Commercial (Non-Residential) Nexus Study & Linkage Fee

ROSENOW SPEVACEK GROUP, INC.

Commercial

(Non-Residential)

Nexus Study &

Linkage Fee Analysis

CITY OF SANTA MONICA

June 5, 2013

ROSENOW SPEVACEK GROUP, INC.

COMMERCIAL NEXUS STUDY AND LINKAGE FEE ANALYSIS

City of Santa Monica

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TABLE OF CONTENTS

INTRODUCTION ..................................................................................................................................... 1

Background ......................................................................................................................................... 2

Affordability Levels............................................................................................................................... 3

Summary of Findings ........................................................................................................................... 4

Report Organization ............................................................................................................................. 6

Data Sources ....................................................................................................................................... 6

SECTION 1: NEXUS CONCEPT AND ASSUMPTIONS .......................................................................... 7

Legal Background ................................................................................................................................ 7

Non-Residential Nexus Study Methodology.......................................................................................... 8

The Relationship Between Job Growth and Population Growth .......................................................... 11

The Relationship Between Non-Residential Development and Job Growth ......................................... 11

Housing Needs of New Population vs. Existing Housing Need ........................................................... 12

Substitution Factor ............................................................................................................................. 12

Employment Multipliers ...................................................................................................................... 12

Discount for Changing Industries ....................................................................................................... 13

SECTION 2: LOCAL ECONOMIC INPUTS AND ADJUSTMENTS ........................................................ 14

Building Prototypes ............................................................................................................................ 14

Employee Density .............................................................................................................................. 14

Occupational Distribution by Building Prototype.............................................................................. 16

Employee Compensation ................................................................................................................... 18

Employment Patterns (Industry Change Factor) ................................................................................. 18

Unemployment .................................................................................................................................. 19

Commute Patterns ............................................................................................................................. 20

SECTION 3: MICRO ECONOMIC JOBS HOUSING ANALYSIS ........................................................... 21

Approach ........................................................................................................................................... 21

Step 1: Establish Building Prototypes .......................................................................................... 21

Step 2: Estimate Total New Employees ...................................................................................... 21

Step 3: Adjustments for Market Conditions.................................................................................. 22

Step 4: Adjustment from Employees to Employee Households .................................................... 23

Step 5: Occupational Distribution of Employees .......................................................................... 23

Step 6: Estimate Distribution of Employee Wages ....................................................................... 26

Step 7: Estimate Household Income Category Distribution .......................................................... 26

Step 8: Estimate New Households that Meet Income Criteria ...................................................... 27

Step 9: Calculate Worker Households Income Categories and Adjust for Commute Patterns ...... 27

Summary ........................................................................................................................................... 28



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SECTION 4: AFFORDABLE HOUSING COSTS ................................................................................... 30

Introduction........................................................................................................................................ 30

Affordable Housing Cost .................................................................................................................... 30

Rental Apartments Valuation ............................................................................................................. 32 Affordable Housing Development Funding Gap .................................................................................. 32

SECTION 5: FEE ANALYSIS AND RECOMMENDATIONS .................................................................. 34

Approach and Methodology ............................................................................................................... 34

Rental Apartment Projects ................................................................................................................. 35

Mitigated Development Funding Gap ................................................................................................. 35

Impact Linkage Fee Calculation ......................................................................................................... 37

Impact Linkage Fee Consideration ..................................................................................................... 36

ATTACHMENTS ................................................................................................................................... 39

Attachment 1: Occupational Categories and Wage Data .................................................................... 40

Attachment 2: Affordable Housing Product Type Pro Formas ............................................................. 53 Attachment 3: Linkage Fee Alternatives ............................................................................................. 62



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INTRODUCTION

This Commercial (Non-Residential) Nexus Study (“Nexus Study”) and Linkage Fee Analysis (collectively referred to as the “Report”) has been prepared by the Rosenow Spevacek Group (“RSG”) for the City of Santa Monica (“City”) to analyze the affordable housing needs created by the development of non-residential buildings in the City.

The primary goal of this Nexus Study is to demonstrate the “reasonable relationship” between the purpose of the affordable housing fee, the fee amount, the revenue generated, and the impacts of commercial development that the proposed use of that revenue is intended to address.1

The Nexus Study identifies the linkages between new non-residential land uses, the net number of new employees and employee households generated by businesses occupying these land use buildings, and the need for affordable housing units for these new employees. The Linkage Fee Analysis quantifies the cost mitigation associated with developing affordable housing units based on the identified need resulting from employees generated by new commercial development.

Factors examined by the Nexus Study include the variety of jobs and varied degrees of compensation for workers in new non-residential buildings which in turn creates a demand for housing at all affordability levels. The Nexus Study quantifies the housing needs of new employees by income category within a variety of land use categories. The Nexus Study examines eight types of non-residential land uses, as identified in the City’s 2010 Land Use and Circulation Element (LUCE) that are anticipated to be built over the next twenty years; they include office, hospital, hotel, retail, industrial, institutional, creative, and medical office. Each land use type results in a different mix of employment and income affordability levels due to the density of jobs, the type of jobs, and the corresponding employee compensation. The Commercial Nexus Study identifies the net number of new employee households living in the City, by affordability level, generated by the development of each of the land use types cited above. The resulting number of net new households indicates the number of housing units needed by income category. The affordable housing impact linkage fee is then ascertained based upon the cost to mitigate the affordable housing need generated by such development based on the development funding gaps associated with producing affordable housing units for each income category.

This Commercial Nexus Study and Linkage Fee Analysis has been prepared to satisfy the requirements of reasonable relationship test set forth in San Remo, as well as to inform the decision makers as to the impacts associated with new non-residential development.

1 California courts have not required affordable housing in-lieu fees to meet the legal requirements of the California Mitigation Fee Act (AB 1600, 1987, Gov. Code § 66000 et seq.). For example, in Action Apartment Ass’n v. City of Santa Monica (2008) 166 Cal.App.4th 456, the appellate court identified the requirement to provide affordable housing as traditional land use legislation. In Building Industry Ass'n of Cent. California v. City of Patterson (2009) 171 Cal.App.4th 886, however, a different court of appeal found that while the in lieu affordable housing fee under review in that case was not subject to the Mitigation Fee Act, it was subject to the reasonable relationship test set forth in San Remo Hotel L.P. v. City And County of San Francisco (2002) 27 Cal.4th 643, 670 ("San Remo"). Therefore, for the purposes of this linkage fee, this analysis has been provided to clearly demonstrate the relationship of the fee to its proposed expenditures.



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Background

The City Santa Monica adopted an Affordable Housing Production Program (AHPP) Ordinance to assist in the production of affordable housing units in the community. The AHPP is applicable to new market rate multifamily residential units constructed in the City. For program consistency purposes, the requirements and provisions under the AHPP are used in determining the income groups incorporated in this Study for purposes of calculating affordable housing costs and the corresponding supportable linkage fee amounts. The following is a summary of the requirements and provisions set forth in the AHPP Ordinance.

• The AHPP is applicable Citywide to each new multifamily project involving the construction of two or more market rate units. Market rate projects include but are not limited to apartments, condominiums, townhouses or the multifamily residential component of a mixed use project.

• Projects exempt from the AHPP include designated landmark buildings or contributing structures to an adopted Historic District retained or preserved on-site as part of a multifamily project, multifamily rental housing projects to be developed by a nonprofit housing provider receiving financial assistance through a City housing trust fund program, non-residential projects, and projects for which a development application was determined complete prior to May 25, 2006.

• Multifamily ownership projects of four or more units may satisfy the affordable housing

requirement by one of the following options: a. Providing the affordable units on-site; or b. Providing the affordable units off-site.

In addition to the options established above, all other multifamily projects may also choose one of the following options:

a. Paying an affordable housing fee; or b. Acquiring land for affordable housing.

• For ownership projects of not more than fifteen units in multifamily residential districts at least: 1) twenty percent (20%) of the total units must be designated as ownership units for moderate-income households; or 2) twenty percent (20%) of the total units must be designated as rental units for low-income households.

• For ownership projects of sixteen or more units in multifamily residential districts at least: 1)

twenty-five percent (25%) of the total units must be designated for moderate-income households as ownership units; or 2) twenty-five percent (25%) of the total units must be designated for low-income households as rental units.

• For all other multifamily projects that elect to develop the affordable units on-site at least: 1) ten

percent (10%) of the total units for very low-income households; or 2) twenty percent (20%) for low-income households; or 3) one hundred percent (100%) for the total units for moderate-income households in an Industrial/Commercial District.



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• The AHPP requires the deposit of any payment made pursuant to the AHPP to an affordable housing reserve account separate from the General Fund to be used only for the development of very low- and low-income housing, administrative costs related to the production of housing, and monitoring and evaluation of the Affordable Housing Production Program.

Affordability Levels

The City’s Land Use and Circulation Element of the General Plan contains data regarding the need for affordable housing in the City. The City’s affordable housing needs are largely defined by the Regional Housing Needs Assessment (RHNA) promulgated by the Southern California Association of Governments (SCAG), which allocates the regional housing demand, by income category, to local jurisdictions as targets to be addressed in their respective Housing Elements. Santa Monica’s fifth cycle RHNA for the period January 2014 through October 2021 reflects a total need for 1,674 new residential housing units, which include an allocation of 25.5% for very low income households, 16.1% for low income households, 17.0% for moderate income households, and 41.5% for above moderate income households. The maximum income level for lower and moderate income households, as defined in the California Health and Safety Code and as promulgated by the Housing and Community Development Department (“HCD”), is 120% of the area median income (“AMI”).

The LUCE showed that 60% of the households in the City make less then 120% AMI, and identified that 72% of the City’s households are renters, which is the highest proportion of renter households among all Los Angeles County cities. Moreover, the LUCE indicates that 35% of renter households of the very low- and low-income households within the City are overpaying for housing2. The federal Housing and Urban Development Department’s (“HUD”) threshold for overpayment is when households spend more than 30% of their gross monthly income on rent or mortgage payments. Overpayment is a critical issue, because it leaves households with insufficient funds for other necessities, such as food, health care, clothing, and utilities. Very low- and low-income households are not the only households in the City who are affected by the City’s high housing costs.

The City’s affordable housing needs can be demonstrated through review of the following information. The 2012 U.S. Census American Community Survey data places the median household income in Santa Monica at $68,842 ($5,737 per month). Based on Apartments.com and Craig’s List data for August 2012 of new and existing apartments in the City, the median monthly rent for a one-bedroom apartment is $2,339, increasing to $3,546 for a two-bedroom apartment. This data indicates that a household would need to make approximately $7,796 per month to afford a median priced one-bedroom apartment within the City, or $11,820 per month to afford a median priced two-bedroom apartment. These rents represent approximately 136% and 206% of the $68,842 ($5,737 per month) median income respectively.

According to the LA Times/DataQuick data, in August 2012 the median price for ownership condominiums in the City ranged between $470,000 and $775,000, with an average of $668,200. Based upon these prices, the estimated monthly housing cost, including principal and interest (based upon 80 percent financing loan), taxes, insurance, and HOA fees would be about $4,435. Therefore, in order to

2 As defined by State HCD, very low-income households earn not more than 50% of area median income; low-income households earn not more than 160% of the very low-income limits for high cost areas such as Los Angeles County, where the limit reflects about 100% of the area median income; and moderate-income households earn not more than 120% of the area median income.



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afford a median priced condominium in the City, the wage earner in a single earner household would need to make approximately $14,785 per month to conform to the 30% housing cost target.

The current minimum wage in the State of California is $8 per hour (or $16,640 per year), which is less than 18% of what is needed to rent a one-bedroom apartment in the City. This means that a full-time dual income household, where both workers make minimum wage, would not be able to afford to rent a median priced apartment within the City. It is expected that a portion of the new workers including lower income households working at low-wage jobs in new non-residential land uses developed in the City would seek housing within the City. Due to a short supply of affordable units, many households would be forced to live outside of the City (in which they work), or spend a large portion of their income on housing, or live in substandard conditions.

The California Health and Safety Code provides a general definition of low and moderate income limits and identifies the calculation of the respective affordable housing costs and rents for each income category. Pursuant to the Health and Safety Code, HCD establishes and publishes annually the Qualifying Income Limits by income category adjusted for household size. The income limits and affordable housing cost criteria under the Health and Safety Code are widely used and generally applicable for various affordable housing programs implemented in local jurisdictions including those by redevelopment agencies and projects using redevelopment housing set-aside funds, those by housing authorities, and those under density bonus programs. The City’s AHPP Ordinance, however, adopted alternative criteria as permissible under the Health and Safety Code, which are defined below.

While lower affordability levels may be evaluated by the City, as previously identified, for program consistency purposes, this Nexus Study uses the AHPP income limits and rents criteria. The AHPP income category limits are defined as follows:

Very Low-Income households earning 50% or less of the area median income; Low-Income households earning 60% or less of the area median income; and Moderate-Income households earning 100% or less of the area median income.

The Nexus Study will identify the affordable housing need, by income category, generated by the development of new non-residential buildings in the City, including office, hospital, hotel, retail, industrial, institutional, creative, and medical office uses. Such buildings will house new jobs, many of which will be low paying, thus generating the need for housing affordable for those wage earner households.

Summary of Findings

The following provides a summary of the Nexus Study findings, which are detailed in Sections 1 through 3, and the Linkage Fee Analysis, as detailed in Sections 4 and 5 of this Report. The City’s LUCE estimates that approximately 3.49 million square feet of non-residential development will occur during the twenty year period from 2010 to 2030. Based on the City’s LUCE data analysis derived from the Los Angeles Unified School District 2008 School Fee Justification Study, which is used to identify employee density, it is estimated that new non-residential development in the City will create a total of about 6,835 net new worker jobs after adjustment for market factors. Further, based on a combination of data from the 2002 Economic Census and the 2011 American Community Survey, it is projected that the estimated employment growth will result in about 6,048 new worker households, of which its is conservatively estimated that approximately 2,057 households (34%) may live in the City.



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An analysis of data for the Los Angeles County MSD provided in the OES Occupational Employment and Wage Estimates, the BLS Occupation and Wage Survey, and from the California Economic Development Department identifies that a substantial portion (65% to 92%) of the new worker households generated by the development of various new non-residential land uses would require housing affordable at the very low-, low-, and moderate-income levels (refer to Table 3-9). The following is a summary of the future affordable housing need in the City generated by non-residential development, which is broken down as follows:

878 (42.7%) Very Low-Income Households 187 ( 9.1%) Low-Income Households

475 (23.1%) Moderate Income Households This Report also provides an analysis of the housing impact linkage fee associated with the affordable housing need generated by the non-residential development in the City. The linkage fee analysis (refer to Sections 4 and 5) translates the affordable housing need generated by each of the land use building prototypes (refer to Sections 1 through 3). This was done by adjusting the affordable housing need into square feet and multiplying that need by the cost to produce housing affordable in each of the income categories. Table I-1 below summarizes the maximum supportable impact fee on a square foot basis for each of the building prototypes, as well as a range of recommended reduced impact fees for the City’s consideration. The recommended reduced fee levels are meant to avoid adverse economic impacts on the developers of new non-residential projects in the City. As discussed in Section 5 of the Linkage Analysis, the final impact linkage fee is recommended at between 5% and 25% of the maximum supportable fee established by the Non-Residential Nexus Study for each of the identified land uses. Table I-1, shown below, demonstrates the range of impact fees per land use.

Per Square Foot Non-Residential Impact Fees1 Table I-1Santa Monica Linkage Fee Analysis

Office Hospital Hotel Retail Industrial Institutional CreativeMedical Office

Full Impact Fee $128.45 $67.46 $31.15 $102.86 $71.16 $116.65 $111.47 $75.55

5% $6.42 $3.37 $1.56 $5.14 $3.56 $5.83 $5.57 $3.7810% $12.85 $6.75 $3.12 $10.29 $7.12 $11.67 $11.15 $7.5615% $19.27 $10.12 $4.67 $15.43 $10.67 $17.50 $16.72 $11.3320% $25.69 $13.49 $6.23 $20.57 $14.23 $23.33 $22.29 $15.1125% $32.11 $16.86 $7.79 $25.71 $17.79 $29.16 $27.87 $18.89

Source: Table 5-3

Impact Fee Options(per Square Foot)

Report Organization

This Report contains five sections, as follows:

Section 1 – Nexus Concept and Assumptions: This section presents a summary of the linkage concept and some of the key issues surrounding nexus analyses for jobs and housing.

Section 2 – Local Economic Inputs and Adjustments: This section provides an overview of the economic conditions in and around the City, including those key to the Non-Residential Nexus Study.



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Section 3 – Micro Economic Jobs Housing Analysis: This section describes the analysis which was performed, linking jobs and housing relationships to the land uses and building prototypes examined.

Section 4 – Affordable Housing Costs: This section examines the cost to produce affordable housing units in the City. This analysis was used to associate a cost with the need for affordable units, as identified in Section 3.

Section 5 – Fee Analysis and Recommendations: This section combines the information from the analyses in Sections 3 and 4 to formulate the maximum non-residential affordable housing impact fees for the City. This section also adjusts and provides recommendations regarding the final fee levels, in order to provide reduced economic impact to developers of non-residential property in the City.

Data Sources

RSG has prepared this Report using the most current and verifiable data available. Sources used include the US Census (“Census”), California Economic Development Department (“CEDD”), Department of Labor - Bureau of Labor Statistics (“BLS”), California Department of Housing and Community Development, the Southern California Association of Governments (“SCAG”), and First American Title MetroScan Information Service. The Census, CEDD, and BLS data and materials are widely used for demographic and econometric analyses including nexus studies prepared for a large number of jurisdictions in California. In addition, at the direction of City staff, employee density factors used in the LUCE were used as a basis for determining the estimated total new jobs resulting from the development of each land use type.

RSG believes that these data sources are deemed to be reliable and believed to provide accurate and relevant information for this analysis. Nonetheless, RSG cannot guarantee their accuracy and assumes no liability for information from these sources or others.



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SECTION 1: NEXUS CONCEPT AND ASSUMPTIONS

Section 1 outlines the nexus concept and the assumptions used in the analysis. The analysis is centered on the linkages between population growth, non-residential development, employment, employee wages, and the demand for housing. The analysis connects the development of certain new non-residential land use building types, employees who will work in those building types, and the generated need for affordable housing. The model utilizes data from a number of sources including the BLS, CEDD, Census including the 2011 U.S. Census American Community Survey (ACS), HCD, and SCAG. In addition, conservative assumptions were used in order to not overstate the affordable housing need generated.

