There is a general and growing unease in the relationship between residents and their city. The people who live here ask themselves and each other – who does the city work for? The few residents who watched the October 12-26 meetings clearly saw what drives the city’s priorities – and what doesn’t. The clear realization was that the concept of a balanced city that works for everyone was fading.
It is important to change this trajectory. The stakes are enormous.
Core topics: Council discussion
In these city council meetings, the three key issues that plague the city were addressed:
- Housing development and densification
In order to meet the administrative requirements of the state and to avoid state reprimands.
- Priorities for Commercial Activities
Subordination of the commercial use of commercial real estate to the priorities of residential development in order to fulfill government mandates. Income generation considerations were secondary and not prioritized.
A seasonal need to attract overseas visitors, vacation shoppers, and superbowl activities (the latter two of which would, of course, require ample downtown parking) supported the demand for $ 1 million in one-time funding for essentially “temporary improvements” to safety to spend.
Core issues: Council perspective
In none of these areas did the long-term core concerns of the constituency and tax-paying residents play a role in decision-making.
- Housing development and densification
As noted in this column, the target of 8,895 housing units along with the affordable component of 6,158 units has been administratively assigned by the state, with no actual need confirmed by the previous council. As a result, there is no city analysis that supports these goals.
The discussion about residential construction increasingly focused on 100% affordable residential projects. Although even this prioritization is not fully accepted by seasoned councilors, it was a grudging recognition by the mayor of the large number of posts across the city. The updated 2020 census figures put the vacancy in Santa Monica at 4,751 units, or 9.1% of total housing units. Since the vacancy rate for single-family houses is significantly lower than for multi-family houses, the vacancy rate for multi-family houses could reach up to 11%.
Councilor Christine Parra expressed concern about the strain this increase would place on the cost of water, infrastructure and services caused by an increase in the city’s resident population of more than 20%. The mayor also admitted that there were real concerns. But that was it. There was no discussion. No instruction was given. The problem is especially critical as the developer impact fees do not make up for these costs.
Again, the need for additional facilities (e.g. swimming centers, parks and libraries) that such a population increase would create was not mentioned.
These problems are much more serious when viewed in the context of a city that is flawed in many of its most critical areas today, just by its present size.
- Priorities for Commercial Activities
City officials had to remind the mayor that cities need tax bases and a sustainable economy.
The long-standing and growing desire of the residents for permanent solutions to precisely these problems was not recognized. Although Councilor Brock pointed to this blatant omission, a purely seasonal focus remained the rationale. After the end of the seasonal events, a return to the essentially current state of security is apparently expected.
What are the effects?
The lack of a holistic approach to these issues exposes the city to long-term imbalances.
- 100% affordable housing projects generate significantly less property tax income. The focus on city-owned land will result in very little additional property tax revenue to offset the necessary increases in services, infrastructure and amenities. Even the development of market interest rates is not self-supporting.
- A focus on 100% affordable projects requires a focus on generating income in the city.
The general restriction of commercial activities in the city, in particular the promenade, due to the demolition of the park infrastructure from Building 3 to enable increased residential development, will cause sales tax and parking garage revenues to fall irrevocably without any discernible substitutes. The infrastructure for lost revenue can never be restored.
- Decreasing quality of life
The high profile incidents of violence in the city contribute to increasing personal insecurity among residents and visitors and contribute to a declining quality of life for everyone. This can be seen most clearly, for example, in the possible closure or significant redesign of the chess park, the removal of benches on the promenade and the conversion of bus benches to stools.
The financial costs of the declining security and quality of life in the city are mainly reflected in the lost city sales tax income due to empty shop fronts.
What should have happened in these (and previous) Council meetings?
In a city-centered, resident-centric process, balanced results with long-term sustainability would have been the goals driving the results. To achieve this, the city would have:
- Studied actual housing needs in order to adequately respond to or directly contradict the unsupported assignment of government units.
- It examined in detail the additional costs required to provide adequate infrastructure, services, security and amenities on a holistic basis as the population increase also affects the existing residents.
This would have given the city an additional basis to assess the practical scope of compliance with the state unit mandate and to demand compliance with the corresponding financial support. Such costs have a real financial impact on actual compliance with the government’s housing mandate, which the government conveniently does not consider an “unfinanced mandate”.
- Determines the level of revenue growth and cost efficiency required to holistically maintain an enlarged city as a parallel and equal priority. Based on this analysis, the city should have worked with the business community to develop a sound, researched, and comprehensive retail and business tax generation plan that highlights business concepts that are resistant to online substitution and offer options that serve the community as a whole. While the city receives a smaller percentage of taxes from online sales than it does from local purchase transactions, adding additional revenue to generate uses would create net profits and growth opportunities for the city’s revenue.
To be clear, phasing out essential services and amenities as a funding strategy is not an option.
What needs to be addressed
- The existing questions of security and city cleanliness with the size of the city “as it is” indicate that until these questions have been fundamentally clarified, no thought should be given to an expansion of the resident population.
Only then can an appropriate baseline of the resources required to maintain that baseline be established. This would involve a reversal of the socialized cost of failed policies like closing the chess park, occasional use of Reed Park, removing benches, etc.
Safety is a fundamental urban responsibility that is a core component of justice in all neighborhoods. It is a prerequisite for ensuring the basic quality of life for all residents and visitors as well as for economic recovery and improvement of urban finances. Needless to say, security, when lacking, creates significant quality of life and financial costs.
- It should be recognized that not just maintaining but improving existing commercial infrastructure, such as parking lots, is critical to such a redevelopment plan.
This would also give clear indications of the opportunity costs associated with eliminating irreplaceable commercial props like parking. The elimination of downtown parking has an impact on both parking fees and the total amount of sales tax transactions. There are no non-regressive tax substitutes for this income.
The importance of this component cannot be emphasized enough. In the pre-pandemic household, sales and use taxes, along with parking fees, provided 20% of the General Fund’s revenues. These revenues are closely related.
What has to happen
As a first step towards restoring a basic quality of life for all residents and visitors, the city must adopt a holistic, city-centered, resident-oriented paradigm. Looking ahead, it must also create a balanced, sustainable and nourishing environment for the improvement of this quality of life, including the impact on the cost of living, for all current and future residents. This approach essentially involves a thriving and sustainable economic base to support these residents.
The city must recognize the crucial role of each of these components in a balanced and prosperous quality of life.
Only with this approach can the city’s decisions be based on the framework conditions that are necessary to correctly assess the prioritization of residential real estate and commercial / retail real estate.
By Marc L. Verville for SMa.rt (Santa Monica Architects for a Responsible Tomorrow)
Mario Fonda-Bonardi AIA, Planning Commissioner; Ron Goldman, FAIA architect; Dan Jansenson, architect, building and fire protection officer; Michael Jolly, AIRCRE; Thane Roberts, architect; Robert H. Taylor, Architect AIA: Sam Tolkin, Architect; Marc L. Verville MBA, CPA (inactive)