The DCP and the lingering impacts of the Great Recession

The question I ended my post with on Saturday was why would Santa Monica enact a Downtown Community Plan (DCP) that makes it easier to build commercial development than housing? Keep in mind that this is taking place during a local, regional and statewide housing crisis, and following a period of 30 years during which something like nine million square feet of commercial development were built in the city, but only a couple of thousand units of housing were built to house the many thousands of new employees.

But first, before getting into that, consider what’s happened in the rest of the city since the enactment of the LUCE in 2010 and the new zoning ordinance in 2015. That history gives a preview of what will happen downtown if the City Council enacts the DCP as currently drafted. The LUCE and the zoning also turn out to favor commercial development, and, sure enough, properties expected to be developed with housing in industrial areas and along the boulevards are instead being developed, or re-used, as one- or two-story commercial projects.

The two biggest examples are in the old industrial area. One is the “Pen Factory” being developed on the Paper Mate site. There the developer Hines had proposed to build 499 apartments to go along with 400,000 square feet of offices and other commercial development. This was too much office, and not enough housing for the big site, but Hines had followed the LUCE standards in developing its plan.

Council Member Kevin McKeown opposed the Hines project and supported the Residocracy referendum that ultimately killed it. He said that Hines would come back and negotiate a better project. McKeown’s intentions were sincere, and I had hoped that he’d be right, given that during the LUCE process he was one of the few who argued against planning staff that the LUCE’s development standards for the Bergamot area called for too much commercial development and not enough housing.

But after the City Council revoked the project’s approval, Hines didn’t renegotiate. They sold the project to new developers who are converting the factory into about 215,000 square feet of offices. Gone are 499 units of housing, along with all other benefits the City negotiated for, including new streets and a sidewalk on Olympic Boulevard. This fiasco would never have happened if the LUCE had not favored office development in the area in the first place—the developer would have had to build housing and would have planned accordingly.

Less well known, but equally a disaster, is what’s happening, or not happening, with the nearly three-acre property on the 2800 block of Colorado known as the Roberts Center. Under a development agreement that site was going to be developed with 231 housing units and only about 60,000 square feet of commercial. The project would have been coordinated with projects on either side of it so that, among other things, Pennsylvania Avenue could be extended through them, breaking up a super block, and helping traffic flow in the area. Now the property owner has abandoned the DA process and is simply rehabbing the existing buildings for new commercial uses. Again, no housing and no community benefits.

Since enactment of the zoning ordinance in 2015, the same thing is happening on the boulevards. Developers are downscaling and building commercial. Properties at Wilshire and Berkeley, and the old Jerry’s Liquor site, that were intended to be sites for apartments will instead become two-story mini-malls, featuring restaurants that will generate more traffic than the apartments would have. The developers needed no special approvals for these projects as they were subject only to administrative approval.

Downtown, where a few projects, under pre-DCP standards, are moving forward after City Council approvals, we can nonetheless see the future in the two-story commercial building recently completed at Fourth and Broadway. On this site there was going to be a mixed-use, primarily residential building, and a plan was approved. But when the developer had to change those plans, to add parking, the project came under new fees charged by the City. The developer opted to build a two-story commercial building, which was also only subject to administrative approval.

IMG_3794

The commercial building at 4th & Broadway built instead of housing.

The City, with the analysis from HR&A Advisors that I discussed in my previous post, has tried to show that housing development under the DCP will be feasible, but the City didn’t ask HR&A to compare the costs, risks, and profitability of residential development against those of commercial. Nor does the DCP take into account how few developers are willing to attempt developing housing in Santa Monica.

Housing development is not for the faint of heart. Two individuals, Craig Jones and Neil Shekhter, are responsible for most of the housing built in downtown Santa Monica over the past 20 years. It’s telling that they both ultimately got into trouble with their lenders. It’s a risky business. Unlike Jones and Shekhter, most developers and (especially) their lenders avoid risks. Given Silicon Beach there’s no risk now and plenty of gain in building one- and two-story retail and/or office buildings, which fly under Tier 1 and only need administrative approvals. It’s these projects that the DCP makes easy—precisely the projects that the rhetoric in the DCP says we don’t want.

So, back to my question, why have Santa Monica’s planners pushed a pro-commercial development plan for downtown? (By the way—I don’t doubt their sincerity. They believe they’ve come up with a “housing plan.” That’s part of what makes this so aggravating.)

It’s not simply a surrender by the planners to the don’t-change-anything crowd, although no one likes being yelled at. It’s true that the anti’s don’t want any more housing built, but housing is their target because housing is what has been primarily built since Santa Monica shut down major office development in the ’90s. (And hotels, but they don’t like them either.)

No, the reasons are deeper and go back to the City’s response to the Great Recession, and the disastrous final years of the LUCE process. Up until the recession hit in 2008 the LUCE was moving towards being a sensible plan that left the neighborhoods alone, continued the slowdown on office development, and concentrated considerable housing development in three commercial zones: downtown, the boulevards, and the old industrial areas near Bergamot Station.

But the recession created a financial crisis for the City. Suddenly I started noticing a big change in the City’s attitude towards the LUCE. The narrative was now all about how Santa Monica was a creative city, and our creative businesses were so important and wonderful, and how good it would be to have more of them. What do you know, but the planners started telling us that new development around Bergamot should be 60 percent commercial, mostly “creative office.”