Legal Background

The first inclusionary housing ordinances were adopted in the early 1970’s. In analyzing initial challenges to them, courts characterized affordable housing and in lieu fee ordinances as traditional land use and zoning regulation, and not as exactions or impacts fees.

The traditional land use ordinance position has been most clearly adopted by the New Jersey Supreme Court in Southern Burlington County NAACP v. Township of Mount Laurel, (N.J. 1983) 456 A.2d 390. In 1990, in Holmdel Builders Ass'n v. Township of Holmdel, (N.J. 1990) 583 A.2d 277, the New Jersey Supreme Court revisited the issue while reviewing the constitutionality of affordable housing fees required by several New Jersey cities. The court explained that "inclusionary-zoning devices," including inclusionary in-lieu fees, are land use ordinances that bear a "real and substantial relationship to the regulation of land" because they are specifically designed to help create affordable housing and will therefore affect "the nature and extent of the uses of land and of buildings. . . " Id. at 286-87. The court held that inclusionary in-lieu fees are not exactions similar to impact fees, because the affordable housing requirements are not based on the impact of a project, but rather on the "the relationship that . . . development has on both the need for lower-income residential development and on the opportunity and capacity of municipalities to meet that need . . ." Id. at 288.

In Home Builders Ass'n v. City of Napa, 90 Cal.App.4th 188 (2001), the first published California case regarding inclusionary zoning, the City of Napa argued that its inclusionary ordinance was a land use ordinance that merely regulated the use of a small part of a development, and that inclusionary in-lieu fees were not impact fees because the underlying inclusionary requirement was not a monetary exaction, but rather a land use control, and fees were paid only at the election of the developer. In rejecting plaintiff's claims that the City's ordinance was an invalid exaction under Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994), the Court of Appeals treated Napa's inclusionary zoning ordinance as "economic legislation that is generally applicable to all development in City." Id. at 197. In Action Apartment Ass’n v. City of Santa Monica, 166 Cal.App.4th 456 (2008), the Court similarly considered the City's inclusionary housing ordinance a traditional land use or zoning legislation and not an exaction.

No California court has treated a generally applicable inclusionary housing ordinance as imposing an impermissible per se exaction or required in-lieu affordable housing fees to meet the legal requirements of the California Mitigation Fee Act. In Building Industry Ass'n of Cent. California v. City of Patterson ("Patterson ") (2009) 171 Cal.App.4th 886, however, the Court of Appeal applied the "reasonable relationship" test to an inclusionary affordable housing in-lieu fee, assuming that it was a generally applicable impact fee and without ever considering (at least in the published opinion) whether the underlying requirement was an exaction or a land use requirement. Nonetheless, the language in



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Patterson characterizes the in-lieu fee under review as not substantively different from the in-lieu housing fee reviewed in San Remo, and subject to the requirement that there be a reasonable relationship between the amount of the fee and the "deleterious public impact of the development." 27 Cal.4th 643, 670-71. This study has been provided to satisfy the requirements of San Remo.

Non-Residential Nexus Study Methodology

The following discussion provides an overview of the general concepts and methodology used in the Non-Residential Nexus Study. The analysis links the construction of new non-residential land uses to a net increase of new workers in the City. These new workers will need housing within a reasonable distance of their jobs, some of which will be in the City. The compensation levels paid to some of these workers will result in them needing housing which is affordable at the very low-, low-, or moderate-income levels.

Briefly summarized in Figure 1-1 below are the basic analytical steps utilized to conduct the Nexus Study. A more detailed description of the methodology associated with each step is provided in Section 3, the Micro Economic Jobs Housing Analysis.



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Nexus Analysis Process Figure 1-1

Step 1: Establish Building Prototypes

The analysis is conducted based on individual non-residential land use building types for the land uses identified in the City’s LUCE. For analysis purposes, prototypical 100,000 square foot buildings for each of the land use types identified in the LUCE were analyzed. The analysis of individual building types is based on general conditions within the City, as identified by City staff.

Step 2: Estimate Total New Employees

Estimate the number of new permanent direct employees which will be generated by the construction of the eight new non-residential land use building types. Employee density factors



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were used to estimate the number of employees in each land use type. The employee density factors used in the Nexus Study are detailed in Section 2 of this Report.

Step 3: Adjustments for Market Conditions This step incorporates into the analysis any changes in the local economy (including increases in unemployment) and the type of jobs and industries which make up the region. Specifically, declines and/or other shifts in the local economy can affect how new non-residential space is occupied. The result of these market condition adjustments is a reduction in the number of employees generated from the development of new non-residential land uses.

Step 4: Adjustment from Employees to Employee Households This step adjusts the number of employees/workers to account for households in which there is more than one wage earner. In order to adjust for this consideration, a ratio of 1.13 workers per worker households is used in this analysis based on City Census data.

Step 5: Occupational Distribution of Employees Job types are then associated with the land use prototypes to produce a distribution of employees by occupation. To do so, NAICS industry sectors were correlated to jobs depending on the likelihood that the industries would be housed in each building type. Next, the NAICS industry sectors are linked to OES occupation categories. This step is important because it links building types with occupational categories. Occupational categories are then linked to wage data addressed in the next step.

Step 6: Estimate Distribution of Employee Wages Occupational data generated in Step 5, is combined with wage and salary information from the County (based upon NAICS and CEDD data) to estimate the distribution of employee wages. Employee wages were then converted to household wages using the employees per household ratio used in Step 4.

Step 7: Estimate Household Income Category Distribution The results from Steps 5 and 6 allow the estimated number of employee households from the previous step to be categorized into household size (number of persons) by income, based on City Census data. This step is important because it allows the households created to have income and size associated with them.

Step 8: Estimate the Households that Meet Income Criteria The previous step distributed households into size and income categories. The households are then allocated to specific income categories (very low-, low-, moderate- and above moderate-income households) per the income categories and limits identified in the AHPP. Once the households have been placed into their respective income categories, it is possible to show the number of housing units required to meet the needs of the very low-, low-, and moderate-income households generated by the construction of each of the building prototypes.



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Step 9: Adjust for Commute Patterns This step adjusts the total number of households by the percentage of employees/workers who currently live in the City. This step reduced the number of new households needing housing by approximately 66%. This adjustment is necessary since not all of the new employees generated by new non-residential buildings will live in the City. The adjustment reflects a combination of data from the 2012 Economic Census and the 2011 American Communities Survey data, which indicates that approximately 34% of the workers in Santa Monica also live in the City. The 34% factor reflects a reasonable and conservative estimate based on empirical data, while it may be a greater percentage subject to net increases in availability of housing units in the City.

Step 10: Calculate Total Affordable Housing Needs Created by Non-Residential Buildings

This final step adjusts the worker household per 100,000 square feet of building to calculate the total new worker households by income category that would live in the City pursuant to the LUCE land use development projections. The resulting total new worker households living in the City serve to reflect the total number of affordable housing units, by income category which is attributable to the total estimated non-residential land use types, if the City’s land use projections are fulfilled.

The Relationship Between Job Growth and Population Growth

The linkage analysis assesses the growth in very low-, low-, and moderate-income households within the City generated by new development, and subsequent lack of affordable housing units available to these new households. A major contributing factor for population growth in most communities is job growth. Households would not arrive or stay in the community if jobs were not available in or near the area to support them. This trend is typically long term since economic cycles and other factors including the availability of housing units can result in population growth without jobs. For these reasons, this analysis is specifically designed to address the long term linkage between the development of new non-residential land uses, job growth, and the resulting need for housing affordable to very low-, low-, and moderate-income households.

The Relationship Between Non-Residential Development and Job Growth

If population growth is in part driven by job growth, then what is the source of employment growth? Many factors contribute to the growth in employment in different areas. These factors tend to be interrelated and associated with outside forces. A major contributing factor is the development of new non-residential land uses, which will house jobs. The rationale behind a non-residential nexus study is that the construction of these new buildings is largely, but not solely, responsible for growth. Nonetheless, in the City of Santa Monica, new non-residential construction is an important factor contributing to population growth, while it is also an essential condition that precedes growth.

As mentioned, new construction itself encourages population growth. This relationship was most recently seen during the ten year period 1995 through 2005, when construction activities in California were one of the main drivers of a thriving economy. In many regions including Los Angeles County, the development industry frequently serves as a proactive force inducing growth to occur, especially with projects of a speculative nature.



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Lastly, new non-residential construction in particular encourages job growth because it precedes population growth. Job growth would not occur in our modern service economies without buildings to house new workers. In fact, the inability to develop new workspace will often constrain or even halt job growth in an area.

Housing Needs of New Population vs. Existing Housing Need

The Housing Element for the City, the City Inclusionary Housing Annual Report, and other materials indicate that while the housing needs of the existing lower-income households in the City are generally being met in accordance with the City’s RHNA distribution, future activities to ensure affordable housing may be hampered by diminished funding availability. Moreover, many existing households, especially those at the lowest income levels, overpay for housing (payment of more than 30% of income for rent, as set forth in federal and state guidelines), live in overcrowded conditions, or cannot live in the City and must live and commute from less expensive locations.

This Non-Residential Nexus Study does not address the housing needs of the existing population or the needs resulting from new residential construction, which was addressed in the 2005 Update Nexus Between New Market Rate Multifamily Developments in the City of Santa Monica and the Need for Affordable Housing. While new employment associated with residential development may result in some minor overlap with the new jobs resulting from new non-residential development, for a number of reasons, including but not limited to, building vacancy/under utilization, unemployment, under employment and part time employment factors, it is deemed to be very minor and would not generally induce a significant level of new commercial or other non-residential development. Accordingly, this Study focuses solely on documenting and quantifying the housing needs of net new households generated by new non-residential buildings.

Substitution Factor

Any new building in the City may be occupied either partially or entirely by workers or firms relocating from elsewhere. When a business relocates to a new building, there is a space in an existing building that is vacated. In turn, the vacated building will likely be filled by a combination of newcomers in the City or existing workers. Somewhere in this cycle, new jobs will be added to the region. The net effect is that new buildings accommodate new employees, although not necessarily inside of the new buildings themselves.

Employment Multipliers

The Non-Residential Nexus Study does not address the concept of multipliers. Multipliers refer to the concept that the income generated by certain types of jobs recycles through the economy, resulting in additional jobs. This Nexus Study omits such multiplier effects, because they are largely accounted for in the City’s Residential Nexus Study, which measures the impact of new household spending on the need for affordable housing units. The assumption in the Residential Nexus Study is that the associated new jobs may be largely employed within existing businesses and buildings (or assist in generating the need for new buildings, as discussed under “Substitution Factor”), and occupy new housing units. These new households themselves, and their need for affordable housing, are addressed in the Non-Residential Nexus Study. Their household spending and the need it generates for affordable housing (through the generation of new jobs) was analyzed in the Residential Nexus Study.



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Discount for Changing Industries

It is general practice in the preparation of a nexus analysis to examine the major sectors of the local economy and determine if there are long term trends in employment suggesting either decline or restructuring. In the case of long-term decline of one or more industries or sectors, it is appropriate to recognize that all new jobs may not be net new jobs. An analysis of the major sectors of the local economy and their recent trends was performed for this analysis and can be found in Section 2 of this Report.



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SECTION 2: LOCAL ECONOMIC INPUTS AND ADJUSTMENTS

This section examines some of the key local factors that affect the nexus analysis. These items include market characteristics such as land use types, employee densities, occupational distribution per building type, and compensation levels. This section also examines several key adjustments which must be made in the nexus analysis, including those relating to changing industries and employment trends, unemployment, and commuter patterns.

Employment patterns and trends were determined by analyzing statistics reported in the North American Industry Classification System (“NAICS”) report and the annual Occupational Employment Statistics Survey (“OES”) from the BLS. Industries listed in the NAICS data were matched to building types and OES occupation categories providing the basis for determining the jobs created by new non-residential developments. Recent historical trends of employment were determined by analyzing the last five years of OES statistics.

Building Prototypes

The nexus analysis is centered on the linkages between population growth, new development, employment, employee salary, and the demand for housing. Non-residential development generally induces job growth, which results in the demand for housing including an increased need for affordable housing in the City. The first step in the analysis is to identify what types of non-residential land uses have recently been developed in the City or are likely to be developed in the future. Specifically, eight non-residential land uses, as identified in the City’s LUCE, and corresponding building types were chosen for the analysis, including:

1. Office 2. Hospital 3. Hotel (Hospitality) 4. Retail & Entertainment 5. Industrial/Light Manufacturing 6. Institutional 7. Creative/Post Production 8. Medical Office

Employee Density

After identification of land use building prototypes, the next step in the analysis is to estimate the number of employees who would work in such buildings. For ease of presentation, a prototypical 100,000 square foot building was examined for each of the land use types.

Each land use type has different employment densities as the demand for space is related to the level and type of employment. Employment densities measure the average amount of space that each employee occupies. The use of employment densities were used to estimate the number of employees for each land use type. The employment densities used in this Nexus Study reflect the employee density factors used in the LUCE. Densities are shown as the number of gross square feet occupied per employee. Identification of the employee density is derived from factoring the estimated median employee per acre, which is divided by the median floor area ratio (FAR) for the particular land use



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building types adjusted for building efficiency. The following provides the employee densities used for each of the eight land use building prototypes.

Office – 275 square feet per employee: Average employee office density in urban areas is usually within the 200 to 300 square feet per employee range, however, these averages typically include high rise office buildings, which are much more efficient than low-rise offices more commonly found in suburban areas such as in Santa Monica. Additionally, the density can also vary depending on the type of office activity, for example, corporate headquarters versus office-support activities.

Hospital – 560 square feet per employee: The average hospital and medical employee density is very similar to office uses. This category includes a variety of uses, from in-patient facilities where densities are lower, to out-patient facilities where densities are greater because beds and living facilities are not present.

Hotel (Hospitality) – 1,500 square feet per employee: Hospitality employee densities can vary greatly depending on the type of hotels present in a geographic area. For example, a City or area with a larger percentage of full-service hotels will have a greater employee density than an area with mostly limited-service hotels. This is because full-service hotels include additional facilities such as restaurants, spas, or retail, and also require a greater level of customer service, thus increasing the number of employees. According to the LUCE, approximately 40 percent of the City’s hotel inventory are full-service or luxury hotels. The City anticipates both luxury and limited-service or budget-friendly hotels to be constructed due the City’s beachfront proximity and excellent regional access; an average employee density for these types of hotels was used.

Retail & Entertainment – 425 square feet per employee: This category covers many different uses, including restaurants, big box retail centers, smaller neighborhood-serving retail centers, and street-front retail, which is typically found in downtown areas. The City is primarily served by shopper-good retail such as specialty clothing retail and convenience goods such as supermarkets and drugstores. According to the LUCE, the City is underserved by major drugstores and anticipates increased development in the future.

Industrial / Light Manufacturing– 500 square feet per employee: This category includes a variety of uses, including light industrial, manufacturing, fabricating, business incubator space, emerging technology, and research and development.

Institutional – 300 square feet per employee: This category covers a wide variety of buildings that serve the needs of the community including government, education, and cultural facilities.

Creative / Post-Production – 275 square feet per employee: This category includes entertainment services, post-production industry related to motion pictures and television, and other information-related occupations. Uses include film and music production, art galleries and studios, and record production and studios4.

Medical Office – 500 square feet per employee: This category includes out-patient services.

4 As defined by the 2010 LUCE and BLS.



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Occupational Distribution by Land Use Types

This segment of the analysis involves allocation of jobs by occupation in the land use prototypes. For this portion of the analysis BLS data on the distribution of different occupational categories was used to estimate the occupational distribution in each of the land use prototypes.

The North American Industry Classification System groups establishments into industries based on the activity in which they are primarily engaged at a national level. Establishments that do similar things in similar ways are classified together. The NAICS reports employment distributions for the 22 industry sectors shown in Table 2-1 at the national level5. The percentages shown in Table 2-1 represent the distribution of the major occupational categories within each building prototype. For example, within an office building, 20.6% of the workers are categorized as being within “office and administrative support occupations” whereas 5.4% are categorized as “computer and mathematical science” occupations. The BLS provides statistics that correlate NAICS industry sectors to Occupation Employment Survey occupation categories at a metropolitan statistical level (MSD). The distributions of occupations within land use types are used in the Non-Residential Nexus Study to associate the employment generated from new buildings to occupations and annual incomes.

5 This distribution uses national level data as local NAICS data is not readily available.



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Distribution of Occupations by Building Type (National Level) Table 2-1Santa Monica Non-Residential Nexus Study

Occupation Category Office Hospital Hotel Retail Industrial Institutional CreativeMedical Office

Management occupations 6.5% 3.4% 2.7% 3.4% 5.8% 5.0% 7.3% 3.4%Business and financial operations occupations 7.9% 2.1% 1.6% 3.7% 6.7% 6.7% 6.6% 2.1%Computer and mathematical science occupations 5.4% 1.0% 0.7% 1.5% 6.4% 3.5% 15.5% 1.0%Architecture and engineering occupations 2.9% 0.2% 0.3% 0.2% 5.2% 2.0% 1.8% 0.2%Life, physical, and social science occupations 1.1% 0.4% 0.1% 0.0% 1.2% 1.4% 0.1% 0.4%Community and social services occupations 1.6% 3.9% 0.1% 0.1% 0.1% 2.8% 0.0% 3.9%Legal occupations 1.4% 0.1% 0.1% 0.2% 2.2% 1.4% 0.3% 0.1%Education, training, and library occupations 15.2% 2.2% 0.3% 0.2% 0.3% 12.6% 0.6% 2.2%Arts, design, entertainment, sports, and media occupations 2.4% 0.3% 0.5% 0.8% 2.0% 1.7% 16.4% 0.3%Healthcare practitioners and technical occupations 1.4% 24.3% 0.8% 1.5% 1.2% 10.5% 0.0% 24.3%Healthcare support occupations 0.8% 14.5% 0.6% 0.5% 0.6% 5.8% 0.0% 14.5%Protective service occupations 1.8% 3.2% 4.3% 2.1% 2.6% 4.5% 0.1% 3.2%Food preparation and serving related occupations 1.4% 2.4% 46.9% 21.9% 0.3% 2.3% 1.7% 2.4%Building and grounds cleaning and maintenance occupations 4.7% 8.4% 11.7% 5.9% 6.0% 4.7% 0.5% 8.4%Personal care and service occupations 2.6% 5.7% 3.3% 3.2% 0.4% 4.1% 1.9% 5.7%Sales and related occupations 7.8% 2.2% 4.6% 23.2% 4.8% 3.2% 13.2% 2.2%Office and administrative support occupations 20.6% 17.6% 10.8% 17.6% 17.4% 19.7% 19.7% 17.6%Farming, fishing, and forestry occupations 0.1% 0.0% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0%Construction and extraction occupations 0.9% 0.7% 0.8% 0.5% 13.4% 1.3% 0.2% 0.7%Installation, maintenance, and repair occupations 3.4% 1.3% 1.7% 4.9% 4.2% 2.2% 10.7% 1.3%Production occupations 4.6% 3.0% 3.5% 3.1% 13.0% 1.7% 1.8% 3.0%Transportation and material moving occupations 5.4% 3.1% 4.4% 5.3% 6.1% 2.6% 1.6% 3.1%

Note: This table is derived from the OES Occupational Employment and Wage Estimates "National 3-digit NAICS Industry-Specific Estimates" datasetSource: U.S. Bureau of Labor Statistics (2011)



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Employee Compensation

An important component of the analysis is the compensation paid to employees in the new non-residential land uses. Since compensation can vary greatly for similar jobs, depending on what geographic region that job is located in, it is important to use local data when estimating the wages of the new employees. For this analysis the occupational data previously shown in Table 2-1 is combined with wage and salary information from the BLS Occupation Wage Survey for the Los Angeles/Long Beach/Glendale Metropolitan Statistical District and from the CEDD, as shown in Attachment 1. The wage and salary information in Attachment 1 was used to calculate the income related to specific occupations. The OES occupational categories are the same as those used by the CEDD. The distribution of jobs within the occupational categories was estimated to be the same as the distribution with the MSD, of which the City of Santa Monica is a part.

