Whack-a-mole housing policy

When in the summer of 2017 the Santa Monica City Council, after six years of work, adopted the Downtown Community Plan (DCP), the then architecture critic for the L.A. Times, Christopher Hawthorne, wrote an article about it. Hawthorne, after a conversation with City Manager Rick Cole, expressed guarded optimism that the plan, which Cole and the council had touted as a “housing” plan, would indeed lead to the building of more housing, for all income levels, in downtown Santa Monica.

According to Hawthorne, Cole characterized the DCP as being the result of a “grand bargain” between anti-growth and pro-housing factions in Santa Monica. Because the DCP included streamlined approvals for housing and height and density bonuses for housing development, and eliminated parking minimums, Cole was confident, based on the City’s financial analysis, that developers would build housing despite increased requirements for including affordable housing.

Hawthorne was respectful of Cole’s optimism, but the critic injected a note of skepticism in his article by including a comment from Santa Monica housing activist Jason Islas to the effect that the DCP’s high percentage requirements for affordable housing (maxing out at 30% for the largest projects “on-site,” or 35% “off-site”) would mean that no housing would be built. Islas’ comment on the affordability question was that “30% of zero is zero.”

Now nearly two years on, and according to a “Downtown Community Plan Monitoring Report” the City issued March 22, Islas’ predictions have proven more accurate that City Manager Cole’s. Since adoption of the DCP, six projects have been proposed under the DCP standards, totaling 335 units, but only 19—only 6%!—are affordable. How can that be, you say? Isn’t 20% the minimum under the DCP?

No. Twenty percent is the minimum for projects over 39 feet tall (“Tier 2 projects.”) Five of the six DCP projects are Tier 1. Under the City’s rosy financial analysis, this wasn’t supposed to happen. The City’s financial consultants, and a majority of City Council members, predicted developers would build market rate units in Santa Monica even if they had to provide higher percentages of affordable housing than were required anywhere else in the state.

Developers are proposing to build market-rate housing (but not much) under DCP standards, but not with nearly the affordable housing City Council wanted to come with it.

As I said, five of the six DCP projects are Tier 1, which means they only have a five percent affordable requirement. One project is Tier 2, but as the March 22 report points out, the developer of that project opted to build to 50 feet even though the zoning would have allowed a height of 60 feet (meaning an additional floor of apartments). By adding that floor, the developer would have increased the affordable obligation from 20% to 25%, presumably wiping out any profit for the additional density.

It’s not only that developers are not building the denser and more affordable housing that the DCP was supposed to encourage, but the housing being proposed contravenes other goals of the DCP. The five Tier 1 DCP projects are entirely comprised of small (less than 375 square feet) studio units. (These units are referred to in developer applications and staff reports as “single room occupancy” (SRO) units, but don’t confuse them with what “SRO” usually refers to, namely “congregant” housing, with shared bathrooms, kitchens and other facilities often built for residents who need supportive services. The proposed units are small versions of what are variously referred to in real estate listings as “studios,” “singles” or “bachelor” units, with their own bathrooms and cooking facilities.)

The DCP is bizarre, but I suppose typical for the product of political “grand bargains,” in that the its standards penalize the building of what the City professes to want—a mix of unit types and affordability to create a diverse neighborhood downtown—while making it easier to build what the City says it doesn’t want, namely smaller projects with 95% market rate units and only one type of unit.

These Tier 1 projects, some of which have replaced previously-proposed Tier 2 projects, have caused the typical hysteria that is the City’s response to events that are simultaneously unexpected and predictable. Tomorrow night City Council will consider an ordinance to ban the building of projects with only small studio units after having adopted an emergency ordinance to do this in March. (Which, no surprise, caused the developer of the Tier 1 all-studio projects to sue the City, since the developer understandably felt that he had played by the rules.)

