City Council
Report
City Council Meeting: December 13, 2022
Agenda Item: 10.D
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To: Mayor and City Council
From: David Martin, Director, City Planning
Subject: Introduction and Adoption of an Emergency Interim Zoning Ordinance to Allow 100% Affordable Housing Projects to Request Waivers or Reductions of Development Standards Pursuant to State Density Bonus Law Recommended Action
Staff recommends that the City Council:
1. Adopt a finding that no subsequent environmental review is required pursuant to California Environmental Quality Act (CEQA) Guidelines § 15162 based on a determination that the proposed project was analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) [SCH No. 20212269242021] that was certified by Council on October 12, 2021 with an Addendum to the EIR approved on October 11, 2022.
2. Introduce and adopt an emergency interim zoning ordinance to allow 100% affordable housing projects that receive unlimited density and up to three stories or 33 feet in additional height under State Density Bonus Law to request additional waivers or reductions of development standards.
Summary
On October 11, 2022, the City Council adopted an amended 6th Cycle (2021-2029) Housing Element, which was subsequently certified by California’s Housing and Community Development Department (“HCD”) as compliant with State Housing Element Law on October 14, 2022. The City’s certified 6th Cycle Housing Element includes a commitment to implement certain programs by October 15, 2023, that focus on planning for new housing units consistent with the City’s Regional Housing Needs Assessment (“RHNA”) allocation of 8,895 housing units with approximately 70 percent allocated as affordable housing. One of the key principles of the 6th Cycle Housing Element, consistent with the City’s RHNA allocation and longstanding commitment to affordable 2 of 9
housing, is to increase housing production for all, with an emphasis on production of affordable housing units in Santa Monica.
State Density Bonus Law provides significant advantages for 100% affordable housing projects that are within one-half mile of a “major transit stop”, which, for purposes of State law, includes, but is not limited to, rail stations, bus rapid transit stations, and the intersection of certain qualifying bus routes. These advantages include:
• Extra 3 stories or 33 feet of building height;
• No maximum controls on density (i.e., no limit to number of units in the project’s building envelope); and
• Up to four (4) incentives/concessions from development standards in the Municipal Code.
In addition to incentives and concessions, projects that request a State Density Bonus also typically have the option of also requesting waivers or reductions of development standards that physically preclude development of a project. Prior versions of State Density Bonus Law prohibited 100% affordable housing projects that receive unlimited density from also being able to request waivers or reductions of development standards (in addition to the 4 incentives/concessions already granted). However, in processing projects, staff has found that this may constitute a barrier to 100% affordable housing projects that need more relief from the code as contemplated by State Density Bonus Law.
As a result, staff proposes an Emergency Interim Zoning Ordinance (“IZO”) to remove potential barriers to production of 100% affordable housing projects that are within onehalf mile of a major transit stop on an interim basis while the City continues implementation of adopted Housing Element programs. Housing Element implementation, which is scheduled to be presented to the City Council in Spring 2023, includes comprehensive rezoning and process streamlining as set forth in required 6th Cycle Housing Element Programs including but not limited to 1F (Downtown standards), 1J (Citywide standards), 2C (AHPP Update), and 2D (State Density Bonus). More 3 of 9
specifically, for purposes of the proposed Emergency IZO, Housing Element Program 2D requires revisions to the City’s Density Bonus Ordinance to ensure consistency with recent changes in State Density Bonus Law, California Government Code Section 65915 et seq. (“SDBL”).
The proposed Emergency IZO would allow these projects to request “waivers or reductions” of development standards that would physically preclude the development of the affordable housing project.
Staff will be proposing that this change be made on a permanent basis in Spring 2023 as part of implementation of Housing Element Program 2D, which includes a broader Density Bonus Ordinance update. In the interim, in order to continue to support the production of 100% affordable housing development, the proposed Emergency IZO is recommended for adoption immediately. This would help to ensure the City does not lose the opportunity to approve applications for 100% affordable housing projects, which are generally subject to strict processing timelines to secure funding. A delay in implementation of this provision could threaten an 100% affordable housing project’s ability to move forward and could, as a result, threaten the City’s ability to meet its RHNA allocation goals.
