Affordable, Livable & Secure Housing for All: Santa Monica launches pilot program to expedite housing development

August 13, 2025 1:55 PM

SANTA MONICA, Calif. (Aug. 13, 2025) - The Santa Monica City Council Tuesday approved an emergency ordinance expanding the city's Affordable Housing Production Program, or AHPP, to allow greater construction flexibility for market-rate housing developments.

The ordinance launches a pilot incentive program to permit already approved projects more options for fulfilling the city's affordable housing requirements while simultaneously proceeding with construction of the market rate portion of the housing development.

Participating builders would also be eligible for a local density bonus - not currently permitted if they choose to build affordable housing off-site - in an effort to expedite housing production in Santa Monica and activate vacant properties more quickly.

Currently, the AHPP requires that builders of market rate housing in Santa Monica provide affordable units either on-site or off-site, or pay an in-lieu fee. If affordable units are provided off-site, the builder must complete the affordable component before completing the market rate development. However, developers are facing obstacles securing construction financing for their housing projects, on top of challenges with the current economic climate.

As a result, many market rate and affordable units have been approved but remain unbuilt.

"We've seen a troubling slowdown in housing construction due to many factors, including high interest rates, material costs, labor shortages and a difficult economy," Community Development Director Arminé Chaparyan said. "Housing is a critical need for our city and the region, so we must adapt and adjust and find new ways to encourage these developments to move forward."

City staff estimate that up to 3,598 approved market rate units and 642 approved affordable units within 37 approved projects could potentially be eligible for the incentives established under the new ordinance.

The initial pilot program will be capped at 1,000 units, with the council set to revisit the issue in September after the trial period.

The AHPP, approved in 1998, requires developers of projects with six units or more to designate at least 15 percent of on-site units as affordable. If a developer opts to construct the affordable units in another area of the city instead, they must build more affordable units - at least 20 percent of the number of market rate units.

Since its inception, AHPP has produced more than 1,200 affordable apartments in Santa Monica.

Under the newly-approved pilot program, developers of sites with already approved projects now have three options if they opt not to include affordable units on-site:

1. Build market rate units first, develop the required affordable units off-site within five years.
2. Rehabilitate existing units off-site that have fallen into disrepair and are deemed uninhabitable and, if they're not already, deed-restrict as affordable.
3. Pay an in-lieu fee that will go to the city's Housing Trust Fund for future affordable housing developments.

If a developer does not comply with the agreed upon terms, it would be required to compensate the city accordingly.

Reach the full city staff report here, and listen to the council discussion here.

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Housing and Human Services