Item 9-A
COUNCIL MEETING: 4/14/98 Santa Monica, CA
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Adopt a Resolution Amending the
Existing Housing Element of the General Plan by Approving
the Draft 1998-2003 Housing Element Update with
Amendments as Proposed By Staff; and Recommendation to
Adopt a Statement of Overriding Considerations and
Certify the Final Environmental Impact Report Evaluating
the Environmental Impacts of the 1998-2003 Housing
Element Update.
INTRODUCTION
This report recommends the City Council 1) adopt a Statement of
Overriding Considerations and certify the Final EIR evaluating the
environmental impacts of the 1998-2003 Housing Element Update; 2)
adopt a resolution amending the existing Housing Element of the
General Plan by approving the Draft 1998-2003 Housing Element
Update with amendments as proposed by staff. (Attachments A, B,
and C.)
This report provides background on the 1998-2003 Housing Element
Update, including responses to comments made by the State
Department of Housing and Community Development (HCD), and
discussion of the EIR.
Pursuant to the City's Zoning Ordinance, the City Council must
conduct a public hearing upon any proposed amendment to the General
Plan within 60 days of Planning Commission action and must consider
adoption of any proposed amendments within 90 days of Planning
Commission action.
BACKGROUND
The 1998-2003 Housing Element is an update to the City's current
Housing Element which was adopted by the City Council on September
28, 1993. One of the seven mandated elements of the General Plan,
the Housing Element establishes a five year plan for addressing the
City's housing needs.
Summary of Legal Requirements
By law, the City's Housing Element must analyze existing and
projected housing needs, set forth goals, policies, and programs
for addressing those needs, and identify adequate housing sites.
(Government Code 65583.) Additionally, the Housing Element must
identify potential and actual constraints upon the maintenance,
improvement, or development of housing for all income levels.
The Draft 1998-2003 Housing Element Update has been prepared in
conformity with both State law and the settlement agreement in
Santa Monica Housing Council, et. al. v. City of Santa Monica, a
case which challenged the City's current Housing Element.
Public Process
This 1998-2003 Housing Element Update was initiated in April, 1995.
The Planning and Community Development Department held a public
scoping meeting and two public workshops on the Housing Element
Update to receive public input and to foster a discussion of
housing issues and policies for the City. The preliminary draft of
the Housing Element was released for public review and comment on
November 11, 1996. The Draft Element was reviewed by the Planning
Commission through the course of five public hearings which
concluded its deliberations on February 5, 1997 and made
recommendations for Council consideration.
Public hearings were held by the City Council over the course of
three meetings between March 18, 1997 and April 15, 1997. On April
15, 1997, the Council approved the Draft Element in concept for
transmittal to the State Department of Housing and Community
Development (HCD). Before transmittal, the Draft Element was
revised to clarify and/or correct information and to incorporate
changes requested by Council.
On July 21, 1997 staff submitted the revised Draft Housing Element
Update to HCD for their review and comment. HCD provided a written
response dated September 5, 1997. (HCD's review and comments are
discussed fully later in this report.)
The Draft Environmental Impact Report on the Draft 1998-2003
Housing Element Update was prepared and released for a 45-day
public review on December 1, 1997.
On February 25, 1998, the Planning Commission held a public hearing
to review the revised Draft 1998-2003 Housing Element Update and
the Final Environmental Impact Report which evaluates the potential
environmental impacts of implementation of the policies and
programs contained in the 1998-2003 Housing Element Update. The
Planning Commission recommends approval with modifications.
(Planning Commission recommendations are presented later in this
report.)
REVISED DRAFT 1998-2003 HOUSING ELEMENT UPDATE
As stated, the 1998-2003 Housing Element Update has been revised to
reflect Council's action in April, 1997 (Attachment L). A summary
of significant text changes is provided as an attachment to the
report. The revisions made to the programs in the "Housing
Objectives, Goals, Policies and Programs" section of the document
are presented in a bold/strikeout version. (Attachments D and E.)
REVIEW AND COMMENT BY HCD
As discussed, on July 21, 1997 staff submitted the revised Draft
Housing Element Update to HCD for their review and comment.