Background
State Density Bonus Law
The State legislature’s stated purpose of the SDBL is to allow public entities to reduce or even eliminate subsidies for housing projects by allowing a developer to include more total units in a project than would otherwise be allowed by the local zoning ordinance in exchange for affordable units, and to cover at least some of the financing gap of affordable housing with regulatory incentives, rather than additional public subsidy. The additional units granted under SDBL are referred to as a “density bonus”, and the regulatory incentives include “incentives or concessions”, and “waivers or reductions of development standards”.
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For purposes of SDBL, “development standard” includes, but is not limited to, a height limitation, a setback requirement, a floor area ratio or parcel coverage limitation, an onsite open-space requirement, or a parking requirement.
Under SDBL, the City is required to grant a density bonus to any housing development project that sets aside a minimum percentage of units as affordable. The density bonus increases based on the number of affordable units set aside, with the highest density bonus for mixed-income projects being 50%. Depending on the percentage of affordable housing units in a project, developers can request up to four incentives or concessions and additionally may request waivers or reductions of development standards.
The City may only deny a request for regulatory incentives based on certain findings.
Specifically, to deny an incentive or concession, the City is generally required to demonstrate that the incentive or concession would not result in identifiable and actual cost reductions to provide for affordable housing, and to deny a request for a waiver or reduction of a development standard, the City is generally required to demonstrate that the waiver or reduction would not physically preclude the developer from constructing the project.
AB 1763
On October 9, 2019, the Governor of California signed 18 bills into law to stimulate housing production, including Assembly Bill 1763, which amends the SDBL to provide for increased density bonuses and incentives and concessions for 100% affordable housing developments. For purposes of SDBL, a 100% affordable housing development is defined as a housing project with 100% of all units in the development for lower income households, except that up to 20% of the units in the development, including total units and density bonus units, may be for moderate-income households.
Under AB 1763, 100% affordable housing developments are automatically granted a density bonus equal to an 80% increase in units and up to 4 incentives or concessions. 5 of 9
In addition, if the 100% affordable housing project is within one-half mile of a major transit stop, the City is required to grant the housing development unlimited density and a height increase of up to three additional stories, or 33 feet. Although the City is required to grant the project “unlimited density”, the City is still able to limit the height of the project to 33 feet or three stories above the maximum for the applicable zoning district. Unlimited density in this context means that the City cannot place a limitation on the number of affordable units that fit within the building envelope.
However, AB 1763 also declared that 100% affordable housing developments that received unlimited density could not request additional waivers or reductions of development standards.
City’s Implementation of AB 1763
AB 1763 became effective on January 1, 2020. On September 8, 2020, the City Council adopted Ordinance Number 2649 (CCS), which, in part, updated Santa Monica Municipal Code (SMMC) Chapter 9.22 to incorporate updates made by AB 1763. In accordance with AB 1763, Santa Monica Municipal Code Section 9.22.070(C) prohibits a developer to request additional waivers or reductions of development standards for 100% affordable housing developments that received unlimited density.
AB 2345
In order to further encourage the development of 100% affordable housing projects, the State legislature passed Assembly Bill 2345, which became effective on January 1, 2021, and expressly authorizes cities to grant additional waivers or reductions to development standards that were formerly prohibited under Assembly Bill 1763.
Consequently, the City now has the option to grant the additional waivers or reductions that the City determines is necessary to allow the construction of 100% affordable housing projects. No additional height is allowed for these projects. During this interim period, staff will further research whether the City can limit the categories of waivers or reductions of development standards that an 100% affordable housing project applicant can request.
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Discussion
Under SMMC Chapter 9.22, and in accordance with SDBL, the City is required to grant unlimited density and up to three stories or 33 feet in height when requested for 100% affordable housing developments located within a ½ mile of a major transit stop (see Figure 1). In addition, those housing development projects may request up to four additional incentives or concessions, but no waivers or reductions of development standards.
Figure 1: Map of Areas within ½ mile of a Major Transit Stop By adopting the proposed Emergency IZO, the City would agree to allow developers to, in addition to what is already required by SDBL, request additional waivers and reductions in development standards.
