City Hall is supposed to play by the rules. Our elected officials, City employees and City commissioners have a legal duty to uphold the law. When they knowingly fail to execute that duty, they need to be held accountable.
That's why United Neighborhoods for Los Angeles (UN4LA) has filed a complaint with the County District Attorney and the State Attorney General asking them to investigate the Department of City Planning (DCP) for possible violations of California Government Code Section 1222. This law says that....
“Every willful omission to perform any duty enjoined by law upon any public officer, or person holding any public trust or employment, where no special provision is made for the punishment of such delinquency, is punishable as a misdemeanor.”
UN4LA believes that the DCP violates the law routinely, but our complaint is based on plans by developer Relevant Group to build a cluster of party hotels in Hollywood. The DCP has already approved the Dream 1, Dream 2, Thompson and tommie hotels. They're currently considering an application for a fifth hotel at 1600 Schrader. All of these projects are within a one block radius of Selma and Wilcox, all of them will be offering live entertainment, and all of them will be making alcohol available on every floor from the lobby to the rooftop deck. While Hollywood is known as an entertainment center, City Planning has ignored the fact that this is also a densely populated residential community. These hotels will bring more booze to an area that's oversaturated with alcohol and more disruptions to a neighborhood where late night noise is already a problem.
What's our specific complaint? State law says clearly that developers must seek approvals for a project in its entirety, rather than breaking it up into smaller segments to ask for piecemeal approvals. Relevant has done this repeatedly with their applications for these hotels. To begin with, fundraising brochures show clearly that Relevant intended to build both the Dream 1 and Dream 2 hotels, along with the restaurant Tao, as far back as 2014. But instead of presenting the whole project for consideration, they started construction on the Dream 1, and then submitted an application for Tao along with a one-story retail building. After beginning construction on that project, they came back with another application for a second hotel, the Dream 2, on the same site.
In an insulting display of arrogance, Relevant submitted their application for the restaurant/retail project using an LLC named "6421 Selma Wilcox Hotel". City Planning ignored the strange discrepancy and approved the restaurant/retail application. Then with that project under construction, Relevant came back with another application, now asking for approval of an eight-story hotel. Rather than calling out the developer's deception, the City Planning Commission okayed the hotel project. The Commission had ample evidence to show that Relevant was seeking piecemeal approvals, and the Commission knows this is illegal. But instead of doing their job, a majority of Commissioners voted to approve the project anyway.
And this is bigger than just the Dream 1 and Dream 2. Relevant is either the owner or a party-in-interest for all five of these hotels. UN4LA believes it's clear that, by building a cluster of hotels around Selma and Wilcox, all of which offer restaurants, bars, and nightclubs, Relevant intends to create their own nightlife hub in a dense residential neighborhood. And rather than looking at the cumulative effects this cluster of party hotels would have on area residents, the DCP has approved each project individually, blithely insisting that impacts from construction and operation will be negligible.
UN4LA believes it's time to hold the Department of City Planning accountable for failing to protect citizens from dishonest developers like Relevant. That's why we've filed this complaint.
Do you agree that City officials haven't been doing their job? If so, we hope you'll write a letter in support of our complaint. It doesn't have to be complicated. Just say that you believe the Department of City Planning and the City Planning Commission have knowingly failed to uphold the California Environmental Quality Act (CEQA) by approving Relevant's party hub one piece at a time. If you live in the Hollywood area, feel free to mention concerns you have about oversaturation of alcohol, noise from live entertainment, or increased crime. Please use the following subject line.
Support UN4LA Complaint Re: Hollywood Hotel Approvals, CA Government Code Sec. 1222
Here are the e-mail addresses for the County DA and the State Attorney General.
And please copy the following people.
Let's tell City officials that we're not going to allow them to shirk their duties by handing illegal approvals to developers. If these officials won't do the job they're sworn to do, let's make sure they're held accountable.
The room was packed and emotions ran high at the January 15 Planning & Land Use Management (PLUM) Committee hearing where the massive Crossroads Hollywood project was on the agenda. While representatives of business and labor groups spoke in support of the project, there were a number of people who spoke against, and many of those opposed brought up the FBI investigation that has raised serious ethics concerns about the way business is done at City Hall. The home and offices of the former PLUM Chair, Councilmember Jose Huizar, were raided by the feds last year, and Huizar stepped down from the Committee shortly afterward. He was replaced by the current PLUM Chair, Councilmember Curren Price.
