City Council
Report
City Council Meeting: February 25, 2025
Agenda Item: 11.A
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To: Mayor and City Council
From: Heather Averick, Director, Housing and Human Services Department Subject: Adoption of Resolution and Approval of Release of Request for Proposals for City-Owned Sites Designated for Affordable Housing Development in the City's 6th Cycle Housing Element and Declaration of Sites as "Exempt Surplus Land" in Accordance with the Surplus Land Act
Recommended Action
Staff recommends that the City Council:
1. Declare City-owned properties located at Bergamot Station Arts Center located at 2500 Olympic (APNs 4268-013-919 and 4268-014-900) as “surplus land” within the meaning of the Surplus Land Act (Government Code sections 54220 et. seq.)(“SLA”), adopt a resolution declaring the Bergamot Station Arts Center as surplus land, authorize the City Manager or his or her designee to advance the Notice/Request for Proposal (RFP) by June 30, 2025 and take implementing actions necessary to comply with the SLA and the City’s Housing Element.
2. Declare two City-owned properties located at 1333 4th Street (APNs 4291- 011- 909 and 4291-011-910) and 1324 5
th Street (APNs 4291-011-900,
4291-011-901, 4291-011-902, 4291-011-903, 4291-011-904, 4291-011-905 and 4291-011-908) as “surplus land” within the meaning of the SLA, adopt a resolution declaring the 4
th/5th and Arizona as surplus land, authorize the
City Manager or his or her designee to advance the Notice/Request for Proposal (RFP) by June 30, 2027 and take implementing actions necessary to comply with the SLA and the City’s Housing Element.
3. Declare City-owned property at 1234 4th Street (currently operated as a public parking structure, Parking Structure 1,(PS1) as “exempt surplus land” within the meaning of the SLA; authorize staff to begin the process of obtaining necessary permits, including a Coastal Development Permit, for demolition of PS1 if demolition is approved by the California Coastal Commission, authorize staff to proceed with developing bidding documents for the demolition to prepare the site for a future 100% affordable housing development.
4. Adopt the findings stated in the Environmental Review section of this staff 2 of 24
report, including, without limitation, a finding of categorical exemption pursuant to Section 15312 of the California Environmental Quality Act (CEQA) Guidelines, a finding of no possibility of significant effect on the environment pursuant to Section 15061(b)(3) (Common Sense Exemption), and a finding that the development of affordable housing on City-owned property was previously analyzed in the 6th Cycle Housing Element Environmental Impact Report.
Executive Summary
On October 11, 2022, City Council approved and adopted the City’s 6th Cycle Housing Element Update for 2021-2029. The Housing Element includes Program 2.E “Commit to the Production of Affordable Housing on City-Owned / Publicly-Owned Land”, which states the City’s commitment to plan for a minimum of 1,880 affordable housing residences on City-owned sites and to release a Request for Proposal (RFP) to solicit design proposals from qualified affordable housing developers every two years. City staff seeks direction on the future releases of Notice/RFP for two of the remaining Cityowned sites and direction on PS1 as a potential site for affordable housing development. The next RFP (third of five) for City-owned sites for affordable housing development will be released by June 30, 2025 as committed in the City’s Housing Element.
Background
6 th Cycle Housing Element Commitments for City-owned Sites The City’s 6th Cycle Housing Element Update was certified by the California Department of Housing and Community Development (HCD) on October 14, 2022.
The Housing Element required the City to demonstrate the City’s zoning could accommodate the City’s assigned Regional Housing Need Assessment (RHNA) of 8,895 units at each income level:
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Figure A: List of City-Owned Property Committed for 1,880 Affordable Housing Units (from Figure F-7, Appendix F of the Certified 6th Cycle Housing Element) 4 of 24
Achieving the number of affordable housing residences for the 6th Cycle RHNA will be challenging, especially given limited public funding and high land costs in the City. 5 of 24
Therefore, the City Council committed to prioritizing City-owned land for 100% affordable housing in the Housing Element.
