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SR 12-15-2020 4A
City Council Report City Council Meeting: December 15, 2020 Agenda Item: 4.A 1 of 29 To: Mayor and City Council From: David Martin, Director, Administration Subject: Review of Housing Element Recommended Action Staff recommends that the City Council review and discuss an update on current work efforts related to the 2021-2029 Housing Element Update. Summary The Housing Element is mandated by State law to be updated every eight years. The next planning period of 2021-2029 (also referred to as the 6th Cycle Housing Element Update) takes place against the backdrop of an ongoing housing shortage in California. Across the State, cities and counties are undertaking updates to their Housing Elements including all 191 cities within the Southern California region. In this current Housing Element cycle, Santa Monica is being asked to plan for the housing needs of the community representing approximately 8,800 units, of which approximately 70% are affordable housing units. Over the past three years, the State legislature has passed housing legislation intended to address the housing shortage by limiting local control and also modifying housing element law. State law changes to how housing need is calculated have reduced local influence in the allocation process. State law has also changed the appeal process to significantly limit the bases on which appeals of housing allocations can be filed. These changes, coupled with consequences for failing to meet housing production targets established by the State, appear intended to spur housing production at the expense of consideration for local factors. It is clear that planning for the significant number of affordable units in Santa Monica’s allocation will require significant public investment and partnership from the State. The Housing Element Update will explore all available tools to produce affordable housing, but this may also present an opportunity for Council 4.A Packet Pg. 769 2 of 29 to direct staff to pursue legislative amendments that acknowledge Santa Monica’s past and future efforts to support housing production and the reality of funding affordable housing. This report provides the following: 1) An overview of the Housing Element and recent housing legislation; 2) The Statewide Housing Crisis and Santa Monica housing context; 3) An update of the Regional Housing Needs Assessment (RHNA) process and Santa Monica’s 6th Cycle Housing Element update; 4) An overview of the Suitable Sites Inventory; 5) An overview of the City’s approach to supporting housing production and preservation to date; 6) Review of the 2013-2021 Housing Element; and 7) Housing Element Update Process and Timeline. The conclusion of this report identifies areas where staff seeks Council’s guidance to address the challenges and issues of the upcoming Housing Element Update. Discussion What is the Housing Element? The housing element is a required element of a general plan. A general plan is mandated by State law (Government Code Section 65300) and expresses the community’s development goals and embodies public policy relative to the distribution of future land uses, both public and private. A general plan consists of individual elements that each address a specific area of concern, but collectively, they comprehensively make up an integrated planning approach for a city. State law (Government Code Section 65302) requires that general plans include seven mandatory elements: land use, circulation (transportation), conservation, noise, open space, safety, and housing. A city or county may choose to have additional elements as part of their general plan. Santa Monica has adopted all mandatory General Plan elements (land use and circulation (transportation) are contained in a single document, 4.A Packet Pg. 770 3 of 29 the Land Use and Circulation Element (“LUCE”)) in addition to an optional Historic Preservation Element. Since 1969, California has required that all local governments adequately plan to meet the housing needs of the community. State law requires that communities prepare and update the Housing Element every eight years. California’s housing-element law acknowledges that, in order for the private market to adequately address the housing needs and demand of Californians, local governments must adopt plans and regulatory systems that provide opportunities for (and do not unduly constrain) housing development. As a result, housing policy in California rests largely upon the effective implementation of local general plans and, in particular, local housing elements. Consistent with State law requirements (Government Code Section 65583), the Housing Element consists of five major components: • A Housing Needs Assessment • Identification of Barriers to Market Rate and Affordable Housing Development • Evaluation of Progress from Prior Cycle • Identification of Sites that can Accommodate Housing Needs • Goals, Policies, and Implementation Actions 4.A Packet Pg. 771 4 of 29 Recent State Housing Legislation Recent State housing legislation has significantly impacted local control in housing matters. Most of this housing legislation took place in 2017, 2018, and 2019. 2017 Housing Legislation In response to the declared housing crisis, Governor Brown signed a 15-bill housing package in 2017 aimed at addressing the state’s housing shortage and rising housing costs. The package included bills aimed towards: • Funding affordable housing, • Streamlining housing building permits, • Increasing compliance and penalty measures focused on local accountability for housing production, • Authorizing local governments to adopt inclusionary zoning requirements to apply affordable housing requirements to rental housing projects, and • Preserving existing affordable housing. This package included AB 1505, which superseded the court decision in Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal.App.4th 1396 to permit local jurisdictions to impose certain inclusionary housing requirements; SB 35, which required local entities not meeting their RHNA goals for housing construction to streamline approval of certain housing projects by subjecting them to a ministerial process; and AB 72, which enhanced the State’s ability to review a local agency’s housing element for compliance with State law. As a complement, the package also included the Building Homes and Jobs Act (SB2), which established a $75 recording fee on real estate documents to increase the supply of affordable homes in California. Through the subsequent SB2 grant program, $123M in funds collected from this fee have been set aside to provide funding and technical assistance to all local governments in California to help cities and counties prepare, adopt, and implement plans and process improvements that streamline housing approvals and accelerate housing production. This grant program is meant to facilitate planning activities that will foster an adequate supply of homes affordable to Californians at all income levels. The 4.A Packet Pg. 772 5 of 29 City was awarded a SB2 grant in the amount of $300,000 to support housing production activities. 2018 Housing Legislation Subsequent legislative sessions have continued to seek to address the State housing shortage by restricting local control over decision-making for housing developments. The 2018 legislative session changed the factors to be considered in the Regional Housing Needs Assessment (RHNA) methodology in a manner that reduced local influence. In the 2019 legislative session, SB330 created an “opt-in” process for streamlined housing approvals and also banned downzoning, housing moratoriums, and non-objective design standards through January 1, 2025. 2019 Housing Legislation New 2019 laws further removed barriers to the production of 100% affordable housing (AB1763) and accessory dwelling units (AB68, AB881, and SB13). AB101 allocated $250M for all regions, cities, and counties to prioritize activities that accelerate housing production, including the Local Early Action Planning Grant Program (LEAP) and Regional Early Action Planning Grant Program (REAP). The City was awarded a LEAP grant in the amount of $300,000 to support the 6th Cycle Housing Element Update and is working with the Westside Cities Council of Governments on activities to be funded by a REAP grant. 2020 Housing Legislation Due to the challenges of the COVID19 pandemic, lawmakers were only able to pass a few pieces of housing legislation during the 2020 session. These pieces of housing legislation relate to tenant protection from evictions during COVID19 pandemic (AB 3088) and further refinements to accessory dwelling units (AB 3182), and changes to density bonus law (AB2345). Council has taken actions to update local regulations in alignment with these changes in State law, some of which are further detailed in Table 1 of the report listing prior Council actions. The Housing Crisis and Santa Monica Since the 1970s, the State of California has struggled to keep pace with rising housing demand. The housing crisis has reached a critical point, as the severe shortage of 4.A Packet Pg. 773 6 of 29 housing continues to drive housing costs and homelessness to record levels. Despite booming economic growth in the State in the past decade, the pace of new housing construction has failed to meet the demands of Californians. The California Legislative Analyst’s Office estimates that to meet existing and projected demand, an estimated three million new housing units are needed by 2025. The on-set of the COVID-19 pandemic in March 2020 has had temporary disruptive effects on the housing market. Time will tell what the extent and duration of the effects will be. However, the limited and early data indicate that the housing market continues to remain strong.1 Furthermore, housing will continue to be an important priority for the City and the State. A diverse and affordable housing stock in the City will be critical for rebuilding the economy, providing safe shelter for residents re-entering the workforce, curbing the increase in homelessness, and addressing social and economic inequities. Housing Inventory The lack of housing, particuarly affordable housing, is consistently a top concern for many Santa Monica residents. The City’s housing stock of 52,529 total housing units is comprised primarily of multifamily rental units.2 The highest concentration of renter- occupied housing is located downtown and east of Lincoln Boulevard along the Pico Boulevard Corridor. The highest concentration of owner-occupied housing is located north of Montana Avenue and in the eastern portion of the city north of Wilshire Boulevard, as well as in certain census tracts in Sunset Park. 1 Harvard University, State of the Nation’s Housing 2020 Report 2 Based on the 2019 American Communities Survey 5-year estimates, approximately 10% of the total units are vacant (i.e., vacation/seasonal homes). 4.A Packet Pg. 774 7 of 29 The majority (75%) of the City’s housing stock was built before 1980, indicating the slow down of housing construction since that time period. Many of the older multifamily housing are subject to the City’s Rent Control Law, which controls most residential rental buildings constructed prior to April 10, 1979. Rent controlled units are subject to maximum annual rent increases authorized by the Rent Control Board, and as such, are valuable assets in the City’s housing market. These rent control units account for slightly more than one‐half of all housing in Santa Monica and just over two‐thirds of multi‐family housing. The number of rent controlled units has decreased over time as a result of temporary use exemptions (for example, owner‐occupancy exemptions on properties of three‐or‐fewer‐units), units granted removal permits, or units being withdrawn from the rental housing market pursuant to the Ellis Act. In 2019, the number of Rent Controlled units in the City was 27,381. With the City’s housing stock comprised primarily of multifamily rental units, housing opportunities for larger families (i.e., units with 3 bedrooms or more) are limited. Approximately 79% of the City’s housing units have 2 bedrooms or less. 3 Cost of Housing The City’s robust employment, coastal location, and mild weather attract residents, employees, and visitors alike. The opportunity to live in the City, however, comes at a 3 American Communities Survey, 2018 5 Year Estimates 4.A Packet Pg. 775 8 of 29 hefty price. While it is generally recognized that Californians pay more for housing than the average American, Santa Monica’s housing costs are among the highest in the nation. In 2019, while the national median price for a single family home was $274,500, the median single family home price in Santa Monica was $3,966,251.4 Although condominiums offer a less expensive path to home ownership for prospective buyers, condo prices are also similarly inflated in the City. In 2019, the median condo price in the City was $915,000 as compared to the national median price of $254,600 and the statewide median price of $477,000. Based on this median condo price, a family would need a household income of $171,560 (35% more than the existing median household income) to afford a condo in Santa Monica. With the high costs of housing and the low supply of ownership units, home ownership is out of reach for much of the population. Not surprisingly, the rental market in Santa Monica also sees some of the highest prices in the nation. In the last 20 years, the City’s rental market has seen an exponential increase in median monthly rents. In 1999, a two-bedroom rental unit in Santa Monica 4 California Association of Realtors, 2019 4.A Packet Pg. 776 9 of 29 had a median price of $1,400. This number grew to a median price of $3,200 in 2019, which is almost two times more than the State median ($1832).5 Housing Cost as a Share of Monthly Income Housing costs are a major factor in the wellbeing of a household. If housing costs are too high, families and households will spend more of their income on housing, leaving less money available for other non-housing basic necessities including food, transportation, childcare, and other necessary purchases. A household is considered to be “housing cost burdened” if more than 30% of household income is devoted toward housing costs. California has the highest number of “housing cost burdened” households in the nation.6 At least a third of California households spent more than 30% of their incomes toward housing in 2018, and as many as one in five spent more than half of their incomes on housing costs.7 Housing costs also vary substantially throughout the State, with the highest costs in coastal urban areas and the lowest costs in inland rural areas. According to the California Budget and Policy Center, eight in ten low income households spent upwards of 50% of their income on housing. Within the City of Santa Monica, more than 43% of the City's rental households are housing cost burdened.8 Although housing affordability is a problem for much of the population across the State and within the City, lower income households are disproportionately more affected by high housing costs. In Santa Monica, renters in Santa Monica need to 5 Apartment List 2020 report on rental prices 6 The State of the Nation’s Housing 2019 Report, Joint Center for Housing Studies, Harvard University, online at https://www.jchs.harvard.edu/state-nations-housing-2019 7 California Budget and Policy Center 8 American Communities Survey, 5 Year Estimate 2018 4.A Packet Pg. 777 10 of 29 earn $61.33 per hour, more than 4 times the minimum wage in the City, to afford the average monthly asking median rent of $3,200 for a two-bedroom apartment. Having less money available for non-housing costs often means that low income households will have less savings in the bank, putting them at risk for poverty or preventing them from rising out of it.9 Santa Monica’s Approach to Housing Production and Preservation The City has historically implemented a two-pronged approach to housing: the preservation of existing housing and the production of new housing with a focus on affordable units. This approach is embodied in the City’s adopted Land Use and Circulation Element (LUCE), which called for the creation of mixed use, complete communities near transit; maintaining the character of the City’s residential neighborhoods; and the development of affordable housing to meet the needs of all household income levels. Prior Council Actions In recent years, Council has taken a number of actions and provided a series of directions to staff that address the preservation of existing housing and production of new housing units in the City. Table 1 provides an outline of the actions taken and directions provided to date: Table 1 Prior Council Actions related to Housing Production and Preservation Council Date Council Action January 9, 2018: Council Discussion on City Planning Division Priorities Council identifies “Options to Encourage Housing on the Boulevards and Bergamot Plan Area” as one of the City Planning Division’s top five workplan priorities. 9 Typically, poverty is calculated by the Official Poverty Measure, which defines a family as poor if their pretax cash income is less than a poverty threshold that is standard across the nation. 4.A Packet Pg. 778 11 of 29 Council Date Council Action December 18, 2018 Council Discussion on Corporate Housing Potential Goals and Policy Options Council 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. December 18, 2018: Council Direction on amendments to Affordable Housing Production Plan Council directs staff to prepare amendments to the Affordable Housing Production Plan disallowing the current option for developers to provide fewer extremely low-income (ELI) units, until such time as a feasibility study can be completed to extend to the rest of the City, as economically justified, the Downtown Community Plan formula requiring a mix of units at appropriate sizes and affordability levels. March 26, 2019 Amendments to the City’s Affordable Housing Production Program Council authorized an expenditure to fund a feasibility study to analyze potential changes to the City’s Affordable Housing Production Program. Additionally, Council authorized modification to the Zoning Ordinance to remove the ELI option from the Tier 2 community benefits menu. April 23, 2019: Changes to emergency interim zoning for market-rate single room occupancy uses. Council approved changes to the City’s emergency interim zoning ordinance related to single room occupancy uses and directed staff to provide additional information about new housing models, including single-room occupancy housing. 4.A Packet Pg. 779 12 of 29 Council Date Council Action May 14, 2019 Amendments to Zoning Ordinance related to Single-Room Occupancy Housing citywide Council approved changes to the Zoning Ordinance that would prohibit Single- Room Occupancy Housing citywide unless proposed as a 100% Affordable Housing Project as defined by SMMC Section 9.52.0050 or certain specialized housing uses such as emergency shelters, transitional housing, and supportive housing. June 11, 2019 Authorization to Apply for SB2 Housing Grant Council authorized staff to apply for SB2 grant funding that would be used to analyze incentives or changes to project requirements to stimulate housing production. Additionally, the grant funds could be used to study policies, programs, and ordinances to protect and support tenants currently living in the city’s existing housing stock. September 10, 2019: Council study session discussing goals and policy options for protecting the City’s existing housing stock and considering what role new housing models may have in the production of housing. Council provided direction to develop code amendments to protect rent- controlled housing with a restriction on lease term and a requirement to lease only to natural persons; and directed Staff to develop a strategy and potential code amendments for addressing new housing models. 4.A Packet Pg. 780 13 of 29 Council Date Council Action October 15, 2019: Extension of removal of the Extremely-Low Income Affordable Housing Category from the City's the Affordable Housing Production Program Council adopted an extension of the temporary removal of the ELI option for an additional year to allow for the RHNA process and new State directives to clarify required zoning capacity. November 12, 2019: SB2 Grant Budget Authorization Council authorized the use of SB2 grant funds for housing production studies and implementation activities, including a financial feasibility analysis for affordable housing. December 10, 2019 Council Study Session on Housing Policy Update Council gave direction to move forward on the Housing Element Update with an emphasis on supporting 100% affordable housing, incentivizing housing production in Bergamot and the Boulevards, reviewing the application of updates to the State density bonus law on both affordable and market-rate housing production, and protecting existing housing stock. March 10, 2020 Emergency Interim Zoning Ordinance related to processing of 100% affordable housing projects and Tier 2 housing projects Council passed an emergency ordinance to allow for Administrative Approval of 100% Affordable Housing Projects and Tier 2 Housing Projects compliant with the Housing Accountability Act (HAA). 4.A Packet Pg. 781 14 of 29 Council Date Council Action August 25, 2020 Amendments to Zoning Ordinance related to Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) Council passed amendments to the City’s Zoning Ordinance for consistency with State law with respect to removing barriers to large family daycares, updates to accessory dwelling unit regulations, and updates to density bonus provisions as they relate to 100% affordable housing. August 25, 2020 New Residential Leasing Regulations Council adopted new leasing regulations that require residential rental units to be rented unfurnished, only to natural persons, only to tenants intending the unit to be their primary residence, and for an initial term of not less than one year. August 25, 2020 Emergency Ordinance related to 100% Affordable Housing Projects and Tier 2 Housing Projects Council extended the emergency ordinance adopted on March 10, 2020 related to the administrative approval of 100% affordable housing projects and Tier 2 HAA compliant housing projects. The extension will sunset on December 31, 2021. August 25, 2020 Amendments to Downtown Community Plan and Zoning Ordinance for Housing Projects greater than 90,000 sf Council adopted amendments to the Downtown Community Plan (DCP) to authorize Tier 3 Housing Projects greater than 90,000 sf within the DCP area to be approved by Development Review Permit. 4.A Packet Pg. 782 15 of 29 Council Date Council Action October 13, 2020 Ordinance to Extend the Removal of the Extremely-Low Income Affordable Housing Category from the City's Affordable Housing Production Program Council passed an ordinance to extend the sunset date of the provision to eliminate the ELI option to February 28, 2022. October 13, 2020 Amendments to New Residential Leasing Regulations Council adopted limited exemptions to the leasing regulations that were adopted on August 25, 2020. The exemptions apply to: an owner-occupied unit with certain conditions and to ADUs and JADUs for which plans are submitted for plan check before December 31, 2020 if the ADU or JADU is located on a parcel improved with a single-unit dwelling occupied by the owner as the owner’s primary residence and the owner remains on site during the rental. Regional Housing Needs Assessment Every eight years, the State of California requires all city and county governments to prepare plans to adequately meet the housing needs of the community. Housing needs are determined by the California Housing and Community Development Department (HCD), which decides what the numerical housing targets should be for each regional council of governments. Each council of government across the state then further allocates the regional housing number (known as the Regional Housing Needs Assessment– or RHNA) to every city and county within its jurisdiction. For the planning period of 2021-2029, HCD has determined that the RHNA for the Southern California region is 1.3 million units. RHNA Process 4.A Packet Pg. 783 16 of 29 RHNA is the process to identify the total number of housing units and income levels that each jurisdiction must accommodate in its housing element. The Southern California Association of Governments (SCAG) is required to develop a final RHNA methodology to distribute existing and projected housing need for the 6th cycle RHNA for each jurisdiction, which will cover the planning period October 2021 through October 2029. SCAG’s RHNA Subcommittee met for a year beginning in October 2018 to develop the methodology for the region. Following extensive feedback from stakeholders during the proposed methodology comment period and an extensive policy discussion, SCAG made their recommendation. SCAG’s Regional Council voted to approve the Draft RHNA Methodology on November 7, 2019 and provide it to the State Department of Housing and Community Development (HCD) for their statutory review. On January 13, 2020, HCD completed its review of the draft methodology and found that it furthers the following five statutory objectives of RHNA (Government Code Section 65584): • Increase the housing supply and mix of housing types, tenure and affordability in all cities and counties within each region in an equitable manner; • Promote infill development and socioeconomic equity, the protection of environmental and agricultural resources, the encouragement of efficient development patterns, and the achievement of the region’s greenhouse gas reductions targets provided by the State Air Resources Board; • Promote an improved intraregional relationship between jobs and housing, including an improved balance between the number of low-wage jobs and the number of housing units affordable to low-wage workers; • Allocate a lower proportion of housing need to an income category when a jurisdiction already has a disproportionately high share of households in that category, as compared to the countywide distribution of households in that category from the most recent American Community Survey; and • Affirmatively further fair housing. On March 4, 2020, SCAG’s Regional Council voted to approve the 6th Cycle Final RHNA Methodology (see Attachment A). In determining a jurisdiction’s RHNA allocation by income category, the methodology applies a four‐step process: 4.A Packet Pg. 784 17 of 29 1. Determine a jurisdiction’s projected housing need a. Assign household growth to jurisdictions based on SCAG’s Connect SoCal Regional Transportation Plan/Sustainable Communities Strategy Growth Forecast between 2020 and 2030 b. Calculate a jurisdiction’s future vacancy need for the jurisdiction’s owner and renter households c. Assign a replacement need to jurisdictions based on each jurisdiction’s share of regional net replacement need based on information collected from the replacement need survey submitted by local jurisdictions. 2. Determine a jurisdiction’s existing housing need considering factors such as transit accessibility and share of the region’s jobs), 3. Determine a jurisdiction’s total housing need by adding 1 and 2 from above 4. Apply a Social Equity Adjustment that accounts for disproportionate concentration of each income category in the County and the need to affirmatively further fair housing. 5. Determine a jurisdiction’s total RHNA allocation by adding 3 and 4 from above The RHNA allocation is then apportioned to the following income levels: very low, low, moderate, and above moderate. Santa Monica’s 6th Cycle RHNA (2021-2029) Based on SCAG’s adopted 6th Cycle RHNA methodology, Santa Monica’s draft allocation has been determined to be 8,873 units (see Attachment B), which represents an almost 5-time increase over the previous Fifth Cycle allocation of 1,674 units. Of the 8,873 units, 69% (6,152) must be provided at affordable levels (very low, low, and moderate income) as shown in Table 2. Table 2. City of Santa Monica Draft RHNA 2021-2029 Income Category RHNA Extremely Low (0-30% AMI) - 4.A Packet Pg. 785 18 of 29 The significant increase in the City’s RHNA allocation can be tied back to SB828 and AB1771, which were passed with the 2019 legislative session and made changes to the RHNA process to use more data to reflect job growth and housing needs, with an emphasis on fair housing goals. From a regional planning standpoint, Santa Monica is highly transit accessible, has a larger share of jobs, and is considered a high resource community, all key factors that resulted in determining higher housing need. As part of the Housing Element Update, Santa Monica must demonstrate that there is available capacity within its jurisdictional boundaries to accommodate its RHNA allocation. This will be a challenge as shown in Figure 1. Within Santa Monica, the total number of building permits issued over the last five years averaged approximately 200 units/year. The RHNA allocation represents planning for issuance of an average of approximately 1,100 building permits for housing units/year. Figure 1: 2014-2019 Housing Units Permitted Compared to 6TH Cycle RHNA Very Low (31-50% AMI) 2,786 Low (51-80% AMI) 1,668 Moderate (81-120% AMI) 1,698 Above Moderate (>120%AMI) 2,721 Total 8,873 4.A Packet Pg. 786 19 of 29 Review of 2013-2021 Housing Element As part of the Housing Element update, staff is reviewing the goals, policies, and programs of the 2013-2021 Housing Element. Table 3, below, shows the City’s progress towards achieving the 2013-2021 5th Cycle RHNA, which is established by SCAG in coordination with the State Department of Housing and Community Development. Table 3 also includes the City’s progress on meeting the Quantified Objectives that are outlined in Santa Monica’s adopted 5th Cycle Housing Element. The 2013-2021 certified Housing Element indicated that 81 identified suitable sites had a potential capacity of 3,702 units. Only 10 of the 81 identified sites have been improved with housing projects since 2013. Nevertheless, as shown in Table 3, Santa Monica has exceeded the overall RHNA and has largely satisfied the City’s Quantified Objectives. However, the allocation of units at the Low and Moderate Income category has not been met. Table 3. RHNA and Quantified Objectives Progress for 5th Cycle Housing Element (June 2013 - September 2020) 4.A Packet Pg. 787 20 of 29 RHNA Appeals Process The RHNA appeals period ran from September 11 to October 26. All appeals are posted on SCAG’S website (https://scag.ca.gov/rhna) with December 10, 2020 as the deadline for comments. The appeals will be heard by the RHNA Appeals Board in January 2021 with any successful appeals reallocated back to each county. The final RHNA allocation is anticipated to be issued on February 4, 2021. Government Code Section 65584.05 sets forth the bases under which jurisdictions can seek appeals of their RHNA allocation. Appeals are required to state why the revised allocation is necessary to further the five required RHNA objectives and also must be consistent with the adopted Sustainable Communities Strategy. Appeals are limited to consideration of the following factors: • Failure to apply adopted final methodology • Failure to consider local planning factors and information affirmatively furthering fair housing • Significant and unforeseen change in circumstance after April 30, 2019 4.A Packet Pg. 788 21 of 29 SCAG cannot grant appeals based on the any of the following factors: • Existing Zoning or General Plan land use restrictions; • Any local ordinance, voter-approved measure or standard that limits the number of residential permits; • Prior underproduction of housing; or • Stable population growth. While there is no longer an opportunity to appeal Santa Monica’s allocation, State housing element law recognizes that the RHNA allocation may exceed available resources and the community’s ability to satisfy this need within the content of the general plan requirements. As a result, a process called the Quantified Objective allows cities to request a more realistic goal that accounts for other constraints. The Quantified Objective is requested at the time of submitting the draft Housing Element to HCD. Thus, for example, the 5th Cycle (2013-2021) Housing Element includes a Quantified Objective for Santa Monica of 1,371 units, as compared to the RHNA allocation of 1,674 units. It should be noted, however, that the Quantified Objective is not used as the threshold for determining the City’s compliance with its certified Housing Element with respect to funding eligibility and erosion of land use control. This is further explained in the next section. Consequences of Non-Compliance with RHNA and State Law The California Department of Housing and Community Development (“HCD”) is responsible for administering State Housing Element Law (Government Code Article 10.6), including review of housing elements for compliance pursuant to Government Code Section 65585(b). In 2017, the Governor signed AB72, which expanded and clarified HCD’s authority enforcement activities. Specifically, this bill: 1) Requires HCD to review any action or failure to act by a city, county, or city and county that it determines is inconsistent with the following: a) An adopted housing element; 4.A Packet Pg. 789 22 of 29 b) Its inventory of sites suitable to accommodate the city's, county's, or city's and county's regional housing needs assessment (“RHNA”); and c) A program to rezone sites to meet the city's, county's, or city's and county's RHNA. 2) Allows HCD to revoke its findings that a housing element or an amendment to the housing element is in substantial compliance, until the city, county, or city and county comes into compliance, if it determines that an action or failure to act by a city, county, or city and county does not substantially comply with housing element law. 3) Allows HCD to consult with and to receive any written comments from a city, county, or city and county, public agency, group or person regarding a city's, county's, or city's and county's action or failure to act to determine whether or not a housing element is in substantial compliance with housing element law. 4) Requires HCD to notify the local government and the Office of the Attorney General (AG) that the city, county, or city and county has violated state law if the department finds that the housing element or an amendment to the element, or any action or failure to act pursuant to (1) above or that any city, county, or city and county has taken an action in violation of the following: a) The Housing Accountability Act (Government Code Section 65589.5); b) No-net-loss-in zoning density law limiting downzoning and density reductions (Government Code Section 65863); c) Density Bonuses and Other Incentives (Government Code Sections 65915 to 65918-); d) Prohibiting discrimination against affordable housing (Government Code Section 65008); and In the 2019 legislative session, AB 101 was enacted, which further expands HCD’s toolkit to hold cities accountable for housing element compliance. The legislation 4.A Packet Pg. 790 23 of 29 requires the Attorney General to bring any suit for violation related to housing element compliance and request that the court issue an order or judgment directing a violating jurisdiction to bring its housing element into substantial compliance and requiring the court to retain jurisdiction to ensure that an order or judgment to bring a housing element into compliance is carried out and impose fines. Other repercussions for noncompliance include limited access to state funding where eligibility for funding is contingent on the jurisdiction having a substantially compliant housing element. To incentivize and reward local governments that have adopted compliant and effective Housing Elements, several housing, community development, and infrastructure funding programs include Housing Element compliance as a rating and ranking or threshold requirement. Some of the programs that consider Housing Element certification in their criteria are listed below: • Infill Incentive Grant (IIG) Program • Multifamily Housing Program • Affordable Housing and Sustainable Communities Program • SB1 Sustainable Communities grants • SB2 Planning grants • Cal Recycle • Water Resources Control Board Funding programs that are currently used by the City are the Affordable Housing and Sustainable Communities Program, SB1 grants, SB2 grants, LEAP grant, Cal Recycle, and Water Resources Control Board. An additional consequence of failure to comply is erosion of local land use control, as established in SB35. On April 1 of each year, every jurisdiction in California must submit an Annual Progress Report (APR) to HCD that reports on housing metrics form the prior calendar year including total units permitted, number of affordable units, and units approved. This information is used to determine whether certain thresholds in SB35 are triggered. If a jurisdiction has not met its lower and above-moderate income 4.A Packet Pg. 791 24 of 29 housing targets, developments including at least 10% or 50% affordability, respectively, are entitled to a streamlined approval process provided they meet certain conditions. Santa Monica is one of 28 cities in California that is not currently subject to SB35’s streamlining provisions. If Santa Monica cannot meet its RHNA targets in any of the upcoming annual reporting periods, then SB35’s streamlining provisions will be triggered. Suitable Sites Inventory As part of the preparation of the Housing Element update, jurisdictions are required to identify an inventory of suitable sites that can be developed for residential units in order to accommodate the RHNA by income category. The 2018 legislative session brought new restrictions to the criteria applied to suitable sites, now codified in Government Code Section 65583.2. These changes have the potential effect of creating a situation where the number of suitable sites decrease despite the increase in the RHNA housing allocation. As provided in HCD’s Housing Element Sites Inventory Guidebook (see Attachment C), factors that must be considered in the selection of suitable sites include rate of redevelopment of similar properties in the City; the effect of market conditions on the likelihood of a site being redeveloped for residential use; availability of incentives for residential redevelopment; site considerations (such as whether existing uses on the site are impediments to redevelopment); and if the site is aligned with the goal of affirmatively furthering fair housing. The identification of suitable sites in the inventory will help to determine whether changes to zoning, development standards, and infrastructure capacity are necessary to accommodate the RHNA allocation. Scope of Study for Housing Element The Housing Element Update will entail a combination of public outreach efforts, policy research, and analytical work with the goal of having an adopted Housing Element by October 15, 2021, the deadline established in housing element law. Specific areas of study for the Housing Element Update include: • Housing Needs Assessment o Update of demographics and data on housing characteristics to establish baseline picture of the community’s housing needs 4.A Packet Pg. 792 25 of 29 • Preparation of the Suitable Sites Inventory o Analyze sites with residential potential based on HCD’s requirements o Consider LUCE growth strategy when selecting sites o Consider opportunities to produce housing on City-owned land o Determine realistic capacity of identified sites to determine potential to meet RHNA allocation • Financial Feasibility Analysis (informs realistic capacity of suitable sites) o Based on market conditions, assess the likelihood of residential development occurring on a site rather than commercial o Explore what it would take to support varying levels of inclusionary affordable housing in market-rate development • Housing Policy and Research o Production ▪ Consider further incentives for 100% affordable housing that match the State in terms of up to 33 feet in height and larger density bonuses ▪ Explore additional financing tools and consider flexibility in allowing developers multiple methods to produce affordable housing ▪ Analyze potential processing incentives and modified and/or flexible development standards for housing development, particularly for 100% affordable housing projects ▪ Analyze density bonuses ▪ Explore what it would take to incentivize ADU production to become a measurable percentage of RHNA allocation ▪ Consider different models of housing such as co-living units ▪ Study fair and equitable distribution of housing throughout the city so that not one area becomes overburdened o Preservation ▪ Explore a minimum density requirement in the context of no net loss of units 4.A Packet Pg. 793 26 of 29 ▪ Study possible resources available for City to provide landlord assistance as an incentive to retain existing rental units and stewardship of existing rent-controlled buildings An Environmental Impact Report (EIR) will also be prepared for the Housing Element Update as the RHNA allocation exceeds the number of housing units that was analyzed in the 2010 LUCE EIR. The Notice of Preparation of the Housing Element Update EIR was issued on October 31, 2020 for a 60-day review period ending on December 31, 2020. A virtual scoping meeting is scheduled for December 10, 2020. Housing Element Update Process and Timeline As discussed above, the City has already undertaken significant steps towards the preservation and production of housing through a number of legislative actions and policy changes. However, considerable work remains towards the goal of an adopted Housing Element by October 2021. The process graphic and timeline for the project below show the key milestone, the opportunities for public participation and the role of the community at key milestones, in addition to showing how the EIR process relates to the project. Figure 2: Housing Element Update Process and Timeline 4.A Packet Pg. 794 27 of 29 The process of updating the Housing Element began in late August/September with initial review of new Housing Element regulatory requirements, followed by the official launch of the website of the Housing Element Update. City staff has also begun initial analysis of the foundational data necessary for the Suitable Sites Inventory and released the Notice of Preparation for the Housing Element EIR. As a result of the COVID-19 pandemic, the public outreach program for the Housing Element Update has been modified from the City’s normal practices for gathering community input. City staff held three separate (but identical) virtual webinars at the beginning of November, emailed and published an on-line housing survey, held presentations with the Planning Commission and Rent Control Board in November and December, and conducted three sessions of the Technical Working Group series in December. Due to the somewhat technical nature of the scope of study and the mandatory timeline by which the Housing Element update must be completed, staff invited persons with knowledge and experience in housing production and preservation to sign up for two technical working groups housing production and housing stability/preservation. The working groups are intended to help formulate concepts that will be presented and tested with the broader community. 