ITEM 8-A
City Council Meeting 3-3-92 Santa Monica, California
STAFF REPORT
TO: Mayor and City Council
FROM: City Attorney
SUBJECT: Ordinance Amending Santa Monica Municipal Code
Sections 9420 through 9433 Relating to the
Inclusionary Housing Program
At its meeting on February 18, 1992, the City Council
introduced for first reading an ordinance amending Municipal Code
Sections 9420 through 9433 which relate to the Inclusionary
Housing Program. The ordinance is now presented to the City
Council for adoption.
RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be adopted.
PREPARED BY: Robert M. Myers, City Attorney
Mary H. Strobel, Deputy City Attorney
ORDINANCE NUMBER ____
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE
SECTIONS 9420 THROUGH 9433
RELATING TO THE INCLUSIONARY HOUSING PROGRAM
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS
FOLLOWS:
SECTION 1. Santa Monica Municipal Code Sections 9420
through 9433 are amended to read as follows:
SECTION 9420. Findings and Purpose. The
City Council finds and declares:
(a) The City of Santa Monica has a
responsibility to address the needs of its residents
and residents in the region, from all social and
economic groups, for decent, affordable housing,
while at the same time maintaining an economically
sound and healthy environment.
(b) The Housing Element of the General
Plan of the City of Santa Monica adopted on January
25, 1983, provided for an inclusionary housing
program to address the need for decent and
affordable housing in Program 12.
(c) The City Council properly considered
and adopted the components of an inclusionary
housing program which would implement the goals of
Program 12 at its meeting on March 10, 1987.
(d) On June 28, 1988, the City Council
revised Program 12, adopting Ordinance Number 1448
(CCS) to implement those revisions.
(e) On May 1, 1990, the City Council
adopted Ordinance Number 1519 (CCS) on an interim
basis, finding that the vast majority of new housing
units being constructed in the City of Santa Monica
were not affordable to persons of low, moderate, or
middle income, that the current inclusionary
requirements placed on new housing development were
inadequate to allow the City of Santa Monica to
provide sufficient numbers of new housing units to
persons of low, moderate, or middle income, that the
current per square foot in lieu fee was inadequate
to allow the City of Santa Monica to provide the
number of units which would be provided if the
inclusionary requirements on new housing development
were met by provision of on site housing units, and
that it was necessary to amend the inclusionary
Program on an interim basis to allow completion of
studies to determine the most appropriate on site
and in lieu fee requirements.
(f) On November 6, 1990, the voters of
the City of Santa Monica approved Proposition R,
adding Section 630 to the City Charter to read as
follows:
The City Council by Ordinance shall at
all times require that not less than thirty percent
(30%) of all multifamily-residential housing newly
constructed in the City on an annual basis is
permanently affordable to and occupied by low and
moderate income households. For purposes of this
Section, "low income household" means a household
with an income not exceeding sixty percent (60%) of
the Los Angeles County median income, adjusted by
family size, as published from time to time by the
United States Department of Housing and Urban
Development, and "moderate income household" means a
household with an income not exceeding one hundred
percent (100%) of the Los Angeles County median
income, adjusted by family size, as published from
time to time by the United States Department of
Housing and Urban Development. At least fifty
percent (50%) of the newly constructed units
required to be permanently affordable by this
Section shall be affordable to and occupied by low
income households.
(g) On December 29, 1990, the City of
Santa Monica published notice that on January 8,
1991, the City Council would consider issues
relating to the implementation of Proposition R
including whether the thirty percent (30%)
requirement of Proposition R could be met on site or
off site, whether an in lieu fee would be permitted,
and whether the thirty percent (30%) requirement had
to be met on a project by project basis. This
notice also provided that at the January 8, 1991
meeting, the City Council would consider directing
staff to prepare an ordinance to implement
Proposition R.
(h) City Staff prepared a staff report
for the January 8, 1991 City Council meeting
identifying the issues that had to be addressed as
part of the implementation of Proposition R,
suggesting a process for obtaining public input,
presenting City Staff's resolution of issues raised
by Proposition R's implementation, and recommending
that staff be directed to prepare an ordinance
implementing Proposition R.
