SR 06-14-2022 3M
City Council
Report
City Council Meeting: June 14, 2022
Agenda Item: 3.M
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Approval of Second Modification to Professional Services Agreement with
HR&A for 6th Cycle (2021-2029) Housing Element
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a second modification to agreement #108300 (formerly #10830) in the amount
of $89,000 and extend the term for one additional year, with HR&A Advisors Inc to
Provide Additional Financial Analyses in Support of the City’s Housing Element. This
will result in a four-year amended agreement with a new total amount not to exceed
$418,900, with future year funding contingent on Council budget approval.
Summary
On October 12, 2021, the City Council adopted the 6th Cycle (2021-2029) Housing
Element. On February 8, 2022, the California Department of Housing and Community
Development (HCD) determined that although Santa Monica’s adopted 6th Cycle (2021-
2029) Housing Element Update meets many statutory requirements, further revision is
necessary in order to comply with all aspects of State Housing Element law (Attachment
A). At the time that HCD’s comments on the adopted Housing Element were received,
the Planning Commission was holding public hearings on changes to zoning and
adopted land use plans that were intended to implement the Housing Element. As a
result of HCD’s determination, rezoning work has been put on hold until staff can
determine what further revisions are necessary to bring the City’s Housing Element into
compliance with State Housing Element law and receive approval from HCD.
Rezoning is necessary to demonstrate to HCD that the City can accommodate its
Regional Housing Needs Assessment (“RHNA”) allocation of 8,895 units between 2021
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and 2029 with a buffer to address net loss of units. Rezoning efforts include
establishing development standards that must be both feasible and sufficient for the City
to accommodate the RHNA as required by HCD.
HR&A advisors has provided financial feasibility analysis and modeling of potential
changes to development standards and project requirements which was used to inform
the rezoning programs included in the 6th Cycle Housing Element. HCD’s comments
require further revisions to the Housing Element and expanded analysis to establish
feasible development standards that can accommodate the RHNA plus a buffer. A
modification to the agreement of $89,900 is required to prepare additional analysis for
the Housing Element as necessary to comply with State law.
Background
The RHNA is mandated by State Housing Law as part of the periodic process of
updating local housing elements of the General Plan. The RHNA quantifies the need for
housing within each jurisdiction during specified planning periods. For the 6th Cycle
planning period of 2021-2029, Santa Monica’s RHNA allocation is 8,895 units, of which
69% must be affordable.
On March 26, 2019, Council authorized an agreement with HR&A Advisors, Inc. to
provide financial feasibility analysis of potential affordable housing requirements and
minimum density. On November 12, 2019, Council authorized the acceptance of SB2
grant funds in the amount of $310,000 from the State of California Department of
Housing and Community Development and a first contract modification in the amount of
$179,000 with HR&A Advisors, Inc. for additional analysis related to housing production
in the context of the 6th Cycle Housing Element. HR&A’s amended contract provided for
a range of economic analyses, typical housing prototype modeling based on revised
standards, and policy and program evaluation necessary to inform the preparation of
the 6th Cycle Housing Element. During the City’s reorganization Contract #10830
expired before the scope of work was completed and a new contract was executed for
the remaining balance with contract #108300.
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On October 12, 2021, City Council adopted the 6th Cycle (2021-2029) Housing Element
and certified the associated 6th Cycle Housing Element EIR. Following Council
adoption, City staff submitted the adopted 6th Cycle Housing Element to HCD on
November 10, 2021 for a 90-day review period and certification. On February 8, 2022,
the City received HCD’s review letter stating that additional changes are required to the
adopted Housing Element to comply with State housing law.
Contractor Selection
HR&A Advisors, Inc. was selected on March 21, 2019 to provide the following:
• Update Financial Feasibility Analysis on the Downtown Community Plan (DCP)
• Explore Revised Development Standards and Incentives for Housing Projects on
Boulevards and in the Bergamot Area Plan
• Multi-Unit Districts Affordable Housing Fee and Density Study
This recommended award was made as an exception to the competitive bidding
process pursuant to Section 2.24.80(d). Competition does not exist because HR&A has
completed extensive feasibility analysis related to evaluating the feasibility of the City’s
development standards, project requirements and fees including ongoing work on the
Affordable Housing Production Program (AHPP) and Housing Element, as well as
financial feasibility on the Downtown Community Plan, and 2015 Zoning Ordinance.
Therefore, HR&A has the unique ability or capability to complete the abovementioned
studies related to the Housing Element. Completing a competitive procurement process
is highly unlikely to produce cost-competitive proposals from other sources, given
HR&A’s experience and knowledge with preparing modeling for the City.
Discussion
The 6th Cycle Housing Element includes key rezoning programs that are necessary to
accommodate the affordable allocation in the RHNA including Programs 1F and 1J.
Program 1F (rezoning of Downtown) commits the City to modifying the heights and floor
area ratios (FARs) in the Downtown Community Plan area to ensure they are set at
levels that can support the minimum AHPP requirements and to support feasible
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housing projects. Similarly, Program 1J (rezoning of mixed-use areas outside of
Downtown) commits the City to amending the Zoning Ordinance, LUCE, and the
Bergamot Area Plan (BAP) to increase FAR and height standards to levels that can
support feasible housing projects. The City’s assumptions of feasibility and the City’s
Suitable Sites Inventory (SSI), a tool used to demonstrate capacity, are based on the
results of a feasibility analysis prepared by HR&A dated June 9, 2021. As stated in the
6th Cycle Housing Element, the feasible FARs for housing projects in the Downtown
range from a minimum 2.75 to 4.0 with heights ranging from 55 feet to 84 feet and the
feasible FARs for housing projects in the remaining areas of the City range from a
minimum 2.75 to 3.25 with heights ranging from 55 feet to 65 feet.
On February 8, 2022, the City received HCD’s review letter stating that additional
changes are required to the adopted Housing Element to comply with State housing
law. Further changes to the development standards in Programs 1F and 1J as well as
other programs in the 2021-2029 6th Cycle Housing Element would require additional
analysis, including financial feasibility testing. A second modification to the agreement
would expand HR&A’s scope of work to conduct further analysis of additional changes
to the Housing Element in response to HCD’s comments. Furthermore, this second
modification to the agreement would extend the terms of the contract to October 30,
2023.
Past Council Actions
Meeting Date Description
03/26/2019 Council approved a contract with HR&A Advisors, Inc to provide
empirical testing of prototypical private developments to help
increase the City’s supply of affordable housing
06/11/2019 Council adopted a resolution authorizing application for, and receipt
of, SB2 grant funds in an amount not to exceed $310,000 from the
California Housing and Community Development Department (HCD)
11/12/2019 Council authorized the City to accept the SB2 grant in the amount of
$310,000 and to authorize the City Manager to negotiate and
execute a first modification with HR&A in the amount of $179,000 for
further prototype testing in support of the 6th Cycle Housing Element
10/12/21 Council adopted the 2021-2029 6th Cycle Housing Element
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Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Miscellaneous Grants Fund to
increase the amount of the agreement with HR&A Advisors Inc. Funds are included in
the FY 2021-22 Adopted Budget in the Community Development Department.
Contract Modification Request Amount
Agreement # Current
Authorized
Amount
FY 2021-22
Modified
Request
Amount
Account # Total Revised
Contract
Amount
10830/108300 $179,000 $89,900 20700002.556420 $268,900
10830/108300 $150,000 $ 01700001.552010 $150,000
TOTAL $418,900
Prepared By: Rachel Kwok, Environmental Planner
Approved
Forwarded to Council
Attachments:
A. March 26, 2019 Council Staff Report
B. June 11, 2019 Council Staff Report
C. November 12, 2019 Council Staff Report
D. 00 EXECUTED CONTRACT #108300 HR&A
E. 00 EXECUTED_PSA_&_Scope-_First_Mod_HR&A_108300
F. HR&A Oaks Initiative_06-10-22
G. Written Comments
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City Council Report
City Council Meeting: March 26, 2019
Agenda Item: 7.B
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Introduction and First Reading of an Ordinance for Proposed Amendments to
the Affordable Housing Production Program
Recommended Action
Staff recommends that the City Council:
1) Review and discuss the information contained in this report regarding the City’s
regulatory and policy framework to support housing production, as well as
affordable housing production trends, including units in the Extremely Low
Income (ELI) category.
2) Authorize the City Manager to negotiate and execute an agreement with HR&A
Advisors, Inc., a California-based company, for financial feasibility analysis of
potential affordable housing requirements and minimum density requirements for
the Planning and Community Development and Housing and Economic
Development Departments. This recommended award is for a total amount not to
exceed $150,000 with future year funding contingent on Council budget approval.
3) Consider introduction and first reading of an ordinance amending the text of the
Municipal Code to temporarily remove the option for providing ELI units to satisfy
a project’s Affordable Housing Production Program obligation pursuant to SMMC
Chapter 9.64 and specify that 100% Affordable Housing Projects that are owned
and operated by non-profit housing providers and financed with tax credits may
be exempt from certain provisions of the Affordable Housing Production Program
(SMMC Chapter 9.64), subject to certain conditions (Attachment “A”)
Executive Summary
Affordable housing is the City’s highest housing priority, and is the focus of City
programs, subsidies and other efforts to minimize the affordability gap in Santa Monica.
This report presents information on the use of the Affordable Housing Production
Program (AHPP) to support the long-term housing needs in Santa Monica, and to
maintain economic diversity within the city. It focuses on two aspects of the AHPP:
1) The use of the Extremely Low Income inclusionary option to satisfy a
development’s affordable housing obligation, and
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2) Development of 100% affordable housing projects owned and operated by non-
profit housing providers outside of the requirements of the City’s AHPP using
financial assistance through the California Tax Credit Allocation Committee.
Extremely Low Income Option
Most of this report focuses on the production of units targeted to lower income
households earning no more than 30 percent of the area median income (“AMI”),
commonly referred to as “extremely low-income” (ELI). Based on evidence of local
housing needs, this income category was added to the AHPP in 2013 as an option for a
development to satisfy its onsite affordable housing obligation by restricting five percent
of the total units built for ELI households for Tier 1 projects, and seven and a half
percent for a Tier 2 housing project.
In the past ten years, nearly 160 units at the ELI income category have been approved,
including several projects that predate the formal introduction of this income category
into the AHPP. While the creation of units deed-restricted to the ELI level helps to
realize SCAG’s Regional Housing Needs Allocation and the City’s own Quantified
Objectives, there is a concern that the recent methodology for creating the units (i.e.,
through the existing AHPP “menu of options”) is counterproductive to meeting the
overall Proposition R mandate for 30 percent of all housing to be affordable. This report
contains data on the use of the 5 percent option since its adoption in 2013, as well as a
preliminary evaluation of its impact on the City meeting its Proposition R targets.
The information presented in this report is intended to support the City Council’s
direction to prepare amendments to the AHPP to temporarily remove the 5 percent
option by providing background on the past half-decade of housing policy, as well as
information about affordable housing production trends, including units in the ELI
category. Should the Council decide to temporarily remove the 5 percent option,
Attachment A presents the ordinance language to effect this change to SMMC Section
9.64.050.
California Tax Credit Allocation Committee Financial Assistance
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Also included in this report is a brief discussion of a financial tool that supports 100%
affordable housing development. The California Tax Credit Allocation Committee
(TCAC) provides financial assistance to housing developers and presents additional
affordable housing opportunities distinct from the City’s AHPP through TCAC’s own
regulations that include affordability levels, maximum rents, minimum unit sizes and
other amenities. TCAC-funded projects that are also funded by the City are currently not
required to use the City’s housing waiting lists.
An ordinance to modify SMMC Section 9.64.030 is included in Attachment A that would
allow affordable housing developments by nonprofit TCAC recipients that are not City-
funded to be exempt from AHPP requirements provided they select households from
the City-developed list of income-qualified households and do not compete with City-
funded projects also seeking TCAC financial assistance.
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PART 1: EXTREMELY LOW INCOME OPTION
Background
Santa Monica has an extensive history that prioritizes affordable housing to preserve
and promote a diverse and sustainable community. Residents have affirmed this priority
in local voter-approved initiatives, such as Proposition R (1990), requiring that 30
percent of all new multifamily housing be affordable, and Proposition I (1998),
authorizing the City to participate financially in creating affordable housing equal to one-
half of one percent of the housing stock annually (approximately 250 residences). City
Council has further facilitated affordable housing through adoption of land use
incentives and administrative funding guidelines to streamline affordable housing
production and preservation, based on a policy foundation supporting affordable
housing in the General Plan Land Use and Housing Elements. The Land Use Element
also identifies affordable housing as a primary community benefit in new development.
The Affordable Housing Production Program (AHPP) requires developers of multi-family
housing to contribute to affordable housing production through a flexible framework to
help the City meet its affordable housing goals. Finally, City Council has approved a
local preference policy that prioritizes affordable housing opportunities for Santa Monica
residents and workers.