Employment Patterns (Industry Change Factor)

During the past four years, the national and regional economies have experienced a significant decline not seen since the Great Depression. Since 2007, a large number of job losses in certain occupation groups were mitigated only in part by gains in other occupation groups, while the growth for all occupations remained fairly flat at less than 1%. The chart on the following page identifies the percent change of all the major occupational groups listed by the OES from 2007-08 through 2010-11 for the Los Angeles County MSD. Since 2007, the region experienced substantial losses in management, protective services, construction, extraction, installation, maintenance and repair occupations. On the bright side, the region experienced substantial gains in the business and financial, computer and mathematical, community and social service, and health care occupations. The other occupation groups experienced modest gains, in part due to shifting occupational choices.

During the period from July 2011 to July 2012, the California EDD reported the largest year over increases for the professional and business services employment sector including administrative, support, professional, scientific, and technical services occupations for the Los Angeles Metropolitan Statistical Division. Increases were also reported for the leisure and hospitality sector, 90% of which was in the accommodation and food services occupation, with gains also occurring in the arts, entertainment, and recreation occupations. The manufacturing and government sectors both experienced declines in employment levels.

The growth in some occupations, along with the steep decline in others, suggests that future new employment generated by new non-residential land uses will be in some part taken by existing workers changing from one occupation category to another. To account for this, a conservative 10% reduction was applied, identified herein as the Industry Change Factor, for jobs generated by the construction of new non-residential buildings.



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Figure 2-1Santa Monica Non-Residential Nexus Study

Source: Bureau of Labor Statistics (Los Angeles-Long Beach-Glendale Metropolitan Statistical Division)

Percent Change of Employees by Occupation from 2007 to 2011 (Los Angeles-Long Beach-Burbank Metropolitan Statistical Division)

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Unemployment

New employment generated by the development of new non-residential land uses will also be taken, in part, by unemployed workers. From 2000 to 2007, the unemployment rate in the City averaged 4.8%, while in the last 4 years the City’s rate has increased to 10.2%, as shown in Table 2-2. There are, however, indications of recent improvements in the economy. The unemployment rate in Los Angeles County decreased to 11.2% in July 2012 from 12.5% in July 2011, while the California unemployment rate decreased to 10.7% in July 2012 from 11.9% a year ago. Comparable estimates for the nation were 8.3% in July 2012 down from 9.1% a year ago.

Since the Non-Residential Nexus Study analyzes the impacts of future development, it was assumed that the unemployment rate will again return to the historical average of approximately 4.8% sometime in the future. The current unemployment rate may serve to reduce the number of new jobs created by new non-residential buildings and taken by new workers moving to the area. For this reason, the number of new workers generated by the development of new non-residential land uses was adjusted downward by 8% to account for existing unemployed (and underemployed) workers who would hypothetically take some of the new jobs in these land uses (Unemployment Factor). The key assumption for this adjustment is that the existing unemployed workers already have housing and would not need new housing units.



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Historical Unemployment Rates (Santa Monica) Table 2-2City of Santa Monica

YearUnemployment

Rate2000 4.4%2001 4.6%2002 5.5%2003 5.7%2004 5.3%2005 4.4%2006 3.9%2007 4.1%Pre-Recession Average 4.8%

2008 6.1%2009 9.6%2010 10.4%2011 10.2%

Note: The State data varies slightly from the data presented in the City of Santa Monica Comprehensive Annual Report (June 30, 2011)

Source: State of California Employment Development Department, Historical Unemployment Rates (Labor Force).

Commute Patterns

This section provides a brief summary of commute trends and relationships. The major relationship of interest in a nexus analysis is the share of jobs within the City that are held by residents of the City. There is no empirical data available to identify the number of new employees in the City who would choose to live in the City. One source of information, however, regarding commute relationships and patterns is the U.S. Census data, which according to the 2011 American Community Survey data for the City, reflected that 34% of Santa Monica residents responded that they currently lived in the same city as where they worked (Santa Monica). Based on this data and data from the 2002 Economic Census, it is conservatively estimated that a similar number of the new workers in Santa Monica would choose to live in the City if housing were reasonably available.

It is important to recognize, however, that the above relationship does not necessarily represent the demand for housing in the City, but it does reflect the historical data regarding housing availability and occupancy in the City. It should also be noted that even if housing were available and affordable, it is unlikely that 100% of people would live and work in the same city. The choice of where one lives depends on many additional factors such as spouse employment, schools, style of housing, types of amenities, local services, family and social networks, and so on.

For the nexus analysis, as reflected by data identified above, it is projected that 34% of the worker households in the new non-residential buildings would live in the City.



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SECTION 3: MICRO ECONOMIC JOBS HOUSING ANALYSIS

This section details the analysis performed to establish the linkage between the construction of different types of non-residential land uses and the need for affordable housing in the City. Unlike the analyses used for the LUCE Environmental Impact Report (EIR) and the Transportation Impact Fee (TIF), which are based on vehicle trip generation factors, the non-residential development linkage is based on the net number of jobs directly resulting from the development of new non-residential uses. The analysis computes the number of new jobs estimated to be housed in the land use building types and the income categories in which the new workers would typically fall. This section uses data and information from previous sections, and should not be considered a separate document.

Approach

The micro economic jobs housing analysis establishes the linkage between the construction of new non-residential buildings and an increased need for affordable housing. The linkage is identified for each land use land use building type. This section will connect employment growth in the City that results from the development of non-residential buildings and the need for affordable housing. The analysis starts with a prototypical 100,000 square foot building for each land use building type. Through the series of steps enumerated below, the total number of workers in each land use type are calculated and then converted to worker households whose incomes are then estimated. Based on each household’s income, they are placed into the subject income categories (either very low-, low-, moderate-incomes) and their need for affordable housing is established.

Step 1: Establish Building Prototypes

As discussed in Section 2, the analysis begins with an identification of what types of non-residential land uses have recently been constructed or may be constructed in the future in the City. This analysis is conducted based on individual non-residential building types for the land uses identified in the City’s LUCE. For analysis purposes, prototypical 100,000 square foot buildings for each of the land use types included were analyzed.

Step 2: Estimate Total New Employees

The next step in the nexus analysis is to estimate the number of new direct permanent employees that would work in each of the eight prototypical non-residential land uses identified in Section 2. The detailed calculation of new employment is shown in Table 3-1. Employee density factors were used to estimate the number of employees in each of the buildings. These factors were based on statistics for Santa Monica per the LUCE. Employee densities are shown as the amount of building square feet occupied per employee, which are then used to estimate the total number of new direct permanent employees who will work in each of the prototype buildings. For example, it is estimated that the employee density factor for new office buildings is 275 square feet per employee (refer to Section 2 for details regarding employee densities for each land use). Using this factor, the 100,000 square foot office land use type would house 363.6 employees.



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Employee Households Generated by Product Type (Per 100,000 Square Feet) Table 3-1Santa Monica Non-Residential Nexus Study


Prototypical Building Size (SF) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000Building Square Feet per New Employee 275 560 1,500 425 500 300 275 500Employees per 100,000 SF Building 363.6 178.6 66.7 235.3 200.0 333.3 363.6 200.0

Source: City of Santa Monica; refer to Section 2 for employee density details by land use.

Step 3: Adjustments for Market Conditions

Adjustments to the total number of new direct permanent employees for each 100,000 square feet building type are then made to reflect changes in the local economy, including unemployment and changing industries. Specifically, declines and/or other shifts in the local economy can affect how new non-residential buildings are occupied. The adjustments included the following:

• An adjustment is made for changing industries taking into account any declines, changes, or shifts within specific sectors of the local economy, recognizing that new space is not always 100% equivalent to net new employees. From 2005 through 2007, economic production grew rapidly, at the end of 2008 and through 2011 economic growth stalled and sharply declined. Even with the recent decline, however, certain occupation groups achieved substantial gains in employment. The growth in some occupations, along with the steep decline in others, suggests that future new employment generated by new non-residential buildings will be in some part taken by existing workers changing from one occupation category to another. To account for this, a conservative 10% industry change factor reduction was applied to jobs generated by the construction of new non-residential buildings. Detailed information regarding industry changes is provided in Section 2.

• An additional adjustment is made for unemployment. From 2000 to 2007, the unemployment rate in the City averaged 4.8%, as detailed in Section 2. Within the last 4 years, the unemployment rate increased to nearly 10.2% due to the economic recession. The current unemployment rate will serve to reduce the number of new jobs created by new non-residential buildings and then taken by new workers moving to the area. For this reason the number of new workers generated by the development of new non-residential buildings was adjusted down by 8% to account for existing unemployed workers who would hypothetically take some of the new jobs in these buildings. Detailed information regarding local and regional unemployment is provided in Section 2. An 8% unemployment adjustment factor is applied for this analysis.

These two adjustments, when combined, account for an 18% reduction in the total number of new direct permanent employees within the non-residential building prototypes. It is not anticipated that these jobs will not materialize, but instead will be taken by existing residents in the City or surrounding area, that are either unemployed or may lose their job because they work in a declining industry. One of the key assumptions used to make these adjustments is that the existing workers already have housing and would not need new housing units.



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Prototypical Building Size (SF) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000Building Square Feet per New Employee 275 560 1,500 425 500 300 275 500Employees per 100,000 SF Building 363.6 178.6 66.7 235.3 200.0 333.3 363.6 200.0Industry Change Factor (decrease of) 1 10% 10% 10% 10% 10% 10% 10% 10%Unemployment Factor (decrease of) 8% 8% 8% 8% 8% 8% 8% 8%Employees Generated 298.2 146.4 54.7 192.9 164.0 273.3 298.2 164.0

1 The Industry Change Factor adjusts for future changes from one occupation to another by existing employees.

Source: 2010 US Census; Bureau of Labor Statistics; City of Santa Monica; refer to Section 2 for employee density details by land use.

Step 4: Adjustment from Employees to Employee Households

This step converts the number of employees/workers created into the number of employee households created. To estimate the number of workers per household in the City, Census data was gathered for the number of households and the number of individuals in the labor force. Using these datasets it is estimated that there are 1.13 workers per household in the City. The modified employee density numbers from Step 3 are adjusted by a factor of 1.13 to identify the number of new worker households.



Prototypical Building Size (SF) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000Building Square Feet per New Employee 275 560 1,500 425 500 300 275 500Employees per 100,000 SF Building 363.6 178.6 66.7 235.3 200.0 333.3 363.6 200.0Industry Change Factor (decrease of) 1 10% 10% 10% 10% 10% 10% 10% 10%Unemployment Factor (decrease of) 8% 8% 8% 8% 8% 8% 8% 8%Employees Generated 298.2 146.4 54.7 192.9 164.0 273.3 298.2 164.0Employees per Household2 1.13 1.13 1.13 1.13 1.13 1.13 1.13 1.13Employee Households Generated 262.9 129.1 48.2 170.1 144.6 241.0 262.9 144.6

1 The Industry Change Factor adjusts for future changes from one occupation to another by existing employees.2 According to the 2000 US Census, there were approxiamtely 1.13 workers per household. Worker households generated are therefore total employees divided by workers per household.

Source: 2010 US Census; Bureau of Labor Statistics; City of Santa Monica; refer to Section 2 for employee density details by land use.

Step 5: Occupational Distribution of Employees

The new worker households created is then associated with occupations and land use types. Utilizing BLS NAICS codes with the land use types and linking industry sectors to OES occupation categories the analysis estimates the occupational composition of employees in the different building types. The occupational mix for each building type is designed to be consistent with the use categories described in the City Zoning Code. This step is important because it links land use building types with occupation categories, and occupational categories can be linked to wages in the next step. The occupations that reflect the expected mix of activities in the new non-residential land uses are shown in Section 2, Table 2-1 at a national level.

§ Office building uses typically reflect a wide range of professional occupations. As summarized in Table 2-1, office and administrative support occupations represent the largest percentage of office related employment at 20.6%, education, training, and library occupations represent the next highest percentage at 15.2%, with sales and related occupations third at 7.8%. Business



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and financial operations occupations, and management occupations are also two of the higher occupational categories for office buildings, representing 7.9% and 6.5% of the employees respectively.

§ Hospital and medical office building uses occupation distributions are the same and, as expected, typically house a large amount of healthcare workers. However, the employees also work in other occupations, such as office and administrative support, and cleaning and maintenance operations. Healthcare practitioners and technical occupations represent the highest percentage of employees at 24.3%, healthcare support occupations are also high at 14.5%, as well as office and administrative support occupations at 17.6%.

§ Hotels typically employ workers from three main occupational categories. These occupational categories include food preparation and serving related occupations at 46.9%, building and grounds cleaning and maintenance occupations at 11.7%, and office and administrative support occupations at 10.8%. Together these three occupational categories make up over 69% of hotel workers.

§ Retail and entertainment uses (restaurants and movie theaters) typically employ workers from three main occupational categories. They include food preparation and serving related occupations at 21.9%, sales and related occupations at 23.2%, and office and administrative support occupations at 17.6%. Together these three occupational categories make up approximately 63% of retail and entertainment use workers.

§ Industrial / Light Manufacturing buildings employees are dispersed somewhat more broadly but the higher distributions occur in three occupation categories. These categories include office and administrative support at 17.4%, construction and extraction at 13.4%, and production occupations at 13.0%. Many other occupational categories account for more than 24% of the employees, including management, business and financial, computer and mathematical, architecture and engineering, building and grounds cleaning and maintenance, and transportation occupations.

§ Institutional buildings employees are also more broadly dispersed with the highest distribution occurring in the office and administrative support occupations at 19.7%, followed by education, training and library occupations at 12.6%, and healthcare practitioners and technical occupations at 10.5%.

§ Creative building employees reflect the highest distribution naturally occurring in the arts, design, entertainment, sports, and media occupations at 16.4% and the computer and mathematical science occupations at 15.5%, reflecting a combined 26.5%. Office and administrative support occupations, however, has the highest distribution at 19.7%, while sales and related occupations comprise 13.2% of the distribution.

Table 3-4 identifies the total net number of new direct permanent employee households by occupation (adjusted for unemployment, changing industries, and multiple wage earner households) for each of the hypothetical 100,000 square foot buildings applying the distribution of occupations by land use building type at a national level. In the next step correlates these employee occupations with the wages associated with each occupational category and grouped by income level.



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Employee Households Generated by Product Type (Per 100,000 Square Feet) (Santa Monica) Table 3-4Santa Monica Non-Residential Nexus Study


Prototypical Building Size (SF) 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000Building Square Feet per New Employee 275 560 1,500 425 500 300 275 500Employees per 100,000 SF Building 363.6 178.6 66.7 235.3 200.0 333.3 363.6 200.0Industry Change Factor (decrease of) 1 10% 10% 10% 10% 10% 10% 10% 10%Unemployment Factor (decrease of) 8% 8% 8% 8% 8% 8% 8% 8%Employees Generated 298.2 146.4 54.7 192.9 164.0 273.3 298.2 164.0Employees per Household2 1.13 1.13 1.13 1.13 1.13 1.13 1.13 1.13Employee Households Generated 262.9 129.1 48.2 170.1 144.6 241.0 262.9 144.6

Occupation Categories 3, 4

Management occupations 17.1 4.4 1.3 5.8 8.4 12.1 19.1 4.9Business and financial operations occupations 20.8 2.7 0.8 6.3 9.6 16.2 17.4 3.0Computer and mathematical science occupations 14.2 1.3 0.3 2.6 9.3 8.6 40.7 1.4Architecture and engineering occupations 7.8 0.3 0.1 0.4 7.6 4.8 4.6 0.3Life, physical, and social science occupations 2.8 0.5 0.0 0.1 1.7 3.3 0.2 0.6Community and social services occupations 4.3 5.0 0.0 0.1 0.1 6.8 0.0 5.7Legal occupations 3.6 0.1 0.1 0.3 3.2 3.5 0.7 0.2Education, training, and library occupations 40.0 2.8 0.2 0.4 0.5 30.4 1.5 3.1Arts, design, entertainment, sports, and media occupations 6.3 0.4 0.3 1.4 2.9 4.1 43.1 0.4Healthcare practitioners and technical occupations 3.6 31.3 0.4 2.5 1.7 25.3 0.1 35.1Healthcare support occupations 2.0 18.7 0.3 0.8 0.9 14.0 0.0 21.0Protective service occupations 4.8 4.2 2.1 3.6 3.8 10.9 0.3 4.7Food preparation and serving related occupations 3.7 3.2 22.6 37.2 0.4 5.6 4.5 3.5Building and grounds cleaning and maintenance occupations 12.4 10.8 5.6 10.1 8.6 11.4 1.3 12.1Personal care and service occupations 6.8 7.3 1.6 5.5 0.5 9.8 5.1 8.2Sales and related occupations 20.5 2.8 2.2 39.5 6.9 7.7 34.6 3.1Office and administrative support occupations 54.2 22.7 5.2 30.0 25.2 47.4 51.9 25.5Farming, fishing, and forestry occupations 0.3 0.1 0.0 0.1 0.1 0.2 0.0 0.1Construction and extraction occupations 2.4 0.9 0.4 0.9 19.4 3.1 0.5 1.0Installation, maintenance, and repair occupations 9.0 1.7 0.8 8.3 6.1 5.4 28.2 1.9Production occupations 12.1 3.8 1.7 5.3 18.7 4.1 4.8 4.3Transportation and material moving occupations 14.2 4.1 2.1 8.9 8.9 6.4 4.3 4.5

1 The Industry Change Factor adjusts for future changes from one occupation to another by existing employees.2 According to the 2000 US Census, there were approximately 1.13 workers per household. Worker households generated are therefore total employees divided by workers per household.3 Occupation categories defined by the Occupational Employment Statistics Survey (OES) of the Bureau of Labor Statistics4 The Bureau of Labor Statistics segregated employment into different industries (NAICS) and these have been matched with OES Occupation Categories and respective building types.Source: 2010 US Census; Bureau of Labor Statistics; City of Santa Monica; and California Department of Housing and Community Development



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Step 6: Estimate Distribution of Employee Wages

In Step Six, the occupational data from Step Five is combined with wage and salary information for Los Angeles County from the NAICS and CEDD. The wage and salary information summarized in Table 3-58 was used to calculate the incomes related to specific occupations at a local level. The OES occupational categories and jobs are the same as those used by the CEDD. The distribution of jobs within the category was estimated to be the same as the distribution within the Los Angeles-Long Beach-Glendale MSD, of which the City is a part. Mean incomes for each job type were taken from the NAICS and CEDD for Los Angeles County, that were then converted from an in individual employee/worker to household wages using the employees per household ratio (1.13) and used to estimate the number of very low-, low- and moderate-income households in each occupational category in Step 7.

