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Santa Monica is short on housing for individuals and families earning between $50,000 and $90,000, according to an annual report on the city’s affordable housing production. 

Under a state law that requires cities to set targets for new development every eight years, Santa Monica is supposed to approve 700 market-rate units and 671 affordable units between 2013 and 2021. Developers of new apartment buildings are required to contribute to affordable housing in Santa Monica by constructing affordable units, paying a fee to the city to subsidize affordable development, or donating or selling land for affordable housing. 

But during the 2013-2021 cycle, the city has issued building permits for 1,714 market-rate units — more than 1,000 above its target — and only 551 affordable units, according to a report City Council will discuss Tuesday.

The shortage of affordable housing is most acute for low- and moderate-income households. 

Two-thirds of the affordable units that have been issued building permits are deed-restricted to extremely or very low-income households, which earn up to 30% and 50% of the Los Angeles area median income of $73,100, respectively.

The city has issued permits to 116 units for extremely low-income households and 258 units for very low-income households — a surplus of 77 units above the city’s targets for both housing types.

The city was meant to issue permits for 263 low-income units and 111 moderate-income units, according to the report. An individual is considered low or moderate-income if they earn roughly $40,000 to $60,000 annually. A two-person household can earn up to $70,000 and a four-person household up to about $90,000.

But only 150 units for low-income households and 27 units for moderate-income households have received permits, although there are 27 low- and moderate-income units that have been approved and will eventually count toward the target.

The overrepresentation of extremely and very low-income housing prompted City Council earlier this year to temporarily suspend the option for developers to fulfill their affordable housing obligations by including a very small number of units for extremely low-income households in their projects. 

An analysis city staff found that developers disproportionately chose the extremely low-income option because it would only apply 5% to 7.5% of units in their projects under the city’s regulations. If a developer chooses to include housing for low- and moderate-income households, they have to set aside a larger percentage of units.

As the city gears up for a forthcoming state mandate to build 8,800 units over the next eight-year housing cycle, City Council and Planning Commission members have said the city needs to ensure enough housing is built for low- and moderate-income households.

“We’re hollowing out the middle class here,” Planning Commissioner Richard McKinnon said at a meeting in October. “What we have now is people who are millionaires because they own houses or are extremely well paid enough to afford the $4,000, $5,000, $6,000, $7,000 a month rent, and people who are being supported by rent-controlled or affordable housing, and less and less in the middle, and that’s an unsustainable city going forward.”

Over the 2013-2021 cycle, the city used $93.7 million of $122.3 million available in its housing trust funds to fund affordable housing, according to the report. 

$21.2 million was used to help fund the development of studios or one-bedrooms and $25.1 million was used for two- and three-bedrooms. The city allocated $25.4 million to help house people experiencing homelessness and $22 million for seniors, as well as $2 million to expand the POD program, which provides rental assistance to elderly Santa Monica residents.

Of all 551 affordable units that have been approved, nearly 60% are studios or one-bedrooms, one-quarter are two-bedrooms and one-fifth are three-bedrooms.

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