February 28, 1990 - From the February, 1990 issue

Santa Monica: Small Coastal City Balances Development Pressure

In our continuing effort to cover land-use regulation throughout Los Angeles County, we focus this month on Santa Monica. With 97,000 residents in a city of 8 square miles, this coastal city is dense and its development intense.  David Kramer of The Planning Report recently met with Paul Berlant, Santa Monica’s Director of Planning for the past two years to discuss current topics in land-use regulation. Berlant joined the City after 9 years as Direct of Community Development for the City of Ventura and a consulting stint with Willdan & Associates.

In the last several months there has been a significant amount of land-use regulation either adopted or introduced by the City Council. What kind of City is this regulation creating?

Our self-image in Santa Monica is that of a small town. People here are physical or socially concerned about a sense of place and relationships of people to places that you find in a small city. We just happen to be on the edge and surrounded by the second largest city in the country. The pressure for development is phenomenal. On the one hand, there’s a community sense that we should function as a small place, but this is hard to do when so many people come here during the day to work or on weekends. Despite our self-image, we must confront major development issues that are typical of big city development pressures.

Therefore, there are a variety of problems that are identified with the rate and amount of development in the City. The intensity is greater than what people expected. Residents feel that the rate of commercial development is going on too fast. And there has been a lot of change which we must respond to in the form of regulation.

What type of developments are currently occurring in Santa Monica?

The City is made up of approximately 75% multi-family development, and most of those residents are renters. But apartments are not being built in large numbers. Most of the current residential development occurring is condominiums. This is fully built-out city, and these projects—4 to 6 units on 7,500 square feet-are built on existing subdivided lots, literally one lot at a time. They may replace an older home or a couple of units that are on the site.

Are owners able to convert apartments to condominiums?

Condominium conversions are virtually not allowed other than through a unique conversion process whereby a majority of the tenants express an interest in buying the units. The owner offers the units at specific prices to the existing tenants. They have first right of refusal to stay if they do not buy, and the tenants are highly protected. This was done through a charter amendment by a vote of the people approximately 6 years ago. Our standard condominium conversion ordinance provisions did not allow other condominium conversions until the units that were lost (in the Demolition Derby in the late 1970’s prior to rent control) had been replaced. That will take a long time because there were a large number of units demolished, and the number of rental units being built is not very large. There are still not a lot of apartments being built even though new construction is not regulated by rent control.

What happened during the Demolition Derby, and what has been it’s long-term influence on land-use regulation?

From what I understand occurred from 1976- 1978, owners, anticipating rent control, demolished apartments whose rental rates would be-controlled in the future and replaced them with condominiums. Many tenants were evicted, buildings were torn down, and condominiums were proposed and built in large numbers. The City reacted by prohibiting condominium conversions until the housing was replaced. In addition, our housing element now requires owners to replace any units they demolish on-site.

Another problem for owners is the Rent Control Board which has very strict rules about when it will issue a removal permit to demolish a unit. Subsequently, a piece of state legislation, the Ellis Act, provides provisions to allow a permit owner to go out of the rental business. The Ellis Act is not popular with City administration. A recent result of these measures is that the Rent Control Board last year adopted a program to allow increases in rents for some units in exchange for a guarantee of a like number of units being maintained for low and moderate income families. The higher rent is neither market rent nor decontrolled rent, but it is a substantial increase in rent upon vacancy. This inclusionary program was initiated in the fall, yet it has not been received well by the apartment owners association.

Has the Rent Control Ordinance of 1979 led to any deterioration the housing stock?

I have not seen any and we do not do inspections. But my impression is, no. I have not seen any data or reports. If you asked the rent control staff, they will tell you they have not seen a problem. For the most part, properties arc maintained very well. Some people speculate that exorbitant move-in costs must help subsidize maintenance work, but talk of a black market has always been no more than a rumor to me. I haven’t seen anything to demonstrate that it’s going on. I may be out of it and naïve, but I have not seen it. For the most part, at least the exteriors are well maintained. I think there’s a different culture with the tenants in the rent controlled apartments to take care of the interiors themselves.

What do you believe are that reasons that much more condominium development is taking place than apartment houses?

My opinion is that the condominium market is very strong in Santa Monica. It was very weak in the late 1970’s, and now it’s very strong. Condominiums can cost $300,000 and up compared to single family detached homes for $400,000 and way up. If someone is in the housing market to buy, a lot of people can only afford a condominium. You’ll need an extra $100,000 for a house, and it's usually a house you need to spend money on to fix up. We’ve seen prices decline in the residential real estate market in single family, while we have not seen condominium prices soften as much because there’s such a demand for that price range. The discrepancy between condominiums and apartments is much greater here than elsewhere. There’s a greater rate of return on condominium development even though the densities and development standards are identical between condominiums and apartments. My impression is that you would be just as well to do apartments elsewhere.

