Housing that Works? Debatable...
By: Melissa Epstein
ULI LA Young Leader and Development Associate, Urban Partners
In 2008 the Los Angeles Business Council reported that Los Angeles was the least affordable metropolitan area in the country. While high-end apartments and condominium projects were springing up all over the city, household earnings did not rise for families making less than $75,000 per year according to the Los Angeles Times ("Los Angeles Housing Plan to be Unveiled", Sept. 28, 2008). The average rent for a two-bedroom unit was $1740 - a cost that only a family earning more than $69,000 per year can afford.
A serious discrepancy exists between what Angelino's are earning and the current housing inventory in Los Angeles which begs the question: what middle class Angelino can continue to afford to live in LA?
"The lack of affordable housing in Los Angeles is a problem for the city's overall business climate, said Mark Wolf, Vice President of Meta Housing Foundation, an affordable and market rate community development firm. "The people most in need of affordable housing, firefighters, teachers and nurses, are the ones that are vital to making the city run efficiently."
On the same day that former President Bush announced his $700 billion bailout plan in the hopes of stabilizing United States markets, Los Angeles Mayor Antonio Villaraigosa formally announced his "Housing that Works" initiative at the steps of the Wilshire/Vermont station subway portal and housing community. Wilshire/Vermont, a mixed-use, mixed-income transit-oriented development, is a successful case study for similar projects that the Mayor hopes to build along major transit corridors under his $5 billion, five-year plan.
The Housing that Works proposal brings together all city housing and planning departments to address the City's housing crisis. It was created partially in response to a failed 2006 plan, Housing LA, that included a mixed income ordinance in addition to other protections for residents of affordable housing. Over the past two years, Housing LA, in conjunction with LA Voice, has enlisted nine of 15 council members to publically commit to supporting an affordable housing plan in Los Angeles.
Developed from the 2006 policies, Housing that Works aims to build more homes along subway and bus corridors, and increase mixed-income developments. In addition to Los Angeles' Sustainable Communities Initiative, the Housing Department, Community Redevelopment Agency, City Planning Department, Housing Authority and Los Angeles Homeless Services Authority all hope the plan will be able to provide more than 20,000 new units across the city, as well as 2,200 new permanent supportive housing units.
Currently more than 40,000 people sleep on the street each night according an article on The Mayor's website. The addition of these units will help shift the homeless debate from managing the homeless population to eliminating it. The initiative also lays out a Mixed Income Ordinance (MIO), requiring that developments greater than 20 units reserve 12.5 to 22.5 percent of units for low- to moderate-income residents, or pay fees to have the units placed off site.
This MIO will pose the greatest challenge to the Mayor's plan, as it has already stirred a city-wide debate among for-profit developers and business leaders. The argument is that private developers should be incentivized for providing affordable units in market rate developments. While existing state law SB1818 grants developers incentives such as additional density, the MIO has no such incentives.
The LA Downtown News reported ("Incentives to be Key in Housing Debate" Jan. 26, 2009) that the ordinance has caught the attention of the Central City Association (CCA) which believes that there are various alternative methods for solving the housing crisis. Carol Schatz, President and CEO of the CCA, and the CCA advisory committee produced a recommendation to the Mayor, "Affordable Housing, Making it Happen," which provides suggestions as to how to best address the problem from all angles. It includes engaging both the private sector and the community to establish best practices for building affordable housing in a smart and thoughtful manner.
A major concern is that an affordable housing requirement without incentives will ultimately hurt the developers' bottom line, given the difficulties of developing market rate housing in today's economy. Developers need incentives such as a streamlined city review process, density bonuses, reduced parking and community engagement.
Developers such as Meta Housing are already well established as affordable housing developers throughout Los Angeles and have been closely tracking the MIO policies.
"Working in concert with the community and the city is a win-win for all involved," said Wolf. "The end result ultimately serves everyone's purpose, and partnering in the overall development gives everyone a voice."
Known for quality of work and mixed-income senior "Artist's Colonies" in particular, Meta Housing takes advantage of existing SB1818 when available to increase density in its projects. Wolf recognizes that while density is not usually a popular word, dense projects can be aesthetically pleasing.
"Developers need to take better advantage of mixed-use opportunities and develop on or around transit hubs," said Wolf. "I am hopeful that Housing that Works, in whatever form it takes, will be able to enhance the affordable housing industry as it can use all the benefits it can find."
As the economy unwinds and prepares to rebound, affordable housing and the MIO will continue to be a major topic of debate. Regardless of how affordable housing and MIO policies shake out over the next few months, all players clearly agree that now is the time to establish rules surrounding affordable housing while development is at a stalemate. When development does pick back up again, the rules in place will launch a success and efficient housing effort for those in need.
Los Angeles is not a typical "urban" city. Other obstacles such as transportation and suburban sprawl make housing a tougher issue to tackle. However, LA is surrounded by ample cities and counties with a number of successful case studies. Best practices are found throughout 170 California counties which currently have mandatory affordable housing requirements. Ultimately, housing is a fundamental issue in Los Angeles' overall business climate, and a key element to its future success.