4.A Packet Pg. 795 28 of 29 City staff anticipates returning to the Planning Commission and City Council in March with early options and concepts on the Housing Element Update. In June/July, the Draft Housing Element will be presented to the Planning Commission and City Council along with the public release of the Draft EIR. The Draft Housing Element will then be transmitted to HCD for a 60-day comment period. Adoption of the Housing Element is required by State law to be completed by October 15, 2021, which is subsequently followed by transmittal of the Housing Element to HCD for final certification. Council Discussion As work on the Housing Element Update continues, City staff is seeking direction from Council as to: • The scope of study related to housing production: o Preparation of Suitable Sites Inventory, with selection of sites guided by HCD requirements and LUCE growth strategy o Analysis of potential processing incentives and modified and/or flexible development standards for housing development, particularly for 100% affordable housing projects o Feasibility analyses to determine likelihood of residential development and testing varying levels of inclusionary affordable housing units o Analysis of density bonuses and minimum density requirements o Analysis of new housing models o Study incentives and best practices for ADU production • The scope of study related to housing preservation: o Explore minimum density requirement in the context of no net loss of units o Analysis of potential “landlord assistance” incentives to encourage continued maintenance and stewardship of existing rent-controlled buildings Financial Impacts & Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. 4.A Packet Pg. 796 29 of 29 Prepared By: Jing Yeo, Planning Manager Approved Forwarded to Council Attachments: A. SCAG Final RHNA Methodology (Web Link) B. Draft RHNA Allocation for Santa Monica C. State Housing and Community Development Site Inventory Guidebook (Web Link) D. Summary of Planning Commission and Rent Control Board Comments on the Housing Element Update E. Written Comments 4.A Packet Pg. 797 SCAG 6TH CYCLE RHNA - STAFF-RECOMMENDED FINAL METHODOLOGY For complete descriptions of values below, see "metadata" tab or www.scag.ca.gov/rhna13-Feb-20 RHNA Allocation inputs for Santa Monica city Select Jurisdiction (drop-down menu) Santa Monica city Forecasted household (HH) growth, RHNA period:1111 Total regional housing need Vacancy Adjustment 45 1,341,827 Replacement Need - Santa Monica city statistics:Regional Percentile:TOTAL PROJECTED NEED:1156 Forecasted household (HH) growth, RHNA period:1111 64% Existing need due to job accessibility (50%)2750 Percent of households who are renting:72%95% Existing need due to HQTA pop. share (50%)4302Housing unit loss from demolition (2009-18):- 0% Net residual factor for existing need^666Adj. forecasted household growth, 2020-2045:*2,888 -TOTAL EXISTING NEED 7718 Pct. of regional jobs accessible in 30 mins (2045):**15.63%71% TOTAL RHNA FOR SANTA MONICA CITY 8874 Pct of total Share of region's job accessibility (pop-weighted):0.66%85% Very-low income (<50% of AMI)2786 31.4% Share of region's HQTA population (2045)1.03%93% Low income (50-80% of AMI)1668 18.8% Share of pop. in low/very low-resource tracts:0.00%-Moderate income (80-120% of AMI)1698 19.1% Share of pop. In very high-resource tracts:92.37%-Above moderate income (>120% of AMI)2721 30.7%Social equity adjustment:180%- **For the jurisdiction's median TAZ ^Negative values represent a lower-resourced community with good job and/or transit access having its allocation capped. Positive values represent this amount being redistributed to higher-resourced communities based on their job and/or transit access. *Local input/growth forecast total adjusted by the difference between the RHNA determination and SCAG's regional 2020-2045 forecast (+4%) What is this? This spreadsheet tool is designed to provide estimates of jurisdictional RHNA allocations based on the staff-recommended Final RHNA methodology, which is equivalent to the draft methodology approved by the Regional Council on 11/7/19 and found to be in compliance with statute by the state Dep't of Housing and Community Development on 1/13/20. This staff- recommended final version includes updates to data elements related to SCAG's Final Connect SoCal Regional Plan. Data may be subject to corrections and intermediate steps may not sum due to rounding. Instructions: Select jurisdiction from drop-down menu. Green boxes will populate based on data in "RHNA_data" tab. For more information, please see www.scag.ca.gov/rhna or email housing@scag.ca.gov. 4.A.b Packet Pg. 798 Attachment: Draft RHNA Allocation for Santa Monica (4280 : Housing Element Study Session (180 mins)) Summary of Planning Commission and Rent Control Board Comments from Study Sessions on Housing Element Update December 2020 Study sessions were held with both the Planning Commission and Rent Control Board to inform the City Council’s discussion on the Housing Element Update. The Planning Commission held two study sessions on the Housing Element Update on November 18 and December 9. At the first Planning Commission study session, the Housing Element Update framework was introduced with a more substantive discussion occurring at the second study session. The Rent Control Board held a study session on December 10. This report provides a summary of comments from both bodies. Planning Commission Study Session Summary The Planning Commission was asked to provide comments and feedback on the outreach program, proposed scope of study for the Housing Element Update, Goals and Policies of the current 2013-2021 Housing Element, and preliminary sites analysis for the Housing Element Update. Outreach Program The Commission was generally supportive of the ongoing outreach program for the Update but indicated that there should be further outreach to: • Communities of color • Low-income tenants • Persons experiencing housing insecurity • Persons experiencing homelessness • Property owners of large sites to gain better understanding of potential for conversion/addition of residential vs. new construction In order to elicit broader survey responses and understanding of the housing needs, the Commission also provided suggestions on organizations that can expand the outreach network such as faith-based organizations, non-profit affordable housing providers, and service providers. The Commission also indicated for staff to consider preparing graphics to explain the nature of housing construction, housing types, and density that may be discussed when concepts are presented. Proposed Scope of Study The Commissioners generally agreed with the policy areas that staff is already pursuing (density bonus, new housing models, and ADUs) but emphasized that the Update should be tied to economic and 4.A.d Packet Pg. 799 Attachment: Summary of Planning Commission and Rent Control Board Comments on the Housing Element Update (4280 : Housing Element environmental sustainability policies with a view towards equitable distribution of housing opportunity across the city. In terms of policy areas for further exploration, there was interest in: • Exploring the viability of conversion of existing commercial space to residential use • Exploring how to incentivize more ownership units for a diverse spectrum of income levels • Incentives for affordable ADUs including fee breaks or tax breaks • Concepts for meeting the goal of Affirmatively Furthering Fair Housing to address the legacy of redlining and to ensure that housing growth does not disproportionately impact any one neighborhood • How to produce housing units for the working middle class with an understanding of how to encourage the financing of moderate-income housing, ideas such as a moderate-income density bonus, and how to incentivize “missing middle” housing • New construction innovations with an emphasis on reducing the construction cost of housing • Strategies for alleviating rent burdens on residents • Protection of tenants at risk of eviction, including incentives to expiring deed restrictions • Funding strategies (e.g. land value tax) • Reduction of parking minimums for housing • How to ensure that all new buildings are net zero The Commission indicated general support to prioritize housing for persons experiencing homelessness, those at greatest risk of becoming homeless, young families most sensitive to pricing adjustments, the moderate income “hole” for the middle class, and young people raised in Santa Monica but who cannot afford to move back or continue to live in the City. Building from the policy areas to further explore, the Commission provided thoughts on potential housing types including modular housing, work force office, co-housing or other adaptive housing types that provide flexibility to address the changes in ways that people live over time, and missing middle housing (e.g. townhomes, bungalows, garden apartments) that limit scale and can allow for more density. Feedback on 2013-2021 Housing Element Goals and Policies The Commission reviewed all of the goals from the 2013-2021 Housing Element and evaluated whether they should be continued forward as part of the 6th Cycle Housing Element Update. The following is a summary of the Commission’s thoughts on the modifications to prior goals: • Goal 1 o Concern about use of terms “compatible” and “high quality” as those are subjective terms that could be used to exclude housing, particularly in neighborhood transition areas o Should address adaptive reuse and home ownership in this goal 4.A.d Packet Pg. 800 Attachment: Summary of Planning Commission and Rent Control Board Comments on the Housing Element Update (4280 : Housing Element o Goal should reflect opportunities for active living, connections to transit, safety, and sustainability • Goal 2 o Should address racial equity, permanent supportive housing for most vulnerable communities o Add to the end of the goal, “…those most at risk, affordable, and missing middle” • Goal 3 o Goal should be re-worded to clarify that it’s intended to address preservation of covenants for existing deed-restricted housing but also broader goal of preserving other types of affordable housing (e.g. rent-controlled, those at greatest risk of loss/conversion) • Goal 5 o Goal is very homeless-focused and needs to expand to include support programs for working families, children, and seniors in addition to including emergency rental assistance • Goal 6 o Goal should address lower-cost opportunities for ownership through missing middle housing o Goal should also affirmatively further fair housing through equitable zoning such that there is the opportunity for affordable housing to be located anywhere and to also understand the neighborhood impact of the varying scales of new housing construction • Goal 7 o Change “citizens” to “residents and stakeholders” in the language of the Goal so that includes people who work in Santa Monica but don’t live here o Goal should capture that the public is informed and engaged on new projects,plans, and public safety. Feedback on Preliminary Sites Analysis The Commission was presented with factors being considered as part of the preliminary analysis of potential housing sites and proposed ranking of those factors for determining site eligibility. The Commission indicated that properties on the Historic Resources Inventory should be considered a possible constraint while priority areas should be Bergamot Area and Downtown in addition to full consideration of not only City-owned land but properties owned by other public entities such as the SMMUSD and the State (e.g. DMV). The Commission also indicated that parking lots of faith-based organizations could be a source of potential housing sites given the typical natural alignment between their mission and affordable housing. Rent Control Board Study Session Summary 4.A.d Packet Pg. 801 Attachment: Summary of Planning Commission and Rent Control Board Comments on the Housing Element Update (4280 : Housing Element The Rent Control Board held a study session on December 10 and similar to the Planning Commission, were asked for their thoughts on policy areas that should be explored as part of the Housing Element Update. The Board wanted the Update to look at creative ways to help tenants in high turnover areas become permanent community members. The Board’s comments emphasized the protection of existing housing, keeping families in their homes, and prioritized the production of lower income housing (not moderate income housing), particularly for workers and tenants in the context of economic recovery from the COVID-19 pandemic. There was concern that with depressed rents, there may be a potential wave of Ellis Act removals and the need for the City to consider a one-to-one unit replacement. The Board was also not supportive of allowing medium-term housing, even in new construction, as the more frequent turnover would result in higher rents overall. In terms of housing types, there was interest in supporting incentives for the production of affordable ADUs and larger family-sized units while there was significant concern about allowing smaller units or co-living models in new construction as they may not support a diverse population. 4.A.d Packet Pg. 802 Attachment: Summary of Planning Commission and Rent Control Board Comments on the Housing Element Update (4280 : Housing Element 1 Vernice Hankins From:JayPJohnson@earthlink.net Sent:Friday, December 11, 2020 11:00 AM To:Phil Brock; Phil Brock Cc:Oscar del la Torre; councilmtgitems Subject:agenda tues 12/15 EXTERNAL 12/11/2020 10:58:12 AM agenda 12/15 Phil/Oscar/Kristine et al: Please join BevHills in reevaluating rhna # for new units next tuesday. Apts. com has 3700 vacancies, there are 27000 controlled rental units--thats 13% vacancy rate, not counting existing new construction post 1999 units, nor duplx/triplex. Building 8800 "affordable" is impossible in SM. We dont' need that many! Stick w/ ADU existing rules. Add in older units that will be ellised, or condemned over time. Costs to rehab are more than new construction. A 3 unit ppty on Euclid, 90 years old, cost $1.5 million to rehab-new construction would have been $600,000. It's happening all over town. To protect existing tenants-- preserve existing structures should be first priority. Building like crazy in R1 residential will just infuriate homeowners. thanks, Jay Johnson 310-488-7431 City of Beverly Hills | Community News Beverly Hills Challenging RHNA Number “In analyzing information provided in September 2020 by Freddie Mac and the Embarcadero Institute, it is clear HCD’s determination of the overall housing shortage in California is flawed,” the letter, written by City Manager George Chavez, says. BY Sam Braslow December 3, 2020 The City of Beverly Hills currently faces the daunting goal of enabling construction of 3,096 units of housing in a City of slightly less than 34,000 residents. This number, known as the Regional Housing Needs Assessment (RHNA), and the methodology behind it have become a source of contention in Beverly Hills and other cities in California who say that Sacramento has set impossible housing expectations for them. At the Dec. 1 Regular Meeting, the Beverly Hills City Council unanimously ratified a letter to the Southern California Association of Governments (SCAG) requesting a special closed meeting of the SCAG Regional Council. The letter points to data that contradicts the State Department of Housing and Community Development (HCD) and suggests a much lower housing need in the State. The special closed meeting would consider the possibility of SCAG launching a legal challenge against the HCD in an effort to reevaluate the housing burden across the State. Item 4.A 12/15/20 1 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 803 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 “In analyzing information provided in September 2020 by Freddie Mac and the Embarcadero Institute, it is clear HCD’s determination of the overall housing shortage in California is flawed,” the letter, written by City Manager George Chavez, says. “For these reasons, the City of Beverly Hills supports a special closed meeting of the SCAG Regional Council be convened in order to discuss the RHNA Litigation Committee’s recommendation.” Every eight years, cities and jurisdictions around the State draft a new Housing Element, a part of the General Plan which considers the housing needs of the community and anticipates how that need will change. With the housing cycle slated to start again in 2021, localities across the State are preparing their Housing Elements for approval by the State. The RHNA number sits at the heart of the Housing Element, an evaluation of the number of units needed in the next eight years and the land use plans and regulations necessary to accommodate them. Before a city like Beverly Hills receives its RHNA allocation, HCD first determines the housing needs in each region of California by examining population data. The number that HCD calculates gets passed to a local regional planning agency that looks at more local data and distributes the total among its jurisdictions. For Beverly Hills, this task falls to SCAG. In 2019, the State gave SCAG a whopping 1.3 million units to distribute among its localities, 3,096 of which were passed on to Beverly Hills. In contrast, Beverly Hills’ allotment in the previous eight-year cycle was only three units. While not a development mandate, cities face penalties for not making it possible to develop the requisite number of units. If the State feels that a jurisdiction falls short of that requirement, it can withhold certification of its General Plan. This results in loss of certain State funds, more frequent updates to the City’s Housing Element, and loss of control over housing project decisions. But according to the City’s letter to SCAG, the State of California made fundamental errors in calculating the amount of housing needed in the Golden State. The letter cites two studies conducted by Freddie Mac and the Embarcadero Institute, a non-profit policy analysis organization. In the study conducted by the former, Freddie Mac calculated the State’s housing shortage at only 820,000 units. As the staff report for the Dec. 1 Regular Meeting notes, “This means the number assigned to the SCAG region by HCD far exceeds the housing units identified by Freddie Mac for the entire state.” The study by the Embarcadero Institute challenges the methodology used by the State, arguing that the State may have “used an incorrect vacancy rate and performed double counting,” according to the staff report. “Given the recent information released by Freddie Mae and the Embarcadero Institute, we also feel this subject merits the additional consideration and recommendation of the Regional Council,” the letter reads. “We hope this special meeting can be convened immediately.” Top Stories Beverly Hills Beverly Hills Demands Action Against County Dining Ban Beverly Hills Newsom Issues New Regional Stay-At-Home Order Beverly Hills Beverly Hills Challenging RHNA Number Beverly Hills Visions in Light: Windows on The Wallis Open Now Beverly Hills Item 4.A 12/15/20 2 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 804 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 FEATURE INTERVIEW – RINGO STARR – A Rare Conversation Spotlight Story A Fashion Phenom in Beverly Hills From Compton to Couture. From learning in sweat shops to presenting on the biggest Fashion Week runways around the world, Johana Hernandez is a Latinx millennial sensation. September 24, 2020 Related Articles Newsom Issues New Regional Stay-At-Home Order “If we don't act now, our hospital system will be overwhelmed,” Newsom said. December 3, 2020 Beverly Hills Demands Action Against County Dining Ban Starting Dec. 3 at midnight, Los Angeles County will begin accepting applications for $30,000 grants to small restaurant owners struggling to make ends meet during a pandemic that has now shut down outdoor dining. December 3, 2020 BHHS Alum Nominated to Head DHS “We have no time to lose when it comes to our national security and foreign policy,” Biden said in a statement. November 25, 2020 About Us Advertise Terms of Use Privacy Policy Do Not Sell My Info Beverly Hills DBAs Contact Us 2020 © BH COURIER ACQUISITION, LLC BEVERLYHILLSCOURIER.COM Facebook Twitter LinkedIn Item 4.A 12/15/20 3 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 805 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 Email Item 4.A 12/15/20 4 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 806 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Ose Dalldorf <bizzi1975@yahoo.com> Sent:Sunday, December 13, 2020 3:33 PM To:councilmtgitems Subject:construction of 8,874 housing units EXTERNAL As a 45 year resident of Santa Monica I would like to strongly urge the SM City Council to participate with " CALE ' in it's legal action to fight the construction of 8,874 new housing units in Santa Monica ! That number of housing should not be executed for many reasons. ! Thank you, Ose Item 4.A 12/15/20 5 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 807 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 6 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 808 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 7 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 809 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 8 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 810 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 9 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 811 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 10 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 812 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 11 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 813 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 12 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 814 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 13 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 815 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 14 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 816 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 15 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 817 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 16 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 818 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 17 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 819 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 18 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 820 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 19 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 821 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 20 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 822 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 21 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 823 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Council Mailbox Sent:Monday, December 14, 2020 2:42 PM To:Sue Himmelrich; Kristin McCowan; Councilmember Kevin McKeown; Gleam Davis; Oscar de la Torre; Phil Brock; Christine Parra Cc:councilmtgitems; Lane Dilg; Anuj Gupta; David Martin; Jing Yeo Subject:FW: Two items - Proposed Housing Growth and the approval of the 130' high Miramar Hotel expansion Council‐ Please see the below email regarding the housing element. Thank you, Stephanie From: Aram Kadish <amk001@yahoo.com> Sent: Monday, December 14, 2020 1:43 PM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Subject: Two items ‐ Proposed Housing Growth and the approval of the 130' high Miramar Hotel expansion EXTERNAL As a home owner and resident of Santa Monica, and one who appreciates the small town feel of Santa Monica, building a behemoth structure right on Ocean Ave is wrong, Besides the environmental impact of impeding on shore air flow which naturally cools the heat of the city, this exemption creates a precedent for future developers. These multi-story buildings block natural cooling air flow, natural light and reduce the ability of all of us to enjoy an unencumbered view of the ocean, beach and sunset. You are literally allowing a wall of buildings to be be built for the benefit of a few and the detriment of the many. My second concern is the Housing Element issue. As I understand it, Santa Monica is REQUIRED to build new housing units to keep up with growth throughout California. Where I have an issue is the fact that you appear to have not appealed the SCAG allocation of building 6000 new affordable housing units and that you didn't question the state's inaccurate assessment. Per the Embarcadero Institute report I read, it seems the state of California over-counted by 100% the needs of the state. If so, having to build half of the housing units is far more achievable. With the unbelievable level of scrutiny every building project is subjected to in Santa Monica, I don't know how the inspectors can possibly review 3-6000 units in the coming years to meet the State's objectives. Are we going to lower our building standards to accommodate developers to achieve this unwanted growth? Thank you for considering my thoughts on these matters. Sincerely, Aram Item 4.A 12/15/20 22 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 824 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Council Mailbox Sent:Monday, December 14, 2020 2:44 PM To:Sue Himmelrich; Kristin McCowan; Councilmember Kevin McKeown; Gleam Davis; Oscar de la Torre; Phil Brock; Christine Parra Cc:councilmtgitems; Lane Dilg; Anuj Gupta; David Martin; Jing Yeo Subject:FW: Housing element Council‐ Please see the below email regarding the housing element. Thank you, Stephanie ‐‐‐‐‐Original Message‐‐‐‐‐ From: Mitchell lachman <shevat117@gmail.com> Sent: Monday, December 14, 2020 9:51 AM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Subject: Housing element EXTERNAL Hello and regarding the Housing Element, “Preservation tor “Historical part of that element”. The existing offer by by the Planning Department is a compromise of 70 to 30 percent range to a property which I am in favor of. The 30 percent keeps the street or front of the house as original thus keeping the street scape as seen from a the street view. historical, original! The 70 percent can, could be changed to design changes. For example, my property has an adjacent empty lot which in the future I, or whom ever get the property would entertain expanding the rear half onto the lot. I have owned my property since 1965 which the idea of making a home expansion when needed. The 100 percent, ossification, of the Preservation Ordinance, as proposed, is in a sense confiscatory , restrictive in using my property and land. . As mentioned above, and in continuance with the past, the 70/30 trade off in preservation and property change allows a historical street scape. Good bye, Mitchell Lachman Item 4.A 12/15/20 23 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 825 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Council Mailbox Sent:Monday, December 14, 2020 2:47 PM To:Sue Himmelrich; Kristin McCowan; Councilmember Kevin McKeown; Gleam Davis; Oscar de la Torre; Phil Brock; Christine Parra Cc:councilmtgitems; Lane Dilg; Anuj Gupta; David Martin; Jing Yeo Subject:FW: Housing Element update and "missing middle" Council‐ Please see the below email regarding the housing element. Thank you, Stephanie From: Ed Salisbury <evs511@verizon.net> Sent: Thursday, December 10, 2020 1:57 PM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Subject: Housing Element update and "missing middle" EXTERNAL To successfully integrate additional housing without disturbing existing neighborhood character, the “missing middle” housing type offers a useful approach. This approach can contribute significantly to the RHNA mandated housing units, while avoiding the specter of “densification”. Santa Monica has many examples of “missing middle” housing integrated into existing residential neighborhoods. Some examples are: Bay Street east of 11th Street, Oak Street west of Clover Park, and Kansas Avenue west of Stewart Street. All these examples are pleasant neighborhoods with tree lined streets, and most people would feel comfortable living on them, in either a home or an apartment. Best wishes, Ed Salisbury, Santa Monica, CA Item 4.A 12/15/20 24 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 826 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) December 14, 2020 Re: Item 4.A - Housing Element Dear Santa Monica City Councilmembers: Below please find the stories of many young members of our community on the topic of housing. As you begin to discuss our 6th Cycle Housing Element, we felt it was important for you to hear directly from these young people. The Housing Element is a process of planning for the future. We believe the needs of our young community members should be front and center in that process. After all, they will have to live with these decisions longer than anyone else. Santa Monica’s housing goals are ambitious and exciting. However, they are not without precedent. From 1960 to 1979, Santa Monica built 17,000 new housing units, much of which make up our more affordable housing stock today. That’s roughly the same rate of housing production we need for our 6th Cycle Housing Element from 2021 to 2028. We are not alone in having ambitious targets - our neighbors share them too. Los Angeles and West Hollywood will be building more units per capita than Santa Monica; and Beverly Hills and Culver City will be building just slightly less. This is a regional responsibility that we are all undertaking together. We hope you treat this process seriously. The young people below are looking to you for real leadership, and real solutions. Saying “no” is not an acceptable answer. Henry G. (30 years old) - I am Santa Monica born and raised, and proudly so--I still wear my SAMOHI Soccer sweatshirt whenever I can. I am now 30, almost 31, and I have moved back to the area and found that I cannot afford to live in Santa Monica. I have tried to find a place where I could live close to my parents but there just aren't enough units. If Santa Monica wants to be a city for its future generations, it needs to build more housing that those future generations can afford. Item 4.A 12/15/20 25 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 827 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Sean S. (27 years old) - I live in a small studio in Ocean Park. I’m a skateboarder and a surfer so being able to live here means so much to me. This is Dogtown, the birthplace of California coastal culture, and I get to call it home. But the types of people that built Dogtown don’t get to call it home anymore. Our high housing costs have pushed them all away. Santa Monica seems more interested in how buildings look than who lives inside them. By not building enough housing, we’ve pushed away our surfers, our skateboarders, our artists, our blue-collar workers - those that made Santa Monica what it is. And maybe our high housing costs will eventually push me away too. My small studio is 400 square feet and costs $2,000 per month. I’ll need more space one day, but I don’t know how I’ll afford it. When people talk about how Santa Monica doesn’t need more housing, I know they’re not listening to people like me. They were able to buy a long time ago, when Santa Monica was a lot more affordable, and now they don’t care about who comes after them. They’d rather hoard privilege for themselves than plan for the future. That’s what kills the soul of Santa Monica. Jeremy A. (25 years old) - I grew up in Santa Monica but when I finished college and got a job in Los Angeles there were zero places I could afford in my own hometown. So, I ended up moving to Long Beach, where the rent is more reasonable. All my friends in Santa Monica who have stayed still live with their parents. They can’t afford a place of their own either. Juan Paulo P. (30 years old) - My biggest issues with housing are the cost of rent, and ownership opportunities. I've seen friends who grew up in Santa Monica unable to stay because nothing is affordable. Now that I'm in my 30s and looking for a place to settle down, home ownership is at the fore of my housing concern. Unfortunately, the absurdly high prices of single-family starter homes put the down payment out of reach. When you say "Santa Monica is full" who is that directed to? The children who grew up here and can no longer afford it? The people of color who live south of the 10? Or the rich executive living north of Montana? Michelle S. (27 years old) - I work on Main Street. I used to live in Brentwood but moved to Santa Monica in 2018 when my husband and I moved in together. Combining our incomes allowed us to buy a small condo but it was tough - we had to borrow a lot of money from my parents because everyone we were bidding against was offering all-cash. Needless to say, most don’t have the “borrow from parents” option. We were really lucky. Item 4.A 12/15/20 26 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 828 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Living in Santa Monica allows me to walk to work which I love. Good for my health, good for the environment, and good for traffic on our roads. But I’m the only person in my office that can do so. All my coworkers live outside of Santa Monica because they can’t afford it here. That means they have to drive in every day which pollutes our air and clogs up our roads. Santa Monica should build more so they can live here too. Natalya Z. (31 years old) - I moved to Los Angeles after college. I quickly found a job in Downtown Santa Monica but the cost of housing near work was a lot more difficult. Even though I had a college degree and work experience, I was unable to afford my own place. I ended up living in a small, converted dining room in West LA for about 4 years until I was finally able to afford a small Santa Monica studio. With market rents as high as they are, I don’t think I could move within the city again. Santa Monica should be more accessible to those who want to be a part of this community. Housing is a large part of the solution. Taylor W. (30 years old) - My fiancée and I lived in an apartment in Downtown Santa Monica. We needed more space and moved away earlier this year. We would have stayed in Santa Monica but there weren’t any good options for us. Our choices were expensive apartments that were way too small or very expensive houses built decades ago and completely run down. Santa Monica ignores its housing needs. We experienced this most viscerally with the large and growing homeless population Downtown. They need shelter but I don’t see anyone proposing we do that. Nor do I see anyone proposing we build more housing to make rent more affordable, so people don’t fall into homelessness to begin with. Matt S. (34 years old) - When I started working in Santa Monica in 2018, one question I received often from friends and family was, “Are you going to move to Santa Monica? It’s such a great town.” Santa Monica is a great town, and I’d love to live here, but it’s just too expensive. The people who asked this question are old enough to no longer be in the housing market so I think they just don’t know. So while their question was well meaning I could only laugh at the thought of being able to afford to move to Santa Monica. Instead, I live to the east and commute into Santa Monica every day. Leonora C. (33 years old) - I’m a mom in Santa Monica to two young kids. I’m worried about the future they will be facing when they are older. I want to plan a city that will meet everyone’s Item 4.A 12/15/20 27 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 829 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) housing needs, be accessible to all, tackle climate change, and be a positive, diverse, and vibrant community. Explaining homelessness and the geographic racial segregation that is visible in this city to young children is devastating. There is so much more that we could be doing on the local level to make housing more affordable. I am Executive Director of Abundant Housing LA and a member of the housing commission, but housing is still a personal issue to me because the #1 most important thing in my life is a more hopeful future for my kids. Carter R. (33 years old) - I was born at St. John’s hospital in 1986. My wife and I have lived together in Santa Monica since 2010. We were joined by a dog in 2014 and a child in 2020. We’ve had two great rentals in Sunset Park that were a perfect starting point for us as we developed as young adults and found our way through grad school. We recently had the opportunity to buy a condo. This was only possible because of support from family in making a down payment. Santa Monica should build enough housing so that people and families can continue to grow and change and have housing options available that are accessible to everyone -- not just those who had the good luck to have access to multigenerational family wealth. I am very excited about our goal of building almost 9,000 new housing units (2/3 of which must be affordable) this decade. I know that building that much housing -- and our neighbor cities doing their fair share too -- would mean we were actually creating enough housing to solve our housing shortage. Bradley E. (26 years old) - I’ve worked and lived in Santa Monica since 2016, with my wife joining me a couple years later. We want to stay and raise a family here but feel that it will stay forever out of reach because of cost. I’ve seen many friends and colleagues face the same dilemma and choose to move away, sacrificing their walking and biking commutes for one by car. Santa Monica’s total population has been virtually unchanged for 50 years and the result is ever-rising rents and home prices. If the city wants to live up to its “progressive” reputation, it must build more homes so it is open to more than just the privileged few. Matthew S. (30 years old) - I moved to Santa Monica in 2013. A friend and I split the rent on a 2-bedroom apartment. A few years later, we parted ways and I moved in with my wife. It works great for now but we want to start a family and will eventually need more space for kids. Truth be told, I don’t know how we’ll make that work in Santa Monica. We love it here, and want to stay, but may have to move elsewhere because everything on the market is just too expensive. When councilmembers say we don’t need more housing, I think what they're really saying is “we don’t need you”. Item 4.A 12/15/20 28 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 830 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (310) 451-3669 December 14, 2020 VIA E-MAIL David Martin Director of Community Development City of Santa Monica 1685 Main Street, Room 212 Santa Monica, CA 90401 Re: Housing Element Update (Sixth Cycle) Our Client: Santa Monica Housing Council Our File No. 639.67 Dear Mr. Martin: Attached is the Santa Monica Housing Council’s (“SMHC”) Part Two memorandum addressing the City of Santa Monica’s Sixth Cycle Housing Element Update for the 2021-29 planning period. SMHC’s Part Two memorandum contains SMHC’s recommendations for the Sixth Cycle Housing Element’s plan of actions to achieve the City’s RHNA allocation of 8,873 units during the 2021-29 planning period. These recommendations are integrated within in each section of the memorandum and also attached separately to the memorandum as Exhibit “A.” Some commenters have dismissed Santa Monica’s RHNA allocation of 8,873 units for the 6th Cycle as unrealistic. (See Brennon Dixcon, Planning Commission hears Housing Element Update, Santa Monica Daily Press (Nov. 23, 2020) pp. 1, 6.) SMHC disagrees. The City’s 6th Cycle Housing Element Update should be able to achieve Santa Monica’s RHNA allocation -- which represents an approximately 2.1% annual increase in the City’s housing supply -- provided the 6th Cycle Housing Element Update includes the plan of actions required by California Housing Element Law. And SMHC is confident that the 6th Cycle Housing Element Update can meet this objective while generally avoiding the displacement of existing residential units. Indeed, SMHC’s recommended reforms are designed to avoid such displacement. In submitting these recommendations, SMHC wishes to emphasize that City compliance with California Housing Element Law is legally mandatory, not optional. Cities, including charter cities like Santa Monica, do not have “local control” over housing free from State control; rather, municipal housing regulations are subject to kutcher@hlkklaw.com Item 4.A 12/15/20 29 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 831 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) David Martin December 14, 2020 Page 2 being preempted by State law (including California Housing Element Law) because, as the California courts (including the California Supreme Court) have held repeatedly, housing is a matter of Statewide interest and concern. Below is a select list of cases holding that State housing laws preempt municipal laws to the contrary. Notably, one case holds that California Housing Element Law preempts municipal regulations to the contrary, and two of the cases involved the City of Santa Monica: Buena Vista Gardens Apartments Ass’n v. City of San Diego, 175 Cal. App. 3d 289, 306, 220 Cal. Rptr. 732 (1985) (holding that California Housing Element Law applies to charter cities, noting that both the legislature and judiciary have found the need to provide adequate housing to be a matter of Statewide concern); City of Santa Monica v. Yarmark, 203 Cal. App. 3d 153, 168, 249 Cal. Rptr. 732 (1988) (holding that the Ellis Act addresses a matter of Statewide concern and preempts Santa Monica’s local removal and eviction controls); Coalition Advocating Legal Hous. Options v. City of Santa Monica, 88 Cal. App. 4th 451, 457, 105 Cal. Rptr. 2d 802 (2001) (rejecting Santa Monica’s attempt to limit second units in single-family residential zones, holding that Santa Monica’s ordinance conflicted with State law and holding that the municipal affairs doctrine did not apply because housing is a matter of Statewide concern); Bruce v. City of Alameda, 166 Cal. App. 3d 18, 22, 212 Cal. Rptr. 304 (1985) (overturning a charter city’s ordinance that prohibited subsidized rental housing absent approval by a majority of the city’s electorate, holding that the ordinance was preempted by State law which prohibits discriminating against low-income residential development and holding that it is “common knowledge” that development of low-cost housing without such local restrictions is a matter of vital Statewide concern); Anderson v. City of San Jose, 42 Cal. App. 5th 683, 715-16, 255 Cal. Rptr. 3d 654 (2019) (holding that the Surplus Land Act applies to charter cities based on fact that the shortage of sites available for affordable housing development is a matter of Statewide concern); and Item 4.A 12/15/20 30 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 832 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) David Martin December 14, 2020 Page 3 Birkenfeld v. City of Berkeley, 17 Cal. 3d 129, 141, 550 P.2d 1001 (1976) (the California Supreme Court held that rent control is not a municipal affair as to which a charter provision would prevail over general State law). The code section within California Housing Element Law specifically relevant here is Government Code Section 65863. This code section requires cities (including charter cities) to ensure that their housing elements’ suitable sites inventories can accommodate their allocated share of regional housing needs. Accordingly, the City has no legal choice but to prepare a Sixth Cycle Housing Element Update that complies with all requirements of California Housing Element Law. In adopting its Sixth Cycle Housing Element Update, the City should pay particular attention to its legal obligation to (1) include in its Sixth Cycle Housing Element an inventory of suitable sites that will realistically accommodate the City’s RHNA allocation of 8,873 units and (2) include a plan of actions that will achieve this objective. Very truly yours Kenneth L. Kutcher Enclosure cc: Lane Dilg (w/ encl.) George S. Cardona (w/ encl.) Jing Yeo (w/ encl.) Steve Mizokami (w/ encl.) Rachel Kwok (w/ encl.) Cary Fukui (w/ encl.) Ross Fehrman (w/ encl.) Heidi von Tongeln (w/ encl.) Santa Monica City Council (w/ encl.) Santa Monica Planning Commission (w/ encl.) Santa Monica Housing Commission (w/ encl.) Santa Monica Housing Council Board of Directors (w/ encl.) F:\WPDATA\639\639.67 (Santa Monica Housing Element 2021)\Cor\City Staff 2020.12.14 (SMHC Housing Element Ltr Part Two).docx Item 4.A 12/15/20 31 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 833 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) M E M O R A N D U M To: David Martin, Director of Community Development CITY OF SANTA MONICA From: Santa Monica Housing Council Date: December 14, 2020 Subject 6th Cycle Housing Element Update (Part Two) I. INTRODUCTION As the Santa Monica Housing Council (“SMHC”) explained in its Part One memorandum commenting on the City’s 6th Cycle Housing Element Update, the City is legally obligated under California Housing Element Law1 to substantially increase its rate of housing production in comparison to the most recent (and prior) Housing Element planning periods. This requires the City to include in its 6th Cycle Housing Element a program (or series of programs) with specific action steps that will significantly increase City housing production.2 SMHC’s recommendations for specific action steps are included in each section below and are also attached as Exhibit “A.” Tinkering at the margins of City housing regulations will not come close to meeting the City’s legal obligations under California Housing Element Law. To meet its legal obligations, the City will need to increase its rate of housing production from about 1 Gov’t Code §§ 65580, et seq. 2 Gov’t. Code § 65583. Item 4.A 12/15/20 32 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 834 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -2- 175 units per year3 to about 1,100 units per year4 in order to achieve its new RHNA allocation of 8,873 units for the 6th Cycle’s planning period (2021-29).5 This quintupling of housing production requires fundamental regulatory reforms that prioritize and incentivize extensive new housing production as a preferable alternative to perpetuation of existing status quo commercial uses on underdeveloped, low-scale sites (i.e., the prevailing “no new development” situation). In this Part Two memorandum, SMHC elaborates further on the ways the City has impeded rather than incentivized new housing production in recent years. This memorandum focuses geographically on those areas where the 2010 LUCE concentrates new housing production: Downtown, Commercial Boulevards, Bergamot, and Activity Centers. This memorandum also recommends housing incentives for residentially-zoned lots currently in commercial parking use. This memorandum then recommends a series of reforms designed to facilitate the increase in housing production, including affordable housing, that will be necessary in order for the City to comply with the requirements of California Housing Element Law in its 6th Cycle Housing Element update. 