CITY HALL — The City Council last week approved new fees developers will have to pay to ensure only vetted tenants take advantage of the city’s affordable housing program.
The Affordable Housing Production Program requires that developers in the housing market build a certain number of affordable units either on-site or off-site that can only be rented out to tenants that qualify as moderate, low or very-low income.
Developers can also choose to pay an in-lieu fee, which is substantially cheaper.
The proposed monitoring fees — $170 for a brand new unit, $145 every time a new person moves into a unit and $135 per unit annually — would pay for the staff time needed to police the program, including annual audits, ongoing monitoring and review of reports submitted by property owners that have affordable units in their buildings.
Vigilance is necessary, said Andy Agle, director of the Housing and Economic Development Department.
A 2008 audit revealed numerous violations of deed-restricted units, particularly at the 300-unit Arboretum complex on Colorado Avenue at Cloverfield Boulevard.
A recent audit on the building found perfect compliance.
“It’s important that apartment owners rather than the city pay for this monitoring,” Agle said.
In part, that may be a result of the success of the inclusionary housing program. The program has added 844 affordable units to Santa Monica’s supply, and approximately 200 more are on their way.
Monitoring them all will take staff time which, valued at $57 per hour including salary and benefits, City Hall cannot afford.
Instead, the cost would fall on property owners, but primarily six large developers who hold 75 percent of the affordable units, Jim Kemper, project manager with City Hall, wrote in an e-mail.
The remaining quarter, or approximately 200 units, belong to around 100 smaller owners who may have one or two of these apartments each.
For each old apartment, however, a landlord could be facing between $135 and $280 per year that could not be passed through to tenants under rent control.
A new apartment with turnover could be $450.
City Councilmember Bob Holbrook, the lone dissenting vote against the fees, expressed his displeasure at the potential for escalation if an apartment owner had a lot of turnover in one apartment.
“If someone has an apartment and rented it three times, the $145 fee would be paid three separate times?” he asked.
The answer was yes.
Wes Wellman, past president of the Action Apartment Association, which represents Santa Monica’s landlords, has seen this kind of increase before.
First, it was the fire inspection fee, an amount to pay for the time fire inspectors spend making sure buildings are in compliance. Then it was a check processing fee levied on business licenses. A City Hall-produced report needed to sell a piece of real estate jumped up as well.
“They’re disguised tax increases, and they’re pretty much blank checks,” Wellman said.
These are costs that should be covered by the General Fund, Wellman argued.
“Why do we pay taxes? We pay taxes for city services,” Wellman said. “It’s not necessarily to pay for social programs or to pay clerical people $57 dollars an hour.”
That $57 figure is the average hourly rate in salary and benefits of a staff person that might be completing the checks. Assuming that individual worked 40 hours a week 52 weeks out of the year, that’s $118,570.
“If you drill down on this, you see what the real problem is,” Wellman said. “It’s not the city with the $500 million budget, the problem is that they’re constantly grabbing for new revenue because the salaries are too high.”
If the employee completing the task doesn’t get a six-figure salary, the fee should be lower, he said.
City Hall has begun a process of creating or raising fees like the fire inspection fee and recreation fees to better reflect the amount of money it spends on staff time.
Originally, the housing monitoring fee was going to cost $300 for each new apartment, and then a flat $120 annual cost.
The fee was changed after discussion before the Housing Commission, Kemper said.