CITY HALL — The Planning Commission has recommended creating new penalties for developers who fail to abide by affordable housing rules, an action sparked by recent revelations some local landlords did not verify income eligibility before leasing low-income units while others failed to provide promised units altogether.

The commission made the unanimous recommendation to establish new penalties last week after reviewing terms of a proposed settlement between City Hall and owners of The Plaza at the Arboretum, a 350-unit complex on Colorado Avenue that was accused of failing to properly check tenants leasing its 97 designated affordable apartments.

In coming up with a settlement agreement, Deputy City Attorney Gary Rhoades said he realized there were no specific penalties in Santa Monica’s city code for violations of affordable housing guidelines.

Without specific rules, he said an apartment owner who fails to follow protocol by providing City Hall with a timely report showing that tenants in affordable units are eligible to live there could be assessed only the default fine of $75.

Planning Commissioner Ted Winterer said there should be a more significant deterrent.

“We were just surprised to learn that right now there are no substantial consequences for being in violation of the terms of these [affordable housing] agreements,” he said. “If there were more significant consequences on the books … people would be less likely to cavalierly violate the terms of these agreements.”

Any new fines or other penalties for failing to abide by affordable housing rules would have to be approved by the City Council. Rhoades said work on the potential new regulations has just begun, but added the council will be briefed on the Planning Commission’s recommendations in September when the council is scheduled to certify the Arboretum settlement.

Rhoades said staff from the Housing & Economic Development Department and the Planning Department will make recommendations to the council about how high new fines for violations should be.

Besides failure to verify income eligibility, Rhoades said City Hall is considering proposing new fines for owners who fail to use the city’s list of income-eligible tenants to fill vacancies and for owners who fill deed-restricted apartment vacancies with relatives or employees.

“This is an effort to make sure there’s more accountability for affordable housing providers,” he said.

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