Why this change? It was obvious, and not really hidden: residents cost the City money for the services they need, while commercial projects pay more taxes to the City than they consume in services. Imagine City Hall as a big cash register. Let L.A. build the housing along the Expo line, and provide the services. Santa Monica will provide the jobs and collect the taxes.

It was around then that the double FAR for housing downtown got thrown out. For five years the planners have been drafting this anti-housing DCP without explaining what was wrong with the old development standards and administrative approval processes that actually got a lot of housing built, creating the downtown they say they admire and want to build upon.

Thanks for reading.

 

How to bust a housing boom and a housing boon: more on the DCP

I’m sure readers are trembling with anticipation after I ended my last post with this cliffhanger: aside from drastically reducing the advantage that residential development in downtown Santa Monica had over commercial development in terms of FAR, how otherwise would the Downtown Community Plan (DCP) discourage housing?

The answer in great part has to do with the higher “community benefits” burdens the DCP places on residential compared to commercial development. This disparity is most impactful with respect to affordable housing. While the whole of our society has failed to provide affordable housing for all income levels, it’s not a problem the whole of our society wants to solve. In particular, people who have housing tend to want future residents to pay for both their own housing and the housing of those who can’t afford market-rate housing.

In Santa Monica many residents want developers to pay for affordable housing out of their profits. They believe these developers, who are riding a boom fueled by low interest rates and high rents (a boom that, based on history, is sure to bust), are making too much money. (No surprise, but many of these same residents voted a few years ago against a small tax on the profits property owners (who already pay low taxes because of Prop. 13) will make when they sell their properties, the values of which have been inflated by the housing shortage.)

“Inclusionary” housing requirements can be a good thing, provided that they are not so onerous that they prevent housing of all income levels to be built. The housing market is fungible, and a shortage of housing for the majority of people who do not qualify for affordable housing inevitably drives up the cost of housing for all. This, in a vicious cycle, increases the number of people who qualify for affordable housing (because rents increase) even if they have full-time jobs.

Purportedly to increase affordable housing development, the City of Santa Monica has conducted “nexus” studies (required by the Supreme Court on constitutional grounds) and feasibility studies, to maximize how much affordable housing the City can make developers, both residential or commercial, either provide or subsidize. The burden is nearly 10 times higher on residential than on commercial development.

Under the DCP, a developer of a Tier 2 commercial building will be required to pay an “an affordable housing commercial linkage fee” equal to 23% above the base fee required under the City’s affordable housing production program. These fees currently range from just below $10 per square foot for retail or creative office to a little more than $11 for regular office. Add 23 percent, and you’re at about $13 per square foot.

As opposed to commercial development, the affordable housing burden placed on market rate housing is not expressed as a per-square-foot fee. Instead, it’s a requirement to build the housing, either onsite or, in limited circumstances, offsite. Depending upon the size of the project, between 15 and 25 percent of the units in a Tier 2 residential project must be affordable. How much does this cost?

The numbers are in an analysis that the City commissioned to show that housing development under the DCP would be financially feasible. The City’s consultants, HR&A Advisors, found that on a site where the height limit was 60 feet, a developer could build, on a typical 15,000 square foot, double-lot site, a project with 45 apartments in 48,571 gross square feet of development. (Under the old zoning I discussed in my last post, such a project would have nearly 60 units — so much for the DCP being a “housing plan.”)

For such a development, assuming the developer could find a suitable site within 500 feet, the developer could satisfy the affordable housing obligation by building 12 affordable units offsite. HR&A analyzed the project on that basis. According to HR&A, these units would cost the developer $5,964,121. Based on the project’s gross square footage of 48,571, that works out to about $122 per square foot of development. (I should note that developers have commissioned an analysis that says the costs are higher than HR&A says, but for these purposes I don’t need to get into that.)

So there it is: $122 vs. $13 per square foot. The affordable housing tax on a square foot of residential will be $109 per square foot more than that on commercial development, representing about 20 percent of the cost of development. To put it in other terms, the cost of affordable housing for a 1,300 square foot three-bedroom unit, the kind that the City says it so wants developers to build for the next generation of Santa Monica families, is $158,600.

What about that half-point of additional FAR, in HR&A’s example an additional 7,500 square feet, that the residential developer would get? Won’t that pay for everything?

Do you want to buy a bridge?

If the developer of HR&A’s prototype provided the affordable housing on-site, in which case the obligation would be for nine affordable units, the 7,500 gross square footage bonus would not even cover the floor area required for the affordable units, let alone be a source of profit. Leading to a question: why is the floor area for onsite affordable housing counted against the FAR limit? If the City wants to get affordable housing built, and wants developers to pay for it, the least it could do is not apply the affordable units against FAR limits (or, for that matter, maximum heights).

Possibly if the developer builds the affordable offsite, as modeled in the HR&A analysis, the profit from the 7,500 bonus square feet would compensate at least somewhat for the cost differential between residential and commercial, but the availability of suitable sites within 500 feet of a given project or, in fact, anywhere downtown, is so limited that it’s not worth running the numbers.