3 The 5th Cycle Housing element was adopted in December of 2013. The City’s Proposition R reports from Fiscal Years 13/14, 14/15, 15/16, 16/17, 17/18, and 18/19 show an average of 175.33 completed units per year. Data for Fiscal Year 19/20 was not available at the time this memorandum was drafted. 4 See SCAG 6th Cycle Draft RHNA Allocation Based on Approved Final RHNA Methodology (Sept. 3, 2020) https://scag.ca.gov/sites/main/files/file-attachments/rhna- draft-allocations-090320-updated.pdf?1602188695 (allocating 8,873 units over the course of the course of the 8 year cycle, for an average of 1,109.13 per year). 5 Id. Item 4.A 12/15/20 33 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 835 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -3- Some have dismissed Santa Monica’s RHNA allocation of 8,873 units for the 6th Cycle as unrealistic. SMHC disagrees. The City’s 6th Cycle Housing Element update should be able to achieve Santa Monica’s RHNA allocation -- which represents an approximately 2.1% annual increase in the City’s housing supply -- provided the 6th Cycle Housing Element update includes the plan of actions required by California Housing Element Law.6 And SMHC is confident that the 6th Cycle Housing Element update can achieve the City’s RHNA allocation while minimizing the displacement of existing residential units. Indeed, consistent with the LUCE, SMHC’s recommended reforms have been designed to achieve this objective. II. RECOMMENDED ACTION STEPS TO INCREASE HOUSING PRODUCTION SMHC will reserve making specific height and density recommendations pending review of the City’s site inventory and analysis for its 6th Cycle Housing Element.7 But the overall direction of the needed regulatory reforms is clear: the City needs to: (1) provide substantial height and density bonuses for housing projects (compared to other uses), with still further height and density bonuses for 100% affordable housing projects; (2) streamline its procedures for housing project review by expanding the Administrative Approval process and eliminating the DA requirement for all housing projects (including Tier 3 projects); and (3) establish affordable housing requirements 6 According to the presentation from the City’s Housing Element Webinar #1 from November 2020, there are approximately 52,000 housing units in the City. A RHNA allocation of 8,873 units over the eight years of the 6th Cycle calls for production of 1,109.13 units per year, which is approximately 2.1% of the existing housing stock. 7 The specific heights and densities will depend in part on whether the City commits to implementing the State Density Bonus Law in districts where the City regulates density by FAR. Item 4.A 12/15/20 34 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 836 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -4- for new market-rate housing projects that are both economically viable and do not render the status quo non-residential uses the preferred outcome for underdeveloped commercial properties, often with little or no mortgage debt. An important first step would be for the City to reverse its anti-housing regulatory changes made since the LUCE was initially adopted in 2010. However, SMHC does not believe returning to the 2010 LUCE standards by itself will result in the City’s suitable sites inventory being sufficient to satisfy California Housing Element Law. SMHC anticipates that further regulatory reforms, including upzoning of non-residential land for housing, will be necessary in order for the City to meet its obligations under California Housing Element Law. A key component of SMHC’s recommendations is the use of housing overlay zones to incentivize housing as recommended by HCD.8 Additionally, the City should take immediate action to fully and wholeheartedly implement the State Density Bonus Law in its non-residential districts and incorporate other State law incentives for housing (including for 100% affordable housing projects). A. Downtown. 1. Pre-2010 LUCE. Beginning in the 1990s, shortly after the Northridge Earthquake, Downtown was the central focus of new housing development in Santa Monica. This new housing occurred primarily on 5th, 6th and 7th Streets. It was fueled by what has been, by far, the most successful housing incentive in the City’s regulatory history: the 50% floor area discount for housing. This “2-for-1” incentive was applied to both FAR and the threshold 8 Megan Kirkeby, Housing Element Site Inventory Guidebook and Memorandum Regarding Government Code Section 65583.2, Cal. Dep’t of Hous. & Community Dev. (June 10, 2020) p. 15. Item 4.A 12/15/20 35 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 837 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -5- for when an Administrative Approval was available. And the City had workable affordable housing inclusionary requirements (a/k/a the City’s Affordable Housing Production Program or “AHPP”) in place that generated affordable housing without impeding new market-rate housing development.9 2. 2010 LUCE. The 2010 LUCE did not include development standards for the Downtown (except for Lincoln Boulevard), deferring such standards until adoption of a specific plan for the Downtown.10 But roughly concurrent with the 2010 LUCE, the City repealed the 50% housing floor area discount. 11 This change dramatically slowed the pace of housing development in Santa Monica’s Downtown. 3. The Downtown Community Plan and Housing. The City adopted a specific plan for its Downtown, known as the Downtown Community Plan (“DCP”), in July 2017. In comparison to the City’s prior Downtown land use regulations, the DCP downzoned significant portions of Downtown. Notably, the DCP does not include the 50% floor area discount that had proven so successful for the 15 years or so prior to the LUCE’s adoption. Instead, the DCP includes minimal FAR incentives for housing, as shown in the excerpts from DCP Table 4.2 below. 12 9 For much of this period, the City provided housing developers with the option of providing either 10% very low income or 20% low income units. 10 See 2010 LUCE p. 2.1-48. 11 See City Council Ordinance No. 2345 (2011) creating interim zoning procedures to replace those not aligned with the LUCE (including the 50% floor area discount for housing). 12 As shown in the excerpts from DCP Table 4.2, where the DCP allows additional heights and densities for housing projects, the benefits are minimal and insufficient to incentivize housing. There are additional incentives for 100% affordable Item 4.A 12/15/20 36 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 838 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -6- The DCP also imposed AHPP requirements on new housing projects in the Downtown that are much more onerous than previously applied in the Downtown and much more onerous than the requirements in other non-residential areas of the City.13 Instead of producing more affordable housing, the increased affordable housing obligations in the Downtown have impeded new housing development, including affordable housing, in the Downtown. projects on certain WT-designated parcels which are not shown above, but such projects are unlikely to ever materialize regardless of the incentives offered. 13 See DCP Action CCP1.3A. Item 4.A 12/15/20 37 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 839 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -7- The Municipal Code’s land use regulations for the Downtown Community Plan Area also effectively ban ground floor residential uses by restricting multifamily residential units to upper floors only in almost all Downtown districts.14 This requirement limits options for residential development, and reduces the number of units that may be included in new housing projects. 4. Recommended Action Steps for Downtown. SMHC recommends the following action steps for the Downtown: a. Adopt a housing overlay zone for all areas in the Downtown Community Plan where there are viable housing sites. These areas include the Neighborhood Village (NV), Bayside Conservation (BC) (particularly the BC-Promenade sites that front on Wilshire Boulevard and the BC - 2nd and 4th Streets subarea), Lincoln Transition, and Wilshire Transition (particularly the sites that front on Wilshire Boulevard). The housing overlay zone should provide substantial height and density bonuses for housing projects in comparison to non-housing projects, with still further heights and densities for 100% affordable housing projects and preservation projects. b. Reform the Downtown’s Affordable Housing Production Program (“AHPP”) requirements as follows: For Tier 1 housing projects, reinstate the Extremely Low-Income Option at up to 10% of the total units. For Tier 2 and 3 (and housing overlay-zoned) housing projects, eliminate the current scheme which ties increases in the affordable housing requirement to various height increments and has resulted 14 See SMMC Table 9.10.040, Special Limitation (1). Item 4.A 12/15/20 38 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 840 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -8- in almost no new housing projects.15 Institute affordable housing requirements based on percentages that have been demonstrated as feasible in other Downtown housing projects, including: o 15% for Tier 2 projects; and o 20% for Tier 3 projects. c. Eliminate the prohibition on ground floor residential units that is currently in place for every Downtown subarea except for the Neighborhood Village, with limited exceptions (e.g., the Promenade).16 This prohibition unnecessarily constrains how many residential units can be located on a site and can hurt the overall economic feasibility of housing projects. B. The Commercial Boulevards. The 2010 LUCE’s articulated vision called for reconfiguring the City’s boulevards “from automobile-oriented retail to a mix of residential, pedestrian, and neighborhood- serving uses.”17 That vision expressly calls for incentives to encourage private investment in housing along the boulevards,18 and rezoning five “Activity Centers” located near transit where higher density mixed-use development would be permitted.19 A similar vision has been proposed for boulevards throughout cities and unincorporated areas of Los Angeles County by the advocacy group Move LA, helmed by former Santa Monica Mayor Denny Zane. Move LA’s Boulevards of Equity and 15 See SMMC Table 9.10.070.A. 16 See SMMC Table 9.10.040, Special Limitation (1). 17 2010 LUCE, p. 2.4-3. 18 Id. 19 2010 LUCE, p. 2.4-4. Item 4.A 12/15/20 39 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 841 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -9- Opportunity proposal calls for the creation of new mixed-use neighborhoods along commercial boulevards to increase housing opportunities without disrupting existing residential neighborhoods.20 To achieve this goal, Move LA states that “state and local governments should enable and encourage, even prioritize, multifamily mixed-income housing along commercial boulevards and in downtowns that are well-served by transit.”21 Santa Monica has the capacity to achieve a substantial portion of its 6th Cycle RHNA allocation on its boulevards. But doing so will require significant regulatory reforms that make housing a more attractive option to landowners than perpetuation of status quo non-residential uses and low-scale infill commercial development. Unfortunately, the 2010 LUCE contained inadequate housing incentives on Santa Monica’s commercial boulevards. And the City has moved in the wrong direction since adopting the LUCE in 2010 by reducing allowable heights and densities for housing projects on the boulevards. The severe reductions in the LUCE’s allowable heights and densities for the land use designations that cover much of the City’s commercial boulevards have disincentivized housing to such an extent that residential mixed-use projects on the boulevards have become, with limited exceptions, economically infeasible. The changes to development standards for the boulevards directly contradict the LUCE’s stated vision for those streets, which calls for the creation of vibrant, walkable, mixed-use 20 Gloria Ohland, What Recovery Could Look Like: Boulevards of Equity and Opportunity (Move LA, Apr. 28, 2020) https://www.movela.org/boulevards_of_equity_and_opportunity#:~:text=Move%20LA%2 0sponsored%20SB%20961,%2C%20called%20NIFTI%2D2%20districts. 21 Id. Item 4.A 12/15/20 40 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 842 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -10- neighborhoods with substantial new housing.22 Such neighborhoods will never be created if development standards do not make housing (generally located above ground floor commercial uses) the highest and best investment for properties along the boulevards. The chart below illustrates the extent to which the City’s post-2010 LUCE amendments have reduced residential development potential on the boulevards. There are exceptions to the general rules expressed by the chart,23 but the City’s changes to the LUCE have effectively downzoned the bulk of boulevard sites outside the Downtown from Tier 3 standards (or greater in Activity Centers) down to Tier 2 standards. 2010 vs. 2017 Maximum LUCE Standards for Boulevard Districts24 LUCE Version 2010 2017 District MUBL MUB MUBL MUB Height 47’ 55’ 36’ 50’ w/ Activity Center 57’ 65’ FAR 2.0 2.75 1.75 2.25 w/ Activity Center 2.5-2.75 3.25-3.5 22 See 2010 LUCE, p. 2.4-7 and 2017 LUCE, p. 2.4-7 (regarding Wilshire Boulevard); 2010 LUCE Policy B6.7, p. 2.4-25, and 2017 LUCE Policy B6.7 (regarding Broadway), p. 2.4-25,; 2010 LUCE Policy B10.7, p. 2.4-33, and 2017 LUCE Policy B10.7 (regarding Colorado Avenue), p. 2.4-33,; and 2010 LUCE Policy B21.7, p. 2.4-59, and 2017 LUCE Policy B21.7 (regarding Ocean Park Boulevard), p. 2.4-59,. 23 See 2017 LUCE, p. 2.1-35 (allowing Tier 3 for MUBL on the north side of Broadway, on the south side of Broadway west of the centerline of 20th Street, on Colorado west of the centerline of 20th Street, or within an Activity Center boundary); and 2017 LUCE, p. 2.1-38 (allowing Tier 3 for MUB sites within the area bounded by Colorado Avenue, Olympic Boulevard, 20th Street, and Cloverfield Boulevard). 24 The standards in this chart for 2010 reflect maximum Tier 3 heights and FARs for the vast majority of MUB and MUBL sites on boulevards outside the Downtown with and without an Activity Center overlay. Because Tier 3 was subsequently removed for all MUBL and MUB sites outside the downtown (except for a few limited areas, very rare Item 4.A 12/15/20 41 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 843 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -11- The City has also imposed “active use” requirements for ground floors in Commercial and Mixed-Use districts.25 Like in the Downtown, these use restrictions effectively ban ground floor residential uses on the ground floor along much of the commercial boulevards. Below, this memorandum describes the City’s 2010 LUCE and current development standards boulevard-by-boulevard and then recommends an overall direction for regulatory reform for the boulevards that should be incorporated in the City’s 6th Cycle Housing Element Update. 1. Wilshire Boulevard. The LUCE’s vision for Wilshire Boulevard calls for the creation of a “pedestrian- priority boulevard lined with a mix of local-serving retail and residential uses.”26 The LUCE’s vision calls for mixed-use development along Wilshire with ground-floor retail and service businesses below upper levels “devoted predominantly to a variety of affordable and market-rate housing types.”27 Wilshire Boulevard is a major east-west arterial street that runs through the entire City from Centinela to Ocean. The street presents a unique opportunity for significant new housing development if properly zoned 100% affordable and landmark-preserving projects), the 2017 maximums reflect Tier 2 standards. Because only one Activity Center overlay zone remains in the current LUCE, Activity Center standards are not shown for 2017, though it should be noted that a small section of Colorado could accommodate greater height and FAR under the remaining Activity Center overlay. 25 See SMMC Section 9.11.030(A)(2). 26 2010 LUCE, p. 2.4-5; 2017 LUCE, p. 2.4-5 (adds that Wilshire will be transit/pedestrian-priority, not just pedestrian-priority) 27 2010 LUCE, p. 2.4-5; 2017 LUCE, p. 2.4-5. Item 4.A 12/15/20 42 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 844 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -12- to encourage housing as the highest and best use in comparison to existing or new commercial uses. The LUCE designates almost the entirety of Wilshire as Mixed-Use Boulevard (MUB),28 and identifies the MUB designation as a crucial component to facilitating Wilshire’s potential for mixed-use investment, stating: The Mixed-Use Boulevard designation provides the framework for Wilshire Boulevard to transition over time from a predominantly regional-serving commercial street to a mixed-use street with retail to service a diversity of residential uses along the boulevard.29 However, the 2015 and 2017 LUCE amendments substantially downzoned Wilshire and made it far less attractive for new housing development. The Activity Center overlay areas that were designated in 2010 have since been completely removed, and the MUB designation that applies to almost all of the street was significantly downzoned, greatly reducing allowable heights and densities.30 In the current version of the LUCE, Tier 3 heights and densities are prohibited within the MUB designation except for 100% affordable projects and projects that preserve a City- designated landmark.31 100% affordable housing projects are rare due to the scarcity of funding subsidies, and the vast majority of buildings along Wilshire are not landmarks. This means that in almost every case, maximum heights and densities on Wilshire have been reduced from 55’ (and up to 65’ in Activity Centers) and 2.75 FAR (and up to 3.25 in Activity Centers) down to 50’ and 2.25 FAR. 28 2010 LUCE, p. 2.4-5; 2017 LUCE, p. 2.4-5. 29 2010 LUCE, p. 2.4-6; 2017 LUCE, p. 2.4-6. 30 See 2017 LUCE, pp. 2.4-5 – 2.4-6. 31 2017 LUCE, p. 2.1-35. Item 4.A 12/15/20 43 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 845 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -13- 2. Santa Monica Boulevard. Like Wilshire Boulevard, Santa Monica Boulevard is a major arterial street that runs through the entire length of the City from east to west. The 2010 LUCE’s vision for the street calls for the replacement of the current random mix of land uses with “a pedestrian-preferred transit street with a mix of local-serving commercial and retail uses, a variety of residential opportunities, and regional healthcare and auto-related retail/service.”32 The 2010 LUCE envisions three distinct subareas of Santa Monica Boulevard: (a) Centinela Avenue to 26th Street; (b) 26th Street to 20th Street; and (c) 20th Street to Lincoln Boulevard. This same vision is stated in the 2017 version of the LUCE.33 a. 26th Street to Centinela. Under both the 2010 and 2017 versions of the LUCE, the eastern segment of Santa Monica Boulevard from Centinela to 26th Street is designated as Mixed-Use Boulevard Low (MUBL).34 The LUCE’s vision for this segment states that “[t]he Mixed- Use Boulevard Low land use designation will ensure the incorporation of local-serving retail uses, a variety of residential types and community spaces.”35 The LUCE notes that “current standards do not provide sufficient incentives to promote housing and upgrade 32 2010 LUCE, p. 2.4-11. 33 2017 LUCE, p. 2.4-11. 34 2010 LUCE, p. 2.4-12; 2017 LUCE, p. 2.4-12. 35 Id. Item 4.A 12/15/20 44 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 846 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -14- underutilized properties.”36 The LUCE calls for a revision of standards to encourage mixed-use development with ground-floor retail below upper-level housing.37 Housing is a vital component of the LUCE’s vision for the eastern part of Santa Monica Boulevard, but the MUBL development standards render this vision largely unachievable. The LUCE’s vision lamented that prior standards did not provide sufficient incentives for housing, yet the City proceeded to adopt inadequate standards for housing before downzoning even further. Even before the reductions in allowable height and density, the MUBL’s 47’ maximum height and 2.0 maximum FAR attracted insufficient housing investment along this portion of Santa Monica. Now that development standards for the MUBL designation have been slashed to a maximum of 36’ in height with a 1.75 FAR, fewer housing projects are likely to proceed, and any that do will have fewer units than is optimal. b. 20th Street to Lincoln Boulevard. The middle portion of Santa Monica Boulevard, from 20th Street to Lincoln Boulevard, is known as Santa Monica’s “auto row” and is dominated by car dealerships. The LUCE’s vision for this area calls for the continuation of auto dealership land uses with an improved pedestrian environment due to the transition of dealerships to an “urban auto dealer format.”38 36 Id. 37 Id. 38 2010 LUCE, p. 2.4–14; 2017 LUCE, p. 2.4-14. Item 4.A 12/15/20 45 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 847 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -15- To accommodate this vision, almost the entirety of Santa Monica between 20th and Lincoln is designated General Commercial (GC). This land use designation prioritizes commercial uses with special incentives for auto dealers.39 The chart below summarizes the current LUCE and Zoning Ordinance development standards for the GC district: Maximum Residential Development Standards for GC Designation40 Street Maximum Height Maximum FAR Santa Monica Boulevard41 35 ft. 1.5 As part of its 6th Cycle Housing Element update process, the City needs to evaluate whether the GC sites on Santa Monica Boulevard should be incentivized for new housing development. If realistic housing incentives were adopted for this segment of Santa Monica Boulevard, the City would be able to add substantially to its suitable sites inventory. And in the event the City chooses to adopt housing incentives for this stretch of Santa Monica Boulevard, the City should also create incentives for the 39 The only incentives for housing are for 100% affordable projects, which as noted above are unlikely to ever materialize. 2010 LUCE, p. 2.1-38; 2017 LUCE, p. 2.1- 41. 40 See 2010 LUCE, p. 2.1-38; 2017 LUCE, p. 2.1-41. (The development standards in these charts are the Tier 2 maximums for residential projects other than 100% affordable housing projects. Community benefits and/or specified levels of affordable housing must be provided to allow for some of these maximum standards.) 41 On the GC segments of Lincoln Boulevard (south of the I-10 Freeway) and Pico Boulevard, the maximum height is 36 feet and the maximum FAR is 2.0. Item 4.A 12/15/20 46 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 848 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -16- R-zoned portions of the auto dealer sites as discussed in Section IV(E) herein, which are currently improved with surface parking lots. 3. Broadway (Lincoln to Cloverfield Boulevard). Broadway is another important arterial street that runs east-west through the center of the City. The LUCE’s vision calls for the portion of Broadway west of 26th Street to “transition into a mixed-use corridor with residential, creative arts studios, offices and local-serving retail uses.”42 The portion of Broadway west of 26th Street is primarily made up of low rise commercial buildings. This portion of the street is almost entirely designated MUBL.43 As noted above, the MUBL designation as established in the 2010 LUCE was not sufficient to attract significant housing investment. The City’s decision to slash allowable residential heights and densities in MUBL-designated areas has further rendered its vision for mixed-use development along Broadway unachievable. 4. Colorado/Memorial Park Neighborhood Plan Area. a. The LUCE and the Memorial Park Area. The LUCE contemplates an area plan for the area surrounding Memorial Park and describes this area as bounded by 17th Street on the east, Euclid Court on the west, properties fronting on Colorado Avenue to the north, and the I-10 Freeway to the south, encompassing both Memorial Park and the Expo light rail station at 17th Street.44 42 2010 LUCE, p. 2.4-19; 2017 LUCE, p. 2.4-19. 43 Id. 44 2010 LUCE, p. 2.5-13. Item 4.A 12/15/20 47 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 849 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -17- However, as part of the Memorial Park Neighborhood Plan (“MPNP”) planning process (now on hold), this area was expanded to extend westerly along Colorado Avenue to Lincoln Boulevard. As expanded, this area is comprised of about 95 parcels, about 85 of which are zoned Mixed-Use Boulevard Low (“MUBL”), with the rest zoned Neighbor Commercial (“NC”), Industrial Conservation (“IC”), and Low-Density Residential (“R2”).45 The LUCE’s vision for the Memorial Park area was to provide a range of new residential housing units.46 Upon adoption of an area plan, the LUCE contemplated an additional 10 feet of height and 0.75 FAR for development agreement projects.47 The LUCE also contemplated a Memorial Park Activity Center.48 However, the LUCE did not provide any development incentives for the Memorial Park Activity Center nor did it provide any other incentives for housing development in comparison to commercial development. Instead, the LUCE envisioned that additional incentives would be included in an area plan. b. The Unfinished Memorial Park Neighborhood Plan. The Memorial Park Neighborhood Plan (“MPNP”) planning effort was launched in 2013. The “core vision for the MPNP” was to “preserve the character and community- 45 See July 9, 2014 Planning Commission Staff Report re: Memorial Park Neighborhood Plan, Attachment A. 46 2010 LUCE, p. 2.5-13, stating the Memorial Park overlay provides the opportunity for a range of residential units; see also 2010 LUCE Policy AC5.2 making it a policy to bring together involved parties to provide affordable and workforce housing. 47 LUCE Policy AC5.6. 48 See Section II(D)(1) for a discussion of the five Activity Centers as contemplated in the LUCE. Item 4.A 12/15/20 48 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 850 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -18- serving nature of the neighborhood while integrating the light rail and providing a suitable amount of family and affordable housing near transit.”49 Despite its intention to create additional housing, the MPNP as proposed by City Staff included zero incentives to develop housing along Colorado and provided zero additional height or FAR in this area compared to the LUCE. Likewise, Staff’s proposed MPNP would have provided only a very modest 0.5 FAR bonus (and no height bonus) to Tier 3 development agreement projects within the Activity Center overlay area compared to the LUCE, and would have provided zero extra height or FAR for Tier 1 or Tier 2 projects in the Activity Center overlay area compared to the standards in the 2010 LUCE and the 2017 LUCE as amended. In addition, the MPNP would not have included any process incentives for housing projects and would have defaulted to the Zoning Ordinance’s 30,000 sf maximum (with at least 85% residential floor area) for residential Administrative Approvals.50 Applicable MPNP Development Standards51 Development Standard 2010 LUCE Amended LUCE Proposed MPNP Standards MUBL MUBL MUBL (activity center area) MUBL (Colorado, non‐activity area) Max. FAR & Height Tier 1 1.5 / 32’ 1.5 / 32’ 1.50 / 36’ 1.25 / 36’ Tier 2 1.75 / 36’ 1.75 / 36’ 1.75 / 36’ 1.75 / 36’ Tier 3 2.0 / 47’ 2.0 / 47’* *only allowed in very narrow circumstances 2.50 / 57’ 2.0 / 47’ 49 Planning Commission Staff Report re: Memorial Park Neighborhood Plan (July 9, 2014), p. 1. 50 SMMC § 9.40.020(A)(4). 51 MPNP proposed standards per July 9, 2014 Planning Commission Staff Report re: Memorial Park Neighborhood Plan, p. 25. Item 4.A 12/15/20 49 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 851 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -19- The MPNP was never finished. (In fact, a public draft was never released.) And although the MPNP appeared on the Planning Division’s Priorities List as recently as 2018, our understanding is that the MPNP is “on hold” and there is no current intention to revive the MPNP planning process. c. Existing Conditions in the Memorial Park Area. By far the most significant change to the Memorial Park neighborhood since enactment of the LUCE in 2010 has been the addition of the Metro Expo Line along Colorado and the Memorial Park Expo Line Station (also known as the 17th Street/Santa Monica College station) at 17th Street and Colorado, which opened in May 2016. The availability of convenient public transit makes this area especially appropriate for new housing development. Unfortunately, the City’s land use regulations impede, rather than encourage, new housing in this area. Except for the new light rail line, the Memorial Park area looks almost exactly like it did when the LUCE was adopted in 2010; little redevelopment has occurred. Colorado between Lincoln Boulevard and 20th Street is developed almost entirely with one-to-two story, mostly small commercial buildings. These buildings are occupied by a variety of commercial uses, but mostly auto-repair, auto-body, and parking lot uses, as well as a modest number of creative office, media production, and light industrial uses. The area surrounding Memorial Park is likewise developed with one-to-two story, mostly small commercial buildings, although it also includes a modest number of public and semi-public uses—most notably the Park, the Santa Monica Police Activities League (“PAL”) building, and SMMUSD offices. A large portion of the plan area was previously zoned Industrial Conservation (“IC”), and the Item 4.A 12/15/20 50 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 852 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -20- scale, uses, and aesthetic of the area generally reflect the historically industrial nature of this area. 5. Lincoln Boulevard. Lincoln Boulevard is a major thoroughfare that runs north-south through the City from Wilshire Boulevard to the southern City limit. The LUCE notes that there are two distinct sections of Lincoln – north of the I-10 Freeway, which is integrated with the City’s Downtown, and south of the I-10 Freeway, which is currently a cluttered, unattractive commercial area.52 The LUCE envisions the northern part of Lincoln becoming a mixed-use area with housing above ground floor retail.53 And the LUCE envisions the southern segment of the street as a “distinctive commercial district,” with some housing above ground-floor retail,54 noting that “there are opportunities for residential uses such as affordable, workforce and market-rate housing on the upper floors.”55 a. North of the I-10 Freeway. The LUCE designates the entirety of Lincoln north of the I-10 Freeway as MUB. This segment of Lincoln is the primary area of the City where the LUCE’s development standards have actually worked to encourage significant housing development. The City’s success in attracting residential development to the northern part of Lincoln demonstrates how workable development standards can effectively encourage new housing. 52 2010 LUCE, pp. 2.4-63-64; 2017 LUCE, pp. 2.4-63-64. 53 2010 LUCE, p. 2.4-68; 2017 LUCE, p. 2.4-68. 54 2010 LUCE, p. 2.4-64; 2017 LUCE, p. 2.4-64. 55 2010 LUCE, p. 2.4-65; 2017 LUCE, p. 2.4-65. Item 4.A 12/15/20 51 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 853 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -21- One reason for the City’s success along this segment of Lincoln is likely due to the fact that the portion between Olympic and Colorado it is one of the few areas that was carved out from the City’s removal of Tier 3 housing from the MUB designation.56 The northern part of the street stands in stark contrast to the southern portion, where highly restrictive standards have disincentivized housing. b. South of the I-10 Freeway. The southern portion of Lincoln Boulevard is almost entirely designated GC with a few parcels designated MUBL. Unsurprisingly, this segment of the street has not seen the same success in attracting new housing as its northern MUB-designated counterpart. In fact, we believe the City has approved a single project only on Lincoln Boulevard south of the I-10 since the LUCE was adopted in 2010.57 The LUCE correctly notes that there are opportunities for workforce, affordable, and market-rate housing on southern Lincoln Boulevard,58 but these opportunities will never be realized under the City’s current development standards. The majority of Lincoln south of the I-10 is designated GC. As noted above, the GC designation prioritizes commercial land uses and has no incentives for housing other than for 100% affordable projects.59 There are a few parcels on the street designated MUBL, but the 56 See 2017 LUCE p. 2.1-38 (allowing Tier 3 for MUB sites within the area bounded by Colorado Avenue, Olympic Boulevard, 20th Street, and Cloverfield Boulevard). 57 To SMHC’s knowledge, an apartment complex at 2903 Lincoln Boulevard is the only housing project that the City has approved on Lincoln south of the I-10 since the LUCE was adopted in 2010. (See CIM Group’s 47-unit project clears appeal in Santa Monica, The Real Deal (Apr. 30, 2018) https://therealdeal.com/la/2018/04/30/cim- groups-47-unit-project-clears-appeal-in-santa-monica/). 58 Id. 59 2010 LUCE, p. 2.1-38; 2017 LUCE, p. 2.1-41. Item 4.A 12/15/20 52 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 854 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -22- MUBL designation does not allow sufficient height and density to facilitate new housing, especially after the MUBL standards were slashed in 2015. 6. Pico Boulevard. Pico Boulevard is an arterial street running east-west through the south side of Santa Monica. The LUCE breaks Pico down into five distinct sections. Below, this memorandum focuses on the segments where new housing seems most realistic. At present, however, the standards in place are not sufficient to attract significant new housing development. a. Centinela to Stewart. The LUCE envisions the easternmost section of Pico as a “mixed-use neighborhood center,”60 but current land use designations do not support mixed-use development. The section from Centinela to Stewart is mostly designated Neighborhood Commercial. The NC designation is not conducive to residential development as it includes no significant incentives for housing. Other parts of this segment are designated MUBL, but allowable heights and densities for MUBL are too restrictive to realistically promote housing development, especially after the reductions that took place in 2015.61 b. Stewart to 20th Street. The LUCE also calls for mixed-use development on Pico from Stewart to 20th Street.62 The north side of the street in this segment is mostly designated MUBL, with 60 2010 LUCE, p. 2.4-44; 2017 LUCE, p. 2.4-44. 61 See 2017 LUCE, p. 2.1-35. 62 2010 LUCE, p. 2.4-46; 2017 LUCE, p. 2.4-46. Item 4.A 12/15/20 53 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 855 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -23- some parks and open space and a few Neighborhood Commercial (NC) lots. The south side of the street is almost entirely designated NC.63 The LUCE assumes that the MUBL designation will encourage the replacement of auto-related uses on this part of the street, but unsurprisingly this has not occurred. There are many potential opportunities for new housing on this section of Pico if the City were to adopt workable development standards and housing incentives. c. 20th Street to 16th Street. The section of Pico from 20th Street to 16th Street (south side) is home to Santa Monica College. The LUCE envisions “[h]ousing and student-oriented retail and service uses across the boulevard from Santa Monica College,”64 but almost all non-college properties are designated NC, with a couple of MUBL sites off of 20th Street. 