The ordinance won’t solve the problem, however, since it won’t stop the building of studios that are larger than 375 square feet. Meaning that developers could still build Tier 1, all studio projects, but with fewer, somewhat larger units. These would still be profitable: according to statistics I read in a recent Lookout article, 435-square-foot studios currently rent for about $2,500 (or more) in Santa Monica. That’s more than $5 per square foot. (Meaning that whatever residents who live comfortably in big houses or securely in rent-controlled apartments say, there’s a market for small apartments. Not only young tech workers, but think of the many international students at SMC.)

What developer needs to build above 39 feet if there is that kind of money to be made, especially if approvals are not discretionary and the affordable housing requirement is minimal? Figure it this way: if you remove all the unprofitable affordable housing from a Tier 2 project, you’re probably left with the same amount of profitable square footage in a Tier 1 project. As Islas said, 30% of zero is zero.

The ordinance being proposed is a typical example of a whack-a-mole planning. You don’t like all-studio projects? Ban them: whack! But the problem is not that developers have found a work-around to the City’s Byzantine and onerous requirements under the DCP, but the DCP itself, which the City based on wishful thinking and a financial analysis that developers warned the City was flawed.

The fact that the DCP turns out not to be the housing plan the City touted is borne out by a lot of good news about housing in Santa Monica. Anyone who gets around town these days can see that a lot of apartments are under construction.

New apartments under construction on Lincoln Boulevard

According to a March 26 staff report on the City’s Affordable Housing Production Program, in the four years ending 2018 1001 units were constructed, of which 40% (402) are affordable. The 1001 is consistent with the LUCE’s modest goal that 250 units would be built per year, a one-half percentage point annual increase over the city’s approximately 50,000 housing units. Even more encouraging, 759 units were under construction, and 1,384 units had received planning approval. (Keep in mind that these figures are for the entire city, while the DCP only affects downtown.)

These are the kind of numbers that the City could try to use to justify an exemption to the “dreaded” SB50 making its way through the legislature. However, none of this housing is a product of the DCP.

It’s time to revisit the DCP. But who wants to spend six years doing that?

Thanks for reading.

Six years of process, and then . . . boom!

At the City Council meeting last Tuesday night on Santa Monica’s Downtown Community Plan (DCP) the ironies abounded. As planning staff has told us many times, the DCP is the result of six years’ of process involving countless public meetings, along with studies and other work by consultants. The Monday night before Tuesday’s meeting itself featured about 150 community members testifying on the plan. Yet to make the biggest decisions about the plan, on the most difficult, contentious and significant issues, the City Council had only time for frantic deliberations as Mayor Ted Winterer pushed them to take “straw votes” as if they were on a life-and-death deadline.

So much for deliberative representative democracy.

Not only that, but the debate over the very most contentious and significant issue—the amount of affordable housing to require for-profit developers to build—was based on a new financial analysis that had been assembled in admitted haste over the previous weekend in response to a recommendation from the Housing Commission to expand the required amount of affordable housing to 30% in some circumstances, a percentage more than what any other jurisdiction in California requires. This analysis, by the City’s regular consultant, Paul Silvern, had not been released to the public for comment or even given to the councilmembers prior to the meeting. The first they heard of it was Silvern’s oral presentation Tuesday night.

Based on this analysis the councilmembers voted to require an on-site affordable housing requirement of more than 20% on any market-rate apartment building greater than 50 feet in height, reaching a 30% affordable requirement at 70 feet in height. I’d say that these numbers are unprecedented, but in fact they would bring Santa Monica back to where it was in the early 1990s, when it had a 30% requirement. For those without long memories, the results of that requirement were (i) no housing got built, and (ii) housing developers sued the City and won, and the City had to revise its zoning so that housing could be built.

While anti-change forces in the City have been chipping away at that 1990s pro-housing zoning for 20 years, it’s the DCP that is finally replacing it entirely. Ironic for a plan that is touted as a “housing plan.”

