Where to build housing and where not

I ended my blog last week about Santa Monica’s housing policies with some good news, namely that a lot of housing was either under construction in the city or had approvals to proceed to construction. As of the end of March, 759 units were under construction and another 1,384 had received planning approvals. Most of this housing received approval under laws that are no longer in force, but it was at least good to see that the one good thing about the high rents that result from the region’s housing crisis is that they do attract investment to build apartments that will house people for 50 or 60 years.

But then depressing news came to light when the City released its annual report on housing production. The numbers showed why the state is trying to take control of land use policy. The City reported that in fiscal year 2017-18 only 46 multi-family housing units (apartments or condos) were built in Santa Monica, of which only two were affordable.

This low level of construction continued and exacerbated a trend from fiscal year 2014-15, when housing production fell drastically. While in the 2013 and 2014 fiscal years total multi-family production was 941 units in Santa Monica (of which 503 were affordable!), in the four years since then, only 478 housing units, an average of 119 per year, have been built. This number is fewer than half of the 250 units expected to be built annually under the LUCE, and less even than the average of 217 units built in Santa Monica annually over the past 24 years. (In fact, housing production wasn’t even that good: the report’s construction numbers don’t take into account demolitions. According to the City’s housing reports, from June 2014 to June 2018, the net increase in housing units, after deducting demolitions (and including data for single-family houses), was 422, an average annual increase of only 105.)

Again, the good news is that a fair amount of housing is now in the works, either under construction or approved, in Santa Monica. However, the anemic production of the past four years, and, as I discussed in last week’s blog, the apparent debacle of the Downtown Community Plan, illustrate why Sacramento is not likely to leave housing policy to local governments. Not when Governor Newson wants his legacy to include 3.5 million new homes.

I write this even as the most ambitious proposal to limit local control, Scott Wiener’s SB50, is dead for the year. Sen. Anthony Portantino, of La Cañada/Flintridge, responding to pleas from residents of single-family, suburban areas (such as La Cañada/Flintridge), used his power as Chair of the Appropriations Committee to prevent Wiener’s bill from reaching the Senate floor. The bill drew the ire of single-family zone residents because somewhere along the way a bill that encouraged in-fill urban development had become a bill that would have drastically up-zoned nearly all single-family zones in the state.

This up-zoning of suburbia not only added a poison pill to SB50, but also it was bad urban policy. Why densify sprawl? It doesn’t make sense: if you build more housing off the urban grid, isolated from decent transit, jobs, shopping and entertainment, you magnify the disaster that sprawl is. Wiener needs to bring back a bill that privileges investment in urban housing, and there is plenty of urban land that is zoned for commercial and industrial purposes where this can be done without driving residents crazy. Santa Monica showed how to do this in the ’90s by allowing double the amount of residential development over commercial development in formerly commercial zones in its downtown. A boom in housing resulted.

Downtown Santa Monica development

But cities don’t like to turn commercial and industrial real estate into housing. While no-growth politics coming from affluent homeowners has had a lot to do with California’s failure to build enough housing, a factor that has drawn national attention, another factor has been that cities prefer commercial development that generates taxes over residential development that requires the delivery of services. Cities are loath to convert commercial real estate to housing.

In the interest of promoting economic development cities don’t take into account how many more jobs per square foot of development are now created in office and retail buildings over what existed on old industrial properties, and how many more square feet can now be built in multi-story office buildings than existed in the old one-story factories. Every 1,000 square feet of office development now generates at least three or four jobs, and for those jobs, at least two housing units need to be built. But cities rarely consider that math when rezoning commercial or industrial properties.

Unfortunately, Santa Monica has been a leader in this regard as well, given how it has converted originally industrial areas to offices without sufficient housing for the many more people who work there. In a future version of his bill, Wiener would do well to require more housing to be built whenever cities entitle more commercial development.

As for the suburbs, instead of attacking single-family zoning where we don’t want denser development anyway, what the legislature needs to do is to require local governments to allow (and encourage) the repurposing of malls with added housing and offices (local jobs for suburbanites), and as nodes for transit. Leave the housing subdivisions alone.

