PICO NEIGHBORHOOD — Community members clashed with Planning Department staff Tuesday night at a meeting meant to help define an elusive concept central to the future of development in Santa Monica — the “community benefit.”
Community benefits are perks that city staff negotiate into contracts called development agreements made with entrepreneurs that want to build large projects in Santa Monica. (City Hall allowed the use of development agreements to govern large scale development in 1982. Since, 20 projects have come under consideration through these rules.)
Several people stood to challenge city staff after an opening presentation and refused to participate in smaller group activities, instead preferring to stay in the center of the Thelma Terry Building at Virginia Avenue Park until the core group reassembled.
The disagreement lay in the purpose of the meeting. Staff planned to make lists of the kinds of things that community members wanted out of developers, be it a bike share program, child care facility or additional park space.
Residents wanted a broader conversation about what a community benefit entails with more details about the costs each development would have on the city before identifying an appropriate price to demand from developers.
There was also a distrust of how the information would be used in the development agreement process, potentially as a justification to allow large-scale development despite the community’s wishes.
“We fear that community input will create an overriding condition that the council will use to forgive adverse impacts because they will argue that the community is getting so much in exchange,” wrote resident Tricia Crane in an e-mail.
At the core of the matter is a simple fact: Although community benefits have been included in development agreements, there’s no clear definition of what a community benefit is, or what it is worth.
The Land Use and Circulation Element of the General Plan, or LUCE, cements the relationship between development agreements and community benefits, requiring that developers add a certain level of benefits on a tiered system for all projects that exceed certain heights.
Community benefits represent a premium package that can buy the developer the right to build outside of the confines of the zoning code, giving them the opportunity to make taller, denser buildings in a city that has long eschewed the high rise.
In return, City Hall gets to ask for parks, child care centers, public art, wage requirements or myriad other things that cost the developer extra and bring extra dollars for things no longer funded by local property taxes or redevelopment agencies, creations that funded infrastructure that expired Feb. 1.
Until now, those benefits have been defined on a case by case basis, with input given at public meetings and through correspondence, but with no formalized process. Debate has also sprung up over the difference between a community benefit and a project benefit, another poorly defined term.
It bothers community members who feel that there’s a disconnect between the kinds of benefits selected, where those benefits accrue and the impacts on the neighborhoods that must make room for the new mixed-use complex, office building or hotel.
It’s also disconcerting for developers, who have to strike a delicate balance between how much projects cost, how much revenue they’ll bring in and what the profit margin is before uncertain costs get added on by the local municipality.
“It’s the single biggest concern of our industry right now,” said Mike Winn, president and CEO of the California Building Industry Association, a trade group that represents a spectrum of professions involved in building projects, from homebuilders to engineers, suppliers and architects.
Developers already have to pay several kinds of fees off the bat for the right to build in the city, including childcare fees, arts fees, parks and recreation fees, amongst others. Wednesday, the Planning Commission began the process to add an additional fee — a transportation fee — to the package.
In some cases, the fees and extras piled on top of development can outweigh the cost of smaller projects, like single family homes, and can even sink larger developments.
“It’s a very difficult business,” Winn said. “We’re confronted with trying to make those tradeoffs and still figure out if there’s any economic viability to a proposal. This is the most complicated state in the nation to evaluate risk, get through the process and still know if you’re going to have an entitlement process.”
According to a 2011 survey conducted by consulting firm Duncan Associates, California charged the highest fees of any state in the nation by almost twice Maryland, its distant second.
“The idea that you can keep adding fees to provide new facilities, community amenities, or whatever the preference du jour happens to be out of hand,” Winn said. “It’s not a malicious strategy.”
Additional fees are, in part, a reaction to the declining amount of property taxes available to municipalities in California to pay for infrastructure and other necessities, begun by the passage of Proposition 13 in 1978, which severely curtailed property tax growth.
Despite the tension, residents Tuesday did provide input on benefits they hoped to see come out of future developments, including calls for additional open space, better public transportation and additional “very low” income housing.
Planning Director David Martin was pleased with the outcome.
“A lot of ideas were put out that we will pursue,” he said, although which ideas were feasible was beyond the scope of the meeting.