City Boosts Developers’ Fees

By Ann K. Williams
Staff Writer

October 13 -- By a narrow 4 to 3 vote, the City Council Tuesday night raised the ante on developers -- in some cases upping the affordable housing fees they pay by more than 300 percent.

The new law increases the fees developers pay the City to build affordable housing instead of building the units themselves -- from $6.14 to $22.33 per square foot for newly constructed apartments and from $11.01 to $26.08 for condominiums.

“These fees should have been adjusted sooner rather than later, and we’re already some place past later as far as I can tell,” Council member Kevin McKeown, who cast the tie-breaking vote, argued. “We are clearly failing at providing affordability.”

McKeown noted that in 1990 local voters approved Prop R, which mandates that “30 percent of all new family housing produced in Santa Monica was affordable.”

But opponents of the fee schedule approved by the council worried that the new rules might unfairly penalize developers and drive housing prices up, reducing the City’s pool of affordable housing.

“Why do we want to discourage people from building apartments?” said Council member Bob Holbrook. “We’ll just be driving the prices up on the monthly cost of apartments for the middle class, if there’s any left in Santa Monica.

“I just think it’s punitive to raise these fees to a point where it may prevent the Holbrook children and other people in the city from some day being able to participate in home ownership… and I think it’s tough on the people who just want to rent an affordable middle class apartment.”

Opponents of the ordinance wanted the City to conduct an impact study to see what effect the higher rates will have on builders’ bottom lines, a study they argued has helped avert housing litigation over the past decade.

“We’re disappointed that the Council…is apparently going to miss an opportunity here to forge a fee schedule that should have consensus support both at the council level and in the community,” said Chris Harding, a local land-use attorney who represents the Santa Monica Housing Council.

“The staff and the council have been unable at least thus far to prepare a study addressing the fiscal impacts on new development of the proposed fee schedule,” Harding said.

“The current ordinance requires such a study,” warned Harding, who has sued the City over its housing policies. “If you pass a resolution tonight, that resolution is clearly not consistent with current law.”

However Council member Ken Genser felt that doing the study in and of itself carried “anti-affordable housing” implications.

“In my view this is sort of a philosophical choice, whether we want to get the maximum fees justifiable both economically and legally based on the analysis we’ve had for affordable housing or if we want to do additional study,” Genser said.

“And the only reason I can think of to do additional study would be to argue for lower fees and to make it easier for people to develop more market value projects,” Genser said.

Council member Richard Bloom argued that it is the marketplace and not the fees that are driving up housing costs.

“These fees that we’re talking about here are not going to change the marketplace,” Bloom said. “The marketplace is what is driving the value of property today.

“It’s going to be more and more difficult for us to build affordable units because they’re expensive to build,” Bloom argued. ”It’s our responsibility as a community to do what we can to find a way to build that housing.”

The measure’s opponents challenged McKeown’s claim that the City is failing to build enough affordable housing units.

While the number may have fallen below the mandated 30 percent in recent years, they argued that more than enough affordable housing is being built in the City if the numbers are averaged over a “cycle” of years, instead of annually.

Holbrook referred to “hundreds and hundreds and hundreds” of affordable housing units being built now.

Tuesday’s proposal was substantially the same as one that failed to pass July 26, when Council members Holbrook, Herb Katz and Bobby Shriver checked supporters Genser, Bloom, and Mayor Pam O’Connor.

Genser then switched his vote to the opposition so that he could move that the Council revisit the agenda item and vote on it again when McKeown was present.

McKeown’s vote Tuesday tipped the balance in favor of the controversial ordinance, with all four of the Santa Monicans for Renters’ Rights council members voting for the new law.

The ordinance will return before the council for its second reading on October 25 and takes effect 30 days later.