The five City-owned sites designated for affordable housing in the Housing Element are:
• former Parking Structure 3 (1318 4th Street, known as former PS3); •Public Parking lots 7, 8, and 12 (Wilshire sites);
• 4th & Arizona (1333 4
th Street and 1324 5th Street, collectively known as
4 th/5th/Arizona);
•Bergamot Station Arts Center (2500 Olympic); and
• Main Street parking lots (Public Parking lots 9, 10 and 11).
The former PS3 and Wilshire sites are currently in predevelopment and are beginning the process of securing funding after undergoing respective RFP’s, community outreach and due diligence. The remaining sites are 4th/5th/AZ, Bergamot Station Arts Center, and Main Street Parking lots as summarized in the Fact Sheet on City-owned Sites (Attachment A).
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Affordable Housing
Affordable Housing Production Program
Affordable housing in Santa Monica is produced through both private and public funding. The City has an inclusionary housing program called the Affordable Housing Production Program (AHPP) that requires market-rate housing developments to set aside a percentage of residences to be deed-restricted for affordable housing split evenly between Very-Low, Low-, and Moderate- Income levels. The AHPP was enacted in 1998, and since that time, approximately 35% of all multifamily development has been affordable. Currently, market-rate housing developments are required to provide 15% of residences as affordable. Smaller developments are allowed to pay an in-lieu fee.
100% Affordable Housing Development
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Production of housing developments with 100% of the residences deed restricted as affordable is only feasible if deeply subsidized by federal, state, and local funding programs and potentially by partnering with market rate/commercial development.
Public subsidies allow the affordable rents charged to lower income households to cover the property operating costs and possibly a small, amortized bank loan to offset some of the development cost not subsidized with public or tax credit investor funds. A typical affordable housing development must combine several government funding programs to cover property acquisition and development costs and achieve financial feasibility. Most affordable housing funding programs are only open for applications annually, with some available biannually.
The various financing programs have unique goals, priorities, requirements, and funding periods which must be successfully navigated to bring a development to fruition.
Competition for limited funding is strong and requires achieving threshold milestones of project readiness - such as site control, environmental review, and land use entitlements - prior to entering the competitive funding cycle. Therefore, affordable housing developers must carefully choreograph project readiness and State funding cycles to minimize the length it takes to develop.
Proposed housing types and target populations should address local needs but must also fit into one of the particular housing category types required by a funding program, such as families, seniors, or persons experiencing homelessness. Designing an affordable housing development often involves tradeoffs, while remaining focused on meeting the needs of lower-income households. Such tradeoffs may include constructing larger apartments to meet the needs of a specific population (such as families); and as a result, being unable to construct as many residences due to site limitations.
Exempt Surplus and Surplus Land
City Council may designate a property as one of two “surplus” designations:
1. “Exempt Surplus” - 100% of the residential units are for low- or moderate- 8 of 24
income households, with a minimum of 75% of the residential units restricted to affordable housing for lower-income households. Mixed-use developments with ancillary commercial ground floor uses are allowed. This designation allows the City to avoid the prescribed SLA notice and 90-day negotiation process with each developer that responds to the RFP.
2. “Surplus” - At least 25% of the total residential units are set as affordable housing, as defined in Section 50052.5 of the Health and Safety Code, or affordable rent, as defined in Section 50053 of the Health and Safety Code, to lower income households, as defined in Section 50079.5 of the Health and Safety Code. This designation would require the City to follow the prescribed SLA notice and 90-day negotiation process with each developer that responds to the RFP. A “surplus” designation does not preclude development of more than 25% affordable housing or combined 100% affordable housing and market rate/commercial development, assuming sufficient available land and zoning development standards.
