ITEM 9-C

Council Meeting:    06/09/92              Santa Monica, California

To:       Mayor and City Council Members

From:     City Attorney and City Staff

Subject:  Recommendation to Adopt the Attached Resolution which
          Establishes the Inclusionary Unit Base Price for Purposes
          of Calculating the In-Lieu Fee Option

INTRODUCTION

     This report recommends that the City Council adopt the
attached resolution establishing the inclusionary unit base price
as required by Section 9426(c) of Ordinance 1615.

BACKGROUND

     On March 3, 1992 the City Council adopted Ordinance 1615
implementing Proposition R.  Section 9426(c) of that Ordinance
requires that the City Council set an inclusionary unit base price
dependent upon the City's cost to subsidize the construction of a
new residential unit.  This unit base price will be used in
calculating the amount of the in lieu fee payment when an in lieu
fee payment option is available for a particular development.

DISCUSSION

     Section 9426(c) of Ordinance 1615 states, "...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."  
Therefore, it is necessary at this time to determine the amount of
the in-lieu fee and incorporate it into the Ordinance.

     The City has chosen four (4) new construction projects to
which it has committed subsidies during the past four years.  These
projects total one-hundred thirty-one (131) units of affordable
housing.  The City's subsidy for those units was as follows:

     PROJECT                  # OF UNITS          CITY SUBSIDY

     2nd St. Center              44               $ 2,165,523
     Greenwood/Garcia            30                 1,107,280
     Virginia Village            12                   723,333
     815 Ashland Ave.            45                 2,689,103
                              _______             ____________
                                131               $ 6,685,239

          AVERAGE PER UNIT SUBSIDY      =    $ 51,032

Therefore, on average, the per unit cost of subsidies to these new
units is  approximately $51,000.  Staff believes this amount is
indicative of the subsidy necessary to enable the production of
affordable units to be feasible, and therefore recommends that the
City Council adopt this amount as the "inclusionary unit base
price."

FINANCIAL/BUDGETARY IMPACT

     In lieu fees collected pursuant to Ordinance 1615 will be
deposited into a deferred revenue account until they can be
programmed for use in accordance with established budget procedures
and necessary Council approvals.  Approval of the recommended unit
base price does not have a financial or budgetary impact at this
time.

RECOMMENDATION 

It is recommended that the City Council adopt the attached
resolution establishing the inclusionary unit base price at
$51,000, as required by Section 9426(c) of Ordinance 1615.

Prepared by:   Barbara Stinchfield, Acting Director
               Chuck Elsesser, Housing Program Manager
               Jim Kemper, Senior Development Analyst
               Community Development Department