Developer says key to workforce housing is cooperative employers
CITYWIDE Building affordable housing for Santa Monica’s workforce may seem like a difficult task given the high price of land, but it isn’t impossible. All it takes are employers with a lot of land and a lot of love to give.
That may sound like a long shot, but it’s been done before, according to veteran developer Ehud Mouchly, who has built housing for faculty at UC-Irvine and Cal State Channel Islands by using land owned by the colleges.
In a presentation to some of Santa Monica’s largest employers, Mouchly, an adjunct professor in USC’s Master of Real Estate Development program, said for-sale housing could be built in urban areas without much open space if employers would be willing to use some of their property for development.
Once units are built, employees could purchase them for considerably less than what they might cost on the open market because the buyer would only be buying the unit and not the land on which it sits. Under the plan, an employer would continue to own the property and receive revenues generated from the sale of the units, Mouchy said.
By not owning the land, buyers could not participate in the speculation game and reap major profits. There would be some financial benefit to owning one of these units, but the idea is to keep them affordable throughout their lifetime, hence the elimination of equity.
“What we do need is land, and that’s no small thing,” Mouchy said.
The presentation was part of an ongoing effort to find solutions to Santa Monica’s housing crisis, where the average cost of a home — $850,000 — is nearly 14 times the annual salary — $62,000 — of most families.
In response to complaints from employers about the difficulty of attracting and retaining highly-skilled and dedicated workers because of the high cost of housing, City Manager Lamont Ewell earlier this year created the Workforce Housing Committee, comprised of city officials, residents and business owners. The committee’s task is to research ways to increase the affordable housing stock for the city’s nurses, teachers, municipal employees and other workers who are the backbone of Santa Monica’s economy.
“There is a barrier to anyone who wants to buy in Santa Monica, and that is hurting the community,” Mouchy told the committee.
Under the model used by Mouchy and his development firm, UniDev, the key to building affordable units is partnering with large institutions with lots of land — mainly, school districts, universities, local governments and major corporations.
These entities would set aside a parcel for development and over time, a portion of the controlled appreciation in the price of the units provides the income. This revenue allows the entity to fund more workforce housing programs or provide low-cost or no-cost loans to assist moderate-income individuals in achieving home ownership.
The obvious problem with the model is the lack of available land in Santa Monica. Those companies large enough to need and support such a development are already cramped. For many, the only option would be to build up, but with many residents and elected officials opposed to taller sky-lines and increased density, this may not be an option.
The plan also doesn’t account for future parks, schools or government buildings that will be needed to accommodate an increase in the population.
Those are some of the questions that continue to challenge the committee, which has yet to come to a consensus on what types of employees a housing program should target. Whether the program should target only Santa Monica residents currently living in the city, but not homeowners, or help those employers whose workforce is comprised largely of non-residents is prime for debate.
As far as heights and density, Mouchy said Santa Monicans will very soon have to come to the realization that times are changing and so should the current zoning restrictions that prevent developers from going higher. The major thoroughfares are ripe for development, he said.
“Santa Monica cannot remain a low-density, low-rise community for long,” Mouchy said. “This [LA County] is the promised land and Santa Monica is right in the middle of it... People will come.”
Where they will live is another story.
Originally published in the Santa Monica Daily Press print edition on July 18, 2007. Read the original PDF.