The folks in Sacramento are in a frenzy right now trying to pass legislation to ease the housing crunch. They realize that housing costs are becoming an extreme burden for Californians, and there's an avalanche of bills cascading through the state legislature that purport to address the crisis. While some of these bills are thoughtful, reasonable attempts to create solutions, others are poorly conceived and could end up doing more harm than good.
One of the latter is SB 35, which takes planning authority away from cities and allows developers to skirt public review. The bill was introduced by Senator Scott Wiener, and he seems to genuinely believe that it will help ease the housing crisis. But like so many others who think that relaxing regulation will solve the problem, Wiener hasn’t taken a good look at the forces that have actually created this situation.
First, let's look at what SB 35 actually would actually do. The bill would require that multifamily housing developments that satisfy certain standards be handled with a streamlined, ministerial approval process. The goal is to speed up approvals of urban infill projects that contain a certain number of affordable units, and to prevent challenges that could slow or stop the process. Public review would be conducted by the local planning commission, and would be limited to 90 days if the project contains less than 150 units, or 180 days if it contains over 150 units. Certain areas are exempt, such as coastal zones, wetlands, fire hazard zones and hazardous waste sites. It’s also important to note that the bill’s provisions would only apply to cities that haven’t met state mandated housing goals, but since that’s true of almost every city in California, you can pretty much assume it’ll apply to the town you live in.
And let’s start with that. We haven’t been building enough housing in California, and that’s certainly a problem. No doubt it's true that many of California's cities have outdated and inadequate zoning codes, and this needs to be addressed. But speeding up approvals and limiting public input isn't going to make things better. We’ve been doing plenty of that since the beginning of this century, and all we’ve got to show for it is higher housing costs and more homelessness.
The problem here is that the bill’s authors don't understand the true causes behind skyrocketing housing costs. Is there a shortage of affordable housing stock? No question. But rising costs have less to do with short supply than with the onslaught of speculative development that’s been encouraged by government at the federal, state and local levels for over 15 years now.
The law of supply and demand is considered a basic economic truth, and there are plenty of cases where you can show a direct relationship between short supply and high prices. But those who insist on the supply side argument when talking about housing in California are making a grave mistake. They aren't looking at the whole picture, and they don’t understand that the market is severely distorted right now for a number of reasons.
First, there's an avalanche of investment capital flowing into real estate these days. With interest rates at historic lows, returns on traditional investments have become negligible. Real estate, on the other hand, offers a high rate of return, and since the US economy began to recover there's been a massive flow of money into development. This has driven a speculative frenzy that has pushed property prices higher than ever.
Second, there’s been a huge shift in the people shaping the market and their motives for getting into it. Fifty years ago multi-family housing was considered a safe bet for people who wanted a reliable source of income. Most apartments were owned by individuals or families. Even if the owner didn’t live on site, chances were the tenants knew the owner, and generally speaking if you paid your rent and didn’t set the place on fire you didn’t have to worry about getting kicked out.
Those days are gone. Nowadays multi-family buildings are being snapped up by anonymous LLCs that do everything they can to keep the tenants at arm's length. Providing decent housing is the last thing on their mind. The property is just an asset that they've determined they can cash in on. Here in Los Angeles, if the building is covered by the Rent Stabilization Ordinance (RSO), they usually evict the tenants in order to build something bigger. In LA alone we've lost over 20,000 RSO units since 2001. Often these investors buy a building at a higher price than it’s assessed for, knowing that the city will almost certainly grant whatever entitlements they request. This means there's a good chance they can drive up the property’s value before the bulldozers even show up on the site. The new generation of real estate investor is only interested in maximizing their return, so those who do build are mainly catering to the high end of the market. This has resulted in a glut of pricey units, and a shortage of affordable ones.