Wiener will bring the bill back next year, and I suspect that next time a version of it will get further along in the process. Wiener learned from his mistakes with the first version of his housing bill last year, and I suspect he’ll learn from his mistakes this year. And presumably by then the governor will want to see more progress. This story isn’t over.

Thanks for reading.

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.

The character of Vicente Terrace

As it turns out, not all politics are local, and what with one thing or another going on in the world, I’m one local news obsessive who has had a difficult time lately obsessing on local news. Thus, no posts here since October, meaning I’ve left uncommented upon elections in Santa Monica and a lawsuit that would upend Santa Monica politics completely. Matters about which previously I would have written much.

But this weekend I’ve put the Mueller report aside to write about a hyper local Santa Monica issue, namely the future of two apartment projects near the beach. I wrote about them in my last column, back in October, and I feel compelled to follow the story.

The owners of the Shutters and Casa del Mar hotels are developing two apartment buildings (with retail on the ground floors) on vacant lots near the hotels. The Planning Commission approved both projects last year, but those approvals have been appealed to the City Council. The council will consider the appeals at its meeting Tuesday evening.

The developer submitted plans for the apartments in September 2015. Even assuming the council denies the appeals and approves the projects, that means it will have taken almost four years to make a decision over two small buildings with a combined 105 apartments, including 16 affordable units. No wonder the legislature in Sacramento is frustrated by how difficult it is to get housing built in California. (Incidentally, based on the development potential of one of the sites, the hotel owners paid $13 million for one of the properties, money that went into the City’s affordable housing fund.)

Of the two projects, the larger one would replace the parking lot between Ocean Avenue and Shutters. The northern edge of the property is Vicente Terrace, a street that runs from Ocean Avenue down to the beach. Residents who live on the north side of the street have appealed the approval of the project, primarily on the grounds that having an apartment building across from their houses would be contrary to “neighborhood character.”

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Vicente Terrace

Before I explain why I disagree with the neighbors’ appeal, it’s only fair to mention that they are not taking the stance of so many opponents of change in Santa Monica, meaning that they are not opposing the whole project. They seem to recognize that buildings across the street housing new neighbors would be an improvement over the parking lot that they face now. What these neighbors say they want is for the developers to make the building look like it’s a row of townhouses rather than an apartment building.

They also acknowledge that the Planning Commission approved a plan that the developer modified to respond to their concerns. The buildings on Vicente Terrace will now be stepped back considerably from the curb (from 15 to 22 feet, even though the zoning ordinance only requires a five-foot setback) and the floors above 36 feet (the height limit the neighbors say they would accept) are stepped back at least another 20 feet, meaning these upper floors will likely not be perceptible from the street below.

There is now only small difference in terms of size and massing between the approved plans and what the neighbors say they want, except that the neighbors want the façades to mimic townhouses rather than apartments. (Related to this, they also contend that apartments across the street will lower their property values.)

I say, “small difference,” but let’s not forget Freud’s concept of the “narcissism of small differences”: small disagreements can fuel passionate arguments. In this case, the neighbors in their houses fervently desire to face façades that are or at least appear to be single-family homes, not apartments.  Instead of the narcissism of small differences, what we seem to have here is plain narcissism. They want the other side of the street to mirror themselves.

As I said, these neighbors don’t seem to be hard-line NIMBYs, and judging by an opinion piece one of them wrote in the Daily Press, some at least assume a liberal political mantle (“Wall Street vs. Main Street”). (I often wonder if Santa Monicans who decry the profit motives of real estate developers don’t go to movies because they’re made by movie producers and studios obsessed with the box office.)

The neighbors, however, seem unaware of how arguments based on “neighborhood character” have historically been used to exclude apartments from neighborhoods because of fears of allowing into neighborhoods the lower economic classes.