Changes to the Zoning Ordinance and AHPP (2013)
In recent years, California’s ongoing housing crisis has underlined the need for local
jurisdictions to revisit their regulatory frameworks governing housing production. In
Santa Monica, the discussion has been particularly dynamic, as the community and
decision-makers have wrestled with a variety of local, regional and State-level factors
that contribute to production, affordability, and equity. From time to time, changes to the
rules and regulations related to housing are effected in response to these factors.
With the dissolution of the Redevelopment Agency in 2012, the City lost its primary
funding source for affordable housing. In 2012-2013, Council led a host of public
discussions on the ability for the City to continue to meet the needs of Santa Monica
residents. Out of those discussions arose a focus on providing for those whose
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household income levels were below the traditional very-low income threshold
established by HUD.
On February 28, 2012 (Attachment G), Council held a study session to consider
a variety of issues related to housing in Santa Monica. At the study session, staff
presented data from the City’s affordable housing waiting list showing that the
vast majority (95%) of Santa Monica residents and workers on the list were at
extremely low- or very low-income levels.
On December 11, 2012 (Attachment H), Council directed staff to amend the
AHPP to include opportunities for extremely low-income households to address
the approximately 3,000 ELI households who lived or worked in Santa Monica at
that time.
On February 26, 2013 (Attachment I), Council directed staff to consult with the
Legal Aid Foundation of Los Angeles (LAFLA) and return with a draft ordinance
amending the AHPP rent limit standards to achieve greater affordability.
On June 25, 2013 (Attachment J), Council introduced for first reading Ordinance
No. 2429 (CCS) to revise household income eligibility levels and rent limits for
the AHPP, and to add an option for developers to provide affordable housing to
households earning no more than 30 percent AMI to satisfy AHPP obligations.
The subsequent amendments to the AHPP approved by Council in 2013 revised the
City’s household income eligibility levels to match income levels published annually by
HUD and/or HCD, and added the 30 percent of AMI category referred to as “extremely
low-income1” to the menu of options that satisfy a development’s inclusionary affordable
housing requirement. This significant addition to the AHPP was designed to create a
financial incentive to stimulate the development of such units. Henceforth, outside of the
1 30% Income Household means a household whose gross income does not exceed the
30% income limits applicable to the Los Angeles-Long Beach Primary Metropolitan
Statistical Area, adjusted for household size, as published and periodically updated by
Housing and Urban Development (HUD)
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areas governed by the Downtown Community Plan, applicants undertaking Tier 1 and
Tier 2 projects currently may select from a menu of options to develop at least:
Option Tier 1 Tier 2 (Requires 50% more than Tier 1)
1
5% of the total units of the project for
30% income households at
affordable rent2; or
7.5% of the total units of the project
for 30% income households at
affordable rent;
2
10% of the total units of the project for
50% income households at affordable
rent; or
15% of the total units of the project
for 50% income households at
affordable rent; or
3
20% of the total units of the project for
80% income households at affordable
rent; or
30% of the total units of the project
for 80% income households at
affordable rent;
4
100% of the total units of a project for
moderate income households at
affordable rent.
Not Applicable
Proposition R Compliance (1994-Present)
The production of multifamily affordable housing in Santa Monica is regulated by the
voter-approved Proposition R, which requires that:
Thirty percent of all multifamily housing completed in each fiscal year be
affordable for and occupied by low- and moderate-income households; and
At least one-half of the total affordable housing completed be affordable for and
occupied by low-income households.
The most recently published Annual Report (FY 16/17) discussing the City’s compliance
with Proposition R illustrates a downward trend in affordable housing production, citing
just 13 percent of multifamily housing completed during that time is affordable to low-
and moderate-income households. This is consistent with the low production numbers
from the previous two fiscal years (FY 14/15, and FY 15/16) when 19 percent of new
multifamily housing was affordable to low- and moderate-income households.
2 The 5% option was added to Chapter 9.64 in 2013 by Ordinance 2429 (CCS)
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Cumulative Proposition R Achievements3
Affordable New Multifamily Residences Completed Annually
FY 94/95 through FY 16/17
One of the main factors affecting the number and percentage of affordable residences
being constructed is the loss of funding from the Redevelopment Agency. Historically, a
3 Annual Affordable Housing Report on Propositions R and I, April 2018
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significant portion of the Proposition R affordable housing mandate has been fulfilled by
nonprofit developers who use City-subsidized loans to create affordable housing. The
largest funding source for such loans was the Redevelopment Agency. Since the
demise of the Redevelopment Agency in 2012, Santa Monica voters approved
measures GS and GSH in 2016, which provides approximately half of the amount of
funding that was available through the former Redevelopment Agency. In addition,
Council has directed that all repayment of loans from the former Redevelopment
Agency to the City be dedicated to affordable housing.
Despite a failure to achieve Proposition R requirements annually over the past three
fiscal years, the City continues to exceed the minimum Proposition R requirement
cumulatively, adding up the developments that have been completed over the past 23
years.
Subsequent Shifts in Housing Policy (2017)
Since the most recent changes were made to the AHPP, local, regional and national
economic factors have shifted once again, leading to a widely-recognized state-wide
housing crisis and a renewed discussion on local housing production policy, both
market-rate and affordable. The City has been proactive in its efforts to use adopted
policy as a lever for incentivizing new housing production in targeted areas, such as
Downtown, and for increasing the supply of affordable housing. These measures have
been implemented at the same time that the City has witnessed a decrease in the
overall amount of affordable housing produced on an annual basis, as previously
mentioned.
Downtown Community Plan
The adoption of the Downtown Community Plan (DCP) in 2017 established a new
methodology for housing production that includes permit streamlining, and floor area
and height incentives for qualified housing projects. Downtown development is also
subject to higher affordable housing requirements than citywide, and must provide a set
percentage of units (on-site or off-site) that are deed-restricted to each income level
identified in the AHPP.
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This approach differs from the Zoning Ordinance in three important ways:
1. The affordable housing methodology in the DCP removes developer selection of
income categories at the Tier 2 level, and instead establishes a 20 percent base
requirement for a project’s total affordable housing contribution based on the
project’s height.
2. The DCP does not provide the developer a financial incentive to profit from a
higher market-to-affordable ratio based on developer selection of income levels.
For example, a Tier 2 mixed-use housing project of 100 units that has selected
the Zoning Ordinance’s ELI option will generate only 8 deed-restricted units, and
92 market-rate units. In the DCP, that same project would provide a minimum of
20 deed-restricted units, and 80 market-rate units.
3. The required affordable housing units produced in a project by the DCP must be
distributed across the four income levels recognized by the AHPP based on the
following percentages:
a. 20% Extremely Low-Income
b. 20% Very Low-Income
c. 30% Low-Income
d. 30% Moderate-Income
The increased affordability requirements in the DCP are expected to play a critical role
in helping the City meet the requirements of Proposition R. Amending the AHPP to
require a broader array of affordability levels could also assist in Proposition R
compliance. A forthcoming Council Information Item on the impact of DCP housing
policy on production will be issued in March 2019.
Suggested Changes to the AHPP (2018)
Based on the DCP’s new approach to creating equity among income levels, new
conversations have sprung up to evaluate the existing Zoning Ordinance methodology
in order to identify potential improvements that balance supply with demand, and aid in
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reversing the downward trend in affordable housing production identified in the past
several Proposition R compliance reports. These discussions have been fueled by the
perception that the financial incentive to allow a development to deed-restrict a low
number of units for extremely-low income households has perhaps been too successful,
and has ultimately impacted the City’s ability to meet annual Proposition R targets. This,
coupled with the loss of Redevelopment, has placed an even heavier burden on the City
to make up the production of remaining affordable units using limited financial and
regulatory resources.
In light of this concern, the Housing Commission discussed on November 15, 2018
modifying affordable housing requirements outside of the Downtown Community Plan
area, and opined on the possibility of suspending the extremely low-income option until
a full review of the AHPP could be conducted through an updated economic feasibility
study. The feasibility study is a work effort currently in the scoping phase being led in
partnership by the Planning and Community Development and Housing and Economic
Development departments, which will provide analysis on the potential to modify the
AHPP so that it addresses a broader range of needs, including supporting Prop. R and
Regional Housing Needs Assessment compliance. The scope and timeframe for the
upcoming feasibility study is discussed later in this report.
As an interim measure, Council directed staff on December 18, 2018 to prepare
amendments to the Affordable Housing Production Plan disallowing the current option
for developers to provide fewer extremely low-income units until the feasibility study can
be completed.
Discussion
Santa Monica is a desirable place to live and work, making the demand for housing far
greater than the existing supply. Based on significantly higher than average rent and
home ownership values, as well as the housing policy described earlier in this report,
the City continues to receive proposals to create new housing. Because of these
conditions, the City has been fortunate to routinely meet the Regional Housing Needs
Assessment (RHNA) housing production targets established by the Southern California
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Association of Governments (SCAG) as well as the City’s own “Quantified Objectives”
for housing production outlined in the adopted 2014-2021 Housing Element. The City’s
mixed-use higher-density commercial districts provide a wide range of housing
opportunities, and current pipeline projects indicate that the City will continue to attract
new market-rate housing development that is capable of contributing to the creation of
new affordable units at a variety of income levels.
Affordable Housing Production (2014-Present)
Since 2014, the cumulative amount of affordable residences completed (final building
permits) has met the City’s minimum requirement of 30 percent. Multifamily
developments completed between 2014 and 2018 produced 1,001 residences, of which
402 (40 percent) were affordable to low-and moderate-income households. Of those
affordable units, 95 percent were affordable to low-income households. The City has
met both Proposition R requirements that 30 percent of all multifamily housing be
affordable to low- and moderate-income households and that at least one-half of the
total affordable housing be affordable for and occupied by low-income households.
However, pipeline projects indicate that future production will fall short of this mark.
Multifamily developments currently in construction will produce just 13 percent
affordable units (95 of 759 total), and multifamily developments with planning approval
will produce just 10 percent affordable units (133 of 1,384 total). For projects in
construction and with planning approval, over 90 percent of all affordable units will be
affordable to low-income households.
Pending projects are those that have been submitted but have not received planning
approval yet. Affordable residences represent 22 percent of all pending projects (366 of
1,651 total), which includes five large 100 percent affordable housing developments.
The following table summarizes this information.
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2014-2018 Affordable Housing Production Program Summary
Development
Stage
Total Residences Affordable
Residences
Percent
Affordable
Completed 1,001 402 40%
In Construction 759 95 13%
Planning Approval 1,384 133 10%
Pending 1,651 366 22%
TOTAL: 4,795 996 21%
Developments Completed
Attachment B indicates that 46 developments totaling 1,001 residences were completed
between 2014 and 2018. A total of 402 of these residences (40 percent) were affordable
to low- and moderate-income households. These projects received planning approvals
between 2000 and 2015 and include six 100 percent affordable housing developments.
Developments in Construction
Attachment C lists active building permits to illustrate the number of multifamily
residences in construction as of January 2019. There are active building permits for 759
residences in 21 new multifamily developments. These developments will provide 95
residences affordable to low- and moderate-income households representing 13
percent of multifamily residences in construction. These active building permits received
planning approvals between 2006 and 2018 and do not include any 100 percent
affordable housing development.
Developments with Planning Approval (not in construction)
Attachment D identifies 38 multifamily developments containing 1,384 residences that
have received planning approval but have not been issued building permits yet. A total
of 133 of these residences will be affordable to low- and moderate-income households,
representing just 10 percent of all residences at the planning approval stage. These
projects received planning approvals between 2008 and 2018 and two of these
developments are 100 percent affordable housing developments.
Looking at just the 14 multifamily developments that received planning approval in
2018, 16 percent of the residences (98 of 604 units) were affordable to low- and
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moderate-income households. Seven of these 14 developments provided only
extremely low-income units (and market rate), representing eight to nine percent of the
units in each development.
Multifamily Residences (Units) with Planning Approvals in 20184
Developments Submitted Since 2013 (Approved, In Construction, Completed)
Considering all multifamily developments that were submitted and received planning
approvals since the changes to the AHPP policy in 2013, which also includes completed
projects and projects in construction, residences affordable to low- and moderate-
income households make up 16 percent of all residences (199 of 1,283). More than
one-third of all affordable units approved since 2013 have been in the extremely low-
income category (74 of 199). Excluding the three large 100 percent affordable housing
developments developed by Community Corps of Santa Monica (CCSM), the remaining
multifamily market developments include just 8 percent of residences that are affordable
to low- and moderate-income households.
4 Source: Planning and Community Development Permit Tracking
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Affordable Units in Approved Multifamily Developments Submitted Since 20135
Pending Developments
Attachment E shows the 27 pending multifamily developments containing 1,651
residences that have been submitted but have not yet received planning approvals. A
total of 366 of these residences are proposed to be affordable to low- and moderate-
income households, representing 22 percent of all proposed residences. Five of these
developments are 100 percent affordable housing developments (three of which are off-
site affordable units from market-rate developments), which represent 231 units, or 63
percent of all the proposed affordable residences.