So shouldn't empty units mean lower prices? Not any more. The third factor here is the rise of short-term rentals. It used to be that a landlord who couldn't rent units would eventually lower the asking price to attract tenants. But now the landlord can just post the units on AirBnB, and in some cases make more than they would on a standard rental. In fact, there are reports of landlords who simply turn their buildings into hotels. (City Attorney Files Charges Over Illegal Hotels, LA Business Journal, June 2016)
So those who argue that we just need to build housing, any kind of housing, are ignoring significant economic forces that are skewing the standard supply and demand formula. In the world of California real estate, the old rules don't apply any more. If you want evidence, take a look at "Impacts of the Widening Divide: Los Angeles at the Forefront of the Rent Burden Crisis" (Ray, Ong, Jimenez, UCLA Luskin School of Public Affairs, July 2014). The authors evaluate housing data going back four decades, and they conclude that rental price increases have outpaced income growth even when vacancy rates were relatively high. They find that neither a tight market nor increased housing quality explain the widening gap.
Senator Wiener, and many others, argue that zoning codes in a number of California cities are too restrictive, and they have a point. There's no question that in some cases homeowners have pressed for low-density zoning in order to protect their property values. This has resulted in bad planning that limits growth in order to serve the interests of a minority. But SB 35 tries to fight bad planning by avoiding planning, and that will only make things worse. In today's speculative environment, developers are always looking for ways to rush their projects through. This bill allows them to do that just by tacking on a certain number of affordable units. Though Senator Wiener's intentions seem to be good, he must realize that development interests have been showering Sacramento legislators with cash in recent years. Lobbyists have been pushing hard to loosen regulations and roll back CEQA. They want the quickest approvals and the least public scrutiny possible.
SB 35 plays right into their hands. From Senator Wiener's public comments on the bill, it seems he buys the simplistic supply/demand argument and believes this piece of legislation will ease the problem. But he's counting on the people who created the problem to solve it. No question many cities have tried to limit housing construction, and that needs to be addressed. But by allowing a streamlined approval process, SB 35 promises to make the problem even worse. We already have streamlined approvals in LA. City Hall calls it "expedited processing", and it's been used repeatedly to rush bad projects through and deny the public a voice. This bill will only lead to less planning and less public oversight. It's the same cure developers and politicians have been prescribing for years now, and the disease just keeps getting worse.
Here's a link to the bill, if you want to look at it yourself.
SB 35 Text
If you'd like to contact your State legislators to comment on SB 35, you can use the link below to find out who's representing you in Sacramento. Please act quickly. This bill has been sent to committee and could come up for a vote soon.
Find Your Rep
United Neighborhoods for Los Angeles (UN4LA) declares its strong support for Measure S, and asks citizens who care about the future of Los Angeles to vote Yes on S on March 7.
UN4LA has chosen to back Measure S because it is consistent with the group's guiding principle, community-driven planning. For too long, communities have been left out of the loop when it comes to envisioning LA's future. City Hall has shown a complete disregard for basic planning principles as the Department of City Planning (DCP) pursues a reckless, ad hoc approach to development. Spot-zoning should be the exception, not the norm. Sadly, recent news stories have only served to confirm the suspicion that local politicians are willing to trade project approvals for campaign cash.
Los Angeles continues to grow, and development is necessary to ensure the city's economic health. But in order for development to benefit all Angelenos, it must be based on careful planning, and the planning process must start in our communities. We must begin by listening to the people who actually live in LA's neighborhoods, and build for the future based on their vision for the city. We must also insist that the environmental assessments required by the State of California are based on actual data, and that they are prepared by professionals with no financial interest in the outcome.
Measure S is not anti-development, it’s pro-planning.
It will not shut down new development. It does not ban new housing. It will not bring about economic Armageddon in Los Angeles. Measure S will compel City Hall to start planning for the future. It REQUIRES that the City update the General Plan and the Community Plans. It will impose a two-year moratorium on spot-zoning while these updates are completed. It will also REQUIRE the City to be responsible for preparing Environmental Impact Reports (EIRs), instead of allowing developers to choose who prepares these important assessments.
UN4LA believes that Measure S will empower citizens to participate in community-driven planning which will benefit all Angelenos. We look forward to partnering with communities in this process, and helping to provide the tools they need to create a healthy, prosperous future.
Mayor Garcetti knows his record on housing looks pretty bad. The fact that his administration has bent over backwards to help developers build luxury units while affordable housing becomes ever more scarce has made him the focus of intense criticism. With his bid for re-election coming up next year, Garcetti is anxious to make it look like he's doing something to address the situation.