But I want to be fair to Paul Silvern: I said his analysis was what the council used to justify going to 30%, but he himself, as passionately as I’ve ever heard him speak, advised the council not to go there. He did not believe his analysis of theoretical and marginal financial feasibility at the 30% level provided justification for requiring it.

And I also don’t want to be completely negative. The council did some good things at the meeting, building on good work from the Planning Commission and staff.

For one, the council voted to remove parking minimums for developments downtown; this was in fact a “forward to the past” move, since the City back in the 1960s removed parking minimums for the core area around Third Street, but 50 years later it’s still considered a brave and radical move.

For two, the council approved expanding significantly (though not as far as would have been justified) the scope of administrative review over housing development. It was telling, however, that some councilmembers wanted to get back every bit of advantage this gave housing developers by assessing new burdens on the construction of market-rate housing. This is where the impetus to increase the on-site affordable housing obligation to 30% came from.

The council also approved reasonable development standards for the three large hotel sites downtown, gave more incentives to 100% affordable housing developments, and increased allowable development in the “Neighborhood Village” area south of Wilshire (although this last improvement will probably be moot considering the increased affordable housing cost put on developments above 50 feet in height).

But getting back to housing, some readers might be wondering why I, a proponent of building affordable housing, object to piling affordable housing requirements on market-rate housing. The reason is that we need market-rate housing just as much as we need affordable, because if middle-class households can’t find new housing that they can afford, particularly in historically middle-class areas like the Westside, then they will cannibalize existing housing occupied by low-income people. This is what is happening all over California, as reported in the papers (including now the New York Times) nearly every day. Housing and neighborhood activists decry gentrification, but discouraging investment in housing is what drives increases in housing costs.

For so long as we have more people who don’t qualify for affordable housing than who do, which is, by the way, a good thing, then, by definition, or simple math, we need more housing for people who don’t qualify. We need that housing to be built, and if we unreasonably burden developers who build it, or owners of the property it could be built on, we won’t get it.

It’s not like there shouldn’t be inclusionary housing. We also have a value that we want housing for different incomes to be mixed together or in proximity. And in a rising housing market, there are some developer profits that can be tapped for this purpose, if developers are given sufficient entitlements to build and there is certainty in the process. But we have to recognize that more investment will be attracted to housing development the lesser the burdens on it.

Ultimately the money for building necessary affordable housing must come from the whole of society.

Thanks for reading.

The DCP on its final stage

After, in words taken from the staff report, “nearly six years in development” (not too much longer than it takes to get approval to build an apartment building!), Santa Monica’s Downtown Community Plan (DCP) is finally approaching finality: the Santa Monica City Council will hear public testimony at a special meeting Monday night, debate the DCP Tuesday night, and vote on it in two weeks.

I wrote five blogs on the DCP in May when the Planning Commission was reviewing it, and I will try to focus my reporting now on the changes in the prior draft the planning and other commissions, and staff, now recommend, and what they are leaving to the council to decide.

There’s bad news and good news.

To start with a little bit of bad news, it appears that not even one board or commission recommended including in the DCP’s history section mention of Arcadia Bandini de Baker as one of the founders of Santa Monica. Maybe the Commission on the Status of Women should review the DCP, too.

But enough with identity politics. I’ll get right into some good news. The DCP is still fundamentally flawed, but it will be less fundamentally flawed if the council follows the Planning Commission’s recommendations, and even less so if the council builds on them in ways that staff is now suggesting.

To recap what I wrote in May, the DCP represents a retreat from extremely successful policies the City adopted in the 1990s, policies that gave residential development big financial advantages over commercial development. Inexplicably, for a plan that its backers call a “housing plan,” the DCP drastically reduces the edge residential development has over commercial in terms of allowed square footage (“FAR”), while increasing even more drastically the relative cost of residential development over commercial development. While the City has financial modeling that purports to show that residential development under the DCP will be feasible, there’s no analysis that shows that developers will in fact build residential development, when it will be much simpler and less costly to build suburban-style commercial projects like low-rise offices or retail.