7. Recommended Action Steps for Boulevards. SMHC recommends the following action steps for the Boulevards: a. Consistent with HCD guidance,65 adopt housing overlay zones on the Boulevards that increase allowable heights and densities for housing projects to, at a minimum, the levels allowed in the 2010 LUCE, and consider additional height and density increases as reasonably necessary to make housing the highest and best use on the Boulevards and facilitate a suitable sites inventory that complies with California 63 Id. 64 2010 LUCE, p. 2.4-47; 2017 LUCE, p. 2.4-47. 65 Megan Kirkeby, supra at 15. Item 4.A 12/15/20 54 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 856 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -24- Housing Element Law.66 Specific areas that appear to have potential for increased height and density standards for housing projects include: o Lincoln Boulevard south of the I-10 Freeway o Wilshire Boulevard, Lincoln to Centinela o Broadway, Lincoln to 26th o Memorial Park Neighborhood Plan area, including Colorado o Santa Monica Boulevard between Lincoln and 20th Street and east of 26th Street o Pico Boulevard between Lincoln and Centinela67 b. Allow ground floor residential units (eliminating the Active Use Requirements included in SMMC Section 9.11.030(A)(2)), with limited exceptions. c. And provide still further heights and densities for 100% affordable housing projects and preservation projects. C. Bergamot. 1. 2010 LUCE Vision & Development Standards for the Bergamot Area. A key part of the 2010 LUCE’s vision for the Bergamot area is the development of new housing. The 2010 LUCE states that it provides “[i]ncentives … for the creation of new affordable, workforce and market-rate housing.”68 Likewise, the LUCE includes a 66 The specific heights and densities on the Boulevards and in the other areas targeted for housing, will depend in part on whether the City complies with the State Density Bonus Law. 67 The City may wish to prohibit housing in the areas on Pico that are in very close proximity to the I-10 Freeway. 68 2010 LUCE, p. 2.1-42. Item 4.A 12/15/20 55 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 857 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -25- Policy to support a variety of residential use types in the Bergamot area, including affordable, workforce, and market-rate housing.69 The 2010 LUCE provided the following development standards for the Bergamot Area70: 2010 LUCE Standards for Bergamot Area Tier Tier 1 Tier 2 Tier 3 Height 32' 60' 75' (39' w/ affordable hous.) (86' w/ decrease in FAR) FAR 1.75 3 3.5 2. Bergamot Area Plan. In accordance with the LUCE’s vision to create an area plan for Bergamot,71 the City adopted the Bergamot Area Plan (“BAP”) on September 11, 2013. The BAP describes itself as a pro-housing plan. It states: “This Plan encourages and creates opportunities to develop appropriate housing for all … members of the community….”72 “It includes policies to … promote a variety of housing types that will accommodate different living arrangements and income levels.”73 And “[t]he removal of long-standing regulatory barriers to a range of uses, like housing and local-serving retail and services, will promote a broader range of activities for which there is clearly local demand.”74 69 2010 LUCE Policy D20.4. 70 2010 LUCE, p. 2.1-43. 71 2010 LUCE, p. 2.6-30. 72 BAP, p. 5. 73 BAP, p. 14. 74 BAP, p. 72. Item 4.A 12/15/20 56 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 858 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -26- The BAP split Bergamot into four sub-districts: Bergamot Transit Village (BTV), Conservation Art Center (CAC), Mixed-Use Creative (MUC), and Conservation Creative Section (CCS). Development standards in the BAP vary based on the sub-district and the size of the parcel. Notwithstanding its pro-housing claims, the BAP significantly downzoned Bergamot in comparison to the development standards set forth in the 2010 LUCE. Only one sub-district (BTV) is permitted to achieve the 1.75 Tier 1 FAR envisioned by the 2010 LUCE; no sub-district allows a project—even a Tier 3 project—to achieve the 3.0 Tier 2 FAR envisioned by the 2010 LUCE (much less the Tier 3 standards envisioned by the 2010 LUCE); the CAC sub-district is limited to a 1.0 FAR for all Tiers; and the CCS sub-district does not allow Tier 2 or Tier 3 projects at all. Below is a comparison of the 2010 LUCE standards for the Bergamot area compared to the development standards adopted in the BAP. 3. Housing Development Since Adoption of the Bergamot Area Plan. Housing development in the Bergamot area has been very limited since adoption of the Bergamot Area Plan. A November 20, 2019 Staff Report to the Planning Commission and Housing Commission addressed the state of housing development in the Bergamot area: [S]ince the adoption of the Bergamot Area Plan in 2013, very few housing projects have been proposed in the area. The Item 4.A 12/15/20 57 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 859 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -27- few projects that have been submitted over the past 6 years include two Tier 2 mixed-use residential projects, one mixed- use office project, and one large Tier 1 mixed-use project. No applications have been received for a Tier 3 mixed-use project since the Papermate project’s approval was rescinded by Council in May 2014. Based on anecdotal evidence, it has been communicated to staff that several potential reasons for the lack of housing production in the transit/job-rich Bergamot area may include density and height parameters that incentivize commercial development instead of housing as a general concern about risk and predictability with the development agreement process that is required to access Tier 3 development standards.75 A 2018 Staff Report to City Council also indicated that there had been a dearth of production under the BAP, especially housing production. Staff noted: In the years subsequent to the adoption of the Bergamot Area Plan, staff has heard from the development community that the BAP does not contain sufficient height and FAR incentives to attract housing or commercial development, and that uncertainty and project risk weigh heavily on larger projects. Minimal differences in the FAR allowance between Tier 1 and Tier 2 do not provide incentives to produce housing or projects that could contribute community benefits to the area’s transformation. And, while the BAP did identify certain properties as ripe for Tier 3 mix-use development projects, the uncertainty of the development agreement process has led many owners to maintain their properties “as-is.”76 Without question, the worst anti-housing fiasco in Bergamot involved the ill-fated Hines project, which the City Council initially approved and later rescinded its approval in 2014. As approved/rescinded, the project would have included 498 rental housing 75 Staff Report to the Planning Commission and Housing Commission (Nov. 20, 2019) pp. 10-11. 76 2018 City Council Staff Report regarding City Planning Division priorities, p. 12. Item 4.A 12/15/20 58 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 860 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -28- units77 (including 93 affordable units)78 in addition to creative offices and other uses. After the City Council rescinded its approval of the Hines project, the property sold and the buyer remodeled the existing industrial buildings into a commercial creative office project with no housing. 4. Recommended Action Steps for Bergamot. The BAP has failed in virtually in every respect to reach its ambitious goals. The BAP’s failings extend far beyond housing and require the City to take a fresh look at how best to achieve its goals for the Bergamot area through revised land use regulations. But the housing crisis does not afford the City the luxury of waiting for yet another multi-year planning process to rewrite the BAP before incentivizing housing in Bergamot. The City needs to address housing in the Bergamot area with a sense of urgency. SMHC recommends that the City expedite a housing overlay amendment to the BAP that creates substantial height and density incentives for housing projects in those areas of Bergamot where housing would be appropriate (with additional heights and densities incentives for 100% affordable housing projects). The Housing Element update should specifically commit the City to expeditiously implementing this overlay to 77 City Council Staff Report (Agenda Item 8-A, May 13, 2014); Hines Development Agreement Section 2.2(a). 78 Hines Development Agreement Section 2.10; Damien Newton, SaMo City Council Debates Bergamot Transit Village, StreetsBlogLA (Jan. 24, 2014) https://la.streetsblog.org/2014/01/24/samo-city-council-debates-bergamot-transit- village/. Item 4.A 12/15/20 59 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 861 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -29- make housing the highest and best use in those areas of Bergamot targeted for housing. D. Activity Centers. 1. The 2010 LUCE and the Activity Centers. The 2010 LUCE included five (5) Activity Centers as key strategic components of its vision for Santa Monica’s future. The Activity Centers were strategically located throughout Santa Monica, well-served by transit, and adjacent to residential neighborhoods. These locations consisted of the following:79 Wilshire Boulevard/Centinela Avenue Wilshire Boulevard/14th Street Broadway /Colorado Memorial Park Area Lincoln Boulevard/Ocean Park Boulevard A key purpose of the Activity Centers was to provide both affordable and workforce housing.80 LUCE Policy 2.4, for example, established a policy to “[c]reate diverse housing options along the transit corridors and in the Activity Centers, replacing some commercial potential with additional affordable and workforce housing, and encouraging affordable workforce housing near the transit stations.”81 LUCE Policy H2.3, likewise, committed the City to “[e]ncourage workforce housing as a component of 79 2010 LUCE, p. 2.5-3. 80 See LUCE Policy AC 1.1, which envisions “a wide range of new housing” in the Activity Centers. 81 2010 LUCE Policy LU2.4, p. 2.1-12. Item 4.A 12/15/20 60 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 862 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -30- Activity Centers at locations accessible to transit.”82 And LUCE Policy CE7.1 stated a policy to “[e]ncourage affordable and workforce housing in close proximity to new Activity Center overlays.”83 The current (2013) Housing Element likewise treated the Activity Centers as significant locations for new housing development. A policy goal of the 2013 Housing Element, for example, was to “[p]rovide new market-rate and affordable housing in transit-rich LUCE Activity Centers and at focal points designated along major corridors,”84 and another was to “[f]ocus housing development in the city’s major Activity Centers near transit stations.”85 The 2010 LUCE did not establish development standards or land use regulations for the Activity Centers. Instead, it required an area plan to be created for each Activity Center in which development standards and land use regulations would be established to incentivize housing.86 Although the 2010 LUCE did not provide much guidance on what the development standards or land use regulations in an area plan should look like, it did require, at minimum, that each area plan must include an FAR bonus for Tier 3 82 2010 LUCE Policy H2.3, p. 3.3-12. 83 2010 LUCE Policy CE7.1, p. 3.5-14. 84 2013 Housing Element, p. 28. 85 2013 Housing Element Policy 1.9, p. 29. 86 See 2010 LUCE p. 2.5-13 (stating that each activity center overlay requires the preparation of an area plan, and that activity center overlays can provide up to one additional residential story). Item 4.A 12/15/20 61 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 863 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -31- development agreement projects.87 The Tier 3 development agreement FAR and height bonus described for each of the original Activity Centers in the 2010 LUCE is as follows: Potential Bonus in 2010 LUCE for Tier 3 Development Agreement Projects Wilshire/Centinela Wilshire/14th Memorial Park Broadway/Colorado Lincoln/Ocean Park Height 10' 10' 10' 10' 10' FAR 0.5 FAR 0.5 FAR 0.75 FAR 0.75 FAR 0.75 FAR 2. Post-2010 LUCE Amendments Concerning the Activity Centers. But since the LUCE’s adoption in 2010, the City has amended the LUCE to eliminate all of the Activity Centers except for the Memorial Park Activity Center Low Overlay.88 Although the Memorial Park Activity Center Low Overlay remains in the LUCE, our understanding is that the City has no current plans to revive the planning process for this area plan (i.e., the Memorial Park Neighborhood Plan). Moreover, some of these sites have been downzoned further. For example, the two Activity Centers on Wilshire Boulevard (14th & Wilshire, and Wilshire & Centinela) were subject to elimination of Tier 3 for all but 100% affordable housing projects and projects that preserve a historic resource.89 Notwithstanding the LUCE and Housing Element’s clear intentions to make the Activity Centers key areas for housing development, we are not aware of any housing built at any of the Activity Center sites since adoption of the LUCE in 2010. 87 Note that it’s not clear whether the FAR bonus described in the LUCE was meant to describe what a Tier 3 project could achieve in comparison to a Tier 2 project, or whether it was meant to describe what a Tier 3 project in the Activity Center overlay area could achieve in comparison to Tier 3 projects with the same underlying zoning designation. Obviously, this makes a difference as to whether this bonus would provide a meaningful development incentive. 88 A small Activity Center is still contemplated for the Memorial Park Area near the 16th Street/Colorado Light Rail Station. See 2017 LUCE, p. 2.5-3. 89 LUCE, p. 2.1-39. Item 4.A 12/15/20 62 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 864 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -32- 3. Recommended Action Steps for Activity Centers. The City should amend the LUCE to increase the potential for housing development as originally envisioned in 2010. The Housing Element update should commit the City to restoring the four Activity Centers that were removed from the 2010 LUCE. Moreover, instead of requiring area plans for the Activity Centers (which would likely take years to develop), development incentives for these areas should be established in the LUCE and Zoning Ordinance and should be targeted towards housing. (One mechanism for doing so is a housing overlay zone.) As the 2010 LUCE recognized, these sites are situated and sized in a way that can accommodate a greater intensity of development. E. Residentially-Zoned Lots Currently in Commercial Use as Surface Parking Supporting Existing Businesses On Adjacent Commercially-Zoned Lots. 1. City Land Use Regulations Affecting Residentially-Zoned Parking Lots. The City has a significant number of existing residentially-zoned parking lots in areas adjacent to commercial businesses which provide parking for these businesses. Common examples include large parking lots adjacent to Wilshire Boulevard that serve grocery stores and other businesses (e.g., Vons at Wilshire/Euclid and Bristol Farms at Wilshire/Berkeley). Other examples are the large parking lots that serve auto dealers along Santa Monica Boulevard. Many of these parking lots were remapped to a commercial district as part of the 2010 LUCE. But since 2010 those zone changes have generally been reversed through a remapping process that returned these parking lot sites to their former residential zoning (typically R-2 or R-3). The apparent purpose of these remappings was to prevent these sites from being redeveloped with commercial uses, but the unintended Item 4.A 12/15/20 63 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 865 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -33- consequence has been to preserve them as surface parking lots for adjacent commercial uses and render it impractical to redevelopment them with housing. This is because the new residential zoning classifications (e.g., R-2 or R-3) permit far less housing than the 2010 LUCE’s commercial designations, and lot consolidation is generally prohibited in the residential districts.90 SMHC believes that many of these sites have significant potential for new housing development if the City would only adopt land use regulations that would encourage housing. 2. Recommended Action Steps for Existing Residentially-Zoned Parking Lots Supporting Commercially-Zoned Lots. To make the City’s residentially-zoned parking lots attractive to housing builders, the City should revise the Municipal Code to incentivize redevelopment of these properties (and their adjacent commercially-zoned lots) with housing. Specifically, SMHC recommends that the City adopt one or more housing overlay zones covering these lots that makes housing development attractive (both from a Code and financial perspective). SMHC recommends land use regulations that would allow housing to be built according to development standards tailored for such sites, including specifically encouraging comprehensive redevelopment of the R-zoned surface parking lots with the adjacent/associated commercially-zoned property that the surface parking is currently supporting. Specifically: 90 See SMMC § 9.21.030(B) (stating that except for 100% affordable projects residentially-zoned parcels generally may not be consolidated so as to create a lot larger than 7,500 sf or greater than 125% of the average parcel size within a 500’ radius in the same zoning district, whichever is less). Item 4.A 12/15/20 64 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 866 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -34- Allow heights and densities at or near what are allowed on the adjacent commercial boulevards; Eliminate or modify the other barriers in the Zoning Ordinance that preclude these sites from being redeveloped with housing projects, including but not limited to: o The restriction on continued use of the R-zoned lot with the commercially-zoned lots if the commercially-zoned lot is redeveloped, expanded or changes use;91 o The requirement that parking for any addition on the commercially- zoned lots be located only on the commercially-zoned lots92 (i.e., parking for a new housing project should be able to span both the R-zoned lot and the commercially-zoned lot); o The anti-lot consolidation provision for such R-zoned sites;93 and o The requirement that vehicular access for any redevelopment occur on the commercially-zoned lot (which in some cases is physically impossible because access is blocked by an existing building).94 The City should also allow for on-site replacement of the existing parking as part of a new housing project to ensure the adjacent businesses remain viable and have adequate parking. (Otherwise the new housing project would likely be infeasible.) 91 SMMC § 9.27.110(A)(1) & (3) and § 9.16.020(B)(1) & (3). 92 SMMC §§ 9.27.110(A)(1)(5) & 9.16.020(B)(4). 93 SMMC § 9.21.030(B). 94 SMMC § 9.16.080(D). Item 4.A 12/15/20 65 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 867 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -35- F. Public Lands. The City and other public agencies have significant land holdings. Some of these sites owned by public agencies are potentially appropriate for new housing development. As part of the City’s 6th Cycle Housing Element process, the City should inventory publicly-owned sites that may be appropriate for new housing and explore the land use regulatory reforms that would be needed to facilitate new housing at these sites. G. Density Bonus Law. The State Density Bonus Law95 (SDBL) requires cities to provide additional density and other incentives and concessions to housing developers who agree to provide specified levels of affordable housing in their projects. The SDBL was recently updated with changes that will take effect on January 1, 2021.96 Under the updated version of the SDBL, the City will be required to grant one density bonus, and other incentives or concessions, when an applicant for a housing development seeks and agrees to construct a project, excluding any units permitted by the density bonus, that will consist of: At least 10% of units for low income households;97 At least 5% of units for very-low income households;98 or 95 Gov’t Code §§ 65915-65918. 96 See Assembly Bill 2345 (2020). 97 Gov’t Code § 65915(b)(1)(A). 98 Gov’t Code § 65915(b)(1)(B). Item 4.A 12/15/20 66 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 868 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -36- At least 10% of units in a common interest development for moderate income households.99 A density bonus and incentives or concessions must also be provided for certain types of senior housing,100 housing for various other vulnerable groups,101 housing for low-income students,102 and 100% affordable projects.103 Density bonuses range from 20% to 50% (and up to no limits on density for certain 100% affordable projects) depending on the amount and type of affordable housing provided.104 A project can request no increase in density and still be eligible for incentives, concessions and waivers under the SDBL.105 Projects eligible for density bonuses are also eligible for one to three “incentives and concessions” depending on the amount of affordable housing provided, with 100% affordable projects eligible for up to four.106 Incentives and concessions can include “[a] reduction in site development standards or a modification of zoning code requirements or architectural design requirements,” among other regulatory concessions.107 99 Gov’t Code § 65915(b)(1)(D). 100 Gov’t Code § 65915(b)(C). 101 Gov’t Code § 65915(b)(1)(E). 102 Gov’t Code § 65915(b)(1)(F). 103 Gov’t Code § 65915(b)(1)(G). 104 Gov’t Code § 65915(f). 105 Id. 106 Gov’t Code § 65915(d)(2). 107 Gov’t Code § 65915(k). Item 4.A 12/15/20 67 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 869 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -37- Additionally, projects eligible for a density bonus are entitled to specified parking incentives.108 City compliance with the SDBL is mandatory; the City is required to provide the SDBL’s regulatory benefits to projects that meet the statutory criteria notwithstanding any local ordinances. The SDBL applies in the City’s commercial districts as well as in residential areas.109 The City should implement the updated SDBL provisions both as a matter of law and as good public policy to facilitate greater production of housing. The Housing Element update should include clear and unequivocal City commitments to: (1) comply with the SDBL throughout the City, including in commercial zoning districts that regulate density by Floor Area Ratio (FAR), and (2) update a SDBL implementing ordinance as an urgent priority. H. Streamline Procedures for Reviewing Housing Projects. As part of its 6th Cycle Housing Element Update, the City should take further steps to streamline its housing project review procedures. A recent first step was to eliminate the previous requirement of development agreements for certain Tier 3 housing projects in Downtown Santa Monica.110 In doing 108 Gov’t Code § 65915(p)(1). 109 The SDBL’s requirements regarding the provision of incentives or concessions apply for eligible projects throughout the City and are not limited to any specific zones or land use designations. Additionally, the City should provide FAR bonuses for eligible projects in commercial zones to implement the SDBL’s density bonus provisions where density is not measured by dwelling units per acre.. 110 See Santa Monica Ordinance No. 2648 (CCS), which allows all Tier 3 Projects in Santa Monica’s Downtown to be processed by Development Review Permit. Prior to passage of Ordinance No. 2648 (CCS), only Tier 3 projects of 90,000 square feet or less could be processed by Development Review Permit. Item 4.A 12/15/20 68 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 870 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -38- so, the City Council recognized that requiring a DA essentially eliminated the possibility of Downtown Tier 3 housing projects; project applicants would choose to pursue entitlements for smaller Tier 2 projects in order to avoid the uncertainty, delay cost and one-sided “negotiations” of the DA process. The City should follow up on this Downtown reform by eliminating DAs for Tier 3 projects City-wide. Additionally, the City should expand its use of Administrative Approvals by raising the development review threshold in each land use district to allow conventional 1 to 3 lot projects to proceed via Administrative Approval if they comply with the City’s development standards. Given the Housing Accountability Act,111 requiring such housing projects to undergo the more costly and time-consuming Development Review Permit process serves no public purpose.112 And allowing such projects to proceed via Administrative Approval will incentivize such projects in comparison to the alternative of commercial development. And the Administrative Approval process should be further streamlined. Currently, Administrative Approval for many projects requires three separate public meetings. A community meeting must be held before an application may even be submitted.113 Next, after an application is submitted, a preliminary ARB hearing is 111 Gov’t Code § 65589.5. 112 See David Zahniser, L.A.’s Rejection of a 577-Unit Housing Project Violated State Law, Judge Finds, Los Angeles Times (Nov. 13, 2020) https://www.latimes.com/california/story/2020-11-13/district-square-ruling-los-angeles (discussing recent decision by Los Angeles Superior Court Judge James C. Chalfant that the City of Los Angeles violated the Housing Accountability Act by rejecting a project that complied with objective standards based on subjective concerns about gentrification). 113 See SMMC § 9.39.040(A) (as amended by Interim Zoning Ordinance No. 2645). Item 4.A 12/15/20 69 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 871 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -39- required for an initial design recommendation.114 Finally, before a building permit is issued, the project must go back to the ARB for final approval.115 While most applicants are happy to receive community feedback, the required community meeting should occur after an application for Administrative Approval is submitted. Requiring a public meeting before submission needlessly extends approval timelines and drags out what is supposed to be a streamlined, truncated process. The requirement of multiple ARB hearings should also be reconsidered. The City should either eliminate the second required hearing or grant the ARB discretion to waive the second hearing after the preliminary review. The Administrative Approval process should also be required to be completed within 45 days after submission of a complete application. I. Parking Minimums. Excessive parking minimums for residential projects stifle housing development by folding the costs of driving into the costs of housing, ultimately reducing both the amount and variety of available housing.116 These effects are especially pronounced in areas (such as Santa Monica) with many small lots and high land values.117 “When cities require on-site parking with every unit, developers cannot build housing explicitly 114 See SMMC § 9.39.040(B) (as amended by Interim Zoning Ordinance No. 2645). 115 SMMC § 9.52.120(A). 116 Michael Manville, Parking Requirements and Housing Development: Regulation and Reform in Los Angeles, Access Magazine, No. 44 (Spring 2014), https://www.accessmagazine.org/spring-2014/parking-requirements-housing- development-regulation-reform-los-angeles/. 117 Id. Item 4.A 12/15/20 70 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 872 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -40- for people without cars (who are often low-income), or for people who own cars but are willing to park off-site.”118 Recognizing this reality, Santa Monica wisely decided to eliminate parking minimums for new development in the Downtown in 2017, and imposed parking maximums for the DCP Area.119 At the time, former Councilmember Ted Winterer noted: Parking has a much broader impact on a city than you might expect. It’s expensive to build, it incentivizes car travel over public and active transportation, and it’s been built with abandon, especially in Southern California. Studies show drivers are more open to using public transit, walking or cycling when there’s less access to cheap and easy parking.120 Eliminating parking minimums in the Downtown was a good start, but the City has failed to apply the logic behind this decision to the rest of the City, much of which is still saddled with excessive parking requirements that stifle new housing development. Today, residential parking minimums outside of the Downtown are essentially the same as what they were under the 1988 Zoning Ordinance.121 These minimums are not empirically linked to actual parking demand in the City according to the City’s own hired 118 Id. 119 SMMC Table 9.28.060; Ted Winterer, Why Santa Monica got rid of parking minimums downtown. And why other cities should consider following suit, LA Times (Sep. 25, 2017) https://www.latimes.com/opinion/livable-city/la-ol-santa-monica-parking- minimum-density-transit-20170924-story.html 120 Id. 121 See standards in SMMC Table 9.28.060 compared with those in 1988 Zoning Ordinance Table 9.04.10.08.040. Item 4.A 12/15/20 71 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 873 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -41- consultants.122 Moreover, in the decades since these parking requirements were established, non-vehicular transportation options have grown considerably throughout the City. Three new light rail stops have come to the City, including two outside of the Downtown.123 Big Blue Bus service routes have been modified to provide connectivity to the new rail stations.124 Additionally, the City has made substantial investments in bike infrastructure. A Bike Action Plan adopted in 2011 expanded protected bike paths, lanes, and routes, and brought other critical bike infrastructure to the City,125 and an update to the Plan approved this year will bring additional infrastructure, including 19 new miles of protected bike lanes over the next 5 years.126 The Municipal Code also now requires bicycle parking in all new or expanded buildings,127 and new nonresidential buildings are required to include showers, lockers, and changing rooms 122 See Nelson/Nygaard Consulting Associates, Inc., Parking Zoning Ordinance Update, Draft Report (City of Santa Monica, Jan. 2013) p. 2-6. 123 See Metro Expo Line Extension Map, http://media.metro.net/projects_studies/exposition_phase2/images/map_expo_line_pha se2_2016-03.pdf. 124 The Evolution of Blue has Begun. Ride With Us, https://www.bigbluebus.com/About-BBB/Evolution-of-Blue/The-Evolution-of-Blue-has- begun--Ride-with-Us-.aspx. 125 See Santa Monice Bike Actin Plan (Nov. 2011) https://www.smgov.net/uploadedFiles/Departments/PCD/Plans/Bike-Action- Plan/Bicycle-Action-Plan.pdf. 126 City Council Adopts Plan to Bring More Protected Bike Lanes to Santa Monica, City of Santa Monica (Oct. 14, 2020) https://www.santamonica.gov/press/2020/10/14/city-council-adopts-plan-to-bring-more- protected-bike-lanes-to-santa-monica. 127 SMMC § 9.28.140. Item 4.A 12/15/20 72 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 874 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -42- to encourage cycling as a viable mode of transportation.128 The recent rise of electric bicycles has further elevated cycling as a viable alternative to local car travel.129 People are more likely to forego cars for these alternative modes of transportation when there is less access to parking.130 Therefore, SMHC recommends that the City remove all parking minimums for residential development throughout Santa Monica or, alternatively, dramatically reduce the existing (outdated) parking minimums based on an empirical study prepared by a respected parking/mobility consultant. This step would make housing less expensive and easier to develop and incentivize residents to utilize the City’s relative wealth of alternative transportation options. J. Unit Mix Requirements. Another way the City stifles residential development is through burdensome unit mix requirements for residential projects that exceed base (Tier 1) heights and densities. In addition to providing high percentages of affordable units, applicants for residential developments seeking additional height and density must ensure that at least 15% of market rate units are three-bedrooms, and 20% of market rate units are two- 128 SMMC § 9.28.170. 129 John MacArthur, Michael Harpool, Daniel Scheppke, & Christopher Cherry, A North American Survey of Electric Bicycle Owners, Portland State Univ. Transp. Research & Educ. Ctr. (2018) p. 19, https://www.calbike.org/wp- content/uploads/2019/02/A-North-American-Survey-of-Electric-Bicycle-Owners.pdf. 130 Ted Winterer, Why Santa Monica got rid of parking minimums downtown. And why other cities should consider following suit, LA Times (Sep. 25, 2017) https://www.latimes.com/opinion/livable-city/la-ol-santa-monica-parking-minimum- density-transit-20170924-story.html Item 4.A 12/15/20 73 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 875 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -43- bedrooms.131 No more than 15% of units may be studios, and the average number of bedrooms for a Tier 2 or Tier 3 project must be at least 1.2.132 The average number of bedrooms for affordable units must be equal to or greater than that of the project’s market rate units.133 While it is understandable for the City to aim to provide a greater share of two and three-bedroom units in new developments to cater to the needs of families with children, these requirements, when paired with excessive AHPP inclusionary mandates, can render projects infeasible, and encourage developers to under-develop sites with Tier 1 projects. While there are certain areas of the City where the current required unit mixes may make sense, SMHC recommends that the City consider removing or revising its unit mix requirements for Tier 2 and Tier 3 projects in areas that are less attractive to families with children (such as the Downtown, Bergamot, and certain MUB-designated areas). This step could give residential developers greater flexibility to produce more market-rate and affordable housing in places where studio and one-bedroom units are in demand. K. “High-Rise” Definition. The City should revise its “high-rise” definition to be consistent with the California Building Code (CBC)’s definition. The City’s current definition of a high-rise is 55 feet, whereas the CBC’s definition (which has been adopted by the City of Los Angeles) is 75 131 See SMMC § 9.23.030(A)(2) (for most of the City) and SMMC § 9.10.070(C)(1)(b) (for Downtown districts). 132 Id. 133 Id. Item 4.A 12/15/20 74 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 876 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -44- feet.134 Because of the substantial increase in construction costs for buildings categorized as “high-rise,” Santa Monica’s lower threshold has been a barrier to housing production and to providing useable roofdeck open space for residents. We are aware of both 100% Affordable Housing projects and mixed-income projects that have foregone a floor or more of much needed housing and/or the development of roof- top open space in order to avoid triggering the additional construction costs associated with “high-rise” construction. We are not aware of any safety or other empirical reason why Santa Monica has a lower high-rise definition than Los Angeles or the CBC and ask that it be revised to be in alignment so that it no longer serves as a constraint on housing. III. THE CITY’S 6th CYCLE HOUSING ELEMENT UPDATE AND AFFORDABLE HOUSING The City’s new RHNA allocation of 8,873 units includes a substantial allocation for affordable housing. Specifically, the City’s RHNA allocation is broken down into segments as follows: 2,787 units for very-low income households;135 1,668 units for low income households;136 1,698 units for moderate income households;137 and 2,720 units for above-moderate income households.138 134 See SMMC § 8.44.090; 2019 CBC § 314.1; LAMC § 94.210.0 H. 135 Infra n.4. 136 Id. 137 Id. 138 Id. Item 4.A 12/15/20 75 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 877 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -45- Achieving the City’s RHNA affordable housing allocation will be challenging. To maximize its chances of success, the City will need to adopt and implement an aggressive affordable housing strategy that includes the following components: 1. The City needs to provide 100% affordable housing projects with substantial height and density bonuses in comparison to market-rate housing projects. An important first step is to comply with State-mandated incentives for 100% affordable housing projects. The City also needs to adopt additional height and density incentives, over and above those mandated by State law, for 100% affordable housing projects. 2. 100% affordable housing projects usually require substantial financial subsidies to be economically viable. As the City recovers from its COVID-19-related budget crisis, the City will need to devote substantial funds to affordable housing -- much more than in the past. Although the City should lobby the State aggressively for substantially increased affordable housing funding, the City should not wait for the State to take action; the City needs to take the initiative on its own to address Santa Monica’s need for affordable housing. 3. The affordable housing requirements for new market-rate housing projects, as provided in the AHPP, must be set at a rate that generates affordable housing without serving as a barrier to market-rate housing development. The City’s current approach of attempting to achieve 15-30% on-site affordable housing has impeded housing development. The City needs to adjust its affordable housing requirements to reflect projects that have been approved, financed and built. Specifically, the City should incorporate the following AHPP reforms in its 6th Cycle Housing Element: Item 4.A 12/15/20 76 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 878 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -46- Reinstate the Affordable Housing Production Program’s Extremely- Low Income (30%) Option either at 5% of the total units or at 7.5% of the total units (Tier 2 would be 50% more); Alternatively, require that Tier 1 projects provide 5% total units as affordable and Tier 2 (or housing overlay-zoned) projects provide 10% total units as affordable and require that the affordable units be subject to the same affordability level breakdown as Downtown projects (i.e., 30% of the affordable units at Moderate Income, 30% of affordable units at Low Income, 20% of the affordable units at Very-Low Income and 20% of the affordable units at Extremely-Low Income) or an adjusted breakdown based on the new RHNA allocation. 4. The City should revise its definition of “Moderate Income Household” to include households also covered by lower income categories. Currently the “Moderate Income” definition only covers households that earn between 80% of area median income (AMI) and the lower of 120% of AMI or two times 50% AMI.139 Households that earn less than 80% of AMI are not included. This wording precludes Moderate Income units from being offered to lower income tenants. In contrast, the other AHPP income categories all encompass the categories below them as well.140 Most developers would prefer to charge the higher rents allowed for the Moderate Income category, but some projects that rely on special financing for affordable housing must offer specified 139 SMMC § 9.64.020(T). 140 See SMMC § 9.64.020(A)-(C). Item 4.A 12/15/20 77 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 879 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) -47- percentages of units to lower income tenants, and the income floor for Moderate Income units can jeopardize funding. Therefore, the City should remove the 80% AMI income floor for Moderate Income units to provide greater flexibility to affordable housing developers. As noted above, the City’s recent history with its Downtown affordable housing requirements underscores the importance of these actions. F:\WPDATA\639\639.67 (Santa Monica Housing Element 2021)\Memo\City Staff 2020.12.14 (Part Two with recommendations).docx Item 4.A 12/15/20 78 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 880 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Exhibit A Item 4.A 12/15/20 79 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 881 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Exhibit A SANTA MONICA HOUSING COUNCIL’S RECOMMENDATIONS FOR THE CITY OF SANTA MONICA’S 6TH CYCLE HOUSING ELEMENT PLAN OF ACTIONS The Santa Monica Housing Council (“SMHC”) recommends that the City include the following action steps in the City of Santa Monica’s 6th Cycle Housing Element in order for the City to comply with California Housing Element Law, including its requirement that the Housing Element identify suitable sites with the realistic potential to achieve the City’s RHNA allocation of 8,873 units. A. Downtown. SMHC recommends the following action steps for the Downtown: 1. Adopt a housing overlay zone for areas in the Downtown Community Plan where there are viable housing sites. These areas include the Neighborhood Village (NV), Bayside Conservation (BC) (particularly the BC-Promenade sites that front on Wilshire Boulevard and the BC - 2nd and 4th Streets subarea), Lincoln Transition, and Wilshire Transition (particularly the sites that front on Wilshire Boulevard) subareas. The housing overlay zone should provide substantial height and density bonuses for housing projects in comparison to non-housing projects, with still further heights and densities for 100% affordable housing projects and preservation projects. 