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9.C. - Page 13 <br /> Santa Monica, California: Community Benefits and Incentives <br /> In 2010, the City of Santa Monica updated their Land Use and Circulation Element (LUCE),which <br /> includes a community benefits program that allows for increased density in exchange for a range of <br /> benefits,including traffic reduction management strategies,affordable housing,physical <br /> improvements, social and cultural amenities, and historical preservation. <br /> How it works:The LUCE establishes a three tiered system for determining development height. Tier <br /> 1 establishes a base height of 32 feet in most areas. If developers want to build above that, they can <br /> opt for a discretionary permit for increased height in exchange for providing public benefits,which <br /> is called Tier 2. Tier 3 is available in certain parts of the city where additional height is allowed in <br /> exchange for even more public benefits,most likely determined through a Development Agreement. <br /> The basic structure of the tier system is described in Chapter 2.1:Land Use Policy and Designations <br /> of the LUCE. The community benefits program is described in Chapter 3.2: Community Benefits of <br /> the LUCE. The entire LUCE is available at http://www.shapethefuture2025.net/ <br /> Residents participated in developing the community benefits program as outlined in the LUCE, <br /> including the categories of community benefits to include and the tiered system, through the three <br /> year-long public participation process for the LUCE. Before the LUCE was adopted,the City <br /> commissioned a financial feasibility study by KMR to determine if the three tiers they were hoping <br /> to establish would result in value enhancements,increasing the development potential of a site and <br /> therefore the potential for community benefits.2 The study involved a case-by-case pro forma <br /> analysis using four different prototype developments. <br /> The pro forma calculated: <br /> • base construction costs; <br /> • sales revenue or net operating income depending on project type; <br /> • residual land value; and <br /> • the value enhancement (difference between residual land value in base case compared to <br /> tiered proposal) <br /> The analysis found that the tier structure proposed in the LUCE provides significant value <br /> enhancement for the prototypes studied. However, this analysis did not attempt to quantify the cost <br /> of the public benefits proposed in the LUCE to determine whether the tier structure provided value <br /> enhancement net the cost of the benefits. <br /> Since the LUCE was adopted in 2010,the City has continued the process of designing and <br /> implementing the tiered development community benefits program. In Spring 2012,the City <br /> commissioned a study by Dyett&Bhatia on issues, options, and case studies for codifying <br /> community benefits into their zoning ordinance update.'This study discusses several legal <br /> considerations for Santa Monica as the City proceeds to incorporate the bonus program into the <br /> zoning code. The study notes that there is an existing body of law that requires cities to establish <br /> nexus and rough proportionality when incorporating community benefits into zoning standards. The <br /> 2 The analysis is available for download at: <br /> http://www.shapethefuture2025.net/PDF/luce_2009_documents/KMA_fiscal_analysis_benefits.pdf <br /> s This study is available for download at <br /> http://www.ci.berkeley.ca.us/uploadedFiles/Planning_and_Development/Level_3_: <br /> Redevelopment_Agency/Santa%20Monica%20Z0%20Update-CB%20and%201ncentives.pdf <br /> Page 8of15 <br />