The lopsided burdens on residential development don’t end with affordable housing. The per-square foot parks fees charged on commercial development are magnitudes lower on a square foot basis than the per-unit parks fees charged on residential. Infill housing is well known as the most efficient development model for energy usage (codified as such by the state’s climate change laws), yet the City piles on transportation costs (an onsite shared bike requirement?). Infill multi-unit housing also provides for the most efficient use of water, but now the City is adding a new water conservation requirement and/or fee. (Water is a regional resource, yet the City fetishizes its local ground water, much of which, of course, comes from wells in Los Angeles. If it were serious about reducing water consumption, sooner than make it more difficult to build water-thrifty apartments and condos it would require homeowners to replace their lawns with drought-tolerant landscaping.)

I hope by now it’s evident that the DCP is far from being a “housing plan.” I fear it would bring Santa Monica back to where it was 25 years ago, when the courts found that the City’s policies unlawfully prevented housing from being built. I hope it doesn’t come to that.

This post also will end with a cliffhanger, for my next post: why is the City doing this?

Thanks for reading, and have a good Memorial Day weekend.

Downtown Santa Monica ain’t broke

There are good ideas in the Downtown Community Plan (DCP): ideas about the role of Santa Monica’s downtown, about nurturing community in “our town” with more and better housing and local-serving retail, about more “complete streets” that are more friendly to pedestrians, about more quality architecture and more adaptive reuse, about more travel options. There is a lot of more in the ideas.

But ideas are not planning. The planning in the DCP, mostly in the form of numbers and procedures, runs counter to the ideas. The planning is about less; less of everything, that is, except commercial development.

To understand the impact of the DCP one needs to understand the planning regimen it is replacing, but the DCP doesn’t describe or compare itself to the existing rules. You have to know the history yourself.

Key to that history are plans the City enacted in the 1990s that have been extraordinarily successful at producing the kind of downtown—a walkable neighborhood complementing a vibrant economic center—that the DCP says it wants. The DCP itself acknowledges the role of the ’90s planning; in its historical overview, it says that in the 1990s: “Zoning Code amendments provided floor area ratio (FAR) incentives for residential uses to encourage housing development for a mixed-use Downtown. As a result, the number of Downtown residential units doubled over the next 15 years to approximately 2,800 units.”

But the DCP doesn’t describe what those amendments were or what they did. (This is not the only gap in the narrative. The most important event in downtown’s recent history was the conversion of the Third Street Mall into the Promenade, but the Promenade isn’t even mentioned in the DCP’s discussion of the “historic planning context.” It’s all of a piece with the plan’s general reluctance to acknowledge how urban downtown Santa Monica is.)

So, what happened in the ’90s? The City Council, responding to the success of the Promenade and to a court decision that forced Santa Monica to increase housing development, radically incentivized the building of housing downtown. The council did this by turning the commercial zoning downtown upside down: the new zoning, though still called “commercial,” allowed on a given lot twice as much housing development than whatever commercial development was allowed.

To apply numbers to this, the zoning in the downtown commercial zone (“C3”) generally allowed a 2.0 FAR—meaning that square footage of development (“floor area”) on a parcel could equal up to 2X the amount of the square footage of land). The base FAR along Sixth Street was less (1.5), while near the Promenade (in the “Bayside Commercial District”) it was more: mostly 3.0. The double FAR for housing applied in all the zones. Also in response to the court decision, the council made it easier to build housing by relaxing what had been extreme requirements for on-site affordable housing.

The double FAR worked like this: where a developer of two contiguous lots (15,000 square feet) (a typical configuration) could build 30,000 square feet of commercial development under a 2.0 FAR, a residential developer could build 60,000 square feet. The density bonus, combined with steadily rising rents (a product of the regional housing crisis as well as increasing job growth on the Westside), made building housing downtown a better investment than commercial development. Developers even found it profitable to build, without subsidy, apartments that were deed-restricted to be affordable to moderate-income households.

As the DCP acknowledges, the ’90s zoning was a rousing success, resulting in a new neighborhood of about 5,000 residents. Largely led by housing development downtown, the City as a whole greatly improved its housing production. While between 1990 and 2000 the City had virtually no housing production (a net increase in units of 0.2%), between 2000 and 2010 the City had a 6.4% increase, which was better than the City of Los Angeles (5.7%) or the County (5.3%). (These figures come from the City’s most recent general plan housing element.)

For the most part, the new apartments downtown were built in five, sometimes four or six, story buildings with local serving retail or offices on the ground floor. The impact of these apartments has been entirely positive. As I have often mentioned, my mother and father moved into one of them, on the 1500 block of Sixth Street, when the building opened in 2003. We’ve watched the neighborhood blossom. If you doubt this, spend half an hour walking around the blocks emanating from the corner of Sixth and Broadway, especially in the evening or on a Sunday morning when the neighbors are out and about strolling, or waiting to get into restaurants. Here’s a photo of the Sunday brunch scene outside the Blue Daisy Café, Sixth and Broadway:

Blue Daisy on a Sunday

Sometimes I wonder if opponents of downtown development are just jealous of all the fun people who live there have.