The 4th/5th/Arizona and the Bergamot Station Arts Center sites have more development potential, given the land area of these sites (approx. 105,000 square feet and 205,000 square feet, respectively). An “exempt surplus” land designation would limit commercial development on these sites to 100% affordable housing development with ancillary ground floor retail, thus increasing reliance on public subsidies to fund construction and limiting the opportunity for joint public-private development. Property tax and other types of revenues would also be lower without market rate development. Designation as “surplus land” may increase possibilities for private funding sources, the extent of which is difficult to know without testing the market. The Housing Element does not dictate how the affordable units are produced on these sites as long as the total number of units planned for each site meet the Housing Element goals. Therefore, staff is recommending designation of these sites as “surplus land” to test expanded development opportunities while complying with Housing Element mandates.
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The Main Street Parking lots are more site constrained and need additional review and information before determining its appropriate designation under the Surplus Land Act.
PS1 is not designated as a city-owned site reserved for affordable housing development in the Housing Element, but has potential for affordable housing development, given the expense associated with earthquake retrofitting of an antiquated public parking facility.
The land area of this site is 29,972 square feet, making this an ideal site for “exempt surplus” designation and possibly allowing the City to receive a credit against the affordable units required for the 4th/5th/Arizona site.
City funding sources and availability
The City has various sources of revenues, such as development impact fees, affordable housing loan repayments, and transaction and use taxes, which pay into the City’s Housing Trust Funds which are used to subsidize affordable housing development. The largest source of housing trust fund revenue for the past several years, approximately $8 million annually, comes from Measure GSH, a transaction and use tax increase adopted by Santa Monica voters in November 2016. A significant portion of GSH revenue has been, and continues to be, diverted from the Housing Trust Fund to address the City’s liabilities, reducing the current availability of the main Housing Trust Fund revenue source.
Santa Monica voters also adopted Measure GS in November 2022, which increases the real estate transfer tax and designates the proceeds for homelessness prevention, rental assistance, and affordable housing production. Measure GS generated nearly $9 million for affordable housing production during its first annual reporting period (March 2023 – February 2024) and has yielded another $4.1 million thus far in year 2 (through December 2024). The limited time period during which revenues have thus far been collected makes it challenging to establish a reliable estimate of future proceeds.
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Discussion
Bergamot Station Arts Center
Bergamot Station Arts Center (Bergamot) is approximately five acres, consisting of five buildings totaling approximately 64,000 square feet, and is leased to 30 for-profit and non-profit galleries, creative uses, and a restaurant. The land for the Bergamot site is approximately six times the size of the two City- owned sites already in process. California State affordable financing programs are generally not geared toward affordable housing developments of this scale (707 affordable residences were committed in the Housing Element). Therefore, financially feasible development on the site may necessitate the phasing of two or three separate developments, which will increase the overall complexity and staff work associated with bringing this site to completion.
The City purchased Bergamot in 1989 with transit funds with the goal that the site could serve future transit needs, including providing a revenue source for the Department of Transportation (DOT). In 2013, Bergamot was designated as a Conservation - Arts Center District in the Bergamot Area Plan to help protect and preserve cultural uses and provide an affordable safe haven for the arts in Santa Monica. In 2016, the E Line light rail project was completed, including the Bergamot Station / 26th Street Light Rail Station that is adjacent to Bergamot at the corner of 26th Street and Olympic Boulevard.
Given Bergamot was built over 30 years ago, the buildings have been determined to require significant capital investments involving the replacement of the roof, sewage line, and other necessary repairs estimated at over $500,000. Staff considered the cost of these repairs, as well as the continuing need for additional capital improvements when evaluating the site for development and prioritization for the RFP. Given that the Bergamot site is slated for future development regardless of the RFP timeline, any capital improvements spent now would eventually be removed within the next five years. Considering the truncated life of any future capital 11 of 24
improvements at the site, in addition to rising holding costs, developing Bergamot sooner and prioritizing it for the next RFP is a more pragmatic option.
When fully leased, Bergamot generates approximately $142,000 monthly or $1,704,000 annually in rent with common area maintenance (CAM) fees paid by the tenants to fund CAM expenses. From this revenue source, $54,089 per month is remitted to the City’s Department of Transportation (DoT) as a condition of the original Purchase and Sale Agreement. The balance funds on-going maintenance, property management, accounting, and administrative costs. The City property management fee paid to Rising Property Management is $6,000 per month and management staff salary reimbursement is $9,500 per month. Remaining revenue ($72,411 monthly, or $868,932 annually) goes to the City’s General Fund as outlined below.