The first step was to issue Executive Directive 13, entitled Support for Affordable Housing Development. And to follow up, the City published a report in August that has lots of beautiful graphics that show what a great job the Mayor's doing. If you take the report at face value, it looks like we've turned the corner and that everything's going great. Take this statement, for instance.
From July 1, 2013 to June 30, 2016 there were 5,982 affordable units financed or incentivized in the City. Of those, 5,774 were affordable to low-income households, reaching 38% of the Mayor’s 15,000 unit goal.
Wow. That's gotta be good. It says we've created almost 6,000 affordable units since July 1, 2013. Or does it? Let's go on to the section titled Details of Affordable Units....
Of the affordable units financed or incentivized in the City from July 1, 2013 to June 30, 2016, 1,488 were at-risk, low-income units preserved from losing their affordability status.
Okay, then apparently 1,488 of the Mayor's total were actually existing units that the City preserved. So even though that brings us down to about 4,500 new units, that's still not bad. And we should encourage the Mayor to preserve affordable units, since his policies have led to thousands of units covered by the rent stabilization ordinance (RSO) being taken off the market.
And since we're talking about RSO units, why don't we take a look at how many we've lost in recent years. According to a report issued by HCIDLA in April of this year, from 2013 through 2015 over 2,600 rent stabilized apartments were taken off the market under the Ellis Act. In many cases the landlords who invoked Ellis were encouraged to do so by the generous entitlements that the City hands out to developers looking to squeeze more money out of their property.
So if we subtract the 2,600 RSO units lost under Ellis from the remaining 4,500 units that Garcetti's crowing about, that brings us down to a net gain of 1,900 new units. Suddenly the Mayor's housing numbers ain't looking so good. But if you've got the stomach for it, let's keep going....
Beginning in 2014, HCIDLA and the Housing Authority of the City of LA (HACLA) established a goal to provide financing for 300 units of permanent supportive housing (PSH) for the homeless each year. From July 1, 2013 to June 30, 2016, the City has fallen short of this goal, producing on average 227 homeless units per year. However, through new land-use reforms and new revenue sources, the Mayor expects to increase annual production to 1,000 PSH units in the years to come.
Okay, well, at least this part is honest. The City admits that they haven't even been able to reach their decidedly modest goal of creating 300 PSH units per year. Over three years, they've only built 681 units. I guess that's something. Unless you also take into account that in 2015 alone the Los Angeles Homeless Services Authority cut funding for about 2,000 beds that served people needing transitional housing. This wasn't Garcetti's doing. It's part of a shift in the way the federal government is trying to address homelessness. But the upshot is that the number of people actually living on the street has increased by over 1,000 since 2015. So the 681 PSH units the City has built over the past three years aren't even sufficient to accommodate the increase in people on the streets over the past year.
Still, the Mayor says he's going to increase the production of PSH units to 1,000 a year. How? Take another look at the last sentence from the paragraph above.
However, through new land-use reforms and new revenue sources, the Mayor expects to increase annual production to 1,000 PSH units in the years to come.
What new revenue sources? Is the City finally going to start charging developers the same fees that many other major cities charge routinely? Let's hope so. The City Council has been talking about it for years, and still hasn't taken any action on this issue. But the most important phrase in that sentence is "new land-use reforms", because that tells you what the Mayor's real agenda is.
No doubt "new land-use reforms" refers to re:code LA, which is the Mayor's attempt to re-write the City's zoning code. There's no question the code is outdated, but re:code is basically a giveaway to development interests. In spite of the City's claim that they've done extensive public outreach, in reality re:code has been largely written behind closed doors. For the most part, the public workshops have been a PR sham, dealing in vague generalities rather than offering information about how communities will actually be affected. And while the public can attend Zoning Advisory Committee meetings, they haven't been allowed to comment. When the Mayor talks about "land-use reforms" he really means letting developers do whatever they want.
And going back to the Mayor's Executive Directive 13, he says that he's going to speed up the approval process for affordable housing. But he also says he's going to speed up the approval process for all housing development. In other words, he's going to accelerate the pace of reckless overdevelopment geared towards serving the wealthy. He's going to give even more freedom to the anonymous LLCs that have taken thousands of RSO units off the market. He's going to ramp up the construction of apartments that start at $3,000 a month, while telling us the tenants will ride the bus to work. Bottom line, he's going to solve the housing crisis by pushing harder on the same policies that helped create it.
