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SR 10-15-2019 7B City Council Report City Council Meeting: October 15, 2019 Agenda Item: 7.B 1 of 11 To: Mayor and City Council From: David Martin, Director, City Planning Andy Agle, Director, Housing and Economic Development Subject: Introduction and First Reading of and Ordinance Amending Santa Monica Municipal Code Chapter 9.64 to Extend the Removal of the Extremely-Low Income Affordable Housing Category from the City's the Affordable Housing Production Program Recommended Action Staff recommends that the City Council introduce for first reading an ordinance amending the text of Santa Monica Municipal Code Chapter 9.64, the City’s Affordable Housing Production Program, to extend the removal of the Extremely-Low Income affordable housing category as an option to satisfy a project’s Affordable Housing Production Program obligation. Executive Summary At a time of escalating housing costs locally and regionally, affordability is one of Santa Monica’s foremost priorities to sustain the economic and social diversity of our community. The City’s Affordable Housing Production Program (AHPP) is a primary tool to implement this priority by requiring market-rate housing projects to contribute to the City’s affordable housing needs. The AHPP provides options for compliance including providing units within a project, construction units at another site, or paying a fee. The program works in combination with the City’s own robust efforts to produce affordable housing. On March 26, 2019, the City Council authorized a feasibility study and outreach for potential modified requirements under the City’s Affordable Housing Production Program (AHPP) for future Tier 2 retail/multi-family developments outside the City’s Downtown. On April 9, 2019, the City Council adopted revisions to the AHPP to remove the extremely-low income category as an option for developers to satisfy a project’s AHPP obligation while the feasibility study is completed. This provision sunsets on 2 of 11 November 27, 2019. This date was established based on the time that staff anticipated completion of the feasibility analyses necessary to propose potential revisions to the AHPP. Work is well under way and expected to be completed in early 2020. However, 2019 is a particularly dynamic time for housing policy in California. The statewide housing crisis has resulted in a new batch of legislative bills aimed at increasing production by removing barriers to entitlements, including project streamlining, fee reductions, and limiting local control, to name a few. At the same time, the 6th Cycle of the Regional Housing Needs Allocation (RHNA) is predicted to vastly increase for jurisdictions positioned like Santa Monica that have access to high quality transit, jobs, and a healthy development community. Projects proposed under today’s rules will likely not obtain building permits for at least two years , and, therefore, would likely not be accounted for in the current Housing Element cycle (covering 2013-2021). At the time of the decision to remove the extremely-low income category as an option to satisfy AHPP obligations, Council reviewed the City’s progress towards achieving the current RHNA. The data showed that the City has produced many units at the extremely low-income level but is deficient at the moderate income and very low-income levels. This has not changed substantially since that time. As a result, extending the sunset date of the provision to eliminate the extremely-low income option to November 27, 2020 will preserve the ability to have affordable housing produced at other income levels and also provide an opportunity to account for evolving State legislation and the pending RHNA allocation in order to meet the City’s obligations under Housing Element law. Background On March 26, 2019, Council introduced for first reading Ordinance Number 2605 (CCS) (Ordinance 2605) to amend the Affordable Housing Production Program (AHPP) to remove the extremely-low income (ELI) category as an option for satisfying a project’s AHPP obligation pursuant to SMMC Chapter 9.64 for projects with completed applications filed after March 26, 2019 and before November 27, 2 019. The City Council adopted Ordinance 2605 on April 9, 2019. At the time the City Council 3 of 11 considered Ordinance 2605, the City’s progress towards meeting its RHNA was provided to Council and is shown in Table 1. Table 1: RHNA and Quantified Objectives Progress for 5th Cycle Housing Element (March 2019) Also on March 26, 2019, Council authorized an agreement with HR&A Advisors, Inc., a California-based company, for financial feasibility analysis and outreach of potential modified affordable housing requirements of future Tier 2 retail/multi-family developments similar to those which were adopted in the Downtown Community Plan (DCP). At the time, staff indicated a timeline of approximately six to eight months to complete the work, once the project was initiated. A kick-off meeting was held on July 16, 2019, which puts the projected completion date in early 2020, several months after the sunsetting of the ordinance temporarily removing the option for providing ELI units to satisfy a project’s AHPP obligation. Similar to the previous analysis completed by HR&A for the DCP, the assignment involves: 1. Research. Research on current real estate market conditions for the most sensitive financial feasibility modeling assumptions. This includes updating relevant assumptions used in prior related HR&A financial feasibility modeling utilizing a variety of third-party data sources that include either Santa Monica- 4 of 11 specific or more general Westside rents, absorption and vacancy data, operating expenses, income capitalization rates, and project financing terms and pricing. In addition to these sources, an independent professional construction cost estimator has been subcontracted to provide assumptions about above -grade and below grade hard construction costs for each prototype. 