Only 46 apartments were built in Santa Monica last fiscal year and just two of those were affordable, according to a report the City of Santa Monica released Thursday.

There have only been two other years where less than two affordable units were completed since local voters approved Proposition R in 1990. The measure requires 30 percent of all new multifamily housing to be affordable to low- and moderate-income households. Although 38 percent of all construction since then has been affordable, Santa Monica has not met the requirement on an annual basis since 2014.

“Only four percent of completed residences were affordable … and therefore did not meet the Proposition R requirement,” Andy Angle, director of housing and economic development, wrote in the report. “However, the Proposition R affordable housing production mandate continues to be met over the longer term.”

The City lost a major source of state funding for low-income housing in 2012, precipitating a dramatic drop in the number of affordable apartments built. 14 to 19 percent of units built in the previous three fiscal years were affordable, down from more than half of units between 2011 and 2014.

Last year saw the lowest number of affordable apartments built in more than a decade. More are in the pipeline – as of last June, there were active building permits for 837 apartments, 19 percent of which were affordable – but not enough to meet the Proposition R requirement.

Four of the six buildings completed last year paid a combined $1.2 million in affordable housing fees rather than provide affordable units. Developments in the pipeline will pay another $3.7 million. Those fees would only amount to 12 percent of the cost of the Arroyo, the most recent affordable development to open in Santa Monica. The Arroyo was built by Community Corporation of Santa Monica, a local nonprofit.

New sources of funding should result in a higher proportion of affordable housing over the next few years, however. In 2016, City Council bolstered the City’s housing trust funds, which are the funding source for most of Santa Monica’s affordable housing, and voters approved two ballot measures to fund affordable housing. The City used the increased funding to approve loans for 47 apartments last fiscal year.

“The funding resources enhance the City’s ability to increase affordable housing production and meet the provisions of Proposition R,” Agle wrote.

Recent changes to the Downtown Community Plan (DCP), which requires that 30 percent of new multifamily housing downtown be affordable, are also expected to spur construction. More than 1,700 units have been proposed since Council approved the plan two years ago. The 2017 changes to the zoning ordinance increased affordable housing requirements throughout the rest of the city.

“The increased affordability requirements in the Zoning Ordinance and DCP are expected to play a critical role in helping the City meet the requirements of Proposition R,” Agle wrote.

The City is also considering amending the affordable housing production plan (AHPP) to ensure that affordable housing is built for a range of income levels. Council believes the current AHPP incentivizes developers to build a very small number of extremely low-income units rather than a larger amount of low- or moderate-income units.

To qualify for an extremely low-income apartment, an individual needs to earn less than $22,000, which is 30 percent of the Los Angeles area’s median income. A family of four needs to earn less than $32,000.

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