OES Occupation Categories with CEDD Wage Data for Los Angeles-Long Beach-Glendale MSD Table 3-5Santa Monica Non-Residential Nexus Study

OES Occupation Category

Total Employees in

MSD

% of Employees in Specific Occupations of Each Major

CategoryMean Annual

WageAll Occupations 3,822,810 $51,660

Management Occupations 214,000 5.6% $123,080Business and Financial Operations Occupations 201,070 5.3% $73,960Computer and Mathematical Occupations 93,670 2.5% $83,340Architecture and Engineering Occupations 70,380 1.8% $90,450Life, Physical, and Social Science Occupations 32,160 0.8% $72,820Community and Social Service Occupations 59,470 1.6% $52,050Legal Occupations 37,750 1.0% $128,650Education, Training, and Library Occupations 241,430 6.3% $59,120Arts, Design, Entertainment, Sports, and Media Occupations 134,810 3.5% $86,580Healthcare Practitioners and Technical Occupations 188,340 4.9% $82,990Healthcare Support Occupations 102,840 2.7% $29,590Protective Service Occupations 112,440 2.9% $52,040Food Preparation and Serving Related Occupations 321,710 8.4% $21,630Building and Grounds Cleaning and Maintenance Occupations 96,710 2.5% $26,990Personal Care and Service Occupations 86,680 2.3% $27,060Sales and Related Occupations 391,150 10.2% $39,930Office and Administrative Support Occupations 708,810 18.5% $37,570Farming, Fishing, and Forestry Occupations 2,850 0.1% $25,840Construction and Extraction Occupations 87,620 2.3% $52,410Installation, Maintenance, and Repair Occupations 115,320 3.0% $47,590Production Occupations 253,130 6.6% $31,730Transportation and Material Moving Occupations 270,480 7.1% $33,310

Sources: 2010 US Census; Bureau of Labor Statistics; and California Department of Housing and Community Development

Step 7: Estimate Household Income Category Distribution

The individual wage data was used to estimate the number of households that fall into the very low-, low-, and moderate-income categories by assuming that individuals in multiple-earner households, on average, earn a similar wage. The same ratio of workers-per-household used in Step Three, was used to adjust the wage data for individual employees to that of households. Households of more than one person were conservatively estimated to, on average, have more than one worker.

After adjusting individual employee income to household income, those households were placed in income categories based on the City’s 2012 AHPP income limits. Household size distribution is based on Census data for the City. After households have been distributed into size categories they now have 8 More detailed wage data is identified in Attachment 1.



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income and size associated with them. These two sets of data allow the households to be distributed into the AHPP income categories, which are categorized by household size and income. Table 3-6 reflects the 2012 qualifying household income limits for the City as established in the AHPP.

2012 Income Limits by Household Size (Santa Monica) Table 3-6Santa Monica Non-Residential Nexus Study

Income Category 1 2 3 4 5 6 7Very Low Income $29,550 $33,750 $37,950 $42,150 $45,550 $48,900 $52,300Low Income $35,500 $40,500 $45,600 $50,600 $54,700 $58,700 $62,800Moderate Income $59,100 $67,500 $75,900 $84,300 $91,100 $97,800 $104,600

Source: City of Santa Monica 2012 Maximum Income and Rent Table

Household Size

Step 8: Estimate New Households that Meet Income Criteria

This step allocates the new worker households created into specific income categories (very low-, low-, and moderate-incomes) pursuant to the City’s AHPP 2012 income categories as indicated in Table 3-6. Households falling at or below the income limits were placed in their corresponding income category. After all worker households were placed into their respective income categories, totals were generated for each income category. Table 3-7 summarizes the total number of new worker households by land use type and income category, before an adjustment for employee commuters is made.

Generated Need for Affordable Housing - Before Adjusting for Commuters Table 3-7Santa Monica Non-Residential Nexus Study

Household Income Categories Office Hospital Hotel Retail Industrial Institutional CreativeMedical Office

Very Low Income 97.6 61.3 37.4 106.4 53.3 90.4 73.6 68.6Low Income 25.1 13.4 2.8 13.9 15.1 23.5 23.3 15.0Moderate Income 70.8 25.3 4.3 29.6 39.0 61.6 73.0 28.3Total Affordable Need Generated 193.5 74.7 40.1 120.3 107.4 175.5 96.9 83.6Over-Moderate Income 69.4 54.4 8.1 49.8 37.2 65.5 166.0 61.0Total Employee Households 262.9 129.1 48.2 170.1 144.6 241.0 262.9 144.6

Note: Refer to Attachment 1 for detailed wage data by occupation type.Sources: US Census Bureau; Bureau of Labor Statistics; California Department of Housing and Community Development; and City of Santa Monica

Step 9: Calculate Worker Households Income Categories and Adjust for Commute Patterns

This step adjusts the total number of worker households needing affordable housing by the percentage of current workers in the City who may also live in the City. This adjustment is made because, as discussed in Section 2, not all of the new employees in new non-residential buildings will live in the City. This adjustment is reflected in Table 3-8, which shows the total number of new worker households, by income category and building type that would live in the City. This also reflects the number of affordable housing units needed to accommodate the new employment in the City that results from the non-residential land types.



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Generated Need for Affordable Housing - After Adjusting for Commuters Table 3-8Santa Monica Non-Residential Nexus Study

% of Santa Monica Employees with Jobs inside City limits 34%




Step 10 – Calculate Total Affordable Housing Needs Created by Non-Residential Buildings The final step in the analysis adjusts the worker household per 100,000 square feet of land use building area to calculate the total worker households, by income category, that would live in the City based on anticipated City growth. This is reflected in Table 3-9, which multiplies the factors identified in Table 3-8 by the total estimated square feet for the non-residential building types to be developed during the period 2010 to 2030, as identified in the LUCE. The resulting total net new worker households living in the City serves to reflect the total number of affordable housing units, by income category, which is attributable to the total estimated non-residential building types if the City were to be built-out as envisioned in the LUCE.

Total Projected Affordable Housing Need (2010-2030) Table 3-9Santa Monica Non-Residential Nexus Study

Office Hospital Hotel Retail Industrial Institutional CreativeMedical Office Total

Estimated 2010 LUCE Net Change 448,980 763,123 628,578 566,803 0 196,029 699,709 187,327 3,490,549

Very Low Income 149.8 159.9 80.3 206.2 0.0 60.6 176.1 44.0 876.8Low Income 38.5 34.9 6.0 26.9 0.0 15.7 55.6 9.6 187.2Moderate Income 108.6 66.0 9.3 57.3 0.0 41.3 174.6 18.1 475.1Total Affordable Need Generated 297.0 260.8 95.5 290.4 0.0 117.6 406.3 71.7 1,539.2Over-Moderate Income 106.5 76.0 8.1 39.2 0.0 43.9 222.6 20.9 517.3Total Employee Households 403.5 336.8 103.6 329.6 0.0 161.5 628.9 92.6 2,056.5

1As discussed in this Report, the Income Limits for Los Angeles County are unique in that lower income is equal to median income.

Sources: City of Santa Monica Land Use and Circulation Element (LUCE, 2010), US Census Bureau; Bureau of Labor Statistics; and California Department of Housing and Community Development; and City of Santa Monica

Summary

As summarized in Table 3-9, the total development of 3.49 million square feet of non-residential buildings to be developed during the period 2010-2030 would generate about 2,057 new worker households living in the City; 1,539 of those households would earn less than 100% of the area median income, of which 1,064 would be lower-income (very low- and low-incomes). For non-residential buildings, the highest new worker household generating land use building type is creative, followed by hospital and medical offices, followed by office, then retail buildings.

The net new worker household data for each building type shown in Table 3-9 is summarized as follows:

1. The development of 950,450 square feet of hospital and medical buildings would generate a total of 429.4 worker households living in the City; 332.5 of those households would earn less than 100% AMI, of which 248.4 would be lower-income.



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2. Similarly, the development of 448,980 square feet of office buildings would generate a total of 403.5 new worker households living in the City; 297.0 of those worker households would earn less than 100% of the area median income, of which 188.3 would be lower-income.

3. The estimated 566,803 square feet of retail development would generate 329.6 worker households living in the City; 290.4 of those worker households would earn less than 100% AMI, of which 233.1 would be lower-income.

4. The estimated 699,709 square feet of creative buildings would generate 628.9 worker households living in the City; 406.3 of those worker households would earn less than 100% AMI, of which 231.7 would be lower-income, reflecting the lowest percentage (36.8%) of lower income households of any land use building type.

5. In contrast, the development of 628,578 square feet of hotel buildings would generate 103.6 worker households; 95.5 of those worker households would earning less than 100% AMI, of which 86.3 would be lower-income, reflecting the highest percentage (83.3%) of lower income households of any building type.

6. The development of 196,029 square feet of institutional buildings would generate a total of 161.5 new worker households living in the City; 117.6 of those households would earn less than 100% of the area median income, of which 76.3 would be lower-income.

The data presented in the tables above are used in Section 5 to produce to total supportable per square foot impact linkage fees for each building type.



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SECTION 4: AFFORDABLE HOUSING COSTS

The Non-Residential Nexus Study as presented in Sections 1 – 3 demonstrated the demand generated for new affordable housing units in the City as a result of the development of eight prototypical non-residential buildings identified in the LUCE. This demand is presented in terms of worker households which in turn generate the need for new housing units. In order to translate this need into an appropriate impact fee, the cost to develop affordable housing units in the City must be calculated. Discussions with City staff along with a review of currently proposed and recently completed projects in the City indicate that multifamily rental housing units (apartments) rather than ownership housing units (townhomes or condominiums) will be primarily developed in the City and will be the primary residential option for new worker households of very low-, low-, and moderate-incomes. Therefore, the following analysis is based on costs associated with rental housing units. A prototypical apartment development with a density of 50 dwelling units per acre was created to estimate the cost to develop affordable units in the City. The impact linkage fees calculated in Section 5 use the estimated development cost to identify the funding gap associated with the construction of a rental product.

Introduction

Affordable housing costs are generally a function of the Qualifying Income Limits and the Area Median Income adjusted for family size appropriate to the unit. As discussed previously, the City’s AHPP defines qualifying annual income limits and establishes the maximum allowable monthly rents per income category adjusted for household size appropriate for the unit. A summary of the AHPP 2012 Qualifying Income Limits is provided in Table 3-6.

The calculation of affordable housing rents is based on the allowable limitation by income category of a household, adjusted for family size, multiplied by the area median income adjusted for that household size.

Affordable Housing Cost

Affordable housing cost for rental units is established annually for the AHPP to reflect the affordable housing cost in terms of the maximum affordable monthly rent per income category adjusted for household size as a percentage of the gross AMI allowing for the deduction of an allowance for utilities. The AHPP calculation of affordable rent is as follows:

• For very low-income households earning not more than 50% AMI, the product of 30% times 50% of the AMI adjusted for family size appropriate for the unit.

• For low-income households earning not more than 60% AMI, the product of 30% times 60% of the AMI adjusted for family size appropriate for the unit.

• For moderate-income households earning not more than 100% AMI, the product of 30% times 100% of the AMI adjusted for family size appropriate for the unit.

The AHPP 2012 maximum affordable monthly rent, after deducting an allowance for utilities, for each income category by unit size is summarized in Table 4-1.



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2012 Maximum Monthly Affordable Rents Table 4-1Santa Monica Linkage Fee Analysis

Unit TypeVery-Low Maximum

Allowable RentLow Maximum Allowable Rent

Moderate Maximum Allowable Rent

Studio $747 $896 $1,4951 Bedroom $854 $1,024 $1,7082 Bedroom $1,014 $1,216 $2,0283 Bedroom $1,158 $1,389 $2,3164 Bedroom $1,308 $1,568 $2,615

Source: City of Santa Monica 2012 Maximum Income and Rent Tables

Rental Apartments Valuation

The valuation of rental apartment units is a function of the annual gross income of a unit reduced by vacancies and operating expenses to determine the net operating income (“NOI”). The industry practice in establishing the value of rental units is to apply a reasonable market capitalization rate to the NOI to identify the value based on the ability to achieve a comparable investment rate to similar properties. Since vacancies and operating costs are generally spread evenly across all units in a project, it is fairly easy to determine the NOI potential of a unit based on comparable market vacancy factors and operating costs. A lender’s underwriting standards would generally use a 5% vacancy factor. Comparable annual operating expenses (excluding real estate taxes) for an affordable rental unit are approximately $5,600 per unit. The exclusion of real estate taxes for affordable apartments is deemed reasonable under the assumption that most affordable apartment projects are constructed in conjunction with non-profit housing developers and receive exemptions from property taxes.

In estimating the value of rental apartment projects, it is useful to use a weighted average basis reflecting the blended rents, mix of bedrooms and unit sizes in a project based on similar affordable rental apartments in the area. In Santa Monica, the bedroom size-unit mix for market-rate and affordable rental apartment projects is fairly similar. For purposes of this analysis for a typical 50 unit affordable apartment development, a mix of 20% one-bedroom, 45% two-bedroom and 35% three-bedroom units of 650, 900, and 1,150 square feet respectively is used, with the weighted average unit size of about 938 square feet. The affordable monthly rent for each unit size and income category is used to determine the weighted average rent for each income category, as follows:

• For very low-income units the weighted monthly rent is $1,032 ($1.10 /s.f.).

• For low-income units the weighted monthly rent is $1,238 ($1.32 /s.f.).

• For moderate-income units the weighted monthly rent is $2,065 ($2.20 /s.f.).

The market value gap reflects the difference between the capitalized value of the affordable unit and estimated cost to develop the unit, which will generally closely approximate the costs of constructing market rate units in the area. A key distinction between the market value gap and the development funding gap is that the capitalized value of the market rate unit may exceed the actual development cost of the unit, due to the market forces of supply and demand which may serve to increase prices above the cost to produce or replace the unit. Use of the capitalization approach to identify the value of income-



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restricted affordable units is problematic in that the selection of the appropriate capitalization rate is impeded by investor perception of risks associated with the long-term rent restrictions which may not keep pace with inflating operating costs. Tables 4-2 and 4-3 reflect the calculation of the capitalized values and the respective market value gap for affordable rental units under the City’s AHPP.

2011 Maximum Monthly Affordable Rents (per Unit) Table 4-2Santa Monica Linkage Fee Analysis

Very Low-Income Low-Income Moderate-Income Gross Income $12,389 $14,858 $24,778Less 5% Vacancy ($619) ($743) ($1,239)Less Operating Costs ($5,600) ($5,600) ($5,600)Net Operating Income $6,169 $8,515 $17,939Capitalized Value @ 5.5% Rate $112,170 $154,817 $326,159

Rental Apartment Market Valuation Gap (per Unit) Table 4-3Santa Monica Linkage Fee Analysis

Very Low-Income Low-Income Moderate-Income

Unit Value1 $112,170 $154,817 $326,159Construction Cost1, 2 ($312,201) ($312,298) ($312,688)Allocated Land Cost1 ($130,000) ($130,000) ($130,000)

Market Valuation Gap ($330,031) ($287,481) ($116,529)

2 Based on a 6.0% Loan and 6.5% construction interest.

Note: Allocated Land Cost based on $149.22 per square foot divided by the assumed 50 units per acre density.

1 Refer to Attachment 2 for calculations

Affordable Housing Development Funding Gap

The development funding gap is more useful in reflecting the subsidy or assistance amounts needed to create affordable housing units for multifamily rental units. Calculation of the development funding gap analysis reflects the difference between the total cost of developing the unit and the amortized value the net operation income of the unit, as reflected by the maximum supportable loan amount and the capitalized value of excess cash flow. Two steps are used to illustrate the incremental increases in the funding gap associated with affordable housing units including the calculation of the construction funding gap and calculation of the development funding gap that reflects the inclusion of the land cost.

The major cost components for affordable housing units are similar to those for market rate units in terms of unit-cost, with the exception perhaps for somewhat smaller unit sizes, slightly lower quality materials and finishes, and a lower developer fee. For this analysis, the estimated development costs were based



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on independent construction cost data obtained from Marshall and Swift Valuation Services, which is a national comprehensive database that is updated monthly and serves the development and insurance industries. Since a nexus analysis should address the lower end of the housing market to reflect affordability, this analysis focuses on rental apartments (see Attachment 2 for multifamily rental housing pro forma).

For affordable rental apartments, the construction funding gap is reflected by the difference between the direct construction cost of the unit and the amortized value of the affordable unit’s projected net operating income. The construction funding gap amount is increased for the allocated land cost to reflect the total development funding gap associated with producing the affordable units. The weighted average development funding gaps for an affordable rental unit by income level are summarized in Table 4-4.