2. Financial Modeling. Empirical testing of prototypical private developments to establish the financially feasible limits of modified affordable housing requirements and development fees. This work utilizes static pro-forma financial feasibility Excel models to test the developer investment return implications of revised affordable housing requirements on prototypical developments on each boulevard. 3. Stakeholder Briefings and Outreach to Development Community. This task consists of roundtable briefings with developers (including non-profits) and property owners to discuss market conditions, as well as costs of construction and labor in order to more accurately model development prototypes that use a modified affordable housing production framework. This task also includes presentations to the Housing Commission, the Planning Commission and the City Council. 4. Memorandum Report. Once the analysis has been finalized, HR&A will prepare a memorandum report describing the analysis approach, assumptions, findings and conclusions. The memorandum will include attachments with the output from the financial feasibility models. 5. Recommendations to Council. Based on the conclusions of the financial feasibility model, and comments and direction generated from outreach and presentations to the City’s Boards, Commissions and Council, staff will develop a series of recommendations for potential modifications to the existing AHPP. Discussion Work is well underway on the financial feasibility model and memorandum report, b ut recommendations to Council for modifying the AHPP will not be ready by the sunset date of November 27, 2019. The delay in progress is partly a factor of contracting timelines and procurement procedures, as well as staff and consultant availability 5 of 11 towards the end of the fiscal year. In addition to these more administrative factors, the extension of the sunset date is recommended for the following reasons: • Opportunity for market-rate development to produce more affordable housing units that will likely be counted towards compliance with the next Housing Element. • Rapidly evolving housing policy landscape that has created new questions around key model inputs that have given the project team some pause as to what the future portends for by-right and discretionary mixed-use housing projects in California. • Pending RHNA allocation that is expected to substantially increase both Santa Monica’s overall number but also at the lower income levels, which may require testing feasibility scenarios that do not represent current regulations. Progress on Financial Feasibility To date, the project team has completed the market research, conducted the first round of roundtable briefings with local housing developers, architects, and land use attorneys, and has constructed the financial model using the inputs generated from outreach, research and cost-estimating subcontractors. A draft memorandum report has been completed and staff is scheduled to present findings to the Planning and Housing Commissions in late November. An update to City Council on the Planning Commission and Housing Commission’s comments and direction is anticipated in December 2019. Based on the direction from Council, the project team will complete a revised report that includes a variety of inclusionary requirement scenarios. This final draft will form the basis of recommendations to modify the zoning ordinance, which could be submitted to Council in early 2020 if direction is given to proceed with the assumption the existing development parameters of the Zoning Ordinance will remain unchanged despite strong signals from the State that indicate otherwise. 6 of 11 Housing Landscape in California Since the adoption of the temporary revisions, the housing discussion has progressed at the State level in terms of new housing legislation and at the regional level, in terms of the Regional Housing Need Allocation (RHNA) process that will inform the 6th Cycle Housing Element Update covering 2021-2029. At the time of the writing of this report, the 2019 legislative session continues to focus on removing barriers to housing production with pending bills such as SB330, which is intended to provide stricter parameters around the development approval process including vesting projects at time of application submittal and prohibitions on downzoning until 2025. AB1771 and SB828 were signed into law as part of the 2018 legislative session. Those bills altered the RHNA allocation process to de-emphasize local inputs into the process in order to ensure all jurisdictions are accountable in doing their fair share to address the region’s housing needs. Importantly, the housing allocation now accounts for