Santa Monica has failed to meet its own affordable housing goals for the third consecutive year, building less than half of the aimed for affordable units.
According to a report on Propositions R and I presented to the city last week, only 13 percent of the residences built last year were considered affordable. The City Charter requires 30 percent of new construction be affordable but developers have failed to meet that measurement for several years.
The annual report measures the number of housing units completed, in construction and approved in a given year. While the charter only governs units completed, staff said the additional data shows what’s likely to happen down the line and helps account for the uneven pace of construction over the years.
This year 100 residences were completed (13 affordable/13 percent), 586 units were under construction (118 affordable/20 percent) and 386 were approved (70 affordable/18 percent). In total the 16/17 year tracked 1,072 units (201 affordable/19 percent).
The report tracks three stats, the number of affordable units created, compliance with affordability requirements by tenants and limits on the number of units the City can help finance. While the first measure fell short, affordability requirements are at a 99 percent compliance rate and the City was within its funding limits.
Proposition R was passed by local voters in 1990 as an amendment to the City Charter. It requires thirty percent of all multifamily housing completed in each fiscal year be affordable to and occupied by low- and moderate-income households. Of that housing, at least one-half of the total affordable housing completed be affordable for and occupied by low-income households. The measurement is taken citywide and the charter doesn’t mandate construction on a project-by-project basis. Instead, several programs are in place to encourage the development of affordable housing including some requirements on specific projects, city-wide development standards and fiscal support for affordable housing from the City.
The terms of the charter could be met by a 100 percent affordable housing project offsetting for-profit development that had less than 30 percent of their units designated affordable but the passage of the Downtown Community Plan changed the rules for some projects.
According to the DCP projects in the Downtown must set aside up to 35 percent of their total units as affordable housing depending on the size and location of the project. Under the rules, projects of less than 50 feet have a 20 percent requirement for onsite housing and 25 percent for offsite. The percentages increase by one percent per two foot in height and any project between 70 – 84 feet have to provide 30 percent onsite or 35 percent offsite.
Developers have the option to building housing on site as part of their project, build affordable housing offsite in a standalone development, pay fees in lieu of construction or donate land to the City or a nonprofit that builds affordable housing.
In Fiscal Year 16/17, eight developments were completed. Four developments provided a total of 13 affordable residences while the rest paid a combined $1,247,872 in fees.
This is the third consecutive year housing production has failed to meet the goal, a situation staff attribute to a lack of funding. According to the report, the primary problem is the loss of Redevelopment money when voters chose to dissolve local Redevelopment Agencies in 2012.
“Without City funding, meeting the requirements of Proposition R has been a challenge, as nearly two-thirds of the affordable housing constructed in the past 23 years was funded with loans from City housing trust funds,” said the report.
The Charter has no penalties for failing to meet the housing goals but does mandate Council should take action to meet the provisions in the future.
According to the report, City Hall is attempting to fill the funding gap with property tax revenue ($1.2 million per year) that previously went to the redevelopment agency, one time money from land sales and profit participation agreements, repayment of loans made to the now-defunct redevelopment agency and an increase in the Transaction and Use Tax (TUT) by one-half percent, half of which (estimated at $8 million per year) is dedicated to affordable housing.
Staff said the current shortfalls are the tail end of the crisis caused by eliminating redevelopment money and the new funding sources should cover the gap for several years allowing more affordable housing to be built in the coming years.
According to the report, about 38 percent of all housing built since adopting Proposition R meet the affordability requirements.