It’s like . . . civilized? (How many times have I heard anti-development folks in Santa Monica ask plaintively, “Why can’t Santa Monica be more like Europe?” or in the next breath ask disdainfully, like you’re some kind of idiot for liking apartments and transit, “What! Do you think we’re in Europe?”)

So you ask, if it ain’t broke, why fix it? Good question. Downtown Santa Monica was doing quite well, thank you, before the City embarked on this five-years-going-on-infinity process to make it better. Sure, the ’90s planning could be improved (someday I’ll get into that), but the DCP moves in the wrong direction.

The biggest problem is with FARs. The DCP has for practical purposes removed the residential advantage that was so fruitful. Instead of doubling the FAR for housing, the DCP gives housing developers minor increases in FAR, while generally increasing allowable FARs overall, making commercial development more competitive.

While the basic FARs in the old downtown C3 and C3-C zones ranged from 1.5 to 2.5 (which would, again, be doubled for residential), the basic FARs for the corresponding DCP areas (the Transit Adjacent (TA) and Neighborhood Village (NV) areas) under Tier 2 (which largely corresponds to the same level of development review) are higher, 3.0 for TA and 2.75 for NV. A residential developer gets only a 0.5 bump (to 3.5 and 3.25 respectively). (By the way, I never heard a convincing argument from planning staff or anyone else for what’s wrong with developing housing downtown at a 4.0 FAR, a level that under the DCP can only be reached in the TA zone, and then only with a development agreement.)

Clearly, compared to residential development with its trivial 0.5 bump, commercial development in the TA and NV districts is going to look much better under the DCP than it did under the 1990s zoning. But that’s not the half of it. To truly understand how the DCP discourages residential development, you need to look at the approvals process and the other burdens placed on housing, which will be the subject of my next post.

Thanks for reading.

What would Arcadia do?

Let me begin my further ruminations and fulminations on the Downtown Community Plan (DCP) with a quibble, namely the failure to include in the DCP’s historical background section mention of Arcadia Bandini de Baker as a founder of Santa Monica. The DCP identifies as founders only Arcadia’s husband, Col. Robert Symington Baker, and Nevada Sen. John Percival Jones, while arguably Arcadia was the most important of the three for Santa Monica’s history. (I don’t mean to offend the dignity of Señora de Baker, but I’ll take the liberty of using her first name, since in her day she was well known by it.)

Arcadia Terrace sign

Santa Monica’s first resort hotel, Arcadia’s namesake, was here.

Arcadia was enormously wealthy. She was rich not only from being a member of a Californio land grant family, but also from what she had inherited from her first husband, Abel Stearns, perhaps in his day the richest man in southern California, and from her own business acumen. A true California, Arcadia never spoke English, at least not in public, conducting all her many business dealings in Spanish.

It’s true that Baker, whom Arcadia married in 1875, had acquired the land that would become Santa Monica before their marriage, and he owned it when, a few months after he and Arcadia married, he and Jones (who brought the railroad to Santa Monica), sold the first lots at auction. Arcadia, however, was right there, involved in designing how the town was subdivided, making sure there was land for schools, churches and parks. Even more significant, in 1877 Baker sold the land to Arcadia and Jones and it was those two who then formed the Santa Monica Land and Water Company. Later, Arcadia collaborated with Collis Huntington when he built the Long Wharf and tried to make Santa Monica the region’s great port.

Arcadia lived out her days in a mansion on Ocean Avenue (near her friend, Georgina Jones) and was a great philanthropist. She and Senator Jones donated the land for Palisades Park, the land for the Westwood veterans home, and land for other public purposes. When she died in 1912 she left a fortune estimated at between eight and fifteen million dollars, the equivalent of hundreds of millions today. In her lifetime and after she was known as the “Godmother of Santa Monica.”

Unfortunately, the DCP is not the only place where the City has recently neglected Arcadia’s legacy. Last month the City installed historical pavers in the sidewalk on Fourth Street north of the downtown Expo station, and they name only Jones and Baker as Santa Monica’s founders.

4th Street historical paver

Etched in concrete: Baker and Jones, but no Arcadia.

Maybe the omission from the DCP of one Latina from Santa Monica’s history is a small thing when the document is, after all, about the future not the past. Overall the DCP’s historical section (pp. 60-65) is a fair retelling of the booms and busts of downtown. The omission of Arcadia, however, strikes me as a melancholic symbol of how cramped our thinking today is about our future.

Santa Monica has always been a dynamic place, always changing, with residents willing to face the future with open and optimistic eyes. While to some extent the DCP itself acknowledges this history, it is, as I wrote previously, a political document, and the politics it responds to are the politics of fear.

Few experienced in their lifetimes more change than Arcadia. She was born on a Mexican rancho in 1827, and died in “L.A.” in 1912. Consider the changes Arcadia experienced and the challenges they must have created, and how she dealt with change and responded to challenges: namely, with foresight, industry, and optimism. (I suspect she was optimistic until the end, since she died without a will, setting off an epic battle over her estate!)

Compare the magnitude of the changes Arcadia confronted to the mere possibility of incremental, even trivial, changes today that cause so much fear and panic. How many times have we heard angry residents declare and demand they have a right not to have their city change from what they bought into 30 years before, when what’s on the table is a 5% increase in our housing stock over 20 years?

