This building at 2029 Olympic Blvd. features a number of single room occpancy units and small studio apartments. (photo by Daniel Archuleta)

CITYWIDE — How much is too much?

That’s a question facing Santa Monica city officials overseeing a update of the zoning rules and regulations at the same time as very small apartments marketed as “affordable housing” multiply across the city.

The apartments range from single-room-occupancy units, called SROs, with no more than 375 square feet, to small studios. Many come with income restrictions and qualify as affordable housing, but still market for over $1,450 per month, depending on location.

Several hundred such units are in the pipeline, according to notes on the Planning Commission caselist, and it has prompted discussion both at recent commission meetings and the City Council about the place of SROs and small studios in the overall housing mix in Santa Monica.

SRO and other small units are popular to build because developers can get more rent per square foot for the properties than they can for larger apartments, said John Warfel of Metropolitan Pacific commercial real estate services.

“They’re also denser, so it’s more expensive to build,” Warfel said. “Theoretically, it pays off.”

The boom is also market-driven, in this case by young professionals who want to move to Santa Monica and either can’t afford a larger one or two-bedroom apartment or don’t need that much space.

In general, that’s the market that developers building SROs and small studios are trying to capture, said Jim Andersen, president of NMS Properties.

NMS Properties — a developer with 18 apartment complexes established in Santa Monica, another four on the Planning Commission’s caselist and at least one property in escrow — is one of the primary developers of SROs and small studios in the city.

“What we’ve attempted to do is hit that demographic that has a certain rent they can pay, and want to live in this city but can’t afford a luxury apartment,” Andersen said.

The apartments created to fill that niche involve some of the same finishing touches of luxury apartments — stone countertops, full kitchens, hardwood cabinets, etc. — in a smaller space.

“By doing that, it makes it more affordable to live in the city,” Andersen said.

While city officials tend to agree that some of this kind of housing is welcome and necessary, concern is beginning to rise at the amount of small units coming on line all around the same time.

At the Oct. 25 City Council meeting, planners brought forth the timeline and thought process behind a comprehensive review of the zoning ordinance that is coming forth over the next year and a half.

In his comments, City Councilmember Kevin McKeown noted that although SRO projects constituted a very valuable kind of housing for the city, the advertising around the units as “affordable” may have missed the mark.

“Very small affordable apartments are a desirable part of our overall housing mix, but current rent levels sometimes mean that tiny SROs at market rate can qualify as affordable under existing law,” McKeown wrote in an e-mail before the meeting. “We need to look at whether the affordability incentives we grant are appropriate for market-rate SROs, and whether we are getting too many tiny units and not enough affordable housing for working families.”

Developers who provide affordable housing can get various incentives from the city for their efforts, including density provisions and variations in setback requirements.

Prior to the meeting, McKeown also mentioned the possibility of limiting further SRO construction until the impacts could be evaluated.

It wouldn’t be the first time that City Hall had taken steps to limit SROs.

In 2007, council members passed an emergency ordinance that slowed permitting for SROs.

The concern at that time was that a range of housing choices were not available, Andersen said, and he described the ordinance as a “pause to make sure everything being proposed was consistent with that ordinance.”

Recent concerns at the Planning Commission level ran along those lines, and how the kinds of tenants in small units tend to hit one note rather than the diversity that officials are looking for.

At the Oct. 19 Planning Commission meeting focusing on a proposed housing project for 401 Broadway, Commissioner Jennifer Kennedy noted that small units create a transitory population and don’t serve as a basis for a neighborhood.

SROs have a place, said Vice Chair Gerda Newbold, but diversity of housing and tenants is critical to a vibrant community.

“SROs and one bedroom apartments are good, but what I see as a commissioner is that is very one-dimensional,” Newbold said. “You get younger, single people living there, but not families. We want all kinds of people living there.”

At present, SROs and small units continue to flourish and are filling a void left in the wake of a large supply of one and two-bedroom apartments that many can’t afford.

“How deep that market is, you won’t know until the units are built,” Warfel said.

NMS, for one, has tried to provide a variety of unit sizes, and didn’t put all its eggs in the SRO basket, Andersen said.

“When it becomes too much, the market will speak in those terms,” Andersen said.

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