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The proposed IZO would not allow a developer to request additional height beyond the additional 3 stories or 33 feet that the City is already required to grant under SDBL.
Waivers are generally requested to modify development standards such as setbacks, stepbacks, parcel coverage or floor area, and open space requirements, but can only be used if the development standard would physically preclude the development of the project at its permitted density and with any incentives or concessions granted. The proposed Emergency IZO would only grant developers of 100% affordable housing projects that receive unlimited density the ability to request waivers or reductions of development standards. Any request for a waivers or reductions would not be automatically granted. The proposed Emergency IZO would not affect the City’s discretion to deny a developer’s request for waivers or reductions of development standards, such as when denial of the requested waiver or reduction of a development standard would not have the effect of physically precluding the construction of the 100% affordable housing project. If the City is able to make the findings set forth in SDBL, then the City may deny a request for a waiver or reduction of development standards.
The Planning Commission has been conducting discussions on implementation of the 6 th Cycle Housing Element, and it is anticipated that the Commission will make a formal recommendation to the City Council in January 2023. If the Planning Commission makes a formal recommendation in January 2023, any changes to Chapter 9.22 to implement Program 2D would not be presented to Council before February 2023, with a likely effective date of April 2023, if adopted by Council in February 2023.
Based on this anticipated timeframe, the adoption of this Emergency IZO provides an opportunity for 100% affordable housing projects to be eligible for a wider range of assistance to make qualifying projects feasible, as authorized by SDBL. More specifically, the combination of SDBL-authorized development incentives and concessions and ability to request waivers supports the development of 100% affordable housing projects. This is particularly important, given the challenges with funding 100% affordable housing projects, which often necessitates the use of financing sources such as tax credits that establish a strict schedule for obtaining entitlements and building permits. A delay in agreeing to waivers or reductions of development 8 of 9
standards before the anticipated effective date for implementation of Program 2D in the Spring of 2023, could jeopardize the production of 100% affordable housing developments within the city as well as the City’s ability to meet its RHNA allocation goals.
If adopted, the proposed Emergency IZO would take effect immediately for an initial period of 60 days, subject to extension by the City Council in accordance with Santa Monica Municipal Code Section 9.46.090(C).
Environmental Review
The proposed adoption of an Emergency IZO to allow a request for waivers of development standards in conjunction with a 100% affordable housing project utilizing State Density Bonus Law provisions was analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) [SCH No. 20212269242021] that was certified by Council on October 12, 2021, with an Addendum to the EIR approved on October 11, 2022. This approval of an Emergency IZO implements a portion of that 6 th Cycle Housing Element project.
An analysis has been performed pursuant CEQA Guidelines § 15162 to determine whether subsequent environmental review is required for the adoption of an Emergency IZO to allow a request for waivers of development standards in conjunction with a 100% affordable housing project utilizing State Density Bonus Law provisions. Based upon this analysis, the following findings are made to support the determination that no subsequent environmental review is required:
1) No substantial changes are proposed in the project which will require major revisions of the previous EIR and Addendum due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects. In this case, there are no changes to the project.
2) No substantial changes occur with respect to the circumstances under which the project is undertaken which will require major revisions of the previous addendum due to the involvement of new significant environmental effects or a 9 of 9
substantial increase in the severity of previously identified significant effects. In this case, no substantial changes have occurred.
3) There is no new information, which was not known and could not have been known at the time of the previous EIR and Addendum that the project will have significant effect not discussed in the EIR and Addendum.
Based upon these findings, it has been determined that no further environmental documentation is required for this project.
Past Council Actions
Meeting Date Description
10/11/2022
(Attachment B)
Adoption of Resolution Amending the 6th Cycle (2021-2029) Housing Element to the City’s General Plan and Approval of Addendum to the Final Environmental Impact Report for the 6th Cycle (2021-2029) Housing Element
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
Prepared By: Roxanne Tanemori, Principal Planner
Approved Forwarded to Council
Attachments:
A. Attachment A EIZO Density Bonus for Affordable Housing 121322 B. Attachment B Link to 10-11-2022 Council Meeting