Nor do they seem to be aware that in places where the population is generally left-wing, left-wingers have been adept at finding new rhetoric to justify the same old suburban sanctification and glorification of single-family homes vs. the vilification of apartments. (This is of course creates cognitive dissonance here in Santa Monica, where left-wing arguments against building market rate apartments are also based on phony (when coming from generally affluent people) quasi-Marxist arguments based on the expected high incomes of  future tenants who surely will be class-enemies if they can afford to rent new apartments in Santa Monica.)

In the context of the housing crisis created by NIMBYism and the environmental crisis created by sprawl, left-wing arguments against infill development, however, are now being challenged as anti-city and pro-sprawl. As Benjamin Ross puts it in his 2014 book, Dead End: Suburban Sprawl and the Rebirth of American Urbanism, a history of how restrictive land use policies aimed against apartments and the people who would live in them destroyed cities and gave us sprawl, “the rise of the antisprawl movement has put resistance to change in conflict with left-of-center social and environmental goals…. [Although] [o]pponents of urban infill are fewer in number . . . they have not abandoned the fight. The rhetoric of the environmentalist Left remains on their lips, but the substance of their agenda has begun to converge with the familiar exclusion of old-line suburbs.” (Emphasis added.) Ross calls this “left nimbyism.”

I live in Ocean Park, a once single-family neighborhood that thankfully became a mixed neighborhood of houses and apartments before the City adopted mono-culture zoning. I don’t know anyone who doesn’t like the “character” of Ocean Park. On a per square foot basis, Ocean Park has some of the highest priced real estate in California. The Vicente Terrace neighbors’ argument that apartments will lower their property values is laughable.

I want to distinguish these phony leftist arguments from the genuine left-wing concerns of UNITE HERE Local 11, the union that represents hotel workers in Santa Monica, which has appealed the approvals of both buildings. The grounds for the union’s appeal are that the union doesn’t believe that the approvals include enough protections against the renting of the apartments as short-term rentals (either as Airbnb-type lodgings or as corporate housing).

UNITE HERE is right to be concerned about short-term rentals of unoccupied apartments, as they have become a scourge of the housing market. It appears to me, however, based on the staff report, that the City has included sufficient enforcement mechanisms in the conditions of approval and in existing law. (And the City has had some success recently with enforcement.) However, if it’s possible to approve the projects with more effective enforcement mechanisms, there wouldn’t be anything wrong with that.

Thanks for reading.

Tale of Two Projects

It’s been a while since I’ve written about a specific development project in Santa Monica. About a year ago I was busy writing articles about the Downtown Community Plan (DCP), and after that I had my fill of F.A.R.’s and levels of review, etc. I’ve mostly been writing travelogues since then. In the past week, however, two projects, of quite different scale, and located in different parts of the city, caught my eye.

One is a small, apartment complex, only 47 units, with ground-floor retail, on a typically skinny Lincoln Boulevard parcel at Ashland Avenue. The project survived development review last week when City Council members, claiming (accurately) that state law limited their power to block the project, rejected an appeal by neighbors of a Planning Commission approval of the project back in January. (Neighbors Lose Bid to Stop Apartment Complex on Santa Monica’s Lincoln Boulevard).

I live not far from the site and I either drive or walk past it often. It’s a location of classic crudscape, an ugly lot with several decrepit garages that look like they were built with stucco and tin foil.

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The current site at Ashland and Lincoln

It’s incredible to me that neighbors would fight a new apartment building, with attractive ground-floor retail, on that stretch of Lincoln, but then I know it shouldn’t be incredible to me that a few neighbors will do anything to prevent people from moving into their neighborhood.

I remember when City Council, during the hearings on the LUCE, was debating standards for the boulevards. Council members were succumbing to anti-development arguments about “character” (that vague quality that has historically been used to keep apartments and apartment-dwellers out of insular communities). I remember, though, Bobby Shriver, who was sympathetic to the anti’s on other boulevards, admitting that Lincoln Boulevard was pretty ugly and needed new development. Almost ten years later, after another whole planning process for Lincoln Boulevard, a developer is finally building something—an improvement.