existing unmet need, whereas prior years have been based solely on projected population growth. In the SCAG region, this could potentially result in a tripling of needed housing units to accommodate job growth, housing-cost burdens, and overcrowding. The Regional Housing Needs Assessment – 6th Cycle (2021-2029) The RHNA process is predicated on five main objectives: • Increase the housing supply and mix of housing types, tenure and affordability within each region in an equitable manner • Promote infill development and socioeconomic equity, the protection of environmental and agricultural resources, and the encouragement of effic ient development patterns • Promote an improved intraregional relationship between jobs and housing • Allocate a lower proportion of housing need in income categories in jurisdictions that have a disproportionately high share in comparison to the County distribution • Affirmatively further fair housing 7 of 11 SCAG has released possible methodology options for RHNA allocation. Staff has been closely following the RHNA process by attending every RHNA subcommittee meeting and submitted a comment letter on the options during the public comment period (Attachment B). The public comments are currently being considered by the RHNA subcommittee in anticipation of a draft methodology to be recommended in January/February 2020 with final allocation anticipated in October 2020. In light of these factors, staff anticipates that like many highly resourced communities, Santa Monica may receive a significantly larger allocation overall, especially at the lower income level compared to the prior cycle. As a result, the feasibility analysis currently underway will need to accommodate future changes in policy and allocation. In light of this, staff was authorized to seek a SB2 grant for funds to complete housing -related analyses. Staff was notified that the City was successful in obtaining the grant in September 2019 and will return on November 12, 2019 for Council’s budget authorization to program the grant funds. Given the evolving discussion on expectations regarding RHNA allocation and the technicalities involved in preparing the 6th Cycle Housing Element, staff needs additional time to ensure that the feasibility analyses and any proposed amendments to the AHPP and zoning ordinance to incentivize housing production do not negatively impact Santa Monica’s ability to be compliant with a certified Housing Element. Current RHNA and Quantified Objectives Progress Table 2 updates the information in Table 1 showing the City’s current progress towards achieving RHNA and Quantified Objectives. Currently, Santa Monica has exceeded the overall RHNA however, the allocation of units at the Low and Moderate Income category has not been met. Table 2: RHNA and Quantified Objectives Progress for 5th Cycle Housing Element (September 2019) Affordable Category RHNA Quantified Objective Completed and In Construction Needed for RHNA Needed for Quantified Objective Approved (not In Construction) Extremely Low (0-30% AMI) 428 83 114 60 (31) 50 Very Low (31-214 254 (40) 56 8 of 11 Affordable Category RHNA Quantified Objective Completed and In Construction Needed for RHNA Needed for Quantified Objective Approved (not In Construction) 50% AMI) Low (51-80% AMI) 263 263 150 113 113 25 Moderate (81- 120% AMI) 283 111 26 257 85 2 Above Moderate (>120% AMI) 700 700 1648 (948) (948) 933 Totals 1674 1371 2192 (518) (821) 1066 Proposition R Progress The production of multifamily affordable housing in Santa Monica is regulated by the voter-approved Proposition R, which requires that: • Thirty percent of all multifamily housing completed in each fiscal year be affordable for and occupied by low- and moderate-income households; and • At least one-half of the total affordable housing completed be affordable for and occupied by low-income households. The FY18/19 Prop R compliance report is not yet published, however, based on current permit data for housing projects that are anticipated to be complete in 2014 and later, the 30% Prop R standard has been met for all completed developments. However, it is not anticipated to be met through future projects either In Construction, those that have received Planning Approval or are Pending Review (Figure 1). Figure 1: Affordability of Multi-Unit Development Anticipated to be Complete 2014 and Later 9 of 11 As a further point of information, staff has received no applications for housing projects since the adoption of the ordinance removing the ELI option in March 2019. However, this a relatively short period of time to assess the effects of the ordinance. At the same period (March-September) during the past 5 years, the City received varying numbers of housing applications predominantly in the Downtown with the exception of two projects and as such, it is challenging to draw a correlation between the temporary revision to the AHPP and development activity. Therefore, in order to ensure that there is an opportunity for market-rate projects to produce as many affordable units as possible, particularly at the low and moderate income levels, staff recommends extension of the temporary removal of the ELI option in the AHPP until November 27, 2020. However, staff will continue to monitor development activity and if it is apparent that there is a reduction in applications for housing