Property Management Fee $6,000.00
Staff Salary Reimbursement $9,500.00
Remaining Revenue to General Fund $72,411.00
Department of Transportation Disbursement $54,089.00
Total Monthly Revenue $142,000
The property management fees are approximately $230,000 per annum in the first three years of operation with future increases at three percent (3%) annually. As rising management fees and capital improvement needs illustrate, holding costs for the Bergamot site are increasing and will have an impact on any potential future City General Fund revenues. The 4th/5th/Arizona site, in comparison, has a greater potential for generating revenue.
4 th/5th/Arizona
The City-owned properties at 1301 Fourth Street and 1333 Fourth Street are part of the 4th/5th and Arizona site which was originally acquired by the City’s Redevelopment Agency in 2010 as part of a land assemblage to form a 12 of 24
redevelopment site consisting of nine contiguous parcels totaling 112,000 square feet bounded by 4th Street, 5th Street, and Arizona Avenue.
The 4th/5th/Arizona site has two existing bank leases which are projected to generate $7,077,967 to the City’s General Fund through the lease terms ending in 2026, with extensions allowed through Fiscal Year 2028. Both Bank of America and Chase Bank have leases with the City through March 2026 and May 2026, respectively. In 2024, Chase reached out to the City, requesting an additional 5-year lease with two options to extend. The offer included paying an additional 10% increase in rent. Because Council had not deliberated on the prioritization of the RFP release yet, Chase accepted a 2-year option to extend with three additional 1-year options. Similarly, Bank of America is seeking a 5-year lease with two options to extend. The two tenancies do not require property management services or maintenance costs borne by the City.
Currently, these two tenants generate $2.5 million to the City’s General Fund annually. Once these tenancies terminate, the General Fund is not expected to receive rental proceeds from the 4th/5th/Arizona site anytime in the near future. The Economic Development Department would be able to negotiate lease extensions at a higher rent, and potentially a longer term if this site remains operational longer. If both bank tenants extend their leases through 2030, this would generate an additional $12,500,000 to the General Fund. Given the City’s current General Fund financial standing, these are invaluable sources of income.
Further, initial analysis indicates that solely 100% affordable housing at 4 th/5th/Arizona
may not be financially or physically feasible. There are 362 affordable residences committed in the Housing Element for these sites, and community feedback has been strong regarding potential non-residential uses. If the City is able to combine 4 th/5th/Arizona with PS1 in the future, the City would have greater flexibility in meeting its commitment of 362 affordable residences, while also exploring other revenuegenerating or community benefit opportunities at the sites.
Future of PS1
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PS1 located at 1234 4th Street is a City-owned parking structure on a roughly 0.75-acre lot with 327 spaces for public use. PS1 is a non-ductile concrete structure which, per the City’s Seismic Retrofit Ordinance Compliance and Noticing Schedule (Attachment B), must receive a seismic retrofit by October 2027 to remain open and in operation. This leaves four options for the future of PS1:
1. Complete a seismic retrofit by October of 2027:
• Estimated to cost roughly $14 million per the adopted FY 24-26 Biennial CIP Budget
• The process of hiring a designer to complete a retrofit, publicly bidding the project, and completing construction would likely take a minimum of three years
2. Demolish PS1 and develop affordable housing on the site:
• Demolition would likely cost $4-$5 million based on the demolition costs of former PS3 with inflation added
• Demolition would require a demolition design, a Coastal Commission permit, and construction process, likely to take three to four years given the process of obtaining a permit from the Coastal Commission
3. Sell the PS1 property with an agreement in place that the new owner would provide affordable housing to meet the City’s requirements:
• This option would put the responsibility of a retrofit or demolition upon the new owner
• This option would also require a Coastal Commission Permit since it reduces the public parking supply
• This process would take one to two years; mostly attributed to the Coastal Commission process
4. Keep PS1 in operation until October 2027, then close it to the public until its future is determined.
Walker Parking Consultants/Engineers was hired by the City and completed a supply and demand study for PS1 (Attachment C). This study concludes that the 327 spaces in 14 of 24
PS1 are not needed to meet the parking demand of the downtown area. It concludes that if these 327 spaces are removed from the public supply, then adjacent parking facilities can meet the current and anticipated future demand for public parking in the area.
