HOUSING: Residential developments along Sepulveda, Rosecrans could add over 1,000 new units to Manhattan Beach

The former site of Fry's Electronics in Manhattan Beach, where a preliminary proposal plans a seven- and a ten-story apartment building. Image Google Earth

by Mark McDermott 

The first in a wave of new multi-family residential developments meant to address the California housing crisis have begun to arrive as preliminary proposals with the City of Manhattan Beach. 

Like most cities in California, the City was required by state law to adopt new zoning that allowed for additional residential developments to address the state’s housing crisis. Manhattan Beach adopted its Housing Element in early 2023, with the City Council at that time reluctantly approving residential overlay zones that would in total allow over 1,000 new, multi-family units along Rosecrans Avenue and Sepulveda Boulevard. The new zoning included Residential Overlay Zones Districts (RODs) on both thoroughfares. Projects on three sites on Rosecrans and Sepuvelda account for most of the units. One project, at the former Fry’s Electronics site at the southeast corner of the two streets, has been submitted as a preliminary proposal to the City of Manhattan Beach Community Development Department’s planning division. 

“The Fry’s property is within the Residential Overlay District (ROD) which allows high-density residential development by-right (administratively and without a public hearing) as long as at least 20% of the units are reserved for either low or very-low income households,” said planning manager Adam Finestone. “At this point, we have not received a formal application for a project at the Fry’s site. What we have received is a request for Preliminary Planning Review of a potential project. The potential project would include 285 units, with 57 of those units reserved as affordable housing units. It would be comprised of two buildings, one of which would be 10 stories tall, and the other seven stories with subterranean parking.” 

Another ROD site, at a former storefront at 2301 N. Sepulveda, is further along in the planning process. The City sent out a notice to nearby property owners on January 10 notifying them that a preliminary proposal had been submitted for a seven-story, 31,962 sq. ft., 38-unit apartment building that would include 27 market rate units, 3 moderate income units, and 8 low-income units. The building would be almost 76 ft. tall at its highest point, feature five residential levels, two levels of above ground parking and one subterranean. 

The City’s notice explained to residents that the ROD limited local oversight, including the usual process of public hearings for approval. All the ROD projects are approved administratively, by state law, and for the most part are not subject to appeals before the Planning Commission or City Council. 

“The ROD was established to comply with provisions of the State-mandated 6th Cycle Housing Element,” the notice said. “As a result of this State-mandate, the City is required to review projects which meet the requirements of the ROD and other applicable sections of the Manhattan Beach Municipal Code for conformance with strictly objective development standards, without public hearings or discretionary reviews, consistent with State housing law (CA Gov. Code § 65583.2(h)). Provisions of State Density Bonus law (CA Gov. Code § 65915) also apply and significantly limit the City’s ability to regulate projects.”  

Another residential development that qualified for the Density Bonus law, Project Verandas, was appealed to the Planning Commission and subsequently to the City Council in 2023 and early 2024. Those appeals were possible because the project was in the City’s coastal zone. The proposals moving forward along Rosecrans and Sepulveda are not in the coastal zone and thus will be difficult for residents to oppose or provide input as usually occurs in the planning process. Because of the housing crisis, several state laws, and particularly the Density Bonus law, streamline the planning process in order to more quickly achieve the goal of more housing generally and affordable housing in particular. 

Former Mayor Mark Burton has accused the City of not providing adequate information to the public regarding the projects currently in preliminary review. 

“Our Council can, and should, provide a transparent process where all residents of Manhattan Beach can learn about these five proposed apartment buildings and provide any opportunity to provide input, to let our voices be heard,” Burton wrote in a letter to the editor earlier this month.  

The Community Development Department issued a statement regarding concerns over transparency. 

“The City is committed to transparency and keeping our community informed about development activities,” the statement said. “Because these initial submissions are often incomplete and subject to significant revisions, we do not specifically aggregate and highlight every request for preliminary planning review of ROD (Residential Overlay District) projects. These types of requests, however, are listed on our CSS (Citizens Self Service) system and searchable by address.” 

All formal ROD applications will be posted on the City’s website, at ManhattanBeach.gov/rod, and thus available for public review, according to planning staff. 

“This allows us to ensure the information shared with the public is accurate and reflects a well-defined project proposal. Additionally, once an official application is submitted it shows significant investment on part of the owner and indicates [to] staff that the project is in fact proceeding. This approach minimizes confusion, ensures consistency, and allows the City to communicate meaningful contextual updates to the community.” 

At present, only the ROD proposal at 2301 Sepulveda is far enough along in the planning process that detailed information has been shared at the City’s website. All totalled, Manhattan Beach’s Residential Overlay District is applicable to 34 sites, comprised of 75 parcels in the CG (General Commercial), Planned Development (PD), and CL (Local Commercial) zoning districts. The ROD encompasses nearly 42 acres scattered throughout the City. In addition to the Fry’s site, three other preliminary proposals are in process: a 48-unit multi-family apartment building at 2705 N. Sepulveda Boulevard; a 70-unit mixed use (multi-family residential and commercial) at 2905 and 2909 N. Sepulveda; and 582-unit multi-family apartment building at 1440 Rosecrans. 

All the Residential Overlay District is being driven by a process all cities are required to go through as part of their Housing Element process, which occurs every eight years, which is called the Regional Housing Needs Assessment (RHNA). The RHNA numbers the state gave Manhattan Beach required zoning that would accommodate 774 new residential units, including 322 units for very low-income residents, 165 low-income,155 moderate income units, and 132 for above moderate income residents. Projects that include five percent of the low income categories or 10 percent of moderate income units qualify for various concessions under the Density Bonus law, allowing for higher density development and height limits beyond City zoning limits, among other things. 

The Regional Housing Needs Allocation for Manhattan Beach is driving a wave of new multi-family development. From the City of Manhattan Beach’s 6th Housing Element

For developers, the market rate units are the carrot —  the component that makes each development economically feasible —  and the lower and moderate income units the stick that makes the development possible. For cities, and many residents who oppose such development, RHNA, ROD and the Bonus Density law are essentially all stick. But legal challenges have been unsuccessful, and when cities flout the requirements —  in addition to being subjected to multi-million dollar lawsuits by housing rights groups and developers —  municipalities can lose all local zoning control if they do not comply.  

The City of Manhattan Beach had a taste of this fate when the City Council initially rejected Project Verdandas, which as noted, was appealable by residents in a way the current ROD projects are not due to its location in the coastal zone. Within weeks of rejecting Verandas, the City received a warning from the State of California’s Department of Housing and Community Development (HCD) department stating the action was a violation of both the Housing Accountability Act (HAA), and the State Density Bonus Law, and gave the City 30 days to respond before the case was referred to the California Attorney General’s office. Additionally, lawsuits seeking $50 million in damages were filed against the City. The Council reluctantly revisited the project and approved it in early 2023. 

At that time, Councilperson David Lesser, who is currently Mayor Pro Tem, said the fight was an impossible one to win. 

“The challenge is separating what we would like the law to be from what it is in fact,” he said. “The state has dislodged local jurisdictions like ours from the ability to entitle projects just like this. You’ve heard we do not have discretion on this project…They have weaponized the state law such that there is huge liability and new equitable remedies not just to developers, but to third party organizations that can bring their own suits and get legal fees for their lawyers to boot. There’s also an Attorney General strike force that’s looking for cases like this and has injected itself into the action and forced cities to move forward.” 

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