Diesel truckers are lined up along 5th Street near Broadway waiting to receive their payload of dirt as construction crews continue to carve out a massive hole in the earth, making way for hundreds of underground parking spaces. What was the former Fred Segal will soon be the home of one of the largest mixed-use housing developments in Downtown Santa Monica with 65 units of varying sizes and affordability.
A few blocks to the east, at Colorado and Lincoln boulevards, the same scene is taking place. Two mixed-use housing projects are sprouting, promising a few hundred more apartments and ground-floor commercial space that promise to further downtown's transformation into a 24/7 community catering to young professionals, seniors and those working in nearby restaurants, hotels, boutiques and other businesses.
It would seem Downtown Santa Monica is experiencing a housing boom, but these projects have been in the pipeline for years and will represent just a drop in the bucket when it comes to meeting projected housing goals being finalized by state officials, who for the first time are putting a greater emphasis on concentrating new dwellings in urban areas with an abundance of jobs, access to public transit and a dearth of units for those living paycheck to paycheck.
The Southern California Association of Governments (SCAG) is recommending Santa Monica find suitable plots for and incentivize the creation of approximately 9,000 housing units, with some 6,700 set aside for those who are rent burdened.
Driving this new way of allocating housing obligations is concern for the environment. No longer will future housing result in growing sprawl and soul-crushing commutes that contribute to climate change. Instead housing will be concentrated where the jobs are.
Currently there are 696 housing units under construction in Downtown Santa Monica, with another 530 in the pipeline. Roughly 1,200 more are still pending.
Whereas other coastal cities have already signaled a strong desire to fight the Regional Housing Needs Assessment (RHNA) numbers being considered by SCAG, Santa Monica is embracing the challenge, with an emphasis on spurring the development of affordable housing and calling on the state to put serious funding behind it instead of relying on the free market to produce it.
"We know the RHNA numbers will be contested by other cities, and by some in our own community," said Mayor Kevin McKeown, an unflinching fighter for affordable housing during his time on the dais. "The Council, rather than argue about the numbers at this point, is choosing to advocate for affordability, not just opening the market-rate floodgates, and is challenging the state to come up with the funding for deed-restriction subsidies so we can house fixed-income seniors, low-income households, and the dispossessed on our streets who have no housing at all."
Cities need to develop attainable housing to attract talent to their communities and to grow their employment base, which means more tax revenue to fund core services. Communities that fail to attract new residents and employment opportunities suffer a slow death. Downtowns play a critical role in this, according to a study on housing by the International Downtown Association, of which Downtown Santa Monica, Inc. is a member.
The study says "a vibrant downtown helps attract talent to regions because, regardless of whether they choose to live downtown, newcomers look to downtown as an indicator of the economic vitality of the region and as a key source of amenities. Housing adds to downtown vibrancy by providing pedestrian activity beyond the typical 9-5 workday."
As more people seek a better work-life balance, there is a greater demand for housing of all types near jobs.
Simply increasing the percentage of affordable housing units that must be included in market-rate projects will most likely not lead to the creation of more housing, and tens of thousands of market rate units would need to be constructed to produce the number of affordable units necessary to meet the RHNA numbers. As a way to make projects pencil out, developers are opting to build fewer units overall, thereby reducing their affordable housing obligations under current zoning. Or they are switching gears in favor of strictly commercial development. This has begun to occur near Bergamot Station, and in select parcels in other areas of Santa Monica, city planners said.
A recent analysis of affordable housing requirements and their impact on future construction provided a sobering reality. Applying the higher affordable housing mandates for the downtown, which is expected to absorb most new housing construction, to other areas of the city would likely lead to less housing overall. The challenge now is to find the right balance, but more so to pressure the state to put significant dollars behind affordable housing construction.
There are calls for creating new revenue streams, like resurrecting redevelopment agencies or floating bonds; opening up more public land for housing construction; and rezoning certain areas of the city, particularly on the major boulevards, to allow for more density and height. In a city where passions regarding new development run high, the Council can expect potentially crippling campaigns to block efforts to build.
Councilman Terry O'Day seems ready for the fight.
"It is clear we need to fundamentally reorient our approach to housing in this city," O'Day said. "It has been easier to say, 'No,' and place restrictions on housing. The anti-growth, exclusionary policy is what has gotten us into this mess as a state, a region and a city. It is not pollution or sewage we are talking about. This is about housing people in our community and when it is done right it can correct many of the things that are not the best for our community, things that will improve our quality of life."
In the end the City has no choice. It can challenge the RHNA allocation in court, sue other cities for failing to do their fair share and stall. Or it can lean in and embrace the challenge. The RHNA numbers are not yet final. They will be debated by SCAG and its municipalities for the majority of 2020, but ultimately Santa Monica's allocation is not expected to change much, if at all. Failing to comply could lead to a loss of state funding for other projects.
If enough cities push back, elected officials in Sacramento could move to supersede local control.
A lack of enforcement has been one of the biggest criticisms of the entire RHNA process, particularly when it comes to building more affordable housing units, according to a 2019 paper co-written by UCLA professors Paavo Monkkonen, Michael Manville and Spike Friedman.
"RHNA only requires that cities demonstrate, in their plans, that they have space that can potentially hold the needed income-restricted houses," the report states. "But nothing in the law ensures that any income-restricted housing will actually be built, nor that these potential sites of income-restricted housing must actually be reserved for that purpose."
The result of that policy, according to the paper's co-authors, is that many cities don't build low-income housing and those that do end up carrying a disproportionate share of affordable housing, which exacerbates inequality.
City planners are expected to come back to the council in the coming months with recommendations for ways to incentivize affordable housing construction, as well as an inventory of possible sites for new development. The Council's direction is to find changes that can be implemented quickly, such as increasing the administrative approval threshold for 100 percent affordable projects, regardless of the number of units planned. The current threshold outside of downtown limits administrative approval to 100 percent affordable projects of 50 units or less. While the change may seem small, every little bit helps, said Tara Barauskas, executive director of Community Corp of Santa Monica, the city's leading affordable housing developer and property manager.
"It's time for informed advocates to discuss how affordable housing, clustered around job centers, is necessary to truly embrace residents of all incomes, backgrounds, and abilities," she recently wrote in an op-ed. "Making sure that people who grew up in Santa Monica, or work here, can afford to live here builds community and affirms our values."
Officials are confident market-rate units will be built without any changes to zoning, meeting the RHNA allocation for those types of dwellings. It's the affordable mandate that has them concerned.
"We in Santa Monica are uniquely focused on the affordable part of the allocation, and share residents' fears of an over-production of luxury housing that doesn't really address community needs," McKeown said. " I think the best response to fears and concerns [regarding overdevelopment] is to point out that, unlike other communities, Santa Monica has a long successful history of building affordable housing that contributes to, rather than degrading, neighborhoods."
To follow the RHNA process and learn more about the methodology used, visit www.scag.ca.gov/housing