Is Santa Monica About to Get Manhattanized?

Santa Monica, California, is one of the nicest places to live in the United States. It has a splendid beach, an amusement park, loads of high-paying jobs, a charming downtown pedestrian mall, and a transit connection to Los Angeles. Plus, it’s 10 to 20 degrees cooler than the rest of Southern California in a heat wave. But don’t pack your bags just yet. The population has remained virtually unchanged since 1970, the median home now sells for $1.8 million, and the city has permitted just 4,500 units of housing in the last two decades.

This scenario, underway in every big city in the state, is the source of California’s crippling housing crisis, which has led to record numbers of people camping out on the streets and helped send the state’s population into decline for the first time ever in 2020.

But Santa Monica just swerved off the NIMBY path. This year, developers have applied to build another 4,000 apartments in the city of 91,000, including more than 800 set aside for low-income residents. How did the city get two decades’ worth of housing proposed in eight months? Last week, the Santa Monica planning manager revealed that the city had accidentally abolished its own zoning code for most of the 2022 calendar year. Oops.

Developers noticed. To take advantage of the oversight, they submitted plans for 16 new projects*, including one 15-story, 2,000-unit block for a low-slung commercial area around the light-rail Expo Line, according to Emily Sawicki at the Santa Monica Daily Press, which broke the story. On that site, builder WS Communities had previously planned to construct 183 units. (Several of the projects come from WS Communities, which submitted supersized versions of previously planned projects. At another site, for example, the firm could replace a planned 51-unit building with a 222-unit building.)

“This is not theoretical,” planning manager Jing Yeo told the Santa Monica City Council recently. “This is very real and it’s happening. These are projects that, as long as they include 20 percent on-site affordable or a 100 percent moderate [-income housing], we must approve those projects … The consequences are already in effect.”

California has finally gotten serious about fixing its housing supply shortfall, and Gov. Gavin Newsom is cracking down on the state’s wealthiest enclaves, which have long resisted any kind of new building at all. The projects proposed for Santa Monica all have an affordable housing component, but the bigger impact may be felt in the broader market, where scarcity has driven the average apartment rent to $4,000 a month, according to RentCafe. What would it look like if the city expanded its apartment stock by 10 percent overnight?

The loophole in this instance is called “builder’s remedy,” and it has been open since February, when Santa Monica fell out of compliance with state housing law. “The authority to manage our city in zoning matters has largely been usurped by the state of California, and it doesn’t matter what we do up here,” council member Phil Brock summed up.

Well, not quite. The state has approved a new, more liberal land-use plan from Santa Monica, so control is back with City Hall now. Meanwhile, the dirty dozen that snuck through in the interim might not actually get built: Most of those applications are preliminary, and developers may not follow through with formal applications, let alone line up financing and break ground.

But they can if they want to, the state has confirmed, and the city cannot say no except if the project would “have a specific, adverse impact upon the public health or safety,” according to a city memo obtained by the Santa Monica Daily Press. “We’re already, to put it lightly, 12 projects in the hole,” said Gleam Davis, another council member. “[The state] has said they’re going forward no matter what we do tonight, because they beat the clock.”

For more than 50 years, California has required its cities and towns make housing plans to accommodate future population growth. In recent years, fulfilling this Regional Housing Needs Allocation (RHNA) has become something of a joke—a box some city planning intern checks every eight years. A state audit from March concluded the California Department of Housing and Community Development (or HCD) “does not ensure that its needs assessments are accurate and adequately supported.”

To put that in plain English, it helps to look at exactly what “planning for housing” looks like. Last year, the planner Nolan Gray, now the research director at the advocacy group California YIMBY, ran down some of the sites that the San Diego-area city of Coronado had “selected” to accommodate future affordable housing. Those included: two supermarkets, the post office, the fire department, and a luxury hotel. Needless to say, those are not plausible locations for low-income apartments.

Last year, however, as part of a broader effort to enforce state housing laws, California bulked up HCD’s accountability team. In August, the state announced an investigation into San Francisco’s housing-approval process. “A housing element is no longer a paper exercise—it’s a contract with the state of housing commitments for eight years and the Housing Accountability Unit will hold jurisdictions to those commitments,” Megan Kirkeby, HCD’s deputy director, said in a statement last year. Activist groups like Abundant Housing L.A. helped by scrutinizing “housing element” documents for sloppy analysis, absurd site selection, and overly optimistic projections. In February, the state told Santa Monica its plan wasn’t good enough.

That opened the door to a little-known provision of a 1990 law that was designed to scare cities into building enough housing: The builder’s remedy. Any city that doesn’t properly submit their housing plan loses all control over projects that dedicate 20 percent of the units to low-income households, or 100 percent of units to moderate-income households.

At the time, the idea was radical—”a powerful bill designed to bludgeon exclusive suburban communities into accepting low-income housing projects,” wrote the San Francisco Chronicle. But as a recent white paper by University of California, Davis law professor Chris Elmendorf shows, the law’s lack of use—which is related to the state’s habitual rubber-stamping of local RHNA plans—may have scared off developers. If a builder’s remedy project is exempt from zoning, can you build a 100-story building in a neighborhood of single-family homes? Who the hell knows?

Nothing quite so radical is in the offing for Santa Monica. The largest of the proposed projects is just 15 stories, and destined for a neighborhood of warehouses and offices with two light rail stops. Nearby, Santa Monica once planned to approve a mixed-use, transit-oriented complex of homes, offices, and shops. But after residents revolted, with a petition that gathered 13,500 signatures, the city backtracked, and the developer wound up building only offices and no housing.

The big question now is whether Santa Monica developers follow through. A few miles to the south in Redondo Beach, a developer took advantage of the same situation to pull permits for a giant complex of 2,300 new homes this summer. Most observers I spoke to say the developers are on solid ground—but there is always the threat of a NIMBY lawsuit and a hostile judge, even if the state has made its position clear. “I think Santa Monica is going to worry about the legal exposure it could face if it denied the projects,” Elmendorf said in an email. “On the other hand, if the city does approve the projects, it may face NIMBY lawsuits arguing that it did not have authority to approve them.”

More fundamentally, it’s not clear how much intent really lies behind these proposals: Preliminary approval requires just a few hundred dollars and a quick submission to the city. None of these projects likely has financing lined up. How many will ever make it to market, even if the city can’t stop them? Are there enough contractors and construction workers on the West Side to ramp up the pace of building tenfold? “I’m cautiously optimistic that at least some of these projects will actually be permitted and built,” David Barboza, director of policy and research at Abundant Housing L.A., wrote to me.

Whatever happens, the builder’s remedy already did one thing: It forced Santa Monica to adopt a new, state-compliant “Housing Element”—the document that makes clear where new units might go in the future—in order to restore the city’s zoning code. “If there weren’t these draconian penalties, I would still consider voting no” on the new housing plan, said council member Davis. But the builder’s remedy was draconian indeed. She voted yes.

Update, October 19th, 2022, 4:22 p.m.: Council member Davis clarified her position in a tweet after this article was published: “I feel compelled to make it clear that I support building more housing (affordable and market rate) in Santa Monica,” she wrote. “My issue with the proposed housing element is that it did not go far enough to meet the state requirement that the housing element affirmatively further housing.”