Rental Apartment Development Funding Gap (per Unit) Table 4-4Santa Monica Linkage Fee Analysis

Very-Low Income Low Income Moderate Income

Amortized NOI1 $90,153 $124,429 $262,139Construction Cost1, 2 ($312,201) ($312,298) ($312,688)Allocated Land Cost1 ($130,000) ($130,000) ($130,000)

Development Funding Gap ($352,048) ($317,869) ($180,548)

2 Based on a 6.0% Loan and 6.5% construction interest.

1 Refer to Attachment 2 for calculations

Note: Allocated Land Cost based on $149.22 per square foot divided by the assumed 50 units per acre density.

The development funding gaps shown in Table 4-4 were used in conjunction with the affordable housing need calculated by the nexus analysis in Section 3, to determine the applicable impact linkage fees for new non-residential buildings, as discussed in Section 5.



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SECTION 5: FEE ANALYSIS AND RECOMMENDATIONS

The Affordable Housing Impact Linkage Fee (“Linkage Fee”) for non-residential projects in the City reflects the financial equivalent needed to develop housing units affordable to very low-, low- and moderate-income persons and families in accordance with the quantified housing needs generated by the development of non-residential projects, as shown in the Non-Residential Nexus Study. The estimated funding deficit or “gap” amount reflects the cost associated with developing housing units affordable to very low-, low-, and moderate-income households. The estimated funding gap is determined based on the difference between the total allowable housing cost, as reflected by the capitalized value, for each income category and estimated cost to develop the affordable housing unit.

Approach and Methodology

The methodology for identifying the full financial equivalent of producing affordable housing units reflects the assumption that the impact is reflected by the total funding gap associated with the cost of producing the required affordable housing unit(s). The following summarizes the methodology used for identifying the development funding gap and the corresponding impact fee amounts.

1. Identification of the current affordable housing costs in accordance with the requirements under the AHPP, which provides the methodology for calculating affordable housing costs for rental units.

2. Preparation of development financial pro forma for a prototypical rental apartment (50 dwelling units/acre) on a weighted unit basis using comparable market building prototypes and unit sizes to estimate direct and indirect construction costs, financing costs, base developer fee, and estimated land costs, to identify the total estimated development costs. A detailed development financial pro forma for the prototypical rental apartment complex is included as Attachment 2.

3. Identification of the total rent revenue based on the maximum rent limits per each income category, as defined under the affordability standards identified in the AHPP (refer to Table 4.1).

4. The difference between the total estimated development cost and the estimated amortized value of the net operating income per unit reflects the supportable debt service derived from the unit’s gross affordable rent less the net operating income, which represents the affordable development funding gap associated with each income category’s affordable rent.

5. A weighted average development funding gap for each income category which is then multiplied by the income category’s proportion of the total affordable units generated, as reflected in the Non-Residential Nexus Study (Section 3).



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Rental Apartment Projects

The median market rental rates for apartments within the City were reviewed to identify the market rental rate based on unit sizes and median rents. The data was used to identify the median market rent as $1,470 per month, while the corresponding weighted affordable housing rent is $702 for a very low-income unit and $889 for a low-income unit. The weighted affordable housing rent for a moderate-income unit in Los Angeles County is $1,630. As identified in Section 4, current market conditions and construction cost estimates for a prototypical 50-unit apartment development would result in development funding deficits for affordable apartment units as follows (refer to Table 4-4):

Very Low-Income Unit $352,048

Low-Income Unit $317,869

Moderate-Income Unit $180,548

The indicated development funding deficits reflect the financial impacts associated with producing the affordable rental units without the benefit of tax credits to leverage the project, which would also reflect the 100% impact fee amount necessary for the City to produce an affordable unit.

Affordable rental apartment projects often receive financial assistance from local, State, and Federal funding sources including 4% or 9% low income housing tax credit equity to reduce the funding deficits to make the development more financially feasible. The future availability of such assistance, however, cannot be assured. Accordingly, the funding gap analysis uses the 100% funding gap amount as the basis for determining the impact fee amounts. Table 5-1 identifies the development funding deficits for affordable rental units.

Apartment Unit Gap Summary1 Table 5-1Santa Monica Linkage Fee Analysis

Very Low-IncomeUnit

Low-IncomeUnit

Moderate-IncomeUnit

Construction Funding Gap2 : ($222,048) ($187,869) ($50,548)(excludes land cost allocation)Total per unit construction cost 3 : $312,337

Development Funding Gap2 : ($352,048) ($317,869) ($180,548)(includes land cost allocation)Total per unit development cost 3 : $442,337

3 Weighted cost per unit for all income categories.

Source: Refer to Attachment 2

1 Apartment development assumption based on 50 du/ac density with market mix reflecting 20% 1 BR units, 45% 2 BR units, and 35% 3 BR units.2 Development assumptions based on a 6.0% loan and 6.5% construction interest.



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Impact Linkage Fee Calculation

As indicated above, the recommended methodology for identifying a maximum impact fee amount reflects the assumption that the Linkage Fee should reflect the amount necessary to fund 100% of the cost to develop the affordable unit(s); that is the full production cost of the affordable unit. The funding gap is translated into a per square foot fee by utilizing the unit need per 100,000 square foot by income category. The financial impacts associated with the affordable housing units are determined by multiplying the development funding gap by the affordable housing generated need as identified in Table 3-8 of the Nexus Study (shown below).

Generated Need for Affordable Housing - After Adjusting for Commuters Table 3-8Santa Monica Non-Residential Nexus Study

% of Santa Monica Employees with Jobs inside City limits 34%




The Linkage Fee for each land use type on a per square foot basis is derived by multiplying the gap funding amount times the number of households indentified in Table 3-8 for each building type, with the sum divided by 100,000 based on the 100,000 square foot building prototype. For example, the per square foot linkage fee for very low-income units without any financial assistance for the office building type is calculated as follows:

$352,048 (Gap) X 33.4 (Households) = $11,758,403.2 / 100,000 square feet = $117.58 9

Table 5-2 identifies the full impact fee per square foot as a result of the construction of non-residential development for the three scenarios identified above. Table 5-2 also provides reduced impact fee alternatives of between 5% and 25%, as found in other communities to mitigate the cost impacts to future non-residential development in the City.

9 While the calculation results in an amount of $117.58, the actual fee is $117.49 due to the rounding function in the computer program.



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Per Square Foot Non-Residential Impact Fees without LIHTC Mitigated Funding Table 5-2Santa Monica Linkage Fee Analysis

Development Funding Gap Office Hospital Hotel Retail Industrial Institutional Creative

Medical Office Average

Very Low Income $352,048 $117.49 $73.76 $44.96 $128.09 $64.17 $108.80 $88.59 $82.61 $88.56Low Income $317,869 $27.27 $14.53 $3.02 $15.08 $16.35 $25.52 $25.27 $16.28 $17.92Moderate Income $180,548 $43.68 $15.61 $2.66 $18.24 $24.08 $38.01 $45.04 $17.49 $25.60Full Impact Fee $188.43 $103.91 $50.64 $161.41 $104.60 $172.33 $158.91 $116.38 $132.08

5% $9.42 $5.20 $2.53 $8.07 $5.23 $8.62 $7.95 $5.82 $6.6010% $18.84 $10.39 $5.06 $16.14 $10.46 $17.23 $15.89 $11.64 $13.2115% $28.27 $15.59 $7.60 $24.21 $15.69 $25.85 $23.84 $17.46 $19.8120% $37.69 $20.78 $10.13 $32.28 $20.92 $34.47 $31.78 $23.28 $26.4225% $47.11 $25.98 $12.66 $40.35 $26.15 $43.08 $39.73 $29.09 $33.02

Sources: Tables 3-8 and 5-1

Impact Fee Options(per Square Foot)

Impact Linkage Fee Consideration

For comparison purposes, a survey of similar jurisdictions’ non-residential impact linkage fees was conducted, with the result summarized in Table 5-5. There is a wide range in the linkage fee amounts imputed, which nevertheless reflect a fairly substantial reduction from the full cost associated with the affordable housing funding gap. In the immediate area, the City of Los Angeles has recently completed a nexus study and linkage fee analysis using a similar approach and methodology as this Report. While still pending review and action, the Los Angeles linkage fee alternatives appear to be similar as those evaluated herein, reflecting a range for consideration from the lower-end range to the higher-end range as identified and discussed below.

The full financial impacts associated with the demand generated by non-residential uses in Santa Monica are very substantial, with the full added costs very likely to impede future development in the City. Accordingly, reduced fee levels were evaluated, which are meant to avoid adverse economic impacts on the developers of new non-residential projects in the City. A range of reduced fee amounts of between 5% and 25% were evaluated for comparison to other jurisdictions, as well as to identify to potential cost impacts to the construction of the various building types (see Attachment 3). The low-, mid-, and high-range fee amounts at 5%, 10% and 15% respectively, generally reflect the range of fees imputed in other jurisdictions, with San Francisco being at the high-end range. The fee schedule range under review in the City of Los Angeles ($5.69 to $18.09 at the reduced 15% level) is slightly lower than the reduced 15% level reflected in this Report primarily due to the lower affordable housing funding gap requirements in the City, which result from a combination of lower cost building types, lower land costs, and no prevailing wage impacts.



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Table 5-5Santa Monica Linkage Fee Analysis

Jurisdiction Population1 Region Year Adopted Office Fee2 Retail Fee2 Blended Fee2

Berkeley 114,821 Bay Area 1993 n/a n/a $4.00Culver City3 39,004 Southern California n/a None None NoneCupertino 59,022 Bay Area 1993 n/a n/a $5.08Hollywood (City of Los Angeles)4 3,806,411 Southern California n/a None None NoneOakland 395,341 Bay Area 2002 n/a n/a $4.00Palo Alto 65,544 Bay Area 1984 n/a n/a $17.97Pasadena3 139,222 Southern California n/a None None NonePleasanton4,9 71,269 Northern California Unknown n/a n/a $2.74San Diego (City)4, 5 1,321,315 Southern California 1990 $1.06 $0.64 n/aSan Francisco (City & County)6 812,538 Bay Area 1996 $22.06 $20.58 n/aSan Luis Obispo (County)7 271,483 Coastal California 2008 $2.56 $2.20 NoneSanta Barbara3 89,082 Coastal California n/a None None NoneSonoma (County)8 485,082 Northern California 2005 $2.34 $4.04 NoneWalnut Creek 65,233 Bay Area 2005 n/a n/a $5.00West Hollywood 34,681 Southern California 1986 n/a n/a $2.85

2 $/square foot of new development3 City staff indicated there is currently no discussion regarding the adoption of a fee.4 Under review.5 Fees by land use. Hotel - $0.64, Research & Development - $0.80, Warehouse - $0.80.

Non-Residential Linkage Fees for California Jurisdictions

6 Fees by land use. Entertainment - $20.58, Hotel - $16.52, PDR - $17.34, R&D - $14.70, Small Enterprise/Workspace - $17.34

1 Population projections from California Department of Finance as of January 1, 2012.

Sources: California Department of Finance, City fee schedules and phone calls with jurisdictions conducted in October 2012.

8 Fees by land use. Commercial Hotels - $2.34, Industrial - $2.42, excludes first 2,000 square feet of building floor area.

7 Fees by land use. Hotel - $2.20, Industrial - $1.02, Other - $1.92



39

ATTACHMENTS



40

Attachment 1: Occupational Categories and Wage Data



41

OES Occupation Categories with CEDD Wage Data for Los Angeles-Long Beach-Glendale Metropolitan DivisionSanta Monica Non-Residential Nexus Study

OES Occupation Category

Total Employees in

MSD

% of Employees in Specific Occupations of Each Major

CategoryMean Annual

WageAll Occupations 3,822,810 $51,660Management Occupations 214,000 5.6% $123,080Business and Financial Operations Occupations 201,070 5.3% $73,960Computer and Mathematical Occupations 93,670 2.5% $83,340Architecture and Engineering Occupations 70,380 1.8% $90,450Life, Physical, and Social Science Occupations 32,160 0.8% $72,820Community and Social Service Occupations 59,470 1.6% $52,050Legal Occupations 37,750 1.0% $128,650Education, Training, and Library Occupations 241,430 6.3% $59,120Arts, Design, Entertainment, Sports, and Media Occupations 134,810 3.5% $86,580Healthcare Practitioners and Technical Occupations 188,340 4.9% $82,990Healthcare Support Occupations 102,840 2.7% $29,590Protective Service Occupations 112,440 2.9% $52,040Food Preparation and Serving Related Occupations 321,710 8.4% $21,630Building and Grounds Cleaning and Maintenance Occupations 96,710 2.5% $26,990Personal Care and Service Occupations 86,680 2.3% $27,060Sales and Related Occupations 391,150 10.2% $39,930Office and Administrative Support Occupations 708,810 18.5% $37,570Farming, Fishing, and Forestry Occupations 2,850 0.1% $25,840Construction and Extraction Occupations 87,620 2.3% $52,410Installation, Maintenance, and Repair Occupations 115,320 3.0% $47,590Production Occupations 253,130 6.6% $31,730Transportation and Material Moving Occupations 270,480 7.1% $33,310

Management Occupations 214,000 $123,080Chief Executives 9,490 4.4% $215,180General and Operations Managers 65,380 30.6% $131,200Legislators 420 0.2% $62,950Advertising and Promotions Managers 1,330 0.6% $119,100Marketing Managers 7,640 3.6% $132,860Sales Managers 15,420 7.2% $124,150Public Relations and Fundraising Managers 2,060 1.0% $118,930Administrative Services Managers 8,570 4.0% $97,990Computer and Information Systems Managers 9,370 4.4% $136,060Financial Managers 18,490 8.6% $137,370Industrial Production Managers 4,640 2.2% $100,690Purchasing Managers 2,200 1.0% $114,080Transportation, Storage, and Distribution Managers 3,290 1.5% $87,520Compensation and Benefits Managers 770 0.4% $110,960Human Resources Managers 2,810 1.3% $117,490Training and Development Managers 690 0.3% $111,320Construction Managers 3,980 1.9% $108,690Education Administrators, Preschool and Childcare Center/Program 1,840 0.9% $57,300Education Administrators, Elementary and Secondary School 5,210 2.4% $102,560Education Administrators, Postsecondary 2,710 1.3% $98,690Education Administrators, All Other 980 0.5% $78,570Architectural and Engineering Managers 6,510 3.0% $145,310Food Service Managers 6,890 3.2% $50,570Gaming Managers 0 0.0% $80,430Lodging Managers 720 0.3% $56,650Medical and Health Services Managers 7,260 3.4% $105,470Natural Sciences Managers 1,070 0.5% $151,520Postmasters and Mail Superintendents 80 0.0% $91,150Property, Real Estate, and Community Association Managers 7,160 3.3% $69,180Social and Community Service Managers 4,240 2.0% $70,050Emergency Management Directors 150 0.1% $99,950Managers, All Other 12,530 5.9% $136,040



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Business and Financial Operations Occupations 201,070 $73,960Agents and Business Managers of Artists, Performers, and Athletes 3,250 1.6% $135,690Buyers and Purchasing Agents, Farm Products 200 0.1% $67,320Wholesale and Retail Buyers, Except Farm Products 4,590 2.3% $55,510Purchasing Agents, Except Wholesale, Retail, and Farm Products 9,080 4.5% $63,290Claims Adjusters, Examiners, and Investigators 7,720 3.8% $63,600Insurance Appraisers, Auto Damage 320 0.2% $54,760Compliance Officers 6,700 3.3% $71,250Cost Estimators 4,150 2.1% $66,730Human Resources, Training, and Labor Relations Specialists, All Other* 13,300 6.6% $70,690Logisticians 3,260 1.6% $80,940Management Analysts 15,810 7.9% $88,830Meeting, Convention, and Event Planners* 1,810 0.9% $50,310Compensation, Benefits, and Job Analysis Specialists 3,360 1.7% $60,930Training and Development Specialists 4,620 2.3% $61,920Market Research Analysts and Marketing Specialists* 13,480 6.7% $65,100Business Operations Specialists, All Other* 32,270 16.0% $70,140Accountants and Auditors 35,840 17.8% $74,290Appraisers and Assessors of Real Estate 930 0.5% $74,890Budget Analysts 3,250 1.6% $76,620Credit Analysts 1,600 0.8% $77,430Financial Analysts 9,270 4.6% $104,970Personal Financial Advisors 5,900 2.9% $76,590Insurance Underwriters 2,250 1.1% $76,460Financial Examiners 0 0.0% $76,560Credit Counselors 960 0.5% $46,880Loan Officers 6,120 3.0% $86,730Tax Preparers 1,600 0.8% $42,200Financial Specialists, All Other 6,400 3.2% $65,680

Computer and Mathematical Occupations 93,670 $83,340Computer and Information Research Scientists 480 0.5% $119,580Computer Systems Analysts 12,620 13.5% $88,640Computer Programmers 9,120 9.7% $84,730Software Developers, Applications 14,110 15.1% $94,180Software Developers, Systems Software 13,220 14.1% $107,550Database Administrators 2,370 2.5% $81,150Network and Computer Systems Administrators* 9,550 10.2% $78,670Computer Support Specialists 16,090 17.2% $54,150Information Security Analysts, Web Developers, and Computer Network Architects 9,100 9.7% $81,270Computer Occupations, All Other* 4,490 4.8% $76,230Actuaries 400 0.4% $86,960Mathematicians 160 0.2% $99,760Operations Research Analysts 1,370 1.5% $84,370Statisticians 510 0.5% $77,560Mathematical Technicians 0 0.0% $39,830Mathematical Science Occupations, All Other 0 0.0% $68,730

Architecture and Engineering Occupations 70,380 $90,450Architects, Except Landscape and Naval 2,830 4.0% $97,760Landscape Architects 250 0.4% $70,960Cartographers and Photogrammetrists 120 0.2% $74,780Surveyors 530 0.8% $87,460Aerospace Engineers 9,320 13.2% $115,330Biomedical Engineers 500 0.7% $87,780Chemical Engineers 420 0.6% $119,440Civil Engineers 7,500 10.7% $91,840Computer Hardware Engineers 0 0.0% $111,900Electrical Engineers 5,330 7.6% $100,030Electronics Engineers, Except Computer 5,450 7.7% $108,260Environmental Engineers 1,010 1.4% $88,530Health and Safety Engineers, Except Mining Safety Engineers and Inspectors 590 0.8% $88,610Industrial Engineers 5,200 7.4% $93,800Marine Engineers and Naval Architects 40 0.1% $71,940Materials Engineers 1,240 1.8% $101,880



