Southern California Real Estate and Neighborhoods

How Much Does It Cost To Add Affordable Units In Santa Monica

How Much Does It Cost To Add Affordable Units In Santa Monica

An editorial criticizes Santa Monica’s new Downtown Community Plan by highlighting the huge difference in the affordable housing cost burden for residential vs commercial developments.

According to DCP requirements, a typical residential development’s affordable housing burden will be nearly 10 times that a commercial development. Running the numbers, we find that a commercial development is required to pay to around $13/square foot vs the $122/square feet for residential developments.

In this housing starved area, the new DCP, in effect, disincentives residential development.

In the DCP zone, commercial developments are required to pay 23% above the normal affordable housing fee required, which works out to about $13, depending on the type of commercial space developed.

For a typical residential development conforming to the 6 story height restriction, a developer would be required to make 15%-25% of the units affordable units (or locate them within 500 feet). A development of 45 apartments with  48,571 gross square feet would need to provide 12 units of affordable housing. This would cost of $5,964,121. Divide the 48,571 gross square feet by the $5 million affordable unit development cost and you get $122/square feet. In this scenario, affordable housing would represent 20% of total development costs.

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