Economic Associates, Culver City, presented the City Council with a
summary of its “research findings pertaining to several pertinent questions about apartment market conditions in the City of Santa Monica. We believe this information will help inform the Affordable Housing Policy agenda…

“We have reviewed housing market conditions in Santa Monica, the City of Santa Monica’s Land Use and Circulation document (LUCE), and tenant profiles of seven apartment buildings owned and operated by NMS Properties. From this review, we suggest three propositions about rental housing in Santa Monica’s downtown and along its Boulevard mixed use areas.

PROPOSITION 1: There is little demand for family housing in Downtown Santa Monica. Family households, defined as two or more persons related by birth, marriage or adoption living together, occupy only 20 percent of rental housing in Santa Monica’s downtown.

Dispatch Counter-Proposition: “Family housing” in Downtown Santa Monica is possibly over-priced.

*Available data also show that the average household size among renters in downtown Santa Monica is much lower than the two-person level required to define a family household.

Dispatch Counter-Proposition: In fact, one is not “much lower” than two,
it’s half of two.

*Nearly one-third of NMS Properties’ apartment units in downtown Santa Monica have two bedrooms. Single person households occupy almost half
of them. The average household size is only 1.3 persons.

Dispatch Counter-Proposition: “Single person households” have more disposable income than families so they can afford over-priced apartments.

*Very few families with children rent NMS Properties’ two bedroom apartments. Of its nearly 80 two bedroom apartments in downtown Santa Monica, families with children live in only 4 of them.

Dispatch Counter-Proposition: Families who can afford them may want more than two bedrooms. Or perhaps parents simply choose not to raise their children in downtown Santa Monica.

PROPOSITION 2: One-bedroom and efficiency apartments appeal to workers in industries deemed critical to Santa Monica’s economic future.Approximately 51 percent of the tenants of NMS Properties are employed in industries that the LUCE deems critical to Santa Monica’s economic future (e.g, the creative/Silicon Beach sector, medical, local serving retail, education and public service employees). As these industries continue to grow in Santa Monica, demand for the types of housing favored by their employees will increase.

*The proportion of employees of these industries among tenants of its “affordable” apartments is even higher. They account for 65 percent of residents in its Downtown area apartments and from 51 percent to 55 percent in its Bergamot Transit Village area units.

Dispatch counter-proposition: The assumption that people in the same
industries or that Silicon Beachers and retailers favor the same sort of housing is insupportable, however piquant.

PROPOSITION 3: There is a difference between rents in moderate-income affordable apartments and market rents

*Some observers believe that rents for moderate-income affordability apartments are effectively the same as market rents. That perception conflicts with the actual rent experience in Santa Monica, as indicated
by the rents collected at NMS Properties’ apartments.

Dispatch counter-proposition: No one who knows anything about Santa Monica thinks that affordable and market rents are synonymous.

*For one-bedroom apartments rented by NMS Properties in Santa Monica, the moderate-income affordable units rent on average for $1,694 per month in contrast to the market rate for one-bedroom apartments of generally between $2,213 and $2,804 per month. Moderate-income affordable apartment units thereby rent for as much as 23 percent below market rents.

Dispatch counter-proposition: Neither NMS nor the economists are breaking new ground here. It’s an apples and oranges question.

*A single person household earning the area median income would need to pay market rents of $2,213 to $2,804 per month, or from 45 percent to 57 percent of his or her annual income of $59,100 to live in Santa Monica.

*Conversely, a one-person household would need to earn from $88,500 to $112,800 (150 percent of 190 percent of area median income) per year to keep its housing costs at or below 30 percent of income, which is considered the critical “affordability” level.

Dispatch counter-proposition: If neither the single-person household nor the one-person household can afford to live in Santa Monica, why is NMS
building so many new apartments?

PROPOSITION 4: Delaying multi-family residential Development Agreements will have an important impact on City finances

*There are currently at least 32 Development Agreement applications for new projects pending before the City of Santa Monica Planning Commission, including multi-family residential developments comprised of 3,403 new housing units.

*The City of Santa Monica will earn fees that average from $11,356 to $13,155 per apartment unit from these new housing developments, exclusive of Transportation Impact Fees of $2,600 to $3,300 per apartment currently under consideration by the City.

*Delaying the pending Development Agreements will put at risk at least $38.6 to $44.8 million in future City revenues, or approximately 13 to 15 percent of the City’s General Fund budget for fiscal year 2012-2013.

Dispatch counter-proposition: The City is currently constructing a six-acre park across Ocean Avenue from the Santa Monica Pier at a cost of $47 million. We can’t imagine that any resident would approve 32 new
Development Agreements in order to finance one park.

What the economists, developers, Chamber of Commerce zealots and City Hall refuse to acknowledge is that money isn’t the main thing in this gloriously idiosyncratic beach town. Quality of life, in its most profound sense, is the main thing. Santa Monica is 137 years old. It’s small, 8.3 square miles. It’s on the beach. And it’s built out. Bring us something singular, something beautiful, something we don’t have — like genuinely affordable and architecturally distinctive housing, and if we like it, we’ll make room for it.