For the appeal staff had to prepare a 29-page staff report, which on top of myriad other documents, including a 50-page staff report for the Planning Commission, means that hundreds of pages of reports were created for . . . a 47-unit project that fits within Tier 2 of the applicable zoning. Months and years go by even with a state-law required “project streamlining” and an exemption from environmental review: the application for this little project was filed in March 2016 and “deemed complete” in May 2016. Already two years ago.

I’m shocked that the developers proposed a Tier 2 building. If they had made it a little smaller (a 1.5 F.A.R. instead of the 1.81 it has), it would have qualified under Tier 1, and they could have avoided this review. I’m glad they were brave—if they can make it to the finish line, the site will have another 10 or 15 apartments. (By the way, the development standards still require an insane about of parking—the project will have 151 expensive underground parking spaces for 47 apartments and about 17,000 square feet of retail. On a transit corridor. Crazy.)

Need I mention that the project replaces commercial zoning with residential development? Isn’t that what we want in jobs rich, housing poor, Santa Monica?

Naturally, the process is not over. The developers still need to take the project back to the Architectural Review Board for a formal review and no doubt another appeal to the Planning Commission. After informal ARB review, and comments from the Planning Commission, the developers and their architects must now deal with the usual litany of vague nostrums about “variation” and “visual breaks” and “modulation” and “granularity.” It’s like the ARB members and Planning Commissioners are wine connoisseurs. Here’s a rendering of the current design.

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As seen in this elevation, the building presents a bold statement on an ugly street. While the ARB and Planning Commissioners (and the anti’s) often complain about bland architecture in Santa Monica, their practice is to screw around with any architects who try to use formal structure and rhythm. They make the same amorphous demands on every project, and then complain that buildings are indistinguishable.

The second project that caught my eye—this one was hard to miss—was the return to the planning process of the Frank Gehry designed hotel project at the corner of Ocean Avenue and Santa Monica Boulevard.

I’m not going to write much about this now—surely there are still years to go on this one and I’ll have more opportunities to write about it later. But as the political class settles down to patting itself on the back about how this project now “fits” the new standards in the DCP, and since the developers have made their peace with the DCP, I’ll be perhaps the one person to talk about what we’ve lost.

Which are 60 condominiums. The new plans are pretty close, in terms of programming, to the old plans, except that 60 condos were sacrificed to make the project fit the new zoning and political standards.

Okay, no one is going to shed a tear for the condos, but let me ask—what was bad about them? In a city of 50,000 housing units, they weren’t going to add to traffic in any measurable way, and they weren’t going to destroy the “character” of anyone’s neighborhood. Yes, rich people were going to buy them, but then we already live in a city where many of the critics of the condos live in houses that are now worth $1,000 per square foot as teardowns.

What the condos would have done is turn thin air into millions of dollars each year of taxes for schools, healthcare, public safety, housing and services for the homeless, etc. Yes, the proverbial bogeymen of Russian oligarchs and Arab sheiks or—Heaven forbid—young Silicon Beach entrepreneurs, might buy some of the condos and only use them a few weeks a year, but others might be bought by elderly Santa Monica homeowners wishing to downsize but stay put.

What was bad about the condos is that they disturbed the false halo of radicalism that the political class in Santa Monica believes crowns their heads. Santa Monicans are mostly on the Left, and so the rhetoric that comes from the most conservative voices in town must use the language of revolution. Oh, those greedy developers! The neighborhood activists and their politicians use words like “community character” and act as if they’re about to storm the barricades of their own privilege, but it’s all about pleasing people who, in the opposite of a progressive agenda, fear change.

Thanks for reading.

A Tale of Three Motions

I was busy (i.e., sleeping) in the wee hours Wednesday morning, and it wasn’t until the weekend that I got around to watching the City Council’s deliberations over the Bergamot Area Plan (BAP). It surprised many residents who spoke at the meeting, but the main issue for the council members was not traffic, density, or parks, but rather how to increase the affordability of housing.

