City Council Meeting: July
10, 2007
July 24, 2007
Agenda Item: 1-F
To: Mayor and City Council
From: Marsha Jones Moutrie, City
Attorney
Subject: Resolution Automatically Adjusting the
Affordable Housing Unit Development Cost Pursuant to Municipal Code Section
9.56.070(c)
Recommended
Action
Staff recommends that the City Council adopt
the attached Resolution which would automatically adjust the Affordable Housing
Unit Development Costs for new market rate apartments and condominiums. The adjusted Affordable Housing Unit
Development Costs Base Fee would be $265,632.00, effective on September 15,
2007.
Executive
Summary
The City’s
Affordable Housing Unit Development Cost was originally estimated to be
$239,949, as established in the nexus study prepared by Hamilton, Rabinovitz
& Alschuler, Inc. (“HR&A”) in 2005 to support the imposition of the
Affordable Housing Unit Base Fee. Santa
Monica Municipal Code Section 9.56.070(c) provides that the Affordable Housing
Unit Development Cost shall be adjusted annually by resolution based on changes
in construction and land costs. On June
13, 2006, the City Council approved the methodology for ascertaining changes in
these costs and thereby for calculating the adjustment. This resolution has been prepared in accordance
with the approved methodology and is attached as Exhibit A.
Discussion
Santa Monica Municipal Code Sections 9.56.050(d) and 9.56.060(e)
provide that when developers of market rate multi-family housing are providing affordable
housing units on or off-site respectively and the calculation of the number of
affordable housing units required results in a fractional unit, these
developers are eligible to pay a fee equal to the cost of producing that
fractional unit if that fraction is less than .75. Section 9.56.020 defines the affordable
housing unit development cost as the City’s average cost to develop a unit of
housing affordable to low- and moderate income households. The City’s Affordable Housing Unit
Development Cost was originally estimated to be $239,949, as established in the
nexus study prepared by HR&A in 2005 to support the imposition of the
Affordable Housing Unit Base Fee.
Section 9.56.070(c) of the City’s Affordable Housing Production Program
provides that the Affordable Housing Unit Development Cost shall be adjusted
annually by City Council resolution based on changes in construction costs and
land costs. In order to implement the
Council’s decision, staff formulated a proposed method of computation to reflect
changes in construction costs and land costs.
This methodology was detailed in an April 24, 2006 letter prepared by
Paul S. Silvern of HR&A on behalf of the City. This methodology was approved by the City
Council at its June 13, 2006 meeting.
HR&A has
calculated the appropriate adjustment to the Affordable Housing Unit Base Fee
for FY 2007-08 based on this established methodology. HR&A’s analysis demonstrates that the
Affordable Housing Unit Development Cost should be increased to $265,632. The proposed resolution would revise the
Affordable Housing Unit Development Cost accordingly, effective on September
15, 2007.
On June 28, 2007, the City published notice of this hearing and
the availability of the HR&A analysis. The City republished this notice on July 5,
2007. A copy of this analysis has been
available in the City Clerk’s Office for public review since June 27, 2007 and
is attached hereto as Exhibit B.
Budget/Financial Impact
There
is no financial impact.
Prepared by: Marsha Jones Moutrie, City Attorney
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Approved: |
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Forwarded to Council: |
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Marsha Jones Moutrie City
Attorney |
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P. City Manager |