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Harding, Larmore
Kutcher & Kozal, LLP

By Niki Cervantes
Staff Writer

February 7, 2017 -- The construction of new apartments in Santa Monica earmarked for lower-income earners is dropping again in 2017, a trend that could continue over the next few years, according a new City report.

The City finished the 2015-2016 fiscal year with 19 percent of all new multi-family housing units set aside for very low income to moderate-income earners, or 34 units of a total of 175 units.

But that percentage -- down from past years -- is already dropping.

Only 12 percent of all new multi-family residential units -- or 15 of them-- are being set aside as affordable by developers with projects now in construction, the report said.

In all, 126 housing units are currently being built.

"Pipeline projections indicate that future production may also fall short," the January 4 report by Andy Agle, the director of housing and urban development, said.

Santa Monica voters approved a measure in 1990 that requires 30 percent of all multifamily housing completed in each fiscal year be affordable to, and occupied by, low- and moderate-income earners.

The law also mandates that at least one-half of that housing be reserved solely for low-income households.

The City has often failed to meet the mandates of Proposition R, which includes no penalties for violations ("Santa Monica Again Fails to Meet Affordable Housing Mandate," October 27, 2016).

But the struggle to build affordable housing in Santa Monica and other localities has been particularly notable since the state's 2012 dissolution of redevelopment agencies -- their main source of funding ("Santa Monica Will Pay $57 Million to End Battle with State Over Redevelopment Agency Funds," October 25, 2013).

Santa Monica is now filling half of the funding gap using a variety of sources in its annual budget. The balance will come from Measure GSH and GS, approved by voters this November.

The two measures increased the sales tax by a half cent and directed the estimated resulting revenue of $16 million annually be divided evenly between affordable housing and public schools.

"Without City funding, meeting the requirements of Proposition R has been a challenge, as almost two-thirds of the affordable housing constructed in the past 22 years was funded with loans from the City’s Redevelopment Housing Trust Fund," Agle said.

His report said that the City issued 680 planning approvals in the last fiscal year, of which 176 -- or 26 percent-- were set aside as affordable.

The 175 housing units completed in the last fiscal year (which ended June 30) were in seven projects.

Three developments provided 34 affordable housing units on site, although all but two were in a development subsidized by City housing trust funds, Agle said

Developers from three others paid a total of $481,232 in affordable housing fees rather than providing affordable residences on site or off site.

Seven of the 13 developments now under construction have opted to pay the in-lieu fee, representing about $1.9 million of anticipated future funding for affordable housing, he said.

Affordable housing is earmarked for those who earn very low to low incomes, or from $48,650 annually for a household of one to $69,450 annually for family of four.

The maximum rent for such units ranges from $680 for a studio to $972 for a three-bedroom apartment.

Affordable housing also includes "moderate" income earners, a category which ranges from $54,450 annually for one person to $77,750 for a family of four, the report said.

Rents in those units range from $1,247 for a studio apartment to $1,782 for three bedrooms.

Seven of the affordable units now under construction are for the low-income tenants and eight are for moderate-income earners, the report said.