projects, will report back to Council with potential policy options at that time, which may include but not be limited to revisions to the ELI option. Environmental Analysis The proposed amendments to the Municipal Code are procedural in nature and are categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines (common sense exemption). Based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed amendment may have a 10 of 11 significant effect on the environment. The recommended amendment only extends an applicability date for a provision in the AHPP to remove the ELI category as an option for meeting a project’s AHPP obligations. Therefore, no further environmental review under CEQA is required. Alternative Actions As an alternative, Council could take no action and let the provision sunset on November 27, 2019. Reintroducing the option to produce ELI housing to satisfy a project’s AHPP requirements would allow for the continued production of ELI housing through the AHPP, assisting to meet a great need in the City. Allowing the provision to sunset would likely have no impact on meeting current Housing Element production requirements as the development cycle affected by the extension would likely result in building permits being issued at least two years from now. However, as a result, given the uncertainty regarding the RHNA and the need to maximize production of housing units at all income levels, staff recommends extending the provision to remove the ELI category as an option. Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Prepared By: Jing Yeo, Planning Manager Approved Forwarded to Council Attachments: A. PCD - Ordinance - AHPP Low Income - 10.15.2019 B. Comment Letter on SCAG RHNA Methodology C. March 26, 2019 Council Staff Report (Web Link) 11 of 11 D. PowerPoint Presentation 1 City Council Meeting: October 15, 2019 Santa Monica, California ORDINANCE NUMBER _________ (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE CHAPTER 9.64 TO EXTEND THE REMOVAL OF THE EXTREMELY-LOW INCOME AFFORDABLE HOUSING CATEGORY WHEREAS, the City has a long history of prioritizing preservation and production of affordable housing in order to promote and maintain affordability and diversity within the community; and WHEREAS, the City’s residents have affirmed this priority in voter-approved initiatives, such as Proposition R, which was adopted by the voters in 1990 and mandated that 30 percent of all new multi-family housing units constructed each year be affordable, and Proposition I, which was adopted by the voters in 1998 and authorized the City to participate financially in creating affordable housing equal to one-half of one percent of the housing stock annually; and WHEREAS, the City Council has further facilitated preservation and production of affordable housing by adopting land use incentives and administrative funding guidelines to streamline affordable housing production and preservation and through the policy foundation of supporting affordable housing articulated in the General Plan’s Land Use and Housing Elements; and WHEREAS, the City’s Affordable Housing Production Program, codified at Chapter 9.64 of the Santa Monica Municipal Code (the “AHPP”), requires developers of 2 multi-family housing projects to contribute to affordable housing production and thereby enhances the City’s efforts to meet its affordable housing production goals; and WHEREAS, the requirements of the AHPP are based on a number of factors including, but not limited to, the City’s longstanding commitment to economic diversity; the serious need for affordable housing as reflected in local, state, and federal housing regulations and policies; the demand for affordable housing created by market rate development; the depletion of potential affordable housing sites due to market-rate development; and the impact that the shortage of affordable housing has on the health, safety, and welfare of the City’s residents, including local and regional traffic, transit, transportation and air quality impacts; and WHEREAS, on June 25, 2013, the City Council adopted Ordinance Number 2429 (CCS) to amend Chapter 9.64 by revising affordable housing categories, income-eligibility limits, and rent limits to be consistent with federal and state affordable housing programs (“Ordinance 2429”); and WHEREAS, Ordinance 2429 also expanded AHPP income categories to include households at the lowest end of the income scale, whose gross income does not exceed 30 percent of the area median income, sometimes referred to as the extremely low- income category; and WHEREAS, Ordinance 2429 further provided that a developer may meet its AHPP requirements by developing 5 percent of the total units of the project to be made available at affordable rent to households in the extremely low-income category; and WHEREAS, the extremely low-income category was added to the AHPP to stimulate the development of such units; and 3 WHEREAS, since the adoption of Ordinance 2429, more than one-third of all affordable units approved have been in the extremely-low income category, and, in 2018, 84 percent of all affordable units approved were in the extremely-low income category; and WHEREAS, although the City has met its overall affordable housing production requirements as mandated by Proposition R since adoption of Proposition R and, collectively, since 2014, the City has seen an