Given this supply / demand information, the high cost of the seismic retrofit, and the City’s need for affordable housing, City staff is recommending Option 2, the demolition of PS1 and pursuing a future affordable housing development. After demolition is completed and before the affordable housing construction begins, staff is recommending interim use of the PS1 site as a surface public parking lot of roughly 90 spaces. This lot could also be used for special events and other temporary economic development activations.
To fund the demolition of PS1, staff would pursue a new capital improvement project.
One potential funding source for the design, permitting, and demolition could be the Tenant Ownership Rights Charter Amendment (TORCA) Housing Trust Fund. This funding source was previously authorized by City Council to pay for the demolition of former PS3 on July 13, 2021 (Attachment D).
Main Street Parking Lots
The Main Street Parking Lots are the other sites designated for affordable housing in the City’s Housing Element with a commitment of 577 affordable residences. These parking lots currently have 339 existing parking spaces and The Victorian leases one of the parking lots. Prior to moving forward with an RFP, these sites will require additional due diligence regarding the potential replacement parking, environmental feasibility analysis of the sites and suitability for development given the narrowness of the site, and the shared garbage for the businesses on the sites. These lots average an annual parking revenue of approximately $800,000 and the adjacent Victorian/Heritage Square businesses generates approximately $450,000 in annual lease revenue. The Main Street Farmer’s Market is also located on one of the surface lots.
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Recommendations
Given the number of residences required at these locations, as well as the complexity of each location and financial considerations to the City’s General Fund, staff recommends proceeding with the release of the next RFP for the Bergamot.
Release of Notice/RFP in 2025 for Bergamot
Staff is recommending Bergamot be prioritized for the next RFP for several reasons:
1) Creation of workforce and artist housing has been identified as a critical need 2) Ongoing maintenance and facility costs associated with the Bergamot buildings 3) Lease revenue for the City’s General Fund from the 4th/5th/Arizona bank leases 4) Potential to package 4th/5th/Arizona site with the PS1 site to support financially feasible developments that meet the Housing Element commitment while potentially allowing for community benefits or a revenue generating source 5) Federal and State tax credits for affordable housing are extremely limited and competitive, Bergamot is better positioned to successfully apply and receive tax credits given its adjacency to transit.
Guiding Principles to be included in the Notice/RFP
1. Reaffirm the City’s commitment in the Housing Element to provide a minimum of 707 affordable residences at Bergamot, up to 80% Area Median Income (AMI).
2. Explore the potential of residences for artist affordable housing.
3. Permanent Supportive Housing apartments would be permissible, with 40 Project Based Vouchers from the Santa Monica Housing Authority, contingent on Federal availability and impacts of regulation changes..
4. Explore other potential commercial uses that prioritize cultural/arts uses.
5. Explore the feasibility and possibility of preservation (in part or in whole) of existing uses.
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6. Tenant retention onsite.
7. Transit-oriented development principles and its proximity to the E-Line.
8. Community engagement.
With Council approval, release of the Notice/RFP for Bergamot will occur by the Housing Element commitment date of June 30, 2025.
Release of Notice/RFP in 2027 for 4th/5th Arizona and PS1 Guiding Principles to be included in the Notice/RFP
1. Reaffirm the City’s commitment in the Housing Element to provide a minimum of 362 affordable residences up to 80% Area Median Income (AMI), with the PS1 identified as a 100% affordable housing development.
2. Permanent Supportive Housing apartments would be permissible, with 40 Project Based Vouchers from the Santa Monica Housing Authority, contingent on Federal availability and impacts of regulation changes.
