City Embarks on Affordable Homeownership Experiment
By Olin Ericksen
November 1 -- For only the second time in the city's history, Council members are trying to make the American Dream of homeownership an affordable reality for Santa Monicans of more modest means.
A united City Council last week cleared the way for up to 40 new condominiums
It's stated aim: to help local teachers, nurses, City employees, blue collar workers and others who earn an average income of $65,000 for a family of four buy a starter property in Santa Monica, where prices for a single family home soar into the seven figure range.
Council members hailed the plan as a breakthrough that has been in the works for several years.
"With this action tonight, we move into a somewhat untested area for us, the promise of affordable homeownership housing,” said Council member Kevin McKeown, a member of Santa Monicans for Renters’ Rights.
Knocking off nearly half-a-million dollars through a mix of state monies and local redevelopment funds, first-time buyers who qualify will be able to purchase the properties for approximately $200,000 -- a fraction what most Santa Monicans currently pay for high-priced condominiums, according to Joan Ling, executive director of Community Corporation.
"If you sold the same units on the market, they would go for nearly $700,000," said Ling. "That's nearly a half million dollars that Community Corp. will forgo in order to make it affordable."
The use of local redevelopment funds allows Community Corporation to give preference to people who currently live and work in Santa Monica, said Ling. That is a goal suggested in numerous surveys, focus groups and community meetings over the last three years.
"We did a survey of the School District and St. John's hospital workers and the response was overwhelmingly in favor of this model," she said.
Former School Board member Patricia Hoffman participated in some of those surveys.
"Our professionals are moving further and further and further away,” said Hoffman. “We’re losing a class of people in addition to people of low income.”
City officials also hope the project will help residents in the Pico Neighborhood -- which has the highest concentration of minorities and the poor -- buy their first home without having to leave the city.
"We also did two forums and a focus group of young people in their twenties and thirties, college educated, who grew up in the Pico Neighborhood, whose parents were blue collar workers and who said they can't afford to stay in Santa Monica," Ling said.
Ana Marie Jara, a Pico Neighborhood activist who participated in the 2003 meetings, asked that language be included to ensure the units go to not just Santa Monicans, but Santa Monicans from her neighborhood.
"I would like to see somewhere in there language that these homes go to Santa Monicans and preferably to the Pico Neighborhood," she said.
While preference cannot be given to people living in certain neighborhoods in the city, Ling hopes locating the project in the Pico Neighborhood and conducting outreach will give those already living there a better chance.
"Preference can only be citywide, and not neighborhood specific," said Ling. "We are also working with the Pico Neighborhood Association to do outreach.”
This is not the first time Santa Monica has experimented with affordable homeownership.
"We've tried a moderate income homeownership model through limited equity cooperative (housing projects), but that was a concept that only seemed to work on the East coast," Ling said.
The cooperatives -- one at 1959 Cloverfield Boulevard and the other at 43 Ocean Park Boulevard – allowed tenants to collectively own their building, but not the individuals units, she said.
Those experiments failed, however, because lending rates by banks on the West Coast are not as favorable to such ownership models -- often lending at rates that are nearly two points higher, according to Ling.
Under the new model, tenants would own their condominiums, a concept banks on the West Coast tend to bankroll at more favorable rates, said Ling.
"So, for the first time in Santa Monica, people will actually own that physical space," she said.
While the units will be owned by the buyer, the land will be owned and operated by a public purpose corporation, such as Community Corporation, under a concept known as a land trust.
In order to keep the unit affordable for a second buyer, each unit’s equities will be limited under the trust, Ling said."While this land-trust model has been tried in other jurisdictions, the is new territory for Santa Monica," she said.
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