Think of how much time and money and angst have gone into the DCP, and before the DCP the LUCE, and we’re not yet done 13 years into the whole combined process. And for what? The DCP will affect only about 20% of the land in downtown, if that, and the political arguments are over the margins. Should the basic height limit be 60 feet, or 84? Should the Tier 2 FAR be 3.25 or 3.5? Should the threshold for development agreements be 60,000 square feet or 100,000? Should Tier 3 developments be allowed beyond a few blocks near the Expo station? Even the arguments over the “large” sites are small potatoes when looked at in the context of all of downtown.

It’s not like one side wants to dredge the harbor and bring back Jones’ and Huntington’s vision of a great port in Santa Monica Bay, and the other side wants to revert to grazing cattle. It’s not like one side wants to bring back Douglas Aircraft and Pacific Ocean Park, and the other side wants to close down the Promenade.

Unfortunately, the DCP reflects our politics by seeking a low common denominator. It’s no accident that Residocracy’s Armen Melkonians says he likes the plan. It’s a plan drafted to appease a minority of Santa Monicans who blindly fear change.

I say “blindly” because the anger is incoherent. As a result, responding to incoherence, the DCP lacks logic. The DCP aims to please people not with a logical vision for the future, but by shaving down reasonable development standards for no reason other than appeasement.

Why do I say the “No” element in Santa Monica politics is incoherent? Consider:

  • They oppose “boxy” apartment buildings, but want limits on height that will guarantee boxy buildings.
  • They oppose developers “slicing and dicing,” but want to kill large-site developments.
  • They oppose development agreements, but want a low threshold for when a developer needs one.
  • They oppose, most of all, traffic, but oppose housing development instead of traffic-generating commercial development, housing development that would reduce commuter traffic, and they oppose limiting parking, which would also reduce traffic.
  • They say they want to save water, but they fight the kind of development (infill housing as opposed to sprawl) that uses less water.
  • Most fundamentally, they oppose the way things are, but they also oppose change.

Thanks for reading.

Downtown Santa Monica: where it doesn’t take a village (with lots of pictures!)

It’s back! The latest (and promised final!) version of Santa Monica’s Downtown Community Plan (DCP), is being dragged through the Planning Commission, with an ultimate destination of the Promised Land, namely approval by the City Council. The DCP is the current installment of Santa Monica’s quasi-permanent, general plan-level, planning process, now approaching the middle of its second decade.

Late last year I wrote three articles about the previous, 2016 version of the DCP, and I’ll probably write at least three about this iteration, too. In some respects the 2016 version has been improved, and some others it’s been made worse, but my overall reaction to the plan has not changed: the plan is more a political document than a planning document.

By “political” I mean that more of the plan’s 290 pages are explaining than are planning. The DCP is the product of staff and consultants who’ve been yelled at a lot, and who are trying to anticipate the path of least political resistance so that they can get enacted something that at least rhetorically they can be proud of.

As a result, much of the plan is not planning but flattery — not only soothing words to make Santa Monicans feel special and fawned upon, but also flattery for the plan itself. Never are Santa Monicans told the truth, which is that much of downtown has been and is a dump, needs new investment, and dammit it could be made a lot better.

Instead, we get a lot of how the DCP will preserve “character and history,” and carefully integrate “the new with the best of the old,” and “carefully nurture Downtown’s character and sense of the past,” not only with “enhanced historic preservation,” but also with “context sensitive infill.” There’s a lot about “sustainability” and “wellbeing.”

We’re constantly being told about downtown’s character, as if it’s the hero or heroine of a romance novel, as if the “scale” of downtown has anything to do with its success. We all know that but for locating new movie theaters downtown and getting a good designer (Boris Dramov) to fix up what was then the Third Street Mall, Downtown Santa Monica would still be the scary ghost town it was in 1981 when, as a member of the Odyssey Theatre’s board, I tried to persuade Third Street property owners to subsidize a theater for the Odyssey to bring some life to the decrepit pit. (Thankfully Denny Zane, whom I first met at the time, ultimately had a more realistic vision.)

When the planners aren’t patting us on the back for being so brilliant because we happen to have a vibrant downtown (I guess we should take credit for the ocean, too), we get reassurances about the plan itself like these:

The community’s expectation for the Downtown area to expand as an energetic, equitable and sustainable urban neighborhood is addressed [by the DCP] through physical land-use planning integrated with circulation policies, and a well-rounded emphasis on community services and amenities. Many of the policies and actions throughout this document aspire to nurture neighborhood and economic prosperity . . . .

Good to know! I’d hate to have a plan that aspires to destroy neighborhood and economic prosperity.

Last year I wrote about how the euphemisms in the plan annoyed me, and my bête noire was calling a crucial core piece of downtown, seven and a half mostly underdeveloped blocks straddling two major transit boulevards, the “Neighborhood Village.”

Here’s a map of the “Neighborhood Village” (NV) (in yellow):

NV District map

You know these blocks: It’s not like there are dirt roads and thatched roofs there, or cows and chickens. This is where the Main Library and the YMCA are. The new hotel at 710 Wilshire, incorporating a large landmarked structure, is under construction. Some of the other large buildings in Downtown are there, too. Here’s a picture of Sixth Street north of Arizona, showing Santa Monica Towers.