Planning Commission Comments
The Planning Commission held a study session on this topic on February 20, 2019.
During that meeting, staff presented information described in this report and
attachments, as well as a snapshot of the City’s progress in realizing the housing
production targets established by the following:
SCAG Regional Housing Needs Allocation (2013-2021) (Attachment E)
5 Source: Planning and Community Development Permit Tracking
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Housing Element Quantified Objectives (2014-2021) (Attachment E)
City of Santa Monica Proposition R (1990)
As demonstrated by the housing production data, the City is on track to meet both the
RHNA and Quantified Objective targets for ELI, VLI and Above Moderate; however,
production has fallen short in the categories of Low Income and Moderate Income.
Approved and pending housing projects are not anticipated to contribute enough units in
these income categories to realize the targets.
Similarly, preliminary data indicates that annual Proposition R compliance will be difficult
to achieve during FY18/19, but some recovery is anticipated in future years based on
the success of the City’s effort to support affordable housing production through its
Housing Trust Fund program, which is successfully generating a range of affordable
units through non-profit development 100% affordable housing projects.
Based on this information, as well as an appreciation of other housing-related work
efforts scheduled for 2019, such as the AHPP Feasibility Study, the DCP Housing
Report, Housing Incentives for the Boulevards and Bergamot, and solutions to
Corporate or “Medium Term” Housing, the 6 person Planning Commission was evenly
split over the issue of temporarily removing the 5 percent ELI option from the AHPP.
Commissioners in Support of Removing the 5 Percent ELI Option
Those in favor of temporarily removing the 5 percent option cited data demonstrating
that ELI needs have been met and already exceeded, and that more attention should be
focused on the production of low- and moderate-income units during the time remaining
in both the RHNA and Housing Element cycles.
Commissioners in Opposition to Removing the 5 Percent ELI Option
Those in opposition to removing the 5 percent ELI option argued for the continued
production of housing under the current regulatory framework, and viewed changes to
the AHPP as premature pending a more comprehensive assessment of the entire
affordable housing production program. This will commence in spring, pending Council
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budget authorization. Some commissioners made a case for expediting the upcoming
feasibility study, as well as the effort to bring forward information regarding possible
incentives for the Boulevards and Bergamot.
Agreement on Pipeline Project Exemption
Despite the split vote on removal of the 5 percent ELI option, the Planning Commission
unanimously passed a separate motion to recommend that pipeline projects be
categorically exempt from any regulatory action taken by Council on this subject. The
Planning Commission did not clarify what defines a “pipeline” project.
Housing Commission Comments
The Housing Commission held a public meeting on February 21, 2019 to discuss,
among other items, use of the ELI option in development. Mirroring the
recommendations of several Planning Commissioners, the Housing Commission
majority voted to 1) temporarily remove the 5 percent option until a financial feasibility
study can be completed to evaluate potential modifications to the AHPP; 2) defer final
consideration of other amendments to the AHPP (regarding exempting nonprofit-
developed affordable housing) until after the financial feasibility is completed and
reviewed, and 3) to expedite the financial feasibility study.
Ordinance to Implement Proposed Temporary Elimination of ELI Option from
AHPP
The proposed ordinance in Attachment A provides for a temporary elimination of the ELI
option to allow the feasibility study to be completed and reviewed. The elimination would
apply to projects with an application that has been determined complete on or after
March 26, 2019. Those projects would not be allowed to select Extremely Low Income
from the AHPP’s “menu of options”, but would otherwise be permitted to choose from
any other income level currently available.
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Future Analysis and Efforts on Housing Production
Downtown Community Plan Housing Report Information Item (March 2019)
Staff recently issued a monitoring report for the DCP that evaluates the influence of
DCP housing policy and requirements on housing production. This review of data from
the past one and a half years since DCP adoption provides information that may be
informative to the related analytical efforts mentioned below, specifically regarding how
the unique project requirements for affordable housing production Downtown are
working, or are producing unintended consequences such as the emergence of six new
Tier 1 SRO projects that avoid entirely the DCP’s affordability requirements. This report
also provides an insight into the urban design implications of the affordable housing
requirements Downtown, as well the fulfillment of desired community benefits that are
associated with Tier 2 and Tier 3 projects.
Feasibility Study to Evaluate Citywide AHPP Program (Spring-Summer 2019)
The upcoming financial feasibility study is intended to inform decision-makers with the
results of empirical testing of prototypical private developments to establish the
financially-feasible limits of modified affordable housing requirements, in addition to
testing a minimum density concept for R2 multi-family lots to help increase the City’s
supply of affordable housing. More specifically, the feasibility study will evaluate
whether affordable housing requirements associated with broader affordability levels,
unit mixes, and percentage requirements can be supported financially by private
developers of future Tier 2 developments outside of the Downtown area. A similar
feasibility analysis was completed for the inclusionary requirements in the DCP. Staff
estimates that this work will take between 6-8 months to complete and review with the
Planning Commission, Housing Commission and City Council.
Housing Incentives: Boulevards and Bergamot Plan Area (Spring-Summer 2019)
During the same timeframe as the AHPP Feasibility Study, staff will work to identify
means to stimulate more housing production on the city’s Boulevards and in the
Bergamot Plan area, where housing development has been relatively anemic over the
past half decade. This process will consider a variety of tools including project
streamlining, floor area and height incentives, and other features to direct multifamily
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housing production away from the residential neighborhoods to areas identified by the
Land Use and Circulation Element.
PART 2: CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE (TCAC)
FINANCING
Background
SMMC Section 9.64.030 defines the applicability of the AHPP to certain project types.
The ordinance currently provides that a multi-family rental housing project that will be
developed by a nonprofit housing provider receiving financial assistance through one of
the City’s housing trust fund programs and secured by a regulatory agreement with the
City for a minimum period of 55 years shall be exempt from the City’s Affordable
Housing Production Program (AHPP). This standard is intended to differentiate
nonprofit affordable housing developments from inclusionary housing obligations
resulting from market-rate developments. This standard is also intended to help ensure
that City funds invested in affordable housing can be maximized, including leveraging
non-city funds.
Nonprofit housing providers have identified an opportunity to increase the total amount
of affordable housing that can be produced through the AHPP by partnering with market
rate developers to leverage tax credits for offsite inclusionary housing. However, under
the existing AHPP ordinance, only projects that will be developed with “financial
assistance through one of the City’s housing trust fund programs” can be exempt from
the AHPP requirements. Community Corporation of Santa Monica (“CCSM”), a non-
profit housing provider who has developed affordable housing throughout Santa
Monica, has therefore proposed an amendment to the AHPP ordinance that would
extend certain provisions of the AHPP exemption to 100% affordable housing projects
owned and operated by nonprofit housing providers that finance the development of
these projects with tax credits. The proposed exemption to the AHPP requirements
would be subject to the following conditions:
(i) compliance with Section 9.64.110 of the AHPP (which would require the
developer to select tenant applicants from the City developed waiting list);
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(ii) compliance with the then-current California Tax Credit Allocation
Committee Regulations (“TCAC Regulations”), including the minimum unit
size requirements in Cal. Code Regs. tit. 4, § 10325(g)(1)(B);
(iii) ensuring that the project’s affordability obligations will be secured by a
regulatory agreement, memorandum of agreement, or recorded covenant
in form approved by the City Attorney, for a minimum period of fifty-five
years; and
(iv) ensuring that the project does not compete with a City-funded Tax Credit
project in the same category and round of competition, as reasonably
determined by the City Manager.
If approved, this exemption would allow these 100% affordable housing projects to
comply with TCAC Regulations, instead of AHPP requirements, except that tenant
applicants would be selected from the City-developed list. TCAC regulations apply
different affordability levels, maximum rents, minimum unit sizes, and amenities from
AHPP standards. For example, the TCAC maximum rent levels are higher than AHPP
maximum rents, which enhances the underwriting of these projects for tax credit equity
investors and commercial lenders, and facilitates layered financing for larger affordable
housing projects than would otherwise be feasible in the absence of tax credit financing.
A comparison of TCAC and AHPP rents are set forth in the table, below:
AHPP vs TCAC Rent Limits (2018)
Unit Type Extremely Low Very Low Low Moderate
AHPP 0-Bdrm $364 $606 $728 $1,334
TCAC $509 $848 $1,018 n/a
AHPP 1-Bdrm $416 $693 $832 $1,525
TCAC $545 $909 $1,091 n/a
AHPP 2-Bdrm $468 $780 $936 $1,715
TCAC $654 $1,091 $1,309 n/a
AHPP 3-Bdrm $520 $866 $1,040 $1,906
TCAC $756 $1,260 $1,512 n/a
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AHPP vs TCAC Minimum Unit Sizes
AHPP in Blue
Unit Type
Minimum
Square
Footage
0-Bdrm 500
200
1-Bdrm 600
450
2-Bdrm 850
700
3-Bdrm 1,080
900
Discussion
Attachment A presents a clarified description of the applicability of the AHPP for certain
project types. The attached ordinance accomplishes the following:
Adds to the current exemption for projects developed with financial assistance
through one of the City’s housing trust fund programs from the AHPP
requirements by further exempting multi-family rental housing projects developed
by a nonprofit housing provider receiving financial assistance through the
California Tax Credit Allocation Committee from the AHPP requirements so long
as the project is a 100% Affordable Housing Project as defined by the Santa
Monica Municipal Code.
Multi-family project applicants would be required to select households from the
City-developed list of income-qualified households or equivalent priority list
approved by the City.
Applicants would be required to comply with then-current California Tax Credit
Allocation Committee Regulations, including the minimum unit size requirements.
The project’s affordability obligations would be secured by a regulatory
agreement, memorandum of agreement, or recorded covenant in form approved
by the City Attorney, for a minimum period of fifty-five years.
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Planning Commission Comments
This issue was first raised as part of the latest round of Zoning Ordinance updates. On
February 20, the Planning Commission recommended that the City Council approve an
amendment consistent with the language presented to the Commission, which did not
require to use the City’s housing waiting list and did not prohibit the projects from
competing with City-funded projects for financial assistance from TCAC.
Housing Commission Comments
The City’s Housing Commission, upon reviewing the proposed modification to this
language, made the following recommendations:
1) Recommends against adopting the text amendment permanently until an
economic analysis is completed to ensure that the off-site inclusionary
requirements reflect the additional opportunity associated with tax-credit
leveraging.
2) Supports adopting the text amendment on an interim basis to enable a currently
proposed inclusionary / market-rate arrangement if the developer can
demonstrate to Council that the proposed developments are beneficial in terms
of the number of inclusionary apartments that will be created.
3) If the proposed text amendment is adopted, it should make explicit that
prospective residents of tax-credit funded inclusionary housing will come from the
City list, as they do for other inclusionary housing.
Next Steps on Financial Feasibility Study
Vendor Selection for AHPP Feasibility Study
Staff recommends HR&A Advisors, Inc. to provide financial feasibility analysis of
potential affordable housing requirements and minimum density. This recommended
award is made as an exception to the competitive bidding process pursuant to Section
2.24.80(d). Competition does not exist because HR&A has completed extensive
feasibility analysis related to the AHPP, including the recent Downtown Community
Plan, and therefore has the unique ability or capability to complete the study.
Completing a competitive procurement process is highly unlikely to produce cost-
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competitive proposals from other sources, given HR&A’s experience and knowledge
with preparing modeling for the AHPP.
Financial Impacts and Budget Actions
Staff seeks authority to award an agreement with HR&A Advisors, Inc. for financial
feasibility analysis of potential affordable housing requirements and minimum density
requirements. Staff will seek grant funding from the California Department of Housing
and Community Development’s to fund the agreement in whole or in part. To ensure
that the study can commence immediately, the Housing and Economic Development
Department will advance the funds from an existing account.
Agreement
Request Amount FY 2019-19 Budget
Housing and Economic
Development Department
Account #
Total Agreement Amount
$150,000 01160001.552010 $150,000
Future funding is contingent on Council budget approval.
Prepared By: Peter James, Principal Planner
Approved
Forwarded to Council
Attachments:
A. Ordinance to Temporarily Remove ELI Option
B. Developments Completed
C. Developments in Construction
D. Developments with Planning Approval
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E. Pending Developments
F. RHNA and Quantified Objectives Progress
G. February 28, 2012 Council Study Session on Housing (Web Link)
H. December 11, 2012 Direction to Staff to Add ELI Option (Web Link)
I. February 26, 2013 Direction to Staff to Amend Rent Limit Standards (Web Link)
J. June 25, 2013 Ordinance Adopted to Include ELI Option (Web Link)
K. Written Comments
L. Powerpoint presentation
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City Council Report
City Council Meeting: June 11, 2019
Agenda Item: 3.F
1 of 4
To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Adoption of SB2 Housing Grant Resolution
Recommended Action
Staff recommends that the City Council:
1. Adopt the attached resolution authorizing the application for grant funds in the
amount of $310,000 from the State of California Department of Housing and
Community Development
2. Authorize the City Manager to execute all necessary documents to apply for the
grant, and if awarded, accept and administer the grant, including any renewals.