(i) At its January 8, 1991 meeting, the
City Council directed staff to prepare an ordinance
implementing Proposition R and to return the
ordinance to the City Council on February 26, 1991.
(j) The Santa Monica Planning
Commission, as well as other groups in the
community, believed the schedule for the return of
the ordinance did not provide opportunities for
adequate review of various alternative strategies
for implementing Proposition R.
(k) At its meeting on February 19, 1991,
the City Council decided to reconsider whether an
ordinance should be prepared, and scheduled for its
next regular meeting a general discussion of
implementing strategies.
(l) On March 5, 1991, the City Council
directed the City Attorney to prepare an ordinance
prohibiting the filing of applications for
market-rate residential housing until such time as
the City Council adopted an ordinance implementing
Proposition R excepting from the prohibition any
project in which thirty percent (30%) of the units
constructed on site are available to low and
moderate income persons as provided for in
Proposition R.
(m) On March 26, 1991, Ordinance Number
1577 (CCS) was adopted imposing restrictions on new
multifamily housing to ensure compliance with
Proposition R. This ordinance was due to expire on
September 26, 1991.
(n) On April 3, 1991, the Planning
Commission reviewed an outline developed by staff on
the issues and information that would be presented
as part of the analysis on the alternative
implementation strategies.
(o) On September 10, 1991, the City
Council adopted Ordinance Number 1599 (CCS)
extending the restrictions on new multifamily
housing to ensure compliance with Proposition R,
pending the issuance of a staff report on a proposed
implementation strategy under Proposition R, to
allow public review and comment on the staff report,
and to allow time for public hearings before the
Planning Commission and City Council. This
ordinance was due to expire on January 10, 1992.
(p) On September 10, 1991, a report was
issued by City staff on the "Proposed Implementation
Strategy Under Proposition R," incorporated into a
Summary Report and Technical Report on Proposition
R.
(q) On October 16 and October 25, 1991,
the Planning Commission conducted a public hearing
on the proposed implementation strategy, and
formulated a recommendation to the City Council.
The Planning Commission requested a two or three
month extension of the existing moratorium ordinance
on multifamily residential development to allow for
further public review and Planning Commission
consideration.
(r) On November 19, 1991 the City
Council conducted a public hearing on the staff
proposal, and requested that staff examine
additional models and provide additional information
to the City Council.
(s) On November 26, 1991, the City
Council adopted Ordinance Number 1609 (CCS) to
ensure that the City of Santa Monica would comply
with Proposition R while further studying approaches
for long-term implementation of the measure. The
ordinance was due to expire on April 10, 1992.
(t) On December 3, 1991, the City
Council directed the City Attorney to prepare an
Ordinance implementing Proposition R which utilized
an approach requiring the provision of on site
inclusionary units in certain circumstances, and
allowing the payment of an in lieu fee in other
circumstances, as set forth below. The following
ordinance is necessary to enable the City to meet
the requirements of Proposition R.
(u) According to the 1980 Census, 42.8%
of all Santa Monica residents are of low or moderate
income. Approximately 8,500 residents live below
the poverty line.
(v) The homeless population in the Santa
Monica area is estimated to be between 3,000-5,000
persons.
(w) Approximately 12,565 lower income
households are paying more than one third of their
income for housing. Over three-quarters of these
are renters. When the cost of housing exceeds 30
percent, it becomes a burden, reducing the money
available for other necessary expenses.
(x) Approximately 2400 households in the
City live in housing that is overcrowded.
(y) The average sales price of a
two-bedroom, single-family house in 1990 was
$525,350 and a two-bedroom condominium averaged
$351,108. The high cost of for-sale housing
indicates that there are no opportunities for
lower-income or moderate-income households to own
homes in Santa Monica without assistance.
(z) Over 20 percent of Santa Monica's
households are headed by senior citizens.
Approximately 65% of the senior citizen households
are renters. In 1980, senior families represented
20 percent of the families with incomes below the
poverty level and 16 percent of the single person
households living in poverty in the City.
