Affordable Housing Production Down, but Spike Expected

By Olin Ericksen
Staff Writer

October 18 -- With demand for affordable housing at an all-time high, Santa Monica fell far short of low-income housing production mandates last year. However, City officials hope projects in the pipeline -- and some recent policy changes some call controversial -- may turn the sagging statistics around.

An “unusually low” number of total units were built citywide during the past fiscal year -- with only two of them considered affordable, according to an annual report on affordable housing published by the City last week.

The figures were tracked in accordance with Proposition R, a measure passed in 1990 by local voters which mandates that 30 percent of all newly built housing each fiscal year be affordable.

With a record numbers of applicants filing applications for affordable housing, the City failed to meet its local affordable housing production goals of 30 percent for the 2005-06 fiscal year. According to the report, only two of the 39 total units built, or 5 percent, were affordable.

“This production number is unusually small relative to past reporting years,” housing officials noted in the report.

Citywide, that is the lowest number of total housing units built since 1994, when 11 units were built, and the second fewest number of affordable housing units produced since 2003, when only one affordable housing unit was completed.

However, despite the low figures during the past fiscal year -- and mixed results in prior years -- City housing officials say it’s important to look at the bigger picture.

“Real estate moves in cycles,” said Housing Division Manager Bob Moncrief, noting that there is a three to five-year lag time between the time a development is proposed and finished.

In coming months, nearly 176 purely affordable housing units built by Community Corporation, the City’s largest non-profit housing provider, could be completed -- if they remain on schedule.

“We could have four projects come on line by the end of next year,” said Joan Ling, executive director of the non-profit agency.

In addition, of 2,089 units built in Santa Monica since 1994, 769, or 37 percent, have been affordable, housing officials said.

However, the percentage of affordable housing built since 2000 drops to 23 percent, or 344 of the 1,510 total units built.

However the statistics are sliced, one fact remains a certainty: the demand for affordable housing is much higher than the current supply, officials said.

The dearth of new affordable housing comes at a time when affordable units are being lost under Costa Hawkins, a state law that kicked into full effect in 1999. The law allows landlords to raise the rents to market rate when a tenant voluntarily vacates a rent-controlled unit or is evicted for non-payment of rent.

“What is dramatic is that we have 2,500 applications for affordable housing in Santa Monica,” said Ling. “Rents have nearly tripled in Santa Monica since Costa Hawkins.”

Jim Kemper, a senior administrative analyst for the City’s housing division who tracks the numbers, said it is difficult to say why the production of affordable units rises and falls.

“How is it that just a few projects get built one year and, other years, more get built? We don’t know,” he said.

Land prices and the amount of redevelopment funding the City receives and among the factors at play, housing officials said.

One big question mark for housing, Kemper said, is a controversial law passed by the City Council this summer that requires condominium developers who build four or more units to include affordable housing on site if their project is in a residential area.

“It remains to be seen how it will affect building,” he said.

Kemper noted that he has been receiving calls from developers, some of whom are “miffed” at the new regulation, which is a dramatic departure from the City’s prior policy allowing fees to be paid to the City “in lieu” of building affordable housing on site.

“The calls that I get, there is quite a bit of anxiousness on the part of developers,” he said.

The City Council has also raised affordable housing fees for apartment and condominium builders – prompting a lawsuit by a local landlord group – and instituted a series of zoning changes that give preference to certain types of projects, including affordable housing developments.

Council member Ken Genser, a major proponent of the recent changes, said he believes they will help increase affordable housing, while limiting the number of affordable housing units lost to lucrative condominium projects.

“These new figures show that we were justified in making the new adjustments we made,” Genser said.

“Over the long term, unless Santa Monica is more aggressively pursuing affordable housing and preserving existing affordable housing stock, the long-term situation is that affordable housing will be on life support,” he said.

Whether some of those aggressive changes will work, or stand up in court, is still to be determined.