3. Authorize budget changes as outlined in the Financial Impacts and Budget
Actions section of this report, in the event that the grant is awarded.
Summary
Santa Monica has an extensive history that prioritizes a range of housing types
(including affordable housing) to preserve and promote a diverse and sustainable
community. This report seeks authorization to submit an application for grant funds to
the State of California Department of Housing and Community Development for an
amount of up to $310,000. The grant would be used to analyze incentives or changes
to project requirements to stimulate housing production, which may include permit
streamlining, height and floor area adjustments, fee reductions and modifications to
affordable housing requirements in the Downtown and Citywide. Additionally, the grant
funds could be used to study policies, programs and ordinances to protect and support
tenants currently living in the city’s existing housing stock. This analysis would be used
to propose changes to City housing policy and regulations, and may involve
implementation through the citywide Zoning Ordinance and/or specific and area plans.
The State’s grant program is available to local jurisdictions, and is offered specifically for
the purpose of providing funding and technical assistance to help cities prepare, adopt,
and implement plans and process improvements that streamline housing approvals and
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accelerate housing production. Per HCD guidelines, grant funds may be subject to
repayment if the plan or process improvement developed with grant funds is not
ultimately adopted.
Discussion
In recent years, California’s ongoing housing shortage has underlined the need for local
jurisdictions to revisit their regulatory frameworks governing housing production. In
Santa Monica, the discussion has been particularly dynamic, as the community and
decision-makers have wrestled with a variety of local, regional and State-level factors
that contribute to production, affordability, and equity. From time to time, the City has
made changes to rules and regulations related to housing in response to these factors.
Two recent examples include the adoption of the Downtown Community Plan’s distinct
project requirements for affordable housing, and the recent removal of the Extremely
Low Income option from the list of options to satisfy the affordable housing obligation
citywide. Further, on March 26th 2019 the Council authorized an expenditure to fund a
feasibility study to analyze potential changes to the centerpiece of the City’s
inclusionary housing framework, the Affordable Housing Production Program.
In 2017, Governor Brown signed a 15-bill housing package aimed at addressing the
state’s housing shortage and high housing costs. This package included the Building
Homes and Jobs Act (SB2, 2017), which established a $75 recording fee on real estate
documents to increase the supply of affordable homes in California. Through the
subsequent SB2 grant program, $123M in funds collected from this fee have been set
aside to provide funding and technical assistance to all local governments in California
to help cities and counties prepare, adopt, and implement plans and process
improvements that streamline housing approvals and accelerate housing production.
This grant program is meant to facilitate planning activities that will foster an adequate
supply of homes affordable to Californians at all income levels.
Staff is preparing a grant application for submittal to the State’s Housing and
Community Development department to fund a range of economic analyses, physical
prototype modeling and policy and program evaluation that will better inform policy
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discussions about housing production in Santa Monica. This grant opportunity can
provide the City with objective market information and prototype analysis to potentially
adjust existing standards, regulations and project requirements as they pertain to
promoting development that is consistent with Santa Monica’s priorities and adopted
plans. This multi-pronged effort would be an opportunity for the City to look at the
mechanics behind housing production and conservation more holistically, and to tie
together the various internal and external factors that contribute to or prevent feasibility
and implementation. If awarded, staff anticipates returning to Council with a
recommendation to amend an existing contract with HR&A Advisors previously
authorized by Council to study modified AHPP requirements so that additional analysis
could be conducted on barriers and incentives to housing production across the board.
Additional sub-consultants to perform physical modeling, policy and program review as
it relates to housing conservation and tenant protections, and creation of revised
standards may also be necessary.
The maximum grant amount provided by SB2 for a jurisdiction of Santa Monica’s size is
$310,000. The outcomes of the analytical study may include the following eligible
activities:
1. Updates to general plans, community plans, specific plans, local planning
initiatives related to implementation of sustainable communities strategies, or
local coastal plans;
2. Updates to zoning ordinances;
3. Environmental analyses that eliminate the need for project-specific review; and
4. Local process improvements that improve and expedite local planning.
The SB2 program will not initially utilize a competitive process to award funds. Funds
will be available to eligible applicants upon request (“over the counter”) for an eight-
month over-the-counter period, commencing from the date of the NOFA, which was
released in late March 2019.
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Financial Impacts and Budget Actions
Staff seeks authority to apply for a grant of up to $310,000 from the State of California
Housing and Community Development Department. If awarded, staff recommends the
following budget changes to the miscellaneous grants fund.
FY 2019-2020 Grant Budget Changes
Establish Revenue Budget Appropriate Funds
Account Number(s) Amount Account Number(s) Amount
TBD $310,000 TBD $310,000
Total $310,000 Total $310,000
If awarded, the grant would, upon Council approval, augment economic analysis being
conducted by HR&A Advisors on the feasibility of modifying the citywide Affordable
Housing Production Program (AHPP). This increase in scope to analyze development
standards, fee structures, permit streamlining and other mechanics of housing
production would necessitate a contract modification. Additional, but separate, analysis
on preserving existing housing stock would require a separate contract with qualified
housing policy professionals.
Per HCD guidelines, grant funds may be subject to repayment if the plan or process
developed using grant funds is not ultimately adopted.
If renewals are awarded, budget changes will be included in subsequent year budgets,
contingent on Council budget approval.
Prepared By: Peter James, Principal Planner
Approved
Forwarded to Council
Attachments:
A. Reso - PCD - SB2 Grant Funds - 06.11.2019
B. Written Comments
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City Council Report
City Council Meeting: November 12, 2019
Agenda Item: 3.I
1 of 11
To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Senate Bill 2 Budget Grant Authorization and First Modification of Agreement
for Financial Feasibility Analysis
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to accept a grant awarded in the amount of $310,000
from the California Department of Housing and Community Development (HCD)
SB2 Building Homes and Jobs Act for housing production related planning
studies and implementation activities, and to accept all grant renewals.
2. Authorize the City Manager to execute all necessary documents to accept the
grant and all grant renewals.
3. Authorize budget changes as outlined in the Financial Impacts and Budget Action
section of this report.
4. Authorize the City Manager to negotiate and execute a first modification to
agreement #10830 (CCS) in the amount of $179,000 with HR&A Advisors, Inc, a
California based company, for expanded financial feasibility analysis and
physical modeling of potential changes to development standards and project
requirements. This will result in an amended agreement with a new total amount
not to exceed $329,000, with future year funding contingent on Council budget
approval.
Executive Summary
The State of California adopted Senate Bill No. 2 (SB2): the Building Homes and Jobs
Act in 2017 to encourage the development of housing of various types in the face of a
statewide housing shortage. As part of its adoption, the state started the SB2 grant
program to provide funding and technical assistance to help cities prepare, adopt, and
implement plans and process improvements that streamline housing approvals and
accelerate housing production. In September 2019, the California Department of
Housing and Community Development (HCD) awarded the City a total of $310,000.
This report seeks authorization to accept the awarded grants and execute all necessary
documents associated with the grant.
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Grant funds would fund a range of economic analyses, physical prototype modeling
around revised standards, and policy and program evaluation to provide the City with
objective market information and prototype analysis to potentially adjust existing
standards, regulations and project requirements as they pertain to facilitating housing
production that is consistent with Santa Monica’s priorities and adopted plans. This work
would also help staff plan for and address forthcoming requirements from HCD and the
Southern California Association of Governments (SCAG) in the context of the 6th Cycle
Housing Element. There is no local match requirement for the SB2 grant program;
however, per HCD guidelines, grant funds may be subject to repayment if the plan or
process improvement developed with grant funds is not ultimately adopted.
Background
In recent years, California’s ongoing housing shortage has underlined the need for local
jurisdictions to revisit their regulatory frameworks governing housing production. In
Santa Monica, where the development of housing, especially affordable housing has
been a long-standing priority, the community and decision-makers have wrestled with a
variety of local, regional and State-level factors that contribute to production,
affordability, and equity.
From time to time, the City has made changes to rules and regulations related to
housing in response to these factors. Two recent examples include the adoption of the
Downtown Community Plan’s distinct project requirements for affordable housing, and
the recent removal of the Extremely Low Income option from the list of options to satisfy
the affordable housing obligation citywide. Further, on March 26, 2019, the Council
authorized an expenditure to fund a feasibility study to analyze potential changes to the
centerpiece of the City’s inclusionary housing framework, the Affordable Housing
Production Program.
In 2017, Governor Brown signed a 15-bill housing package aimed at addressing the
state’s housing shortage and high housing costs. This package included the Building
Homes and Jobs Act (SB2, 2017), which established a $75 recording fee on real estate
documents to increase the supply of affordable homes in California. Through the
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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.
On June 11, 2019, Council authorized the application for SB2 grant funds in the amount
of $310,000 from the State of California Department of Housing and Community
Development. At that meeting, staff reported that the grant would be used to analyze
incentives or changes to project requirements to stimulate housing production, which
may include permit streamlining, height and floor area adjustments, fee reductions and
modifications to affordable housing requirements in the Downtown and
Citywide. Additionally, the grant funds could be used to study policies, programs and
ordinances to protect and support tenants currently living in the city’s existing housing
stock. This analysis would be used to propose changes to City housing policy and
regulations, and may involve implementation through the citywide Zoning
Ordinance and/or specific and area plans. Council discussed budget authorization for
the grant funds, if successful, but did not vote to authorize expenditure of the funds due
to concerns about the need to study Downtown’s project requirements.
Discussion
The City of Santa Monica submitted a successful SB2 grant application to HCD and was
awarded a total of $310,000 in September of this year. Pursuant to the project
description in the grant application, the funds are scoped for the following purposes,
which conform to the State’s planning priorities:
1. Update Financial Feasibility Analysis on the Downtown Community Plan
(DCP)
Downtown Santa Monica is where much of future mixed-use housing
development is likely to occur. A recent monitoring report indicated that since
Plan adoption, very few, if any, new housing projects have been submitted
despite process incentives that expedite entitlements for housing projects. The
proposed analysis would seek to provide decision-makers with an updated
financial feasibility analysis on DCP project requirements to better inform the
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regulatory framework that guides housing production in the City’s job-rich and
transit-oriented center.
2. Explore Revised Development Standards and Incentives for Housing
Projects on Boulevards and in the Bergamot Area Plan
The 2013-2021 Housing Element identified potential for over 2,700 units on the
City’s major boulevards and over 1,000 units in the districts governed by the
2013 Bergamot Area Plan. This housing is not being produced as anticipated as
less than a third of those potential housing units has been built or is under
construction in these areas. This project would require physical modeling and
financial feasibility analysis to identify the “tipping point” at which a housing
developer will be incentivized to produce a housing development. Factors for
evaluation/modification may include development standards such as height, floor
area, and parking requirements, streamlined entitlement processes, and reduced
permit and development fees for qualified housing projects.
3. Multi-Unit Districts Affordable Housing Fee and Density Study
In Santa Monica’s Multi-Unit Districts (R2, R3, and R4) in recent years,
developers often build below the allowable density, with replacement projects
often resulting in a net loss of units citywide. This project contemplates two
potential changes to the City’s existing zoning ordinance: 1) Evaluating the
overall feasibility of residential development in the multi-unit districts and the
associated municipal requirements in order to make recommendations on
standards and incentives to support the City’s goals for housing production for a
variety of income levels. 2) Based on the evaluation, explore “minimum density”
standards in the multi-family districts to support the City’s housing production
goals.
4. Protect Existing Tenants from Displacement *
The City has many policies and programs on housing affordability, access, and
tenant rights. These include rent control rules, tenant protections, housing
assistance, and other housing stabilization measures. These are administered by
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several City departments, making it difficult to easily locate information. This anti-
displacement project will result in a website and marketing materials with
information about these programs by topic (not department). A communications
campaign will reach tenants to assist them in situations that may threaten their
tenancies.
*Note: SB2 guidelines allow for only 10% of grant award to be used for purposes
of protecting existing housing stock. $31,000 is the maximum that can be
awarded.
5. Enhancements to City of Santa Monica Electronic Permitting Software
The City has instituted digital Building permit applications, yet some important
and time-consuming Planning entitlements are not yet on this system. This
project would enhance the City’s permit application software for the additional
Planning applications, which will then be managed electronically. This process
integration will improve efficiency by allowing applicants to submit online instead
of at City Hall and will streamline the review process by allowing simultaneous
review from multiple reviewers.
6. Illustrated Housing Development Process Guidebooks
The City currently lacks user-friendly materials to assist applicants proposing
housing developments. The proposed guidebooks for Accessory Dwelling Units
and Multi-family Housing will provide clear, concise and updated information on
City housing policies, processes and development standards supported by
graphics including architectural drawings that will illustrate the development and
design standards.
