City Council Report
City Council Meeting: January 25, 2022
Agenda Item: 7.F
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Introduction and Adoption of an Emergency Interim Zoning Ordinance to Extend Interim Zoning Regulations Established by Emergency Interim Zoning Ordinance 2633 and Extended by 2645 Amending Santa Monica Municipal Code Chapter 9.39 and Section 9.40.20 to Increase Thresholds for Review of One Hundred Percent Affordable Housing Projects and Housing Projects Subject to the Housing Accountability Act by Administrative Approval Recommended Action
Staff recommends that the City Council introduce and adopt an emergency Interim Zoning Ordinance to extend interim regulations authorizing 100% affordable housing projects and Tier 2 housing projects subject to the Housing Accountability Act to be reviewed through an Administrative Approval process.
Summary
The Housing Accountability Act (California Government Code Section 65589.5) (“HAA”) was enacted by the State Legislature in 1982 and prohibits cities from denying or placing conditions on housing development projects that comply with a city’s “objective” general plan, zoning, subdivision, and design review standards (e.g., height, floor-arearatio (FAR), density), without personal discretion or subjective judgment on the part of City staff. The HAA defines “housing development project” as: (a) residential units only; (b) mixed-use developments consisting of residential and nonresidential uses with at least two-thirds of the square footage designated for residential use; and (c) transitional housing or supportive housing. The stated intent of the HAA is to ensure that local governments do not reject or make infeasible housing development projects that contribute to meeting their Regional Housing Needs Allocation (RHNA). The RHNA is a state-mandated process that determines the amount of future housing growth each city 2 of 8
and county must plan for in its Housing Element. For the 2021-2029 Housing Element cycle, Santa Monica’s RHNA is 8,895 units, of which 69% must be affordable housing units.
Supporting housing production, particularly affordable housing, has long been a core policy focus for the City and is embedded in the City’s adopted land use plans including the 2010 Land Use and Circulation Element (LUCE), 2013 Bergamot Area Plan (“Bergamot Plan”), and 2017 Downtown Community Plan (“Downtown Plan”). These plans have been implemented through the 2015 Zoning Ordinance Update and subsequent amendments. The most recently adopted 6th Cycle Housing Element was transmitted to California Department of Housing and Community Development on November 10, 2021 and is pending their review and comment as part of the certification process.
Given the very limited discretion afforded to cities for qualifying projects under the HAA and the need to create better housing affordability in Santa Monica, on March 10, 2020, the City Council adopted an emergency Interim Zoning Ordinance (“IZO”) authorizing 100% affordable housing projects and Tier 2
1 housing projects compliant with the HAA,
to be reviewed and approved without a public hearing through an Administrative Approval process. A public hearing by the Architectural Review Board (ARB) for design review is still required. The IZO was extended on August 25, 2020 and under current emergency orders, the IZO would expire on January 31, 2022.
Staff proposes to extend and amend the interim zoning regulations until May 31, 2022.
Extension of the IZO would sustain a streamlined process for 100% affordable and Tier 2 housing projects pending certification and implementation of the adopted Housing Element. Extension would also allow time for Council to make the IZO provisions permanent by amending review processes in the Zoning Ordinance for housing projects to be consistent with Program 1A of the adopted 6th Cycle Housing Element (By-Right 1 The Land Use and Circulation Element created a tiered land use system based on increments of height and floor area ratio (FAR). Tier 1 establishes a base height and FAR while Tier 2 establishes additional height and FAR that can be requested if community benefits are provided. 3 of 8
Approvals for Housing Projects). The proposed termination date of the IZO is based on timing of the first phase of permanent zoning and land use plan changes necessary to implement the 6th Cycle Housing Element, which are scheduled to be brought forward to the Council on March 22, 2022. Further, with the establishment of generally applicable leasing regulations in Chapter 6.22, and in order to avoid potential inconsistencies with Chapter 6.22, staff proposes deletion of the requirement to record a deed restriction on the property establishing leasing restrictions as set forth in Section 9.39.020(A)(3)(c) of the IZO.