Pursuant to Government Code Section 65585(b), the State Department
of Housing and Community Development is required by State law to
review draft housing elements and report their findings to the
locality. HCD provided a written response dated September 5, 1997
and concluded that further revisions were needed to bring the
element into compliance with State law. (Attachment F) State law
requires that the City Council consider HCD's comments in its
decision to amend the Housing Element. HCD's comments and staff's
response to the issues raised are provided below.
Category D Removal Permits
HCD expressed concerns that the replacement housing requirement
imposed by the Rent Control Board for Category D removals could
result in an "affordable unit" burden in excess of 30% for the
redeveloped property. In response to HCD's concern, the Rent
Control Board has modified its requirement to clarify that no more
than 15% of the units in the new project would be required to be
affordable. The discussion on page III-30 of the Element will be
revised to reflect this. The proposed revision can be found in
Attachment H.
The staff report to the Rent Control Board is also attached for
reference. (Attachment G)
Inclusionary Housing
With regard to Housing Element Program 2a (Maintain an Inclusionary
Housing Program) HCD feels that the City's housing element should
"clearly commit the City to removing or mitigating those provisions
of the ordinance that have already been determined to be obvious
constraints", and goes further to conclude that the City should
exempt residential projects of less than 20 units from the
inclusionary requirement. HCD is critical of the action plan for
Program 2a since it does not include such a strategy in the list of
changes to be considered.
The City believes the draft Housing Element does commit the City to
amending its inclusionary housing ordinance. Indeed, when the City
Council gave conceptual approval to the Housing Element, it also
directed staff to commence the process of modifying the
Inclusionary Housing Ordinance. The City is actively engaged in
this process of modifying the inclusionary housing ordinance.
Subsequent to Council direction in July, 1997, the City enlisted
the professional services of HR&A to assist in the development of
alternatives to Ordinance 1615. Six conceptual alternatives were
identified and refined through workshops, study sessions and public
hearings. More specifically, a Public Workshop was held September
7, 1997 that included an open house segment where participants
viewed and commented on display panels that explained the current
Inclusionary Program and possible conceptual alternatives. A
presentation with group discussion about the existing Inclusionary
Program and conceptual alternatives was conducted. Subsequently,
Public Hearing and Study Sessions were conducted at the September
10, 1997, February 25 and March 4, 1998 Planning Commission
meetings, at the September 18, 1997, February 19 and March 5, 1998
Housing Commission meetings and at the October 7, 1997 City Council
meeting.
Staff is recommending replacing Ordinance 1615 with a new
Affordable Housing Production Program that requires developers of
market-rate multi-family housing to assist in the production of
affordable housing through payment of an affordable housing
development fee or through other specified options. Under this
approach, the mandatary on-site requirement, found by HCD to
constitute a potential constraint, would be eliminated for all
projects. (See April 14, 1998 City Council staff report prepared
by the Housing Division on proposed modifications to the
inclusionary program.)
At its April 14th meeting the City Council takes further testimony
and consider the merits of the staff's recommendations.
Additionally, the City is actively engaged in a process to modify
the development standards in certain residential districts to
facilitate accommodation of State Density Bonus units. These
proposed modifications will act in concert with a modified
inclusionary program. (See April 14, 1998 City Council staff
report regarding Proposed Revisions to Residential Development
Standards in the R2 and R3 Districts pertaining to State Density
Bonus Units.)
Potential for Residential Development in Commercial Districts
HCD has indicated that the element should include specific program
actions designed to promote residential recycling (including the
removal of potential constraints) and residential development, or
mixed-use, in commercial zones.
First, as discussed, the City is actively engaged in revising or is
committed to revising, certain programs that have been identified
as potential constraints to residential recycling, namely the
City's Inclusionary Housing Program and the City's development
standards.
Second, the City has long promoted residential development, or
mixed use, in commercial zones. In 1993, the City amended the
Zoning Ordinance to conditionally permit residential development in
the Special Office Commercial (C5) and Industrial Conservation (M1)
Districts, and to permit residential uses in most other commercial
districts (BCD, CP, RVC,CM,C2,C3,C3C,C4,C6). In 1995, the City
established the Light Manufacturing Studio District (LMSD) to
replace a portion of the M1 and C5 districts. The LMSD permits
studio live/work uses, while preserving existing light industrial
uses and providing a location for studio-related uses, such as film
and music production and post-production facilities. The City also
permits residential development in the commercial Bayside
Commercial District (BSC), which it established in early 1996.
