City Council
Report
City Council Meeting: June 21, 2022
Agenda Item: 8.B
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Housing Element Draft Redline Revisions
Recommended Action
Staff recommends that the City Council direct staff to transmit draft redline revisions to the adopted 6th Cycle (2021-2029) Housing Element Update to the California Department of Housing and Community Development for review and comment.
Summary
On February 8, 2022, the California Department of Housing and Community Development (“HCD”) determined that although Santa Monica’s adopted 6th Cycle (2021-2029) Housing Element Update meets many statutory requirements, further revision is necessary in order to comply with all aspects of State Housing Element law (Attachment A). Because Santa Monica did not adopt an HCD-certified Housing Element by October 15, 2021 or within the additional 120-day period (i.e. February 12, 2022), Santa Monica was formally deemed out of compliance for the 6th Cycle Housing Element.
Since receipt of the letter, staff has had consultations with HCD staff regarding revisions to the Housing Element to address HCD’s comments. On April 26, 2022, staff provided a progress update to the City Council on consultations with HCD. On June 15, 2022, the Planning Commission provided a recommendation to the City Council on the draft redline revisions, which is summarized in the Background section of this report. 2 of 8
This report presents draft redline revisions to all of HCD’s comments on the Housing Element as shown in the attached table (Attachment B). City staff’s draft redline revisions (Attachments C-F) have been viewed by HCD staff who have preliminarily provided generally favorable feedback on City staff’s approach to addressing the comment, subject to full review and public comment once draft redline revisions are submitted to HCD.
Upon City Council’s direction, these redline revisions to the Housing Element will be transmitted to HCD with a goal to receive HCD’s approval of draft revisions before formal adoption of a revised Housing Element in the Fall, when additional environmental analysis is complete.
Past Council Actions
Below are past Council actions related to the 6th Cycle Housing Element process.
Date Description
10/12/2021 City Council adopted the 6th Cycle 2021-2029 Housing Element. The adopted Final Housing Element was transmitted to HCD for their 90- day review period for certification.
3/15/2022 City Council held SB9 Study Session and gave direction to staff 4/26/22 City Council received progress update on potential revisions to Housing Element as a result of consultations with HCD staff Background
On February 2, 2022, pending completion of HCD’s review, the Planning Commission reviewed the first phase of implementation of priority housing programs per the schedule in the adopted 6th Cycle Housing Element. The first phase of implementation included proposed amendments to the Land Use and Circulation Element (LUCE}, Bergamot Area Plan, Downtown Community Plan, and the Zoning Ordinance for consistency with the Housing Element.
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Planning Commission Recommendation on Draft Redline Revisions On June 15, 2022, the Planning Commission voted 5-2 to recommend that the City Council direct staff to transmit draft redline revisions to the Housing Element with the following changes:
• Mixed Use Creative zone south of Expo Bike Path and north of Pennsylvania Avenue (between Stewart St and Stanford St) - 3.25 FAR and 70 feet • Add language to Programs 2E, 2F, and 6C indicating the City’s past and future commitment to support measures that are not housing constraints to generate and allocate tax revenue for the acquisition and development of deed-restricted affordable housing.
The Planning Commission’s recommendation has been incorporated into the draft redline revisions.
Discussion
The redline revisions are grouped into three main categories and the below provides a brief summary:
• Technical Revisions – Suitable Sites Inventory, Constraints Analysis • Affirmatively Furthering Fair Housing
o Housing preservation programs
o Rezoning in commercial districts
o R1 zone metrics and monitoring
• City-owned Sites
Technical Revisions
The proposed redline revisions are technical in nature and primarily address HCD’s comments on assumptions used in the Suitable Sites Inventory that are the basis for calculating overall capacity. As previously explained at the April 26, 2022 City Council meeting, the overall housing capacity analyzed in the Housing Element has increased to over 13,000 units in order to address HCD’s technical comments. The revisions also address HCD’s comments on the constraints analysis on such issues as emergency shelters, fees, and Accessible Dwelling Units (ADUs).
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Affirmatively Furthering Fair Housing (AFFH)
The proposed redline revisions address HCD’s comments on AFFH and as noted above, focus on three general areas:
• Housing preservation programs – City staff clarified for HCD staff that Santa Monica’s fair housing strategy leads first and foremost with housing preservation.
The City’s long record of rent control, tenant protection policies, use of the City’s housing trust funds to provide loans for substantial rehabilitation of existing buildings with low-income tenants, and programs to assist vulnerable households most at-risk of displacement are evident in the list of housing programs in Chapter 5. Revisions focused on adding program background, clarifying geographic targeting, and adding metrics where available. • Distribution of housing capacity throughout the city – Given Santa Monica’s relative homogeneity as a highest/high resource city, HCD placed a greater emphasis on reviewing local data and factors. This means that Santa Monica’s AFFH strategy is different compared to other cities with significant demographic and socioeconomic disparities between census tracts. HCD staff did not have objection to the strategy to distribute housing capacity throughout the city. The draft redline revisions include floor area ratio (FAR) and corresponding building height increases largely in commercial boulevards north of the I-10 freeway (Wilshire, Santa Monica Boulevard, Broadway, Colorado, Olympic), Bergamot, and Downtown in exchange for lesser development standards in Pico neighborhood and neighborhood commercial areas such as Montana Avenue, Main Street, and Ocean Park Boulevard.
