City Council
Report
City Council Meeting: May 9, 2023
Agenda Item: 11.C
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To: Mayor and City Council
From: Douglas Sloan, City Attorney, City Attorney's Office, Administration Subject: Consideration of a Settlement Agreement between the City of Santa Monica and WS Communities, LLC and its affiliates (“WS”), consistent with the City’s 6th Cycle (2021-2029) Housing Element for applicants that have asserted eligibility for processing under the “Builder’s Remedy” provision of the Housing Accountability Act (“HAA”), California Government Code section 65589.5(d)
Recommended Actions
Staff recommends that the City Council:
1. Adopt a finding that no subsequent environmental review is required pursuant to California Environmental Quality Act (CEQA) and CEQA Guidelines:
a. CEQA Guideline §15378(b) and (c); Pub. Res. Code § 21065 b. CEQA Guideline § 15061(b)(3)
c. CEQA Guideline § 15168, 15162
2. Approve the Settlement Agreement between the City of Santa Monica and WS, the owners of the following properties: 1437 6th Street, 601 Colorado Avenue, 1518-24 7th Street, 1443 Lincoln Boulevard, 3030 Nebraska Avenue, 2901 Santa Monica Boulevard, 1415-27 5th Street, 1557 7th Street, 1238 7th Street, 1925 Broadway, 1433-37 Euclid Street, 1238-42 10th Street, 1007 Lincoln Boulevard, and 1038 10th Street.
Discussion
On May 9, 2023, the Santa Monica City Council will consider approval of a Settlement Agreement with WS, the owners of the following properties: 1437 6th street, 601 Colorado Avenue, 1518-24 7th Street, 1443 Lincoln Boulevard, 3030 Nebraska Avenue, 2901 Santa Monica Boulevard, 1415-27 5th Street, 1557 7th Street, 1238 7th Street, 1925 Broadway, 1238-1242 10th Street, 1007 Lincoln Boulevard, 1038 10th Street. The Settlement Agreement addresses the status of thirteen pending applications filed by WS to develop housing under the provisions of the Builder’s Remedy statute of the HAA 2 of 7
(Government Code Section 65589.5(d)) (the “BR Projects”). See Attachment A. The City and owners disagree on the applicability of the Builder’s Remedy statute.
On April 11, 2023, the City Council adopted the ordinances necessary to implement the certified Housing Element, in conjunction with the Housing Element Environmental Impact Report (EIR) [SCH No. 2020100575] that was certified by Council on October 12, 2021, with an Addendum to the EIR approved on October 11, 2022. Consequently, the parties have elected to settle various disputes involving the BR Projects and unrelated litigation. Specifically, the parties have agreed to settle pending litigation against each other pertaining to the City’s leasing ordinance (requiring leasing periods of no less than one year) and alleged violations of consumer and tenant protection laws by the City against certain of the WS affiliates. The Settlement Agreement provides financial benefits for three recently displaced tenants of 1242 10th Street and guarantees them the right to return. The Settlement Agreement would also authorize the transfer of 20 deed-restricted affordable units from 1560 Lincoln Blvd to 1038-42 10th Street.
The Settlement Agreement also includes a completely optional component that the City is under no obligation to pursue and that provides reciprocal benefits to the parties independent of the other provisions of the Settlement Agreement discussed above.
Under the optional provisions, the City may adopt an ordinance that contemplates WS’s use of the ministerial development process already authorized in the Housing Element implementing ordinance adopted on April 11, 2023 in conjunction with the following local incentives that would allow (i) a 15% inclusionary requirement for the development of off-site affordable housing units, giving the owners more flexibility to pool off-site affordable housing units into one 100% affordable housing project to satisfy off-site inclusionary requirements for multiple market-rate projects, (ii) the grant of State density bonus waivers and concessions for the market rate projects as if the off-site units were provided on-site, and (iii) an increase in the Downtown Community Plan maximum parking requirement from 0.5 to 1.0 spaces. If adopted, these incentives would further facilitate the owners’ voluntary use of the ministerial development process previously authorized in the April 11, 2023 ordinance rather than the Builder’s Remedy. 3 of 7
As part of the Settlement Agreement, the owners’ have the option to suspend the BR Project applications, and, instead, file thirteen new multi-family housing projects that would qualify for ministerial approvals under the ordinances implementing the certified Housing Element adopted on April 11, 2023 with the additional incentives authorized by the State Density Bonus Law and, potentially, the local incentives discussed above if the City Council elects to ultimately adopt the ordinance. If WS elects to file the ministerial administrative approval applications in lieu of the Builders Remedy projects the City would process the new applications on an expedited basis. The thirteen BR Project applications would be permanently withdrawn if the ministerial approvals are granted. The BR Project Applications for 1038 10th Street, 1238-42 10th Street, and 1007 Lincoln Blvd would be withdrawn without replacement applications. The BR Project Application for 1433-47 Euclid Street would remain outside the Settlement Agreement and proceed through the discretionary review process.
The overall result is that WS will utilize the Housing Element implementing ordinances with expedited processing rather than the Builder’s Remedy statute to develop housing, and the housing built by the owners will satisfy a significant portion of the City’s regional housing needs, as planned in its certified Housing Element. Additionally, three tenants will have the right to return to their units with financial compensation.