Moreover, in several districts, the City offers special incentives
for housing. In the BSC, C3, C3C and CM districts, any floor area
devoted to residential use is eligible to receive a FAR (Floor Area
Ratio) discount of 50 percent. In BCD, C2, C4, and C6 districts,
the City offers increased density if at least 30 percent of the FAR
is residential. These changes have been very successful in
bringing residential development to commercial zones.
To further facilitate development of residential uses in non-
residential zoning districts, Program 1.a of the revised Draft
1998-2003 Housing Element Update identifies specific analyses and
revisions which will be undertaken during the planning period,
including "evaluate additional modifications of development
standards to encourage the development of housing in commercial
areas of the City". The action plan for Program 1.d. (Consider
Rezoning Non-residential Areas for Residential Use) states that
"the City will explore further opportunities for developing housing
in areas currently zoned for non-residential use."
HCD states that the element should include specific programs which
articulate the City's intent or clearly describe the incentives to
encourage residential development in commercial zones. As
discussed above, the Housing Element already has such programs.
However, to further confirm the City's intent to maintain the
current incentives for residential development in commercial zones,
staff recommends the following modification to the seventh bullet
under the action plan for Program 1a.
Continue to promote and provide incentives to develop
residential uses in non-residential zoning districts and
evaluate additional modification of development standards
to encourage the development of housing in commercial
areas of the City.
On March 3, 1998, the City Council introduced an interim ordinance
modifying the development standards in the C3C Downtown Overlay
District to discount square footage devoted to residential purposes
for purposes of calculating the development review square footage
threshold. The requirement of a development review permit adds
additional time and expense to the review of a project and also
subjects a project to environmental review since it is a
discretionary action. Staff recommends that an additional bullet
be added to Program 1.a. to reflect these specific efforts to
further facilitate residential development in the non-residential
districts as follows:
Evaluate the modification of the existing project design
and development standards in the C3C District and other
commercial districts as appropriate, to provide that for
the purposes of assessing whether a development review
permit is required for new development, floor area
devoted to residential uses shall be discounted by fifty
percent.
HCD also asked that the City further assess the potential for
residential development in commercial zones. In response staff
prepared an analysis of sites in commercial districts (C2, C4, C3,
C3C, C4, C6, CM) which would be most likely to recycle during the
planning period due to the age and/or condition of the existing
structures, or due to the potential for a substantial
intensification of the existing use(s). Considering the incentives
the City has in place for residential development in commercial
zoning districts, it is quite likely that some portion of these
parcels, which total in area over 70 acres, will be developed as
residential projects or include some residential units.
The number of potential residential units is unrestricted in these
commercial districts, however, the size of projects is determined
by FAR. Each project will have a different mix of residential and
commercial uses depending on the developers' project objectives.
Although it is difficult to estimate the actual number of
residential units which could be accommodated on these sites, the
following table provides a preliminary assessment of the
residential potential based on an assumed 10% residential mix, a
30% residential mix, and a 100% residential mix in buildings built
to the maximum FAR permitted. The number of units were calculated
based on the maximum FAR, adjusted by 15% to account for "non-
leasable" space, and an average 1200 square foot unit size.
Commercial District 10% 30% 100%
Corridor Residential Residential Residential
Lincoln C4 16 - 39 68 - 84 225 - 282
Pico C2 33 -39 140 -165 468 - 551
Santa Monica C4 46 - 51 198 -228 660 - 761
Wilshire C6 21 - 25 92 - 105 307 - 350
Main Street CM 15 - 20 44 - 59 147 - 196*
Downtown C3, C3C 98 294 - 392 979- 1306*
Total 228 - 249 836 -1034 2786-3445
* Certain zoning districts restrict the use of ground floor
frontage and would prevent a project from being 100% residential.