3. Explore other potential commercial uses or community benefits for 4th/5th Arizona, including the option to include revenue generating sources, whether market rate apartments, hotel, or other commercial sources of revenue.
4. Parking parameters – there would be no replacement parking requirements based on the parking study completed by DoT.
5. Community engagement.
With Council approval, release of the Notice/RFP for 4
th/5th Arizona with the PS1 site
will occur by the Housing Element commitment date of June 30, 2027.
Recommendation to Proceed with one RFP at a Time
Due to staff bandwidth and the complexity of the remaining City-owned sites, as well as the existing City-owned sites underway, staff recommend proceeding with the release of RFPs based on the schedule outlined in the Housing Element. If the RFPs are released every two years as committed in the Housing Element, no additional staff are needed. 17 of 24
Should City Council desire and direct staff to proceed with the release of an RFP for two city-owned sites concurrently, it will require two additional Senior Development Analysts prior to the release of the RFPs - one in the Housing Division and one in the Economic Development Division - to assist with lease negotiations, drafting and executing master ground leases, overseeing tenant retention efforts and transitioning site operations involving City commercial tenants. The Economic Development Division would also require funds to retain a commercial broker to assist with tenant relocation/retention efforts at the Bergamot site.
Beyond City staffing and consulting resources, there are additional concerns in successfully financing more than one affordable housing development if the City moved forward with two or more city-owned sites simultaneously. There are very limited resources to leverage outside funding from the State of California budget and LowIncome Housing Tax Credits, of which State funding for affordable housing was significantly reduced in the State budget.
Having competing affordable housing developments may limit the leveraging of resources while also increasing the timeline for the start of construction if financing is not achieved. Additionally, Low-Income Housing Tax Credits are increasingly competitive and limited, these typically fund 50% of an affordable housing development.
Furthermore, the 1318 Fourth Street development is also located in Downtown Santa Monica. Staff recognizes that developing the 4th/5th/Arizona site (located directly across the street) contemporaneously with the 1318 Fourth Street site may cause an oversaturation of affordable residences in one neighborhood. Allowing more time between developments would allow staff to analyze the economic impacts of the 1318 Fourth Street development on the Downtown Santa Monica neighborhood; and provide valuable insight that could better inform future development and economic activation in the Downtown area.
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Lastly, funding from the Affordable Housing and Sustainable Communities (AHSC or Cap & Trade) program are increasingly becoming a key role in financing larger affordable housing which requires transportation/transit component that significantly reduces greenhouse gas emissions. While the AHSC program brings additional transportation funding to the City if the development is successful in its application, more than one development application in a round may limit the ability to identify a qualifying transportation project for each affordable housing development. City staff is currently reviewing if Bergamot sites would be competitive for the AHSC program funding.
Next Steps
Consistent with the goals established in the Emergency Order on Homelessness and the Housing Element, and contingent on Council approval, the City will initiate the SLA process and issue a Notice/RFP for the City-owned site located at Bergamot by June 30, 2025, and for 4/5/Arizona by June 30, 2027.
After evaluating proposals, staff will return to City Council for recommendation and selection of a development team, terms for disposition of City land, and a Housing Trust Fund loan request if the amount requires Council approval under the Housing Trust Fund Guidelines. Staff are currently working on the following for the remaining City-Owned sites to ensure they are ready for an RFP within the allotted timeframe:
1. Main Street parking lots and the need for replacement parking is included in the Department of Transportation’s parking study
2. Conducting an environmental study of Main Street sites to determine where the water table is and what is feasible for underground parking
3. Once Council provides direction on PS1, staff will start the process with the Coastal Commission for demolishing PS1
Environmental Review
City Owned Sites
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The actions to adopt a framework for the development of affordable housing on Cityowned sites and declaration of sites as surplus lands are categorically exempt from environmental review pursuant to Section 15312 of the California Environmental Quality Act (CEQA) Guidelines as the action involves the first step in the sale of surplus government property that is not located in an area of statewide, regional, or areawide concern identified in Section 15206(b)(4) of the State CEQA Guidelines.