IMG_2926

And don’t forget the former telephone company building that now houses the restaurant Cassia.

IMG_3715

Not only that, but much development of mixed-use buildings, with typically four stories of apartments over a ground floor of retail or small offices, has already occurred in the district, like this one.

IMG_3725

The DCP doesn’t note how much better these new developments have made the area from what it was before. For all the charm and character the DCP assures us downtown has, the older buildings on the NV blocks are mostly an incongruous collection of bad modernism and worse kitsch, all punctuated by parking lots and “cars behind bars” curb cuts and black holes. Here are some of my favorites.

IMG_3691

Kitschy office building trying to look like apartments.

IMG_3700

Two really friendly modern buildings, side-by-side.

IMG_3701

Your classic Mission Revival mini-mall. Don’t tell me, someone wants to landmark this.

IMG_3703

Slanted roofs! How village-like. Note the cars-behind-bars-black-hole motif.

IMG_3719

My absolute favorite. Undefinable Olde English kitsch on top of cars-behind-bars black hole. Let’s create an Olde English village in DTSM! We can have wassail parties (whatever wassail is).

IMG_3721

And of course a dental office surrounded by parking. The suburban vista that so warms the hearts of some.

IMG_3685

Yes, there once was a village. Let’s bring back the Long Wharf, too.

Sure, there are a few vestigial wood-framed throwbacks to when, more than a century ago, downtown was at least village-like, but there is no village there now. Instead, on their own, with largely private investment, these blocks have, since the City liberalized the zoning for housing 20 years ago, been making an excellent transition to a mixed, post-sprawl neighborhood of five-story apartments, shops, offices, hotels and public-serving uses. It’s the past 20 years of development, not some false nostalgia, that the DCP should be celebrating and building upon.

IMG_3723

Real people live here.

So one has to ask, why do intelligent planners and consultants call an area like this a village? The answer is political. The more distinctions the planners can make in the amount of development allowed from one area to another, the more they can demonstrate (truthfully in fact) that they’re listening to those residents who are angry about any and all development.

Let me step back for a moment from my criticism to say that I don’t believe that the amount of development the DCP allows is, in most instances, too little for downtown. The problems with getting housing built, that many people are complaining about and about which I’ll write in a future column, have more to do with the approval process than with the amount of development allowed.

But look at the difference between the amount of development (which is expressed by the permitted “floor-area ratio,” or FAR) that the DCP allows in the NV area and the amount allowed in the “Transit Adjacent” (TA) area immediately to the south. Here’s a map of the Transit Adjacent area (in turquoise):

TA District map.png

In TA, for Tier 2 projects with housing, the DCP allows for an FAR of 3.5 while the NV only allows 3.25. (A quarter point of FAR is financially significant, especially considering the costs that the City lays on housing development.) When it comes to larger developments, TA allows for Tier 3 projects with potentially an FAR of 4.0 (which is about what apartment buildings got under the 1990s zoning that allowed a double FAR for housing, so it’s not too much), while the NV doesn’t allow Tier 3 projects at all.

Not only that, the TA area is already more built-out than the NV area, or occupied by uses like the City’s bus yards. So the NV area is a more promising area for continued residential growth.

There is no reason to make a distinction between the NV blocks, which are either between or straddle Santa Monica and Wilshire Boulevards, and the TA blocks between Santa Monica and Colorado. The former are a little further from the Expo station, but both Wilshire and Santa Monica Boulevard are routes for Metro Rapid buses that will, within the lifetime of the DCP, connect with the Purple Line subway, as well as major Big Blue Bus routes to UCLA and elsewhere.

When there is no real reason to make a distinction, look for a political one.

Call it a village.

Thanks for reading.

Victory in the air

“Belts and suspenders.” That’s a phrase that we lawyers use to describe how we write contracts and other documents repeating the same concepts multiple times. (“Repeating” and “multiple times”—you see, belts and suspenders.)

Sometimes the belts and suspenders are verbiage, but belts and suspenders have a role in legal drafting, because sometimes you need them to make sure everyone knows what the parties to a contract have agreed to.

Take the 1984 Agreement between Santa Monica and the Federal Aviation Administration (FAA) that settled litigation over Santa Monica Airport (SMO). The agreement stated clearly that the City could not close SMO until July 1, 2015. That was the “belt,” but the agreement didn’t say explicitly that on July 1, 2015, the City could close the airport (which would have been the “suspenders”). The belt held for 24 years, during which time both the City and the FAA knew (and acted accordingly) that the intent of the agreement was that the City could close SMO July 1, 2015. When, however, in 2008 the FAA decided to change its interpretation of the agreement, the missing suspenders gave the FAA cover to tell Santa Monica that though it couldn’t close SMO before July 1, 2015, it couldn’t do so afterwards either. Until last week, the City and the FAA were scheduled to go to trial in August to determine this issue.

When in 2003 Santa Monica negotiated an increase in a 1994 grant from the FAA to build a blast wall at SMO, the intent of the parties was not to have the 2003 money extend the term of the 1994 agreement. The 2003 amendment to the 1994 agreement had a belt (a clause saying that nothing in the amendment altered any other provisions of the 1994 agreement, which presumably included the term), but not suspenders (an explicit mention that the new money would not extend the term). The FAA later ruled that the new money extended the term of the 1994 agreement, and until last week the City had that ruling on appeal in the Ninth Circuit.