This preliminary investigation indicates that if these commercial
properties, were to be redeveloped during the planning period and
devoted 10% of the floor area to residential use, between 228 and
249 residential units would result. If the same properties were to
be redeveloped with 30% residential use (the threshold for density
incentives in the C2, C4, and C6 zoning districts), between 836 to
1034 residential units would be developed. For comparison
purposes, if these properties were to be redeveloped as 100%
residential projects, between 2,786 and 3,445 units would be
developed. As discussed, each project will have a different mix of
uses. These calculations have been prepared for illustrative
purposes.
Staff recommends that this information be included in the Housing
Element discussion of suitable sites in the Housing Needs and
Resources section (Page II-76). (See Attachment H).
Projected Housing Needs
HCD states that the City's 3,219-unit estimate developed of the
City's fair share of the regional housing need for the 1998-2003
planning period is acceptable, but may be subject to revision if
SCAG issues revised need allocations or growth forecasts. HCD
expresses some confusion over the alternative estimates referenced
in the housing element. Staff has made certain that all footnotes
and references with regard to the City's projected housing needs
are accurate. As stated on page II-92 of the Housing Element
Update, the City has adopted 3,219 units as its Fair Share. HCD
has accepted this number under present circumstances.
Consequently, there is no dispute between HCD and the City as to
the City's fair share number. Accordingly, no modifications to the
Housing Element are necessary.
Second Units Ordinance
HCD feels that the City's second unit ordinance should be analyzed
in the housing element as a potential constraint. HCD contends that
the "decision to exclude second units" from the single family zones
should not only be evaluated relative to the provision of adequate
sites and the accommodation of projected housing needs, but also in
consideration of the City's overall strategy to assist affordable
housing development.
First, as regards to the provision of adequate sites, the adequate
site analysis in the Housing Element Update is not dependent upon
increased development on R1 and OP1 sites. The City has
demonstrated it has sufficient sites to meet its needs during the
planning period without consideration of these single-family
residential areas. (See Table II-25 on pg. II-72 and Table II-27
on pg. II-81)
Second, with regards to governmental constraints, the Housing
Element defines a constraint as:
A program ... [which] either individually or in combination with
other governmental programs, has significant adverse impact on the
City's ability to meet its fair share of the regional need for
additional housing determined in accordance with the Southern
California Association of Government's regional housing need
allocation.
The City does not believe that the second unit ordinance
constitutes a constraint.
The City adopted the interim ordinance addressing second units on
October 15, 1996. Second units are allowed in all multi-family
districts. The City also allows a variety of residential
development in non-residential zones, including second units.
Further, this ordinance allows second units in the R1 and OP1
Districts, albeit under limited circumstances.
Moreover, as HCD has acknowledged, even if the City were to
liberalize its second unit ordinance, it is unlikely that second
units would have a significant impact on the new housing stock
during this planning period. The majority of requests for second
units in these districts would likely be for legalization of
existing illegal units and not for the construction of new housing
units. Additionally, in regards to second units in single-family
districts, the City remains concerned for the reasons detailed
fully in the interim ordinance that second units would erode the
quality of life for residents of single family districts in Santa
Monica. It would, among other things, exacerbate problems resulting
from the City's overall density and the unusually large number of
persons who work within the city, visit it for recreation, and
travel through it.
Third, with regard to housing affordability, staff does not believe
that newly constructed second units will necessarily be affordable.
The City has no ability to control the rents and these units are
not subject to the Proposition R requirement. Date provided by the
Rent Control Board tracking the rent levels of units decontrolled
as a result of Costa-Hawkins demonstrates that these units are
losing their affordability. Given the rent levels commanded for
these units, staff has no reason to believe that newly constructed
second units would be offered at affordable rents. Consequently,
staff does not consider second units to be an integral part of any
affordable housing program in the City.
The City has a long-standing commitment to the provision of
affordable housing, and the City successfully effectuates this
commitment through implementation of various City laws, policies
and programs. The City's zoning laws and policies include
substantial incentives for the production of affordable housing,
including height and density bonuses and reduced parking
requirements.
In addition, the City operates a number of programs which
facilitate the production of affordable housing. These include
loans to private, for-profit developers and owners and funding to
non-profit agencies to acquire or construct housing units. The
City also funds many social service programs which provide
emergency shelter, transitional housing and permanent and
supportive housing to individuals and families with very low
incomes.
