Santa Monica has overhauled the way it approves housing, but the reforms have not yet produced more construction, and a typical project still takes more than six years to go from application to move-in, according to a new RAND Corporation study.
The report, "Santa Monica's Recent Economic and Social Trends: A Case Study with Regional Comparisons," found that from 2018 to 2025, Santa Monica built fewer new homes per resident than any of eight comparison jurisdictions except Beverly Hills. The group included Culver City, West Hollywood, Los Angeles, Burbank, Glendale, Long Beach and Pasadena. Santa Monica issued about 10 to 15 building permits per 10,000 residents a year from 2018 to 2024, fewer than Culver City, and was overtaken by Beverly Hills in 2021.
Using city permit records, RAND calculated that a project takes an average of 403 days to win entitlement, 726 more days to receive a building permit and 965 more days to reach a final permit, usually a certificate of occupancy. Comparable projects in the West Los Angeles Area Planning Commission area take an average of 4.9 years. The difference lies mainly in the entitlement and permitting stages, which are largely within the city's control, the authors wrote.
The California Coastal Commission adds delay, RAND found. Because Santa Monica lacks a fully certified Local Coastal Program, projects in the coastal zone, which runs four to eight blocks inland, need state approval as well as the city's. Projects there took 77% longer to win entitlement, 701 days compared with 396, and 12% longer to move from entitlement to building permit.
The 2022 "builder's remedy" produced a surge in applications. Between February and October 2022, while the city lacked a state-approved housing plan, developers filed 16 applications proposing 4,260 units, according to RAND. A May 2023 settlement let the projects be refiled with expedited processing but many of those units have not shown up in permit numbers.
The city has since made substantial reforms, RAND found. It eliminated its tier system in 2023, raised height and floor-area limits, expanded administrative approval and adopted a pilot program that lets builders pay fees or build affordable units off-site. The pilot has been credited with reviving several stalled projects. "I would rather propose a housing project in Santa Monica than literally any other jurisdiction in the entire state of California," an experienced land-use attorney told researchers.
Interviewees blamed many stalled projects on Measure GS, the 5.6% transfer tax on sales of $8 million or more. The tax represents more than 30% of a typical expected return on a development project, enough to make many projects infeasible, according to the report. A separate RAND study found a similar Los Angeles tax led to a major decline in apartment construction.
Bottlenecks remain, the researchers concluded. Interviewees described a two-step architectural review in which the architectural review board appeared to disregard the urban designer's earlier review. They said inspectors apply discretion inconsistently, departments such as sanitation and public works make costly demands late in construction, and permits are routed to every department whether or not they need to weigh in. City staff said experienced inspectors often leave for the private sector. A developer estimated that a two-month construction delay "could cost $600,000 at the peak of the construction loan," and an architect said new construction pencils out only at rents of $3,500 to $4,500 a month for a one-bedroom.
Researchers Jason M. Ward, Roland Neil and Lizhong Liu analyzed state Department of Housing and Community Development progress reports, Los Angeles County assessor data and Santa Monica and Los Angeles permit records, with help from USC and MAREA.AI analysts. They interviewed 14 of 19 people invited, including five development-sector participants, city staff, elected officials and business owners. The authors note the study is descriptive, did not include affordable housing developers and did not test the effects of the reforms with data. Timeline data may include delays by developers between permit and construction start.
Santa Monica must plan for 8,895 units by 2029, more than five times the prior requirements. It permitted about 1,034 units, roughly 11.6% of the goal, through 2023, and just 37 in 2024, according to state data. Only 265 affordable units were permitted through 2023, 4.3% of that target. Meanwhile, 3,296 market-rate and 878 affordable units held approvals without permits.
City staff have cited high interest rates, volatile material costs, labor shortages and flat rents as impacts on the housing construction ecosystem.
RAND recommended that the city expedite certification of its Local Coastal Program and publicly commit to a timetable, which would let applicants get coastal permits directly from the city. It urged the city to reconsider its two-stage architectural review, reduce the number of required reviewers and stop sending every application to all departments when routine items were already approved in plan check.
The authors also called for earlier interdepartmental coordination, bringing in sanitation and transportation at the start as Los Angeles does, and more inspection resources, including retaining experienced inspectors and using deputy inspectors. They recommended additional incentives, such as fee waivers, to convert offices to housing beyond the city's 2024 adaptive reuse ordinance; a transparent open data portal showing stage-by-stage timelines and how much time applications spend with the city versus applicants; and outreach to builders and investors to dispel the city's outdated reputation as "a place to avoid."