2. Reform the Downtown’s Affordable Housing Production Program (“AHPP”) requirements as follows: Tier 1 housing projects - reinstate the Extremely-Low Income Option at up to 10% of the total units. Tier 2 and 3 (and housing overlay-zoned) housing projects - eliminate the current scheme which ties increases in the affordable housing requirement to various height increments (Zoning Ordinance Table 9.10.070.A) and has resulted in almost no new housing projects. Institute affordable housing requirements based on percentages that have been demonstrated as feasible in other Downtown housing projects, including: o 15% for Tier 2 o 20% for Tier 3 3. Eliminate the prohibition on ground floor residential units that is currently in place for every Downtown subarea except for the Neighborhood Village, with limited exceptions (e.g., the Promenade). (Table 9.10.040, Specific Limitation (1).) This prohibition unnecessarily constrains how many residential units can be located on a site and can hurt the overall economic feasibility of housing projects. Item 4.A 12/15/20 80 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 882 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 B. The Commercial Boulevards. SMHC recommends the following action steps for the Boulevards: 1. Consistent with HCD guidance,1 adopt housing overlay zones on the Boulevards that increase allowable heights and densities for housing projects to, at a minimum, the levels allowed in the 2010 LUCE, and consider additional height and density increases as reasonably necessary to make housing the highest and best use on the Boulevards and facilitate a suitable sites inventory that complies with California Housing Element Law. Specific areas that appear to have potential for increased height and density standards for housing projects include: Lincoln Boulevard south of the I-10 Freeway Wilshire Boulevard, Lincoln to Centinela Broadway, Lincoln to 26th Memorial Park Neighborhood Plan area, including Colorado Santa Monica Boulevard between Lincoln and 20th Street and east of 26th Street Pico Boulevard between Lincoln and Centinela2 2. Allow ground floor residential units (eliminating the Active Use Requirements included in SMMC Section 9.11.030(A)(2), with limited exceptions for locations where retail/pedestrian-oriented uses should be required. 3. And provide still further heights and densities for 100% affordable housing projects and preservation projects. C. Bergamot. The Housing Element update should commit the City to expedite a housing overlay amendment to the BAP that creates substantial height and density incentives for those areas of Bergamot that are deemed appropriate for housing (with additional height and density incentives for 100% affordable housing projects) to make housing the highest and best use in those areas targeted for housing. 1 Megan Kirkeby, Housing Element Site Inventory Guidebook and Memorandum Regarding Government Code Section 65583.2, Cal. Dep’t of Hous. & Community Dev. (June 10, 2020) p. 15. 2 The City may wish to prohibit housing in the areas on Pico that are in very close proximity to the I-10 Freeway. Item 4.A 12/15/20 81 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 883 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 D. Activity Centers. The City should include a commitment in the Housing Element Update to restore the four Activity Centers that were removed from the 2010 LUCE. Instead of requiring area plans for the Activity Centers (which would likely take years to develop), development incentives for these areas should be established in the LUCE and Zoning Ordinance and should be targeted towards projects that are predominantly housing. One mechanism for doing so is a housing overlay zone. E. Residentially-Zoned Lots Currently in Commercial Use as Surface Parking Supporting Existing Business On Adjacent Commercially-Zoned Lots. The City has a significant inventory of residentially-zoned lots that are in surface parking use for adjacent commercial uses. SMHC recommends that the City adopt one or more housing overlay zones covering these lots that makes housing development feasible (both from a Code and financial perspective). SMHC recommends a housing overlay zone that would allow housing to be built according to development standards tailored for such sites, including specifically encouraging comprehensive redevelopment of the R-zoned surface parking lots with the adjacent/associated commercially-zoned property that the surface parking is currently supporting. Specifically, SMHC recommends: Heights and densities at or near what are allowed on the adjacent commercial boulevards; Eliminate or modify the other barriers in the Zoning Ordinance that preclude these sites from being redeveloped with housing projects, including but not limited to: o The restriction on continued use of the R-zoned lot with the commercially-zoned lot if the commercially-zoned lot is redeveloped, expanded or changes use (Sections 9.27.110(A)(1) and (3) and Section 9.16.020(B)(1) and (3)); o The requirement that parking for any addition on the commercially- zoned lot be located on the commercially-zoned lot (Section 9.27.110(A)(1)(5) and Section 9.16.020(B)(4)) (parking for a new housing project should be able to span both the R-zoned lot and the commercially-zoned lot); o The anti-lot consolidation provision for such R-zoned sites (SMMC § 9.21.030(B); and o The requirement that vehicular access for any redevelopment be on the commercially-zoned lot (SMMC Section 9.16.080(D)). Allow for on-site replacement of the existing parking to ensure the adjacent businesses remain viable and have adequate parking. Item 4.A 12/15/20 82 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 884 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 F. Public Lands As part of the City’s 6th Cycle Housing Element process, the City should inventory publicly-owned sites that may be appropriate for new housing and explore the land use regulatory reforms that would be needed to facilitate new housing at these sites. G. Citywide: Implement State Density Bonus Law. SMHC recommends that the City’s Housing Element update should include a City commitment to comply with the State Density Bonus Law throughout the City, including in commercial zoning districts that regulate density by Floor Area Ratio (FAR). In areas where density is not measured by dwelling units per acre, an FAR bonus should be provided to eligible projects. H. Project Review Procedures. SMHC recommends the following reforms to the City’s project review procedures: 1. Review and revise the Administrative Approval threshold in each district to accommodate projects at the maximum allowable FAR on sites up to three lots in size (generally, about 22,500 square feet of land area). 2. All projects above the Administrative Approval threshold should be subject to the City’s Development Review Permit Process; similar to the City Council’s recent decision with respect to Downtown, no housing project (regardless of tier or size) should require a development agreement. 3. The Administrative Approval process should be further streamlined. The required community meeting should be held after (not before) an application is submitted, and the City should either remove the requirement for a second ARB hearing, or allow the ARB to waive the second hearing when it first reviews a project. 4. The Administrative Approval process should have a deadline to be completed within 45 days after submission of a complete application. I. Parking. The City should remove all parking minimums for residential development throughout Santa Monica or, alternatively, dramatically reduce the existing (outdated) parking minimums based on an empirical study prepared by a respected parking/mobility consultant. J. Unit Mix Requirements. SMHC recommends that the City remove or revise its unit mix requirements for Tier 2 and Tier 3 projects in areas that are less attractive to families with children (such as the Downtown, Bergamot, and certain MUB-designated areas). Item 4.A 12/15/20 83 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 885 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5 K. “High-Rise” Definition SMHC recommends that the City revise the Municipal Code’s definition of “high- rise,” which currently covers all buildings more than 55 feet tall, to cover only buildings more than 75 feet tall in line with the provisions of the California Building Code and the codes of neighboring jurisdictions. L. Affordable Housing. SMHC believes that to meet its obligations under the California Housing Element Law, the City needs to adopt the following reforms to its affordable housing policies: 1. The City needs to provide 100% affordable housing projects with substantial height and density bonuses in comparison to market-rate housing projects. An important first step is to comply with State-mandated incentives for 100% affordable housing projects. The City also needs to adopt additional height and density bonuses, over and above those mandated by State law, for 100% affordable housing projects. 2. 100% affordable housing projects require substantial financial subsidies to be economically viable. As the City recovers from its COVID-19-related budget crisis, the City will need to devote substantial funds to affordable housing -- much more than in the past. 3. The affordable housing requirements for new market-rate housing projects, as provided in the AHPP, must be set at a rate that generates affordable housing without serving as a barrier to market-rate housing development. Specifically, the City should incorporate the following AHPP reforms in its 6th Cycle Housing Element: Reinstate the Affordable Housing Production Program’s Extremely- Low Income (30%) Option either at 5% of the total units or at 7.5% of the total units. (Tier 2 would be 50% more.) Alternatively, require that Tier 1 projects provide 5% total units as affordable and Tier 2 (or housing overlay-zoned) projects include 10% total units as affordable and require that the affordable units be subject to the same affordability level breakdown as Downtown projects (i.e., 30% of the affordable units at Moderate, 30% of affordable units at Low Income, 20% of the affordable units at Very- Low Income and 20% of the affordable units at Extremely-Low Income) or an adjusted breakdown based on the new RHNA allocation. 4. The City should revise its definition of “Moderate Income Household” to include households also covered by lower income categories to provide greater flexibility and access to financing for affordable housing developers. F:\WPDATA\639\639.67 (Santa Monica Housing Element 2021)\Memo\City Staff 2020.12.14 (Part Two Exhibit A).docx Item 4.A 12/15/20 84 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 886 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Arlene Hopkins <arlene.hopkins@gmail.com> Sent:Monday, December 14, 2020 10:31 PM To:councilmtgitems Subject:Council Mtg 14 Dec: Item 4 EXTERNAL Honorable Council Members, I write to request that our City renegotiate a lower number that is better aligned with our community constraints, and in light of our decades long successes in producing housing, much of it affordable. Thank you for your consideration. Arlene Hopkins Item 4.A 12/15/20 85 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 887 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 Vernice Hankins From:Elizabeth Lerer <elerer@elizabethlerer.com> Sent:Monday, December 14, 2020 8:44 PM To:Sue Himmelrich; Councilmember Kevin McKeown; Gleam Davis; Phil Brock; Oscar de la Torre; Christine Parra; Kristin McCowan Cc:councilmtgitems; Clerk Mailbox Subject:Agenda item #4. Study Session – Review of the Housing Element Attachments:CALE Declaration 08-20-2020.pdf EXTERNAL Dear Santa Monica City Council and City Staff, As a longtime Santa Monica resident and on behalf of the Residents Cross‐City for Safety & Sanity group, I would like to enter into the record for the December 15, 2020 City Council meeting, Agenda Item #4 Study Session – Review of the Housing Element, the letter of protest submitted to Gov. Gavin Newsom and the state legislature leadership by the statewide group of local elected officials known as the California Alliance of Local Electeds (CALE). The letter is signed by Peggy Huang, the Mayor of Yorba Linda. Ms. Huang is also Chair, Southern California Association of Governments Regional Housing Needs Assessment (RHNA) Subcommittee and Executive/Administration Committee Member, Southern California Association of Governments (SCAG). Thank you, Elizabeth Lerer Residents Cross‐City for Safety & Sanity Item 4.A 12/15/20 86 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 888 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 Vernice Hankins From:Clerk Mailbox Sent:Monday, December 14, 2020 7:55 PM To:councilmtgitems Subject:FW: Agenda Item 4A From: Michele Perrone <micheleperrone@icloud.com> Sent: Monday, December 14, 2020 7:06 PM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Cc: Clerk Mailbox <Clerk.Mailbox@SMGOV.NET> Subject: Agenda Item 4A EXTERNAL Dear Mayor Himmelrich and City Council Members, We cannot handle any more density. Also, life is going to change dramatically when this pandemic is over. There are so many unknowns, “unexpecteds,” and dramatic changes to daily life to come. For instance, it is likely a lot of office space can and will be turned into living space. We just don’t know. 9 years of progress has been condensed into a year. Let’s take a breather and find out. In the meantime, PLEASE: 1. Instruct the City attorney to draw up the legal basis for a RHNA challenge along with the 50 other cities to Sacramento’s RHNA over reach 2. Commit to NO up‐zoning. The City has enough capacity for the 8800 units with its existing zoning for example just the City’s 9000 R‐1 parcels could each have an accessory dwelling unit. There is no need for any up zoning. 3.Instruct the staff to prepare a real housing element based on real attainable targets with a real budget for water, infrastructure, schools, affordable housing etc. Item 4.A 12/15/20 87 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 889 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 Vernice Hankins From:Tricia Crane <1triciacrane@gmail.com> Sent:Monday, December 14, 2020 6:43 PM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:To City Council from Northeast Neighbors re Agenda item 4-A, Housing Element Update, Dec. 15, 2020 EXTERNAL To: Mayor Himmelrich and Santa Monica City Council From: Northeast Neighbors Re: Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 Dear City Council, Santa Monica has done an exemplary job among coastal cities in our region of providing affordable housing and we must continue to plan for affordability for our existing and future residents. However, the RHNA allocation will not serve our City well in this continued effort. As we study the Housing Element and the requirement from the State HCD and SCAG to plan for more than 8800 new housing units, we need to address questions that have been raised about the underlying methodology used by HCD and SCAG in the RHNA housing allocation mandates. The state’s approach to determining housing needs must be defensible and reproducible if cities are to be held accountable. The problem is that there is evidence that HCD generated RHNA housing numbers using an incorrect vacancy rate and double counting: 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing-shortage-number-is- wrong-fueling-poor-policy/ Item 4.A 12/15/20 88 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 890 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227‐the‐housing‐supply‐shortage.page Given the questions raised by the Embarcadero Institute and the Freddie Mac studies, the Board of Northeast Neighbors requests that both of these reports should be reviewed and discussed in public as the City Council considers our RHNA number and understands our best options. City Council should direct the City Attorney to send a letter to SCAG asking for a review of our RHNA numbers. Further, we ask that the City Council direct Staff to research and assemble a report on those California cities that are actively mounting legal challenges to their regional RHNA allocations. Finally, We request that City Council members participate in the California Association of Local Electeds to explore opportunities to work alongside the leaders of neighboring cities who seek to preserve local control as we continue to pursue housing affordability. Sincerely, Tricia Crane, Chair and the Board of Northeast Neighbors Item 4.A 12/15/20 89 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 891 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 6 Vernice Hankins From:Daniel Galamba <galambadb@hotmail.com> Sent:Monday, December 14, 2020 5:27 PM To:Council Mailbox; Gleam Davis; Councilmember Kevin McKeown; Sue Himmelrich; Kristin McCowan; Phil Brock; Christine Parra; Oscar de la Torre; councilmtgitems Subject:Dec 15, 2020 City Council Meeting Item 4A Review of Housing Element EXTERNAL Dear City Council, I must urge you to oppose this Housing Element. This would impose almost 9,000 new housing units in Santa Monica with about 6,000 of them for low and moderate income people but without providing funds to do this. Santa Monica is already the second most dense California coastal city. Adding 9,000 units would increase our population by about 20% and we can not handle the traffic, congestion and gridlock that we have already let alone adding 20% more people with the infrastructure they would require. Adding 6,000 units for low and moderate income people would require more than $3 billion and we do not have $440 million to pay our unfunded pension obligations let alone adding $3 billion more for these units. Also the methodology for adding these 9,000 additional units is flawed. California's population increase is at its lowest level since 1900 if not actually decreasing. Also with the trend of working from home that probably will continue after the coronavirus pandemic ends existing commercial office space can be converted to residences thus making it unnecessary to add more residences in Santa Monica. For these reasons and many others I must request that you oppose this Housing Element and fight SCAG's 9,000 unit assessment on Santa Monica. Thank you. Sincerely, Dr Daniel Galamba Item 4.A 12/15/20 90 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 892 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Santa Monica Housing Production 1995 -2020 Courtesy of Residents Cross-City for Safety & Sanity (RxSS) Item 4.A 12/15/20 91 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 893 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Santa Monica Housing Production I.THE QUESTION OF NEED II.THE QUESTION OF AFFORDABILITY Item 4.A 12/15/20 92 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 894 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Santa Monica Housing Production I.THE QUESTION OF NEED Current Picture 2020 Item 4.A 12/15/20 93 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 895 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) I.THE QUESTION OF NEED Source: Apartments.com as of 12-02-2020 * This refers to rentals held off market, part-time rentals, rental models like Air B&B, corporate housing, etc. 1,107 1,993 3,085 3,776 Current Vacancies at the beginning of December 2020 reached almost 3,800, excluding off-market units * Item 4.A 12/15/20 94 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 896 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) I.THE QUESTION OF NEED Location of Marketed Vacant Rental Units –beginning of December 2020 Source: Apartments.com as of 12-02-2020 90401 90402 90403 90404 90405 Marketed Vacant ZIP Code ZIP Code Units Share 90401 805 21.3% 90402 302 8.0% 90403 886 23.5% 90404 1,092 28.9% 90405 691 18.3% SM ZIPs 3,776 100.0% Item 4.A 12/15/20 95 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 897 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) I.THE QUESTION OF NEED At least 3,979 units were either under construction, permitted or permit pending as of August 2020 Source: 1633 26th Street Office Draft EIR Vol 1 –Nov 2020 https://www.smgov.net/uploadedFiles/Departments/PCD/Environmental-Reports/1633%2026th%20Street%20Office%20Draft%20EIR_Vol1.pdf Item 4.A 12/15/20 96 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 898 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) I.THE QUESTION OF NEED Trends: 1995 -2020 Item 4.A 12/15/20 97 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 899 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Sources: (a) CA Department of Finance: Report: E-5 Population and Housing Estimates for Cities, Counties, and the State, 2011-2020 with 2010 Census Benchmark SM Council Meeting 12-10-2019, Staff Report 3873 -RHNA and Quantified Objectives Progress for 5th Cycle Housing Element (Housing Units -September 2019) (b) Households estimated at the average 1.888 persons per household from data reported for 2010 to 2020 by CA DoF •New housing units of ~2,500 since 2010 compare to a SM Household increase of ~1,400(a) •Households(b)have declined by (388) in the last three years; Declines in SM over index declines in LA County I.THE QUESTION OF NEED Item 4.A 12/15/20 98 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 900 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) * Estimate for all unoccupied properties (e.g. off-market rentals, rentals of part-time residents, corporate housing as well as marketed vacant units) at beginning of year Source: CA Department of Finance Report: E-5 Population and Housing Estimates for Cities, Counties, and the State, 2011-2020 with 2010 Census Benchmark Estimated total vacancies since 2010 have steadily increased from 4,000 to 4,500 * I.THE QUESTION OF NEED Item 4.A 12/15/20 99 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 901 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5,230 11 -108 111 168 166 420 702 212 235 55 39 272 296 537 189 134 156 483 458 157 175 100 46 - 1,000 2,000 3,000 4,000 5,000 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Total ProdUnits ProducedSource:" City of Santa Monica Housing Policy“, Slide 7 -Proposition R Performance; City Council Meeting 12-10-2019 https://santamonicacityca.iqm2.com/Citizens/FileOpen.aspx?Type=4&ID=9109 I.THE QUESTION OF NEED Production from 1995 to 2018 has been at least 5,230 units, outpacing net new households Item 4.A 12/15/20 100 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 902 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Sources: Census population data, CA DoF Schedule E-5 population data with extrapolations for 1995 to 2000 Households (HH) estimated based DoF average 1.888 persons per HH for period 2010 to 2020 Net new Households from 1995 to 2018 has been approximately 3,900 3,864 I.THE QUESTION OF NEED Item 4.A 12/15/20 101 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 903 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Santa Monica Housing Production II.THE QUESTION OF AFFORDABILITY Item 4.A 12/15/20 102 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 904 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) II.THE QUESTION OF AFFORDABILITY “Zillow, the real estate site, found, in 2016, that in San Francisco, Los Angeles, and other major cities, ‘very high demand at the low end of the market is being met with more supply at the high end, an imbalance that will only contribute to growing affordability concerns for all renters.’ What’s more, there’s no guarantee that luxury housing will become affordable years, even decades, from now. According to the California Legislative Analyst’s Office, it will take some 25 years for that possibility.” (a) (a)Inside Game: California YIMBY, Scott Wiener, and Big Tech’s Troubling Housing Push in Housing is a Human Right, By Patrick Range McDonald | January 13, 2020 Item 4.A 12/15/20 103 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 905 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Source: Rent Jungle https://www.rentjungle.com/average-rent-in-santa-monica-rent-trends/ Despite consistent overproduction and significant vacancies, rent increases have consistently outpaced inflation, increasing 77% over the past 10 years $3,544 $3,229 $3,858 $1,770 $2,226 II.THE QUESTION OF AFFORDABILITY Item 4.A 12/15/20 104 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 906 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) II.THE QUESTION OF AFFORDABILITY Source: Adapted from Livable California https://www.livablecalifornia.org/ab-725-is-alive-in-the-california-senate-lets-kill-this-bad-bill-on-sat-aug-29/ California Gentrification 80% of New Apartment Buildings are Unaffordable Luxury Item 4.A 12/15/20 105 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 907 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Santa Monica Housing Production SummaryGiven: •Current and longstanding oversupplies of housing units in proportion to population needs •Risks and dangers of overdevelopment and hyper-densification to the environment, public health and safety, city infrastructure and support services, fiscal and budgetary responsibility, and community stability and well-being * These data strongly suggest the need for: 1.An immediate halt in housing production, including projects currently in various stages of the permitting process 2.Re-evaluation of housing policies in accordance with actual housing needs, in consensus with the needs and determinations of the local community of permanent residents 3.Santa Monica housing policies that are clearly articulated and formed in consideration of well- researched environmental, social, fiscal, budgetary, infrastructural and community impacts. * Data documented and available on request Item 4.A 12/15/20 106 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 908 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) September 18, 2020 The Honorable Rex Richardson, President Southern California Association of Governments 900 Wilshire Boulevard, Suite 1700 Los Angeles, CA 90017 RE: Request to Reconvene the SCAG President’s RHNA Litigation Study Team to Re- Assess State HCD’s RHNA Allocation of 1.34 Million Housing Units to the SCAG Region Dear President Richardson: On behalf of thirty-two cities in Orange County, we, the mayors respectfully support the request of our colleague – City of Yorba Linda Council Member Peggy Huang – that the SCAG President promptly reconvene the SCAG President’s RHNA Litigation Study Team. We have a deep respect for Council Member Huang and her stewardship of the SCAG RHNA Subcommittee these past two years. We all agree with Council Member Huang that the starting point – the 1.34 million RHNA housing units that the State Department of Housing and Community Development (State HCD) issued for the 6-county SCAG region – must be re- examined. At the September 3, 2020 SCAG Regional Council meeting, Council Member Huang explained that new and recent housing shortage information has been issued by Freddie Mac, which states that the housing shortage for the entire State of California, not just the SCAG region, is 820,000 units (Attachment 1: Page 6, February 2020 Freddie Mac Insights Report: “The Housing Supply Shortage: State of the States.”). Further, the Embarcadero Institute, a non- profit policy analysis organization, just released a September 2020 Report – “Double Counting in the Latest Housing Needs Assessment” – that questions whether State HCD’s use of an incorrect vacancy rate and double counting has exaggerated the RHNA for the SCAG region, San Diego, the Bay Area and Sacramento area by more than 900,000 units (Attachment 3). Clearly, this new and credible data should be explored with the members of the President’s RHNA Litigation Study Team. It is our hope that upon examination of the new data, that the President’s RHNA Litigation Study Team could deliberate on options to require State HCD to: Item 4.A 12/15/20 107 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 909 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1) consider this and other new information from credible agencies; 2) justify how its 1.34 million housing unit determination is defensible in light of the new information and should be fittingly revised; and, 3) justify how its 1.34 million housing unit determination is consistent with State Statute provisions. A prompt assessment of this information, and options to pursue resolution with State HCD, would be invaluable and timely to SCAG’s member agencies, many of which are currently exploring appeals of their individual RHNA allocations. Moreover, if the SCAG President’s RHNA Litigation Study Team is reconvened, we would strongly urge SCAG to revisit the critical issue that State HCD did not follow housing statute, when it determined SCAG’s 1.34 million housing units need. We appreciate that SCAG raised this concern to State HCD. We object, however, that State HCD has chosen to not adhere to the provisions of our Government Code, and we have provided a detailed, technical assessment of such noncompliance in Attachment 2. We thus respectfully seek your support and follow-through of your verbal commitment to Council Member Huang, that the President’s RHNA Litigation Study Team be reconvened to undertake this important discussion. We look forward to your response, with the desire that the RHNA Litigation Study Team be reconvened prior to the next SCAG Regional Council meeting, October 1, 2020. With sincere respect and appreciation, Mike Munzing Harry Sidhu Mayor Mayor City of Aliso Viejo City of Anaheim Marty Simonoff Fred Smith Mayor Mayor City of Brea City of Buena Park Katrina Foley Rob Johnson Mayor Mayor City of Costa Mesa City of Cypress Item 4.A 12/15/20 108 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 910 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Cheryl Brothers Jennifer Fitzgerald Mayor Mayor City of Fountain Valley City of Fullerton Steven R. Jones Lyn Semeta Mayor Mayor City of Garden Grove City of Huntington Beach Christina Shea Tom Beamish Mayor Mayor City of Irvine City of La Habra Peter Kim Bob Whalen Mayor Mayor City of La Palma City of Laguna Beach Janine Heft Laurie Davies Mayor Mayor City of Laguna Hills City of Laguna Niguel Item 4.A 12/15/20 109 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 911 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Noel Hatch Neeki Moatazedi Mayor Mayor City of Laguna Woods City of Lake Forest Richard D. Murphy Brian Goodell Mayor Mayor City of Los Alamitos City of Mission Viejo Will O’Neill Mark A. Murphy Mayor Mayor City of Newport Beach City of Orange Ward Smith Bradley J. McGirr Mayor Mayor City of Placentia City of Rancho Santa Margarita Troy Bourne Miguel A. Pulido Mayor Mayor City of San Juan Capistrano City of Santa Ana Item 4.A 12/15/20 110 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 912 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Schelly Sustarsic David J. Shawver Mayor Mayor City of Seal Beach City of Stanton Allan Bernstein Robbie Pitts Mayor Mayor City of Tustin City of Villa Park Tri Ta Beth Haney Mayor Mayor City of Westminster City of Yorba Linda Attachments: 1. Freddie Mac Economic and Housing Research Insight: February 2020 2. Orange County Technical Analysis: State Government Code Requirements to Calculate Regional Housing Need 3. Embarcadero Institute Report: Updated September 2020 cc: Council Member Peggy Huang, City of Yorba Linda and SCAG RHNA Subcommittee Chair Council Member Trevor O’Neil, Chair, OCCOG Board of Directors Council Member Wendy Bucknum, Vice-Chair, OCCOG Board of Directors Mayor Pro Tem Michael Carroll, OC Representative SCAG's RHNA Litigation Study Team Orange County Representatives on SCAG Policy Committees and Regional Council Kome Ajise, SCAG Executive Director Orange County City Managers Association Orange County Mayors Marnie O’Brien Primmer, OCCOG Executive Director Nate Farnsworth, OCCOG TAC Chair Item 4.A 12/15/20 111 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 913 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 112 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 914 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 113 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 915 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 114 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 916 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 115 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 917 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 116 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 918 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 117 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 919 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 118 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 920 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 119 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 921 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 120 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 922 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 121 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 923 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 122 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 924 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Orange County Technical Analysis of SCAG’s Regional Determination from HCD Government Code Section 65584.01(a) states: “If the total regional population forecast for the projection year, developed by the council of governments and used for the preparation of the regional transportation plan, is within a range of 1.5 percent of the total regional population forecast for the projection year by the Department of Finance, then the population forecast developed by the council of governments shall be the basis from which the department determines the existing and projected need for housing in the region….”. As outlined in SCAG’s September 18, 2019 objection letter to the California Department of Housing and Community Development (HCD) (see Exhibit B), SCAG’s regional population forecast for its Regional Transportation Plan (RTP) differs from the State Department of Finance (DOF) projection by 1.32%, which falls within the statutory range of 1.5% outlined in state law. Therefore, by statute, the regional determination should be based on SCAG’s population projections. However, HCD’s October 15, 2019 response letter to SCAG (see Exhibit C) cites two reasons for not using SCAG’s total regional population forecast: 1)The total household projection from SCAG is 1.96% lower than DOF’s household projection. 2)The age cohort of under 15-year old persons from SCAG’s population projections differ from DOF’s projections by 15.8%. A careful reading of Government Code Section 65584.01(a) demonstrates that HCD’s interpretation and rejection of the use of SCAG’s regional population forecast is incorrect for the following two reasons: 1)The law clearly states that that the 1.5% range is based on the total regional population forecast and not the regional household projection forecast. 2)The law clearly states that the 1.5% range is based on the total regional population forecast and not on age-cohort population forecasts. While Government Code 65584.01 provides a significant level of discretion to HCD over many of the factors used for the regional determination (i.e., vacancy adjustments, overcrowding rates, replacement adjustments, cost-burdened adjustments, etc.), this one issue is clearly written into the law without any discretion from HCD. Therefore, even though we support all of the arguments SCAG outlined in their September 18, 2019 objection letter, we also recognize that state law grants HCD the final determination for those specific factors. However, there is no discretion in HCD’s decision to ignore SCAG’s regional population forecast. Had HCD adhered to Government Code 65584.01(a), we estimate that the regional determination should have been at least approximately 133,000 housing units lower (see Exhibit A), or no more than approximately 1.2 million housing units. We would hope that HCD would reconsider the other SCAG’s recommendations as noted in their September 18, 2020 objection letter, especially in light of the change in circumstances related to the current COVID-19 pandemic, as well as the recent studies and reports stating that California’s statewide housing shortfall is significantly lower than even SCAG’s entire RHNA obligation. ATTACHMENT 2 Item 4.A 12/15/20 123 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 925 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Exhibit A OPTION A: SCAG region housing needs, June 30 2021-October 1 2029 (8.25 Years) 1 Population: Oct 1, 2029 (SCAG 2020 RTP/SCS Forecast) 20,725,878 2 - Less Group Quarters Population (SCAG 2020 RTP/SCS Forecast) -327,879 3 Household (HH) Population, Oct 1, 2029 20,397,998 SCAG Projected HH Population Headship rate - see Table 2 Projected Households Household Formation Groups 20,397,998 6,668,498 under 15 years 3,812,391 n/a 15 - 24 years 2,642,548 147,005 25 - 34 years 2,847,526 864,349 35 - 44 years 2,821,442 1,304,658 45 - 54 years 2,450,776 1,243,288 55 - 64 years 2,182,421 1,116,479 65 -74 years 1,883,181 1,015,576 75 - 84 years 1,167,232 637,415 85+ 590,480 339,727 4 Projected Households (Occupied Unit Stock) 6,668,498 5 + Vacancy Adjustment (2.63%) 178,896 6 + Overcrowding (6.76%)459,917 7 + Replacement Adjustment (0.50%)34,010 8 - Occupied Units (HHs) estimated June 30, 2021 (from DOF data)-6,250,261 9 + Cost-burden Adjustment ((Lower Income: 10.63%, Moderate and Above Moderate Income: 9.28%)117,505 6th Cycle Regional Housing Need Assessment (RHNA) 1,208,565 EXHIBIT A Item 4.A 12/15/20 124 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 926 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) September 18, 2019 Mr. Doug McCauley Acting Director Housing & Community Development (HCD) 2020 W. El Camino Ave. Sacramento, CA 95833 Subject: SCAG’s Objection to HCD’s Regional Housing Need Determination Dear Mr. McCauley, This letter represents the Southern California Association of Governments (SCAG)’s formal objection to HCD’s Regional Housing Need Determination as submitted to SCAG on August 22, 2019 and is made in accordance with Government Code Section 65584.01(c)(2)(A) and (B). At the outset, please know that SCAG is fully aware that the State of California is in the midst of a housing crisis and that resolving this crisis requires strong partnerships with state, regional and local entities in addition to private and non-profit sectors. As such, SCAG desires to be an active and constructive partner with the State and HCD on solving our current housing crisis, and this objection should not suggest otherwise. We are in fact currently setting up a housing program that will assist our local jurisdictions on activities and policies that will lead to actual housing unit construction. In the context of the 6th cycle Regional Housing Needs Assessment (RHNA) process, SCAG appreciates the collaboration with HCD as reflected in the numerous consultation sessions on the regional determination and other staff engagement on housing issues with the objective of making RHNA a meaningful step toward addressing our housing crisis. As you are aware, HCD transmitted its Regional Housing Needs Determination of 1,344,740 units for the SCAG region last month. This number reflects the housing units that local jurisdictions in the region must plan for during the 8-year period from October 2021 to October 2029. At the September 5, 2019 meeting, SCAG Regional Council authorized staff to file an objection to HCD on regional housing need determination pursuant to Government Code Section 65584.01(c). EXHIBIT B Item 4.A 12/15/20 125 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 927 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) I would like to note that SCAG’s objection focuses on the process and adherence to state housing law requirements and not necessarily to the regional housing need determination number. The ultimate aim of this objection, as discussed at length by the Regional Council, is to ensure the most technically and legally credible basis for a regional determination so that the 197 local jurisdictions in the SCAG region can approach the difficult task of zoning to accommodate regional needs with the backing of the most robust and realistic target that is possible. One of our major concerns is that HCD did not base its determination on SCAG’s RTP/SCS Growth Forecast, which was inconsistent with Government Code 65584.01(c)(2)(A). Another major concern is that pursuant to Government Code 65584.01(c) (2) (B), HCD’s determination of housing need in the SCAG region is not a reasonable application of the methodology and assumptions described in statute. Specifically, HCD compared household overcrowding and cost- burden rates in the SCAG region to national averages rather than to rates in comparable regions as statutorily required. These and two additional basis for objections are described in detail in the section below which also includes a deduction for household growth on tribal land and a concern that the vacancy rate standards used by HCD are not substantiated by data, analysis, or literature. In addition, the attached EXCEL worksheet and technical documentation contain SCAG’s alternative proposed 6th cycle RHNA determination, which would consist of a range of total housing unit need between 823,808 and 920,772. BASIS FOR SCAG OBJECTION Use of SCAG’s Population Forecast HCD did not base its determination on SCAG’s RTP/SCS Growth Forecast, which was provided in the original consultation package and via follow-up email to HCD. Government Code 65584.01(a) indicates [emphasis added]: “(a) The department’s determination shall be based upon population projections produced by the Department of Finance and regional population forecasts used in preparing regional transportation plans, in consultation with each council of governments. If the total regional population forecast for the projection year, developed by the council of governments and used for the preparation of the regional transportation plan, is within a range of 1.5 percent of the total regional population forecast for the projection year by the Department of Finance, then the population forecast developed by the council of governments shall be the basis from which the department determines the existing and projected need for housing in the region. If the difference between the total population projected by the council of governments and the total population projected for the region by the Department of Finance is greater than 1.5 percent, then the department and the council of governments shall meet to discuss variances in methodology used for population projections and seek agreement on a population projection for the region to be used as a