Replacement Housing Fee Plan Gains in Santa Monica
Developers in Santa Monica who have been required to replace rental apartments they demolish may soon be given the option of paying fees that the city would use to build replacement housing.
The City Council voted 4-2 Tuesday night to prepare an ordinance that would establish the fee plan, known as Program 10, which was called for under a larger housing plan adopted in 1983.
Program 10 was developed in response to a decline in the number of rental units in Santa Monica, especially affordable housing, since the mid-1970s. The 942 rental units built from 1976 to 1986, city records show, were only 63% of the number demolished during the same period.
Currently, a developer or landlord who removes rental units from a site by demolishing or converting them to another use is required to include an identical number of units in the new development on the site.
Fee for Each Unit Approved
Under Program 10, developers would be allowed to build anything within applicable zoning laws and would not have to build replacement units. However, they would have to pay a fee to the city for each unit they removed.
The fees for units removed and not replaced would range from $27,000 for an efficiency apartment to $63,000 for a four-bedroom apartment.
City officials have said the fees could be paid in a lump sum or over 10 years, with the money earmarked for moderate- and low-income housing.
Councilwoman Christine Reed argued that the council was being inconsistent in blaming the housing shortage on developers. Because of an emphasis in recent years on lowering density in many areas of the city, she said, the council has also contributed to the rental housing shortage.
“We are downzoning; we are saying we want less housing and less people,” she said. “You have a direct contradiction in policy here.”
Opposed by Developers
Although Reed and Councilman William H. Jennings ultimately voted against the proposal for that and other reasons, it passed by a two-vote margin. (Councilman Herb Katz was absent.)
Opposition at Tuesday’s meeting also came from developers and property owners who insisted that the plan unfairly penalizes them--just as they have maintained in the past that they are unfairly penalized by the requirement to replace rental units.
“It’s a practical prohibition on development in general, not a response to (the need for) affordable rental housing in the city,” said attorney Christopher Harding, who represents developers opposed to the plan.
In addition, “it is a direct violation of property owners’ constitutional rights. . . . They’re going to be sued on this ordinance,” he said.
Harding argued that property owners who have pulled out of the rental market under the Ellis Act--a state law passed in 1985 that allows landlords to go out of business if they can’t turn a fair profit--should be exempt from Program 10. Currently, such property owners are not required to replace the rental units they take off the market.
“The key issue is, once you’re under the Ellis Act, does the city still have jurisdiction over you?” Harding said.
Courts have ruled against Santa Monica in two cases involving the city’s attempt to override the Ellis Act.
When questioned by council members, City Atty. Robert M. Myers admitted that there are “judicial concerns” about Program 10 but argued that it was proposed as part of the overall housing plan before the Ellis Act was passed. He urged the council to adopt the measure.
Harding also complained that the replacement fees under Program 10 would be “extraordinarily high” and were designed simply to discourage people from demolishing existing buildings, not as a legitimate response to the housing shortage.
However, Assistant City Atty. Laurie Lieberman, who helped devise the plan, rejected the idea that the program would penalize developers, saying it would provide them with more options.
“There are lots of developers who would prefer to pay a fee rather than be forced to construct rental units on the property,” she said.
Meanwhile, the city Rent Control Board and various community organizations have argued that the fees are too low and that further subsidies are needed to replace lost units.
According to a city staff report, the fund would provide only partial help in replacing affordable rental units.
Not only developers spoke against the program Tuesday night. Ed Simonian, an engineer who owns a three-unit building on 26th Street, said Program 10 will keep him from converting the three 1920s apartments into residences for himself, his sister and his mother-in-law. The fees for taking the rental units off the market will be prohibitive, he said.
“This is sheer blackmail; it’s ransom money,” Simonian told the council. “Why should I pay for housing for some stranger? You should shoot higher than pick on the small property owners of Santa Monica.”
The Program 10 fee schedule would require Simonian to pay the city $128,000 to convert the property to his own use--money he said he doesn’t have.
The program last came before the City Council in June, 1988, before nearly 10 months of refinement. The next step will be a preliminary environmental report. A formal vote on the ordinance putting Program 10 into effect is probably four to six months away, Lieberman said.