• R1 zone metrics and monitoring – HCD staff clarified that in order to address comments, appropriate metrics would need to be added to demonstrate commitment to increasing housing choice and type in R1 zones. In addition to the existing program to incentivize additional ADUs, two new programs (4E and 4F) have been added to incentivize SB9 units, particularly on larger parcels, and 5 of 8
also add a target to issue building permits for 47 additional housing units per year in the R1 zones coupled with mid-cycle monitoring to assess progress.
City-Owned Sites
HCD staff clarified that a more explicit explanation of the City’s commitments to offer City-owned sites for affordable housing would need to be provided, and the draft redline revisions in Program 2E reflect changes necessary to address HCD’s comments. The Housing element identifies five City-owned sites to meet the City’s lower income targets in the RHNA. Program 2E indicates that 1,880 affordable housing units can be accommodated on City-owned sites as shown in the following table:
Sites Unit
Capacity Constraints
Parking Structure 3
(pending project) 104 None
Wilshire Parking
Lots
(3 sites)
130 None
4th/Arizona 362 Bank leases don’t terminate until 2026
Bergamot Arts
Center 707
Property management agreement until April 2027.
Annual leases with 30 businesses that renew each
calendar year until redevelopment
Main Street Parking
Lots 577 None but replacement parking will be necessary (Coastal Zone) Total 1,880
The City-owned sites are also being relied upon to address the lower-income shortfall – a statutory requirement in Housing Element where the City must calculate the difference in lower-income affordable housing capacity between existing zoning standards and the lower-income RHNA allocation. The lower-income shortfall has been calculated to be 1,433 lower-income units and thus the 1,880 affordable units that could be accommodated on City-owned sites would cover that shortfall. Government Code Section 65583.2(h) and (i) require that identified land must allow 100% residential use and can only be redeveloped with a minimum 50% residential floor area in mixed-use 6 of 8
projects (i.e. 100% commercial projects would be prohibited). The City has the greatest amount of control over city-owned sites, particularly in terms of being able to impose a minimum requirement for residential uses and thus, Program 1K states that City-owned sites are addressing the lower-income shortfall.
Next Steps
As explained in the April 26, 2022 Council report providing a progress update on HCD consultations in addition to a summary table of consequences of being out of compliance, October 15, 2022 is the next consequential milestone in Housing Element law as it is the date by which the City must rezone to accommodate the RHNA allocation.
As also explained in the April 26, 2022 Council report, the consequences for jurisdictions that have failed to adopt a housing element that has been found by HCD to be in substantial compliance include the following:
1. Denial of state funding where eligibility is contingent upon a housing element that has been found by HCD to be in substantial compliance. Gov’t Code § 65589.11
2. Required by-right approval of housing development projects with at least 20% of units affordable to 60% AMI households or 100% Moderate, even if the project exceeds zoning or general plan maximums. Any conditions placed on such projects cannot render the project infeasible. Gov’t Code § 65589.5(d)(1) & (5)(B)
3. By-right approval of housing developments that comply with standards listed in the housing programs for rezoning and for which 49% of the housing units are affordable for very low, low-, and moderate-income households proposed on a site required to be rezoned. Gov’t Code § 65583(g)
4. Legal action by any interested party to enforce programs of the housing element authorized under Code of Civil Procedure § 1085. Gov’t Code §§ 65583(h), 65587(b)
5. HCD notification to the Attorney General and potential judicial action to force substantial compliance plus fines in the amount of $10,000 per month, not to 7 of 8
exceed $100,000 per month, plus continuing court jurisdiction. Gov’t Code § 65583(j, k, l)
If Council directs staff to transmit the draft redline revisions to HCD, HCD would have up to 60 days to review the draft redlines and provide written comments to the City. As noted in this report, staff’s goal is to receive a “draft in compliance” letter from HCD on the attached draft redlines, which would provide a path forward for the City Council to adopt a revised compliant Housing Element. However, the primary schedule driver for Council to adopt a revised compliant Housing Element is the preparation of additional environmental analysis, which is not anticipated to be complete until September. The following represents a potential schedule for next steps through the Fall should HCD determine that the draft redlines are in compliance with Housing Element law:
• July 2022 – transmit draft redline revisions to HCD
• July-September 2022 – HCD timeframe to provide written comments on draft redline revisions. Additional environmental analysis underway. Should HCD letter on draft redline revisions be received relatively quickly, staff could return to working on Housing Element first phase implementation (i.e., zoning changes) that was underway with Planning Commission in February 2022. • September/before October 15, 2022 – Council adopts both Housing Element and first phase implementation together (i.e., zoning changes) Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
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Prepared By: Jing Yeo, Planning Manager
Approved Forwarded to Council
Attachments:
A. HCD Comments on Adopted 6th Cycle Housing Element February 8, 2022 B. Attachment B - Summary of City Responses to HCD Comments C. Housing Element (Chapters 1-5) Redline June 2022
D. Appendix E Constraints Redline June 2022
E. Appendix F SSI Report Redline June 2022
F. Appendix F SSI Table Redline June 2022
G. Housing Element (Chapters 1-5) Clean June 2022
H. Appendix E Constraints Clean June 2022
I. Appendix F SSI Report Clean June 2022
J. Appendix F SSI Table Clean June 2022
K. October 12, 2021 City Council Meeting
L. March 15, 2022 City Council Meeting
M. April 26, 2022 City Council Meeting
N. February 2, 2022 Planning Commission Meeting
O. June 15, 2022 Planning Commission Meeting
P. Written Comments
Q. PowerPoint Presentation