The final count is in: 16 new medium- and high-density residential projects — most of them between nine and 15 stories high — slipped through the door held open by a non-compliant Housing Element, allowing them to bypass local oversight and head straight into permitting under state rules.
That door is now closed.
Last week, city staff disclosed that at least 12 new projects had received vested rights to be built in Santa Monica, circumventing local zoning laws including height and FAR (floor-area ratio) restrictions, because the City was not able to complete its state-mandated Housing Element by California Department of Housing and Community Development (HCD) deadline. Four more have since joined the list.
The Housing Element is the plan by which each California city proves it can meet mandated minimums for new housing over the next decade (although the plan is not a commitment that the city will, in fact, build the housing). Because the city’s Housing Element was out of compliance, developers were able to apply for any residential project that included at least 20% low income or 100% moderate income units.
The City of Santa Monica received word on Oct. 14 that the final version of the 2021-29 6th Cycle Housing Element had received final HCD approval, hours shy of the final deadline. That means that the door has finally closed on developers proposing projects that would receive a rubber stamp of approval without local zoning controls.
According to City staff, the applications for all but one of the 16 vested projects — known as “builder’s remedy” projects — came in between Sept. 30 and Oct. 14. They now total 4,562 total new housing units, of which 941 are affordable. The tallest of the new projects is 15 stories high; another five are 12 stories high, one is 11 stories and two more are 10.
Within days of the news breaking, neighborhood groups from all corners of the city have jointly signed a letter stating they are “extremely upset” over new projects and urging city council “to hire outside legal counsel … to conduct an independent review and then present the Council with options and remedies” that would result in the development projects being rejected.
The chances that these 16 new projects will be rejected is slim, according to both HCD and the City of Santa Monica’s planning department.
“The City cannot deny a builder’s remedy project solely on the basis that it does not comply with the zoning ordinance or General Plan,” according to a memo provided to City Council earlier this month. The only grounds for denial, according to the memo, would be if a project is proven to “have a specific, adverse impact upon the public health or safety.” Moreover, “inconsistency with the zoning ordinance or general plan land use designation” does not qualify as a “specific, adverse impact,” the memo says.
The narrow opening sparked a bonanza for at least one developer in particular: Adam Shekhter of NMS Properties, WS Communities and WSC Communities.
The largest share of the 16 projects were submitted by WSC Communities, the latest iteration of a real estate empire with dozens of Santa Monica properties built and/or leased by Shekhter.
WS Communities was most recently in the news for entering into a pretrial diversion agreement with the City of Santa Monica after city attorneys accused 1433 Euclid Street, LLC, and WS Communities, LLC, of price gouging tenants. Earlier this month, WS Communities announced it had secured $141.4 million toward its Santa Monica portfolio, which real estate blog Commercial Observer recently called “the largest portfolio of deed-restricted affordable units in the city, located downtown and in the Bergamot districts of Santa Monica.”
Shekhter’s company submitted applications for projects at sites including 1433 Euclid Street (replacing the current two-story apartment building with a 12-story building containing 190 units) and 3000 Nebraska, the largest of the builder’s remedy projects containing 2,000 residential units and 15 stories.