Rent-Control Preservation Law OKd by City Council : Housing: Apartment owners must include on-site affordable units if they want to redevelop their property. The city is warned that it will squelch construction.
The Santa Monica City Council this week passed a law aimed at preserving the rent-control housing stock by requiring apartment owners to include on-site affordable units if they want to redevelop their property.
The new regulations are the long-awaited implementation of Proposition R, a measure passed by voters in November, 1990, providing that at least 30% of all new multifamily housing be affordable to people of low and moderate income.
Proposition R did not specify whether the units had to be at the same location as the higher-priced housing, or whether developers could avoid doing so by paying a fee to the city that would be used to develop housing at another site.
But the council on Tuesday adopted stringent on-site requirements, despite warnings from developers that their action would squelch all new construction of multifamily units--including affordable units--because building them would be economically unfeasible.
Developer John Given, speaking on behalf of the Santa Monica Housing Roundtable, a developers group that has spent a year preparing a plan for implementing Proposition R, said the city’s analysis is “terribly flawed.” by using construction costs well below market rates to justify the fairness of its actions.
“Private development will stop,” Given said, if the regulations are implemented. “The loss of affordable housing is not addressed by being punitive to new construction.”
But Councilman Dennis Zane said new affordable housing is only part of the picture in Santa Monica.
“I am not only concerned about the new affordable housing but the net affordable housing,” which includes about 30,000 rent controlled apartments, whose occupants keep the renters’ rights council majority in office.
In voting for the ordinance, Councilman Kelly Olsen said he sought to preserve the city’s economic diversity and to keep it from becoming “Beverly Hills by the Sea” filled with luxury condos affordable only to the rich.
Under the newly enacted council guidelines, for example, a property owner who wants to replace an old four-unit apartment building with a new condominium or apartment complex containing the same number of units would be required to make one new unit available for rent or sale to a low-income person or family. An additional fee of 20% of the cost of an affordable unit must be paid to the city to be used for more affordable housing.
A seven-unit new building will have to contain one low-income and one moderate-income unit, plus a fee equal to 10% of the cost of an additional affordable unit.
The city would control who got the units, with city employees and their relatives excluded from consideration.
To qualify for a low-income unit, a tenant’s income cannot exceed 60% of the median income for Los Angeles County. For a family of four, that figure is $25,200 a year. A low-income, two-bedroom apartment would rent to such a family for $599 a month.
To qualify for a moderate-income unit, a tenant’s income cannot exceed the county median, which for a family of four is $42,000. A new two-bedroom unit earmarked for moderate income tenants would rent for $998 a month under city guidelines.
Zane said the new regulations will apply to properties that have already been removed from the housing market under the state Ellis Act, a law that sets forth the conditions under which landlords may evict tenants and go out of the rental business. The new rules will apply because they are based on the last use of the building, Zane said.
Critics of the council plan argue that its purpose is to circumvent the Ellis Act, the one legal tool property owners have acquired over the years to combat the city’s tough rent control law.
About 1,000 rent-controlled units have been taken off the market under the Ellis law, although the pace of Ellis evictions has slackened considerably in the last year because the recession has dampened redevelopment pressure. Renters’ rights activists have expressed fear, however, that over time the Ellis law will deplete the city’s stock of affordable housing as landlords throw in the towel and sell their property for redevelopment.
In opposing the regulations, Councilman Robert Holbrook criticized them as “a perversion of Prop. R.” He and Councilman Herb Katz opposed the measure, which passed on a 4-2 vote.
Development attorney Chris Harding also criticized the measure, saying the council was trying an end run around the Ellis Act. The council’s plan for implementing Proposition R will prevent development altogether, he said, adding that this is probably the council’s aim.
“They’re not interested in new housing,” Harding said.