(aa) There is essentially no vacant
residential land in Santa Monica. New construction
must occur on recycled parcels or on marginal
commercial or industrial land. When parcels are
recycled which previously contained affordable
housing, there is often a net loss in the total
number of affordable housing units provided, even
with an inclusionary housing requirement.
(bb) There is inadequate federal and
state support for programs to assist the City in
meeting its affordable housing needs.
SECTION 9421. Definitions. The
following words or phrases as used in this Chapter
shall have the following meanings:
Developed Use. A use of land which
includes either residential or commercial
structures.
Dwelling Unit. One or more rooms,
designed, occupied, or intended for occupancy as
separate living quarters, with full cooking,
sleeping, and bathroom facilities for the exclusive
use of a single household. Dwelling Unit shall also
include Single Room Occupancy unit.
HUD. The United States Department of
Housing and Urban Development or its successor.
Inclusionary Unit. A rental or ownership
dwelling unit as required by this Chapter which is
affordable by a household with low or moderate
income.
Income Eligibility. The gross annual
household income considering household size and
number of dependents, income of all wage earners,
elderly or disabled family members, and all other
sources of household income.
In Lieu Fee. A fee paid to the City by a
developer subject to this Chapter in lieu of
providing the required inclusionary units.
Market Rate Unit. A dwelling unit as to
which the rental rate or sales price is not
restricted by this Chapter.
Maximum Allowable Rent. A monthly
housing charge which does not exceed 30% of the Los
Angeles County low income (in the case of a low
income unit) or median income (in the case of a
moderate income unit), adjusted for household size,
as published from time to time by the United States
Department of Housing and Urban Development. This
charge shall represent full consideration for
housing services and amenities as provided to market
rate dwelling units in the project, whether or not
occupants of market rate dwelling units pay separate
charges for such services and amenities. Housing
services and common area amenities include, but are
not limited to, the following: parking, use of
common facilities including pools or health spas,
and utilities if the project is master metered.
Notwithstanding the foregoing, utility charges for
use of natural gas and electricity, to the extent
individually metered for each unit in the project,
may be passed through or billed directly to the
occupants of inclusionary units in the project in
addition to maximum allowable rents collected for
those inclusionary units.
"Moderate" and "Low" Income Levels.
Determined periodically by the City based on the
United States Department of Housing and Urban
Development (HUD) estimate of median income in the
Los Angeles-Long Beach Primary Metropolitan
Statistical Area. The two major income categories
are: "moderate income" (61% to 100% of the area
median) and "low income" (60% or less of the area
median). Further adjustment shall be made by
household size as established by the City. The
Planning Department shall make available a list of
moderate and low income levels as adjusted, which
list shall be updated periodically by the City and
filed with the City Clerk.
Multi-Family District. Any zoning
district in which multi-family dwelling units are a
permitted use.
Project. A residential development or
land subdivision proposal for which City permits and
approvals are sought.
SECTION 9422. Applicability.
(a) An inclusionary requirement shall
apply to all projects for which a development
application was deemed complete after February 11,
1992, involving new construction of two or more
residential market rate dwelling units or
condominium or cooperative conversion of two or more
dwelling units, or involving new construction of a
single family home when it is replacing more than
one dwelling unit in a multi-family district. An
inclusionary unit requirement shall not, however,
apply to tenant participating conversions governed
by the provisions of the Tenant Ownership Rights
Charter Amendment, Article XX of the Santa Monica
City Charter.
(b) A project not subject to this
Chapter pursuant to subdivision (a) of this Section
shall be subject to the provisions of this Chapter
as they existed on the date the application for the
project was deemed complete, except that with
respect to any project for which an application has
been filed but not approved at the time this Chapter
becomes effective, the applicant can elect to have
the provisions of this Chapter apply to the project.
SECTION 9423. Project Development
Requirements.
(a) This Chapter requires that not less
than thirty percent (30%) of the total number of new
dwelling units to be constructed in any project
developed by an applicant at one location, designed
for permanent occupancy, excluding any density bonus
units to which an applicant is entitled under
Government Code Section 65915, shall be affordable
to households of low- or moderate-income.
SECTION 9424. On site and In Lieu Fee
Options.