7. Innovative Affordable Housing Financing Tools to Increase Production
The high cost of land in Santa Monica makes deed-restricted affordable
residences very expensive, and limited funding is a primary barrier to creating
more units. This project will look at how innovative financing tools like a regional
housing trust fund and infrastructure financing plans are used elsewhere and
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how the City can best leverage these tools to enhance the production of
affordable housing.
The above analytical activities will be complemented by a robust public engagement
platform, which is accounted for in the budget developed for each activity described in
the SB2 grant application. Grant funds must be used by FY 21/22, and are subject to
potential repayment if no implementation actions result from grant-funded activities.
Interface with Other Housing-Related Activities (Local, Regional and State)
2019 has seen a tremendous focus on housing policy at local, regional and State levels
owing to the widely-acknowledged and highly visible housing crisis. PCD and other
departments have worked collaboratively to track State legislative actions aimed at
increasing housing production, as well as regional discussions that are largely
dominated by the emerging Regional Housing Needs Assessment 6th Cycle allocation.
Interdepartmental staff has also been active in addressing local housing policy issues at
the request of the City’s Housing Commission and City Council. SB2 presents an
opportunity to address the changing landscape of housing policy in California by
exploring changes to existing standards and project requirements; however, staff notes
that the work contemplated by the SB2 scope may not be adequate to address the
totality of the required policy shift. Below are brief descriptions of the most pertinent
issues developing in the housing landscape.
A. State Legislation of Key Interest to Santa Monica
A multitude of housing bills were signed by Governor Newsom that alters existing
housing policy that govern processing of housing projects, rent control and rent
caps, density bonuses, accessory dwelling units, and community investment.
Key highlights relevant to Santa Monica include:
State Housing Bills Status Description
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FASTER APPROVALS
Approved
SB330: Faster approvals for
housing and zoning changes.
Time-limited, Statewide ban on (A)
downzoning, (B) moratoriums on
housing development, (C) non-
objective design standards, and (D)
limit on number of permits issued.
Approved
AB1485: Incentives and faster
approvals for moderate-income
housing built with prevailing (union)
wage labor.
Approved AB1763: 80% density bonus for
affordable housing.
Approved
AB101: By-right approval for
homeless shelters. AB101 also
includes $650 million in grants for
cities and counties to address
homelessness issues. It also
includes $250 million for local
governments and regional bodies to
measure housing needs and develop
plans for providing more housing.
TENANT
PROTECTIONS
Approved
AB1110: Longer notice require for
rent increases. 60 days for under
10%, 90 days for 10-15%, 120
days for 15%+
Approved
AB1482: Statewide limit to annual
rent increases. Statewide Just
Cause limits to evidence.
ACCESSORY
DWELLING UNITS Approved
SB13, AB68, and AB881: Further
removes barriers to ADU
productions
FUNDING
Vetoed
SB5: Creates new local funding
agencies for affordable housing,
infrastructure and community
investment.
Approved AB857: Allows cities to create
Public Banks.
B. 6TH Cycle Housing Element and Regional Housing Needs Assessment
The Regional Housing Needs Assessment (RHNA) is mandated by State
Housing Law as part of the periodic process of updating local housing elements
of the General Plan. The RHNA quantifies the need for housing within each
jurisdiction during specified planning periods. SCAG is in the process of
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developing the 6th cycle RHNA allocation plan which will cover the planning
period October 2021 through October 2029. The final methodology is anticipated
to be adopted by the Regional Council in January/February 2020, followed by an
appeal period and final planned for adoption by SCAG in October 2020. SCAG
has made a tool available online that allows cities to have an understanding of
the possible allocation range in scenarios that are currently being proposed.
According to the tool, Santa Monica’s RHNA allocation is estimated to be
approximately 4,800 units, which is substantially higher than in previous cycles
(the 5th Cycle allocation was 1674 units) owing to the new requirement to
address “existing housing need” (unmet existing demand) as well as “projected
need” (based on a forecast of future population growth).
In parallel with the development of the RHNA, changes to state law
(Government Code section 65583.2, Residential land inventory; definitions;
inventory element; suitability for regional housing needs; densities) affect what
may be counted as a suitable housing site to accommodate the RHNA in the
Housing Element. Additionally, HCD has signaled that jurisdictions that do not
meet their Housing Elements numbers would be subject to more severe
consequences than in the past, including ineligibility for transportation and
housing funding.
C. Local Housing-Policy Related Efforts
Interdepartmental staff are engaged in addressing local housing demand through
a variety of measures that have been authorized recently by the Council. These
efforts primarily relate to the Affordable Housing Production program, but bear
influence on market-rate development across the city.
• Removal of the Extremely Low Income Option. On March 26, 2019
Council authorized a modification to the zoning ordinance to temporarily
remove the option for providing extremely low-income (ELI) units to satisfy
a project’s Affordable Housing Production Program obligation pursuant to
SMMC Chapter 9.64. This action was taken due to a perception that an
overuse of this option was placing an undue burden on the City to fund
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affordable units to meet the voter-approved Proposition R target of 30% of
all multifamily housing completed each fiscal year that must be affordable
and occupied by low- and moderate-income households; and at least one-
half of the total affordable housing completed be affordable for and
occupied by low-income households.
Council extended the temporary removal through November 2020 at its
October 22, 2019 meeting.
• Affordable Housing Production Program Financial Feasibility Study. At its
March 26, 2019 meeting, Council also authorized a contract with HR&A
Advisors for financial feasibility analysis of potential modified affordable
housing requirements for future Tier 2 mixed-use developments similar to
those which were adopted in the DCP. Work on this effort is underway
and is based on Council’s direction to only study existing development
parameters. In the face of forthcoming adjustments to Santa Monica’s
RHNA allocation, as well as a slew of State bills aimed at increasing
housing production through potential upzoning activities and by-right
approvals, questions have arisen as to the utility of this effort that uses
existing development parameters.
Vendor Selection
Staff recommends HR&A Advisors, Inc. to provide financial feasibility analysis of:
• Update Financial Feasibility Analysis on the Downtown Community Plan (DCP)
• Explore Revised Development Standards and Incentives for Housing Projects on
Boulevards and in the Bergamot Area Plan
• Multi-Unit Districts Affordable Housing Fee and Minimum Density Study
This recommended award is made as an exception to the competitive bidding process
pursuant to Section 2.24.80(d). Competition does not exist because HR&A has
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completed extensive feasibility analysis related to evaluating the feasibility of the City’s
development standards, project requirements and fees including ongoing work on the
AHPP, as well as financial feasibility on the recent Downtown Community Plan and
2015 Zoning Ordinance. Therefore, HR&A has the unique ability or capability to
complete the abovementioned studies related to the SB2 grant. Completing a
competitive procurement process is highly unlikely to produce cost-competitive
proposals from other sources, given HR&A’s experience and knowledge with preparing
modeling for the City. Future advertising and vendor selection for the remaining SB2-
related activities will be forthcoming in the coming months as staff puts together a
workplan and a process for engaging the community on these substantive issues.
Financial Impacts and Budget Actions
Staff seeks authority to accept a grant awarded in the amount of $310,000 from the
California Department of Housing and Community Development (HCD) SB2 Building
Homes and Jobs Act for housing production related planning studies and
implementation activities. Award of the SB2 grant totaling $310,000 requires the
following FY 19/20 budget changes.
FY 2019-2020 Grant Budget Changes
Establish Revenue Budget Appropriate Funds
Account Number(s) Amount Account Number(s) Amount
20700002.405570 $310,000 20700002.556420 $310,000
Total $310,000 Total $310,000
Future year funding is contingent on Council budget approval.
Staff seeks authority to approve a portion of the funding from the SB2 Grant to increase
the amount of agreement #10830 with HR&A Advisors for expanded feasibility analysis
and physical modeling services.
Agreement Modification Request
Agreement #
Current Authorized
Amount
FY 2019-20
Modified Request
Amount
Account # Total Revised
Contract Amount
10830 150,000 01160001.552010 150,000
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179,000 20700002.556420 179,000
TOTAL 329,000
Prepared By: Peter James, Principal Planner
Approved
Forwarded to Council
Attachments:
A. June 11, 2019 Council Meeting (Web Link)
B. RHNA Proposed Methodology (Web Link)
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Contract No. 108300 (CCS)
PROFESSIONAL SERVICES AGREEMENT
This Professional Services Agreement (“Agreement”), entered into as of
_________________(“Execution Date”), by and between the City of Santa Monica
(“City”) and HR&A Advisors, Inc. (“HR&A”), is made with reference to the following:
RECITALS:
A. The City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of the City.
B. HR&A is qualified to do business, and is doing business, in the State of California.
HR&A represents it has the background, knowledge, experience and expertise
necessary to provide the services set forth in this Agreement.
C. The City and HR&A now desire to enter into an agreement for HR&A to provide
professional services to the City.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
TERMS AND CONDITIONS
1. Term. This Agreement begins on the Execution Date and terminates on June 30,
2022, unless sooner terminated in accordance with Section 14.
2. HR&A Services. HR&A will perform all of the services (“Services”) described in
Exhibit A, Scope of Services. HR&A will complete the Services in accordance with
Exhibit B, Budget.
3. City Services. The City agrees to:
3.1 Make available to HR&A any currently existing documents, data or information
required for the performance of the Services.
3.2 Designate a representative authorized to act on behalf of City.
3.3 Promptly examine and render findings on all documents submitted for staff
review by HR&A.
4. Compensation. The City will compensate HR&A for the Services performed in an
amount not to exceed $219,000.00, as set forth in Exhibit B.
5. Invoices. HR&A will invoice the City for the Services in accordance with Exhibit B
and the City will pay any undisputed amount within 30 days of receipt.
6. Notices. All notices, demands, requests or approvals to be given under this
Agreement, must be in writing and will be deemed served when delivered personally,
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by email, or on the third business day after deposit in the United States mail, postage
prepaid, registered or certified, addressed as follows:
6.1 All notices, demands, requests or approvals to the City:
City Planning Division
City of Santa Monica
1685 Main Street, Mail Stop 28
Santa Monica, California 90401
Attention: Rachel Kwok
Re: Contract No. 108300 (CCS)
with a copy to:
Santa Monica City Attorney’s Office
1685 Main Street, Third Floor
Santa Monica, California 90401
Attention: City Attorney
Re: Contract No. 108300 (CCS)
6.2 All notices, demands, requests or approvals to HR&A:
HR&A
700 South Flower Street, Suite 2995
Los Angeles, California, USA
Attention: Paul J. Silvern, Vice President
psilvern@hraadvisors.com
Re: Contract No. 108300 (CSS)
7. Independent Parties. Both parties to this Agreement will be acting in an independent
capacity and not as agents, employees, partners, or joint venturers of one another.
Neither the City nor its officers or employees will have any control over the conduct
of HR&A or any of HR&A’s agents, employees, or subconsultants, except as
otherwise provided in this Agreement.
8. Integrated Contract. This Agreement represents the full and complete understanding
of every kind or nature whatsoever between the parties. Any preliminary negotiations
and agreements of any kind or nature are merged into this Agreement. No oral
agreement or implied covenant may be held to vary the provisions of this Agreement.
This Agreement may be modified only by written agreement signed by City and
HR&A, and approved as to form by the City Attorney.
9. Insurance. Prior to commencing work, HR&A must procure, maintain and pay for
insurance against claims for injuries to persons or damage to property that may arise
from or in connection with the performance of the Services by HR&A or HR&A’s
agents, representatives, employees or subconsultants for the duration of this
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Agreement. HR&A must obtain insurance that, at a minimum, meets the
requirements for insurance set forth in Exhibit C, Insurance Requirements and
Verifications.
10. Defense and Indemnification.
10.1 Indemnification. As to HR&A’s Services produced under this Agreement,
HR&A agrees to defend, indemnify, protect, and hold harmless the City, its
agents, officers, boards and commissions, and employees (collectively, “City”)
from and against any and all liability, claims, demands, damages, or costs,
including but not limited to attorney’s fees, or payments for injury to any
person or property (collectively, “Losses”) caused or claimed to be caused by the
acts, errors and/or omissions of HR&A, or HR&A’s employees, agents,
officers, and subconsultants. HR&A’s responsibilities under this Section 10.1
include liability arising from, connected with, caused by, or claimed to be
caused by the active or passive negligent acts or omissions of the City, which
may be in combination with the acts or omissions of HR&A, its employees,
agents or officers, or subconsultants; provided, however, that HR&A’s duty to
defend, indemnify, protect and hold harmless shall not include any Losses
arising from the sole negligence or willful misconduct of the City.
Notwithstanding HR&A’s obligation to defend City hereunder, City has the
right to conduct its own defense and seek reimbursement for reasonable costs
of defense from HR&A, if City chooses to do so.
