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This lawsuit launches a far reaching and at the same time, fundamental attack against the rent control politics of the SMRR dominated City Council. The history of SMRR’s housing policy over the last 30 years has been one of shame and deception. Under the guise of attempting to provide newly constructed low income housing, the SMRR City Council has attempted to reduce or stop the construction of market rate new housing in Santa Monica, so as to protect existing tenants living in rent controlled buildings from being Ellised from those buildings. Thus the City has purposefully attempted to stop the construction of needed new housing units, so that their political cronies and supporters can maintain their occupancy of old and decaying rent controlled units. There is an ongoing and every increasing tension between owners who wish to build new needed housing, and SMRR’s City Council who wishes to pass ever restrictive disguised moratoriums on new construction. This tension has now come to a head with the City Council’s newly enacted July 13, 2006 housing ordinance which mandates owners to construct deed restricted housing units on the same site as the proposed new project.
A brief history of the evolution of the City’s housing laws will help us understand the purpose of the ACTION lawsuit. In the past (over the last 27 or so years), the SMRR City Council has continued to pass ever more restrictive laws, which reduce the number of units and the size of those units, which an owner can build on his/her property. The SMRR City Council has been attempting to discourage (economically and practically) owners from tearing down old units and building new units. Thus prior to rent control (April 10, 1979) an owner could build 8 units on a typical 7,500 sq. foot property. The City has not only steadily reduced the number of units one can build on a lot, it has also reduced the size (sometimes called the bulk) of the building that an owner can build. As of today, an owner can only build 4 units on a typical 7,500 sq. foot lot (i.e. 50 feet x 150 feet). But the City was not satisfied with that drastic density reduction. Based on the July 13, 2006 enacted law, the City is now requiring an owner to build at least one low income unit in the same building as the proposed 4 units. The SMRR City Council has always taken the position that the obligation to construct low income units belongs NOT to the entire population of the City (i.e., owners and renters) but instead rests SOLELY on the owner who wishes to build new housing. Furthermore, the City has been charging owners an ever increasing tax on their new construction to pay for the construction of low income units in the City. This tax has been called an “in lieu” fee. The reason for that name is that in the past (pre July 13, 2006) a owner could pay this tax instead of actually having to build low income units on the property along with the new construc¬tion. (Within a matter of a few years, the City has raised its in lieu fee from $11.00 a foot of newly constructed building, to $28.00 a foot). However, because of the scarce housing shortages in Santa Monica (brought about primarily by the Rent Control Law and the city’s restrictive zoning laws– reducing densities) owners were still demolishing (Ellising) old buildings and constructing new housing. The more restrictive the City Council became, the higher the sale prices of the finished housing became. It was a never-ending battle, and the City Council was losing. The City then decided to change its tactics. Instead of allowing the owner to pay an “in lieu” fee– no matter how expensive– it would now require the owner to actually build low income housing units on the same property as the owner was building the newly constructed housing units. Thus the July 13, 2006 law, requires owners to provide 20% of the newly constructed market rate units as low income units. The owner cannot pay the in lieu fee if the owner intends to build more than 3 (three) units. Thus if the owner wishes to pay the in lieu fee instead of building low income units, s/he can only build THREE UNITS. The city has cleverly down zoned the density to 3 units per 7,500 sq. foot lot. However, if the owner intends to build the 4 units which zoning allows, then s/he must build a 5th unit which will be low income. The problem with this law (among many other things) is that a owner cannot financially afford to build one low income condominium unit if s/he only builds 4 market rate units. The City’s own financial expert has stated in writing to the City Council that the owner must build at least 6 market rate units, to be able to afford to build 1 deed restricted income unit. The City Council has brushed off their consultant’s economic study, and responded by saying that the City will allow an owner a density bonus (i.e. an increase in the number of market rate units an owner can build on a lot) if s/he builds this required one low income unit. The City states that the owner can build 6 market rate units under this density bonus. However what the City failed to study or even address at their hearings (even though it was brought to their attention in writing by members of ACTION) was that an owner could not physically fit 7 units onto a 50 x 150 foot lot, because of the current parking requirements (i.e. two car spaces for each unit, and two disability spaces). In addition, since the bulk of the building has been so drastically reduced, 7 units inside the small box space allowed by City laws, would make the units small, chopped up, and unsaleable. The sum and substance is that the City’s proposal stops all new construction of any building over 3 units per lot. There are many other tricks that the City Council has adopted to increase the burdens on new construction as well. If this law is allowed to remain, construction in the City will come to a halt, except for a few 3 unit condominium projects here and there. The SMRR City Council will have realized its dream of stopping new construction, and ending Ellising of existing tenants. The housing needs of our City will be sacrificed for the selfish desires of tenants who do not want to pay market rate rents.
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