(a) The requirements of Section 9423
shall be met by providing on site inclusionary units
meeting the requirements of Section 9425 in either
of the following circumstances:
(i) The project is on a site for
which no Category C Removal permit was issued prior
to February 18, 1992 (or was issued after February
18, 1992, but applied for prior to February 18,
1992), and which the developed use on February 18,
1992, was multifamily housing and at least one
dwelling unit was rented at levels affordable to
households of moderate income levels or if vacant on
February 18, 1992, when last rented.
(ii) The project involves the
construction of 20 or more market rate dwelling
units, excluding any density bonus units to which an
applicant is entitled under Government Code Section
65915.
(b) The requirements of Section 9423
shall be met either by providing on site
inclusionary units meeting the requirements of
Section 9425, or by satisfying the requirements of
9426, if both of the following circumstances apply:
(i) The project is not on a site as
described in subdivision (a)(i) of this Section.
(ii) The project involves the
construction of less than 20 market rate dwelling
units, excluding any density bonus units to which an
applicant is entitled under Government Code Section
65915.
(c) Whenever inclusionary units are
provided on site, such units must comply with the
requirements of Section 9425.
(d) Whenever the payment of an in lieu
fee is allowed by this Chapter, such payment must
comply with the requirements of Section 9426.
(e) At the time of filing an application
with the City's Planning Department for permission
to develop multi-family market rate dwelling units,
the developer shall specify the number, type,
location, size, and construction schedule of all
dwelling units proposed to be developed and shall
indicate which of the dwelling units, if any, are
intended to satisfy the inclusionary housing
requirements of this Chapter.
(f) Once the developer of a project has
elected to satisfy the requirements of this Chapter
through the provision of inclusionary units on site,
or through the payment of an in lieu fee, such
option is determinative for the life of the project.
SECTION 9425. On Site Inclusionary Unit
Development Requirements.
(a) In determining the number of
inclusionary units required when on site units are
provided, any decimal fraction of 0.3 or more shall
be rounded up to the nearest whole number.
(b) Inclusionary units shall, whenever
reasonably possible, be evenly distributed
throughout the project. The applicant may reduce
either the size or interior amenities of the
inclusionary units as long as there are not
significant identifiable differences between
inclusionary and market rate dwelling units visible
from the exterior of the dwelling units and the size
and design of the dwelling units are reasonably
consistent with the market rate units in the
project, provided that all dwelling units conform to
the requirements of the applicable Building and
Housing Codes. Inclusionary units provided shall
have at least the same number of bedrooms as the
average dwelling unit in the project and if the
floor area of the inclusionary units is not the same
as the floor area of the market rate dwelling units
at the project, each of the inclusionary units shall
satisfy the following minimum total floor area,
depending upon the number of bedrooms provided:
0 Bedroom 500 Square Feet
1 Bedroom 600 Square Feet
2 Bedrooms 850 Square Feet
3 Bedrooms 1080 Square Feet
4 Bedrooms 1200 Square Feet
(c) All inclusionary units in a project
or a phase of a project shall be constructed
concurrently with the construction of market rate
dwelling units in the project or phase of that
project.
(d) On site inclusionary units must be
rental units in rental projects. In ownership
projects, inclusionary units may be either rental
units, or ownership units. Ownership units shall
comply with requirements concerning sales price,
monthly payment, limited equity, and resale
restrictions established by Resolution of the City
Council to ensure that subsequent purchasers are
also income-qualified households.
(e) If only one inclusionary unit is
required, such unit must be affordable to low income
households. The second inclusionary unit provided
may be affordable to moderate income households, and
alternating thereafter.
(f) Whenever inclusionary units are
required by this Chapter, the requirement may be
satisfied at the developer's discretion by providing
100% of the units in the project affordable to
moderate income households, provided that all such
units meet the requirements of subsections (b) and
(d) of this Section, and Sections 9429, 9430, and
9432.
SECTION 9426. In Lieu Fees for
Inclusionary Housing.
(a) Whenever this Chapter allows the
payment of an in lieu fee, the required inclusionary
unit number shall be determined as follows: Number
of units in the project, (excluding density bonus
units) x 30% = required inclusionary unit number.