I bring up these examples of the perils of contract drafting because they provide the context for Santa Monica and the FAA’s most recent attempt to settle their differences over SMO: the settlement agreement they entered into last Saturday, which U.S. District Court Judge John F. Walter confirmed yesterday.

That context is twofold: (1), that because of the lack of suspenders in the 1984 and 2003 agreements, instead of having closed the airport in 2015 the City was involved until last week in a multi-front series of court cases, which were expanding whack-a-mole style, and which would not be resolved for years (and possibly not ever successfully); and (2), because in reviewing the new agreement, based on past disappointments one wants to be sure the agreement has both belts and, where needed, suspenders.

Taking up first Context 2, let’s look in the new agreement for the suspenders that were missing in 1984: an express acknowledgement that at the end of the term of the agreement, Santa Monica can close the airport. The new settlement agreement has the belt (it provides that the City’s remaining obligations to SMO continue only until Dec. 31, 2028), but also has this language (in the last paragraph of Section VI):

“[Unless the City agrees otherwise] the Parties agree that the City may, in its sole discretion at any time on or after January 1, 2029, cease to operate the Airport as an airport and may close the Airport to all aeronautical use forever [on 30 days’ notice].”

Ahh! An explicit statement that the City of Santa Monica can close SMO on a date certain! The missing suspenders from the 1984 Agreement! (There are community members who are concerned that a future City Council would not exercise its right to close SMO, but it’s a more plausible risk that a future council would keep the airport open if the current one hadn’t entered into the settlement agreement. A future council burdened with expensive and unending litigation, that the City might well be losing, would be more likely to cave in. Remember the “visioning process” that the council instigated after the City lost the Class C&D litigation with the FAA?)

Western end of soon-to-be shortened SMO runway

—Western end of soon-to-be shortened SMO runway

But wait, there’s more. Perhaps the most important provisions of the new settlement agreement are two provisions that are true suspenders. Why? Because they don’t add anything substantive to the agreement, but are crucial. Both relate to the FAA’s future actions.

The first is in Section I, where the City and the FAA settle all their claims, including claims under the Notice of Investigation and Cease and Desist order that the FAA served on the City last year. But the second paragraph of Section I goes beyond the mutual release. In true suspender fashion the paragraph requires the FAA to send to all the private parties bringing FAA administrative actions against Santa Monica (“Part 16 complaints”) a letter requesting that they withdraw their complaints. Although the FAA can’t require private parties to withdraw Part 16 complaints, the form of the letter attached to the settlement agreement includes language where the FAA tells the complainants that it will now be the terms of the settlement agreement that apply to their case, and that if the City is in compliance with the settlement agreement, the FAA will presume that the City “is meeting its obligations to the FAA.”

But the second provision about the FAA’s future action is even more important. This is Clause VIII.F, “Defense of this Agreement.” In it both parties agree to “vigorously and actively defend” the settlement and its terms “against any challenge by any individual or entity.” This means that if any aviation business contends that the settlement agreement is invalid, and that Santa Monica doesn’t have the right to close the airport (or exercise any of the other powers it has under the agreement), the FAA will take the City’s side.

There’s a lot of angst, even anger, from anti-airport activists about the settlement agreement. Most of it arises understandably from disappointment that the City’s absolute right to close the airport has been delayed from July 1, 2015 to Jan. 1, 2029. I feel the same way: I’ll be 76 then and I’m not happy to wait that long. But the true causes of the wait are the suspenders missing from the 1984 and 2003 agreements, and the resulting litigation context, not this agreement.

Additional fears arise from anxious reading of the agreement itself. For instance, many are worried about an “avigation easement” the City grants to the FAA preventing interference with aeronautical activities, but it’s clear from the agreement (although honestly there could be some suspenders making it doubly clear) that this easement only applies to the 1500 or so feet of the runway that are being decommissioned under the agreement. (From Clause II.C: “such land shall be subject to an avigation easement” (emphasis added).)

As I said in my post earlier in the week, the anti-airport, pro-park groups will need to continue to be active. The settlement agreement doesn’t end anything. Christian Fry of the Santa Monica Airport Association told a KPCC radio audience that he feels hopeful that the settlement agreement will result in the preservation of the airport, because by reducing its size, it will be more acceptable to residents.

So nothing is over. Expect another initiative, Measure D.2. La luta continua.

Yet it’s incomprehensible to me that there are anti-airport people who don’t realize that they are in a drastically improved situation from where they were a week ago. The City has neutralized the FAA! What can aviation businesses do now that they don’t have the big bad FAA backing them up? Where do they go when they can’t, realistically, file Part 16 complaints? (By the way, they’re not happy about it.)

Moreover, the City wasn’t going to be able to close the airport for years, or even reduce air traffic; now it’s as if the City won the Class C&D litigation, the City has a clear path to taking over FBO services, and true, it’s 12 years away, but we have a firm, outside date to close SMO and reason to believe that date can be accelerated.

Finally, Santa Monica faced years of litigation, litigation it might lose, or which a new council might abandon. Aggressive new challengers like JetSuiteX were popping up all over, but now the City has the advantage.