10.2 Enforcement Costs. HR&A agrees to pay any and all costs the City incurs
enforcing the indemnity, defense and hold harmless provisions set forth in
Section 10.1.
11. Prohibition Against Transfers.
11.1 HR&A may not assign, hypothecate, or transfer this Agreement or any interest
therein directly or indirectly, by operation of law or otherwise without the prior
written consent of City. Any attempt to do so without the City’s consent will
be null and void, and any assignee, hypothecatee or transferee acquires no right
or interest by reason of such attempted assignment, hypothecation or transfer.
11.2 The sale, assignment, transfer or other disposition of any of the issued and
outstanding capital stock of HR&A or of any general partner or joint venturer
or syndicate member of HR&A, if a partnership or joint venture or syndicate
exists, which results in changing the control of HR&A, will be construed as an
assignment of this Agreement. Control means 50% or more of the voting
power of the corporation.
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12. Permits and Licenses. HR&A, at its sole expense, must obtain and maintain during
the term of this Agreement all required business and professional permits, licenses
and certificates.
13. Waiver. A waiver of any breach of this Agreement may not be deemed a waiver of any
subsequent breach of the same or any other term, covenant, or condition of this
Agreement.
14. Default and Termination.
14.1 If HR&A fails or refuses to perform any of the provisions of this Agreement,
and if the default is not cured within a period of five days after the City’s
written notice of default specifying the nature of the default, City may
immediately terminate this Agreement by written notice to HR&A.
14.2 The City has the option, at its sole discretion and without cause, of terminating
this Agreement by giving ten days’ written notice to HR&A. Upon termination
of this Agreement, City will pay HR&A any compensation earned and unpaid
up to the effective date of termination.
15. Compliance with Law. HR&A must comply with all laws of the State of California
and the United States, and all ordinances, rules, and regulations enacted or issued by
City.
16. Discrimination. HR&A may not discriminate in the provision of services hereunder
because of race, color, religion, national origin, ancestry, sex, age, sexual orientation,
marital status, AIDS or disability.
17. Nuisance. HR&A may not maintain, commit, or permit the maintenance or
commission of any nuisance in connection with the performance of services under
this Agreement.
18. Records.
18.1 HR&A must maintain complete and accurate records with respect to costs,
expenses, receipts and other such information required by the City for any
services provided where compensation is on the basis of hourly rates,
subconsultant costs, or other direct costs. HR&A must keep the records,
together with supporting documents, separate from other documents and
records and maintain them for a period of three years after receipt of final
payment.
18.2 HR&A must maintain records in sufficient detail to permit an evaluation of the
Services and in accordance with generally accepted accounting principles.
HR&A must clearly identify all records and make them readily accessible to the
City. At the City’s request, HR&A must provide records in an electronic
format and, if necessary, access to any proprietary software to view such
electronic records.
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18.3 HR&A must allow the City to have free access to HR&A’s books and records
and to inspect all work, data, documents, proceedings and activities related to
this Agreement. The City has the right to examine or audit HR&A’s records,
and HR&A agrees to cooperate with any examination or audit of its records. If
a City audit discloses an error of 5% or more in information reported by
HR&A, HR&A agrees to pay the cost of the City’s audit computed on the
basis of four times the direct payroll of the audit staff completing the audit and
audit report.
19. Work Product; Reports.
19.1 Any work product prepared or caused to be prepared by HR&A or any
subconsultant for this Agreement will be the exclusive property of City. No
work product given to or prepared by HR&A or any subconsultant pursuant to
this Agreement may be made available to any individual or organization by
HR&A without prior written approval by City.
19.2 At the City’s request, HR&A must furnish reports concerning the status of the
Services.
20. Standard of Care. HR&A agrees to provide all Services, including services performed
by any subconsultant, in a manner consistent with the level of care and skill ordinarily
exercised by members of HR&A’s profession currently practicing in the same locality
under similar conditions.
21. Subconsultants.
21.1 If HR&A proposes to have any subconsultant perform any part of the Services,
HR&A must submit a request for approval in writing, describing the scope of
work to be subcontracted, the name of the proposed subconsultant, and the
total price or hourly rates used in preparing an estimated cost for the
subconsultant’s services. The City, in its sole discretion, may grant or deny the
request.
21.2 HR&A will be responsible for the quality of any subconsultant’s work. Every
subcontract or agreement of any kind entered into between HR&A and any
subconsultant (or between any subconsultant and others) must contain the
following provision:
This agreement is consistent with all terms and conditions of
the Agreement No. 108300 (CCS) entered into between the
City of Santa Monica and HR&A on^^___________.
22. Governing Law. The laws of the State of California, without regard to any choice of
law provisions, will govern this Agreement.
23. Venue and Jurisdiction. The City and HR&A agree that the Services will take place
in Los Angeles County. Any litigation arising out of this Agreement may only be
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brought in either the United States District Court, Central District of California, or
the Superior Court of California, County of Los Angeles, West District, as
appropriate. The parties agree that venue exists in either court, and each party
expressly waives any right to transfer to another venue. The parties further agree that
either court will have personal jurisdiction over the parties to this Agreement.
24. Survival of Provisions and Obligations. Any provision of this Agreement, which by its
nature must be exercised after termination of this Agreement, will survive termination
and remain effective for a reasonable time. Any obligation that accrued prior to
termination of this Agreement will survive termination of this Agreement.
25. Exhibits. The following exhibits are incorporated by reference into this Agreement as
though fully set forth herein.
Exhibit A Scope of Services
Exhibit B Budget
Exhibit C Insurance Requirements
In witness whereof, the parties have caused this Agreement to be executed the day and
year first above written.
ATTEST:
______________________________
DENISE ANDERSON-WARREN
City Clerk
APPROVED AS TO FORM:
______________________________
LANE DILG
City Attorney
CITY OF SANTA MONICA,
a municipal corporation
By: ______________________________
RICK COLE
City Manager
ABC Corporation
#VENDOR
By: ________________________________
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George Cardona
Interim City Attorney
11/19/2020
Paul J. Silvern, Vice President
HR&A Advisors, Inc.
Paul J. Silvern
11/19/2020
11/23/2020
Lane Dilg
Interim City ManagerCity Clerk
Denise Anderson-Warren
11/30/2020
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Exhibit A
Scope of Services
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New York | Dallas | Los Angeles | Raleigh | Washington DC
Revised: October 21, 2020
via email to: jing.yeo@smgov.net
Jing Yeo
Planning Manager
Community Development Dept.
City Hall, Room 212
1685 Main Street
Santa Monica, CA 90404
Re: Proposal to Update 2019 AHPP Analysis and Analyze New Prototypes in Additional Commercial Areas
Dear Jing:
Per your request, HR&A Advisors, Inc. (HR&A) is pleased to provide this proposal to provide additional
prototype testing to determine whether increased development standards and/or new affordable housing
requirements (i.e., in terms of percentages, unit mix and affordability levels) can accelerate development of
mixed-income housing. This effort will include updating feasibility analysis for 14 prototypes from our
previous analysis, modelling 14 new prototypes in additional commercial areas, and updating real estate
market and construction cost assumptions for selected market areas.
Similar to previous analysis completed by HR&A, the assignment involves empirical testing of prototypical
private developments to establish the financially-feasible limits of modified affordable housing requirements
and development fees, utilizing static pro forma financial feasibility Excel models to test the developer
investment return implications of revised affordable housing requirements on prototypical developments. The
assignment is also similar to a financial feasibility analysis that we are currently completing for the Los
Angeles City Planning Department, wherein our analytic model was re-designed to evaluate the
development capacity (in terms of incremental stories or FAR) that would be required to support Transit-
Oriented Communities affordability percentages and income levels in Downtown Los Angeles. Our proposed
approach to the new assignment will build on these prior efforts.
PROPOSED SCOPE OF WORK
HR&A will undertake the following tasks in a generally sequential order:
Task 1. Kick-off Meeting and Discussion About Modeling Assumptions.
HR&A will meet with City staff to discuss various elements of the analysis, obtain certain data and clarify
certain modeling assumptions. These include, but are not necessarily limited to the following:
Confirm the general objectives for performing this analysis and review the scope and schedule for
completing it;
Confirm communication protocols between HR&A and the City staff team, including the City
Attorney’s office;
Confirm the 24 prototypical mixed-use development scenarios for Bergamot, Boulevards, Lincoln,
Downtown, General Commercial - Santa Monica Boulevard and Neighborhood Commercial (see
Task 2 for the list of prototypes to be confirmed), including a range of flexibility in terms of changes
to existing Tier structures, FAR, or height;
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Confirm that HR&A will first test each prototype with the exact affordable housing requirements in
the Zoning Code (i.e., base case) and then a set of requirements (i.e., household income levels,
minimum unit sizes and affordable unit mix) provided by City staff;
Confirm that HR&A should use FY 2020-21 City development impact fee, permit charges and other
fee schedules for development costs, and obtain the applicable schedules of all such fees, including
recently approved standards for Tier 2 and Tier 3 developments;
Obtain the most current AHPP household income, maximum rent and maximum sale price schedule;
and
Discuss what types of City land use permits and environmental documentation should be assumed
for each prototype (if different), and their related average approval schedules and costs; and
Discuss alternative means to improve construction cost estimates for the prototypes.
Deliverables: Meeting agenda and meeting summary memo.
Task 2. Develop the Specifications of All Development Prototypes.
Based on the results of the above meeting, HR&A will collaborate with City Planning staff to prepare a
general profile for each of 24 prototypical development scenarios, including total site area (if different
from 15,000 s.f. for the Boulevards), acceptable range of gross building floor area, total net floor area and
related building efficiency factors, net floor area by land use, acceptable range of total building height
and number of stories, average unit sizes for both market rate and affordable units, dwelling unit counts by
type, parking counts and number of subterranean levels, among other modeling assumptions. This analysis
will vary from our previous analyses, assuming concurrence from City staff, wherein we will design our model
to test incremental development capacity (in terms of additional floors/FAR of multifamily housing and
additional floors of subterranean parking) within a reasonable set of parameters (i.e., setbacks, construction
type, etc.). These specifications should reflect all recent changes to development standards approved by the
City Council. This will allow HR&A to rapidly and incrementally test additional development capacity
required to support certain affordable housing requirements while maintaining acceptable developer profit
margin to incentivize development.
Analyze a total of 24 prototypes including:
Bergamot Area Plan – Mixed-Use CD and Bergamot Transit Village
Boulevards – Mixes Use Boulevard – Wilshire and Mixed-Use Boulevard Low - Santa Monica
General Commercial – Lincoln
R2/R3 Zones
Downtown – Transit Adjacent and Neighborhood Village
General Commercial – Santa Monica Boulevard
Neighborhood Commercial
Deliverable: Final specification of physical characteristics and related assumptions for all prototypes.
Task 3. Update Current Real Estate Market Conditions for the Most Sensitive Financial Feasibility Modeling
Assumptions.
This includes updating relevant assumptions used in prior related HR&A financial feasibility modeling to pre-
COVID-19 conditions, specifically for up to 5 submarkets (potentially including Downtown, the Boulevards,
Bergamot, Ocean Park, and Montana). In doing so HR&A will utilize a variety of third-party data sources
available to HR&A, including Co-star, Reis, quarterly real estate market surveys prepared by several real
estate brokerages and other real estate services that include either Santa Monica-specific or more general
Westside rents, absorption and vacancy data, operating expenses, income capitalization rates, and project
financing terms and pricing. Optional Task 12 below addresses various sensitivities that HR&A can run to
demonstrate the potential impact of long-term impacts of the COVID-19 pandemic.
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HR&A will consult with local developers and architects to confirm the development cost assumptions during
the course of the analytic process, as described in Task 10. HR&A can subcontract with an independent
professional construction cost estimator to provide assumptions about above-grade and below grade hard
construction costs for each prototype if required.
To support this work, City staff will supply HR&A with an updated inventory of recent multi-family projects
that have been completed or still have active applications under review during the past five years, as
applicable to all prototypes.
Deliverable: The assumptions derived from this Task will be incorporated into the deliverables for Task 4.
Task 4. Prepare Financial Feasibility Pro Forma Models for Each Prototype.
HR&A will first prepare two base case financial feasibility models for each retail/apartment prototype
assuming the Tier 2 affordable housing options most frequently used by developers (i.e., first at 7.5% of the
units affordable to 30% income households; then 15% affordable to 50% income households; each using
the unit mix by bedrooms per unit and other requirements specified in the Zoning Code). HR&A will then
prepare an analysis case for each prototype using a new set of affordable housing requirements determined
through discussion with City staff. These feasibility models (both base cases and analysis case) will resemble
the type of Excel workbook pro formas prepared by HR&A for previous analyses of this type.
Central to this analysis are the feasibility thresholds employed. Again, building on previous work of this type,
HR&A will use two different, but related measures, both of which would have to be met for the results to be
considered “financially feasible.” These are:
1) Return on Total Development Cost1, which is calculated as Net Operating Income divided by Total
Development Cost, the result of which should be at least one to two percentage points above the
weighted average of the income capitalization rates for each land use in the prototype; and
2) Developer Profit Margin, which is calculated as Capitalized Project Value minus Total Development Cost,
the result of which should be at least equal to 10 percent of net Capitalized Project Value.