overall decline in affordable housing production since 2014 and has not met its annual targets for affordable housing production under Proposition R in fiscal years 2014/2015, 2015/2016, or 2016/2017; and WHEREAS, the production of such a large number of affordable units in the extremely low-income category has resulted in fewer affordable units being produced in the very low-, low- and moderate-income categories and fewer affordable units being produced overall; and WHEREAS, on July 25, 2017, after conducting a feasibility study, the City adopted AHPP obligation requirements specific to the Downtown as part of the Downtown Community Plan (“DCP”); and WHEREAS, the DCP established a 20 percent base requirement for a p roject’s total affordable housing contribution, with a required distribution across all affordable income levels; and WHEREAS, the DCP AHPP requirements are designed to ensure the development of affordable units to be made available across all income levels and to assist the City in meeting its affordable housing production goals overall; and 4 WHEREAS, on March 26, 2019, the City Council authorized a feasibility study to determine whether adjustments to the AHPP obligations are appropriate for areas outside of the City’s Downtown; and WHEREAS, on April 9, 2019, the City Council adopted Ordinance Number 2605 (CCS) to remove the extremely-low income category as an option for satisfying affordable housing production obligations until November 27, 2019 in order to ensure production of affordable housing units at a variety of affordable income levels and to encourage the overall production of affordable housing within the City while the feasibility study is completed; and WHEREAS, since the adoption of Ordinance 2605, the California legislature passed legislation intended to address the State’s housing crisis by removing regulatory barriers that discourage housing production; and WHEREAS, the Southern California Association of Governments has released possible methodology options for allocation of the Regional Housing Needs Assessment (“RHNA”) for the based on recent changes in State law; and WHEREAS, the current feasibility study will need to be updated to account for these changes in State law and possible RHNA outcomes; and WHEREAS, in order to accommodate such revisions, the City desires to extend the elimination of the extremely-low income category as an option for satisfying affordable housing production obligations until November 27, 20 20; and WHEREAS, the proposed amendments to the AHPP are intended to achieve greater affordability and maintain Santa Monica’s economic diversity; and 5 WHEREAS, the proposed changes to the AHPP would result in lower rents and greater accessibility of affordable housing to lower income households; and WHEREAS, the proposed amendments to the AHPP are consistent with Proposition R. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Santa Monica Municipal Code Section 9.64.030 is hereby amended to read as follows: 9.64.050 On-site option. The following requirements must be met to satisfy the on -site provisions of this Chapter: A. For ownership projects of at least four units but not more than fifteen units in multi-family residential districts, the multi-family project applicant agrees to construct at least: (1) twenty percent of the total units as ownership units for moderate-income households at an Affordable Ownership Hosing Cost, or as an alternative; (2) twenty percent of the total units as rental units for 80% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); (3) ten percent of the total units as rental units for 50% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); or (4) for projects with an application for a ministerial or discretionary planning approval that is determined complete on or before March 26, 2019 or after November 27, 2019 2020, five percent of the total 6 units as rental units for 30% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2). B. For ownership projects of sixteen units or more in multi-family residential districts, the multi-family project applicant agrees to construct at least: (1) twenty-five percent of the total units as ownership units for moderate -income households at an Affordable Ownership Housing Cost, or as an alternative; (2) twenty-five percent of the total units as rental units for 80% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); fifteen percent of the total units as rental units for 50% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); or (4) for projects with an application for a ministerial or discretionary planning approval that is determined complete on or before March 26, 2019 or after November 27, 2019 2020, ten percent of the total units as rental units for 30% income households at affordable rent if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2). C. For all other multi-family applicants, the multi-family project applicant agrees to construct at least: 1. five percent of the total units of the project for 30% income households at affordable rent for projects with an application for a ministerial 7 or discretionary planning approval that is determined complete on or before March 26, 2019 or after November 27, 2019 2020; 2. ten percent of the total units of the project for 50% income households at affordable rent; 3. twenty percent of the total units of the project