With the economic challenges brought by the COVID-19 pandemic, there is even more need to ensure that affordable housing and housing production continues to be supported through a streamlined process. Within the context of California’s housing crisis, pending Housing Element certification and implementation, and the continued urgent need to produce affordable housing, this extension to May 31, 2022 is recommended in order to continue to support housing production until Council has the opportunity to evaluate long-term policy solutions this spring.
Background
Table 1: Past Council Actions
Meeting Date Description
July 6, 2010
(Attachment B)
Adoption of Land Use and Circulation Element
September 11, 2013
(Attachment C)
Adoption of Bergamot Area Plan
June 23, 2015
(Attachment D)
Adoption of Zoning Ordinance Update
July 25, 2017
(Attachment E)
Adoption of Downtown Community Plan
December 10, 2019
(Attachment F)
Council study session on housing policy
March 10, 2020
(Attachment G)
Adoption of Emergency Interim Zoning Ordinance
August 25, 2020
(Attachment H)
Extension of Emergency Interim Zoning Ordinance
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The Land Use and Circulation Element (LUCE) was adopted by City Council on July 6, 2010. The Land Use and Circulation Element (LUCE) set forth a land use system based on the premise that projects with increased height and FAR above the base would provide additional community benefits. This concept was then largely transferred to the Bergamot Plan, Downtown Plan, and zoning ordinance. The LUCE sets forth development parameters for each land use designation including establishing the review process for Tier 1, Tier 2, and Tier 3 projects. As a result, the zoning ordinance and adopted plans (i.e. LUCE, Bergamot Plan, Downtown Plan) establish the conditions where a Planning Commission public hearing is required, specifically, height and FAR for Tier 2 projects and process thresholds based on project size. For example, the LUCE states that Tier 1 projects are ministerial up to the discretionary review threshold established in the zoning ordinance. Similarly, 100% affordable housing projects are identified as being only subject to administrative review if they do not exceed 50 units.
While helpful in providing guidance for implementation, such process thresholds are already in the zoning ordinance and not necessary in the LUCE. As part of the implementation of the LUCE, the Bergamot Plan was adopted by City Council in September 2013. The Plan includes the same process thresholds as the LUCE.
The Downtown Plan was adopted by City Council in July 2017 and amended on August 25, 2020 to include housing production incentives by way of allowing all Downtown Tier 2 housing projects to be exempt from Development Review Permit requirements, which would require review at a Planning Commission public hearing. The requirement for development agreements for Tier 3 housing projects over 90,000 sf was also eliminated in favor of requiring those projects be processed through a Development Review Permit process.
Table 2: Downtown Application Thresholds Table
Housing Project All Other Projects
Administrative Approval* Tier 1 projects Less than 10,000 sf Tier 2 projects
Development Review
Permit** Tier 3 projects 10,000 – 30,000 sf
Development Agreement N/A Greater than 30,000 sf
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*No public hearing required
**Planning Commission public hearing required
On December 10, 2019, Council held a study session regarding housing policy in light of State and Regional directives regarding housing production. Council directed staff to proceed with efforts to support housing production, particularly 100% affordable housing.
The IZO was first introduced and adopted on March 10, 2020. The IZO was extended on August 25, 2020. Also on August 25, 2020, the Council introduced for first reading an ordinance to establish residential leasing regulations (SMMC Chapter 6.22), which were adopted on September 8, 2020 and subsequently amended on October 27, 2020, primarily to allow for certain exceptions and to expand the documentation that may be used to demonstrate primary residence. The residential leasing regulations are similar to the streamlining eligibility requirements in the IZO, except that the IZO requires Tier 2 housing projects with rental units to record a deed restriction imposing certain leasing requirements to ensure that the units in the project will be used to supply long-term housing to tenants who wish to make Santa Monica their primary residence. Further, due to the amendments to Chapter 6.22 adopted by Council on October 27, 2020, there are inconsistencies between the IZO and the residential leasing regulations.
Discussion
Based on consultation with both affordable and market-rate housing providers, the uncertainty presented by a discretionary process is a factor in whether to move forward with housing projects when factored with other project risks like land cost, construction costs, and lender requirements. Over the past five years, the City issued building permits for approximately 200 units/year, on average, for housing projects, of which approximately 20% are for affordable housing. With the adopted Housing Element requiring the City to demonstrate that building permits could potentially be issued for approximately 1,100 units/year between 2021 and 2029, of which 69% are to be for affordable housing, there is a need to establish parameters that maximize streamlining of the housing approval process.