The pro forma models will be designed in a way that will make it relatively easy to test the implications of
changing the key elements of a set of assumed affordable housing standards (i.e., percentage requirements
by income level and unit mix), should any of the initial analysis cases prove to be financially infeasible. But
HR&A will not make any such changes until the feasibility results for the base cases and initial analysis cases
have been reported to City staff.
Deliverable: Pro forma model results for each prototype and associated affordable housing assumptions.
Task 5. Document 100% Affordable Housing Opportunities and Constraints.
HR&A will review and document development standards applicable to 100% affordable housing projects
across the City, and will engage non-profit affordable housing developers to determine the impact of
development standards on the feasibility of affordable housing projects. Because 100% affordable housing
projects, which are typically funded through the use of Low-Income Housing Tax Credits (“LIHTC”) and other
sources, are not well-suited to conventional financial feasibility pro forma analysis, HR&A will develop a list
of opportunities and constraints for affordable housing projects Citywide and within individual zoning
districts. This documentation will be focused on the impact of development standards and physical location
on the availability of land, pursuit of funding/financing, and other relevant criteria. These findings will be
summarized in the deliverable associated with Task 6.
1 Assuming rental projects only. Analysis for condo scenarios will require additional budget depending on the scope.
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Task 6. Preliminary Results Briefing.
At the end of the preceding task, HR&A will prepare a presentation-style briefing summary to support a
discussion meeting with City staff. The purposes of this meeting are to report on: (1) the degree to which the
prototypes are financially feasible; (2) the degree to which any new affordable housing requirements
appear to be feasible; (3) if not, what adjustments to the modeling should be pursued to achieve financial
feasibility, and in what order of policy priority (i.e., percentages of affordable units, affordability level and
unit mix).
Deliverable: Briefing book summarizing pro forma modeling approach, assumptions and preliminary results.
Task 7. (Optional) Allowance for Further Feasibility Testing.
This is an as-needed task for any further sensitivity testing that may be required, should the initial analysis
case results indicate that modifications of new affordable housing requirements or development standards
would be needed to achieve financial feasibility for one or more of the prototypes. A general schedule and
budget allowance are included for this task, but it may require augmentation if more than one round of
sensitivity testing is required.
Deliverable: Additional pro forma model results, as needed.
Task 8. (Optional) Revised Results Briefing.
This is another as-needed task for summarizing and discussing the results with City staff about any needed
sensitivity testing as described above.
Deliverable: Updated briefing book summarizing any additional pro forma modeling.
Task 9. Memorandum Report.
Once the analysis has been finalized and all questions and issues of concern to City staff have been
addressed, HR&A will prepare a memorandum report describing the analysis approach, assumptions,
findings and conclusions. The memorandum will include a concise executive summary, a narrative explanation
of approach and key assumptions, and conclusions. It will also include attachments with the output from the
financial feasibility models. The memorandum will be prepared first in draft for review and comment by the
City staff project team, and then put into final form after considering any comments on the draft.
HR&A acknowledges that all preliminary and revised analysis, internal briefings and other communications
with City staff will be treated as strictly confidential, and possibly subject to attorney-client privilege, until
City staff approves public release of the Final Memorandum Report.
Deliverables: Draft and Final Memorandum Report.
Task 10. Stakeholder Briefings.
This task consists of: up to two roundtable briefings with developers (including non-profits), architects and
property owners, which may be convened by the Santa Monica Area Chamber of Commerce, to provide
input on key assumptions and to review HR&A’s draft findings, conclusions and recommendations; and up to
two meetings with other local stakeholders to be determined in coordination with City staff, also to review
HR&A’s draft findings, conclusions and recommendations. The specific schedule and format for these meetings
will be determined after consultation with City staff but are intended to occur before Task 10 (Public
Presentations).
Deliverables: Meeting presentation briefing materials and meeting results summary memos.
Task 11. Public Presentations.
This task is an allowance for HR&A to appear at public meetings to present and discuss the results of this
analysis. For budgeting purposes, the schedule and budget assume two meetings with the Housing
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Commission, two with the Planning Commission and two with the City Council, including time to prepare
materials for the meetings, contribute to relevant sections of staff reports and PowerPoint presentations, and
participate in the meetings. The schedule for these meetings will be determined in consultation with City staff,
but it is intended that one set of public meetings will occur prior to Task 8 (Memorandum Report) and one
after Task 9 (Stakeholder Briefings).
Deliverables: HR&A presentation briefing materials and, as needed, written comments on companion City staff
presentation.
Task 12. (Optional) COVID-19 Updates
Because our modeling will not yet account for the full near-term impacts of COVID-19 on the real estate
market, we can update our analysis at a later date once the longer-term impacts are clear, or run subsequent
sensitivity models. This task would assess the impact of various changes to real estate revenues, financing
costs and construction costs on supportable levels of affordable housing.
PROPOSED STAFFING AND SCHEDULE
All the work described above will be prepared by qualified HR&A professional staff working under the
direct supervision of Paul J. Silvern, Vice President. This includes Thomas Jansen, a Principal (as Project
Manager), Ada Peng, a Senior Analyst and Jenna Gray, a Research Analyst.
Subject to further discussion with City staff, subsequent decisions about whether multiple rounds of sensitivity
testing may be required, and assuming timely City staff input during the progress of the work, HR&A will
complete the above-described tasks on approximately the following schedule, including overlaps between
individual tasks to the degree possible, but also allowing for the further feasibility testing and related
discussion tasks, if needed:
Task Cumulative Time
Task 1. Kick-off Meeting Week 1
Task 2. Specify 24 Prototypes Week 4
Task 3. Update Market Assumptions Week 6
Task 4. Base Case & Initial Analysis Case Feasibility Models Week 9
Task 5. Document 100% Affordable Housing Opportunities & Constraints Week 9
Task 6. Preliminary Results Briefing & Meeting Week 10
Task 7. Allowance for Further Feasibility Testing Week 12
Task 8. Allowance for Revised Results Briefing Week 14
Task 9. Draft & Final Memorandum Report To Be Determined
Task 10. Stakeholder Briefings To Be Determined
Task 11. Presentations to Commissions & City Council To Be Determined
Task 12. COIVD-19 Updates To Be Determined
PROPOSED BUDGET
Based on our experience with comparable projects, and taking into account certain economies available
from our previous related assignments for the City, we estimate that the completion of the above scope of
work will require a budget of $219,000.00, excluding customary reimbursable expenses (which we expect
to be limited). This total is allocated among individual tasks approximately as follows.
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Task Cost
Task 1. Kick-off Meeting $4,000
Task 2. Specify 24 Prototypes $26,000
Task 3. Update Market Assumptions $24,000
Task 4. Base Case & Initial Analysis Case Feasibility Models $50,000
Task 5. Document 100% A.H Opportunities & Constraints $5,000
Task 6. Preliminary Results Briefing & Meeting $8,000
Task 7. Allowance for Further Feasibility Testing $24,000
Task 8. Allowance for Revised Results Briefing $8,000
Task 9. Draft & Final Memorandum Report $12,000
Task 10. Stakeholder Briefings $8,000
Task 11. Presentations to Commissions & City Council $20,000
Task 12. COVID-19 Updates $15,000
Subtotal Fees $204,000
Contingency $15,000
Total $219,000
The proposed budget includes a roughly 7.5 percent contingency, based on our experience that these kinds
of analyses frequently require mid-term changes in assumptions that require additional work beyond the
original scope of the assignment. Customary expenses should be limited to third party data acquisition and
local travel to meetings; these are charged at their direct cost to HR&A without mark-up. Any additional
services that may be requested can be provided on a time and materials basis, per the hourly rate schedules
shown in Attachment A to this proposal letter, or on a mutually agreeable fixed fee basis, as City staff may
prefer. We propose to invoice the City on a monthly basis for the percentage of each task completed during
the prior month.
**********************
We hope you find the foregoing proposal responsive to the City’s needs. Once finalized, we assume City
staff will prepare a standard City professional services contract using this proposal letter to define the scope
of work, schedule and compensation. We are very familiar with the City contract, and related City contract
requirements, and take no exceptions to their terms or conditions.
We can be available to discuss this proposal with you and your colleagues as needed to clarify any issues
or discuss any amendments that may be required. We look forward to the possibility of working with you
and the other members of the City project team on this assignment.
Sincerely,
PAUL J. SILVERN,
Vice President
Attachment A: 2020 HR&A Hourly Rate Schedule for Public Sector and Non-Profit Clients
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Attachment A
HR&A Advisors, Inc. 2020 Hourly Rate Schedule for Public Sector & Non-Profit Clients
Hourly rates for HR&A staff are as follows:
Personnel Hourly Rate
Chair / Vice Chair $ 535
Partner $ 395
Principal $ 350
Director $ 315
Senior Analyst $ 240
Analyst $ 190
Research Analyst $ 150
Admin $ 105
HR&A bills for customary out-of-pocket expenses (e.g., travel costs, mass reproduction, specialized graphics,
long-distance telephone, messenger and overnight delivery) at their direct cost to HR&A without mark-up.
Depositions, mediations, arbitration hearing or trial testimony hours are billed at time and one-half.
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Exhibit B
Budget
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Exhibit C
Insurance Requirements and Verifications
Consultant shall procure and maintain for the duration of the Agreement insurance against
claims for injuries to persons or damages to property that may arise from or in connection
with the performance of the work hereunder by the Consultant, its agents, representatives,
employees or subcontractors.
Minimum Scope and Limits of Insurance
Coverage shall be at least as broad as:
1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01
covering CGL on an “occurrence” basis, including products and completed operations,
property damage, bodily injury and personal and advertising injury, with limits of no
less than $1,000,000 per occurrence. If a general aggregate limit applies, either the
general aggregate limit shall apply separately to this project/location (Insurance Services
Office Form CG 25 04) or the general aggregate limit shall be twice the required
occurrence limit.
2. Automobile Liability: Insurance Services Office Form CA 00 01 covering Code 1 (any
auto), or if Consultant has no owned autos, Code 8 (hired) and Code 9 (non-owned),
with limits of no less than $1,000,000 per accident for bodily injury and property
damage.
3. Workers’ Compensation: Workers’ Compensation insurance as required by the State
of California, with Statutory Limits and Employers’ Liability Insurance with limits of
no less than $1,000,000 per accident for bodily injury or disease (see footnote #1).
4. Professional Liability: Insurance appropriate to the Consultant’s profession with limits
of no less than $1,000,000 per occurrence or claim/$2,000,000 in the annual aggregate.
If the Consultant maintains broader coverage or higher limits than the minimums shown
above, the City of Santa Monica requires and shall be entitled to any broader coverage and
higher limits maintained by the Contractor. Any available insurance proceeds in excess of
the specified minimum limits of insurance and coverage shall be available to the City of
Santa Monica.
Other Insurance Provisions
1. The insurance policies are to contain, or be endorsed to contain, the following
provisions:
a. Additional Insured Status: The City of Santa Monica, its officers, officials,
employees and volunteers are to be covered as additional insureds on the CGL
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policy with respect to liability arising out of work or operations performed by or on
behalf of Consultant including materials, parts, or equipment furnished in
connection with such work or operations. CGL coverage can be provided in the
form of an endorsement to the Consultant’s insurance (at least as broad as
Insurance Services Office Form CG 20 10 11 85, or if not available, through the
addition of a combination of (1) CG 20 10, CG 20 26, CG 20 33, or CG 20 38
and (2) CG 20 37).
b. Primary Coverage: For any claims related to this Agreement, the Consultant’s
insurance shall be primary coverage at least as broad as Insurance Services Offices
Form CG 20 01 04 13 as respects the City of Santa Monica, its officers, officials,
employees and volunteers. Any insurance or self-insurance maintained by the City
of Santa Monica, its officers, officials, employees or volunteers shall be in excess of
the Consultant’s insurance and shall not contribute with it.
c. Notice of Cancellation: Each insurance policy required herein shall state that
coverage shall not be cancelled except after notice has been given to the City of
Santa Monica.
d. Waiver of Subrogation: Consultant hereby grants to the City of Santa Monica a
waiver of any right of subrogation which any insurer of said Consultant may acquire
against the City of Santa Monica by virtue of payment of any loss. Consultant agrees
to obtain any endorsement that may be necessary to affect this waiver of
subrogation, but this provision applies regardless of whether or not the City of Santa
Monica has received a waiver of subrogation endorsement from the insurer.
Self-Insured Retentions
Self-insured retentions must be declared to and approved by the City of Santa Monica. The
City of Santa Monica may require the Consultant to purchase coverage with a lower
retention or provide satisfactory proof of ability to pay losses and related investigations,
claim administration, and defense expenses within the retention. The policy language shall
provide, or be endorsed to provide, that the self-insured retention may be satisfied by either
the named insured or City of Santa Monica.