There was an especially contentious moment when Miki Jackson, of the Coaliton to Preserve LA, stated that some PLUM members were mentioned in a recent warrant tied to the federal investigation into bribery, extortion, and money laundering. Acting PLUM Chair Marqueece Harris-Dawson seemed to take offense, stating, "Say who you're talking about or don't besmirch all of us." Jackson then clarified, saying that the warrant mentioned former PLUM Chair Huizar and current PLUM Chair Price. Price was not at the hearing, probably because his wife, Del Richardson, has been working with Crossroads developer Harridge Group to move tenants out of existing apartments on the project site. These rent-stabilized units will be demolished if the project goes forward.
Others on the PLUM Committee were bothered by accusations of corruption. The LA Times quoted Councilmember Gil Cedillo complaining about the "hysteria" surrounding the FBI probe. According to the Times story, Cedillo went on to say “It’s like ‘The Day of the Locust’ here at City Hall now."
So is it just "hysteria"? Is a confused public lashing out blindly at City Hall, hurling unfounded accusations at innocent Councilmembers? Well, let's start by taking a look at campaign contributions received by Cedillo to see if there might be any possible improprieties. Interestingly, the LA Ethics Commission web site says that $1,400 in campaign contributions were made to Cedillo by businessman George Chiang, who was mentioned in the warrant tied to the FBI investigation. Cedillo has also received campaign contributions amounting to $1,200 from Liner LLP, a lobbying firm that represented Harridge Group until it merged with DLA Piper, which is currently representing the Crossroads project. But the most interesting number that comes up in connection with Cedillo on the Ethics site is the $4,700 he's received from employees of Harridge. Of the total from Harridge, $2,100 was given on a single day, December 31, 2015. Could these contributions have possibly influenced Cedillo's vote on the project? Undoubtedly the Councilmember would say such accusations are simply the result of "hysteria". (Apparently Cedillo later returned $700 he received from David Schwartzman of Harridge.)
So let's take a look at current PLUM Chair Curren Price. Are you surprised that Price also received campaign cash from George Chiang, of FBI investigation fame? It was only $700, but it's worth mentioning that Price got another $1,400 from employees of Concord Realty, a firm that Chiang worked for. But the most interesting fact about the Chiang contribution is that the date given, December 30, 2015, is the same day that David Schwartzman, James Hearn, and Brad Woomer, all Harridge employees, kicked in a total of $2,100 for Price. And it gets even more interesting when you realize that this was one day before the same three Harridge employees gave exactly the same amount to Cedillo's campaign.
Since PLUM Vice-Chair Harris-Dawson was the one who bristled at accusations that members of the PLUM Committee might be corrupt, let's take a peek at his campaign contributions. And once again, there's a connection to George Chiang. Turns out back in 2017 Harris-Dawson got $800 from Synergy Alliance Advisors, which listed Chiang as its CEO. As for tie-ins with the Crossroads project, Harris-Dawson also received $1,500 in campaign cash from Harridge CEO David Schwartzman, with $800 of that arriving on December 27, 2018, just weeks before the PLUM hearing on Crossroads.
It's worth noting that since 2013 Harridge employees have contributed $21,850 to the campaigns of current Councilmembers or candidates running for City Council. Of that total, $2,400 went to Councilmember Mitch O'Farrell, in whose council district the Crossroads project would be built; $1,900 went to Council President Herb Wesson; and $1,300 went to Mayor Eric Garcetti. You might also find it interesting that Garcetti, Wesson and former PLUM Chair Jose Huizar all received campaign cash from companies or persons associated with George Chiang, the man named in the FBI warrant.
So is it all just hysteria? Is it just that members of the public have been whipped into a frenzy by media reports of an investigation into corruption? Are Hollywood residents unfairly venting their anger at innocent politicians who would never think of approving projects in exchange for campaign cash? Are developers and lobbyists showering our elected officials with thousands of dollars out of sheer generosity, with no expectation of favors in return?
Or has the planning process in LA become completely corrupted by a culture where project approvals are awarded on the basis of how much campaign cash our Mayor and Councilmembers have received? UN4LA believes it's the latter. And we only hope that the federal investigation expands beyond Downtown to look at some of the shady development deals that are happening all over Los Angeles.