How can the settlement agreement not be a victory?

Thanks for reading.

The SMO settlement, eternal vigilance, and the beginning of the end

Procrastination can pay. For the past two weeks the top item on my to-do list has read, “Blog on SMO—read dox.” “Dox,” meaning the pleadings and briefs that have been piling up in multiple pending Santa Monica Airport (“SMO”) court cases.

“Pending”—scratch that. The settlement announced Saturday between the City of Santa Monica and the Federal Aviation Administration (FAA) resolves all litigation between the City and the FAA. As for litigation with third parties, such as aviation businesses at SMO, the FAA agreed to defend the settlement against any challenges.

Happy now that I didn’t waste time reading those dox.

The settlement has been widely reported, even making the front page of Sunday’s Los Angeles Times. There have been many articles in the local press, such as here (Santa Monica Lookout News) and here (Santa Monica Daily Press).

Most attention has focused on the City’s getting from the FAA an absolute date, Jan. 1, 2029, by which the City can close SMO. Other important points include that the runway will be shortened to 3,500 feet, eliminating most larger (“C and D” class) jets and preventing charter services like JetSuiteX, which was already selling tickets, from operating. The City also strengthened its authority over operations at the airport.

Speaking broadly, most observers outside of Santa Monica expressed astonishment that the City got the FAA to agree that the airport could close, while within Santa Monica a considerable number of anti-airport activists are shocked that the City agreed to operate the airport for 12 more years. In fact, three members of City Council voted against the settlement for precisely that reason.

So—is it a good deal?

Well, as one of those anti-airport activists—one who believed the City’s case against the FAA was good—my initial reaction was shock. I mean, Jan. 1, 2029? It’s also impossible not to recall that this is not the first time the FAA has agreed the City could close SMO. The first time was in 1984, when the FAA agreed the City only had to keep the airport open until July 1, 2015. As of 2000 the FAA was acknowledging that after that date SMO’s future would be a “local land use matter.”

But then in 2008, for reasons I’ll get to, the FAA changed its mind. The feds said the City couldn’t close the airport in 2015; that when the 1984 agreement expired the parties would return to where they were in 1984, fighting again over the same issues. It hurts to say it, but as a result of the SMO saga, I’ve become a little more understanding of the Sagebrush Rebellion.

So is the agreement, as Council Member Kevin McKeown said to the Daily Press, a case of “snatching defeat from the jaws of victory?”

I don’t believe so, and let me explain why.

First, would there have been a victory to snatch defeat from? As I’ve written often, the City had a good case that it had the right to close SMO, but that doesn’t mean it would win. The City was facing a party, the federal government, with unlimited resources, an agency, the FAA, dedicated to keeping airports open, and an incoming administration that favors business. (Not to mention a president whose most potent symbol was his private jet.) It’s significant that the law firms representing the City in its cases against the FAA advised the City to take the settlement. That was advice coming from lawyers who are naturally competitive, who like to win, and whom, incidentally, the City would have paid millions in fees if the cases continued to be litigated.

The great example of allowing enthusiasm to influence litigation was the fiasco of the City’s attempt to ban from SMO class C and D jets, an attempt that resulted in litigation that the City lost catastrophically. It felt good to ban the jets, and everyone was certain that the City was in the right. Not only, however, did the City lose and spend a lot of money doing so, but it was that case that prompted the FAA to change its interpretation of the 1984 Agreement. In years when the City should have been lying low, waiting until 2015, the C and D litigation kicked awake the sleeping dog of the FAA.

The only certainties about litigation are that it costs a lot and that no one knows how it will turn out. There is a reason that city councils discuss litigation in closed session. Decisions about legal tactics are not best made in response to public comment.

In evaluating the settlement, one also has to consider the context, namely the threat from JetSuiteX to begin the equivalent of commercial air service at SMO. If JetSuiteX succeeded, no one knows how that might have changed the political dynamic. Inevitably the aviation industry will try another initiative to keep SMO open; the vote might go differently than it did in 2014 with Measure D if voters not negatively affected by SMO are using and benefiting from it.

One is reminded of the axiom that the price of liberty is eternal vigilance. (Something we are reminded of these days whenever we look at a newspaper.) The fight to close SMO is not over because the fight to keep it open is not over. The aviation industry is just as angry about the settlement as anti-airport activists. They’re fired up and they’re not ready to go.

What will be most important in coming years is that the City use its enhanced powers over the airport—enhanced more because the FAA has decided to wash its hands of SMO than because of any specific right the City obtained under the settlement—to continue to reduce operations at SMO until no one has a financial interest in keeping it open.

For those of us who want to close the airport and build a park there, it’s going to be essential to remain politically involved. Council Member Tony Vazquez, as quoted in the Daily Press, made the valid point in explaining his “No” vote on the settlement that he would “hate to see a future council cut a deal with the FAA to continue to operate this airport any longer than 12 years,” but that’s a political reality settlement or no settlement. Meaning that even if there were no settlement, a future council could decide to cease litigating against the FAA. At least the settlement neutralizes the FAA.

The settlement is not the end of SMO. But, apologies to Winston Churchill, it should be the beginning of the end.

Thanks for reading.