Affordable housing development High Place East (Daniel Archuleta)

City Council will temporarily prevent developers from including affordable housing intended for extremely low-income households to increase the number of affordable units in the city overall.

The City of Santa Monica requires developers to include affordable units in their projects or pay into an affordable housing fund. Current rules have incentivized developers to include the smallest number of affordable units possible, preventing Santa Monica from reaching its affordable housing goals. Council will vote to alter those rules at its meeting Tuesday.

“Council has directed staff to temporarily eliminate the extremely low-income option to allow staff to continue to work on a more comprehensive update to the Affordable Housing Production Program (AHPP) so we can ensure we’re balancing needs for affordable housing at a variety of income levels,” said Roxanne Tanemori, the city’s acting planning manager.

Voters passed Proposition R in 1990 to require that 30 percent of all new multi-family housing be affordable, but the AHPP gave developers the option to build fewer units for extremely low-income tenants instead of constructing more units for other low-income tenants. Council adopted that option in 2012 because 95 percent of households on the City’s affordable housing waitlist were extremely or very low-income.

Depending on the project’s size, developers can choose to set aside five to 7.5 percent of the units for households making 30 percent of the Los Angeles area’s median income, 10 or 15 percent for households making 50 percent of the median income, or 20 or 30 percent for households making 80 percent of the median income.

Under those rules, the City is projected to fall short of the Measure R requirement between 2013 and 2021 by five percent, and has not met the requirement on an annual basis since fiscal year 2013-2014. City Council will vote Tuesday to temporarily suspend the extremely low-income option and begin drafting new affordable housing and density requirements.

“The financial incentive to allow a development to deed-restrict a low number of units for extremely-low income households has perhaps been too successful, and has ultimately impacted the City’s ability to meet annual Proposition R targets,” City staff wrote in a report on the proposed changes.

Staff will likely draw from the Downtown Community Plan (DCP), which requires a mix of units at appropriate sizes and affordability levels, in crafting changes to the AHPP.

The City will engage HR&A Advisors, Inc. with $150,000 in a combination of local and state funding to recommend affordable housing requirements that would be financially feasible for developers. The study will take six to eight months to complete and review.

When Council first considered the idea in January, some questioned whether mandating that developers reserve more units for lower-income tenants could discourage them from building more housing of any kind.

Mayor Gleam Davis said no developers have applied to build housing downtown since the City adopted the DCP and questioned whether suspending the option would depress the production of new housing overall.

Paula Larmore, who has served on the Chamber of Commerce’s Land Use and Circulation Element Subcommittee, said forcing developers to set aside a higher proportion of affordable units could render projects financially unviable. She said the City risks losing any potential housing by trying to make more of it affordable.

Larmore also said in a memo to Council that as of 2014, 79 percent of people on the City’s affordable housing waitlist qualify as extremely low-income.

Councilmember Kevin McKeown said in January that the City is only suspending the option temporarily and may allow developers to build extremely low-income housing in the future.


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