Furthermore, the actions are exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines, which states that CEQA does not apply, “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.” No development for the City-owned sites is being authorized at this time. Furthermore, the issuance of RFPs for development of affordable housing on these City-owned sites implements the 6th Cycle Housing Element (Program 2.E), which 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. The issuance of the RFPs and the development of affordable housing on City-owned properties implements a portion of that 6th Cycle Housing Element and is consistent with the Housing Element EIR. Therefore, no further CEQA review is necessary.
Demolition of PS1
On February 28, 2006, the City Council certified the Final Program Environmental Impact Report (Final PEIR State Clearinghouse No. 2002121122) for the City of Santa Monica Downtown Public Parking Program (Downtown Parking Program). The Final PEIR analyzed demolition and reconstruction of PS1 located at 1234 4th Street, PS3 located at 1320 4th Street, and Parking Structure 6 located at 1431 Second Street. The Notice of Determination for the Final PEIR was filed on May 12, 2006. (Notice of Determination, Attachment E)
The Final EIR for the Downtown Community Plan (DCP EIR) also analyzed a buildout scenario of 3,024 housing units throughout the Downtown District. Demolition of PS1 and subsequent development of affordable housing would also be exempt from environmental review pursuant to Gov. Code Section 65457. “Government Code 20 of 24
section 65457 provides an exemption from environmental review for a residential development that is consistent with a broader specific plan for which an environmental impact report previously has been certified.” (Concerned Dublin Citizens v. City of Dublin (2013) 214 Cal.App.4th 1301.) The City further finds that no grounds for supplemental or subsequent environmental review have occurred since certification of the DCP EIR.
The demolition of PS1 requires a ministerial demolition permit, issued by the City’s Building Official. Ministerial projects proposed to be carried out by public agencies are exempt from the California Environmental Quality Act (“CEQA”)(Public Resources Code sections 21000 et seq.). Pub. Resources Code § 21080(b)(1); title 14 CCR § 15369; Friends of Juana Briones House v. City of Palo Alto (2010) 190 Cal.App.4th 286.)
In order to satisfy its obligations under the Housing Accountability Act (Government Code section 65589.5), the City adopted Resolution No. 11239 (CCS) on March 10, 2020, 2020 to amend Chapter 9.39 of the Santa Monica Municipal Code, establishing an administrative (ministerial) approval process for 100% affordable housing projects, such as the one contemplated for development on the PS1 site. 100% affordable housing projects are defined as “[h]ousing projects with a minimum of 25% of the units deed restricted or restricted by an agreement approved by the City for occupancy by 60% Income Households or less and the remainder of the housing units are deed restricted or restricted by an agreement approved by the City for occupancy by 80% Income Households or less. Such projects may include nonresidential uses not to exceed 33% of the project’s total floor area.” The effect of Resolution 11239 (CCS) and its implementing ordinance (Chapter 9.39 of the Santa Monica Municipal Code) is that housing projects in the City that meet the qualifications of a “housing development project” under the Housing Accountability Act, including any proposed for development on the PS1 site, would be subject to ministerial approval and would not require environmental review. Cal. Pub. Res. § 21080(b)(1); CEQA Guideline §15369 (ministerial approvals).