The first inclusionary unit required shall be
affordable to low income income households, and the
second to moderate income households. Additional
inclusionary units shall alternate between low and
moderate income units. Any fraction of a unit
required shall not be considered either a low or
moderate income unit.
An in lieu fee may be paid only for low income
units required, and any fraction of a unit required.
All moderate income units required shall be provided
on site. The fee shall be determined as follows:
(i) For any low income unit, the
in lieu fee payment required shall equal the
inclusionary unit base price, as established in
subdivision (c) of this section.
(ii) For any fraction of a unit
required, the in lieu fee shall equal the
inclusionary unit base price times the fraction of a
unit required.
(b) The following chart illustrates the
in lieu fee payable, the number of on site
inclusionary units required, and whether such units
must be affordable to low or moderate income levels,
using, for illustrative purposes only, an
inclusionary unit base price of $60,000:
NO. UNITS BUILT MODERATE FEE
EXCLUDING DENSITY INCLUSIONARY UNITS
BONUS ON SITE
____________ ________________ ___________
2 0 $ 36,000
3 0 54,000
4 0 72,000
5 0 90,000
6 0 108,000
7 1 66,000
8 1 84,000
9 1 102,000
10 1 120,000
(c) For purposes of this Section, the
inclusionary unit base price shall be established
and adjusted from time to time by Resolution of the
City Council based upon the cost to the City of
subsidizing the construction of a new residential
unit.
(d) Fifty percent (50%) of any fee
required pursuant to this Section shall be paid
prior to the issuance of a Building Permit for the
project. The remaining fifty percent (50%) shall be
paid in full before a Certificate of Occupancy is
issued for any unit in the housing project.
(e) Any fee required by this Section
shall be secured by execution of an irrevocable
letter of credit in favor of the City or other
security acceptable to the City for the total amount
of the obligation. The letter of credit or other
acceptable security shall be delivered to the City
prior to the issuance of a building permit for the
housing development. The letter of credit or other
security shall be released and returned to the
developer immediately upon payment in full of the in
lieu fee.
(f) Any payment made pursuant to this
Section shall be deposited in a Reserve Account
separate from the General Fund to be used only for
development of low income housing.
(g) If an lieu fee is paid pursuant to
this Section, such payment shall not be considered
provision of an inclusionary units for purposes of
determining whether the housing development
qualifies for a density bonus pursuant to Government
Code Section 65915.
SECTION 9427. Fee Waivers. The
Condominium and Cooperative Tax described in Section
6651 of the Santa Monica Municipal Code and the Park
and Recreation Facilities Tax established in Chapter
6C of Article VI of the Santa Monica Municipal Code
shall be waived for required inclusionary and for
low and moderate income dwelling units developed by
the City or its designee using in lieu fee funds.
However, any developer who elects to pay an in lieu
fee shall not be eligible for any fee waiver under
this Section.
SECTION 9428. Density Bonus and Other
Incentives. Projects which meet applicable
requirements of State law as a result of
inclusionary units are entitled to density bonuses
or other incentives in accordance with the
provisions of such law.
SECTION 9429. Pricing Requirements for
Inclusionary Units. The City Council shall, by
Resolution, on an annual basis, set maximum
allowable rents and maximum allowable purchase
prices for inclusionary units, adjusted by the
number of bedrooms. Such maximum allowable rents
and maximum allowable purchase prices shall be set
at rates such that qualified occupants for low
income units pay no more than thirty percent (30%)
of the gross monthly household income for households
earning 60% of the median income. Qualified
occupants for moderate income units shall pay no
more than 30% of the gross household income for
households earning the median income.
SECTION 9430. Eligibility Requirements.
(a) Only low- and moderate-income
households shall be eligible to occupy or own and
occupy inclusionary units. The City shall develop a
list of income-qualified households which gives
priority to persons who have been evicted pursuant
to the Ellis Act, Government Code Section 7060,
persons residing in Santa Monica, and persons
working in Santa Monica. Developers shall be
required to select households from the
City-administered list of income-qualified
households. The City shall develop administrative
guidelines for the tenant and purchaser selection
process, which shall require, at a minimum, that 80%
of the inclusionary units in a project be leased and
occupied within 60 days of issuance of the
certificate of occupancy for the project, or sold
and occupied within 120 days of issuance of the
certificate of occupancy for the project, and that
any vacancies in inclusionary units shall be leased
and occupied within 30 days of vacancy, or sold and
occupied within 120 days of vacancy.