This gulf between what some residents believe are the issues and what in fact were the issues arises because the council members, even those elected with the support of, for instance, residents who rank traffic congestion as Santa Monica’s worst problem, are aware that they have to deal with the inevitable more than they have to deal with the wishful.

It is inevitable that the old industrial areas of Santa Monica will be redeveloped, and it is inevitable that the number of Santa Monicans who live in apartments and condos, already a massive majority, will continue to increase. Santa Monica is both a post-sprawl and a post-industrial city, and people charged with managing that transition, that evolution, cannot wish away the inevitable.

And so the council members did not discuss traffic much, because they know that the BAP deals with traffic as best as any realistic plan for the area could, and they didn’t discuss density much, because they know that the densities to be allowed under the plan, even if you don’t count new streets in the FAR calculation, are moderate and realistic for a place that a metropolis surrounds and which in turn surrounds a train station on a billion-dollar light rail line. It was telling that there was no controversy among the council members about increasing the density for the two privately own parcels on Michigan Avenue adjacent to the Bergamot galleries.

Nor did the council members argue much about parks, since they know that given the legal and fiscal constraints, they couldn’t do any more Wednesday morning to create parks than the plan did, and that the real work of creating usable public open space will come in the negotiation of development agreements.

So what did the council members argue about, or given that they didn’t really argue, what did they spend a couple of hours discussing? Well, it was housing, specifically how to get more housing that would be available to people who work in the area. The discussion revolved around three motions.

Council Member Gleam Davis made the first motion, and it reflected the consensus of a lot of progressives in the city, including the leadership of Santa Monicans for Renters Rights, that the plan needed more affordability. Davis’ motion was to expand density bonuses for building affordable housing, and to target the bonuses reward developers who build units for households earning less than what staff had recommended.

This motion passed unanimously.

The next motion came from Council Member Ted Winterer, and it had to do with the ratio between commercial and residential development in the area under the plan. If you were reading my Lookout columns three years ago about the updates to the land use and circulation elements of the general plan (the LUCE) (and you’re obsessed enough with local politics to remember them), you will know my heart went all fluttery when Winterer made the motion, because he wanted to clarify that the ratios called for in the plan would include in the calculation of the ratio existing square footage (which is all commercial), and existing square footage that is removed in the building of new development, thereby increasing the percentage of residential development because the percentage would be based upon the whole amount of development, not only the new development.

Winterer’s motion passed on a 4-3 vote; voting for it were Winterer, Davis and Council Members Tony Vazquez and Kevin McKeown. Council Member Terry O’Day said that he was voting against it because he believed that it would put the BAP in conflict with the LUCE, and presumably Mayor Pam O’Connor and Council Member Robert Holbrook agreed with him because they didn’t say anything and also voted no.

Council Member McKeown made the third motion, and it was to increase by 50% the amount of affordable housing that would be required under the plan in large projects. This motion lost on a 4-3 vote; Davis, who was the key vote all night, voted no because she was concerned that an across-the-board increase in the requirement might reduce the overall amount of housing that would be built, defeating the purpose of, as McKeown had emphasized, getting housing built near the jobs in the area to house working families and reduce commuter traffic.

Instead, Davis and the rest of the council directed staff to analyze the economics of increasing the affordable housing requirement; this data can then be used in negotiations over development agreements, which is where the data, on a project-by-project basis, would be most relevant.

In the end, the council members voted 6-1 to pass the BAP. The no vote came from McKeown; he made a protest vote on the affordability issue, but otherwise did not express significant disagreements with the plan. It was significant that O’Day, Holbrook and O’Connor voted for the plan even though they had lost the vote on the commercial/residential ratio, and that Vazquez and Winterer voted in favor of the plan even though they had lost the vote on McKeown’s motion to increase affordability.

It’s worth remembering that the Planning Commission approved the plan on a 5-1 vote, and the one no vote then was also a kind of protest vote, that time on the parks issue.

Some Santa Monicans are mystified about how the commissioners and the council members could so overwhelmingly endorse a plan that plan opponents say the public overwhelmingly rejects. Leaving aside the question whether the general public is in fact upset about the plan, the fact remains that the job of the commissioners and the council members is to plan for the future not sanctify the past.