basis for determining the existing and projected housing need for the region. If no agreement is reached, then the population projection for the region shall be the population projection for the region prepared by the Department of Finance as may be modified by the department as a result of discussions with the council of governments.” Item 4.A 12/15/20 126 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 928 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) SCAG projects total regional population to grow to 20,725,878 by October, 2029. SCAG’s projection differs from Department of Finance (DOF) projection of 20,689,591, which was issued by DOF in May, 2018, by 0.18%. The total population provided in HCD’s determination is 20,455,355, reflecting an updated DOF projection, differs from SCAG’s projection by 1.32%. As SCAG’s total projection is within the statutory tolerance of 1.5%, accordingly HCD is to use SCAG’s population forecast. While HCD has emphasized that consistency in approach to the 6th cycle RHNA across regions is a priority, deference to the Council of Governments’ forecast as specified in statute is an important aspect of regional planning. Federal requirements for SCAG’s Regional Transportation Plan necessitate a forecast of population, households, and employment for evaluating future land use patterns and measuring future travel demand as well as air quality conformity under the federal Clean Air Act. In addition, under SB 375, the State requires SCAG to develop a Sustainable Communities Strategy which is a coordination of transportation and land use in the regional planning process to achieve State’s climate goals. Both federal and State requirements are predicated on SCAG’s forecast of population, households and employment. As a result, SCAG has a long-established and well-respected process for producing a balanced forecast of population, households, and employment for the region, the details of which can be found in each Regional Transportation Plan (e.g. http://scagrtpscs.net/Documents/2016/final/f2016RTPSCS_DemographicsGrowthForecast.pdf). SCAG’s quadrennial growth forecast begins with a consensus on appropriate assumptions of fertility, migration, immigration, household formation, and job growth by a panel of state and regional experts including members of DOF’s Demographic Research Unit. In addition, SCAG co-hosts an annual demographic workshop with the University of Southern California to keep state and regional experts and stakeholders appraised of demographic and economic trends (https://www.scag.ca.gov/calendar/Pages/DemographicWorkshop.aspx). SCAG places a high priority on generating its own forecasts of population, households, and employment and ensuring the highest possible degree of consistency and integrity of its projections for transportation, land use, and housing planning purposes. Use of Comparable Regions Pursuant to Government Code 65584.01(c)(2)(B), HCD’s determination of housing need in the SCAG region is not a reasonable application of the methodology and assumptions described in statute. Specifically, HCD compared household overcrowding and cost-burden rates in the SCAG region to national averages rather than to rates in comparable regions as statutorily required. SCAG’s initial consultation package provided an approach using comparable regions to evaluate household overcrowding SCAG staff met with HCD staff in-person in both Los Angeles and Sacramento to discuss adjustment criteria and how to define a comparable region to Southern California, as our region’s size precludes a straightforward comparison. At the direction of HCD, SCAG staff refined its methodology for identifying comparable regions and provided a state-of- the-practice analysis supported by recent demographic and economic literature which determined Item 4.A 12/15/20 127 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 929 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) that the most appropriate comparison to the SCAG region would be an evaluation against the San Jose, New York, San Francisco, Miami, Seattle, Chicago, San Diego, Washington D.C., Houston, and Dallas metropolitan areas. Despite this collaboration on the subject between HCD and SCAG, HCD elected to reject this approach and instead used national average statistics, which include small metropolitan areas and rural areas having little in common with Southern California. HCD’s choice to use national averages: Is inconsistent with the statutory language of SB 828, which added the comparable region standard to RHNA law in order to improve the technical robustness of measures of housing need. Is inconsistent with empirical data as economic and demographic characteristics differ dramatically based on regional size and context. For comparison, the median-sized metropolitan region in the country is Fargo, North Dakota with a population of 207,500. That is not a meaningful basis of comparison for the nation’s largest MPO. Is inconsistent with HCD’s own internal practice for the 6th cycle of RHNA. The regional need determination for the Sacramento Area Council of Governments (SACOG), issued on July 18, 2019, was the first 6th cycle RHNA determination following SB 828’s inclusion of the comparable region standard. During their consultation process with HCD, SACOG also produced a robust technical analysis to identify comparable regions for the purposes of using overcrowding and cost-burden statistics to determine regional housing needs. However, HCD’s final determination for SACOG used this analysis while the SCAG region was held to a different and less reasonable standard. Improved Vacancy Rate Comparison HCD seemingly uses unrealistic comparison points to evaluate healthy market vacancy, which is also an unreasonable application of the methodology and assumptions described in statute. While SB 828 specifies a vacancy rate for a healthy rental housing market as no less than 5 percent, healthy market vacancy rates for for-sale housing are not specified. HCD’s practice is to compare actual, ACS vacancy rates for the region versus a 5 percent total vacancy rate (i.e. owner and renter markets combined). During the consultation process, SCAG discussed this matter with HCD staff and provided several points of comparison including historical data, planning standards, and comparisons with other regions. In addition, SCAG staff illustrated that given tenure shares in the SCAG region, HCD’s suggestion of a 5 percent total vacancy rate is mathematically equivalent to an 8 percent rental market vacancy rate plus a 2.25 percent for-sale housing vacancy rate. However, in major metropolitan regions, vacancy rates this high are rarely experienced outside of severe economic recessions such as the recent, housing market-driven Great Recession. Given the region’s current housing shortage, the high volume of vacant units envisioned in HCD’s planning target would be rapidly absorbed, making it an unrealistic standard. Item 4.A 12/15/20 128 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 930 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) SCAG staff’s original suggestion of 5 percent rental vacancy and 1.5 percent for-sale vacancy (resulting in a 3.17 percent total vacancy rate based on current tenure shares) is in fact higher than the observed rate in the comparable regions defined above. It is also above Federal Housing Authority standards for regions experiencing slow or moderate population growth. It is also above the very liberal standard of 6 percent for for-rent housing and 2 percent for for-sale housing suggested by the California Office of Planning and Research (equivalent to 3.90 percent total vacancy based on SCAG tenure shares) which would also be a more reasonable application of the methodology.1 Additional Considerations In addition to the three key points above, SCAG’s proposed alternative includes several other corrections to technical shortcomings in HCD’s analysis of regional housing needs. 1. HCD’s evaluation of replacement need is based on an arbitrary internal standard of 0.5 percent to 5.0 percent of total housing units. 2010-2019 demolition data provided by DOF suggest that over an 8.25-year period, it is reasonable to expect that 0.14 percent of the region’s total housing units will be demolished, but not replaced. This would form the basis of a more reasonable housing needs determination, as DOF’s survey represents the most comprehensive and robust data available. 2. Anticipated household growth on tribal land was not excluded from the regional determination as indicated in the consultation package and follow-up communications. Tribal entities within the SCAG region have repeatedly requested that this estimate be excluded from the RHNA process entirely since as sovereign nations, state law does not apply. SCAG’s proposed approach is to subtract estimates of household growth on tribal land from the regional determination and ensure that these figures are also excluded from local jurisdictions’ annual progress reports (APRs) of new unit construction to HCD during the 6th cycle. 3. A refinement to the adjustment for cost burden would yield a more reasonable determination of regional housing needs. SCAG has repeatedly emphasized the shortcomings of and overlap across various ACS-based measures of housing need. Furthermore, the relationship between new unit construction and cost burden is poorly understood (i.e., what will be the impact of new units on cost, and by extension, cost-burden). Nonetheless, SCAG recognizes that the region’s cost burden exceeds that of comparable regions and proposes one modification to HCD’s methodology, which currently considers cost burden separately by lower and higher income categories. While housing security is dependent on income, it is also heavily dependent on tenure. While spending above 30 percent of gross income on housing for renters can reflect true housing insecurity, spending above this threshold for owners is substantially less problematic. This is particularly true for higher income homeowners, who generally benefit from housing shortages as it results in home value appreciation. Thus, a more reasonable application of cost burden 1 See Nelson, AC. (2004), Planner’s Estimating Guide Projecting Land-Use and Facility Needs. Planners Press, American Planning Association, Chicago. P. 25. Item 4.A 12/15/20 129 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 931 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) statistics would exclude cost-burden experienced by moderate and above-moderate owner households and instead make an adjustment based on three of the four income and tenure combinations: lower-income renters, higher-income renters, and lower-income owners. 4. From our review, HCD’s data and use of data is not current. In large metropolitan regions, there is no reasonable basis for using 5-year ACS data, which reflects average conditions from 2013 to 2017. For cost-burden adjustments, HCD relies on 2011-2015 CHAS data. By the beginning of the 6th cycle of RHNA, some of the social conditions upon which the determination is based will be eight years old. During the consultation process, SCAG staff provided HCD with Excel-version data of all inputs needed to replicate their methodology using ACS 2017 1-year data (the most recent available); however, this was not used. The Census bureau is scheduled to release ACS 2018 1-year data on September 26, 2019. SCAG staff would support replicating the same analysis, but substituting 2018 data when it becomes available in order to ensure the most accurate estimates in planning for the region’s future. Finally, given that the manner and order in which modifications are made affects the total housing need, the attachments demonstrate two alternatives with varying interpretations of three of the above points (see boldface, red text in attachments): - Vacancy rate comparison – SCAG’s originally proposed values versus an alternative which emerged from the consultation process - Replacement need – DOF survey value versus HCD’s current practice - Cost burden measure – whether or not to include higher-income homeowners in this adjustment We appreciate your careful consideration of this objection. RHNA is a complex process and we recognize the difficult positions that both SCAG and HCD are in but are hopeful that our agencies can reach a reasonable conclusion with respect to the regional need determination. Please contact me if you have questions. I look forward to continuing our close partnership to address the housing crisis in our state. Sincerely, Kome Ajise Executive Director Attachments 1. SCAG Alternative Determination 2. Excel version: SCAG Alternative Determination and supporting data 3. HCD Letter on Regional Need Determination, August 22, 2019 Item 4.A 12/15/20 130 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 932 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Attachment 1 SCAG Alternative Determination 1 OPTION A: SCAG region housing needs, June 30 2021-October 1 2029 (8.25 Years) 2 Population: Oct 1, 2029 (SCAG 2020 RTP/SCS Forecast)20,725,878 3 - Less Group Quarters Population (SCAG 2020 RTP/SCS Forecast)-327,879 4 Household (HH) Population, Oct 1, 2029 20,397,998 Household Formation Groups 20,397,998 6,668,498 under 15 years 3,812,391 n/a 15 - 24 years 2,642,548 147,005 25 - 34 years 2,847,526 864,349 35 - 44 years 2,821,442 1,304,658 45 - 54 years 2,450,776 1,243,288 55 - 64 years 2,182,421 1,116,479 65 -74 years 1,883,181 1,015,576 75 - 84 years 1,167,232 637,415 85+590,480 339,727 5 Projected Households (Occupied Unit Stock)6,668,498 6 + Vacancy Owner Renter Tenure Share (ACS 2017 1-year)52.43% 47.57% Households by Tenure 3,496,058 3,172,440 Healthy Market Vacancy Standard 1.50% 5.00% SCAG Vacancy (ACS 2017 1-year)1.13% 3.30% Difference 0.37% 1.70% Vacancy Adjustment 12,953 53,815 66,768 7 + Overcrowding (Comparison Point vs. Region ACS %)5.20% 9.82% 4.62%308,264 8 + Replacement Adj (Actual DOF Demolitions)9,335 - Household Growth on Tribal Land (SCAG Estimate)-2,766 9 - Occupied Units (HHs) estimated June 30, 2021 (from DOF data)-6,250,261 10 + Cost-burden Adjustment (Comparison Point vs. Region)23,969 823,808 SCAG Projected HH Population Headship rate - see Table 2 Projected Households 6th Cycle Regional Housing Need Assessment (RHNA) 0.14% Item 4.A 12/15/20 131 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 933 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 OPTION B: SCAG region housing needs, June 30 2021-October 1 2029 (8.25 Years) 2 Population: Oct 1, 2029 (SCAG 2020 RTP/SCS Forecast)20,725,878 3 - Less Group Quarters Population (SCAG 2020 RTP/SCS Forecast)-327,879 4 Household (HH) Population, Oct 1, 2029 20,397,998 Household Formation Groups 20,397,998 6,668,498 under 15 years 3,812,391 n/a 15 - 24 years 2,642,548 147,005 25 - 34 years 2,847,526 864,349 35 - 44 years 2,821,442 1,304,658 45 - 54 years 2,450,776 1,243,288 55 - 64 years 2,182,421 1,116,479 65 -74 years 1,883,181 1,015,576 75 - 84 years 1,167,232 637,415 85+590,480 339,727 5 Projected Households (Occupied Unit Stock)6,668,498 6 + Vacancy Owner Renter Tenure Share (ACS 2017 1-year) 52.43% 47.57% Households by Tenure 3,496,058 3,172,440 Healthy Market Vacancy Standard 2.00% 6.00% SCAG Vacancy (ACS 2017 1-year) 1.13% 3.30% Difference 0.87% 2.70% Vacancy Adjustment 30,433 85,540 115,973 7 + Overcrowding (Comparison Point vs. Region ACS %)5.20% 9.82% 4.62%308,264 8 + Replacement Adj (HCD minimum standard)33,340 - Household Growth on Tribal Land (SCAG Estimate)-2,766 9 - Occupied Units (HHs) estimated June 30, 2021 (from DOF data)-6,250,261 10 + Cost-burden Adjustment (Comparison Point vs. Region)47,724 920,772 6th Cycle Regional Housing Need Assessment (RHNA) SCAG Projected HH Population Headship rate - see Table 2 Projected Households 0.50% Item 4.A 12/15/20 132 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 934 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 2-5 6 7 8 9 10 Cost Burden Adjustment: A cost-burden adjustment is applied to the projected need by comparing the difference in cost-burden by income and tenure group for the region to the cost-burden by income and tenure group for comparable regions. Data are from 2017 1-year ACS and the ACS $50,000/year household income threshold is used to distinguish between lower and higher income groups. The lower income RHNA is increased by the percent difference between the region and the comparison region cost burden rate for households earning approximately 80% of area median income and below (88.89%-84.39%=4.51% for renters and 27.33%-20.97%=6.36% for owners), then this difference is applied to very low- and low- income RHNA proportionate to the share of the population these groups currently represent (Very Low=63% of lower, Low=37% of lower). The higher income RHNA is increased by the percent difference between the region and the comparison region cost burden rate (67.15%-65.53%=1.62% for renters and 23.78%-17.06%=6.72% for owners) for households earning above 80% Area Median Income, then this difference is applied to moderate and above moderate income RHNA proportionate to the share of the population these groups currently represent (Moderate=29% of higher, Above Moderate=71% of higher). SCAG's analysis of the cost-burden measure suggests that it may be less appropriate to apply for higher-income owners and it may be excluded from the adjustment. Occupied Units: Reflects DOF's estimate of occupied units at the start of the projection period (June 30, 2021). Projection period: Gov. Code 65588(f) specifies RHNA projection period start is December 31 or June 30, whichever date most closely precedes end of previous RHNA projection period end date. RHNA projection period end date is set to align with planning period end date. The planning period end date is eight years following the Housing Element due date, which is 18 months following the Regional Transportation Plan adoption rounded to the 15th or end of the month. Population, Group Quarters, Household Population, & Projected Households: Pursuant to Government Code Section 65584.01, projections were extrapolated from SCAG's Regional Transportation Plan projections. Population reflects total persons. Group Quarter Population reflects persons in a dormitory, group home, institution, military, etc. that do not require residential housing. Household Population reflects persons requiring residential housing. Projected Households reflect the propensity of persons, by age-groups, to form households at different rates based on Census trends. Vacancy Adjustment: Pursuant to Government Code 65584.01, a 5% minimum is considered to be healthy market vacancy in the for-rent housing market. Vacancy rates in the for-sale market are unspecified in statute. SCAG's analysis of vacancy rates suggests a healthy market standard of 5% for fore-rent housing and 1.5% for for-sale housing. After extensive consultation with HCD, a review of historical trends, regional and national comparison, and various planning standards, a more liberal vacancy standard of 6% for for-rent housing and 2% for for-sale housing may also be supported by this analysis. These standards are compared against ACS 2017 1-year data based on the renter/owner share in the SCAG region. Overcrowding Adjustment: In regions where overcrowding is greater than the Comparable Region Rate, an adjustment is applied based on the amount the region's overcrowding rate (9.82%) exceeds the Comparable Region Rate (5.20%). Data is from 2017 1-year ACS. Replacement Adjustment: A replacement adjustment is applied based on the current 10-year average % of demolitions according to local government annual reports to Department of Finance. While these data suggest an adjustment of 0.14% is most appropriate, SCAG recognizes that HCD's internal practice is to use an adjustment factor of 0.5%. Item 4.A 12/15/20 133 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 935 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Income Category Percent Housing Unit Need Very-Low *25.8%212,284 Low 15.1%124,375 Moderate 17.1%140,601 Above-Moderate 42.1%346,547 Total 100.0%823,808 *Extremely-Low 14.6% Income Category Percent Housing Unit Need Very-Low *25.8%231,084 Low 15.1%135,390 Moderate 17.1%159,982 Above-Moderate 42.1%394,316 Total 100.0%920,772 *Extremely-Low 14.6% Option A: Regional Housing Need Allocation (RHNA) Determination SCAG Region June 30, 2021 through October 1, 2029 Option B: Regional Housing Need Allocation (RHNA) Determination SCAG Region June 30, 2021 through October 1, 2029 included in Very-Low Category Income Distribution: Income categories are prescribed by California Health and Safety Code (Section 50093, et.seq.). Percents are derived based on ACS reported household income brackets and county median income, then adjusted based on the percent of cost-burdened households in the region compared with the percent of cost burdened households nationally. included in Very-Low Category Item 4.A 12/15/20 134 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 936 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF HOUSING POLICY DEVELOPMENT 2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916) 263-2911 / FAX (916) 263-7453www.hcd.ca.gov October 15, 2019 Kome Ajise Executive Director Southern California Association of Governments 900 Wilshire Boulevard, Suite 1700 Los Angeles, CA 90017 Dear Executive Director Ajise, RE: Final Regional Housing Need Assessment The California Department of Housing and Community Development (HCD) has received and reviewed your objection to the Southern California Association of Governments (SCAG)’s Regional Housing Needs Assessment (RHNA) provided on August 22, 2019. Pursuant to Government Code (Gov. Code) section 65584.01(c)(3), HCD is reporting the results of its review and consideration, along with a final written determination of SCAG’s RHNA and explanation of methodology and inputs. As a reminder, there are several reasons for the increase in SCAG’s 6th cycle Regional Housing Needs Assessment (RHNA) as compared to the 5th cycle. First, as allowed under Gov. Code 65584.01(b)(2), the 6th cycle RHNA applied housing need adjustment factors to the region’s total projected households, thus capturing existing and projected need. Second, overcrowding and cost burden adjustments were added by statute between 5th and 6th cycle; increasing RHNA in regions where incidents of these housing need indicators were especially high. SCAG’s overcrowding rate is 10.11%, 6.76% higher than the national average. SCAG’s cost burden rate is 69.88% for lower income households, and 18.65% for higher income households, 10.88% and 8.70% higher than the national average respectively. Third, the 5th cycle RHNA for the SCAG region was impacted by the recession and was significantly lower than SCAG’s 4th cycle RHNA. This RHNA methodology establishes the minimum number of homes needed to house the region’s anticipated growth and brings these housing need indicators more in line with other communities, but does not solve for these housing needs. Further, RHNA is ultimately a requirement that the region zone sufficiently in order for these homes to have the potential to be built, but it is not a requirement or guarantee that these homes will be built. In this sense, the RHNA assigned by HCD is already a product of moderation and compromise; a minimum, not a maximum amount of planning needed for the SCAG region. For these reasons HCD has not altered its RHNA approach based on SCAG’s objection. However, the cost burden data input has been updated following SCAG’s objection due to the availability of more recent data. Attachment 1 displays the minimum RHNA of 1,341,827 total homes among four income categories for SCAG to distribute among its local governments. Attachment 2 explains the methodology applied pursuant to Gov. Code section 65584.01. EXHIBIT C Item 4.A 12/15/20 135 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 937 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) The following briefly responds to each of the points raised in SCAG’s objection: Use of SCAG’s Population Forecast SCAG’s overall population estimates for the end of the projection period exceed Department of Finance’s (DOF) population projections by 1.32%, however the SCAG household projection derived from this population forecast is 1.96% lower than DOF’s household projection. This is a result of SCAG’s population forecast containing 3,812,391 under 15-year old persons, compared to DOF’s population projection containing 3,292,955 under 15-year old persons; 519,436 more persons within the SCAG forecast that are anticipated to form no households. In this one age category, DOF’s projections differ from SCAG’s forecast by 15.8%. Due to a greater than 1.5% difference in the population forecast assessment of under 15-year olds (15.8%), and the resulting difference in projected households (1.96%), HCD maintains the use of the DOF projection in the final RHNA. Use of Comparable Regions While the statute allows for the council of government to determine and provide the comparable regions to be used for benchmarking against overcrowding and cost burden, Gov. Code 65584.01(b)(2) also allows HCD to “accept or reject information provided by the council of governments or modify its own assumptions or methodology based on this information.” Ultimately, HCD did not find the proposed comparable regions an effective benchmark to compare SCAG’s overcrowding and cost burden metrics to. HCD used the national average as the comparison benchmark, which had been used previously throughout 6th cycle prior to the addition of comparable region language into the statute starting in January 2019. As the housing crisis is experienced nationally, even the national average does not express an ideal overcrowding or cost burden rate; we can do more to reduce and eliminate these worst-case housing needs. Vacancy Rate No changes have been made to the vacancy rate standard used by HCD for the 6th cycle RHNA methodology. Replacement Need No changes have been made to the replacement need minimum of adjustment .5%. This accounts for replacement homes needed to account for homes potentially lost during the projection period. Household Growth Anticipated on Tribal Lands No changes have been made to reduce the number of households planned in the SCAG region by the amount of household growth expected on tribal lands. The region should plan for these homes outside of tribal lands. Overlap between Overcrowding and Cost Burden No changes have been made to overcrowding and cost burden methodology. Both factors are allowed statutorily, and both are applied conservatively in the current methodology. Item 4.A 12/15/20 136 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 938 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Data Sources No changes have been made to the data sources used in the methodology. 5-year American Community Survey data allows for lower margin of error rates and is the preferred data source used throughout this cycle. With regard to cost burden rates, HCD continues to use the Comprehensive Housing Affordability Strategy, known as CHAS data. These are custom tabulations of American Community Survey requested by the U.S. Department of Housing and Urban Development. These customs tabulations display cost burden by income categories, such as lower income, households at or below 80% area median income; rather than a specific income, such as $50,000. The definition of lower income shifts by region and CHAS data accommodates for that shift. The 2013-2016 CHAS data became available August 9, 2019, shortly prior to the issuance of SCAG’s RHNA determination so that data is now used in this RHNA. Next Steps As you know, SCAG is responsible for adopting a RHNA allocation methodology for the projection period beginning June 30, 2021 and ending October 15, 2029. Pursuant to Gov. Code section 65584(d), SCAG’s RHNA allocation methodology must further the following objectives: (1) Increasing the housing supply and the mix of housing types, tenure, and affordability in all cities and counties within the region in an equitable manner, which shall result in each jurisdiction receiving an allocation of units for low- and very-low income households. (2) Promoting infill development and socioeconomic equity, the protection of environmental and agricultural resources, the encouragement of efficient development patterns, and the achievement of the region’s greenhouse gas reductions targets provided by the State Air Resources Board pursuant to Section 65080. (3) Promoting an improved intraregional relationship between jobs and housing, including an improved balance between the number of low-wage jobs and the number of housing units affordable to low-wage workers in each jurisdiction. (4) Allocating a lower proportion of housing need to an income category when a jurisdiction already has a disproportionately high share of households in that income category, as compared to the countywide distribution of households in that category from the most recent American Community Survey. (5) Affirmatively furthering fair housing. Pursuant to Gov. Code section 65584.04(e), to the extent data is available, SCAG shall include the factors listed in Gov. Code section 65584.04(e)(1-12) to develop its RHNA allocation methodology. Pursuant to Gov. Code section 65584.04(f), SCAG must explain in writing how each of these factors was incorporated into the RHNA allocation methodology and how the methodology furthers the statutory objectives described above. Pursuant to Gov. Code section 65584.04(h), SCAG must consult with HCD and submit its draft allocation methodology to HCD for review. Item 4.A 12/15/20 137 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 939 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) HCD appreciates the active role of SCAG staff in providing data and input throughout the consultation period. HCD especially thanks Ping Chang, Ma’Ayn Johnson, Kevin Kane, and Sarah Jepson. HCD looks forward to its continued partnership with SCAG to assist SCAG’s member jurisdictions meet and exceed the planning and production of the region’s housing need. Just a few of the support opportunities available for the SCAG region this cycle include: • SB 2 Planning Grants and Technical Assistance (application deadline November 30, 2019) • Regional and Local Early Action Planning Grants • Permanent Local Housing Allocation If HCD can provide any additional assistance, or if you, or your staff, have any questions, please contact Megan Kirkeby, Assistant Deputy Director for Fair Housing, at megan.kirkeby@hcd.ca.gov. Sincerely, Douglas R. McCauley Acting Director Enclosures Item 4.A 12/15/20 138 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 940 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) ATTACHMENT 1 HCD REGIONAL HOUSING NEED DETERMINATION SCAG: June 30, 2021 – October 15, 2029 (8.3 years) Income Category Percent Housing Unit Need Very-Low* 26.2% 351,796 Low 15.4% 206,807 Moderate 16.7% 223,957 Above-Moderate 41.7% 559,267 Total 100.0% 1,341,827 * Extremely-Low 14.5% Included in Very-Low Category Notes: Income Distribution: Income categories are prescribed by California Health and Safety Code (Section 50093, et.seq.). Percents are derived based on ACS reported household income brackets and regional median income, then adjusted based on the percent of cost-burdened households in the region compared with the percent of cost burdened households nationally. Item 4.A 12/15/20 139 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 941 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) ATTACHMENT 2 HCD REGIONAL HOUSING NEED DETERMINATION SCAG: June 30, 2021 – October 15, 2029 (8.3 years) Methodology SCAG: June 30, 2021-October 15, 2029 (8.3 Years) HCD Determined Population, Households, & Housing Need 1. Population: DOF 6/30/2029 projection adjusted +3.5 months to 10/15/2029 20,455,355 2. - Group Quarters Population: DOF 6/30/2029 projection adjusted +3.5 months to 10/15/2029 -363,635 3. Household (HH) Population: October 15, 2029 20,079,930 Household Formation Groups HCD Adjusted DOF Projected HH Population DOF HH Formation Rates HCD Adjusted DOF Projected Households 20,079,930 6,801,760 under 15 years 3,292,955 n/a n/a 15 – 24 years 2,735,490 6.45% 176,500 25 – 34 years 2,526,620 32.54% 822,045 35 – 44 years 2,460,805 44.23% 1,088,305 45 – 54 years 2,502,190 47.16% 1,180,075 55 – 64 years 2,399,180 50.82% 1,219,180 65 – 74 years 2,238,605 52.54% 1,176,130 75 – 84 years 1,379,335 57.96% 799,455 85+ 544,750 62.43% 340,070 4. Projected Households (Occupied Unit Stock) 6,801,760 5. + Vacancy Adjustment (2.63%) 178,896 6. + Overcrowding Adjustment (6.76%) 459,917 7. + Replacement Adjustment (.50%) 34,010 8. - Occupied Units (HHs) estimated (June 30, 2021) -6,250,261 9. + Cost Burden Adjustment (Lower Income: 10.63%, Moderate and Above Moderate Income: 9.28%) 117,505 6th Cycle Regional Housing Need Assessment (RHNA) 1,341,827 Explanation and Data Sources 1-4. Population, Group Quarters, Household Population, & Projected Households: Pursuant to Government Code Section 65584.01, projections were extrapolated from Department of Finance (DOF) projections. Population reflects total persons. Group Quarter Population reflects persons in a dormitory, group home, institution, military, etc. that do not require residential housing. Household Population reflects persons requiring residential housing. Projected Households reflect the propensity of persons, by age-groups, to form households at different rates based on Census trends. 5. Vacancy Adjustment: HCD applies a vacancy adjustment based on the difference between a standard 5% vacancy rate and the region’s current "for rent and sale" vacancy percentage to provide healthy market vacancies to facilitate housing availability and resident mobility. The adjustment is the difference between standard 5% and region’s current vacancy rate (2.37%) based on the 2013-2017 5-year American Community Survey (ACS) data. For SCAG that difference is 2.63%. 6. Overcrowding Adjustment: In region’s where overcrowding is greater than the U.S overcrowding rate of 3.35%, HCD applies an adjustment based on the amount the region’s overcrowding rate (10.11%) exceeds the U.S. overcrowding rate (3.35%) based on the 2013- 2017 5-year ACS data. For SCAG that difference is 6.76%. Continued on next page 7. Replacement Adjustment: HCD applies a replacement adjustment between .5% & 5% to total housing stock based on the current 10-year average of demolitions in the region’s local Item 4.A 12/15/20 140 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 942 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) government annual reports to Department of Finance (DOF). For SCAG, the 10-year average is .14%, and SCAG’s consultation package provided additional data on this input indicating it may be closer to .41%; in either data source the estimate is below the minimum replacement adjustment so the minimum adjustment factor of .5% is applied. 8. Occupied Units: Reflects DOF's estimate of occupied units at the start of the projection period (June 30, 2021). 9. Cost Burden Adjustment: HCD applies an adjustment to the projected need by comparing the difference in cost-burden by income group for the region to the cost-burden by income group for the nation. The very-low and low income RHNA is increased by the percent difference (69.88%-59.01%=10.88%) between the region and the national average cost burden rate for households earning 80% of area median income and below, then this difference is applied to very low- and low-income RHNA proportionate to the share of the population these groups currently represent. The moderate and above-moderate income RHNA is increased by the percent difference (18.65%-9.94%=8.70%) between the region and the national average cost burden rate for households earning above 80% Area Median Income, then this difference is applied to moderate and above moderate income RHNA proportionate to the share of the population these groups currently represent. Data is from 2013-2016 Comprehensive Housing Affordability Strategy (CHAS). Item 4.A 12/15/20 141 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 943 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) ATTACHMENT 3Item 4.A 12/15/20 142 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 944 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Item 4.A 12/15/20 143 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 945 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Do the Math: The state has ordered more than 350 cities to prepare the way for more than 2 million homes by 2030. But what if the math is wrong? Senate Bill 828, co-sponsored by the Bay Area Council and Silicon Valley Leadership Group, and authored by state Sen. Scott Wiener in 2018, has inadvertently doubled the “Regional Housing Needs Assessment” in California. Use of an incorrect vacancy rate and double counting, inspired by SB-828, caused the state’s Department of Housing and Community Development (HCD) to exaggerate by more than 900,000 the units needed in SoCal, the Bay Area and the Sacramento area. The state’s approach to determining the housing need must be defensible and reproducible if cities are to be held accountable. Inaccuracies on this scale mask the fact that cities and counties are surpassing the state’s market-rate housing targets, but falling far short in meeting affordable housing targets. The innacuracies obscure the real problem and the associated solution to the housing crisis—the funding of affordable housing. Item 4.A 12/15/20 144 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 946 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Sierra DelNorte Humboldt Trinity Shasta Lassen Tehama Plumas Butte Nevada Placer Sonoma Napa Yolo Solano Stanislaus SantaClara SanBenito SanJoaquinContraCosta Alameda Marin San Francisco San Mateo Santa Cruz Monterey San LuisObispo Santa Barbara Ventura Los Angeles Orange San Bernardino Riverside San Diego Imperial Yuba GlennMendocino Lake Colusa Sutter Sacra-mento El Dorado Alpine Calaveras Tuolumne Mono Mariposa Madera Fresno Kings Kern Tulare Inyo Merced Amador Siskiyou Modoc Every five to eight years the Department of Housing and Community Development (HCD) supervises and publishes the results of a process referred to as the Regional Housing Needs Assessment (RHNA). Four regional planning agencies cover the 21 most urban counties and account for 80% of California’s housing. All four regions saw a significant jump in the state’s assessment of their housing need for the years 2021 to 2030. Double counting (not surprisingly) doubled the assessed housing need for the four major planning regions. Four Regions Contain 80% of the State’s HousingHousing Units Needed According to the State, (1996–2030) 0 0.5M 1.0M 1.5M 2.0M 2.5M Sacramento AreaCouncil of Governments(SACOG) 1996–2006 2005–2014 2013–2022 2021–2030 Associationof Bay AreaGovernments(ABAG) San DiegoAssociation ofGovernments(SANDAG) Greater Sacramento San Diego Region Greater Bay Area Six SoCal Counties Southern CaliforniaAssociation ofGovernments(SCAG) 1 Impacted by Great Recession foreclosure crisis Made before COVID impact Item 4.A 12/15/20 145 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 947 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 0 500,000 1,000,000 Cost burdening double-count Overcrowding double-count Extra units needed to replace demolished units Extra units needed to achieve healthy vacancy rate Households needed as determined by the Dept. of Finance(factors in overcrowding and cost burdening) Conventional Economist Approach Conventional Economist Approach Conventional Economist Approach Conventional Economist Approach Six SoCal Counties Greater Bay Area San Diego Region Greater Sacramento California plans for its housing needs in “cycles.” The four regions are on cycles that last roughly eight years with staggered start dates. In the 2021–2030 housing cycle, errors introduced by language in SB-828 nearly equal the entire 1.15M units of new housing required during the 2013–2022 “cycle.” As illustrated, Southern California and the Bay Area are the most impacted by the state’s methodology errors. The double count, an unintended consequence of Senate Bill 828, has exaggerated the housing need by more than 900,000 units in the four regions below.Number of Housing Units(1,341,827) (153,512)(122,000)(112,000) (283,000) (441,176) (171,687) (651,000) SB-828 Double Count SB-828DoubleCount SB-828 DoubleCount SB-828 DoubleCount 2 Item 4.A 12/15/20 146 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 948 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Senate Bill 828 was drafted absent a detailed understanding of the Department of Finance’s methodology for developing household forecasts, and absent an understanding of the difference between rental and home-owner vacancies. These misunderstandings have unwittingly ensured a series of double counts. State’s erroneous benchmark of 5%Annual Homeowner Vacancy Rates for the United States and Regions: 1968º2019 Typical benchmark is 1.5% 3 1. SB-828 wrongly assumed ‘existing housing need’ was not evaluated as part of California’s previous Regional Housing Need Assessments, or RHNA. There was an assumption that only future need had been taken into account in past assess-ments. (In fact, as detailed in The Reality section, the state’s existing housing need was fully evaluated in previous RHNA assessment cycles). 2. SB-828 wrongly assumed a 5% vacancy rate in owner-occupied housing is healthy (as explained in the column on the right, 5% vacancy in owner-occupied homes is never desir-able, and contradicts Government Code 65584.01(b)(1)(E) which specifies that a 5% vacancy rate applies only to the rental housing market). 