The Planning Commission made an effort to address this issue. The commissioners did not make recommendations relating to the substantive issues of the relative costs and benefits of developing housing versus commercial, other than some incentives for 100% affordable projects, but they did recommend simplifying the approval process for all housing developments up to certain size limits. The commission recommended that any housing project on up to two standard lots (meaning up to 15,000 square feet of land) be subject only to administrative approval. Similarly, in the “Transit Adjacent” zone where Tier 3 projects are still allowed, they recommended increasing the threshold for requiring a development agreement from 60,000 to 90,000 square feet.

These recommendations by the Planning Commission are significant, not the least because they have encouraged planning staff to do some planning of their own. On pages 49 and 50 of the staff report, where staff gives its recommendations to the City Council, staff recommends that the council consider additional incentives for housing development.

It’s taken “nearly six years,” but it was heartwarming to see in the staff report recognition that making it administratively easier to build housing would be “similar to the procedural incentives that were formerly in place for Downtown in the 1990s that resulted in the production of approximately 2,500 housing units.” (Let me add, because it’s important, that if these downtown properties had been developed for commercial uses, which, given Silicon Beach would likely have happened, this would have resulted in more than one million square feet of commercial, mainly office, development. Development that would have generated orders of magnitude more traffic, particularly rush hour traffic, than the apartments that were built at the double-FAR granted to residential development.)

I’d be shouting hallelujah to the rooftops, but for the fact that the DCP still contains policies that dramatically favor commercial development over housing, policies that the Housing Commission, believe it or not, wants to make even worse, by piling more affordable housing requirements onto market-rate housing.

The DCP will never be as favorable to housing as the 1990s zoning (which, by way, produced a lot of affordable housing). The staff report makes the unfounded claim that the DCP is different, and presumably better, than the 1990s zoning because the DCP has development standards that will make projects “complement Downtown’s existing character” (for my skepticism about that, see this blog) as well as make downtown vibrant, walkable and welcoming to a diverse population. The problem with this rationale is that the 1990s rules have been proven to produce these results—it’s only wishful speculation that the DCP will do the same.

IMG_3703

Part of Downtown’s existing character that the DCP would have complemented.

The Planning Commission also did good work adding incentives for 100% affordable projects, but only in some zones downtown. The incentives should apply throughout downtown. Even more important, incentives should extend to market-rate projects, too. The plan could encourage housing for all income levels and in particular onsite inclusionary housing by the simple measure of not counting the square footage of onsite affordable units against FAR limitations. If developers are saving government from having to provide the public good of affordable housing, why not at least give them free air to build it in? (You could still have a maximum cap on FAR.)

Regarding the zones downtown, the DCP has too many of them. Downtown is not big and there are not as many differences within downtown as the DCP would have you believe. In the six-minute walk I take most days of the week from my office to my dad’s apartment for lunch, I pass retail, offices and apartments, all mixed up. This is good. The DCP overcomplicates what downtown Santa Monica is all about. It’s full of distinctions without differences. It micromanages.

Hopefully the City Council will take into account the recommendations from Downtown Santa Monica, Inc. (DTSM), the City-created entity that manages downtown. Who knows downtown better than DTSM? No one, and DTSM’s recommendations, on pages 31-32 of the staff report, include equalizing (more or less) the development standards among the “Neighborhood Village” (NV) and “Bayside Conservation” (BC) districts and the Transit Adjacent (TA) district. In the staff report the staff opens up the possibility of increasing height and FAR standards, presumably in the NV and BC, but except for a few pros and cons doesn’t provide the council with much in the way of analysis.

DTSM also knows the retail situation, and knows that it makes sense to allow small offices on the ground floors of mid-block apartment buildings. Other than on the boulevards, I don’t see any reason to favor retail over offices in ground floors. DTSM also makes a small but important point, which is that it makes sense to allow retailers to easily redesign frontages.

Thanks for reading.

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.