial Zones OR 100% of New Construction Units Allowed OR Limitation on % of New Construction Units Allowed Market-Rate Micro-Units –Concepts for Consideration Consider Role of Market-Rate Micro-Units •Fully contained units with kitchen & bath, less than Zoning Ordinance’s minimum dwelling unit size (375 SF) •Flexibility in unit types, sizes of living spaces, and amenities •Assess whether market-rate micro-units are a desirable and necessary component of our housing stock •If yes, identify conceptual options / parameters Market-Rate Micro-Units –Conceptual Parameters Allow Market-Rate Micro-Units in New Construction •Consider allowing in new construction projects or change of use –or not at all. •If allowed, consider in which zones (Downtown, Healthcare District, etc.) •Should market-rate micro-units be a single building type and/or part of a mix. •Consider special standards (e.g., amenities in unit, common area, unit size) •Tr adeoff smaller private living space for common living area –focus on livability. Applicability & Options Which Commercial Zones? New Construction or Not Allowed? Special Standards Required? Single Building Type or Mix of Units? allowed New Housing Models –Concepts for Consideration Consider Role of New Housing Models •Individual leasable bedroom/group housing format: shared kitchen/bath/common areas; tenants typically enter into separate leases. •Membership-based transitory housing format:leasable beds/shared kitchen/bath/common areas; subscription-based extended stay fo rmat. •Flexibility in unit types, sizes of living spaces, and amenities –reflects housing market trends. •Assess whether these new housing models are desirable and necessary component of our housing stock. •If yes, identify conceptual options / parameters. New Housing Models –Conceptual Parameters Allow New Housing Models in New Construction •Consider allowing in new construction projects or change of use –or not at all. •If allowed, consider in which zones (Downtown, Healthcare District, etc.) •Consider special standards (e.g., occupancy, ratio of bedrooms to common area) •Tr adeoff smaller private living space for common living area –focus on livability. Applicability & Options Which Commercial Zones? New Construction or Not Allowed? Special Standards Required? allowed Commercial Lodging Use? Residential Use? OR Membership-Based Transitory Housing Policy Options for Discussion 1.Protection of Existing Housing Stock §Prohibit Medium Te rm and New Housing Models in: 2.Duration of Lease ü Natural persons only ü Define medium-term housing Rent-controlled units Option A All existing units Option B A OR B plus all residential neighborhoods Option C Flexibility for tenant ’s choice or subsequent years Option B 1-year lease only Option A 4.Market Rate Micro-Units & Amenities 5.New Housing Models §Allow in New Construction only §Special Standards? Policy Options for Discussion 3.Medium Term Housing Parameters §Allow in New Construction only Certain Commercial Zones Where? All Commercial Zones 100% of new units How Much? Percentage of new units More Affordable Units Affordability? No Change to Affordable Units Certain Commercial Zones Where? All Commercial Zones 100% of new units How Much? Percentage of new units Staff Recommendation LEASE DURATION MICRO UNITS NEW HOUSING MODELS EXISTING HOUSING STOCK Rent Controlled 1 Year Minimum No No Not Rent Controlled Residential Zones 1 Year Minimum No No Not Rent Controlled Commercial Zones 1 Year Minimum OR 31 à 365 days for Percentage of Units Maybe Maybe NEW CONSTRUCTION Residential Zones 31 à 365 days for Percentage of Units No Ye s with limitations Commercial Zones 31 à 365 days for Percentage of Units Ye s with limitations Ye s with limitations Healthcare Mixed Use Zone 31 à 365 days for Percentage of Units Ye s with limitations Ye s with limitations §Protect Rent Controlled Units §Protect Residential Neighborhoods §1-year minimum with some flexibility in lease duration §Limited accommodation for micro units and demand for new housing types REFERENCE: Ordinance No. 2614 (CCS)