SANTA MONICA—The city of Santa Monica released a report showing that the city is struggling to meet its affordable housing quota, a ratio set by voters in 1990 when they passed Proposition R.

Per Proposition R, 30 percent of all new multi-family housing should go to moderate – income (less than $54,450 per year) or low-income households (less than $48,660 per year). Out of the 175 brand new apartments available for rent from the seven-new apartment buildings constructed in the 2016 fiscal year, only 19 percent were below market rate. This the third year in a row that Santa Monica has failed to meet the 30 percent threshold.

If the 30 percent threshold is not satisfied, Proposition R states: “The City Council shall take such action as is necessary to ensure that the provisions will be met in the future.”

Options available for developers while constructing a new building to satisfy Proposition R include:

  • They may reserve units in new buildings for low-income households
  • Build affordable housing somewhere else, pay a fee, or dedicate or sell land to the City or nonprofit housing providers.

“If a developer is allowed to pay a fee, those fees are typically not equivalent to the cost to build affordable housing so the number of homes that are created, tend to be lower when a fee is paid,” said Director Andy Agle to the Santa Monica Daily Press.

In 2016, three developers took the pay a fee option which amounted to a total of $481,232, which will be used as funds to pay for affordable housing developments in the future. Two for-profit developers provided onsite (housing for low-income families also allows them to get into neighborhoods that they can’t afford otherwise), or inclusionary, housing.

City staff are struggling to keep up with the standard after the state legislature eliminated redevelopment funds, which accounted for 80 percent of funding for affordable housing, in 2012. These funds were given to non-profits in the form of a loan to build affordable housing.

To raise money for affordable housing, the Santa Monica City Council placed a measure on the November ballot to raise the local sales taxes by one-half percent for voters. These increased sales taxes combined with loan repayments and property taxes may help in gathering funds for affordable housing.

“We anticipate going forward that we’ll be able to increase the number of loans we’re making for affordable housing,” said Agle to the Daily Press.

In 2017, only 15 of 126 new apartments constructed by 13 new developments are slated to be affordable.