The Affordable Housing Crisis Won’t Be Over Soon

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September 1, 2017 · Posted in Commentary 
Mija Town Homes, 4501 S. Figueroa, Los Angeles 90037. One of the all-too-few affordable housing complexes in Los Angeles.

Mija Town Homes, 4501 S. Figueroa, Los Angeles 90037. One of the all-too-few affordable housing complexes in Los Angeles.

Leslie Evans

A daunting complex of causes stands behind Los Angeles’ crisis-level lack of affordable housing. Too few houses and too expensive ones, along with very low wages, are the single biggest causes of the city’s huge homeless population. According to Professor Dennis P. Culhane, an authority on homelessness at the University of Pennsylvania, “It’s not personal vulnerabilities of drug use or illness driving homelessness. It’s a lack of access to housing. If there were lots of available housing, all of these vulnerabilities would be hidden.” (8-2-2017 LA Times)

A widely reported study by the Zillow real estate agency released on August 3 predicted that a 5% rent increase in Los Angeles would create 2,000 more homeless people. Zillow expects a 4.5% increase in the coming year.

Rental vacancy in LA is 2.6%. Even that is misleading. Housing developers grade properties A, B, and C. A are high end luxury units, B, more middle class, and C, low-end affordable housing. Far more of A and B are built and these have a higher vacancy rate than the neglected housing of the poor, so the median understates how few units are on offer in class C.

Zillow adds that median rents, adjusted for inflation, rose 28% in LA between 2000 and 2014, while renter incomes declined 8%. People are caught between high rents, few vacancies, and low pay. Median rent in Los Angeles, depending on which source you consult, is currently $1,900 for a one-bedroom apartment and $2,700 for two bedrooms.

On the West Side and other pricey neighborhoods two bedrooms are going for upward of $4,000 a month. The median income in what the LA Times calls Historic South Central is $30,883. The median rent there for a two-bedroom apartment is $1,850. This is lower than in more prosperous parts of town, but is still 72% of a South LA family’s annual income. That often means two families are doubled up or several generations are crowded into one or two bedrooms. It leaves nothing for medical emergencies, a period of unemployment, or savings. This means that the first setback is likely to precipitate a family onto the street.

Even when you fold in the better off areas, according to a 2015 California Housing Consortium report, one in three Los Angeles county residents spend more than half their income on rent.

Home ownership is even further out of reach than rentals. Governing.com points out that “Los Angeles has some of the most expensive housing in the United States. The median price of a new home in the city is more than nine times median household income. That makes L.A. one of the 10 least affordable markets for homeowners in the world, let alone in the nation.” (May 2017)

Why Aren’t More Houses Built?

Between 2006 and 2014, California housing construction fell almost 750,000 units short of what was needed. Why? Predominately, housing is built by for-profit developers. The market does a reasonably good job of providing many other physical goods, such as cars, televisions, and clothing, at a wide range of prices. It has not done that for places to live. The main reason is restrictive zoning laws. Los Angeles and many other California cities were built around the model of a dense downtown surrounded by neighborhoods of single family homes. Zoning is usually hostile to intruding large, multifamily buildings into these residential areas.

Housing specialist Ed Pinto says, “If carmakers could only build 100,000 cars, they’d build the most expensive cars with the largest margins. That’s the situation builders are in.”

Early recognition of the market failure in housing led the California state government to pass what’s called the housing-element law in 1969, requiring that every city government include a detailed plan for new housing in its overall plans.

Cities go through the motions, drafting detailed plans on where affordable housing is to be built. Committees meet. Long reports are drafted and published. But the state law does not require that the housing actually be built, and it usually isn’t. State Senator Scott Weiner (D-San Francisco) told the LA Times:

“Many local communities basically run a scam where they spend all sorts of time – lots of public hearing, lots of public discussion – and then it’s over and you have this collection of paper sitting on a shelf. It doesn’t result in any additional housing.” (June 29, 2017).

The required city studies showed that 1.5 million new homes were needed statewide between 2006 and 2014. Less than half were built. Sacramento now tries to make the numbers look better by counting prison beds and student dormitories as part of the low-income housing total.

Bills in the Legislature

State Senator Scott Weiner’s SB35 would force cities that have not met their housing goals to not submit new projects to California Environment Quality Act (CEQA) review.

State Senator Scott Weiner’s SB35 would force cities that have not met their housing goals to not submit new projects to California Environment Quality Act (CEQA) review.

The 1969 law is in a legal area called inclusionary housing. For decades, there has been a legal dispute over whether inclusionary housing goals can only be voluntary or if they can be made mandatory. A 2009 court decision ruled that it was illegal for the state to require developers to include affordable housing in their projects. This was overturned by the California Supreme Court only in 2015. The state legislature is now flooded with bills, 130 of them, proposing all manner of fixes for the housing crisis. Here are some of the main ones.

 

  • In May the State Assembly passed AB1505. This authorizes, but does not require, cities to pass laws mandating inclusionary housing in new developments. It has yet to be voted on by the State Senate.
  • Senator Scott Weiner’s SB35 would force cities that have not met their housing goals to not submit new projects to California Environment Quality Act (CEQA) review. This is a favorite delaying tactic of opponents of homeless and low-income housing. For example, critics of the Community of Friends’ planned Lorena Plaza low-income development in Boyle Heights just succeeded is halting the project by requiring a lengthy and expensive CEQA review (see Important Setback for Homeless Housing, p. 1). SB35 would also prohibit defaulting cities from having their city councils vote on new housing projects. Construction would be “by right” as long as developers would have to abide by existing rules, make 10% of their units for low-income tenants, and not demolish any existing low-income units. SB35 passed the State Senate in June and needs a vote in the State Assembly.
  • Assembly Bill 71 eliminates the mortgage tax credit on second homes, and assigns $300 million of the savings to the Low Income Housing Tax Credit program. It also would expand the tax credit for farmworkers from the current $500,000 to $25 million.
  • Senate Bill 2 would impose a $75 fee on non-residential real estate transaction document to go to low income housing.
  • AB73 offers payments to local governments as an incentive for building housing near mass transit.
  • Miguel Santiago, State Assembly member from Los Angeles, is backing a measure in the Assembly to legalize tiny homes as one additional way to provide housing for the homeless. Until now, Los Angeles has ruled these little structures illegal.

    Miguel Santiago, State Assembly member from Los Angeles, is backing a measure in the Assembly to legalize tiny homes as one additional way to provide housing for the homeless. Until now, Los Angeles has ruled these little structures illegal.

    Assembly Bill 352 by Miguel Santiago (D-Los Angeles, Assembly District 53) would allow cities to issue permits for houses as small as 150 square feet. At the small end even for the tiny house movement, this is an interesting attempt to legalize the tiny houses used in several states to create little villages for the homeless as one option in the broader effort to eliminate homelessness.

 

Each of these is a step in the right direction and should be supported. Together, the measures listed above would raise about $3.9 billion a year. Unhappily, we are so far behind that this would fall far short of what is needed. State officials and housing groups that have looked at the pending legislation say it would require $10 billion more each year to fill the gap. (LA Times, August 12, 2017)

Even more than government money, which is desperately needed, a solution to the homeless housing crisis will require Los Angeles and other cities to accept a major increase in density: very many larger and taller apartment houses.  One possibility is to earmark declining industrial areas, to be completely remade as privately financed multistory affordable housing. This would evade the likely fight with single-family homeowners in existing residential neighborhoods. But to succeed it would have to be on a large enough scale to create viable multifamily neighborhoods with stores, schools, parks, and other amenities. A few isolated projects lost among industrial recycling yards and metal fabricating shops would be a slum in the making.

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