To: Mayor Brock, Mayor Pro Tem Negrete and Councilmembers From: Planning Commission
Date: April 17, 2024
Re: Local Density Bonus Program for Off-Site Affordable Housing The Planning Commission requests that the City Council direct staff to engage the community in preparing an ordinance to create a local density bonus program which allows inclusionary housing requirements to be met with off-site affordable units. A separate ordinance to establish a local density bonus program with an offsite option is necessary because State Density Bonus Law does not allow this option. But Santa Monica has a long history of allowing inclusionary units to be developed off-site. Since its creation in the 1990’s, the City’s Affordable Housing Production Program has permitted this off-site option. The Commission is asking that this option be extended to housing projects using density bonuses regardless of the size of the density bonus to be used. This recommendation will not result in more density than that allowed currently under State Law.
It is important to allow for an off-site option because the developers’ direct financial contribution to 100% affordable housing projects or, alternatively, developers’ financial contribution to the Housing Trust Fund will provide a critical source of funding and leveraging potential for meeting the City’s RHNA goals. As the City Council knows, the current status of the Housing Trust Fund balance is inadequate to meet these goals. While the disposition of City-owned property for affordable housing development will certainly help, it too is not enough to meet the RHNA production goals.
SUMMARY
The Commission’s recommendation is based on the following reasons.
1. Developers’ off-site contribution to 100% affordable housing projects will improve the economic feasibility of these projects in an era of declining State and local housing finance sources. Due to the State’s significant budgetary shortfall, the Governor’s proposed FY 24-25 Budget slashes funding for HCD’s Multifamily Housing Program by seventy-five percent and reduces the State’s Low Income Tax Credit Program by $500 million. Both State programs have been used extensively by our nonprofit housing providers to finance 100% affordable housing projects.
2. The City is no longer allowed to require parking in its approval of new housing projects. It is a widely accepted fact, among affordable housing providers and their residents, that lower income families have a greater need for access to an automobile, largely due to the nature of their employment. Affordable housing developers understand that and provide parking in their new projects although it is not required. Developers of mixed income housing need not provide parking for residents of their on-site inclusionary units. For example, the proposed mixed income project at 700 Santa Monica Boulevard has no parking for residents.
3. Affordable housing projects are designed and built to provide services directed toward the needs of affordable housing residents. These include community rooms for workshops and tenant meetings, garden areas, outdoor play areas, and offices for service providers. The developers of mixed income housing projects are not mission-driven to serve lower income people and have no economic incentive to do so.
4. The City fell short of meeting its 5th Cycle lower income RHNA goals although it exceeded the market rate production by 250%. Developers’ offsite funding of 100% affordable housing units will enable the leveraging of Federal and State funding sources and will, therefore, result in the production of a larger number of lower income units. Relying on onsite inclusionary units will contribute very little to the City’s meeting its 6th cycle lower income goals. In fact, the City has already fallen behind in low income housing production in the 6th Cycle and is therefore subject to SB 35/423 sanctions.
Thank you for your consideration. We are available to address any questions or concerns you may have.