for 80% income households at affordable rent; or 4. one hundred percent of the total units of a project for moderate income households at affordable rent. D. Except as provided in 9.23.030(A), any fractional affordable housing unit that results from the formulas of this Section that is 0.75 or more shall be treated as a whole affordable housing unit (i.e., any resulting fraction shall be rounded up to the next larger integer) and that unit shall also be built pursuant to the provisions of this Section. Any fractional affordable housing unit that is less than 0.75 can be satisfied by the payment of an affordable hou sing fee for that fractional unit only pursuant to Section 9.64.070(A)(2) or by constructing all the mandatory on-site affordable units with three or more bedrooms. The City shall make available a list of income levels for 30% income households, 50% income households, 80% income households, and moderate income households, adjusted for household size, the corresponding maximum affordable rents adjusted by household size appropriate for the unit, and the minimum number of units required for 30% income households, 50% income households, or 80% income households required for typical sizes of multi-family projects, which list shall be updated periodically. 8 E. The multi-family project applicant may reduce either the size or interior amenities of the affordable housing units as long as there are not significant identifiable differences between affordable housing units and market rate units visible from the exterior of the dwelling units; provided, that all dwelling units conform to the requirements of the applicable Building and Housing Codes. However, except as provided in Section 9.23.030(A), each affordable housing unit provided shall have at least two bedrooms unless: 1. The proposed project comprises at least ninety-five percent one bedroom units, excluding the manager’s unit, in which case the affordable housing units may be one bedroom; 2. The proposed project comprises at least ninety-five percent zero bedroom units, excluding the manager’s unit, in which case the affordable housing units may be zero bedroom units; 3. The proposed project comprises zero and one bedroom units, excluding the manager’s unit, in which case the affordable housing units must be at least one bedroom units; or 4. The multi-family project applicant has elected not to pay the affordable housing fee pursuant to Section 9.64.070(A)(2), in which case the affordable housing units must be at least three bedroom units. The design of the affordable housing units shall be reasonably consistent with the market rate units in the project. An affordable housing unit shall have a minimum total floor area, depending upon the number of bedrooms provided, no less than the following: 9 0 bedrooms 500 square feet 1 occupant 1 bedroom 600 square feet 1 occupant 2 bedrooms 850 square feet 2 occupants 3 bedrooms 1,800 square feet 3 occupants 4 bedrooms 1,200 square feet 5 occupants Affordable housing units in multi-family projects of one hundred units or more must be evenly disbursed throughout the multi -family project to prevent undue concentrations of affordable housing units. F. All affordable housing units in a multi-family project or a phase of a multi-family project shall be constructed concurrently with the construction of market rate units in the multi-family project or phase of that project. G. On-site affordable housing units must be rental units in rental projects. In ownership projects, these affordable housing units may be either rental units or ownership units. H. Each multi-family project applicant, or his or her successor, shall submit an annual report to the City identifying which units are affordable units, the monthly rent (or total housing cost if an ownership unit), vacancy information for each affordable unit for the prior year, verification of income of the household occupying each affordable unit throughout the prior year, and such other information as may be required by City staff. 10 I. A multi-family project applicant in a residential district who meets the requirements of this Section shall be entitled to the density bonuses and incentives provided by Sections 9.22.030 or any successor thereto and the waiver/modification of development standards provided by Section 9.22.040 or any successor thereto. A multi-family project applicant in a commercial or industrial district shall be entitled to the development bonuses and incentives provided in the Land Use and Circulation Element and implementing ordinances. J. All residential developments providing affordable housing on-site pursuant to the provisions of this Section shall receive priority building department plan check processing by which housing developments shall have plan check review in advance of other pending developments to the extent authorized by law. K. The City Council may by resolution establish compliance monitoring fees which reflect the reasonable regulatory cost to the City of ensuring compliance with this Section when affordable housing units are being initially rented or sold, when the required annual reports are submitted to the City, and when the unit s are being re-sold or re-leased. SECTION 2. Any provision of the Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining 11 portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption. APPROVED