CITY HALL — A proposal to extend an existing ordinance that permits certain large projects if developers promise public benefits is receiving resistance from neighborhood groups.

Several organizations, including the Ocean Park Association, Friends of Sunset Park, and the Pico Neighborhood Association, sent letters to the City Council this week opposing the continuation of an interim ordinance that requires development agreements for projects that are more than 7,500 square feet or contain more than 15 housing, artist studio or single room occupancy units.

The regulations, which were initially adopted in 2007, applies to the Industrial Conservation (M1) and Light Manufacturing Studio District (LMSD), which are contiguous and roughly bounded by Colorado Avenue to the I-10 Freeway and nearly running the entire east-west length of the city. The area is home to mainly industrial and creative uses.

The City Council on Tuesday adopted the extension of the ordinance upon first reading, which is when the issue is open to a public hearing. The ordinance is expected to be finalized at the next meeting, extending the regulations through early 2012.

The action comes months after a ballot initiative that seeks to cap commercial developments to 75,000 square feet a year was defeated.

The Santa Monica Coalition for a Livable City, which authored the initiative, also wrote a letter in opposition to the ordinance.

Neighborhood groups argued that instead of permitting development agreements, which they blast as rarely providing public benefits in exchange for more density and height, there should be a moratorium on projects bigger than 7,500 square feet until the Land Use and Circulation Element is finalized.

Many of the neighborhood groups also opposed the ordinance when it was first enacted.

The Friends of Sunset Park board of directors wrote that past developments in the Special Office District have resulted in worsening congestion caused by cut-through commuter traffic in the neighborhood.

“Past development agreements in Santa Monica have resulted in minimal public benefits, maximum environmental impacts, and no compliance reviews, as legally required to ensure that terms of the agreements for the public’s benefit were enforced,” the board wrote in the letter.

Some groups, including the Pico Neighborhood Association, argue that development agreements are being used to destroy affordable housing. The FOSP board said that the development at the Village Trailer Park where a new residential complex is proposed to be constructed, will result in the loss of home ownership for 109 very low income families.

The LUCE, which is a 20-year update of the general plan, was initially set to return to council this year but most likely will not return for final adopt until next winter.

Eileen Fogarty, the planning and community development director, said the ordinance is meant to prevent “piecemeal development” in the industrial area, which she believes will conflict with the LUCE goals for the two districts, which will feature transit-oriented development focused around the Exposition Light Rail and affordable housing.

“We were seeing development coming in with inadequate services, inadequate infrastructure and inadequate open space,” Fogarty said. “Throughout all of this, the applications that were coming forward were not consistent with the goals the council and the community had talked about for the Land Use and Circulation Element.”

Fogarty, who said LUCE is on a fast schedule to completion, said that there has been less development pressures recently. There are four development agreements pending.

“(The ordinance) has been a very effective tool to manage piecemeal development and ensure the council and community can plan for the future and appropriately evaluate the scale, type and use and the infrastructure of future development,” Fogarty said.

The Ocean Park Association said in a letter on Tuesday that the development agreements have become too common, arguing that it threatens to make a “mockery” of the LUCE revisions.

Mary Marlow, the president of the association, said there is an accountability issue with the agreements, questioning what happens to the conditions imposed on the developer if the contract changes and whether public consent is then required.

“People are saying that the benefits negotiated by the city are not necessarily the same as the ones that residents see as benefits,” Marlow said in an interview on Wednesday.

During the council meeting, Mayor Ken Genser said that officials decided to move forward with development agreements once it became clear that a moratorium would have some vulnerability in court, forcing City Hall to spend a lot of time defending it.

He said two development agreements have come to the council, one of which did not receive unanimous support.

Officials stressed that the agreements have to be approved by the council.

Councilman Kevin McKeown said that while he has reservations about approving any development agreements before fully knowing what is slated to happen in the industrial area, he believes extending the ordinance is necessary.

“I do think continuing this ordinance is the prudent thing to do, it’s the most practical thing to do,” he said. “It’s not the most ideal thing to do.”

melodyh@smdp.com