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At the time of adoption of the Land Use and Circulation Element (LUCE) and Bergamot Plan as implemented through the 2015 Zoning Ordinance Update, the City Council required projects that exceed certain height and Floor Area Ratio (FAR) thresholds to be reviewed by the Planning Commission at public hearings. Streamlining the approval process for 100% affordable housing projects, and projects subject to the HAA, over which the City has very limited discretion under State law, should encourage housing production in a way that aligns with the intent of the City’s tiered land use system.
Process Thresholds for 100% Affordable Housing Projects Except for the Downtown Plan area, the existing Zoning Ordinance requires 100% affordable housing projects over 50 units to be reviewed through a Development Review Permit process. These projects are typically code compliant and would produce much needed affordable housing units and thus, a discretionary review process has little or no added value. In addition, affordable housing projects within one half mile of a major transit stop are afforded additional development potential and concessions through recent changes to the State density bonus law. With challenges in available funding, 100% affordable housing projects are turning to financing sources such as tax credits, which establish a strict schedule for obtaining entitlements and building permits.
These financing tools and State bonuses will be more effective in producing affordable housing if paired with streamlined local processes to ensure that these units are brought to the market as quickly as possible. The following chart shows a timeline comparison between the existing review procedures and the IZO procedures for review of 100% affordable housing:
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Process Thresholds for Housing Projects Subject to the Housing Accountability Act The Housing Accountability Act (HAA) severely restricts a local jurisdiction’s discretionary review of housing projects that meet objective general plan, zoning and subdivision standards and criteria, including, design review standards, in effect at the time the project application is deemed complete. Specifically, the HAA prohibits the City from denying a housing project, or placing conditions on a housing project that would have the effect of reducing the project’s density, unless the City determines that the project would have a specific, adverse effect on public health and safety. As a result, cities are afforded narrow jurisdiction over housing projects that are protected by the HAA, raising questions regarding the utility of public hearings for housing projects if the City essentially has no ability to disapprove or unduly condition housing projects.
In accordance with the HAA, the interim zoning regulations that staff proposes to extend seek to provide a streamlined administrative process for Tier 2 housing projects that meet all objective general plan, zoning, and subdivisions standards and criteria in effect at the time the project application is deemed complete. In accordance with SMMC Chapter 6.22, housing projects with rental units are required to ensure that units are used to supply long-term housing to tenants who wish to make Santa Monica their primary residence.
The residential leasing regulations established in Chapter 6.22 are similar but are not identical to the rental unit requirements in the interim zoning regulations. The only distinction between the Chapter 6.22 residential lease regulations and Section
9.39.020(A)(3)(c) of the IZO is that Chapter 6.22 does not require that a deed restriction be recorded against a property. However, the provisions of Chapter 6.22 would be applicable to any future rental units such that the deed restriction is no longer necessary and the duplicative leasing provisions in the IZO can be deleted.
Environmental Analysis
The proposed extension of the Urgency Interim Zoning Ordinance establishing application process thresholds for 100% affordable housing projects and Tier 2 housing 8 of 8
projects compliant with the Housing Accountability Act are categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines (common sense exemption).
Based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed changes may have a significant effect on the environment.
The recommended amendments represent procedural changes in how projects are reviewed and do not substantively affect the policy decisions with respect to development standards or land use regulations made with the City Council’s adoption of the 2015 Zoning Ordinance Update. Therefore, no further environmental review under CEQA is required.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
Prepared By: Jing Yeo, Planning Manager
Approved Forwarded to Council
Attachments:
A. Housing Process Thresholds 2d IZO Extension 01.25.2022 B. July 6, 2010 City Council Meeting (Web Link)
C. September 10, 2013 City Council Meeting (Web Link)
D. June 23, 2015 City Council Meeting (Web Link)
E. July 25, 2017 City Council Meeting (Web Link)
F. December 10, 2019 City Council Meeting (Web Link)
G. March 10, 2020 City Council Meeting (Web Link)
H. August 25, 2020 City Council Meeting (Web Link)
I. Written Comments
J. PowerPoint Presentation