Thanks for reading.

Money Isn’t Everything

On Saturday I co-hosted with former Santa Monica Mayor Mike Feinstein a forum to discuss whether Santa Monica should relax the limitations on building height that it enacted in the ’80s. Because of limited seating at the venue (the restaurant Bizou Grill on Colorado Avenue, which deserves great praise) we couldn’t publicize the event widely, but about 70 interested community members turned out.

The discussion was good – serious talk about the pros and cons of building up. Frankly, it was hard to separate the issue of height from other issues relating to development and the future of downtown Santa Monica (at the moment, of course, there are three controversial tall hotel/condo developments pending), but as one participant told me later, there are benefits to isolating and focusing on one aspect of a complex problem.

I had many thoughts during the forum on what the issue of height is about, but also many on what height is not about, and in this post I’m going to write about some of the latter.

For one thing, height is not about density. As architect and urbanist Stefanos Polyzoides (who journeyed from Pasadena to give an outside-of-Santa-Monica perspective) pointed out, two of the densest cities in the world, Paris and Barcelona, have few buildings higher than six stories. More allowable height enables the shifting of development into different shapes (for good or ill), but how much development to allow is a separate decision.

Height is also not about money, and this works both ways.

Misti Kerns, the head of Santa Monica’s Convention and Visitors Bureau, reminded the group that more hotel development indisputably will aid our local economy and help the city balance its budget. It’s not indisputable, however, that hotel development depends on allowing taller buildings. More than a few hotels have been built here since the height restrictions were enacted 30 years ago, and the City Council has already voted to give priority in the planning process to hotel developments.

It’s true that the City faces deficits over the next few years, but none of the hotels now in the development pipeline could be opened in time to help with the current situation. Even if they could, does anyone believe that fundamental long-term planning decisions should be made one way or the other to solve an immediate budget issue?

But “money” arguments that the opponents of height make are also irrelevant. These take various forms, including (i) “the only reason to build is so that greedy developers can make money,” or (ii) “the only reason to build is so that rich people can live in luxury condos.”

As for developers’ profits, we live in a capitalistic society characterized by the profit motive and the importance of investment in assets, including real estate. If you want to see a city where developers stopped investing, take a look at Detroit, and unless you live in a building built by a nonprofit affordable housing developer, you either live on property that a developer subdivided and developed or in a building that one built.

Sure developers are out to make a buck, but then so are film producers and doctors and artists, but I don’t see anyone calling them greedy when they make a successful movie or build a good practice or sell a painting. Nor have I heard homeowners calling themselves greedy for feeling good when home values increase, or future retirees complaining when the investments in their 401k or pension plan increase in value.

As for the luxury condo argument, 31% of the land in Santa Monica is zoned single-family residential, and this being the Westside, we can assume that nearly every one of those houses is affordable to only the 10% (and a lot of it to only the 1%). We may not need social policies to get housing for rich people built, but don’t kid yourself that it isn’t part of what Santa Monica is. Besides that, it’s a good thing when rich people want to live in your downtown. It shows you’ve done something right.

And look: do you believe the opponents of the pending tall hotel/condo projects would like them any better if they had a mix of work-force and affordable family-oriented housing that perfectly meshed with Santa Monica’s needs? Or, heaven help us, what if someone wanted to build 120 affordable units at the Miramar instead of 120 condos? Would the Huntley Hotel accept 22 stories of that?

When we’re talking about height, let’s talk about height. I’m sure the aesthetic, communitarian, urbanism, and other real issues about it will give us plenty to argue over all by themselves.

Thanks for reading.

Housing is Complicated, Post #2

In my last blog post I wrote about how affordable housing policy has interacted with the politics and economics of development in Santa Monica. In this post I’d like to look beyond that to some of the forces that shape the market for housing.

Housing attracts contradictions. Start with price. People generally complain when housing prices are too high: it’s not good when people have to spend too much of their income on decent housing (or even worse when they spend too much of their income on substandard housing).