These and other laws, policies and programs have resulted in the
preservation and production of an extraordinary number of
affordable units with in the City. The presence of these units has
allowed a very substantial number of low and moderate income
households to live in the City notwithstanding its prime location
and high real estate values. Census data shows that sixty percent
of the City's households have low or moderate incomes.
In creating housing policy the City has tried to strike a balance
between protecting the existing housing stock, and allowing for the
development and production of new housing for all income groups
while protecting the quality of life within the City. The
maintenance of this balance has been a difficult task because of
the unique characteristics of Santa Monica which are a function of
its prime seaside location and its historical development pattern.
Staff recommends that this discussion of the City's policy
regarding second units in the R-1 and OP-1 Districts be included in
the Potential Governmental Constraints section of the Housing
Element (Section III-B). Although, the City does not conclude
that the second unit policy acts as a constraint to the development
of housing, inclusion of this discussion would address the HCD
comment that the City's policy be considered in the context of the
Housing Element constraint analyses. The proposed text is
presented in Attachment H.
COMMISSION RECOMMENDATIONS
The Planning Commission conducted a public hearing on the Housing
Element update and Final EIR on February 25, 1998. The City's
Housing Commission reviewed the revised Draft 1998-2003 Housing
Element Update and provided their comments to the Planning
Commission in a letter dated February 6, 1998. (Attachment I)
The Planning Commission recommends Council adoption of the Housing
Element update with some modifications, certification of the Final
EIR, and adoption of a statement of overriding considerations.
Modifications recommended by the Planning Commission include those
proposed by staff and additional modifications as described below.
Section 8 Housing
The Planning Commission concurs with the Housing Commission
recommendation that Program 3a. (Develop Programs to Ameliorate the
Effects of Costa-Hawkins) be revised to include three additional
programs to be investigated when developing a strategy to address
the effects of the Costa-Hawkins Rental Housing Act on housing
affordability. The following will be added to the list of programs
under the fourth bullet of Program 3a:
a rental assistance program that funds the difference
between the Fair Market Rent and the market rent for
Section 8 tenants;
a rental program that assists Section 8 tenants whose
landlords have opted out of the Section 8 program to pay
the Maximum Allowable Rent if the tenant decides to
remain in the unit;
a program that provides security deposit assistance for
initial lease up and contract opt out relocations for
needy Section 8 recipients.
The Housing Division and Planning staff concur with this
recommendation.
Land Banking
The Housing Commission recommends that Program 2f (Assess the Use
of City-Owned/Publicly-Owned Land for Affordable Housing) be
revised to reflect a more definitive commitment by the City to land
banking. The Planning Commission supports the program "if
feasible" and recommends the following modification:
Enact a land banking program, if feasible, for the City
and non-profit developers of affordable housing to
purchase land and existing properties for future
development of affordable housing.
Second Units
The Planning Commission, along with the Housing Commission,
continue to recommend that the City Council include the following
program as part of Program 1a's action plan:
As a means of providing additional sites for housing,
broaden the current development standards for second
units in the R1 District within reasonable limits
requiring at least one of the units be owner occupied.
The City Council did not support this program and it is not
included in the revised document. As discussed, the Planning staff
does not consider this program to be critical to the City's
affordable housing strategy. There is no guarantee that the second
units created would be affordable since their rent level would not
be subject to governmental regulation. Furthermore, it is likely
that a substantial number of permits issued for second units that
would be directed toward legalizing existing illegal second units.
Non-Conforming Residential Buildings
The Housing Commission recommends that the 1998-2003 Housing
Element Update include a policy that permits the reconstruction of
nonconforming residential buildings located in residential
districts in the case of destruction by fire, earthquake, flood or
other disaster.
The Planning Commission reconsidered this recommendation during its
review of the revised draft Housing Element Update, and now
recommends that an additional bullet be added to Program 1a to
address this issue as follows:
Evaluate modifications to the Zoning Ordinance to
allow for existing non-conforming multi-family
residential developments that are destroyed due to
fire, earthquake or other natural disaster to be
replaced in-kind in order to prevent the loss of
dwelling units in the City. Consider the use of the
Earthquake Recovery Act as a model for this program.
Staff concurs with the recommendation to include a program to
evaluate potential modifications to the Zoning Ordinance with
regard to nonconforming buildings and uses.
