City Council will embark on a wide-ranging discussion of corporate housing in Santa Monica at their Tuesday meeting to eventually craft more specific rules that will prevent permanent housing from being used for temporary residences.

According to City Staff, the corporate housing problem is still small compared to the broader housing market but there are signs developers and landlords are looking to explore the corporate housing market. Staff said existing rules do not adequately cover the kinds of housing options available and direction is needed from Council to guide new policies.

“Council’s concerns were precipitated by recent practices that appear to attempt to divide existing rent-controlled housing units, resulting in illegal increases in allowable density but not meeting the definition of corporate housing,” said the staff report. “There has also been anecdotal evidence that rent-controlled units are being used as temporary housing, whether for approximately 6-month leases for students or other durations of less than one year. This kind of housing typically has a higher monthly price point than typical annual leases. Rent-controlled housing is a particularly valuable resource in providing predictability in housing costs for tenants looking to establish ongoing residency, thereby promoting neighborhood stability.”

The city has rules defining corporate housing including temporary stays of more than 30 days, stays by individuals with permanent address elsewhere and housing that includes at least two specified amenities. Under that definition, all corporate housing is banned in Santa Monica but staff said the rules are easy to circumvent if providers simply limit the units to one of the banned amenities. Staff said the housing market has also evolved beyond current definitions with some providers offering a kind of subscription based model that falls outside any existing rules.

According to the staff report, some new housing has already been earmarked by developers for temporary rentals of more than 31 days and the policy raised questions about height and density bonuses being given to projects that will not become permanent housing.

The Rent Control Board took action on the issue earlier this year clarifying that a corporation cannot rent a controlled unit in the City and stating the high turnover corporate housing model has always been outlawed in Santa Monica.

No new laws will be passed Tuesday but council will be asked to discuss how to define short term vs. medium or long term tenants and how to define a permanent resident. They will also be asked to consider ways to protect permanent housing stock, curb abuse of permanent housing for corporate uses and accommodate the diversity of housing needs in the city.

Specific discussion points will focus on the intensity of enforcement options available to staff and what kind of punishments can be put in place to curb bad behavior.

“Once staff receives clear policy direction from Council, staff will conduct further research and anticipates seeking input from the Planning Commission, Housing Commission and Rent Control Board prior to bringing back an ordinance for adoption at a future Council Meeting,” said the staff report.

Council will meet on Tuesday, Dec. 18 in City Hall, 1685 Main Street. Closed session begins at 5:30 p.m. and open session will not begin before 6:30 p.m.

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