But then bad things also happen when prices are too low. Think about the crash in housing prices in the Inland Empire — housing was suddenly much less expensive, but the rapid decline in prices caused a lot of heartache.

Affordable prices for real estate are not themselves a solution to poverty. Think generally about the most disadvantaged areas in Los Angeles County — property values are low, but because of low incomes, housing is still unaffordable to many, and many pay a lot (relatively) for poor quality housing. (Like any commodity, when it comes to housing price and value are related — think of those people paying $500 to rent a room in an illegally subdivided house.)

It costs real money to build good housing. High property values also translate into better public services — it may be an anomaly from our agrarian past, but governments rely on real property taxes. Many ordinary folks rely on the investments they make in real property.

Perhaps when we say that housing prices are too high, what we’re really saying is that incomes are too low.

Housing prices also make a joke out of the classic economics of supply and demand. You’d think that increasing the supply of housing would automatically lower prices, and certainly if there isn’t enough housing rents and prices will tend to increase. But if you believe the solution to high housing prices is simply to build more housing, I’ve got an apartment to rent you in Manhattan.

Many people want, need or like to live where many other people live, and so typically the most dense cities or the most dense neighborhoods in cities, where the number of units of housing is the greatest per acre, have, other things being equal, the highest rents and property values (at least on a per square foot basis).

That’s because these dense neighborhoods are typically convenient to “amenities” that people need or want, from jobs (most important) to shopping to entertainment. Supply is also not, as the economists say, “elastic”: there are always physical or legal restrictions on how much can be built in any given area.

I say that many people want or need to live near other people, because it’s not true for everyone. One mistake that people commonly make about housing is to generalize about housing needs and wants, usually based on their own. The housing policy of the whole country was misguided for decades, generations even, because of a generalization that all Americans wanted to live in single-family suburban houses.

The only good housing policy is a non-dogmatic housing policy. Beware anyone who says that everyone wants to live a single-family home in the suburbs or that everyone wants to live in an apartment in town.

Having said that, one always has to look at the realities of any given situation. In Santa Monica nearly 32% of all land in the city is zoned for single-family homes, but there are few empty single-family lots, and no matter what, virtually all new housing is going to be in some kind of multi-unit development.

It’s also not surprising that housing is expensive in Santa Monica. Many people want to live here, and it’s not only the beach or the weather that attracts them. Santa Monica was always a jobs center, but over the past 30 years Santa Monica added more than 9 million square feet of offices. We also built hotels and invested in our downtown, and employment increased in the hospitality industry and in retail. At the same time the enrollment at Santa Monica College increased significantly.

Little housing was built for these workers and students. Some say that our housing resources should go only to house current Santa Monica residents, but they ignore the reality that economic development in Santa Monica has contributed to a regional need for housing (and a local crisis in commuter traffic).

The demand for apartments in Santa Monica also reflects broad demographic trends affecting housing markets nationwide. The two largest generations in U.S. history, the Baby Boomers and the Millennials (roughly defined as those born between 1980 and 2000) are both increasing demand for apartments (and condos): the former because as they age they are moving out of now empty, single-family nests, and the latter because only the oldest of them have started to form families and look for nests to fill (and for cultural and economic reasons it appears that fewer of them than in prior generations want to live in the suburbs).

These demographic changes have resulted in changes to the form that households take. Some recent research indicates that over the next 20 years, 87% of growth in households will be households without children, and 53% of all growth will be single-person households. I see this in my own family — my 92-year-old father has lived alone since my mother died six years ago, and my 23-year-old son, when he starts graduate school at UCLA in the fall will be looking for his own apartment (on the other hand, he may not find one, which could mean that he’s won’t be living alone and that his parents won’t be empty-nesters).

The challenge for Santa Monica is to respond to the need to house people who work, study, and retire here, while at the same time providing housing for a full range of incomes, including housing for people who essentially have no incomes and would be homeless without assistance. As I said, it’s a challenge.

Thanks for reading.