Council Changes Affordable Housing Guidelines

By Jason Islas
Special to The Lookout

June 16, 2011 – The City Council voted unanimously to amend Santa Monica's Affordable Housing Production Program administrative guidelines Tuesday to require developers who wish to fulfill their affordable housing obligation with the off-site option to finish building the affordable units before or at the same time as their market rate units.

“Once you step away from the concurrent development, the City is more vulnerable,” Santa Monica Housing Administrator Jim Kemper told The Lookout Wednesday.

The guidelines originally required that developers building market rate units in Santa Monica fulfill their affordable housing obligation before their market rate project, but after several successful partnerships with developers, the City decided to give developers more flexibility as to when they built the affordable units required of them.

Kemper said that, at the time, the City wanted to encourage more developers to choose the off-site option for the affordable units, rather than just pay the fee to satisfy their obligation, because that had proven to be the quickest method to get affordable units built and families who needed them moved in.

According to the staff report, though, “Recent experience with the economic downturn and associated foreclosures on pending multifamily developments has exposed vulnerabilities in this approach to the off-site affordable housing option.”

The staff report identifies the main weakness in the current guideline as the fact that market rate buildings can be certified for occupancy before off-site affordable units are built.

Those vulnerabilities became very apparent recently when developer Craig Jones, after building several market rate projects, never completed the 15 affordable housing units he owed the city. He has since left the country.

Kemper hopes that by changing the guidelines, the City will have more leverage to make sure developers meet their obligation to the community before their market rate developments are completed.

Development is important for the economic growth of Santa Monica, Kemper emphasized. But he added that in the current economic climate, the City has to be more cautious to prevent against problems caused by developer default, as in the case of Jones, or other unforeseen circumstances that might prevent the affordable units which the City is owed from being built.

That way, he said, the community's needs are met as well as those of the developers'.

The motion to amend the guidelines was considered along with several other affordable housing items Tuesday night, including a vote to postpone the comprehensive study of affordable housing fees until July 1, 2015 and a resolution to automatically adjust the Affordable Housing Unit Base Fee and Affordable Housing Unit Development Cost, all of which passed unanimously.