Developers temporarily will be unable to build housing for extremely low-income households as City Hall refines its affordable housing rules.

The City of Santa Monica requires developers to include affordable units in their projects or pay into an affordable housing fund. For the past seven years, they have had the option to set aside five to 7.5 percent of the units for households making 30 percent of the Los Angeles area’s median income, depending on the project’s size, rather than including more affordable units restricted for households making 50 or 80 percent of the median income.

Council believes the option incentivizes developers to include the smallest number of affordable units possible and voted Tuesday to suspend that option while the City revises the Affordable Housing Production Plan.

The City will be bringing in a consultant to conduct a feasibility study that will determine how Santa Monica can reach its affordable housing goals – the voter-approved Proposition R requires that 30 percent of all new multi-family housing be affordable – without chilling development. The study will be conducted by HR&A Advisors, Inc., cost $150,000 in local and state funding and take six to eight months to complete and review.

Some councilmembers said suspending the extremely-low income option would put the city on the path toward meeting the Proposition R requirement, which it is projected to fall short of between 2013 and 2021 by five percent, but others said it could discourage developers from building any housing at all. Developers argue that including higher proportions of affordable units in a project makes it less profitable to build.

“If we don’t build any housing, we don’t build any affordable housing,” said Mayor Gleam Davis. “None of us know if this is going to chill the production of housing.”

Councilmember Terry O’Day also said Santa Monica risks losing new market-rate housing if the City makes it more difficult to build. O’Day was the only councilmember to vote against suspending the option to build extremely low-income units.

“We need housing of all types,” he said. “We need to meet the Proposition R requirement, but the housing crisis is at all income levels.”

Councilmember Kevin McKeown said he supported temporarily halting the production of extremely low-income units until the study is completed and Council better understands how different affordable housing options affects the production of housing.

“If we let them keep building (extremely low-income units), we get farther and farther away from what Proposition R requires us to do,” he said.

After Council voted, McKeown also directed staff to explore reserving spots on the City’s affordable housing waitlist, which will be merged with Community Corporation of Santa Monica’s waitlist, for the descendants of people displaced by the construction of the Civic Center area and the 10 freeway in the late 1950s and early 1960s.

He said the idea was spurred by the Coastal Commission’s approval of the Civic Center Multipurpose Sports Field, which included a request that the City commemorate the African-American community that was displaced when the Civic Center area was originally created.

McKeown said adding the children and grandchildren of people who were displaced to the waitlist would not be easy, but the City could reach out to existing communities, such as African-American churches in the city whose congregations are in part made up of displaced families.

“There are lots of families here in town with relatives who were displaced,” he said. “We can really give back what has been taken from people and it will make a real difference to those communities.”

Correction: The original version of this article incorrectly stated the Civic Auditorium will be redeveloped. In fact, the Civic Center Multipurpose Sports Field will be redeveloped.

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