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New Santa Monica Ordinance Will Make Developers Pay to Offset Traffic

Santa Monica Real Estate Company, Roque and Mark
By Jason Islas
Staff Writer

February 28, 2013 -- The Santa Monica City Council voted unanimously Tuesday to levy new fees on developers that are expected to generate some $50 million over the next 20 years to maintain and improve the City's transit ways.

At Tuesday's meeting, residents and members of the business community came out to speak about the Transportation Impact Fee (TIF) ordinance, which, depending on the size and use of a development, would charge to help pay for the $134,315,829 of transportation-related capital project costs the City is anticipating over the next two decades.

“The fee is 20 years overdue,” said Elizabeth Van DeBurgh, the treasurer of the Wilshire/Montana Neighborhood Coalition. She said that although a similar ordinance had been passed in 1991, it had never been properly enforced.

“This is a chance for all of us to pull together” to address traffic, said Council member Kevin McKeown.

According to City officials, Santa Monica's Redevelopment Agency (RDA) accounted for 17 percent of the money that the City used for transportation infrastructure.

With Governor Jerry Brown closing down RDAs throughout the state last February, Santa Monica has been forced to seek new funding sources.

The TIF would generate 37 percent of the money required for Santa Monica's transit infrastructure to meet the Land Use and Circulation Element (LUCE) goal of no new net PM trips, according to staff.

Though every speaker Tuesday supported the concept, members of the business community said that the proposed fees are too high.

Kathleen Rawson, president and CEO of Downtown Santa Monica, Inc., warned that the fee schedule is “out of line with our neighbors.”

For example, a developer building in Downtown Santa Monica or the Bergamot Area would have to pay $21 per square foot of retail space, higher than the regional average of about $12 per square foot. In any other part of the city, developers would have to pay $30.10 per square foot.

In West Los Angeles, developers pay approximately $7 per square foot to build retail space. Culver City charges developers $1 per square foot of retail space.

Only Warner Center, near Woodland Hills, and Los Angeles' Coastal Corridor charge more: $23 per square foot and $46 respectively.

Rawson warned that setting Santa Monica's TIF higher than its neighbors could discourage new small businesses from setting up shop in the beachside city’s central commercial district.

That sentiment was echoed by Santa Monica Chamber of Commerce President Ellis O'Connor, who said that the TIF should be looked at in the context of the other fees already levied against developers.

“The cumulative effect of these fees would have the unintended consequence of being a barrier to the quality of development that the LUCE envisions for a small percentage of Santa Monica land,” he said.

Chamber Board member Susan Gabriel Potter added that “larger, more established chains stores may be able to afford these fees, but these costs would be prohibitive to smaller shops that provide the unique character that we love about Santa Monica.”

Some argued that the $134,315,829 worth of project costs seemed steep. The City expects to spend most of that money -- $33,708,781 -- on bicycle-related infrastructure. After that, the City has estimated “pedestrian actions” will cost $25,024,000.

Auto network actions and transit actions - - including money for public transit - - accounted for a total of $21,771,750.

Retail won't be the only use affected by the new ordinance.

Residential developments will cost developers $2,600 per unit in Downtown Santa Monica and the Bergamot Area and $3,300 per unit anywhere else in the city. Office space would cost developers $9.70 per square foot in Downtown and Bergamot and $10.80 everywhere else.

The priciest developments are medical offices, which would run developers $28.10 in Downtown and Bergamot and $29.80 elsewhere.

However, affordable housing is exempt from the fee, as are government buildings and developments for “religious uses,” daycares, private schools, outdoor dining, additions and changes of use under 1,000 square feet and any conversion of “existing non-conforming ground floor to a pedestrian-oriented use.”

As it stands, the fee would only apply to net gains in square footage, so if a developer is demolishing 5,000 square feet of retail space in order to build 10,000 square feet, that developer would be charged for the new 5,000 square feet of retail space.

The TIF only applies to existing buildings, officials said, if a change in use of that building would lead to increased traffic.

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