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Mechanical Engineers 5,900 8.4% $92,570Mining and Geological Engineers, Including Mining Safety Engineers 0 0.0% $98,040Petroleum Engineers 260 0.4% $93,380Engineers, All Other 3,190 4.5% $97,070Architectural and Civil Drafters 2,900 4.1% $54,030Electrical and Electronics Drafters 0 0.0% $58,110Mechanical Drafters 1,270 1.8% $54,860Drafters, All Other 890 1.3% $52,670Aerospace Engineering and Operations Technicians 790 1.1% $65,340Civil Engineering Technicians 1,560 2.2% $62,370Electrical and Electronics Engineering Technicians 4,000 5.7% $65,920Electro-Mechanical Technicians 300 0.4% $54,740Environmental Engineering Technicians 650 0.9% $61,760Industrial Engineering Technicians 1,260 1.8% $52,820Mechanical Engineering Technicians 840 1.2% $60,200Engineering Technicians, Except Drafters, All Other 1,750 2.5% $64,050Surveying and Mapping Technicians 300 0.4% $62,150

Life, Physical, and Social Science Occupations 32,160 $72,820Food Scientists and Technologists 340 1.1% $61,740Biochemists and Biophysicists 610 1.9% $80,410Microbiologists 390 1.2% $72,490Zoologists and Wildlife Biologists 120 0.4% $75,850Biological Scientists, All Other 470 1.5% $72,930Conservation Scientists 90 0.3% $82,570Epidemiologists 0 0.0% $73,030Medical Scientists, Except Epidemiologists 5,360 16.7% $74,780Life Scientists, All Other 0 0.0% $88,790Astronomers 340 1.1% $104,570Physicists 930 2.9% $93,640Atmospheric and Space Scientists 60 0.2% $113,190Chemists 1,810 5.6% $71,680Materials Scientists 310 1.0% $88,610Environmental Scientists and Specialists, Including Health 1,780 5.5% $78,650Geoscientists, Except Hydrologists and Geographers 630 2.0% $90,690Hydrologists 0 0.0% $101,550Physical Scientists, All Other 140 0.4% $103,700Economists 660 2.1% $120,530Survey Researchers 690 2.1% $53,520Clinical, Counseling, and School Psychologists 4,670 14.5% $75,270Psychologists, All Other 380 1.2% $90,670Sociologists 0 0.0% $76,580Urban and Regional Planners 1,910 5.9% $79,540Anthropologists and Archeologists 60 0.2% $59,210Historians 0 0.0% $70,410Political Scientists 0 0.0% $90,020Social Scientists and Related Workers, All Other 0 0.0% $85,570Agricultural and Food Science Technicians 400 1.2% $32,160Biological Technicians 1,890 5.9% $47,310Chemical Technicians 1,460 4.5% $44,180Geological and Petroleum Technicians 110 0.3% $59,870Social Science Research Assistants 530 1.6% $44,980Environmental Science and Protection Technicians, Including Health 410 1.3% $52,160Life, Physical, and Social Science Technicians, All Other 1,420 4.4% $47,910

Community and Social Service Occupations 59,470 $52,050Substance Abuse and Behavioral Disorder Counselors 2,730 4.6% $33,370Educational, Guidance, School, and Vocational Counselors 9,340 15.7% $72,030Marriage and Family Therapists 2,200 3.7% $51,010Mental Health Counselors 1,820 3.1% $49,070Rehabilitation Counselors 2,820 4.7% $34,730Counselors, All Other 880 1.5% $40,500Child, Family, and School Social Workers 8,260 13.9% $52,990Healthcare Social Workers 3,140 5.3% $57,480Mental Health and Substance Abuse Social Workers 3,180 5.3% $49,040



44

Social Workers, All Other 3,730 6.3% $0Health Educators 2,010 3.4% $48,210Social and Human Service Assistants 10,560 17.8% $36,070Community and Social Service Specialists, All Other* 3,340 5.6% $39,210Clergy 920 1.5% $71,490Directors, Religious Activities and Education 540 0.9% $59,100Religious Workers, All Other 0 0.0% $26,850

Legal Occupations 37,750 $128,650Lawyers 23,210 61.5% $167,300Judicial Law Clerks 1,300 3.4% $0Arbitrators, Mediators, and Conciliators 690 1.8% $123,000Paralegals and Legal Assistants* 7,310 19.4% $59,540Title Examiners, Abstractors, and Searchers 1,230 3.3% $48,830Legal Support Workers, All Other 2,110 5.6% $58,260

Education, Training, and Library Occupations 241,430 $59,120Business Teachers, Postsecondary 1,870 0.8% $121,270Computer Science Teachers, Postsecondary 1,430 0.6% $106,770Mathematical Science Teachers, Postsecondary 1,780 0.7% $109,410Architecture Teachers, Postsecondary 160 0.1% $85,670Engineering Teachers, Postsecondary 1,380 0.6% $110,930Biological Science Teachers, Postsecondary 0 0.0% $94,690Atmospheric, Earth, Marine, and Space Sciences Teachers, Postsecondary 780 0.3% $119,950Chemistry Teachers, Postsecondary 680 0.3% $104,680Environmental Science Teachers, Postsecondary 70 0.0% $109,680Physics Teachers, Postsecondary 560 0.2% $108,290Anthropology and Archeology Teachers, Postsecondary 180 0.1% $96,100Area, Ethnic, and Cultural Studies Teachers, Postsecondary 320 0.1% $85,620Economics Teachers, Postsecondary 320 0.1% $108,860Geography Teachers, Postsecondary 80 0.0% $98,950Political Science Teachers, Postsecondary 330 0.1% $88,950Psychology Teachers, Postsecondary 1,210 0.5% $98,250Sociology Teachers, Postsecondary 360 0.1% $102,370Social Sciences Teachers, Postsecondary, All Other 510 0.2% $148,990Health Specialties Teachers, Postsecondary 3,280 1.4% $92,250Nursing Instructors and Teachers, Postsecondary 770 0.3% $88,690Education Teachers, Postsecondary 1,270 0.5% $75,180Library Science Teachers, Postsecondary 90 0.0% $89,120Criminal Justice and Law Enforcement Teachers, Postsecondary 180 0.1% $88,310Law Teachers, Postsecondary 220 0.1% $171,240Social Work Teachers, Postsecondary 160 0.1% $94,930Art, Drama, and Music Teachers, Postsecondary 4,950 2.1% $94,890Communications Teachers, Postsecondary 1,070 0.4% $101,170English Language and Literature Teachers, Postsecondary 1,950 0.8% $106,550Foreign Language and Literature Teachers, Postsecondary 1,520 0.6% $75,820History Teachers, Postsecondary 470 0.2% $104,150Philosophy and Religion Teachers, Postsecondary 500 0.2% $89,720Graduate Teaching Assistants 2,060 0.9% $50,050Home Economics Teachers, Postsecondary 120 0.0% $91,120Recreation and Fitness Studies Teachers, Postsecondary 730 0.3% $99,090Vocational Education Teachers, Postsecondary 4,250 1.8% $74,210Postsecondary Teachers, All Other 8,430 3.5% $72,260Preschool Teachers, Except Special Education 11,610 4.8% $31,320Kindergarten Teachers, Except Special Education 5,100 2.1% $63,200Elementary School Teachers, Except Special Education 35,770 14.8% $67,240Middle School Teachers, Except Special and Career/Technical Education 11,430 4.7% $63,490Career/Technical Education Teachers, Middle School 0 0.0% $60,170Secondary School Teachers, Except Special and Career/Technical Education 28,200 11.7% $63,960Career/Technical Education Teachers, Secondary School 840 0.3% $69,160Special Education Teachers, Preschool, Kindergarten, and Elementary School* 3,160 1.3% $64,440Special Education Teachers, Middle School 1,350 0.6% $61,780Special Education Teachers, Secondary School 4,340 1.8% $63,970Adult Basic and Secondary Education and Literacy Teachers and Instructors 1,880 0.8% $73,140Self-Enrichment Education Teachers 3,230 1.3% $53,600



45

Teachers and Instructors, All Other* 32,200 13.3% $47,600Archivists 0 0.0% $42,610Curators 270 0.1% $72,030Museum Technicians and Conservators 380 0.2% $48,680Librarians 2,500 1.0% $68,300Library Technicians 2,350 1.0% $41,310Audio-Visual and Multimedia Collections Specialists 390 0.2% $43,850Instructional Coordinators 4,000 1.7% $62,320Teacher Assistants 36,090 14.9% $29,820Education, Training, and Library Workers, All Other 8,960 3.7% $30,910

Arts, Design, Entertainment, Sports, and Media Occupations 134,810 $86,580Art Directors 2,920 2.2% $118,800Craft Artists 300 0.2% $61,270Fine Artists, Including Painters, Sculptors, and Illustrators 2,960 2.2% $67,390Multimedia Artists and Animators 5,060 3.8% $89,860Artists and Related Workers, All Other 240 0.2% $63,020Commercial and Industrial Designers 1,230 0.9% $59,030Fashion Designers 2,760 2.0% $75,860Floral Designers 570 0.4% $29,740Graphic Designers 9,500 7.0% $59,630Interior Designers 1,790 1.3% $61,970Merchandise Displayers and Window Trimmers 1,640 1.2% $31,830Set and Exhibit Designers 1,210 0.9% $65,120Designers, All Other 750 0.6% $53,210Producers and Directors 18,850 14.0% $139,770Athletes and Sports Competitors 0 0.0% $142,710Coaches and Scouts 5,690 4.2% $44,140Umpires, Referees, and Other Sports Officials 290 0.2% $26,090Dancers 1,190 0.9% $0Choreographers 0 0.0% $62,930Music Directors and Composers 550 0.4% $65,700Musicians and Singers 2,800 2.1% $0Entertainers and Performers, Sports and Related Workers, All Other 0 0.0% $0Radio and Television Announcers 710 0.5% $75,440Public Address System and Other Announcers 340 0.3% $71,180Reporters and Correspondents 1,430 1.1% $51,960Public Relations Specialists 7,480 5.5% $71,090Editors 4,300 3.2% $63,130Technical Writers 1,110 0.8% $88,380Writers and Authors 3,720 2.8% $115,030Interpreters and Translators 1,740 1.3% $55,720Media and Communication Workers, All Other 6,340 4.7% $68,690Audio and Video Equipment Technicians 3,560 2.6% $54,510Broadcast Technicians 3,540 2.6% $48,200Radio Operators 0 0.0% $61,380Sound Engineering Technicians 2,260 1.7% $82,890Photographers 1,350 1.0% $52,780Camera Operators, Television, Video, and Motion Picture 1,680 1.2% $80,010Film and Video Editors 4,780 3.5% $102,770Media and Communication Equipment Workers, All Other 2,780 2.1% $79,770

Healthcare Practitioners and Technical Occupations 188,340 $82,990Chiropractors 700 0.4% $83,530Dentists, General 3,510 1.9% $131,960Orthodontists 0 0.0% $207,220Dentists, All Other Specialists 80 0.0% $151,770Dietitians and Nutritionists 1,640 0.9% $64,910Optometrists 690 0.4% $100,420Pharmacists 5,780 3.1% $119,940Anesthesiologists 900 0.5% $0Family and General Practitioners 2,400 1.3% $171,500Internists, General 2,050 1.1% $193,690Obstetricians and Gynecologists 410 0.2% $239,130Pediatricians, General 1,120 0.6% $173,650



46

Psychiatrists 1,240 0.7% $201,060Surgeons 1,100 0.6% $237,120Physicians and Surgeons, All Other 7,150 3.8% $177,370Physician Assistants 2,110 1.1% $97,850Podiatrists 310 0.2% $115,560Registered Nurses* 69,540 36.9% $85,340Occupational Therapists 2,200 1.2% $88,480Physical Therapists 4,080 2.2% $86,820Radiation Therapists 500 0.3% $89,560Recreational Therapists 200 0.1% $57,720Respiratory Therapists 4,130 2.2% $66,110Speech-Language Pathologists 2,060 1.1% $83,620Therapists, All Other* 890 0.5% $46,660Veterinarians 830 0.4% $92,420Audiologists 680 0.4% $75,740Health Diagnosing and Treating Practitioners, All Other 690 0.4% $66,160Medical and Clinical Laboratory Technologists 2,610 1.4% $77,530Medical and Clinical Laboratory Technicians 5,780 3.1% $38,950Dental Hygienists 4,280 2.3% $93,130Cardiovascular Technologists and Technicians 1,050 0.6% $56,420Diagnostic Medical Sonographers 1,520 0.8% $72,890Nuclear Medicine Technologists 510 0.3% $88,650Radiologic Technologists and Technicians* 4,460 2.4% $61,460Emergency Medical Technicians and Paramedics 3,910 2.1% $30,330Dietetic Technicians 370 0.2% $33,570Pharmacy Technicians 6,570 3.5% $37,200Psychiatric Technicians 1,850 1.0% $47,420Respiratory Therapy Technicians 230 0.1% $47,010Surgical Technologists 2,760 1.5% $48,290Veterinary Technologists and Technicians 1,210 0.6% $35,270Licensed Practical and Licensed Vocational Nurses 19,360 10.3% $49,740Medical Records and Health Information Technicians 5,090 2.7% $38,830Opticians, Dispensing 1,520 0.8% $35,220Orthotists and Prosthetists 70 0.0% $103,000Health Technologists and Technicians, All Other* 4,470 2.4% $42,930Occupational Health and Safety Specialists 1,330 0.7% $73,250Occupational Health and Safety Technicians 260 0.1% $47,360Athletic Trainers 200 0.1% $56,400Healthcare Practitioners and Technical Workers, All Other* 1,700 0.9% $70,280

Healthcare Support Occupations 102,840 $29,590Home Health Aides 14,980 14.6% $23,590Nursing Aides, Orderlies, and Attendants* 33,610 32.7% $26,510Psychiatric Aides 760 0.7% $25,640Occupational Therapy Assistants 450 0.4% $61,440Occupational Therapy Aides 280 0.3% $28,500Physical Therapist Assistants 1,090 1.1% $55,850Physical Therapist Aides 1,700 1.7% $27,200Massage Therapists 2,130 2.1% $38,390Dental Assistants 10,440 10.2% $34,000Medical Assistants 23,910 23.2% $31,120Medical Equipment Preparers 1,720 1.7% $29,780Medical Transcriptionists 1,570 1.5% $44,520Pharmacy Aides 1,980 1.9% $26,570Veterinary Assistants and Laboratory Animal Caretakers 1,490 1.4% $26,760Healthcare Support Workers, All Other* 6,720 6.5% $35,970

Protective Service Occupations 112,440 $52,040First-Line Supervisors of Protective Service Workers, All Other 2,220 2.0% $47,750Firefighters 7,840 7.0% $0Fire Inspectors and Investigators 240 0.2% $96,400Parking Enforcement Workers 460 0.4% $41,120Police and Sheriff's Patrol Officers 22,280 19.8% $85,620Transit and Railroad Police 170 0.2% $61,860Private Detectives and Investigators 690 0.6% $58,550



47

Gaming Surveillance Officers and Gaming Investigators 110 0.1% $36,170Security Guards 53,360 47.5% $27,240Lifeguards, Ski Patrol, and Other Recreational Protective Service Workers 3,820 3.4% $33,700Transportation Security Screeners* (federal only) 2,710 2.4% $38,020Protective Service Workers, All Other * 3,780 3.4% $40,840

Food Preparation and Serving Related Occupations 321,710 $21,630Chefs and Head Cooks 2,790 0.9% $44,450First-Line Supervisors of Food Preparation and Serving Workers 23,190 7.2% $30,050Cooks, Fast Food 30,370 9.4% $18,770Cooks, Institution and Cafeteria 4,980 1.5% $27,800Cooks, Restaurant 25,150 7.8% $23,290Cooks, Short Order 4,400 1.4% $23,710Cooks, All Other 690 0.2% $27,390Food Preparation Workers 26,550 8.3% $20,230Bartenders 11,050 3.4% $21,760Combined Food Preparation and Serving Workers, Including Fast Food 71,790 22.3% $20,040Counter Attendants, Cafeteria, Food Concession, and Coffee Shop 12,930 4.0% $20,460Waiters and Waitresses 59,760 18.6% $21,210Food Servers, Nonrestaurant 3,970 1.2% $25,280Dining Room and Cafeteria Attendants and Bartender Helpers 16,730 5.2% $20,240Dishwashers 17,310 5.4% $19,150Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop 8,360 2.6% $20,110Food Preparation and Serving Related Workers, All Other 1,670 0.5% $19,200

Building and Grounds Cleaning and Maintenance Occupations 96,710 $26,990First-Line Supervisors of Housekeeping and Janitorial Workers 3,880 4.0% $41,420First-Line Supervisors of Landscaping, Lawn Service, and Groundskeeping Workers 1,730 1.8% $52,410Janitors and Cleaners, Except Maids and Housekeeping Cleaners 49,010 50.7% $25,860Maids and Housekeeping Cleaners 20,080 20.8% $22,650Building Cleaning Workers, All Other 110 0.1% $32,350Pest Control Workers 2,030 2.1% $31,590Landscaping and Groundskeeping Workers 18,590 19.2% $28,290Pesticide Handlers, Sprayers, and Applicators, Vegetation 130 0.1% $41,140Tree Trimmers and Pruners 970 1.0% $32,890Grounds Maintenance Workers, All Other 0 0.0% $30,310

Personal Care and Service Occupations 86,680 $27,060Gaming Supervisors 250 0.3% $42,250First-Line Supervisors of Personal Service Workers 3,650 4.2% $45,400Animal Trainers 300 0.3% $52,120Nonfarm Animal Caretakers 3,700 4.3% $22,590Gaming Dealers 3,260 3.8% $19,950Gaming and Sports Book Writers and Runners 270 0.3% $35,980Gaming Service Workers, All Other 750 0.9% $24,910Motion Picture Projectionists 490 0.6% $27,950Ushers, Lobby Attendants, and Ticket Takers 4,870 5.6% $21,970Amusement and Recreation Attendants 7,420 8.6% $21,250Costume Attendants 400 0.5% $47,610Locker Room, Coatroom, and Dressing Room Attendants 670 0.8% $20,890Entertainment Attendants and Related Workers, All Other 140 0.2% $24,740Embalmers 100 0.1% $41,220Funeral Attendants 330 0.4% $29,110Funeral Service Managers, Directors, Morticians, and Undertakers 490 0.6% $87,080Barbers 0 0.0% $23,530Hairdressers, Hairstylists, and Cosmetologists 5,770 6.7% $27,460Makeup Artists, Theatrical and Performance 350 0.4% $84,860Manicurists and Pedicurists 3,020 3.5% $19,490Shampooers 0 0.0% $19,310Skincare Specialists 1,800 2.1% $31,780Baggage Porters and Bellhops 1,440 1.7% $24,110Concierges 540 0.6% $29,260Tour Guides and Escorts 320 0.4% $23,860Travel Guides 160 0.2% $41,300Childcare Workers 16,860 19.5% $24,880



