Santa Monica residents are being squeezed by two related realities: 1) increasing property values affordable only to a small minority, and 2) a lack of low-cost housing caused by the City’s notorious housing/job imbalance. This imbalance has been created by four decades of policies that have incentivized commercial over residential construction. Concurrent with the commercial space boom, there has been a rush to create housing for the well-to- do at the expense of affordable housing. There are currently over 3,000 new market rate units in the pipeline. These units will not be affordable for the average resident for three reasons: 1) new construction will always be more expensive than adaptive reuse; 2) the demand for beachfront housing, and the ability of the wealthy to pay market rates, is unlimited; and 3) land values and construction costs in our already dense city will continue to escalate because no amount of new housing will result in lower home prices or rents. Even when we deed restrict a small fraction of those units to qualified low-income residents, the affordable portion is too small to impact prices in such a competitive marketplace. In other words, we cannot build our way to affordability.
If you believe, as we do, that housing for a wide range of incomes is a worthwhile goal, the only way to create affordable housing is with subsidies. The question then becomes what kind of subsidy, how big, and for whom? The current City Council is struggling to create affordable housing with the new zoning code. The only tool they have devised is giving projects with affordable units extra floor(s) and/or height. This should not be the only incentive because of the potential, unintended consequences. In our already dense City, new construction often entails the demolition of existing buildings and sometimes even affordable housing. This leads to more traffic because housing is mostly being built concurrent with new commercial development. The result is more office space and a failure to right the job/housing imbalance. In many cases, those extra floors will seriously impact their residential neighbors’ sunlight, air, and views.
A far better solution would be if the new planning code incentivized the conversion of existing office buildings to mixed use with residential uses on the upper floors and commercial uses below. This would have several advantages: It’s the fastest, greenest and least disruptive way to create housing. You can take a typical, existing office space add bathrooms, a kitchen and some operable windows and “voila” you have a new unit. These conversions could be done as tenant improvements in a fraction of the time it takes to build a new building. Office buildings are usually designed to facilitate the reorganization of their spaces so this transition is usually not difficult.
It does not generate more parking or traffic demand. Most commercial buildings, particularly recent ones, have more parking per square foot than is required for the equivalent square footage for residential uses. Those that used to drive to work or shop there would be replaced by a fewer residents who would live there.
The largest traffic change would be the partial reversal of today’s traffic flow. Instead of the majority of commuters arriving in the morning and leaving the City at night, more would be leaving in the morning and returning at night thereby balancing our traffic overload.
Local businesses would benefit from increased foot traffic from these new residents who would likely spend more locally than commuters.
Because our commercial buildings are more often near to or on the boulevards, the “new” housing would be more likely to have the transit infrastructure already in place.
The quality of these converted spaces could be as luxurious or as spare as the owners wanted. Simple, open plans would cost less to build and be akin to the hip, simple artist lofts attractive to today’s young tenants and buyers.
Since the buildings are already here, all we need to convert them to housing is a suitable financial incentive for the owners to make the conversion. In the past, commercial rents per square foot were priced very differently than residential rents, but they have since crept up to be within 25 percent of commercial rents. This is where subsidies might be needed to close the gap. The new Zoning code should have a number of subsidies and incentives to encourage these conversions. For example: Allow the conversions “by right” as tenant improvements (i.e. no Conditional Use Permits etc. required); Waive any additional parking requirements if no new square feet were added. If the new parking mix was below that required under the current code, the owner could “save” the extra parking for future tenants; While unbundled parking is generally not desirable, this is one case where it might be possible if each new loft had at least one dedicated space. The current requirement for open, common areas, balconies and patios might be waived if the commercial buildings did not have the available space; Finally, and most importantly, we need the code to provide financial subsidies to close the rental gap between residential and commercial uses. This can include waived permit fees as done for Historical buildings, waived or reduced property taxes as done for the Mills Act projects, waived business taxes, unit taxes, tax credit syndications, waived meter fees and any package of other cost reductions to incentivize the conversions.
Currently, the rents from low-income housing only cover about a third or quarter of the actual costs to produce that housing. So we are already subsidizing 2/3s or 3/4 of the cost of low income housing at substantial public expense. Converting business square footage to residential uses is a good way to close the gap for mid-range housing with a significantly lower subsidy. If the City desires the full range of affordable housing, it needs to put more skin in the game using incentives and subsidies built into the new Zoning Code.
By Mario Fonda Bonardi AIA for SMa.r.t.
Ron Goldman FAIA, Thane Roberts AIA, Architect, Robert H. Taylor AIA, Mario Fonda Bonardi AIA, Daniel Jansenson Architect, Samuel Tolkin AIA, Armen Melkonians Civil & Environmental Engineer, Phil Brock Chair, Parks & Recreation Commission. For previous articles, see www.santamonicaarch.wordpress.com/writings.