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Santa Monica Sees Lowest Affordable Housing Production in More Than a Decade

Bob Kronovetrealty
We Love Property Management Headaches!

Santa Monica Convention and Visitors

By Jorge Casuso

May 13, 2019 -- Santa Monica added two affordable housing units during the past fiscal year, making it the fewest affordable multi-family residences built in the city in more than a decade, according to a report released Thursday.

That represents 4 percent of the 46 total units built in the city in Fiscal Year 2017/18, according to the Affordable Housing Progress Report. The last time so few units were built was two in Fiscal Year 2005/06.

Still, over the past 24 years, the City has cumulatively met the requirement set by local voters in 1990 under Proposition R that 30 percent of new multifamily housing be affordable to low- and moderate-income households.

Since the law went into effect, 1,966 of the 5,230 units built in Santa Monica -- or 38 percent -- have been affordable, according to the report.

Of those 1,217 were City funded.

The peak was reached in Fiscal Year 2013/14, when 257 of the 458 multifamily units built in the City were affordable.

Since then, the number has been dropping -- to 19 percent in each of the following fiscal years and 13 percent in Fiscal Year 2016-17 for a total of 77 units built in the three subsequent years.

The sudden shortfall is due to the elimination in 2012 of state redevelopment agencies, a major funding source for low-income housing construction for local governments throughout California, City officials said.

Santa Monica had been relying on about $16 million a year in redevelopment funds to finance affordable housing construction ("Where Santa Monica's RDA Money Goes," February 23, 2012).

"Without City funding, meeting the requirements of Proposition R
has been a challenge," Andy Agle, director of Housing and Economic Development, wrote in his report.

Nearly two-thirds of the affordable housing constructed in the
past 24 years was funded with loans from City housing trust funds, Agle said.

Agle outlined the steps the City Council has taken to help bridge the gap, which include an estimated at $16 million a year in funding from Measure GSH, a half-cent City sales tax approved by Santa Monica voters in 2016.

Half of that amount -- $8 million -- is earmarked for affordable housing, Agle said.

Other sources of funding for affordable housing include $1.2 million a year in property tax revenue that previously went to the redevelopment agency, the repayment of loans that were made to the agency and proceeds from City land sales.

"The Council’s actions are expected to temporarily replace the funding that was lost when the Redevelopment Agency was dissolved," Agle said.

Two new developments approved during the past fiscal year will add 47 affordable units using housing trust fund loans, Agle said.

Changes to the Zoning Ordinance and the Downtown Community Plan (DCP) the Council approved two years ago also are expected to produce a burst of affordable housing ("Development Plan for Downtown Santa Monica Spurring Housing, Report Says," April 22, 2019).

A total of 1,762 units have been proposed under the DCP, which increased the requirements for affordable housing to the highest in the state ("Santa Monica Council Sets Highest Affordable Housing Requirement in State for Downtown," July 27, 2017).

Over the past 24 years, only twice have fewer affordable units been built in Santa Monica than in the past fiscal year -- in Fiscal Year 1995-96 and Fiscal Year 2002-03, according to the data provided in the report.

Last fiscal year, six developments totaling 46 residences were completed in the city.

Two of the developments each provided two affordable housing units onsite, while the other four paid a total of $1,213,122 in affordable housing fees "rather than providing affordable residences onsite or offsite," Agle said.

A monitoring of households occupying affordable housing "found a 99 percent rate of compliance with the affordability requirements," the report said.

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