The City Council is currently considering changing its inclusionary housing program.

The City through its housing policy has an inclusionary housing program which requires that 15% of all units be set-aside for low and moderate income tenants. This is for all residential projects with five or more units. What people usually do is pay the in-lieu fee. What the Council has asked us to do is beef up the inclusionary housing program.

The notion is to increase the inclusionary requirement from 15% to 30%-50% and to expand the range of eligible beneficiaries to middle-income purchasers. What we will end up with is a greater in-lieu fee and a split of replacement housing among very-low, low and moderate income housing. And we’re dropping the threshold from 5 to 3 units. We are now in the process of putting the program together, and it will take at least 4 months.

What ordinances exist which regulate the expansion of single-family dwellings in the City?

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Legislation was adopted several years ago because of what happened in the neighborhood of Sunset Park which extends from Pico Boulevard to the South City line and from Lincoln Boulevard to the East City Line. Sunset Park is a single family neighborhood built primarily in the 1930’s and 1940’s. It’s a very attractive community, but problems were created when people started enlarging their houses. We now have citywide provisions for how one can enlarge a house.

Most of the original houses built here were small houses of 1,000 square feet. They build them substantially larger, add a second floor, and double the size. A compatibility problem can therefore exist between these older houses and the remodels.

What the City Council did several years ago was require additional stepping back as you go up so that there is more room between you and your neighbor. It’s for all single family, but the problem is probably greater north of Wilshire and Montana where people are doing it in much greater scale.

What is the status of the potential moratorium on all pre-1940 structures?

That ordinance went to Council on January 9. The notion was that any building prior to 1940 which falls into a group of significant architectural styles would be protected by a moratorium until we could find a way of preserving them. We would then rewrite our landmarks ordinance to protect them.

The Council decided not to pursue the moratorium, and instead, directed the Landmarks Commission to review demolitions of any buildings which are already included on a survey list of potentially significant historical buildings. This list was compiled by our staff in the early 1980’s. These buildings are both single-family and multi-family, and the single family houses are being demolished to be replaced by bigger houses.

Another moratorium is also being considered for the northwest part of Santa Monica.

That area includes a new neighborhood, from Wilshire Boulevard to Montana and from Ocean Avenue to Fifth Street, which has recently organized itself. This is virtually the only R4 area in the city, and it’s highly dense. The moratorium on new construction was initiated by this new group.

The concern of the neighbors was that older smaller apartment buildings were being demolished and replaced by more intense condominiums. Many people were fearful of the loss of residential units where they lived. The Council asked us to do an analysis. And we did not recommend further downzoning. We did recommend some minor changes to development standards. Such as some stepping back, open space, and lower heights, so that the new buildings would be more compatible. We also looked at limiting the number of projects going on in a smaller geographic area like a block. We are now writing a permanent ordinance to be ready in the fall.

The City is currently undertaking a revision of the land-use and circulation elements of the general plan. What planning changes do you anticipate?

We are currently going through a growth management strategy. However, we have already adopted some interim changes as part of our growth strategy. For instance, the Mayor asked us two years ago to come up with a program to limit commercial development We came up with a commercial allotment program which establishes a maximum size for a project. In the highest density corridor along Wilshire Boulevard, for example, the maximum project that can be built is 22,000 square feet.

The allotment program has been in place for 6 months, and I’m sure more changes will come in the land-use element. We will be focusing on development standards; the amount of development, FAR or height limits will probably be reduced. I think we will come back with some program which limits the amount of development to occur either at any given time throughout the City or in a geographic area based upon some set of criteria such as infrastructure or traffic.

ls the City considering any further developer exaction fees?

For commercial development, the primary fee which already exists is the Housing Parks Mitigation Fee which applies to buildings over 15,000 square feel. It is a little more than six dollars per square foot which is divided between housing programs and parks.

Our transportation management plan is also considering a new tax on commercial development. Our first draft of the plan talked of $2500 per trip which is a very high fee. We’re reconsidering, but it will be based on a citywide traffic study which analyzes the actual generation of traffic by new development. That will be coming out later this year.

What other land-use regulation are you anticipating for Santa Monica in the coming months?

We are undertaking a Specific Plan for the Civic Center area from Ocean Avenue to Fourth Street from the Santa Monica Freeway to Pico Boulevard. This plan includes the Rand property, the Courts, City Hall, and an old motel which Maguire Thomas owns. We will set development standards, infrastructure needs, and design guidelines. We are also planning a community analysis of the Main Street Commercial area south of Pico Boulevard. We will make minor changes to the codes and establish a set of design guidelines.

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