Lowering Thresholds Could Chill Housing Construction, Developers Warn

By Jorge Casuso and Teresa Rochester

A measure that would require Planning Commission approval for most developments in commercial zones could chill the construction of housing in the very areas where the city is encouraging new residences, developers warned the council Tuesday night.

The council, which was two members short, put off voting on the proposed emergency ordinance, which would lower from 30,000 to 7,500 square feet the size of projects that require discretionary, rather than administrative, review.

The council will use the extra time to analyze options that would continue to encourage the construction of new housing in commercial and industrial zones.

"It couldn't have turned out better," Councilman Michael Feinstein said after the meeting. "Many of the points that were made were valid. The many interesting points that were brought up, including those on housing, can be looked at by staff."

Housing providers argued that the proposed ordinance would eliminate the key advantage the City provides when they compete with commercial developers -- an expedited permitting process that can save hundreds of thousands of dollars and months of studies and hearings. As a way of encouraging housing in commercial districts, the council enacted a policy in 1996 that allows developers to discount housing floor area by 50 percent, allowing for larger projects that still fall below the threshold.

Lowering the threshold would make it difficult, if not impossible, for housing providers to compete for the limited land available for development.

"Because commercial (development) is more profitable, I'd lose the biggest benefit, which is the faster process," said Howard Jacobs, who is constructing several large housing developments in commercial zones. "Pass an ordinance, but exempt housing."

"The measure goes beyond the intent," land use attorney Chris Harding, who spoke on behalf of the Santa Monica Housing Council, said after the meeting. "This proposal would inadvertently impact housing. We do not believe that was the intent of the council, but the clear impact would be very adverse in those districts affected by the measure."

Harding said he was "encouraged" by the council's request that City staff study the potential impacts.

"We were encouraged by the council's response and hope the council will include an exemption for housing," Harding said.

The proposed measure was the council's response to neighbors who complained that they have no say in new developments that are increasingly dotting the city.

"Our neighborhood has been treated as a commercial zone without any public process or notification," said Ellen Brennan, chair of South Beach Neighbors, which represents the area just south of the pier. "Subsequently, there are commercial developments covering a disproportionate portion of our neighborhood."

Brennan, as well as other neighborhood representatives, urged the council to consider dropping the dividing line between administrative review and public review to 5,000 square feet instead of the 7,500 square feet proposed by City staff.

"The one thing this council has proven over the years is that it tries to be more neighborhood friendly," said Bob Seldon. "It [the ordinance] will guarantee a better project, at least from a neighborhood view."

Opponents of the ordinance have argued that lowering the threshold will backfire because developers will have no incentive to build smaller buildings if they take as long to process as a large development.

They also contend the proposed ordinance would "bog down" a Planning Department that already is backed up with a heavy workload and force the City Council to micro-manage projects appealed after a Planning Commission hearing.

Proponents of the measure contend that lowering the threshold is a necessary measure to curb future development in an already overdeveloped city.

Council directed staff to draft an emergency as well as a non-emergency ordinance. The measure could come back to council as early as the next meeting.