Santa Monica City Council Approves Off-Site Affordable Plan

The Santa Monica City Council has made way for a new approach to affordable housing construction in the seaside enclave.

Officials voted 6-1 in the council’s most recent meeting to approve a pilot program allowing developers to build affordable housing off-site instead of requiring it as part of a development, the Santa Monica Daily Press reported.

The approval comes amid concerns the policy could lead to economic segregation in the city. Mayor Lana Negrete was the sole dissenter, noting it could create “modern-day redlining, just in a much subtler form.”

“This pilot risks accelerating that imbalance,” Negrete said, per the Daily Press. “Off-site inclusionary housing… still tends to push affordable units to where the land is the cheapest. That’s not integration. That’s not diversity.”

Councilmember Jesse Zwick, who supported the measure, believes that economic realities require flexible solutions. “We need to adapt our rules to this economy because it’s not changing anytime soon,” Zwick said, stating “The status quo is not working.”

So far this year, only two building permits for multifamily properties have been issued in Santa Monica. One of those is for affordable housing and the other is for a three-unit project, according to the Daily Press. It comes as the residential construction industry in L.A. deals with higher interest rates, labor shortages, and construction material costs as a result of tariffs.

Under the pilot program, developers will have three options to choose from to meet affordable housing requirements. They can build units off-site with $150,000 per unit in gap financing; rehabilitate existing units deemed uninhabitable; or pay in-lieu fees of $43.91 per square foot for apartments and $51.30 per square foot for condominiums.

The program would help advance 40 housing projects that received approval but are stalled, with up to 3,598 approved market-rate units and 642 affordable units across 37 projects potentially being eligible.

Developers have a short timeline to apply for the program. It’s limited to 1,000 units and is set to expire Sept. 30.

— Chris Malone Méndez