(b) The following individuals, by virtue
of their position or relationship, are ineligible to
occupy an inclusionary unit:
(1) All employees and officials of
the City of Santa Monica or its agencies,
authorities, or commissions who have, by the
authority of their position, policy-making authority
or influence affecting City housing programs.
(2) The immediate relatives,
employees, or other persons gaining significant
economic benefit from a direct business association
with public employees or officials.
(3) The immediate relatives of the
applicant or owner, including spouse, children,
parents, grandparents, brother, sister,
father-in-law, mother- in-law, son-in-law,
daughter-in-law, aunt, uncle, niece, nephew,
sister-in-law, and brother-in-law.
SECTION 9431. Relation to Units Required
by Rent Control Board. Low- and moderate-income
dwelling units developed as part of a market rate
project, pursuant to replacement requirements of the
Santa Monica Rent Control Board, shall count towards
the satisfaction of this Chapter if they otherwise
meet applicable requirements for this Chapter
including, but not limited to, the income
eligibility requirements of the Chapter, deed
restriction requirements, and pricing requirements.
New inclusionary units required by the Rent Control
Board which meet the standards of this Chapter shall
count towards the satisfaction of this Chapter.
SECTION 9432. Deed Restrictions. Prior
to issuance of a building permit for a project
subject to the requirements set forth in this
Chapter, the applicant shall submit deed
restrictions or other legal instruments setting
forth the obligation of the applicant under this
Chapter for City review and approval. Such
restrictions shall be effective for the lifetime of
the project.
SECTION 9433. Availability of Government
Subsidies. It is the intent of this Chapter that
the requirements for the inclusionary units shall
not depend upon the availability of federal or state
housing subsidies. This Section does not, however,
preclude the use of such programs or subsides.
SECTION 9434. Enforcement. No building
permit or occupancy permit shall be issues, nor any
development approval granted, for a project which is
not exempt and does not meet the requirement of this
Chapter. All inclusionary units shall be rented or
owned in accordance with this Chapter.
SECTION 9435. Relation to Units or Fees
Required Pursuant to Future Ordinances Implementing
Program 10 of the City's Housing Element. Low- or
moderate-income dwelling units constructed to meet
the requirements of this Chapter, or in lieu fees
paid to meet the requirements of this Chapter, shall
be credited toward requirements for On site
replacement units or fees required pursuant to any
ordinance implementing Program 10 of the City's
Housing Element.
SECTION 9436. Annual Report. The
Housing Department shall submit a report to the City
Council on an annual basis which shall contain
information concerning the implementation of this
Chapter and whether the provisions of Proposition R
have been met. In the event the provisions of
Proposition R have not been met, the City Council
shall take such action necessary to amend the
provisions of this Chapter or its implementation to
ensure that the provisions will be met.
SECTION 2. Ordinance Number 1609 (CCS) is repealed.
SECTION 3. Any provision of the Santa Monica Municipal
Code or appendices thereto inconsistent with the provisions of
this Ordinance, to the extent of such inconsistencies and no
further, are hereby repealed or modified to that extent necessary
to affect the provisions of this Ordinance.
SECTION 4. If any section, subsection, sentence, clause,
or phrase of this Ordinance is for any reason held to be invalid
or unconstitutional by a decision of any court of any competent
jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The City Council hereby
declares that it would have passed this Ordinance, and each and
every section, subsection, sentence, clause, or phrase not
declared invalid or unconstitutional without regard to whether
any portion of the Ordinance would be subsequently declared
invalid or unconstitutional.
SECTION 5. The Mayor shall sign and the City Clerk shall
attest to the passage of this Ordinance. The City Clerk shall
cause the same to be published once in the official newspaper
within 15 days after its adoption. This Ordinance shall become
effective after 30 days from its adoption.
APPROVED AS TO FORM:
__________________________________
ROBERT M. MYERS
City Attorney