United Neighborhoods for Los Angeles (UN4LA) believes that instead of pushing bad projects through faster than ever, we need to slow things down and start doing some real planning. We also need to bring communities into the planning process so that they can find solutions that will work for their area. The affordable housing crisis impacts all Angelenos, directly or indirectly. Shouldn't we let the people who are most affected by this problem have a voice when it comes to solving it?
The people of West Adams, Baldwin Hills and Leimert Park have been working for years to create a new Community Plan in order to provide a framework for future growth in these areas. In May of this year they released the Final Environmental Impact Report (FEIR) for the plan. That should have been a time for celebration. But far from celebrating, many community members felt betrayed when they learned that the City Council was working feverishly to approve a massive project that violated the Community Plan in a number of ways.
The proposed Cumulus project would dump nearly 2 million square feet of new development, including a 30-story skyscraper, at the already congested intersection of La Cienega and Jefferson. It goes far beyond what would be allowed under the new Community Plan, and renders meaningless the years of hard work that local residents invested in creating it.
This is just one more instance where the City Council has shown its total contempt for the planning process. Once again, City Hall has chosen to empower developers with deep pockets, while cutting the community out of the decision-making process.
As a result of the City Council's actions, the Crenshaw Subway Coalition and Friends of the Neighborhood Integrity Initiative are jointly suing the City Council and the developer to stop the project. Follow the link to read their press release.
Crenshaw Subway Coalition
If you've been following local news over the past few years, you know that a lot of people are angry about the City of LA's current approach to development. Unfortunately, the media often frames the argument in terms of pro-density developers and city officials with a vision for the future against aging white homeowners who want to cling to the past.
The problem with this view is that it doesn't begin to deal with the scope and complexity of the problems we're facing. The simplistic pro-density vs. anti-density trope makes it look like City Hall and developers are fighting to bring LA into the future, without taking into account the reality of what's happening as a result of the current building binge. For years the City has been building residential complexes along transit corridors in the belief that it would get people out of cars, but transit ridership is down and congestion is worse than ever. The Department of City Planning incentivises the eviction of low-income tenants by offering zone changes and other variances to landlords. City Hall has been successful in luring businesses and residents to "revitalized" communities, but hasn't addressed LAPD staffing shortages, causing huge spikes in crime. And while our elected officials will move heaven and earth to push a luxury housing complex through the approval process, they have yet to create a credible plan to solve the homeless crisis.
Let's face it. The development process in LA is completely, utterly broken. The Mayor and City Council routinely hand out zoning changes and major variances to developers who have contributed thousands of dollars to their campaigns. The Mayor blithely overturns unanimous decisions made by the City Planning Commission. The DCP has greenlighted numerous luxury skyscapers in its push for higher density, while thousands of affordable units are taken off the market. LA's water resources continue to shrink, and yet the City refuses to undertake a cumulative assessment of the demands planned construction will make on our water supply. And why are we even talking about updating our General Plan and Community Plans, when it's clear that City Hall has zero interest in monitoring and enforcement?
So what we do? It's clear that many Angelenos feel they have no voice in planning for the future of their community, and there are a number of groups that have organized to fight individual projects. But wouldn't our efforts have a greater impact if we were all working together? United Neighborhoods for Los Angeles (UN4LA) was created to give Angelenos a unified voice. If we can come together to press for better planning, we have a better chance of getting City Hall to pay attention. UN4LA will fight for:
• Projects that are designed to enhance, not exploit, your community.
• Water, power and transit infrastructure that you can rely on.
• Consistent enforcement of zoning and building codes.
If you're interested in working with us, or if you just want to learn more, follow this link to our Contact page:
The City of LA is facing numerous challenges right now, but we believe that we can meet these challenges and overcome them. We've seen the disastrous results of short-sighted policy decisions made by politicians and developers acting out of self-interest. It's time for our communities to come together and demand a role in shaping the city's future. UN4LA believes that better planning means a better Los Angeles.
If you feel the same way, let's talk.