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.