48

Personal Care Aides 9,830 11.3% $21,680Fitness Trainers and Aerobics Instructors 5,870 6.8% $43,610Recreation Workers 10,690 12.3% $25,070Residential Advisors 880 1.0% $33,360Personal Care and Service Workers, All Other 1,280 1.5% $25,670

Sales and Related Occupations 391,150 $39,930First-Line Supervisors of Retail Sales Workers 29,770 7.6% $45,020First-Line Supervisors of Non-Retail Sales Workers 6,640 1.7% $74,710Cashiers 85,340 21.8% $22,540Counter and Rental Clerks 24,440 6.2% $27,750Parts Salespersons 4,390 1.1% $33,140Retail Salespersons 116,470 29.8% $25,820Advertising Sales Agents 4,550 1.2% $66,000Insurance Sales Agents 6,490 1.7% $67,340Securities, Commodities, and Financial Services Sales Agents 9,450 2.4% $113,240Travel Agents 3,590 0.9% $35,090Sales Representatives, Services, All Other 22,030 5.6% $64,340Sales Representatives, Wholesale and Manufacturing, Technical and Scientific Products 8,800 2.2% $80,450Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products43,470 11.1% $64,020Demonstrators and Product Promoters 3,530 0.9% $32,020Models 60 0.0% $46,190Real Estate Brokers 1,760 0.4% $120,960Real Estate Sales Agents 2,640 0.7% $45,690Sales Engineers 1,960 0.5% $95,810Telemarketers 7,190 1.8% $27,130Door-to-Door Sales Workers, News and Street Vendors, and Related Workers 510 0.1% $23,080Sales and Related Workers, All Other* 7,770 2.0% $43,250

Office and Administrative Support Occupations 708,810 $37,570First-Line Supervisors of Office and Administrative Support Workers 51,170 7.2% $58,360Switchboard Operators, Including Answering Service 4,350 0.6% $29,770Telephone Operators 0 0.0% $37,980Bill and Account Collectors 14,000 2.0% $39,980Billing and Posting Clerks 17,700 2.5% $35,550Bookkeeping, Accounting, and Auditing Clerks 53,800 7.6% $39,820Gaming Cage Workers 310 0.0% $26,370Payroll and Timekeeping Clerks 5,090 0.7% $43,340Procurement Clerks 2,030 0.3% $38,070Tellers 15,360 2.2% $26,530Brokerage Clerks 960 0.1% $49,100Correspondence Clerks 0 0.0% $39,600Credit Authorizers, Checkers, and Clerks 810 0.1% $42,070Customer Service Representatives 55,660 7.9% $37,720File Clerks 6,590 0.9% $29,300Hotel, Motel, and Resort Desk Clerks 3,670 0.5% $23,310Interviewers, Except Eligibility and Loan 7,280 1.0% $37,530Library Assistants, Clerical 3,210 0.5% $28,160Loan Interviewers and Clerks 3,440 0.5% $40,980New Accounts Clerks 1,100 0.2% $34,410Order Clerks 10,820 1.5% $31,820Human Resources Assistants, Except Payroll and Timekeeping 4,780 0.7% $43,590Receptionists and Information Clerks 26,720 3.8% $28,170Reservation and Transportation Ticket Agents and Travel Clerks 5,260 0.7% $35,060Information and Record Clerks, All Other 5,260 0.7% $40,600Cargo and Freight Agents 7,240 1.0% $42,210Couriers and Messengers 4,540 0.6% $27,470Police, Fire, and Ambulance Dispatchers 920 0.1% $51,030Dispatchers, Except Police, Fire, and Ambulance 5,410 0.8% $39,200Meter Readers, Utilities 1,060 0.1% $45,420Postal Service Clerks 1,760 0.2% $53,090Postal Service Mail Carriers 8,980 1.3% $54,400Postal Service Mail Sorters, Processors, and Processing Machine Operators 5,110 0.7% $51,030Production, Planning, and Expediting Clerks 12,650 1.8% $47,590Shipping, Receiving, and Traffic Clerks 29,950 4.2% $29,900



49

Stock Clerks and Order Fillers 55,430 7.8% $25,000Weighers, Measurers, Checkers, and Samplers, Recordkeeping 4,250 0.6% $26,830Executive Secretaries and Executive Administrative Assistants 42,350 6.0% $52,070Legal Secretaries 9,630 1.4% $52,160Medical Secretaries 20,030 2.8% $34,380Secretaries and Administrative Assistants, Except Legal, Medical, and Executive 47,700 6.7% $36,940Computer Operators 1,910 0.3% $41,020Data Entry Keyers 7,080 1.0% $30,860Word Processors and Typists 8,410 1.2% $38,700Desktop Publishers 320 0.0% $39,110Insurance Claims and Policy Processing Clerks 6,620 0.9% $37,210Mail Clerks and Mail Machine Operators, Except Postal Service 2,670 0.4% $29,800Office Clerks, General 91,620 12.9% $31,320Office Machine Operators, Except Computer 2,980 0.4% $29,900Proofreaders and Copy Markers 440 0.1% $45,100Statistical Assistants 290 0.0% $41,720Office and Administrative Support Workers, All Other* 18,720 2.6% $31,460

Farming, Fishing, and Forestry Occupations 2,850 $25,840First-Line Supervisors of Farming, Fishing, and Forestry Workers 170 6.0% $49,760Graders and Sorters, Agricultural Products 390 13.7% $19,550Farmworkers and Laborers, Crop, Nursery, and Greenhouse 1,440 50.5% $20,200Farmworkers, Farm, Ranch, and Aquacultural Animals 340 11.9% $23,520Agricultural Workers, All Other 50 1.8% $45,230Forest and Conservation Workers 150 5.3% $21,080

Construction and Extraction Occupations 87,620 $52,410First-Line Supervisors of Construction Trades and Extraction Workers 7,380 8.4% $73,060Boilermakers 210 0.2% $84,920Brickmasons and Blockmasons 410 0.5% $58,080Stonemasons 250 0.3% $46,190Carpenters 9,530 10.9% $53,650Carpet Installers 1,030 1.2% $41,900Floor Layers, Except Carpet, Wood, and Hard Tiles 330 0.4% $47,100Tile and Marble Setters 1,160 1.3% $43,270Cement Masons and Concrete Finishers 2,240 2.6% $48,960Terrazzo Workers and Finishers 280 0.3% $44,950Construction Laborers 18,130 20.7% $40,670Paving, Surfacing, and Tamping Equipment Operators 400 0.5% $61,120Operating Engineers and Other Construction Equipment Operators 3,130 3.6% $72,080Drywall and Ceiling Tile Installers 2,650 3.0% $49,430Tapers 600 0.7% $46,440Electricians 9,200 10.5% $61,820Glaziers 610 0.7% $55,830Insulation Workers, Mechanical 0 0.0% $50,540Painters, Construction and Maintenance 4,370 5.0% $40,450Paperhangers 0 0.0% $45,370Pipelayers 390 0.4% $47,630Plumbers, Pipefitters, and Steamfitters 6,830 7.8% $59,910Plasterers and Stucco Masons 1,210 1.4% $52,240Reinforcing Iron and Rebar Workers 270 0.3% $44,260Roofers 1,610 1.8% $39,070Sheet Metal Workers 2,150 2.5% $51,600Structural Iron and Steel Workers 1,040 1.2% $55,200Helpers--Brickmasons, Blockmasons, Stonemasons, and Tile and Marble Setters 790 0.9% $28,680Helpers--Carpenters 530 0.6% $33,930Helpers--Electricians 1,280 1.5% $39,140Helpers--Painters, Paperhangers, Plasterers, and Stucco Masons 620 0.7% $31,920Helpers--Pipelayers, Plumbers, Pipefitters, and Steamfitters 1,020 1.2% $0Helpers--Roofers 0 0.0% $27,280Helpers, Construction Trades, All Other 0 0.0% $28,250Construction and Building Inspectors 1,930 2.2% $74,280Elevator Installers and Repairers 470 0.5% $94,500Fence Erectors 690 0.8% $37,440Hazardous Materials Removal Workers 780 0.9% $44,590



50

Highway Maintenance Workers 620 0.7% $64,480Septic Tank Servicers and Sewer Pipe Cleaners 290 0.3% $36,280Construction and Related Workers, All Other* 450 0.5% $39,520Derrick Operators, Oil and Gas 90 0.1% $64,120Rotary Drill Operators, Oil and Gas 0 0.0% $53,120Service Unit Operators, Oil, Gas, and Mining 130 0.1% $58,960Earth Drillers, Except Oil and Gas 0 0.0% $56,270Roustabouts, Oil and Gas 330 0.4% $45,940Extraction Workers, All Other 30 0.0% $58,580

Installation, Maintenance, and Repair Occupations 115,320 $47,590First-Line Supervisors of Mechanics, Installers, and Repairers 10,210 8.9% $70,320Computer, Automated Teller, and Office Machine Repairers 2,510 2.2% $42,800Radio, Cellular, and Tower Equipment Installers and Repairs 240 0.2% $56,170Telecommunications Equipment Installers and Repairers, Except Line Installers 7,280 6.3% $53,080Avionics Technicians 0 0.0% $57,610Electric Motor, Power Tool, and Related Repairers 370 0.3% $51,860Electrical and Electronics Installers and Repairers, Transportation Equipment 310 0.3% $64,350Electrical and Electronics Repairers, Commercial and Industrial Equipment 1,440 1.2% $55,070Electrical and Electronics Repairers, Powerhouse, Substation, and Relay 480 0.4% $85,490Electronic Equipment Installers and Repairers, Motor Vehicles 430 0.4% $29,410Electronic Home Entertainment Equipment Installers and Repairers 570 0.5% $33,060Security and Fire Alarm Systems Installers 1,750 1.5% $46,520Aircraft Mechanics and Service Technicians 3,580 3.1% $58,900Automotive Body and Related Repairers 3,010 2.6% $40,030Automotive Glass Installers and Repairers 0 0.0% $29,020Automotive Service Technicians and Mechanics 13,860 12.0% $39,530Bus and Truck Mechanics and Diesel Engine Specialists 4,360 3.8% $52,590Mobile Heavy Equipment Mechanics, Except Engines 2,690 2.3% $60,880Rail Car Repairers 100 0.1% $45,130Motorboat Mechanics and Service Technicians 90 0.1% $0Motorcycle Mechanics 310 0.3% $35,990Outdoor Power Equipment and Other Small Engine Mechanics 140 0.1% $38,990Bicycle Repairers 450 0.4% $21,610Recreational Vehicle Service Technicians 0 0.0% $51,660Tire Repairers and Changers 2,430 2.1% $30,740Mechanical Door Repairers 0 0.0% $47,760Control and Valve Installers and Repairers, Except Mechanical Door 1,200 1.0% $62,090Heating, Air Conditioning, and Refrigeration Mechanics and Installers 3,360 2.9% $53,680Home Appliance Repairers 0 0.0% $38,720Industrial Machinery Mechanics 5,390 4.7% $56,940Maintenance Workers, Machinery 1,800 1.6% $40,570Millwrights 300 0.3% $52,740Refractory Materials Repairers, Except Brickmasons 0 0.0% $37,810Electrical Power-Line Installers and Repairers 1,070 0.9% $80,400Telecommunications Line Installers and Repairers 5,590 4.8% $51,620Camera and Photographic Equipment Repairers 300 0.3% $47,690Medical Equipment Repairers 540 0.5% $51,030Musical Instrument Repairers and Tuners 0 0.0% $31,560Precision Instrument and Equipment Repairers, All Other 630 0.5% $60,990Maintenance and Repair Workers, General 27,380 23.7% $40,020Coin, Vending, and Amusement Machine Servicers and Repairers 490 0.4% $32,530Locksmiths and Safe Repairers 550 0.5% $44,970Riggers 0 0.0% $55,090Helpers--Installation, Maintenance, and Repair Workers 4,200 3.6% $30,180Installation, Maintenance, and Repair Workers, All Other* 3,580 3.1% $37,380

Production Occupations 253,130 $31,730First-Line Supervisors of Production and Operating Workers 15,950 6.3% $56,330Aircraft Structure, Surfaces, Rigging, and Systems Assemblers 0 0.0% $38,310Coil Winders, Tapers, and Finishers 440 0.2% $21,300Electrical and Electronic Equipment Assemblers 3,760 1.5% $30,700Electromechanical Equipment Assemblers 1,190 0.5% $27,790Engine and Other Machine Assemblers 310 0.1% $45,980Structural Metal Fabricators and Fitters 1,860 0.7% $37,010



51

Fiberglass Laminators and Fabricators 480 0.2% $27,520Team Assemblers 23,200 9.2% $26,690Assemblers and Fabricators, All Other 6,080 2.4% $28,280Bakers 6,080 2.4% $26,320Butchers and Meat Cutters 4,460 1.8% $27,700Meat, Poultry, and Fish Cutters and Trimmers 3,460 1.4% $24,260Slaughterers and Meat Packers 500 0.2% $20,170Food and Tobacco Roasting, Baking, and Drying Machine Operators and Tenders 180 0.1% $32,070Food Batchmakers 4,570 1.8% $26,220Food Cooking Machine Operators and Tenders 770 0.3% $22,730Computer-Controlled Machine Tool Operators, Metal and Plastic 3,170 1.3% $35,530Computer Numerically Controlled Machine Tool Programmers, Metal and Plastic 790 0.3% $54,830Extruding and Drawing Machine Setters, Operators, and Tenders, Metal and Plastic 1,370 0.5% $30,730Forging Machine Setters, Operators, and Tenders, Metal and Plastic 1,040 0.4% $34,080Rolling Machine Setters, Operators, and Tenders, Metal and Plastic 990 0.4% $27,600Cutting, Punching, and Press Machine Setters, Operators, and Tenders, Metal and Plastic 4,410 1.7% $30,350Drilling and Boring Machine Tool Setters, Operators, and Tenders, Metal and Plastic 620 0.2% $36,350Grinding, Lapping, Polishing, and Buffing Machine Tool Setters, Operators, and Tenders, Metal and Plastic3,650 1.4% $28,490Lathe and Turning Machine Tool Setters, Operators, and Tenders, Metal and Plastic 1,180 0.5% $37,180Milling and Planing Machine Setters, Operators, and Tenders, Metal and Plastic 860 0.3% $33,670Machinists 8,980 3.5% $37,550Metal-Refining Furnace Operators and Tenders 130 0.1% $39,550Pourers and Casters, Metal 300 0.1% $30,350Model Makers, Metal and Plastic 90 0.0% $35,870Patternmakers, Metal and Plastic 80 0.0% $39,680Foundry Mold and Coremakers 260 0.1% $28,600Molding, Coremaking, and Casting Machine Setters, Operators, and Tenders, Metal and Plastic3,240 1.3% $25,040Multiple Machine Tool Setters, Operators, and Tenders, Metal and Plastic 1,230 0.5% $32,710Tool and Die Makers 990 0.4% $47,210Welders, Cutters, Solderers, and Brazers 5,420 2.1% $37,560Welding, Soldering, and Brazing Machine Setters, Operators, and Tenders 510 0.2% $43,000Heat Treating Equipment Setters, Operators, and Tenders, Metal and Plastic 510 0.2% $34,900Layout Workers, Metal and Plastic 130 0.1% $34,680Plating and Coating Machine Setters, Operators, and Tenders, Metal and Plastic 1,500 0.6% $32,700Tool Grinders, Filers, and Sharpeners 220 0.1% $33,310Metal Workers and Plastic Workers, All Other 520 0.2% $30,480Prepress Technicians and Workers 1,630 0.6% $42,680Printing Press Operators 5,180 2.0% $36,410Print Binding and Finishing Workers 1,090 0.4% $27,470Laundry and Dry-Cleaning Workers 7,230 2.9% $21,010Pressers, Textile, Garment, and Related Materials 2,610 1.0% $21,150Sewing Machine Operators 22,240 8.8% $20,700Shoe and Leather Workers and Repairers 270 0.1% $24,620Shoe Machine Operators and Tenders 60 0.0% $20,050Sewers, Hand 580 0.2% $27,080Tailors, Dressmakers, and Custom Sewers 1,610 0.6% $29,260Textile Bleaching and Dyeing Machine Operators and Tenders 2,460 1.0% $20,970Textile Cutting Machine Setters, Operators, and Tenders 2,810 1.1% $22,460Textile Knitting and Weaving Machine Setters, Operators, and Tenders 890 0.4% $21,500Textile Winding, Twisting, and Drawing Out Machine Setters, Operators, and Tenders 240 0.1% $20,560Extruding and Forming Machine Setters, Operators, and Tenders, Synthetic and Glass Fibers 280 0.1% $30,890Fabric and Apparel Patternmakers 1,980 0.8% $45,990Upholsterers 1,660 0.7% $28,030Textile, Apparel, and Furnishings Workers, All Other 1,170 0.5% $23,070Cabinetmakers and Bench Carpenters 1,930 0.8% $29,240Furniture Finishers 600 0.2% $29,330Sawing Machine Setters, Operators, and Tenders, Wood 360 0.1% $25,270Woodworking Machine Setters, Operators, and Tenders, Except Sawing 1,040 0.4% $26,060Woodworkers, All Other 590 0.2% $23,880Power Distributors and Dispatchers 620 0.2% $77,650Power Plant Operators 1,060 0.4% $85,330Stationary Engineers and Boiler Operators 780 0.3% $60,900Water and Wastewater Treatment Plant and System Operators 2,000 0.8% $71,780Chemical Plant and System Operators 340 0.1% $46,780Gas Plant Operators 0 0.0% $68,830