ADDITIONAL STAFF RECOMMENDATIONS
Staff also recommends that miscellaneous tables, maps and text be
revised to update and/or clarify information presented in the 1998-
2003 Housing Element Update. These proposed modifications are
presented in Attachment H. Additionally, Housing Division staff
recommends that a provision in Program 1a's action plan to target
City Subsidies to affordable housing projects that serve households
earning 61-80% of the County median income be removed. Planning
staff concurs with this recommendation.
Following adoption of the 1998-2003 Housing Element, City staff
will submit a copy to HCD for its review.
ENVIRONMENTAL IMPACT REPORT
An Environmental Impact Report (EIR) has been prepared by
Cotton/Beland/Associates which evaluates the potential
environmental impacts of implementation of the policies and
programs contained in the 1998-2003 Housing Element Update. (
Attachment K)
Public Review
The Draft EIR on the Draft 1998-2003 Housing Element Update was
released for a 45-day public review on December 1, 1997. Two
comment letters were received. The comments contained in these
letters, as well as responses to these comments, have been
incorporated into the Final EIR.
Approach/Methodology
Many of the programs contained in the 1998-2003 Housing Element
Update are not new. To the extent that ongoing programs would not
present any new impacts, the EIR examines only the potential
environmental effects of the new and modified programs. For the
purposes of the EIR analysis, a number of alternatives to the
proposed project are considered: A) an alternative that assumes
that current housing goals and policies remain in place and no new
element is adopted; B) an alternative that assumes that residential
development is permitted by right in all commercial and industrial
zoning districts; C) an alternative that involves adding a new
program to the Housing Element, whereby the Ocean Park and North of
Wilshire neighborhoods would be rezoned to allow higher densities;
D) an alternative focusing on revisions to the City's inclusionary
housing program implementing Ordinance 1615. The EIR identifies
Alternative B as the environmentally superior alternative.
Significant Impacts
The EIR concludes that there are significant impacts in the areas
of Air Quality; Transportation/Circulation; Parks and Recreation
and Water Use as a result of the proposed project. The EIR
identifies four areas of unavoidable significant impact associated
with the adoption and implementation of the 1998-2003 Housing
Element Update even after mitigation. These include:
Air pollutant emissions associated with new development
in excess of thresholds established by the South Coast
Air Quality Management District.
Increased traffic due to new development, with the
traffic potentially impacting intersections already
experiencing adverse conditions.
Increased demand on parks and recreation services.
Cumulative air quality, circulation, and parks and
recreation services impacts, when the contributions of
new residential development is combined with other
development expected to occur during the 1998-2003
period.
The EIR identifies the cumulative use of domestic water supplies
when the contributions of new residential development is combined
with other development expected to occur during the 1998-2003
period, as one area of potentially significant impact that can be
mitigated to a less-than-significant level.
It will be necessary for the City to adopt a Statement of
Overriding Considerations in order to adopt the 1998-2003 Housing
Element Update and certify the Final EIR.
BUDGET/FINANCIAL IMPACT
The recommendation presented in this report does not have a budget
or fiscal impact.
RECOMMENDATION
Staff respectfully recommends that City Council take the following
actions:
1. Adopt a Statement of Overriding Considerations and certify the
Final EIR evaluating the environmental impacts of the 1998-
2003 Housing Element Update.
2. Adopt a resolution amending the existing Housing Element of
the General Plan by approving the Draft 1998-2003 Housing
Element Update with amendments as proposed by staff.
Attachments:
A. Resolution to Certify the EIR
B. Resolution to Approve a Statement of Overriding
Considerations
C. Resolution Amending the Housing Element of the General
Plan
D. Summary of Revisions pursuant to Council Action
E. Program Revisions (Bold/Strikeout) pursuant to Council
Action
F. HCD letter dated September 5, 1997
G. Staff Report to Rent Control Board dated December 1,
1997.
H. Proposed Revisions to Hou-sing Element Update
I. February 6, 1998 letter from Housing Commission
J. Public Hearing Notice
K. Final Environmental Impact Report and Mitigation
Monitoring Program
L. Draft 1998-2003 Housing Element Update- Revised July,
1997 and Technical Appendix