Environmental Review
The Settlement Agreement is not subject to the California Environmental Quality Act (Public Resources Code Sections 21000 et seq. [“CEQA”] and 14 Cal. Code of Regulations Sections 15000 et seq. [“CEQA Guidelines”]) because it is not a “Project” pursuant to CEQA Section 21065 and 21080 and CEQA Guidelines Section 15378.
Under these provisions, a “Project” under CEQA involves agency action that has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. 4 of 7
The Settlement Agreement involves neither a direct or reasonably foreseeable indirect physical change in the environment. First, the resolution of litigation does not cause any direct or reasonably foreseeable indirect environmental impacts, nor does providing tenant benefits including financial benefits or the right to return. Second, the transfer of the deed restriction for the 20 Affordable Units from 1560 Lincoln Blvd to 1038-42 10th Street would not involve any changes to the number of units provided or result in any new construction and would only cause the deed restriction to be recorded against a different existing residential property. Therefore, no direct or reasonably foreseeable indirect environmental impacts would result from recording the deed restriction for a different property. Third, the Settlement Agreement’s expedited processing mandate would have no possible environmental implications and is merely a procedural and administrative benefit associated with the ministerial process already adopted for certain housing projects as part of the Housing Element Update related ordinances. Thus, nothing in the Settlement Agreement would increase potential development intensity or capacity or result in any foreseeable direct or indirect environmental impacts.
Finally, the optional ordinance would also not result in direct or reasonably foreseeable indirect environmental impacts. At this time, the adoption of the ordinance is optional and therefore speculative and subject to the discretion and independent judgement of City decision makers. Even if the City ultimately adopts the ordinance, the Settlement Agreement requires consistency with the 6th Cycle Housing Element.
Based upon this analysis, the following findings are made to support the determination that the Settlement Agreement is not a Project and therefore not subject to CEQA:
1) Pursuant to CEQA Guideline Section 15378(b) and (c); CEQA Section 21065, the Settlement Agreement is not a Project because it contemplates a process for approving housing projects that are already subject to ministerial approvals and proposed at intensities already permitted through the Housing Element and analyzed under the Housing Element EIR and Addendum; settles litigation, provides tenant benefits, and transfers affordability covenants from one site to another. The Settlement Agreement only establishes processing parameters, does not contemplate increased 5 of 7
development rights, and does not confer any benefits that have either a direct or indirect effect on the environment.
In addition, even if the Settlement Agreement is considered subject to CEQA, it is subject to the commonsense exemption under CEQA Guideline §15061(b)(3). The commonsense exemption under CEQA applies where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. As described above the Settlement Agreement would not result in any direct or reasonably foreseeable indirect environmental impacts.
Additionally, the following findings are also made to support the determination that the Settlement Agreement is exempt from CEQA:
2) Pursuant to CEQA Guideline §15061(b)(3) the approval of the Settlement Agreement does not have the potential for causing a significant effect on the environment because it contemplates a process for approving housing projects that are already subject to ministerial approvals and proposed at intensities already permitted through the Housing Element and analyzed under the Housing Element EIR and Addendum; settles litigation, provides tenant benefits, and transfers affordability covenants from one site to another. The Settlement Agreement only establishes processing parameters, does not contemplate increased development rights, and does not confer any benefits that have an effect on the environment.
Based upon this analysis, the following findings are made to support the determination that no subsequent environmental review is required:
3) CEQA Guideline § 15168; 15162 based on a determination that the Settlement Agreement is consistent with implementation of the 2021-2029 6th Cycle Housing Element, which actions were analyzed in the Environmental Impact Report (EIR) [SCH No. 2020100575] that was certified by Council on October 12, 2021 with an Addendum to the EIR approved on October 11, 2022.
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a) 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.
b) 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 substantial increase in the severity of previously identified significant effects. In this case, no substantial changes have occurred.
c) 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 approval of the Settlement Agreement.
Past Council Actions
Meeting Date Description
October 11, 2022 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
February 22 and
February 28, 2023
Study Session on Implementation of 6th Cycle (2021-2029) Housing Element Programs
March 21, 2023 and
April 11, 2023
Adoption of a finding that various amendments necessary to implement the City’s Certified 6th Cycle (2021-2029) Housing Element were analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) and
Addendum, and no further review pursuant to the California Environmental Quality Act (CEQA) is required.
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First and Second Reading, as required: Adoption of
ordinances for amendments to the LUCE, DCP, BAP, and
Zoning Ordinance, LUCE designation map, and Zoning
Districting Map, LUCE designation map, and Zoning
Districting Map implementing Certified 6
th Cycle (2021-2029)
Housing Element programs.
Effective Date of Action
The Settlement Agreement would take effect immediately upon execution of the document by all parties.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
Prepared By: Susan Cola, Assistant City Attorney
Approved Forwarded to Council
Attachments:
A. Attachment A - Project List
B. October 11, 2022 City Council Meeting (Web Link)
C. February 22, 2023 City Council Meeting (Web Link)
D. February 28, 2023 City Council Meeting (Web Link)
E. March 21, 2023 City Council Meeting (Web Link)
F. April 11, 2023 City Council Meeting (Web Link)
G. ITEM.11.C.Written Comments
H. PowerPoint Presentation