However, even without the effect of Resolution No. 11239 (CCS) or the City’s administrative approval process for 100% affordable housing projects under Chapter 21 of 24
9.39 of the SMMC, CEQA already contains express exemptions for infill housing in order to facilitate housing approvals, including the following:
(i) CEQA § 21155.4; CEQA Guideline §15182 (projects proximate to transit or residential projects pursuant to the Downtown Community Plan); (ii) CEQA Guideline §15183.3 (streamlining for infill projects); (iii) CEQA § 21083.3 (CEQA restrictions on residential zoning and community plans); and
(iv) CEQA § 21159.21 (exemption for qualified housing projects) The full scope of the future 100% affordable housing development cannot be described in this report with certainty because the development team has not yet been selected and a proposed development has not been presented to stakeholders and the broader community for input. However, it is reasonably foreseeable that the City would select a housing developer and proceed with negotiating the terms and conditions of conveyance of the site for a 100% affordable housing project that would meet the definition of “housing development project” within the meaning of the Housing Accountability Act, as well as the CEQA exemptions referenced above. While CEQA does not allow for “piecemeal” environmental review of two projects where it is reasonably foreseeable that one project is a precursor to another project, the prohibition on “piecemealing” does not apply where the projects are ministerial, since neither project would be subject to CEQA review. Pub. Resources Code § 21080(b)(1); title 14 CCR § 15369; Cal. Gov’t Code § 65583.2(i); Friends of Juana Briones House v. City of Palo Alto (2010) 190 Cal.App.4th 286. Therefore, environmental review of the 100% affordable housing project is not required before approval of the demolition of PS 1 since the 100% affordable housing project would be exempt under CEQA. Furthermore, demolition and redevelopment have already been programmatically analyzed in several prior CEQA documents.
Past Council Actions
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Date Council Action
April 9, 2019 Authorize issuance of a request for
proposals for the development of
affordable housing on City-owned
property at 1318 Fourth Street, and
authorize staff to continue to explore
similar opportunities on other City-owned
properties.
March 23, 2021 Resolution declaring the City-owned
property at 1333 4th St as surplus land
and the City-owned property at 1318 4
th
St. as exempt surplus land.
January 11, 2022 Authorize the City Manager to negotiate and execute an Exclusive Negotiating
Agreement with EAH, Inc. for a mixeduse, affordable housing development on the city-owned site located at 1318-20
Fourth Street.
October 11, 2022 Adoption of 6
th Cycle Housing Element
March 14, 2023 Resolution declaring the City-owned
properties at 1217 Euclid Street, 1211-
1217 Fourteenth Street, and 1146
Sixteenth Street as exempt surplus land.
March 21, 2023 Ordinance implementing Housing
Element Phase 1 Programs.
March 19, 2024 Award RFP #365 to Hollywood
Community Housing Corporation (HCHC)
for the future development of affordable
housing on City-owned property at 1217
Euclid Street, 1211-1217 Fourteenth
Street and 1146 Sixteenth Street; and
authorize the City Manager to negotiate
and execute an Exclusive Negotiating
Agreement with HCHC.
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October 8, 2024 Authorize the City Manager to negotiate and execute a Ground Lease with a
ninety-nine (99) year term and a
Disposition and Development Agreement
(DDA), with EAH Inc for development and
operation of affordable and permanent
supportive housing on City-owned
property located at 1318 4th Street.
December 17, 2024 Authorize the City Manager to negotiate and execute a Ground Lease with a fiftyfive (55) year term, with two options to extend by twenty-two (22) years each,
and a Disposition and Development
Agreement (DDA) with Hollywood
Community Housing Corporation (HCHC)
for development and operation of
affordable housing on City-owned
property located at 1217 Euclid Street;
Authorize the City Manager to negotiate
and execute a Ground Lease with a fiftyfive (55) year term, with two options to extend by twenty-two (22) years each,
and a Disposition and Development
Agreement (DDA) with HCHC for
development and operation of senior
affordable and senior permanent
supportive housing at 1211-1217
Fourteenth Street on property to be
acquired by HCHC at 1402 Wilshire
Boulevard and deeded to the City.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary because of the recommended action. Staff will return to Council if specific budget actions are required in the future.
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Prepared By: Agustin Aleman, Senior Development Analyst Approved Forwarded to Council
Attachments:
A. Fact Sheets on City-Owned Sites
B. Seismic Retrofit Ordinance
C. Parking Structure 1 Supply and Demand Report
D. Staff Report - Award Bid #2610 for the Demolition of Parking Structure #3 E. Downtown Parking Improvement Program NOD
F. Resolution - Updating Seismic Retrofit Standards and Tenant Protection Laws G. SLA Resolution
H. Written Comments