Politics & Government

New Taxes, Fees Could Fund More Affordable Housing

Selling Mountain View Mobile Home Park is also on the table.

With commercial development on the rise, the Expo light rail coming in 2016 and the loss of redevelopment money, the city is starting to explore a few new ways to ensure working families can afford to live in Santa Monica.

Housing director Andy Agle floated this week a few ways the City Council could choose to fund the construction of affordable housing, including a real estate tax, sale of the city-owned Mountain View Mobile Home Park to a non-profit housing corporation and developer fees.

See also: Santa Monica to Consider Slowing Down Development

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There are currently more than 2,000 households on the city's waitlist for affordable housing, Agle said, and the demand is only projected to grow. The non-residential developments—such as hotels, hospitals, retail outlets and entertainment offices—anticipated in the next 20 years could generate 1,280 new jobs in Santa Monica, which would mean the need for 1,132 new housing units, according to Rosenow Spevacek Group, Inc., a city-hired consultant.

"The impact of this new workforce would stretch the capacity for affordable housing even further if their needs are not addressed," said city Housing Administrator James Kemper.

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A majority of the units would need to be affordable—from $854 to $1,708 for a one-bedroom—to workers earning between $29,550 and $59,100, according to RSG’s study.

Santa Monica lost its main source of funding for affordable housing when the state killed redevelopment agencies last year. In Santa Monica, the agency—which generated revenue by revamping blighted areas and then collecting a share of the increased property tax revenues—helped pay for the construction of nearly 1,700 units.

It provided 75 percent of the affordable-housing trust fund in Santa Monica, and in total, over more than five decades, spent more than $195 million on housing projects.

"With the absence of redevelopment, we don't have a reliable, steady funding source" for income-restricted housing, Councilwoman Gleam Davis said in February.

Kemper said coming up with a tax to support affordable housing "could be a successful strategy in a community like Santa Monica." In a report to the council, he pointed to a proposal from the mayor of San Francisco to increase the city's real estate transfer tax on property sales above a certain dollar amount.

The city's housing division also suggested selling a number of city-owned rent-controlled properties that it manages, including Mountain View Mobile Home Park. The proceeds from some of the properties could be used, Kemper said, to fund future housing development. "Selling properties would also eliminate property management costs and indirect staff oversight costs," he wrote in the report.

See also: New Council Cans Approval of Trailer Park Development

And, under a proposal councilman Kevin McKeown called "obvious," the housing division has asked the City Council to consider assessing fees to commercial developers to help pay for the housing their workers will need. City officials are trying to build more workforce housing to alleviate traffic congestion caused by commuters.

See also: Developer Fee Proposal Would Generate $60 Million

"The full cost to address the affordable housing needs of new worker households varies widely based on the type of commercial development, the targeted affordability of the housing, and affordable housing funding mechanisms," Kemper said. 

"The preliminary results of the RSG study identify a full cost ranging from $12 per square foot to $140 per square foot," he continued.

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