52

Petroleum Pump System Operators, Refinery Operators, and Gaugers 1,540 0.6% $73,330Plant and System Operators, All Other 340 0.1% $60,590Chemical Equipment Operators and Tenders 660 0.3% $41,040Separating, Filtering, Clarifying, Precipitating, and Still Machine Setters, Operators, and Tenders710 0.3% $39,200Crushing, Grinding, and Polishing Machine Setters, Operators, and Tenders 610 0.2% $29,640Grinding and Polishing Workers, Hand 1,560 0.6% $26,070Mixing and Blending Machine Setters, Operators, and Tenders 3,410 1.3% $32,350Cutters and Trimmers, Hand 1,330 0.5% $23,310Cutting and Slicing Machine Setters, Operators, and Tenders 2,260 0.9% $28,800Extruding, Forming, Pressing, and Compacting Machine Setters, Operators, and Tenders 1,050 0.4% $26,700Furnace, Kiln, Oven, Drier, and Kettle Operators and Tenders 220 0.1% $31,070Inspectors, Testers, Sorters, Samplers, and Weighers 13,610 5.4% $38,000Jewelers and Precious Stone and Metal Workers 990 0.4% $31,330Dental Laboratory Technicians 1,230 0.5% $40,370Medical Appliance Technicians 270 0.1% $33,990Ophthalmic Laboratory Technicians 170 0.1% $28,650Packaging and Filling Machine Operators and Tenders 13,410 5.3% $24,640Coating, Painting, and Spraying Machine Setters, Operators, and Tenders 1,920 0.8% $27,140Painters, Transportation Equipment 1,500 0.6% $37,850Painting, Coating, and Decorating Workers 660 0.3% $25,730Semiconductor Processors 730 0.3% $33,260Photographic Process Workers and Processing Machine Operators 1,870 0.7% $32,880Adhesive Bonding Machine Operators and Tenders 520 0.2% $26,090Cleaning, Washing, and Metal Pickling Equipment Operators and Tenders 480 0.2% $24,520Cooling and Freezing Equipment Operators and Tenders 50 0.0% $33,060Etchers and Engravers 270 0.1% $29,910Molders, Shapers, and Casters, Except Metal and Plastic 630 0.2% $27,460Paper Goods Machine Setters, Operators, and Tenders 2,030 0.8% $32,100Tire Builders 160 0.1% $32,840Helpers--Production Workers 12,780 5.0% $23,230Production Workers, All Other* 5,720 2.3% $31,760

Transportation and Material Moving Occupations 270,480 $33,310Aircraft Cargo Handling Supervisors 430 0.2% $53,490First-Line Supervisors of Helpers, Laborers, and Material Movers, Hand 6,530 2.4% $47,550First-Line Supervisors of Transportation and Material-Moving Machine and Vehicle Operators6,900 2.6% $59,510Airline Pilots, Copilots, and Flight Engineers 2,620 1.0% $114,320Commercial Pilots 810 0.3% $82,510Airfield Operations Specialists 140 0.1% $55,940Flight Attendants 4,290 1.6% $37,400Ambulance Drivers and Attendants, Except Emergency Medical Technicians 290 0.1% $29,110Bus Drivers, Transit and Intercity 8,370 3.1% $38,260Bus Drivers, School or Special Client 7,290 2.7% $31,530Driver/Sales Workers 10,860 4.0% $28,180Heavy and Tractor-Trailer Truck Drivers 27,810 10.3% $42,120Light Truck or Delivery Services Drivers 27,240 10.1% $33,210Taxi Drivers and Chauffeurs 4,210 1.6% $23,770Motor Vehicle Operators, All Other 2,350 0.9% $32,390Sailors and Marine Oilers 0 0.0% $30,600Captains, Mates, and Pilots of Water Vessels 800 0.3% $85,850Ship Engineers 0 0.0% $81,480Parking Lot Attendants 10,900 4.0% $20,610Automotive and Watercraft Service Attendants 1,330 0.5% $22,120Transportation Inspectors 610 0.2% $71,110Transportation Attendants, Except Flight Attendants 620 0.2% $25,730Transportation Workers, All Other 1,890 0.7% $0Conveyor Operators and Tenders 620 0.2% $32,520Excavating and Loading Machine and Dragline Operators 200 0.1% $52,930Industrial Truck and Tractor Operators 16,260 6.0% $40,130Cleaners of Vehicles and Equipment 12,410 4.6% $22,050Laborers and Freight, Stock, and Material Movers, Hand 70,170 25.9% $25,870Machine Feeders and Offbearers 3,020 1.1% $24,820Packers and Packagers, Hand 29,780 11.0% $21,260Pump Operators, Except Wellhead Pumpers 0 0.0% $55,590Wellhead Pumpers 0 0.0% $60,240Refuse and Recyclable Material Collectors 4,490 1.7% $41,430



53

Attachment 2: Affordable Housing Product Type Pro Forma



54

FINANCIAL SUMMARY FOR RENTAL UNITS 50 DU/AC MAX DENSITY SANTA MONICA DEVELOPMENT SITE

Project Programming Summary Total

Acres 0.20 0.40 0.40 1.00 AcresEst. Density (d.u./acre) 50 50 50 50.0 DensityWt. Avg. Unit Size 938 938 938 938 Avg. SizeTotal Units 10 20 20 50 Units

I. Revenue

Wt. Avg. Rent $2,065 $1,238 $1,032 $5,685Est. Annual Gross Rent Revenue $247,776 24,777.60 per unit $297,156 14,857.80 per unit $247,776 12,388.80 per unit $792,708Vacancy Loss 5% ($12,389) ($1,239) ($14,858) ($743) ($12,389) ($619) ($39,635)Real Estate Taxes 1.00% $0 $0 $0 $0Operating Expenses ($56,000) ($5,600) ($112,000) ($5,600) ($112,000) ($5,600) ($280,000) $5,600Net Operating Income $179,387 $17,939 $170,298 $8,515 $123,387 $6,169 $473,073

Available for Debt Service 1.2 $149,489 $141,915 $102,823 $394,227

Monthly Debt Service $12,457 $11,826 $8,569 $32,852Max. Loan Amount 6.00% $2,077,797 $262,139 $1,972,522 $124,429 $1,429,163 $90,153 $5,479,482

30

Capitalized Project Value 5.5% $3,261,585 $3,096,331 $2,243,404 $8,601,320$326,159 / Unit $154,817 / Unit $112,170 / Unit

II. Costs$ Per $ Per $ Per Cost

Directs Bldg SF Bldg SF Bldg SF Per UnitSite Work $110,000 11.73 $220,000 11.73 $220,000 11.73 $550,000 11,000Residential Building $1,277,284 136.24 $2,554,567 136.24 $2,554,567 136.24 $6,386,418 127,728Garage/Parking Structure @ 1.7 per unit $636,144 110.06 $1,272,289 110.06 $1,272,289 110.06 $3,180,721 63,614

$0Construction Contingency 8.0% $161,874 17.27 $323,748 17.27 $323,748 17.27 $809,371 16,187General Conditions 4.0% $80,937 8.63 $161,874 8.63 $161,874 8.63 $404,686 8,094Insurance & Bonds 2.0% $40,469 4.32 $80,937 4.32 $80,937 4.32 $202,343 4,047Contractor Fee 6.0% $121,406 12.95 $242,811 12.95 $242,811 12.95 $607,028 12,141Total Directs $2,428,113 259.00 54.8% $4,856,227 259.00 54.9% $4,856,227 259.00 54.9% $12,140,567 $242,811

IndirectsA&E Fees 7.0% $141,640 15.11 $283,280 15.11 $283,280 15.11 $708,200 14,164City Fees & Permits Allow $80,000 8.53 $160,000 8.53 $160,000 8.53 $400,000 8,000Taxes 1.1% $19,760 2.11 $39,520 2.11 $39,520 2.11 $98,800 1,976A&D Loan Fees 2.0% $48,562 5.18 $97,125 5.18 $97,125 5.18 $242,811 4,856Construction Interest (16 mos.) 6.5% $126,262 13.47 $252,524 13.47 $252,524 13.47 $631,309 12,626Sales & Marketing 3.5% $8,672 0.93 $10,400 0.55 $8,672 0.46 $27,745 555Builder G&A / Mgmt. 1.0% $24,281 2.59 $48,562 2.59 $48,562 2.59 $121,406 2,428Soft Contingency 4.0% $17,967 1.92 $35,656 1.90 $35,587 1.90 $89,211 1,784Total Indirects $467,144 49.83 10.6% $927,067 49.44 10.5% $925,270 49.35 10.5% $2,319,482 $46,390

Subtotal Costs $2,895,258 308.83 $5,783,294 308.44 $5,781,497 308.35 $14,460,048 $289,201

Builder Profit 8.0% $231,621 24.71 $462,664 24.68 $462,520 24.67 $1,156,804 $23,136Total Construction Costs $3,126,878 333.53 $6,245,958 333.12 $6,244,016 333.01 $15,616,852 $312,337

Construction Funding Surplus (Deficit) ($505,484) ($50,548) Per Unit ($3,757,381) ($187,869) Per Unit ($4,440,952) ($222,048) Per Unit ($8,703,817) ($174,076)

Allocated Land Cost / Sq.Ft. $149.22 $1,300,000 138.67 $2,600,000 138.67 $2,600,000 138.67 $6,500,000 $130,000

Total Development Costs $4,426,878 472.20 100% $8,845,958 471.78 100% $8,844,016 471.68 100% $22,116,852 $442,337

Development Funding Surplus (Deficit) ($1,805,484) ($180,548) Per Unit ($6,357,381) ($317,869) Per Unit ($7,040,952) ($352,048) Per Unit ($15,203,817) ($304,076)

Capitalized Excess Cash Flow 5.5% $543,598 $516,055 $373,901

Moderate-Income Units Low-Income Units Very Low-Income Units



55

Market Rate Apartments

Market Unit Mix

Average Unit Size

Median Market Rent

VL Income

Rent

Low Income

Rent

Moderate Income

Rent

1 Bedroom 20% 650 $2,339 $854 $1,024 $1,7082 Bedrooms 45% 900 $3,546 $1,014 $1,216 $2,0283 Bedrooms 35% 1,150 $4,409 $1,158 $1,389 $2,316

Wt.Avg. 938 3,606 $1,032 $1,238 $2,065$/Sq.Ft. $3.85 $1.10 $1.32 $2.20



56

Multiple Residential Dwelling Units 4- 5 Stories Podium Construction w/ elevators and fire sprinklers

Building Quality Bldg. Class Base Sprinklers Elevators Cost/SF AdjustedExcellent D $120.77 $1.91 $2.76 $125.44 $177.75 1.200 Local MultiplierGood D $88.95 $1.91 $2.76 $93.62 $132.66 1.000 Current Cost MultiplierAverage D $65.24 $1.91 $2.76 $69.91 $99.06 0.984 Flr. Area MultiplierFair D $56.48 $1.91 $2.76 $61.15 $86.65 1.200 Prevailing Wage Base costs assumes 9' and under ceilings, buildings with elevators and fire sprinklers.

Sec. 12 Pg. 41Appliance Allowance Low Average Good Excellent

Per Unit $1,236 $2,088 $3,360 $5,280

Class "D" Construction reflects wood or steel studs in bearing walls, full or partial open wood or steelframe , primarily combustible construction; wood or steel floor joists or concrete slab on grade;wood or steel deck; and, almost any material except bearing or curtain walls of solid masonry orconcrete. Generally combustible construction.

"Good" Type Class D Building Quality reflects good stucco or siding, some brick or stone trim, good roof;good plaster or drywall, painted, hardwood, vinyl composition, carpet; good lighting, one bath per bedroom; package A.C.bedroom; and, package A.C.

Source : Marshall & Swift Valuation Service - Calculator Method / Multiple Residences

Below Grade Parking Structure Sect 15, Page 18

w/ 3 - 5 Story Podium Development Over

Building Bldg. Class Base Fire-Proof Sprinklers Courtyard Deck Cost/SF Adjusted Cost AdjustmentsAverage Parking A-B $57.94 $5.65 $1.91 $10.55 $76.05 $110.06 1.200 Local MultiplierLow Cost Parking A-B $44.50 $5.65 $1.91 $10.55 $62.61 $90.61 1.000 Current Cost Multiplier

1.005 4th Story1.200 Prevailing Wage

50 d.u./ac Condos/Apts

Cost Adjustments



57

CLASS OF CONSTRUCTION INDICATORS

Class Frame Floor Roof Walls A Structural Steel Columns and

beams,fireproofed with masonry, concrete, plaster, or other noncombustible material.

Concrete or concrete on steel deck, fireproofed.

Formed concrete, precast slabs, concrete or gypsum on steel deck, fireproofed.

Nonbearing curtain walls, masonry, concrete, metal and glass panels, stone, stell studs and masonry, tile or stucco, etc.

B Reinforced concrete columns and beams. Fire-resistant construction.

Concrete or concrete on steel deck, fireproofed.

Formed concrete, precast slabs, concrete or gypsum on steel deck, fireproofed.

Nonbearing curtain walls, masonry, concrete, metals and glass panels, stone, steel studs and masonry, tile or stucco, etc.

C Masonry or concrete load-bearing walls with or without pilasters. Masonry, concrete or curtain walls with full or partial open sttel, wood or concrete frame.

Wood or concrete plank on wood or steel floor joists, or concrete slab on grade.

Wood or steel joists with wood or steel deck. Concrete plank.

Brick, concrete block, or tile masonry, tilt-up, formed concrete, nonbearing curtain walls.

D Wood or steel studs in bearing wall, full or partial open wood or steel frame, primarily combustible construction.

Wood or steel floor joists or concrete slab on grade.

Wood or steel joists with wood or steel deck.

Almost any material except bearing or curtain walls of solid masonry or concrete. Generally combustible construction.

S Metal bents, columns, girders, purlins, and girts without fireproofing, incombustible construction.

Wood or steel deck on steel floor joists, or concrete slab on grade.

Steel or wood deck on steel joists. Metal skin or sandwich panels. Generally incombustible.



58

Attachment 3: Linkage Fee Alternatives

Buiding Type 100% Fee % Direct % Total 5% Fee % Direct % Total 10% Fee % Direct % Total

Office $299.00 $695.35 $115.05 38.5% 16.5% $5.75 1.9% 0.8% $11.51 3.8% 1.7%R&D $148.00 $344.19 $115.05 77.7% 33.4% $5.75 3.9% 1.7% $11.51 7.8% 3.3%Gov/Instutional $251.00 $583.72 $24.66 9.8% 4.2% $1.23 0.5% 0.2% $2.47 1.0% 0.4%Hotel $262.00 $609.30 $65.21 24.9% 10.7% $3.26 1.2% 0.5% $6.52 2.5% 1.1%Medical Offices $323.00 $751.16 $134.10 41.5% 17.9% $6.71 2.1% 0.9% $13.41 4.2% 1.8%Hospitals $529.00 $1,230.23 $141.53 26.8% 11.5% $7.08 1.3% 0.6% $14.15 2.7% 1.2%Out Patient/Surgery Centers $418.00 $972.09 $134.10 32.1% 13.8% $6.71 1.6% 0.7% $13.41 3.2% 1.4%Light Ind / Manufacturing $91.00 $211.63 $45.43 49.9% 21.5% $2.27 2.5% 1.1% $4.54 5.0% 2.1%Restaurants $314.00 $730.23 $96.54 30.7% 13.2% $4.83 1.5% 0.7% $9.65 3.1% 1.3%Fast Food $259.00 $602.33 $96.54 37.3% 16.0% $4.83 1.9% 0.8% $9.65 3.7% 1.6%Drug Stores $162.00 $376.74 $96.54 59.6% 25.6% $4.83 3.0% 1.3% $9.65 6.0% 2.6%Retail Stores $202.00 $469.77 $96.54 47.8% 20.6% $4.83 2.4% 1.0% $9.65 4.8% 2.1%Neighborhood Retail $119.00 $276.74 $96.54 81.1% 34.9% $4.83 4.1% 1.7% $9.65 8.1% 3.5%Super Markets $135.00 $313.95 $96.54 71.5% 30.7% $4.83 3.6% 1.5% $9.65 7.2% 3.1%Mega Whse Stores $69.00 $160.47 $96.54 139.9% 60.2% $4.83 7.0% 3.0% $9.65 14.0% 6.0%

Buiding Type 15% Fee % Direct % Total 20% Fee % Direct % Total 25% Fee % Direct % Total

Office $17.26 5.8% 2.5% $23.01 7.7% 3.3% $28.76 9.6% 4.1%R&D / Ceative $17.26 11.7% 5.0% $23.01 15.5% 6.7% $28.76 19.4% 8.4%Gov/Instutional $3.70 1.5% 0.6% $4.93 2.0% 0.8% $6.17 2.5% 1.1%Hotel $9.78 3.7% 1.6% $13.04 5.0% 2.1% $16.30 6.2% 2.7%Medical Offices $20.12 6.2% 2.7% $26.82 8.3% 3.6% $33.53 10.4% 4.5%Hospitals $21.23 4.0% 1.7% $28.31 5.4% 2.3% $35.38 6.7% 2.9%Out Patient/Surgery Centers $20.12 4.8% 2.1% $26.82 6.4% 2.8% $33.53 8.0% 3.4%Light Ind / Manufacturing $6.81 7.5% 3.2% $9.09 10.0% 4.3% $11.36 12.5% 5.4%Restaurants $14.48 4.6% 2.0% $19.31 6.1% 2.6% $24.14 7.7% 3.3%Fast Food $14.48 5.6% 2.4% $19.31 7.5% 3.2% $24.14 9.3% 4.0%Drug Stores $14.48 8.9% 3.8% $19.31 11.9% 5.1% $24.14 14.9% 6.4%Retail Stores $14.48 7.2% 3.1% $19.31 9.6% 4.1% $24.14 11.9% 5.1%Neighborhood Retail $14.48 12.2% 5.2% $19.31 16.2% 7.0% $24.14 20.3% 8.7%Super Markets $14.48 10.7% 4.6% $19.31 14.3% 6.1% $24.14 17.9% 7.7%Mega Whse Stores $14.48 21.0% 9.0% $19.31 28.0% 12.0% $24.14 35.0% 15.0%

* Direct constuction cost dervied from Marshall & Swift Valuation Service data.** Total Construction Cost exludes land cost and assumes direct cost to reflect about 43% of the total construction cost.Note: Linkage Fee alternatives in tables are expressed as a percent increase to Direct Construction and Total Construction Costs.

The 5% fees reflect the lower end range more closely

approximating the broader experience in other cities.

Analysis of Reduced Impact Fee Analysis of Reduced Impact Fee Analysis of Reduced Impact Fee

The 15% fees reflect the higher end range approximating the San

Francisco fee schedule.

The 10% fees reflect a mid range that would result in a nominal increase to total construction

costs.

Direct Construction

Cost*

Total Construction

Cost**Analysis of Full Impact Fee Analysis of Reduced Impact Fee Analysis of Reduced Impact Fee

Documents

Commercial (Non-Residential) Nexus Study & Linkage Fee