Editor’s note: This is the second in a series of articles on housing in Santa Monica. Future topics will include permanent supportive housing, the role of Development Agreements in producing affordable housing and the importance of providing housing for all income levels to preserve the historic diversity of Santa Monica.
There is an alarming mismatch between housing prices in Santa Monica and the income levels of the city’s middle-income workers. These are the people whose incomes fall above that of low and moderate income, making them ineligible for affordable housing, but far below the income needed to compete in our housing market.
They tend to be single, young and working in “helping” professions. It is the needs of this group that workforce housing is intended to address. Providing this housing is far more challenging than providing affordable housing, since public housing money cannot be used to house these middle-income workers. According to a housing needs analysis prepared as part of the Bergamot Area Plan process, only one in 10 of the people who work in Santa Monica live here, which explains much of the traffic congestion in our city and the horrendous rush hour situation on the I-10 freeway.
So, who are these people who are locked out of Santa Monica’s housing market? Frankly, many of them may be our adult children who were born and raised here and attended our local schools.
Santa Monica’s five largest employers, in order, are the City, Santa Monica College, the two hospitals and SMMUSD. They employ 53 percent of the workforce of the City’s principal employers, or 9,690 people. Taking out the higher paid administrators in these organizations, 2013 salaries range from $44,341 for an entry level teacher to $107,564 for a school principal. A nurse’s average salary is $95,341, a firefighter’s is $82,566 and a police officer’s is $83,610.
Can these people afford to live in Santa Monica? Not unless they are already here in a rent-controlled apartment or there is another wage earner in the household. If they are single, or the only wage earner in the family, they will likely relocate to the San Fernando Valley or some other less costly housing market and commute to work.
Let’s look at a representative of this middle-income working group to see what they could afford. In 2013, an experienced teacher in the SMMUSD made about $74,475 per year. Using the standard 30 percent of income considered reasonable for housing expenses, and subtracting out a utility allowance, this teacher could afford a monthly housing expense of about $1,700. Unless that teacher is married to an executive at Yahoo! or Google, or has wealthy and generous parents, buying a house in Santa Monica is out of the question.
How about renting an apartment? If very lucky, the teacher could rent a vacant, rent-controlled studio or one-bedroom apartment. But if he/she has children, that would not be adequate. Since newly constructed apartment units’ rents start at more than $2,000 per month for a studio, that would not be an option either, unless the teacher were willing to pay a much higher percentage of their income for housing, and settle for a much smaller living space than could be found outside Santa Monica.
The other side of the equation is the income level of workers in the city’s entertainment and tech businesses, which is about $137,000 per year on average. It is with these wage earners that our middle-income workers are competing for scarce housing.
So, what is the solution for our workforce housing need? One is to have multiple roommates to make the rent affordable. Some of us have young adult children in the San Francisco Bay Area who are living like sardines in overpriced housing. Whether that would work in Santa Monica is questionable.
If you were a landlord, would you rent to two, three or four young adults or to one CEO who can afford the rent by him/herself?
One approach to providing workforce housing is to require developers to include such housing in mixed-use projects governed by Development Agreements (DAs). The downside of this approach is, of course, that the number of very low and low-income units in the project would necessarily be reduced for project feasibility purposes. The Bergamot Area Plan specifically identified that part of town as ideal for the production of workforce housing, but that requires new housing projects to be built in the area and, after the failure of the Transit Village project, it’s unclear if much else will get built there.
Another alternative would be to encourage major employers to develop housing for their mid-level employees or to provide rent vouchers (subsidies) that would help their employees compete in Santa Monica’s housing market. The amount of each subsidy could be geared to the employee’s income and would decrease if the employee’s income went up and end altogether should the employee take a job elsewhere. The City should consider setting aside matching funds for such employer rent subsidies.
Finally, any City or SMMUSD surplus land should be seen as a possible resource for development of workforce housing. The rents or sales prices would be lower if there were a land write-down.
We, as a community, should support providing housing opportunities to people who teach our children, take care of us in our hospitals and protect our property and us from fire and crime. The only practical solution for providing these opportunities is supporting the development of new housing in appropriate locations.
There will be real consequences if we don’t: housing prices in Santa Monica make it virtually impossible for younger, middle-income people to consider long-term futures here.
Clearly the provision of workforce housing is a challenging issue in a high-cost area such as Santa Monica, but it needs attention and real, actionable solutions if we as a community care about making sure middle-class people also have a future here. We encourage the City and the broader community to prioritize strategies for meeting these needs.
Leslie Lambert, Natalya Zernitskaya, Jason Islas, and Judy Abdo for Santa Monica Forward. Read previous columns at www.santamonicaforward.org/news.
Our City needs to provide more affordable housing…however the same Bergamot Study referenced states: “99.9% of workers with incomes over 58K, living in dual-income households (in 2012), were able to afford rental housing in Santa Monica.” Currently most new projects have a majority of Studio or 1-BR units rather than those that can be shared- 80% vs. 20% at VTP. This may be why 50% of City workers live in the adjacent Westside neighborhoods with lower rents and reasonable commutes. The new Expo Line will soon provide access to more low-cost housing and a faster commute for those wishing to live further east…. not solutions but viable alternatives until more can be done here in Santa Monica.
The employers of those in the “helping professions” (mostly luxury hotels) should pay their employees a livable wage rather than hording massive profits and forcing us to pay to house their sorely underpaid employees. Meanwhile the city is full of “affordable housing” but it almost does not exist for long time Santa Monica citizens with families or our older residents who lose their apartments
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