AS TO FORM: _______________________ LANE DILG City Attorney CITY OF SANTA M ONICA Affordable Housing Policy CITY COUNCIL October 15, 2019 Discuss Progress on AHPP Feasibility Study 2 Purpose of Tonight’s #7B Discussion Extend Removal of ELI Option from AHPP Until Nov. 2020 1 Preview Rapidly Changing Housing Policy Landscape 3 Extremely Low-Income •Council Direction •Development Activity UpdateELI Removal Extenstion 1 Council Direction March 26, 2019 •Remove the Extremely-Low Income affordable housing category as an option to satisfy a project’s Affordable Housing Production Program obligation (SMMC 9.63) •Conduct financial feasibility of a revised AHPP using Downtown Community Plan approach to distributing inclusionary units across all income categories Needed for RHNA Needed for Quantified Objective 93 (14) (24) 128 128 257 85 (563)(563) Completed and In Construction 97 238 135 27 1,263 1,760 Housing Production RHNA Quantified Objective Extremely Low (0-30% AMI) 428 83 Ve ry Low (31-50% AMI)214 Low (51-80% AMI)263 263 Moderate (81-120% AMI)283 111 Ab ove Moderate (>120% AMI)700 700 To tals 1,674 1,371 Progress Towards RHNA and Housing Element Quantified Objectives MARCH 2019 Approved (Not In Construction) 60 52 19 2 1,251 Needed for RHNA Needed for Quantified Objective 58 (31) (40) 11 3 11 3 257 85 (948)(948) Completed and In Construction 11 6 (+19) 254 (+16) 150 (+15) 27 (same) 1,648 (+385) 2,195 (+435) Housing Production RHNA Quantified Objective Extremely Low (0-30% AMI) 428 83 Ve ry Low (31-50% AMI)214 Low (51-80% AMI)263 263 Moderate (81-120% AMI)283 111 Ab ove Moderate (>120% AMI)700 700 To tals 1,674 1,371 Progress Towards RHNA and Housing Element Quantified Objectives OCTOBER 2019 Approved (Not In Construction) 50 56 25 2 933 Housing Production Applications received since March 26, 2019 for Mixed-Use Housing Projects LUCE Growth Areas •Downtown: 0 •Bergamot: 0 •Memorial Park: 0 •Boulevards: 2 •825 Santa Monica Blvd (Toyota lot), Tier 2 @ 15% Very Low Income •1834 14th Street, 100% Affordable Feasibility Study •Progress updateAHPP Feasibility Study 2 AHPP Study Process for AHPP Financial Feasibility Study Forthcoming mid-point check-in with PC, Housing Commission and Council State and Regional Update •State Legislature •Regional Housing Needs Assessment Housing Landscape in California 3 State Housing Bills State Housing Bills Status Description FA STER APPROVALS Approved SB330: Faster approvals for housing and zoning changes. Statewide ban on (A) downzoning, (B) moratoriums on housing development, (C) non- objective design standards, and (D) limit on number of permits issued. Active AB1484: Development fees published throughout project approval process. Approved AB1485: Incentives and faster approvals for moderate- income housing built with prevailing (union) wage labor. Approved AB1763: 80% density bonus for affordable housing. UPZONING Approved AB101: By-right approval for homeless shelters. AB101 includes $650 million in grants for cities and counties to address homelessness issues. It also includes $250 million for local governments and regional bodies to measure housing needs and develop plans for providing more housing. SHELTERS Inactive SCA3: Ends inheritance of Prop 13 tax break, unless heir lives in the house. TA X POLICY Active SCA1: Eliminates requirement that public hearing be approved by ballot measure. State Housing Bills State Housing Bills Status Description BALLOT MEASURE Failed ACA1: Allows bonds for housing and infrastructure to pass with a 55% majority. Approved AB1482: Statewide limit to annual rent increases. Statewide Just Cause limits to evidence. TENANT PROTECTIONS Approved AB1110: Longer notice require for rent increases. 60 days for under 10%, 90 days for 10-15%, 120 days for 15%+ Approved SB13 and AB68: Simplifies process of approvals and allows more houses to add Accessory Dwelling Units. ACCESSORY DWELLING UNITS Active AB10: Expands Low Income Housing Tax Credit funding program by $500 million per year. FUNDING Ve toed SB5: Creates new local funding agencies for affordable housing, infrastructure and community investment. Approved AB1483: Creates housing production database. DATA Approved AB857: Allows cities to create Public Banks. Approved SB18: Funds for legal aid and rent assistance. LEGAL AID Approved SB329: Requires landlords to accept Section 8 vouchers. MOVE-IN ASSISTANCE Active AB437: Move-In loans for security deposit and first months rent. Regional Housing Needs Assessment 6th Cycle RHNA •Anticipating large allocation to Santa Monica (estimate ~ 4800 units based on SCAG tool) •January/February 2020 final methodology announced •October 2020 final numbers •Fall 2021 Housing Element Adopted To ols for Implementation Upcoming Efforts •SB2: City awarded grant to pursue incentives to housing production •Process streamlining •Incentives for housing •Increase certainty in entitlements •Information and communications •Te nant support and protection •Pursuing other opportunities Consideration for Council 1.Should staff proceed with AHPP study using existing development parameters? Recommendation to Council 1.Introduce for first reading an ordinance amending the text of SMMC Chapter 9.64 to extend the removal of the Extremely-Low Income affordable housing category as an option to satisfy a project’s Affordable Housing Productions Program obligation.