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Market Rate SROs Get Go-ahead Under Settlement Agreement

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By Jorge Casuso

July 1, 2019 -- Six market-rate single room occupancy (SRO) developments slated for Downtown Santa Monica have received the go-ahead under a settlement agreement between the City and WS Communities.

The agreement, approved by the City Council on Tuesday, paves the way for the proposed SRO developments totaling 361 "micro-units" and moves forward two of the developer's projects currently in the planning pipeline, said City Attorney Lane Dilg.

The six SRO projects were rejected by the Planning Commission after the City Council passed an emergency interim ordinance in March to block market rate SROs.

The ordinance, which was made permanent in May, exempts 100 percent affordable developments ("City Council Permanently Bans Market-Rate 'Micro Units,' At Least For Now," May 15, 2019).

The settlement releases the City of all claims by the developer, which threatened to file a lawsuit, and sets guidelines for the units, which will be clustered on 5th, 6th and 7th streets between Colorado and Arizona avenues.

Under the settlement agreement, the SROs must be a minimum of 220 square feet, excluding the closet and bathroom, and meet the open space requirements set by the Downtown Community Plan.

Of the total units, 15 percent must be affordable to persons earning 80 percent of the median income for Los Angeles County, which would be no more than $54,250 a year.

Under the original proposals, 5 percent of the units were affordable.

The settlement requires that all the units be rented to natural persons -- not corporate entities -- who must occupy them as their "primary residence," Dilg said.

Half of the units can be rented furnished, but the monthly cost of the rental furniture cannot exceed the rent of the affordable units.

The SRO projects used a loophole in the Downtown Community Plan that encourages housing construction.

The interim ban was meant to halt an "over-concentration" of market-rate SRO units that could "impact the future population of the City," Santa Monica officials said.

Such small units "tend to cater to small households and would unduly limit housing options for larger households," according to the resolution approved by the Council.

The market rate SROs, staff said, also undermine the Downtown Community Plan's goal of turning the Central Business District into a thriving neighborhood.

The Planning Commission disagreed, refusing to recommend a permanent ban on units they said filled a valuable niche in Santa Monica's housing market ('Planning Commission Rejects Council's Request to Propose Ban on "Micro Units," May 2, 2019).

The settlement agreement also paves the way for WS Communities' projects at 1543 7th Street and 1425 5th Street.


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