Santa Monica Builder Flouts Affordable Housing Rules

Santa Monica apartments low incomeSanta Monica has some of the strictest laws in California regarding affordable housing, including rent control and inclusionary housing laws (I'll explain more in a minute). However, the Santa Monica Daily Press details how JSM Construction -- builder of much of Santa Monica's downtown housing -- did not build the 52 affordable housing units it promised the city to finish. The deal called for JSM to build eight market rate housing complexes in downtown Santa Monica if it built the affordable housing units as well.

Long story short: Many of the market rate buildings were constructed and received the city's OK, and now have tenants. But the two lots for the affordable housing were sold in foreclosure.

Although Santa Monica has stiff laws to promote low-priced rentals, in this instance affordable housing did not come out on top.

"Here, we are concerned that units that are built to be affordable are being done, so our clients have homes that are safe," says Denise McGranahan, a senior attorney at the Santa Monica office of the Legal Aid Foundation of Los Angeles.

She explains that Santa Monica has a 20 percent affordable housing mandate, or inclusionary housing, meaning that every complex has to have 20 percent of the units reserved for affordable housing. The units can be in the same building or, as was to be the case with JSM, in another location.

Numerous calls to JSM were not returned.

According to the Santa Monica Daily Press, the city's guidelines have a loophole for developers to get out of completing affordable housing while still getting permits for their completed, market-rate projects. "All the developer has to do is prove that construction on the affordable units is underway and provide some type of security at least equal in value to the 'in-lieu fee' that the developer would be charged for opting not to provide the affordable units," the article explains

However, the in-lieu fees are far less than the cost of completing the affordable housing. So why would builders choose to complete the affordable housing projects then, if they can opt out for cheaper cost? The SMDP reports the city of Santa Monica rewards those who complete the affordable projects with an expedient approval process for market-rate buildings.

"Santa Monica is one city that actually sued a developer for not building the affordable housing," says McGranahan. "Santa Monica is pretty good about production of affordable housing, but it's all relative to other cities. Most would say it's one of the best in that regard, but I can't say more than that. They have an inclusionary housing law, not every city has one, and good rent control law."

In fact, according to McGranahan, only a third of California jurisdictions have some form of inclusionary housing laws, which have been proven to combat residential segregation.

But what can be done in this circumstance with JSM, and with future developers that fail to build affordable housing, remains to be seen. For now, citizens of Santa Monica are still without an additional 52 affordable housing units, though there are plenty more market-rate units available.

Also at AOL Real Estate.
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