Acceptability of Insurers
Insurance is to be placed with insurers authorized to conduct business in California with a
current A.M. Best rating of no less than A:VII, unless otherwise acceptable to the City of
Santa Monica.
Claims Made Policies
1. If the Professional Liability policy provides “claims made” coverage:
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a. The Retroactive Date must be shown and must be before the date of this Agreement
or the start of work.
b. The insurance must be maintained, and evidence of insurance must be provided
for at least 5 years after completion of work.
c. If the policy is cancelled or not renewed, and not replaced with another “claims
made” policy form with a Retroactive Date prior to the effective Agreement date,
the Consultant must purchase “extended reporting” coverage for a minimum of 5
years after completion of work.
Verification of Coverage
Consultant shall furnish the City of Santa Monica with original certificates and amendatory
endorsements (or copies of the applicable policy language effecting coverage provided by
this clause). All certificates and endorsements are to be received and approved by the City
of Santa Monica before work commences. However, failure to obtain required documents
prior to the work beginning shall not waive the Consultant’s obligation to provide them.
The City of Santa Monica reserves the right to require complete, certified copies of all
required insurance policies, including the endorsements required herein, at any time.
Failure to Maintain Insurance Coverage
If Consultant, for any reason, fails to maintain insurance coverage which is required
pursuant to this Agreement, the same shall be deemed a material breach of contract. The
City of Santa Monica, at its sole option, may terminate this Agreement and obtain damages
from the Consultant resulting from said breach.
Subcontractors
Consultant shall require and verify that all subcontractors maintain insurance meeting all
the requirements stated herein. All exceptions must be approved in writing by the Risk
Manager.
Footnotes
# 1: Workers’ Compensation insurance coverage is not required if the Consultant does
not have employees. The Consultant must, however, execute the City’s Workers’
Compensation Coverage Exemption Declaration Form.
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FIRST MODIFICATION OF AGREEMENT NO. 108300 (CCS)
This First Modification of Agreement Number 108300 (CCS) (“First Modification”),
entered into as of _________________(“Execution Date”), by and between the City
of Santa Monica, a municipal corporation (“City”), and HR&A Advisors, Inc
(“HR&A”) is made with reference to the following:
RECITALS
A. On or about November 23, 2020, the City and HR&A entered into Agreement
Number 108300 (CCS) for professional services to support drafting and approval
of the pending Housing Element Update (“Original Agreement”).
B. The City and HR&A desire to modify the Original Agreement to extend the con-
tract term, include additional services to be performed by HR&A, and increase the
contract price to pay for those additional services.
TERMS AND CONDITIONS
Now, therefore, the undersigned parties do hereby mutually agree to modify the Origi-
nal Agreement as follows:
1. Section 1 of the Original Agreement entitled “Term” shall be deleted in its entirety
and replaced with the following paragraph:
Term. This Agreement begins on the Execution Date and terminates
on June 30, 2022, unless terminated earlier as set forth in the Original
Agreement or extended by the parties in writing.
2. Section 2 of the Original Agreement entitled “HR&A Services” shall be modified
by adding the following paragraph:
Additional Services. HR&A will perform all of the additional services
(“Additional Services”) described in Exhibit A-1, Scope of Services and
Budget. HR&A will complete the Additional Services in accordance
with Exhibit A-1.
3. Section 4 of the Original Agreement entitled “Compensation” shall be modified
by adding the following paragraph:
Compensation. The City will compensate HR&A for the Additional
Services in an amount not to exceed $39,900.00, as set forth in Exhibit
A-1. The total contract price for services pursuant to the Original
Agreement and this First Modification shall not exceed $258,900.00.
4. Exhibit A-1 is attached hereto and incorporated herein by this reference.
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5. Except as expressly modified by this First Modification, all other terms and condi-
tions of the Original Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Modification as of the
date and year first written above.
ATTEST:
______________________________
DENISE ANDERSON-WARREN
City
Clerk
APPROVED AS TO FORM:
______________________________
LANE DILG
City Attorney
CITY OF SANTA MONICA,
a municipal corporation
By: ______________________________
RICK COLE
City Manager
HR&A Corporation
#VENDOR
By: _______________________________
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Interim City Attorney
George S. Cardona
8/10/2021
HR&A Advisors, Inc.
Paul J. Silvern, Vice President
8/10/2021
Paul J. Silvern
8/10/2021
John Jalili
Interim City Manager
9/7/2021
City Clerk
Denise Anderson-Warren
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Exhibit A-1
Scope of Services and Budget
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New York | Dallas | Los Angeles | Raleigh | Washington DC
June 7, 2021
via email to: jing.yeo@smgov.net
Jing Yeo
Planning Manager
Community Development Dept. City Hall, Room 212
1685 Main Street
Santa Monica, CA 90404
Re: Additional Services for Housing Element Update Support
Dear Jing:
Per your request, HR&A Advisors, Inc. (HR&A) is pleased to provide a scope and budget for additional
services under Professional Services Agreement #108300 (CCS) entered into as of November 23rd, 2020,
by and between the City of Santa Monica (City) and HR&A, to support drafting and approval of the pending
Housing Element Update. The additional services include feasibility testing to determine whether increased
development standards and/or new affordable housing requirements (i.e., in terms of percentages, unit mix
and affordability levels) can accelerate development of mixed-income housing in R-1 neighborhoods. HR&A
has already engaged John Kaliski Architects (JKA), Danielian Associates, and MGAC as subconsultants using
our contingency as originally budgeted. We are requesting budget authorization to provide this additional
support, along with preparation for and participation in additional public meetings.
The following sections of this letter present HR&A’s proposed additional services and updated budget to
support the City’s Housing Element update.
PROPOSED ADDITIONAL SERVICES
Task 13: R-1 Diagrams (Reimbursement to JKA and Danielian Associates - $9,900)
HR&A will engage John Kaliski Architects and Danielian Architects to develop alternative diagrams
illustrating massing prototypes on typical City of Santa Monica R1 parcels of 7,500 Sq. Ft. in size and
illustrating the immediate neighborhood context. The development programs for each of the alternatives will
be based on program and zoning constraint information developed collaboratively between City staff and
HR&A.
Deliverables: R-1 diagrams and zoning analysis based on eight development scenarios
Task 14: Additional Public Meeting Support
This task is an allowance for HR&A to prepare for and participate in public meetings to present and discuss
the results of HR&A analysis for the Housing Element Update. For budgeting purposes, the schedule and
budget assume two meetings with the Housing Commission, two with the Planning Commission and one with
the City Council, including time to prepare materials for the meetings, contribute to relevant sections of staff
reports and PowerPoint presentations, and participate in the meetings. The schedule for these meetings will
be determined in consultation with City staff.
Deliverables: HR&A presentation briefing materials and, as needed, written comments on companion City staff
presentation.
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PROPOSED REVISED BUDGET
HR&A will complete the additional services with a revised contract total amount of $258,900 allocated by
task approximately as follows:
TASKS BUDGET
TASK 1: KICK-OFF MEETING 4,000
TASK 2: SPECIFY 24 PROTOTYPES 26,000
TASK 3: UPDATE MARKET ASSUMPTIONS 24,000
TASK 4: BASE CASE AND INITIAL ANALYSIS CASE FEASIBILITY MODELS 50,000
TASK 5: DOCUMENT 100% A.H OPPORTUNITIES AND CONSTRAINTS 5,000
TASK 6: PRELIMINARY RESULTS BRIEFING AND MEETING 8,000
TASK 7: ALLOWANCE FOR FURTHER FEASIBILITY TESTING 24,000
TASK 8: ALLOWANCE FOR REVISED RESULTS BRIEFING 8,000
TASK 9: DRAFT AND FINAL MEMORANDUM REPORT. 12,000
TASK 10: STAKEHOLDER BRIEFINGS 8,000
TASK 11: PRESENTATIONS TO COMMISSIONS & CITY COUNCIL 20,000
TASK 12: COVID-19 UPDATES 15,000
CONTINGENCY (SUBCONTRACTOR SERVICES) 15,000
TOTAL: $219,000
ADDITIONAL SERVICES:
TASK 13: R -1 DIAGRAMS 9,900
TASK 14: ADDITIONAL PUBLIC MEETING SUPPORT 30,000
REVISED TOTAL: $258,900
**********************
We hope you find the foregoing proposal responsive to the City’s needs. Once finalized, we assume City
staff will amend our existing contract with the revised scope of work and compensation.
We can be available to discuss this proposal with you and your colleagues as needed to clarify any issues
or discuss any changes that may be required.
Sincerely,
PAUL J. SILVERN,
Vice President
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Please attach additional pages if more space is required.
CITY OF SANTA MONICA
OAKS INITIATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known as
the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s
text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection. It
prohibits a public official from receiving, and a person or entity from conferring, specified
personal benefits or campaign advantages from a person or entity after the official votes,
or otherwise takes official action, to award a “public benefit” to that person or entity. The
prohibition applies within and outside of the geographical boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of Santa
Monica shall provide the names of trustees, directors, partners, and officers, and names
of persons with more than a 10% equity, participation or revenue interest. An exception
exists for persons serving in those capacities as volunteers, without compensation, for
organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the
Internal Revenue Code. However, this exception does not apply if the organization is a
political committee or controls political committees. Examples of a “public benefit” include
public contracts to provide goods or services worth more than $25,000 or a land use
approval worth more than $25,000 over a 12-month period.
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an
entity, rather than an individual person, the information includes the name of every person
who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent
interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks
Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This
information must be updated and supplied every 12 months.
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CITY OF SANTA MONICA
OAKS INITIATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the City compiles
and maintains certain information. That information includes the name of any person or persons
who is seeking a “public benefit.” If the “public benefit” is sought by an entity, rather than an
individual person, the information includes the name of every person who is: (a) trustee, (b)
director, (c) partner, (d) officer, or has (e) more than a ten percent interest in the entity.
Public benefits include:
1. Personal services contracts in excess of $25,000 over any 12-month period;
2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12-month
period;
3. Purchase, sale or lease of real property to or from the City in excess of $25,000 over a 12-
month period;
4. Non-competitive franchise awards with gross revenue of $50,000 or more in any 12-month
period;
5. Land use variance, special use permit, or other exception to an established land use plan,
where the decision has a value in excess of $25,000;
6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12-month
period; or
7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12-month
period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: ____________________________Title: __________________________
Signature: ______________________________________ Date: ________________
Email: ____________________________________ Phone: ____________________
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Packet Pg. 1228 Attachment: Written Comments (5128 : Second Modification to HR&A contract)
1 May 10, 2022
(NOT APPROVED)
CITY OF SANTA MONICA
CITY COUNCIL MINUTES
MAY 10, 2022
A regular meeting of the Santa Monica City Council was called to order by Mayor Himmelrich at 5:32 p.m.,
on Tuesday, May 10, 2022, via teleconference pursuant to Assembly Bill No. 361 signed by, Governor Gavin
Newsome at City Council Chambers, 1685 Main Street, Santa Monica, CA.
Roll Call: Present: Mayor Sue Himmelrich (attended via phone)
Mayor Pro Tem Kristin McCowan
Councilmember Phil Brock
Councilmember Gleam Davis
Councilmember Lana Negrete
Councilmember Oscar de la Torre
Absent: Councilmember Christine Parra
Also Present: City Manager David White
Interim City Attorney Joseph Lawrence
City Clerk Denise Anderson-Warren
CONVENE/PLEDGE
On order of the Mayor Pro Tem, the City Council convened at 5:32 p.m.,
with all members present, with Mayor Himmelrich, and Councilmember
Parra absent. Councilmember Negrete led the assemblage in the Pledge of
Allegiance.
CLOSED SESSIONS
There was no one present for public comment on closed sessions.
On order of the Mayor Pro Tem, the City Council recessed at 5:36 p.m., to
consider closed sessions and returned at 8:00 p.m., with all members
present, except Councilmember Parra, to report the following:
1.A. Conference with Labor Negotiator: Government Code Section
54957.6 -- Agency Designated Representatives: City Manager David
White and Chief People Officer Lori Gentles; Bargaining Units: ATA-
Administrative Team Associates; IBT-California Teamsters Local 911;
FEMA-Santa Monica Fire Executive Management Association; FIRE-
Santa Monica Firefighters Local 1109 IAFF; MEA-Municipal
Employees Association; AFSCME Local 4819, Management Team
Association; PALSSU-Public Attorneys’ Legal Support Staff Union;
PAU- Public Attorneys Union; POA-Santa Monica Police Officer
Association; SMART TD-The International Association of Sheet
Metal, Air, Rail, and Transportation Division, Local 1785; STA-
3.N
Packet Pg. 1229 Minutes Acceptance: Minutes of May 10, 2022 5:30 PM (CONSENT CALENDAR)