3. SB-828 wrongly assumed overcrowding and cost-burdening had not been considered in Department of Finance projections of housing need. The bill sought to redress what it mistaken-ly thought had been left out by requiring regional planning agencies to report overcrowding and cost-burdening data to the Dept. of Housing and Community Development (as explained in the right column). SB-828 MISTAKENLY ASSUMED:THE REALITY IS: 1. Existing housing need has long been incorporated in California’s planning cycles. It has been evaluated by comparing existing vacancy rates with widely accepted benchmarks for healthy market vacancies (rental and owner-occupied). The difference between actual and benchmark is the measure of housing need/surplus in a housing market. Confusion about the inclusion of “existing need” may have arisen because vacancy rates at the time of the last assessment of housing need (”the 5th cycle”) were unusually high (higher than the healthy benchmarks) due to the foreclosure crisis of 2007–2010, and in fact, the vacancy rates suggested a surplus of housing. So, in the 5th cycle the vacancy adjustment had the effect of lowering the total housing need. Correctly seeing the foreclosure crisis as temporary, the state Department of Finance did not apply the full weight of the surplus, but instead assumed a percentage of the vacant housing would absorbed by the time the 5th cycle began. The adjustment appears in the 5th cycle determinations, not as ‘Existing Housing Need’ but rather as “Adjustment for Absorption of Existing Excess Vacant Units.” 2. While 5% is a healthy benchmark for rental vacancies, it is unhealthy for owner-occupied housing (which typically represents half of existing housing). Homeowner vacancy in the U.S. has hovered around 1.5% since the ‘70s, briefly reaching 3% during the foreclosure crisis. However, 5% is well outside any healthy norm, and thus does not appear on the Census chart (to the right) showing Annual Homeowner Vacancy Rates for the United States and Regions: 1968–2019. 3. Unknown to the authors of SB-828, the Department of Finance (DOF) has for years factored overcrowding and cost-burdening into their household projections. These projections are developed by multiplying estimated population by the headship rate (the proportion of the population who will be head of a household). The Department of Finance (DOF) in conjunction with the Department of Housing and Community Development (HCD) has documented its deliberate decision to use higher headship rates to reflect optimal conditions and intentionally “alleviate the burdens of high housing cost and overcrowding.” Unfortunately, SB-828 has caused the state to double count these important numbers. Five Percent Item 4.A 12/15/20 147 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 949 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1. Incorrect use of a 5% benchmark vacancy rate for owner-occupied housing. The vacancy rate was incorrectly used for both existing and projected owner-occupied households. 2. Current vacancies were assumed to exist in household projections. This error is unrelated to SB-828, but is an accounting error introduced by HCD methodology. 3. Overcrowding and cost-burdening were double counted.** In addition to the household projection methodology outlined by the Department of Finance (shown to account for overcrowding and cost-burdening), the matter is also mentioned in meeting notes available on the Association of Bay Area Government’s (ABAG) website.*** Quote from ABAG’s Housing Methodology Committee Agenda Packet for the 4th RHNA Cycle, July 2006 “There was also a lot of discussion about the headship rates used by HCD/DOF. Several people commented that headship rates in the Bay Area are generally lower than the State’s estimates because the region’s high housing costs limit household formation. In response, Mr. Fassinger noted that HCD uses these higher headship rates because the RHNA process is intended to alleviate the burdens of high housing cost and overcrowding.” Despite this, overcrowding and cost-burdening were counted a second time as adjustment factors required by SB-828. + 229,000 housing units + 734,000 housing units – 22,000 housing units + 941,000 housing units 4 The forced double-counting errors are significant.* * All errors are rounded to the nearest thousand. ** Overcrowding measures the number of households with more than 1 person per room. Cost-burdening measures the number of households that spend more than 30% of the household income on housing. Cost-burdening is measured by five income levels — extremely low, very low, low, moderate, above moderate*** P-4 tables are created by the Department of Finance—Household Projection table 2020–2030 and their methodology is fully explained in ‘read me’ notes that accompany the table. TOTAL: Item 4.A 12/15/20 148 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 950 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) * Based on permit progress reports published by the Dept of Housing and Community Development and updated July 2020, reporting progress through April 2019.** Only the Bay Area is shown because other regions have not kept detailed records of permit progress through the 3rd and 4th cycles. 5th Cycle Targets (as of April 2019) 500K 250K Permit Progress in the 5th Cycle (2013-2022)* (all 4 regions) Very low + low income Market rate Permits Issued (as of April 2019) Affordable Housing Languishes as Market-Rate Housing Overachieves (Bay Area only)* 4th Cycle2007–2014 5th Cycle2014–20223rd Cycle1996–2006 +150% +100% +50% -50% 0% Very-low + Low Income PermitsMarket-Rate Permits 5 The state has shown, with decades of data, that it cannot dictate to the market. The market is going to take care of itself. The state’s responsibility is to take care of those left behind in the market’s wake. Based on housing permit progress reports published by the Dept. of Housing and Community Development in July 2020, cities and counties in the four most populous regions continue to strongly outperform on the state’s assigned market-rate housing targets, but fail to achieve even 20% of their low-income housing target. In the Bay Area where permit records have been kept since 1997, there is evidence that this housing permit imbalance has propagated through decades of housing cycles. The state’s exaggerated targets unfortunately mask the real story: Decades of overachieving in market-rate housing has not reduced housing costs for lower income households. Great Recession (2007–2010) impacted housing. Market-rate meets but does not exceed state target in the 4th cycle. Item 4.A 12/15/20 149 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 951 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Cities are charged by the state to build one market-rate home for every one affordable home. But state laws, such as the density bonus law, incentivize developers to build market-rate units at a far higher rate than affordable units. As a result, California has been building four market-rate units for every one affordable unit for decades. And with the near-collapse of legislative funding for low-income housing in 2011, that ratio has grown to seven to eight market-rate units to each affordable unit. Yet we need one-to-one. This worsening situation can’t be fixed by zoning or incentives which are the focus of many recent housing bills and only reinforce or worsen the ever-higher market-rate housing ratios. From the data it appears that the shortage of housing resulted not from a failure by cities to issue housing permits, but rather a failure by the state to fund and support affordable housing. Future legislative efforts should take note. Market-Rate to Low-Income Housing Permits in the Bay Area has grown from a ratio of 4 : 1 to 7 : 1 (Bay Area only)** 4th Cycle2006–2014 5th Cycle2014–20223rd Cycle1999–2006 4 2 6 8 0 Effect of reduced state funding for affordable housing. 2008 2010 2012 2014 2016 2018 $3.0 $2.0 $1.0 $0 The ratiomandated by the state State Funds for Affordable Housing, 2008–2019* $ Billion Actual ratio Redevelopmentagenciesshuttered 6 It’s clear. Market-rate housing doesn’t need state incentives. Affordable housing needs state funding. * “The Defunding of Affordable Housing in California”, Embarcadero Institute, update June 2020 www.embarcaderoinstitute.com/reports/** Only Bay Area is shown because other regions have not kept detailed records of permit progress through the 3rd and 4th cycles. Data is from ABAG’s permit progress reports for 3rd and 4th cycle and Dept. of Housing and Community Development’s 5th cycle Annual Progress Report. Item 4.A 12/15/20 150 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 952 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Finally, since penalties are incurred for failing to reach state targets for housing permits, the methodology for developing these numbers must be transparent, rigorous and defensible. Non-performance in an income category triggers a streamlined approval process per Senate Bill 35 (2017). These exaggerated 6th cycle targets will make it impossible for cities and counties to attain even their market-rate targets, ensuring market-rate housing will qualify for incentives and bonuses meant for low income housing. Yet again low-income housing will lose out. The state needs to correct the errors in the latest housing assessement, and settle on a consistent, defensible approach going forward. 1. ConventionalEconomist Approach 2. SB-828Double Count 3. McKinsey’s New YorkBenchmark Jobs-to-Housing Ratio of 1.5 1.17M 2.11M 2.88M 0.23M 1. The Conventional Economist Approach: uses goldilocks (not too big, not too small, just right) benchmarks for vacancies - 1.5% for owner-occupied and 5% for rental housing. 2. SB-828 Double Count: incorrectly uses a benchmark of 5% vacancy for owner-occupied housing. It also double counts overcrowding and cost-burdening 3. McKinsey’s New York Benchmark: the over-simplified approach generated an exaggerated housing gap of 3.5 Million for California. McKinsey multiplied California’s population by New York’s housing per capita to get 3.5M. New York is not a proper benchmark for California and NY’s higher housing per capita is more reflective of NY’s declining population rather than a healthy benchmark for housing 4. Jobs-to-housing ratio of 1.5: according to state planning agencies 1.5 is the optimal benchmark. Employment in the four regions is estimated to grow to 17 million by 2030 (job growth estimates prepared before COVID).** Forecast 2030 Housing Need for the Four RegionsAt Least Four Different Methodologies Have Been Used Simultaneously by the State to Discuss Housing Need: We Only Need One * California’s Employment Development Department (EDD) estimates employment by county through 2026. Using annualized growth (2016 to 2026) as a basis for future growth 2030 employment is estimated for the four regions.** The 17 million includes estimates of self employed, private household workers, farm and nonfarm employment. Occupations with employment below 100 in 2016 are excluded. McKinsey’s 3.5 Million Housing Gap for California (New York as comparable) 7 McKinsey’s Housing Gap for the four regions Item 4.A 12/15/20 151 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 953 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Dept. of Finance (DOF) How it Works : A multi-agency collaborative effort has generated past state housing targets. However, in 2018, SB-828 annointed the Dept. of Housing and Community Development with final veto powers. STEP 1 STEP 2 STEP 3 STEP 4 Dept. of Housing and Community Development (HCD) APPENDIX A-1 The Dept. of Finance (DOF) generates household forecasts by county based on population growth and headship rates. This is the step where overcrowding and cost-burdening are factored in . The Dept. of Housing and Community Development (HCD) then takes the DOF household projections and adds in a healthy vacancy level (1.5% for owner-occupied, 5% for rental housing) to determine the number of housing units needed to comfortably accommodate the DOF household projections. Cities and Counties report annual progress on housing permits to the Dept. of Housing and Community Development (HCD) The regional agencies allocate housing targets to cities and counties in their jurisdiction. These allocations collectively meet their RHNA assessments, and are based on algorithms that may include employment, transit accessibility and local housing patterns Item 4.A 12/15/20 152 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 954 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) + 228,000 housing units + 734,000 housing units – 22,000 housing units Six SoCal Counties = +578,000 Greater Bay Area = +104,000 San Diego Area = +39,000 Greater Sacramento = +13,000 Southern California and the Bay Area were most impacted by the double counting. San Diego was not assessed for cost-burdening although it is more cost-burdened than the Bay Area. It was perhaps overlooked because its assessment cycle began in July, 2018, a few months before SB-828 passed into law. Six SoCal Counties = -13,000 Greater Bay Area = -4,000 San Diego Area = -2,000 Greater Sacramento = -3,000 Six SoCal Counties = +126,000 Greater Bay Area = +59,000 San Diego Area = +23,000 Greater Sacramento = +21,000 A-2 APPENDIX SB-828 introduced errors in Step 2 (when the Dept. of Housing and Community Development made adjustments to the Dept. of Finance’s household projections). 1. Used a benchmark of 5% vacancy rate for BOTH owner-occupied and rental housing. The Department of Housing and Community and Development 2. Assumed vacancies in household projections * 3. Double counted overcrowding and cost-burdening * P-4 tables are created by the Department of Finance—Household Projection table 2020–2030 and their methodology is fully explained in ‘read me’ notes that accompany the table ** Overcrowding measures the number of households with more than 1 person per room. Cost-burdening measures the number of households that spend more than 30% of the household income on housing. Cost-burdening is measured by five income levels—extremely low, very low, low, moderate, above moderate. Item 4.A 12/15/20 153 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 955 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (10,000) (39,000) * Owner-occupied has a lower healthy vacancy rate because it is usually only vacant while a house is for sale** All numbers are rounded to the nearest thousand.*** Seasonal Vacancies represent second homes, coprorate housing, and short-term rentals such as AIrBnBs EXISTING HOUSING: Six SoCal Counties The Department of Housing and Community Development (HCD) have traditionally arrived at a number for pent-up demand or housing shortfall by comparing vacancy rates in owner-occupied and rental housing to healthy benchmarks (1.5% for owner-occupied* and 5% for rental housing). The largest of the four regions, six SoCal Counties (covering Imperial, Los Angeles, Orange, Riverside, San Bernardino, and Ventura counties) is considered in the example below**. 1.2%Home-owned (3.3 Million) Vacant Housing Units Actual Vacancies (40,000) Healthy Benchmark (50,000)1.5% 3.7% 5.0% Existing Need Rentals (3 Million) Occupied Housing Units Actual Vacancies (111,000) Healthy Benchmark (150,000) Seasonal Vacancies (500,000)*** 1 circle = 10,000 households A-3 APPENDIX Detailed explanation of the errors using SoCal Counties as an example: First—the correct approach. Item 4.A 12/15/20 154 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 956 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) PROJECTED HOUSING NEED: Six SoCal Counties Healthy Vacancy New Housing: Replacement Adjustment: Existing NeedAdditional HH by 2030 Home-owned (290,000) Rentals (261,000) Total Housing Need by 2030 1.5% (4,000)(10,000) 5.0% (13,000)(39,000) (34,000) The Dept. of Finance (DOF) supplies the Dept. of Housing and Community Development (HCD) with an estimate of additional households (HH) needed by the end of the cycle. The DOF forecast the 2030 population and using an optimal household formation rate determine the number of households needed to comfortably house that population*. The DOF also supply the HCD with the number of existing households at the start of the cycle. The HCD adds to the base number of additional households needed, factoring in vacancies for a healthy market, and adding a replacement adjustment (also supplied by the DOF)**. * Households represent occupied housing units. The number of housing units is always higher as at any given time than the number of households because some housing will be vacant or unutilized. The DOF is responsible for the base projection because they manage population projections for the state, and determine those by analyzing births, deaths and net migration. ** Replacement represents houses that may be demolished or replaced during the cycle*. 651,000housing units 1 circle = 10,000 households A-4 APPENDIX The housing need also takes into account for future growth. Item 4.A 12/15/20 155 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 957 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (125,000) (38,000) EXISTING HOUSING: Six SoCal Counties Instead of the typical 1.5% benchmark for owner-occupied housing, they used a 5% vacancy rate usually reserved for rental housing. A 5% vacancy in owner-occupied housing is indicative of a distressed housing market. At 5%, SoCal’s existing housing need is increased by 115,000 housing units. Existing need for rental housing is unchanged. However, the Dept. of Housing and Community Development has adopted an unusual methodology in evaluating existing need in the 6th housing cycle. 1.2%Home-owned (3.3 Million) Vacant Housing Units Actual Vacancies (40,000) Healthy Benchmark (165,000)5.0% 3.7% 5.0% Existing Need Rentals (3 Million) Occupied Housing Units Actual Vacancies (110,000) Healthy Benchmark (149,000) Seasonal Vacancies (500,000) 1 circle = 10,000 households A-5 APPENDIX Item 4.A 12/15/20 156 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 958 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (34,000) PROJECTED HOUSING NEED: Six SoCal Counties Healthy Vacancy New Housing: Assumed Vacancy New Housing Replacement Adjustment: Existing Need Additional HH by 2030 Home-owned(290,000) Rentals (261,000) 5% (15,000)1.2%(3,000)(125,000) 5.0% (13,000)(39,000) Again, instead of using the separate benchmark of 1.5% for owner-occupied housing, 5% was used for all housing. It was also assumed that new projected households had existing vacancies. The full benchmark was not applied to new households. Instead, the difference between the benchmark and the current vacancy rate was applied. The replacement adjustment was applied as it has been in the past. 3.7%(10,000) 763,000housing units 1 circle = 10,000 households A-6 APPENDIX The Dept. of Housing and Community Development have also taken an unual approach in evaluating projected housing need. Item 4.A 12/15/20 157 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 959 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (460,000) PROJECTED HOUSING NEED: Six SoCal Counties Overcrowding Adjustment* Additional HH by 2030 Home-owned(290,000) Rentals (261,000) (118,000) Cost Burdening Adjustment** Two new factors were introduced into the 6th assessment — overcrowding and cost burdening. These factors had already been rolled into the DOF’s household projections. The DOF explicitly recognized that regional household formation rates might be depressed (a symptom of overcrowding and cost-burdening) because of the affordable housing crisis. The household formation rate used by the DOF is higher than the actual rate experienced. As such it generates a higher housing target meant to relieve overcrowding and cost-burdening. Projected Households already factors in overcrowding and cost-burdening From the Department of Finance “The argument was that the Great Recession and the affordability crisis which impact recent trends in headship should not be allowed to solely dominate the projection, rather some return to underlying socio-cultural norms of homeownership/fewer roommates is a beneficial assumption” A DOUBLE COUNT 1 circle = 10,000 households A-7 APPENDIX Lastly, the Dept. of Housing and Community Development double counted by adding two new factors that had already been factored into household forecasts made by the Dept. of Finance (DOF). * In addition to double counting, HCD incorrectly calculated the overcrowding factor. They assumed that for every house that was overcrowded another house would be required to relieve overcrowding. The more accurate analysis would be to assess the number of extra people to be housed and divide by the average household size. ** HCD only applied cost-burdening adjustments to future households not existing households. It is unclear why cost-burdening would only be considered an issue for future households, as the data is for current households. Item 4.A 12/15/20 158 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 960 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) (34,000) (460,000) HCD 6TH CYCLE METHODOLOGY Healthy Vacancy New Housing: Assumed Vacancy New Housing Replacement Adjustment: Overcrowding Adjustment Existing Need Additional HH by 2030 Home-owned(290,000) Rentals (261,000) (118,000) Cost Burdening Adjustment Total Housing Need by 2030 5% (15,000)1.2%(3,000)(125,000) 5.0% (13,000)(39,000) 1,342,000housing units TYPICAL METHODOLOGY Healthy Vacancy New Housing: Replacement Adjustment: Existing NeedAdditional HH by 2030 Home-owned (290,000) Rentals (261,000) Total Housing Need by 2030 1.5% (4,000)(10,000) 5.0% (13,000)(39,000) (34,000) 651,000housing units 3.7% (10,000) 1 circle = 10,000 households A-8 APPENDIX The vacancy errors and double counting resulted in a doubling of the housing needs assessment for the six counties of SoCal. Item 4.A 12/15/20 159 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 961 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) Complete data tables: www.embarcaderoinstitute.com References used in the analysis : Dept. of Housing and Community Development (HCD) https://www.hcd.ca.gov Regional Housing Needs Allocation and Housing Elements Regional Housing Needs Allocations for 6th Cycle Housing Elements: Association of Bay Area Governments Regional Housing Need Determination Plan for the Sixth Housing Element Update Sacramento Area Council of Governments Regional Housing Need Determination for the Sixth Housing Element Update Southern California Association of Governments Regional Housing Need Determination for the Sixth Housing Element Update San Diego Association of Governments Regional Housing Need Determination and Plan for the Sixth Housing Element Update Allocations for 5th Cycle Housing Elements: Association of Bay Area Governments (February 24, 2012) Sacramento Area Council of Governments (September 26, 2011) San Diego Association of Governments (November 23, 2010) Southern California Association of Governments (August 17, 2011) Annual Progress Reports Annual Progress Report APR: 5th Cycle Annual Progress Report Permit Summary (updated 730/2020) Allocations for Earlier Cycles and Housing Element RHNA 2007-2014 - Housing Methodology Committee Agenda Packet 07-27-06 Regional Housing Needs Plan 2006 to 2013 SACOG February 2008 3rd and 4th Cycle RHNA allocations (data sent in personal communication witthe Department of Housing and Comunity Development) Department of Finance Methodology for Household Forecasts “Read Me” P4 Tables : Household Projections 2020 to 2030 Association of Bay Area Governemnets Digital Library: RHNA Documents, Regional Housing Neeed Allocation Documents RHNA 2007-2014 - Housing Methodology Committee Agenda Packet 07-27-06, Regional Housing Need Allocation p 2 Other Housing Assessment Methodologies “Mckinsey & Company: A TOOL KIT TO CLOSE CALIFORNIA’S HOUSING GAP: 3.5 MILLION HOMES BY 2025”, October 2016 Jobs to Housing Employment Development Department, State of California, Employment Projections : Long Term Projections https://www.labormarketinfo.edd.ca.gov/data/employment-projections.html END NOTES Item 4.A 12/15/20 160 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 962 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:zinajosephs@aol.com Sent:Tuesday, December 15, 2020 9:11 AM To:councilmtgitems; Gleam Davis; Phil Brock; Christine Parra; Oscar de la Torre; Councilmember Kevin McKeown; Kristin McCowan; Sue Himmelrich Cc:zinajosephs@aol.com Subject:City Council 12/15/20 agenda item 4-A: Housing Element Update EXTERNAL December 14, 2020 To: Mayor Himmelrich and City Council members From: Board of Directors, Friends of Sunset Park RE: 12/15/20 agenda item 4-A: Housing Element Update Although Santa Monica has exceeded its SCAG allotments in the past, the FOSP Board finds that the SCAG / RHNA number of 8,874 new housing units for Santa Monica by 2029, with 70% of those affordable, is unrealistically high. The FOSP Board urges the Santa Monica City Council to do the following: 1) Direct staff to provide information on the current carrying capacity of present zoning. 2) Direct staff to agendize a City Council study session on the Embarcadero Institute document “Double Counting in the Latest Housing Needs Assessment.” 3) Participate in CALE – the California Association of Local Electeds -- https://www.caleelecteds.org/ -- which is investigating possible legal action concerning the unrealistic statewide HCD numbers and the local SCAG allocation, with which the City of Santa Monica cannot possibly comply. With no state funding, the city cannot afford to pay for the construction of 6,000 new affordable apartments, and developers are not going to build 6,000 affordable apartments out of the goodness of their hearts. Item 4.A 12/15/20 161 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 963 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 According to “Double Counting in the Latest Housing Needs Assessment” (September 2020 – Embarcadero Institute -- https://embarcaderoinstitute.com/) the state has ordered more than 350 cities to prepare the way for more than 2 million homes by 2029. But use of an incorrect vacancy rate and double counting has caused the state’s Department of Housing and Community Development (HCD) to exaggerate by more than 900,000 the number of units needed in SoCal, the Bay Area, and the Sacramento area. The League of California Cities “2021 Strategic Advocacy Priorities” doesn’t even include discussion of the HCD numbers. https://www.cacities.org/Top/About-Us/Strategic-Goals Again, the FOSP Board urges the Santa Monica City Council to: 1) Direct staff to provide information on the current carrying capacity of present zoning. 2) Direct staff to agendize a City Council study session on the Embarcadero Institute document “Double Counting in the Latest Housing Needs Assessment.” 3) Participate in CALE – the California Association of Local Electeds -- https://www.caleelecteds.org/ -- which is investigating possible legal action concerning the unrealistic statewide HCD numbers and the local SCAG allocation, with which the City of Santa Monica cannot possibly comply. Thank you for your consideration. Item 4.A 12/15/20 162 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 964 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 Vernice Hankins From:jmdmel@aol.com Sent:Tuesday, December 15, 2020 9:36 AM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 EXTERNAL Dear Mayor and Council members of Santa Monica, By adding a copy of Northeast Neighbors email to you regarding Agenda item 4-A, I am voicing my support for their request and am requesting that you review and stop the RHNA allocation and demand at this moment. When this study was done (incorrectly) our lives and world environment was different than what it is today. Not to say that it even had a merit then in my opinion. Yes, Everybody has to have a chance for a good life and access to affordable housing but at what cost? What about the rights of the current residents of the city? I totally disagree with putting the burden of adding thousands of new housing in Santa Monica and therefore adding to our already dense population. I do not believe RHNA ever asked the opinion of the people of the cities they are forcing their mandate on whether or not we agreed with them. We the people who came to Santa Monica many years ago and have lived and paid taxes to make it flourish. Please listen and act accordingly to what is being asked from you by the CURRENT citizens of this city. This is an unfair and unjust request put on our city and you must fight it. Respectfully, D. Melamed To: Mayor Himmelrich and Santa Monica City Council From: Northeast Neighbors Re: Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 Dear Mayor Himmelrich and City Council, Santa Monica has done an exemplary job among coastal cities in our region of providing affordable housing and we must continue to plan for affordability for our existing and future residents. However, the RHNA allocation will not serve our City well in this continued effort. As we study the Housing Element and the requirement from the State HCD and SCAG to plan for more than 8800 new housing units, we need to address questions that have been raised about the underlying methodology used by HCD and SCAG in the RHNA housing allocation mandates. The state’s approach to determining housing needs must be defensible and reproducible if cities are to be held accountable. The problem is that there is evidence that HCD generated RHNA housing numbers using an incorrect vacancy rate and double counting: Item 4.A 12/15/20 163 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 965 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing-shortage-number-is- wrong-fueling-poor-policy/ 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227‐the‐housing‐supply‐shortage.page Given the questions raised by the Embarcadero Institute and the Freddie Mac studies, the Board of Northeast Neighbors requests that both of these reports should be reviewed and discussed in public as the City Council considers our RHNA number and understands our best options. City Council should direct the City Attorney to send a letter to SCAG asking for a review of our RHNA numbers. Further, we ask that the City Council direct Staff to research and assemble a report on those California cities that are actively mounting legal challenges to their regional RHNA allocations. Finally, We request that City Council members participate in the California Association of Local Electeds to explore opportunities to work alongside the leaders of neighboring cities who seek to preserve local control as we continue to pursue housing affordability. Sincerely, Item 4.A 12/15/20 164 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 966 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5 Vernice Hankins From:Mario Fonda-Bonardi <mario@fbharchitects.com> Sent:Tuesday, December 15, 2020 10:56 AM To:councilmtgitems Subject:Item 4A SCAG Study session EXTERNAL Dear Councilpersons As you face the fantasy of 8874 new units required by SCAG and the mirage that 6000 will be affordable in a shrinking local and statewide population (not even counting those being killed by Covid), please take three prudent steps to protect our City: 1. Agree now that no new up zoning is needed since there is more than sufficient capacity in our current zoning for any foreseeable growth. SCAG tries to make the fraudulent argument that only certain sites are “suitable” and tries, for example. to limit the production of Accessory Dwelling Units to only 600 when we actually have 9000 suitable R‐1 lots. There is no need for any up zoning, the entire City is a suitable site for development. Our LUCE and current codes are already permitting, in the last 8 year cycle, about twice the approximately 1700 units required by SCAG. The fact that not enough were affordable was not a zoning problem but a funding problem. Your agreement of no new up zoning will reassure the thousands of resident who know their City is out of control and that SCAGs coercion only makes it worse. 2. The City needs to go back to SCAG to talk some sense to them as their numbers are completely unsubstantiated by a factor of 4 or 5 (see the 2/2020 Freddie Mac vacancy study). We will have plenty of company in this effort from the 50 Cities that are already appealing their numbers. The City attorney needs to lead this charge because this overreach is an illegal unfunded mandate and will inevitably end up in court, wasting millions that would best be spent actually making affordable housing. 3. Finally please instruct the Staff to prepare our own real credible housing element given our natural population growth, our limited water, our projected jobs profile, the need to get the entire state off of fossil fuels in 25 years, the realistic projected availability of affordable housing funds, the existing traffic capacity, infrastructure and schools, and the countless other variables that impact our housing outcomes. This is a complex but valuable public discussion best accomplished uninfluenced by SCAG’s blackmail. Realism is a virtue in public policy. Lies in the public domain (e.g." don’t wear a mask”) kill people. Lies embedded in a housing element can kill an entire City. Like republican politicians parroting the lie that the election was stolen, do not sacrifice your credibility propagating the SCAG numbers lie. Get us the real housing element we need and the City deserves. We only do this SCAG dance once every eight years. Lets do it right by stepping off in a real direction from the beginning. Thanks Mario Fonda‐Bonardi AIA Mario@fbharchitects.com 310‐699‐0374 Item 4.A 12/15/20 165 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 967 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 6 Vernice Hankins From:Dan J. <danjan101@gmail.com> Sent:Tuesday, December 15, 2020 11:01 AM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 EXTERNAL Dear Mayor Himmelrich and members of City Council, Any discussion of the RHNA allocation for our City must take into account an understanding of the current carrying capacity of our current zoning codes. We must also have an understanding of which properties are underbuilt (relative to the maximum allowed by the zoning code), and what their capacity is. Without those two things, we'll never know how many new units our City can accommodate. Some people and organizations are already demanding that we upzone the entire city to accommodate the new units, without knowing how many can be built under the current zoning. To date we have not seen any study produced by the City that provides that information. Without that most basic data, any discussion inevitably devolves into ideological chest‐beating. And any workshops, study groups and webinars are, essentially, ineffectual. This helps nobody. We must get beyond the ideological propaganda phase and address the matter effectively. Please instruct staff to produce the information mentioned above immediately so that we may have an intelligent discussion about this issue. Sincerely, Daniel Jansenson Item 4.A 12/15/20 166 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 968 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 7 Vernice Hankins From:danilobach <danilobach@aol.com> Sent:Tuesday, December 15, 2020 11:05 AM To:councilmtgitems Subject:Item 4-A, City Council agenda for 12/15/20 EXTERNAL Dear Mayor Himmelrich and Council members, It's clear to me that there is too much mystery, confusion, and perplexity about the RHNA numbers assigned to our city by the HCD and SCAG and how we will meet them, especially the need for affordable housing, not to urge you to approach these agencies for a review and reconsideration of the numbers. State funding is essential and there is no indication of it on the horizon, which makes the endeavor even more pressing. Santa Monica residents are not alone in their doubt about these allocations and I urge you to direct staff, our City Attorney, and our City Manager to join with other cities, too, in this approach to the State. Respectfully, Danilo Bach Item 4.A 12/15/20 167 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 969 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 8 Vernice Hankins From:Garland Allen <garallenlaw@gmail.com> Sent:Tuesday, December 15, 2020 12:03 PM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda item 4-A, Housing Element Update EXTERNAL Dear Mayor Himmelrich and City Council Members, I second and completely agree with the sentiment expressed in the email below from NE Neighbors. Respectfully, Garland Allen 2722 Washington Avenue Santa Monica, CA 90403 Tel: 310‐260‐1288 Website: GarlandAllen.com Subject: To City Council from Northeast Neighbors re Agenda item 4‐A, Housing Element Update, Dec. 15, 2020 To: Agenda Items <councilmtgitems@smgov.net>, <christine.parra@smgov.net>, <phil.brock@smgov.net>, <oscar.delatorre@smgov.net>, sue.himmelrich <sue.himmelrich@smgov.net>, <Kristin.McCowan@smgov.net>, kevin <kevin@mckeown.net>, Gleam Davis <gleam.davis@smgov.net>, clerk <clerk@smgov.net>, Denise Anderson‐Warren <denise.anderson‐warren@smgov.net>, Lane Dilg <Lane.Dilg@smgov.net> To: Mayor Himmelrich and Santa Monica City Council From: Northeast Neighbors Re: Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 Dear Mayor Himmelrich and City Council, Santa Monica has done an exemplary job among coastal cities in our region of providing affordable housing and we must continue to plan for affordability for our existing and future residents. Item 4.A 12/15/20 168 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 970 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 9 However, the RHNA allocation will not serve our City well in this continued effort. As we study the Housing Element and the requirement from the State HCD and SCAG to plan for more than 8800 new housing units, we need to address questions that have been raised about the underlying methodology used by HCD and SCAG in the RHNA housing allocation mandates. The state’s approach to determining housing needs must be defensible and reproducible if cities are to be held accountable. The problem is that there is evidence that HCD generated RHNA housing numbers using an incorrect vacancy rate and double counting: 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing-shortage-number-is- wrong-fueling-poor-policy/ 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227‐the‐housing‐supply‐shortage.page Given the questions raised by the Embarcadero Institute and the Freddie Mac studies, the Board of Northeast Neighbors requests that both of these reports should be reviewed and discussed in public as the City Council considers our RHNA number and understands our best options. City Council should direct the City Attorney to send a letter to SCAG asking for a review of our RHNA numbers. Further, we ask that the City Council direct Staff to research and assemble a report on those California cities that are actively mounting legal challenges to their regional RHNA allocations. Finally, We request that City Council members participate in the California Association of Local Electeds to explore opportunities to work alongside the leaders of neighboring cities who seek to preserve local control as we continue to pursue housing affordability. Item 4.A 12/15/20 169 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 971 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 10 Sincerely, Tricia Crane, Chair and the Board of Northeast Neighbors Item 4.A 12/15/20 170 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 972 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 11 Vernice Hankins From:Farrokh Allen <farrokhjune@hotmail.com> Sent:Tuesday, December 15, 2020 12:07 PM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda Item 4-A,HOusing Element EXTERNAL Dear Mayor Himmelrich and City Council Members, I agree with the letter sent by Tricia Crane of NE Neighbors re Agenda Item4-A on tonight's agenda. Respectfully, Farrokh Allen 2722 Washington Avenue Santa Monica, CA 90403 To: Mayor Himmelrich and Santa Monica City Council From: Northeast Neighbors Re: Agenda item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 Dear Mayor Himmelrich and City Council, Santa Monica has done an exemplary job among coastal cities in our region of providing affordable housing and we must continue to plan for affordability for our existing and future residents. However, the RHNA allocation will not serve our City well in this continued effort. As we study the Housing Element and the requirement from the State HCD and SCAG to plan more than 8800 new housing units, we need to address questions that have been raised abou underlying methodology used by HCD and SCAG in the RHNA housing allocation mandates. Item 4.A 12/15/20 171 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 973 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 12 The state’s approach to determining housing needs must be defensible and reproducible if cit are to be held accountable. The problem is that there is evidence that HCD generated RHNA housing numbers using an incorrect vacancy rate and double counting: 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing-shortage-number-is-wrong-fuel poor-policy/ 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the Sta http://www.freddiemac.com/research/insight/20200227‐the‐housing‐supply‐shortage.page Given the questions raised by the Embarcadero Institute and the Freddie Mac studies, the Bo of Northeast Neighbors requests that both of these reports should be reviewed and discussed public as the City Council considers our RHNA number and understands our best options. City Council should direct the City Attorney to send a letter to SCAG asking for a review of ou RHNA numbers. Further, we ask that the City Council direct Staff to research and assemble a report on those California cities that are actively mounting legal challenges to their regional RHNA allocations Finally, We request that City Council members participate in the California Association of Loc Electeds to explore opportunities to work alongside the leaders of neighboring cities who seek preserve local control as we continue to pursue housing affordability. Sincerely, Tricia Crane, Chair and the Board of Northeast Neighbors To help protect your privacy, Microsoft Office prevented automatic download of this picture from the Internet. ReplyReply allForward Item 4.A 12/15/20 172 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 974 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 15 Vernice Hankins From:Clerk Mailbox Sent:Tuesday, December 15, 2020 1:23 PM To:councilmtgitems Subject:FW: Agenda Item 4-A From: Shari Phillips <write.shari@verizon.net> Sent: Tuesday, December 15, 2020 12:03 PM To: Christine Parra <Christine.Parra@SMGOV.NET>; Phil Brock <Phil.Brock@SMGOV.NET>; Oscar de la Torre <Oscar.delaTorre@SMGOV.NET>; Sue Himmelrich <Sue.Himmelrich@SMGOV.NET>; Kristin McCowan <Kristin.McCowan@SMGOV.NET>; Kevin McKeown Fwd <kevin@mckeown.net>; Gleam Davis <Gleam.Davis@SMGOV.NET>; Clerk Mailbox <Clerk.Mailbox@SMGOV.NET>; Denise Anderson‐Warren <Denise.Anderson‐Warren@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET> Subject: RE: Agenda Item 4‐A EXTERNAL Dear Mayor Himmelrich and City Council, Santa Monica has done an exemplary job among coastal cities in our region of providing affordable housing and we must continue to plan for affordability for our existing and future residents. However, the RHNA allocation will not serve our City well in this continued effort. As we study the Housing Element and the requirement from the State HCD and SCAG to plan for more than 8800 new housing units, we need to address questions that have been raised about the underlying methodology used by HCD and SCAG in the RHNA housing allocation mandates. The state’s approach to determining housing needs must be defensible and reproducible if cities are to be held accountable. The problem is that there is evidence that HCD generated RHNA housing numbers using an incorrect vacancy rate and double counting: 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing-shortage-number-is- wrong-fueling-poor-policy/ Item 4.A 12/15/20 173 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 975 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 16 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227‐the‐housing‐supply‐shortage.page Given the questions raised by the Embarcadero Institute and the Freddie Mac studies, the Board of Northeast Neighbors requests that both of these reports should be reviewed and discussed in public as the City Council considers our RHNA number and understands our best options. City Council should direct the City Attorney to send a letter to SCAG asking for a review of our RHNA numbers. Further, we ask that the City Council direct Staff to research and assemble a report on those California cities that are actively mounting legal challenges to their regional RHNA allocations. Finally, We request that City Council members participate in the California Association of Local Electeds to explore opportunities to work alongside the leaders of neighboring cities who seek to preserve local control as we continue to pursue housing affordability. Sincerely, Shari P. Item 4.A 12/15/20 174 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 976 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Clerk Mailbox Sent:Tuesday, December 15, 2020 1:26 PM To:councilmtgitems Subject:FW: RHNA From: Marc Abraham <m.abraham@strike‐ent.com> Sent: Tuesday, December 15, 2020 12:53 PM To: Phil Brock <Phil.Brock@SMGOV.NET>; Christine Parra <Christine.Parra@SMGOV.NET>; Oscar de la Torre <Oscar.delaTorre@SMGOV.NET>; Kristin McCowan <Kristin.McCowan@SMGOV.NET>; Gleam Davis <Gleam.Davis@SMGOV.NET>; Clerk Mailbox <Clerk.Mailbox@SMGOV.NET>; Denise Anderson‐Warren <Denise.Anderson‐Warren@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET> Subject: RHNA EXTERNAL Dear Council Members, After extensive research and considering all the pertinent and available data I have come to the conclusion that the City of Santa Monica must challenge the state’s unrealistic, damaging and questionable RHNA numbers. The City Council needs to immediately let SCAG know Santa Monica wants a review of the numbers and also join the other California cities that have already begun mounting legal challenges to the allocations. Unfortunately, SM is already late and let far too much time pass without substantially vetting the entire process and the potential impact on SM. Housing affordability is a serious concern, but the process has gone way off the rails and needs to be rectified. Sincerely, Marc Abraham 927 Berkeley st. SM Item 4.A 12/15/20 175 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 977 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Katharine Dreyfuss <kitdreyfuss@gmail.com> Sent:Tuesday, December 15, 2020 1:49 PM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda item 4-A, Study Session on the Housing Element Update, Dec.15,2020 EXTERNAL Dear Mayor Himmelrich and City Council, Santa Monica has worked hard to provide affordable housing and must continue to plan for affordability for its current and future residents. The State HCD and SCAG RHNA allocation for Santa Monica of 8800 new housing units will not meet this goal because of the use of incorrect vacancy rate and double counting in HCD's generation of RHNA housing numbers. Two studies produced this evidence: 1) the September 2020 report by the Embarcadero Institute: "Double‐Counting in the Latest Housing Needs Assessment" 2) the February 2020 Freddie Mac report: "The Housing Supply Shortage: State of the States" These reports must be reviewed and discussed in public in order for the City Council to make an appropriate decision for our community's allocation. Please direct the City Attorney to request a SCAG review of our RHNA numbers. Please direct staff to report on California cities who are challenging tyjrot pwn regional RHNA allocations. Please join the California Association of Local Electeds to work with neighboring cities toward preservation of local control in their pursuit of affordable housing. Thank you for considering my requests. Sincerely, Kit Dreyfuss Item 4.A 12/15/20 176 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 978 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:news4jd@verizon.net Sent:Tuesday, December 15, 2020 1:40 PM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:Agenda Item 4-A, Study Session on the Housing Element Update, Dec. 15, 2020 EXTERNAL Dear Council Members, I mirror and support the Board of Northeast Neighbors email sent to you in the last few days. There is no reason to repeat what was very well stated in that email. Thank you. Sincerely, John Dahl Resident of SM Item 4.A 12/15/20 177 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 979 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 Vernice Hankins From:sherkush@aol.com Sent:Tuesday, December 15, 2020 1:38 PM To:councilmtgitems Subject:Item 4A EXTERNAL Dear Council members: According to “Double Counting in the Latest Housing Needs Assessment” (September 2020 – Embarcadero Institute -- https://embarcaderoinstitute.com/) the state has ordered more than 350 cities to prepare the way for more than 2 million homes by 2029. But use of an incorrect vacancy rate and double counting has caused the state’s Department of Housing and Community Development (HCD) to exaggerate by more than 900,000 the number of units needed in Southern California, the Bay Area, and the Sacramento area. I urge you to fight this mandate. It is unreasonable to ask Santa Monica to build an additional 8,000+ units. While I agree we need more affordable housing in the City, this amount is outrageous. Please consider joining a lawsuit with other cities to have this scaled back to what is more reasonable given our infrastructure capacity and available space. Sincerely, Sherrill Kushner sherkush@aol.com (310) 729-2647 Item 4.A 12/15/20 178 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 980 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Michael Jolly <mpers1971@gmail.com> Sent:Tuesday, December 15, 2020 7:34 AM To:councilmtgitems Cc:Clerk Mailbox Subject:Re: Agenda item #4. Study Session – Review of the Housing Element (see attachment) Attachments:LETTER-32-MAYORS-09-18-2020.pdf EXTERNAL Hello, I'm sending you this communication and attachment referenced below at the request and on behalf of the Residents Cross‐City for Safety & Sanity group. Please enter into the record for the December 15, 2020 City Council meeting, Agenda Item #4 Study Session – Review of the Housing Element, the “Request to Reconvene the SCAG President’s RHNA Litigation Study Team to Reassess State HCD’s RHNA Allocation of 1.34 Million Housing Units to the SCAG Region. This request is accompanied by (see attached) the Freddie Mac Economic and Housing Research Insight: February 2020, the Orange County Technical Analysis: State Government Code Requirements to Calculate Regional Housing Need and the Embarcadero Institute Report: Updated September 2020. Thank you, Michael Jolly for Residents Cross‐City for Safety & Sanity ‐‐ Sent from MacBook on Gmail Electronic Privacy Notice: This email, and any attachments, contains information that is, or may be, covered by electronic communications privacy laws, and is also confidential and proprietary in nature. If you are not the intended recipient, please be advised that you are legally prohibited from retaining, using, copying, distributing, or otherwise disclosing this information in any manner. Instead, please reply to the sender that you have received this communication in error, and then immediately delete it. Thank you in advance for your cooperation. Item 4.A 12/15/20 179 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 981 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Elizabeth Van Denburgh <emvandenburgh@gmail.com> Sent:Tuesday, December 15, 2020 11:57 AM To:councilmtgitems; Councilmember Kevin McKeown; Sue Himmelrich; Gleam Davis; Christine Parra; Phil Brock; Oscar de la Torre; Kristin McCowan Cc:Lane Dilg; Housing Update; David Martin; George S. Cardona; Andy Agle; Mario Fonda-Bonardi; Shawn Landres; Ellis Raskin; Nina Fresco; Jim Ries; Elisa Paster; Leslie Lambert; Jing Yeo; Ross Fehrman; Roxanne Tanemori; Rachel Kwok; Steve Mizokami; Cary Fukui; Clerk Mailbox Subject:12/15/20 City Council Meeting - Item 4.A (Review of Housing Element) EXTERNAL Dear Mayor Himmelrich and Councilmembers - Regarding Meeting Item 4.A. (Review of Housing Element) - the community understands that the Housing Element Update is a state-required process the City is compelled to conduct but, within that context of understanding, nevertheless please consider the following actions tonight: (1)Appoint an official CALE Representative. Please appoint an official council representative to CALE (California Association of Local Electeds) to monitor and learn about potential collective legal challenge to the outsized 6th Cycle RHNA mandate. Maybe Councilmember Davis or Mayor Pro Tem McCowan would be willing to serve in this capacity? A great networking opportunity, if nothing else. (2) Authorize a legal challenge to the #s. If the critics are correct, the #s have been over-inflated by as much as 2/3rds, which would make SM's 6th Cycle RHNA # closer to 2800 or so. Still a larger # than we've ever been allocated, but significantly more manageable from a planning standpoint than 8,873. So, please, should CALE (or any other coalition of cities) resist this unconstitutional, unfunded, politically-driven mandate by mounting a collective legal challenge based on flawed state numbers, direct & authorize the City Attorney tonight to join this collective legal action on behalf of the City of Santa Monica. (3) Study Session. Please schedule as soon as possible a Study Session to examine the credible studies by The Embarcadero Institute & Freddie Mac, which examine the methodology that led to the 6th cycle #s & lay out the basis for the overinflated current mandate. To be reviewed during that study session: September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing- shortage-number-is-wrong-fueling-poor-policy/ February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227-the-housing-supply- shortage.page Item 4.A 12/15/20 180 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 982 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 (4) Prepare an HEU that requires no upzoning. In the meantime, regardless of whether the new RHNA mandate is challenged or successfully challenged, please direct Staff to prepare an updated element that is realistic for our community and its resources, that does not accept SCAG limits on suitable sites, and without any recommended upzoning or suggested amendment to the LUCE. The planet, the country, and our City have had a terrible year. There is no guarantee that 2021 will be any better. We can control this piece of things, at least. So please do not allow Staff (and local lobbyists) to pile what is sure to be another contentious Zoning update onto the community's plate on top of everything else. (5) Complete EIR project description and Suitable Sites Inventory. Without the completion of the Housing Element project description and the Suitable Sites Inventory (SSI) prior to the closing of the Scoping of Housing Element EIR on December 31, 2020 it is impossible to determine what alternatives should be considered or really address any significant scoping issue. Please finish these two deliverables prior to the closing of comments on the Scoping of Housing Element EIR and extend the comment period so these deliverables can be reviewed and incorporated into the scoping comments. (6) Full and complete EIR. Finally, please direct that the EIR being prepared in connection with the HEU includes a discussion of water resources and infrastructure as a separate category from "Energy", "Public Services", or "Utilities". And please direct that, if we're going to significantly add to the City's population in the next cycle via lots of new housing, the need to add new & meaningful park space must be quantified, planned & paid for (Park Planning is now a function of the Planning Department), along side analyses of impacts on our Urban Forest, on Overall Well-Being, and on Homelessness issues. (7) Unbundled parking is not necessarily "working". Lastly - just FYI - a big "a-ha" moment during the Planning Commission's first Study Session on the Housing Element Update came from Tara Barauskas of Community Corporation, who reported that lack of onsite parking likely is driving high turnover rates in their housing. The conclusion seems to be that tenants need their cars (A) for work (either to drive to remote locations not readily accessible by public transport or because their vehicles effectively are their offices, as in the case of many construction trades, gardeners, etc.) and (B) to manage family commitments like pediatrician appointments, getting kids to school [pre-COVID], attendance at sports practices, extended family gatherings, etc. It gets too stressful for people to have to rely only on street parking rather than having a dedicated parking space. So they move out. Thanks for your time and consideration of these ideas and concerns. Elizabeth Van Denburgh Wilmont Chair Speaking only for myself Item 4.A 12/15/20 181 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 983 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 Vernice Hankins From:Matthew Stevens <mastevens0131@gmail.com> Sent:Tuesday, December 15, 2020 11:51 AM To:Gleam Davis; Councilmember Kevin McKeown; Sue Himmelrich; Kristin McCowan; Phil Brock; Christine Parra; Oscar de la Torre Cc:councilmtgitems Subject:Fwd: Embarcadero Institute EXTERNAL Dear Council, Last week, I sent the below email to Planning Commision regarding the Embarcadero Institute (EI). It seems like a number of our slow‐growthers are excitedly citing EI without having read the report. Using the report's methodology applied specifically to Santa Monica, we should have a RHNA target of 18,000 instead of our current target of 8,800. Please bear this in mind if anyone brings up the EI report tonight. If they are citing EI as an excuse for housing inaction, they obviously have not done their homework. That said, I'm personally a fan of planning for the future and providing housing opportunities for all. So if we want to use EI's methodology and plan for 18,000 homes instead of 8,800, that sounds really good to me. Regards, Matthew Stevens Staff ‐ please add this to the public record for Item 4.A. ‐‐‐‐‐‐‐‐‐‐ Forwarded message ‐‐‐‐‐‐‐‐‐ From: Matthew Stevens <mastevens0131@gmail.com> Date: Wed, Dec 9, 2020 at 12:54 PM Subject: Embarcadero Institute To: Shawn Landres <shawn.landres@smgov.net>, Leslie Lambert <leslie.lambert@smgov.net>, <elisa.paster@smgov.net>, <jim.ries@smgov.net>, <mario.fonda‐bonardi@smgov.net>, <nina.fresco@smgov.net>, <ellis.raskin@smgov.net> Cc: Planning Commission Comments <planningcomment@smgov.net>, <HousingUpdate@smgov.net> Dear Santa Monica Planning Commissioners: I've noticed a number of people citing the report from Embarcadero Institute ("EI") which allegedly disproves California's statewide housing need. I find this very ironic and would encourage those who think they like the report to read it more closely. What they don't seem to realize is that EI's methodology applied to Santa Monica suggests we need many more homes than contemplated by RHNA. About 18,000 total, or 9,000 more than RHNA. Here's how: One of the metrics presented by EI is a jobs to housing ratio of 1.5 to 1. According to data compiled by SCAG, Santa Monica has 105,800 jobs and 52,441 housing units. That's nowhere near enough using EI's numbers. To reach a ratio of Item 4.A 12/15/20 182 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 984 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 1.5 to 1, we'd need about 70,500 housing units total which is 18,000 more than we have right now. And that's just to account for existing shortages. Expected growth over the next 8 years would likely mean several thousand more. So it seems like we have a choice here. Do we trust the SCAG methodology which says we need 8,800 additional homes? Or do we trust the Embarcadero Institute methodology which says we need 18,000 additional homes, plus more for growth? Food for thought! Best, Matt Stevens Item 4.A 12/15/20 183 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 985 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5 Vernice Hankins From:Ann Hoover <annkbowman@yahoo.com> Sent:Tuesday, December 15, 2020 11:17 AM To:councilmtgitems; Councilmember Kevin McKeown; Sue Himmelrich; Gleam Davis; Christine Parra; Phil Brock; Oscar de la Torre; Kristin McCowan Cc:Lane Dilg; Housing Update; David Martin; George S. Cardona; Andy Agle; Mario Fonda-Bonardi; Shawn Landres; Ellis Raskin; Nina Fresco; Jim Ries; Elisa Paster; Leslie Lambert; Jing Yeo; Ross Fehrman; Roxanne Tanemori; Rachel Kwok; Steve Mizokami; Cary Fukui Subject:December 15, 2020 City Council Meeting - Item 4.A. (Review of Housing Element) EXTERNAL Dear Mayor Himmelrich and Councilmembers - Regarding Meeting Item 4.A. (Review of Housing Element) - the community understands that the Housing Element Update is a state-required process the City is compelled to conduct but, within that context of understanding, nevertheless please consider the following actions tonight: (1) Appoint an official CALE Representative. Please appoint an official council representative to CALE (California Association of Local Electeds) to monitor and learn about potential collective legal challenge to the outsized 6th Cycle RHNA mandate. Maybe Councilmember Davis or Mayor Pro Tem McCowan would be willing to serve in this capacity? A great networking opportunity, if nothing else. (2) Authorize a legal challenge to the #s. If the critics are correct, the #s have been over-inflated by as much as 2/3rds, which would make SM's 6th Cycle RHNA # closer to 2800 or so. Still a larger # than we've ever been allocated, but significantly more manageable from a planning standpoint than 8,873. So, please, should CALE (or any other coalition of cities) resist this unconstitutional, unfunded, politically-driven mandate by mounting a collective legal challenge based on flawed state numbers, direct & authorize the City Attorney tonight to join this collective legal action on behalf of the City of Santa Monica. (3) Study Session. Please schedule as soon as possible a Study Session to examine the credible studies by The Embarcadero Institute & Freddie Mac, which examine the methodology that led to the 6th cycle #s & lay out the basis for the overinflated current mandate. To be reviewed during that study session: September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing- shortage-number-is-wrong-fueling-poor-policy/ February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” http://www.freddiemac.com/research/insight/20200227-the-housing-supply- shortage.page Item 4.A 12/15/20 184 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 986 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 6 (4) Prepare an HEU that requires no upzoning. In the meantime, regardless of whether the new RHNA mandate is challenged or successfully challenged, please direct Staff to prepare an updated element that is realistic for our community and its resources, that does not accept SCAG limits on suitable sites, and without any recommended upzoning or suggested amendment to the LUCE. The planet, the country, and our City have had a terrible year. There is no guarantee that 2021 will be any better. We can control this piece of things, at least. So please do not allow Staff (and local lobbyists) to pile what is sure to be another contentious Zoning update onto the community's plate on top of everything else. (5) Full and complete EIR. Finally, please direct that the EIR being prepared in connection with the HEU include a discussion of water resources and infrastructure as a separate category from "Energy", "Public Services", or "Utilities". And please direct that, if we're going to significantly add to the City's population in the next cycle via lots of new housing, the need to add new & meaningful park space must be quantified, planned & paid for (Park Planning is now a function of the Planning Department), along side analyses of impacts on our Urban Forest, on Overall Well-Being, and on Homelessness issues. (6) Unbundled parking not necessarily "working". Lastly - just FYI - a big "a-ha" moment during the Planning Commission's first Study Session on the Housing Element Update came from Tara Barauskas of Community Corporation, who reported that lack of onsite parking likely is driving high turnover rates in their housing. The conclusion seems to be that tenants need their cars (A) for work (either to drive to remote locations not readily accessible by public transport or because their vehicles effectively are their offices, as in the case of many construction trades, gardeners, etc.) and (B) to manage family commitments like pediatrician appointments, getting kids to school [pre-COVID], attendance at sports practices, extended family gatherings, etc. It gets too stressful for people to have to rely only on street parking rather than having a dedicated parking space. So they move out. Thank you - Ann Hoover Resident 24+ years City Clerk – Please include this letter in the Public Record for Agenda Item 4.A., City Council meeting of December 15, 2020. Thank you. Item 4.A 12/15/20 185 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 987 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Brian O'Neil <bpo42@yahoo.com> Sent:Tuesday, December 15, 2020 10:43 AM To:councilmtgitems; Christine Parra; Phil Brock; Oscar de la Torre; Sue Himmelrich; Kristin McCowan; Kevin McKeown Fwd; Gleam Davis; Clerk Mailbox; Denise Anderson-Warren; Lane Dilg Subject:To City Council from PNA re Agenda item 4-A, Housing Element Update, Dec. 15, 2020 EXTERNAL To: Mayor Himmelrich and City Council members From: Board of Directors, Pico Neighborhood Association RE: 12/15/20 agenda item 4-A: Housing Element Update The PNA Board finds that the SCAG / RHNA number of 8,874 new housing units for Santa Monica, with 70% of those affordable, is unrealistically high. There is evidence that the State HCD generated the current RHNA housing numbers using an incorrect vacancy rate and double counting. See links below to the recent Embarcadero Institute study and the 2020 Freddie Mac study. The PNA Board urges the Santa Monica City Council to do the following: 1) Direct staff to agendize a City Council study session on the Embarcadero Institute document “Double Counting in the Latest Housing Needs Assessment.” 2) Participate in CALE – the California Association of Local Electeds -- https://www.caleelecteds.org/ -- which is investigating possible legal action concerning the unrealistic statewide HCD numbers and the local SCAG allocation, with which the City of Santa Monica cannot possibly comply. With no state funding, the city cannot afford to pay for the construction of 6,000 new affordable apartments, and developers are not going to build 6,000 affordable apartments out of the goodness of their hearts. Item 4.A 12/15/20 186 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 988 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 Sincerely, Brian O’Neil, Co-Chair and the Board of the Pico Neighborhood Association Links to pertinent studies: 1) September 2020 report by the Embarcadero Institute, a Palo Alto non-profit public policy organization, entitled “Double-Counting in the Latest Housing Needs Assessment” https://embarcaderoinstitute.com/portfolio-items/3-5-million-california-housing- shortage-number-is-wrong-fueling-poor-policy/ 2) February 2020 Freddie Mac report entitled “The Housing Supply Shortage: State of the States.” The Housing Supply Shortage: State of the States The Housing Supply Shortage: State of the States The United States suffers from a severe housing shortage. In a recent study, The Major Challenge of Inadequate U... Item 4.A 12/15/20 187 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 989 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Council Mailbox Sent:Tuesday, December 15, 2020 2:00 PM To:Sue Himmelrich; Kristin McCowan; Gleam Davis; Councilmember Kevin McKeown; Oscar de la Torre; Phil Brock; Christine Parra Cc:councilmtgitems Subject:FW: Agenda Item 4A Council‐ Please see the below email regarding the housing element. Thank you, Stephanie From: Michele Perrone <micheleperrone@icloud.com> Sent: Monday, December 14, 2020 7:06 PM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Cc: Clerk Mailbox <Clerk.Mailbox@SMGOV.NET> Subject: Agenda Item 4A EXTERNAL Dear Mayor Himmelrich and City Council Members, We cannot handle any more density. Also, life is going to change dramatically when this pandemic is over. There are so many unknowns, “unexpecteds,” and dramatic changes to daily life to come. For instance, it is likely a lot of office space can and will be turned into living space. We just don’t know. 9 years of progress has been condensed into a year. Let’s take a breather and find out. In the meantime, PLEASE: 1. Instruct the City attorney to draw up the legal basis for a RHNA challenge along with the 50 other cities to Sacramento’s RHNA over reach 2. Commit to NO up‐zoning. The City has enough capacity for the 8800 units with its existing zoning for example just the City’s 9000 R‐1 parcels could each have an accessory dwelling unit. There is no need for any up zoning. 3.Instruct the staff to prepare a real housing element based on real attainable targets with a real budget for water, infrastructure, schools, affordable housing etc. Item 4.A 12/15/20 188 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 990 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 Vernice Hankins From:Council Mailbox Sent:Tuesday, December 15, 2020 1:59 PM To:councilmtgitems Subject:FW: Tuesday's agenda - Housing and Land Value From: Mike Feinstein <mfeinstein@feinstein.org> Sent: Monday, December 14, 2020 11:09 PM To: Gleam Davis <Gleam.Davis@SMGOV.NET>; Councilmember Kevin McKeown <Kevin.McKeown@SMGOV.NET>; Sue Himmelrich <Sue.Himmelrich@SMGOV.NET>; Kristin McCowan <Kristin.McCowan@SMGOV.NET>; Phil Brock <Phil.Brock@SMGOV.NET>; Oscar de la Torre <Oscar.delaTorre@SMGOV.NET>; Christine Parra <Christine.Parra@SMGOV.NET>; Council Mailbox <Council.Mailbox@SMGOV.NET> Cc: David Martin <David.Martin@SMGOV.NET>; Jing Yeo <Jing.Yeo@SMGOV.NET>; Melissa Zak <Melissa.Zak@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET> Subject: Tuesday's agenda ‐ Housing and Land Value EXTERNAL Dear Councilmembers I’ve submitted the following column to the SMDP, but not in time to run before your meeting on Tuesday night. I assume it will run soon after. Please take it as my public input, urging you to direct City Staff to look into a Land Value Tax to assist in housing production. Thanks Mike Feinstein Ocean Park Housing and Land Value in Santa Monica In much of California, one of the biggest barriers to needed housing production is the high cost of land. Part of the price of land comes from speculation about its future value. Part of this incentive to speculate ‐ which drives prices up ‐ is the ability by property owners to privatize the publicly created value of land. A large‐scale local example was the creation of the I‐10 freeway into Santa Monica (in the 1960s), which made it easier to live in Santa Monica and work elsewhere. This caused land values to skyrocket — and ultimately led to local rent control being passed by initiative in 1979, as a response to rapidly increasing apartment rents. When land values increase, it becomes more expensive to achieve public policy goals that require land — like new parks, schools and affordable housing. But under our U.S. economic system, property taxes are the same, whether the majority of increased land values result from public investment (like a new park across the street) or private investment (like adding an extra bedroom on one’s property.) As a result, much of the increased value from public investment is privatized into the hands of a small number of Item 4.A 12/15/20 189 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 991 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 3 property owners, leaving less money in public coffers; while public policy objectives become more expensive at the same time because of higher land prices. This also contorts public policy via the fiscalization of land use, which favors tax‐generating commercial uses over needed housing. Land Value Tax A public policy tool to address this is a Land Value Tax (LVT). Under an LVT, the property tax is split so that the tax on the land is higher (capturing publicly‐created land value), and it is lowered on improvements made by the property owner (which more fully rewards private investment.) An LVT — also called Community Ground Rent — diminishes the privatization of publicly‐created land value. This reduces the upward speculative dynamic on the price of land, making land for new housing more affordable. It also creates a public funding source to enable cities to subsidize new housing affordability required by their state mandated Regional Housing Needs Assessment (RHNA) numbers; as well as to establish public Land Trusts to keep land and housing in long‐term affordability. Santa Monica freeway redux Had an LVT been in place when the I‐10 freeway was built, a greater percentage of the resultant land value increase could have been used to purchase and deed restrict existing affordable housing, and create new affordable housing. Rent control would have then been a complementary tool (to respond to the housing gentrification caused by the new freeway) instead of a primary tool, as rental costs would not have gone up as high and there would have been more publicly‐created ’social housing’ (as it is often called in Europe.) When local rent control was weakened by vacancy decontrol via the 1995 Costa‐Hawkins Act, the damage proportionally would have not been as great. An LVT also could have a been a source of reparations for displaced residents of the Pico Neighborhood which was divided in the middle by the I‐10 freeway. Santa Monica faces another major land value increase caused by public policy changes, when Santa Monica Airport (SMO) becomes a Great Park after 2028. Land values in Sunset Park will spiral upwards, and this will also negatively affect affordability in the Pico Neighborhood. Without an LVT in place to depress this speculation and capture a greater part of the increased value for public use, Santa Monica will become a victim of the gentrification caused by the very needed Great Park. By contrast, an LVT in place could also become a partial founding source for capping the I‐10 freeway, as called for in the City’s Open Space Element. When parts of the I‐10 freeway are capped and new parkland is put on top, the further increase in land value would be captured by the LVT and recycled back into the community. Capping the freeway (say between 11th St and 17th St) also creates extensive opportunities for new affordable housing above what are now the planted freeway embankments. That land can handle the weight of new housing and should be zoned for as such in future City planning. Franz Kafka Sadly, the lack of sufficient public funds for affordable housing — combined with the high cost of land — means cities have to accept larger than wanted market‐rate projects, in order to get paltry amounts of inclusionary affordable housing. But because legally, local zoning has to allow these projects have to be financially viable, there usually isn’t room to require a great deal of inclusionary housing, because there isn’t much money to be made from it. The result is a Kafka‐esque public policy debate, where if we require ‘too much’ inclusionary housing, no housing will be built; and if we require too little, all we get is mostly market‐rate, which is outside the reach of affordability for most people. There are also nexus studies that show when you build market rate housing, you create a demand for low income workers who themselves need affordable housing, which can’t be provided locally, which leads to longer commutes, leading to increased CO2 emissions and climate change, which argues for more density instead of sprawl — all which returns to how the privatized value of high‐cost land makes local housing production so difficult. Item 4.A 12/15/20 190 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 992 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 4 Santa Monica makes sense as a LVT test area ‐ because of the self‐induced gentrification in land values value resulting from major public policy choices like the I‐10 freeway, Expo Light Rail Line, and the impending Great Park; combined with the financial difficulty of providing the affordable housing mandated by Santa Monica’s recent RHNA numbers, without a new source of public funds. Another test area could be along the Los Angeles River, where public investment also threatens to gentrify and undermine affordability in nearby communities. For all of these reasons, the City Council should ask City Staff to explore the idea of Land Value Tax — and be in consultation with our State Senator Ben Allen and State Assembly member Richard Bloom, for policies in support of it. ========================================================== Item 4.A 12/15/20 191 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 993 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 5 Vernice Hankins From:Council Mailbox Sent:Tuesday, December 15, 2020 1:58 PM To:Sue Himmelrich; Kristin McCowan; Councilmember Kevin McKeown; Gleam Davis; Phil Brock; Oscar de la Torre; Christine Parra Cc:councilmtgitems Subject:FW: housing element discussion Council‐ Please see the below email regarding the housing element. Thank you, Stephanie From: Barbara Filet <barrie.filet@gmail.com> Sent: Monday, December 14, 2020 11:49 PM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Subject: housing element discussion EXTERNAL Dear council members, In reading your staff report for the Housing Element Study session, I wondered why ADUs were not featured prominently as a way to fulfill the requirement to build more housing in Santa Monica. Why were not Santa Monica’s 13,406 R1 properties listed under the suitable sites analysis as possible locations for ADUs? ADUs would help create a fair and equitable distribution of new housing throughout the city so that not one area becomes overburdened. It could be promoted as a patriotic thing to do to help resolve the housing crisis. Why not incentivize the 13,406 owners to build ADUs on their properties. If half of them do so, then there can be fewer blocky apartment buildings created. Perhaps the city could come up with several stock plans for free‐standing ADUs, to lower the cost to homeowners to build them. Or work with a manufactured housing company to come up with some plans for Santa Monica owners. I am sure there might be many ways the city could make it easier for homeowners to build ADUs. I just built a third unit on my property and I loved being a small‐time developer. It was wonderfully creative and so satisfying to see this concrete achievement every day. Barbara Filet Item 4.A 12/15/20 192 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 994 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 6 Vernice Hankins From:Council Mailbox Sent:Tuesday, December 15, 2020 1:57 PM To:Sue Himmelrich; Kristin McCowan; Gleam Davis; Councilmember Kevin McKeown; Oscar de la Torre; Christine Parra; Phil Brock Cc:councilmtgitems Subject:FW: Please Put a Moratorium On Development In Santa Monica Council‐ Please see the below email regarding the housing element. Thank you, Stephanie From: Arthur Jeon <arthur@ombaseproductions.com> Sent: Tuesday, December 15, 2020 9:56 AM To: Council Mailbox <Council.Mailbox@SMGOV.NET> Subject: Please Put a Moratorium On Development In Santa Monica EXTERNAL Dear City Council, Regarding your discussion of densification. There are dozens of monolithic apartments already in the pipeline for Santa Monica (see Lincoln & Broadway). As a city that depends upon tourism (local and international), destroying what makes SM attractive to people looking to get away from the hustle is killing the goose laying the golden eggs. Decisions for development should be local. They should also include some condos that give people an ownership stake in the city. Please fight top down decisions to add 8,000 new apartments to Santa Monica, which could bring a 20% increase to our population. My question is: What is the vision for Santa Monica? Is it Miami Beach? Manhattan Beach? (past that now). I just don't get the sense that our city leaders know. Now, with new city council members in place, it's an opportunity to be heard. Given the changing economics after the pandemic, a moratorium on development is in order. We don't know what we need, how much existing commercial real estate will be converted to housing, etc. Please take a breath and assess the changed economic landscape before plunging ahead with more development. Best, Item 4.A 12/15/20 193 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 995 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 7 Arthur Jeon Arthur Jeon, Partner Om Base Productions 1431 7th St. #302, Santa Monica, CA 90401 Office: 310.593.4830 * Cell: 310.871.4884 www.ombaseproductions.com Arthur@OmBaseProductions.com Item 4.A 12/15/20 194 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 996 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 8 Vernice Hankins From:Joanne Rotella <jorotella@hotmail.com> Sent:Tuesday, December 15, 2020 1:54 PM To:councilmtgitems Subject:High Density Housing in Santa Monica EXTERNAL Dear Council Members ‐ Please do not move forward with any plans to increase the amount of high‐density housing in Santa Monica until the facts, counts and needs have been verified. We have no funding for this increased housing and we are already seeing Santa Monica turning into a mini‐Manhattan. It's abominable and not the city I wish to live in. Thank you for your careful consideration of any future planning. Sincerely, Joanne Rotella 415‐407‐6778 (mobile) Item 4.A 12/15/20 195 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 997 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 1 Vernice Hankins From:Denise Anderson-Warren Sent:Tuesday, December 15, 2020 2:01 PM To:councilmtgitems Subject:FW: Agenda Item 4A-Study Session on the Housing Element Update, Dec. 15, 2020 ‐‐‐‐‐Original Message‐‐‐‐‐ From: Carol Dickinson <caroldickinson@verizon.net> Sent: Tuesday, December 15, 2020 1:41 PM To: Denise Anderson‐Warren <Denise.Anderson‐Warren@SMGOV.NET> Subject: Fwd: Agenda Item 4A‐Study Session on the Housing Element Update, Dec. 15, 2020 EXTERNAL > > >> >> >> >> >> >> >>> : >>> Dear Ms. Anderson‐Warren, Below is a copy of the letter that I sent to each City Council member. >>> >>> Dear City Council, >>> Please dispute the absurd RHNA housing numbers. There is much evidence that an incorrect vacancy rate and double counting led to this mandate. The reports of the Embarcadero Institute and the Freddie Mac studies should be reviewed and discussed. Please have the City Attorney ask SCAG to review the RHNA numbers. I also ask that the Council direct City Staff to study and report on the California cities that are legally challenging such numbers. Finally, please help preserve local control by participating in the California Association of Local Electeds. >>> Santa Monica has done a great job of providing affordable housing and we must carry on in that endeavor. That being said, the requirement to plan for more than 8,800 new units would destroy the livability of our city. We do not have the infrastructure to support anywhere near that number, nor do we have the funding. >>> Sincerely, >>> Carol Dickinson >> > Item 4.A 12/15/20 196 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 998 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins)) 2 Vernice Hankins From:Denise Anderson-Warren Sent:Tuesday, December 15, 2020 2:02 PM To:councilmtgitems Subject:FW: RHNA From: Marc Abraham <m.abraham@strike‐ent.com> Sent: Tuesday, December 15, 2020 12:53 PM To: Phil Brock <Phil.Brock@SMGOV.NET>; Christine Parra <Christine.Parra@SMGOV.NET>; Oscar de la Torre <Oscar.delaTorre@SMGOV.NET>; Kristin McCowan <Kristin.McCowan@SMGOV.NET>; Gleam Davis <Gleam.Davis@SMGOV.NET>; Clerk Mailbox <Clerk.Mailbox@SMGOV.NET>; Denise Anderson‐Warren <Denise.Anderson‐Warren@SMGOV.NET>; Lane Dilg <Lane.Dilg@SMGOV.NET> Subject: RHNA EXTERNAL Dear Council Members, After extensive research and considering all the pertinent and available data I have come to the conclusion that the City of Santa Monica must challenge the state’s unrealistic, damaging and questionable RHNA numbers. The City Council needs to immediately let SCAG know Santa Monica wants a review of the numbers and also join the other California cities that have already begun mounting legal challenges to the allocations. Unfortunately, SM is already late and let far too much time pass without substantially vetting the entire process and the potential impact on SM. Housing affordability is a serious concern, but the process has gone way off the rails and needs to be rectified. Sincerely, Marc Abraham 927 Berkeley st. SM Item 4.A 12/15/20 197 of 197 Item 4.A 12/15/20 4.A.e Packet Pg. 999 Attachment: Written Comments (4280 : Housing Element Study Session (180 mins))