Recently the Department of City Planning (DCP) informed residents of the Wilshire District that it was initiating work on the Purple Line Transit Neighborhood Plan (TNP) in anticipation of the completion of the Purple Line. Area residents, already angry at being left out of the loop, are also puzzled by the rush to implement the TNP when work on the Wilshire Community Plan Update is scheduled to begin in 2021. UN4LA must side with Wilshire residents. Below is a copy of a letter we sent to Councilmembers Wesson, Koretz, and Ryu, and to Planning Director Bertoni.
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November 27, 2018
Honorable Herb Wesson
Honorable Paul Koretz
Honorable David Ryu
Director of Planning Vince Bertoni Los Angeles
200 N. Spring St., 5th Floor
Los Angeles, CA 90012
Re: Purple Line Transit Neighborhood Plan
Case Number: CPC-2018-3731-ZC-GPA-HD-CDO; ENV-2018-3732-EIR
Alternative Proposal by UN4LA
Dear Councilmembers Wesson, Koretz and Ryu, and Director Bertoni,
United Neighborhood for Los Angeles (UN4LA) is an organization working with community groups throughout Los Angeles to promote better planning and better governance.
We have carefully studied the proposed Purple Line Extension Transit Neighborhood Plan (TNP) and concluded that, as now formulated, it will not work. At best, it will not meet its expressed goals of building affordable housing, increasing transit ridership, and reducing the generation of greenhouse gases (GHGs).
At worst, the current TNP proposal will upzone the Miracle Mile, San Vicente, Fairfax, and La Brea corridors, further reduce bus and subway ridership, decrease the supply of affordable housing, and expand the generation of GHGs. This is because the proposed Purple Line Extension TNP awards property owners unconditional bonuses to increase the height, size, and density of new residential buildings, without affordable housing requirements. Unless blocked by the courts, this approach might result in more apartment and commercial construction, but these buildings and their rentable units will be limited to the upper end of the rental market. This is exactly the population that owns and drives cars, while seldom riding buses or subways.
Furthermore, the existing problems faced by the Purple Line TNP area have no connection to zoning since these neighborhoods currently have an enormous amount of unused zoning capacity. Additionally, the Miracle Mile corridor has suffered long term time decline because of inadequate infrastructure and prior approvals of four new regional centers north of Wilshire Boulevard: Cedars-Sinai Hospital, the Beverly Center, the Beverly Connection, and the Grove shopping center.
Instead, we recommend a transit program that addresses the actual problems faced by the TNP neighborhoods. The revamped Purple Line TNP should be modeled after the recently completed Crenshaw Light Rail TNP, which entirely focused on public improvements. To best make this change, the Purple Line TNP should be folded into the forthcoming update of the Wilshire Community Plan and then fully implement two manuals posted on City Planning’s web site: Mobility Hubs and Complete Streets Guidelines. This approach also has the advantage of relying on the Wilshire Community Plan Update’s community analysis and extensive outreach efforts.
We are including attachments that provide further analysis to support our recommendations. If you would like more information on our proposal, UN4LA would be happy to meet with you to discuss these issues further.
Casey Maddren, President
United Neighborhoods for Los Angeles
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UN4LA Alternative to Purple Line Extension Transit Neighborhood Plan
UN4LA proposes that the Purple Line Extension Transit Neighborhood Plan and its Draft Environmental Impact Report (DEIR) be incorporated into the impending the Wilshire Community Plan Update. We consider this the best way avert litigation and also ensure a high quality planning product. In order to create truly livable, sustainable communities, any planning program must be a holistic effort which engages a range of stakeholder groups in a comprehensive process of assessing the community's current state, and imagining a vision for
the future. Instead of pursuing true community engagement, City Planning has insisted on pressing forward with a process that is narrowly focussed on upzoning near transit.
City Planning’s efforts to jam through this ambitious up-zoning scheme, using two new Purple Line subway stations as an excuse, have galvanized all local communities, including thousands of area residents. One local organization, the PICO Neighborhood Council, was, like other local groups, excluded from public participation. It nevertheless organized a large public meeting with City Planning in late September 2018. There was a standing room only crowd at this meeting. Local residents made clear that they oppose the Purple Line Transit Neighborhood Plan for the following reasons:
Neighborhood input is essential to the planning process, and in the case of the Purple Line Extension Transit Neighborhood Plan, it was ignored. Had it been solicited, the Department of City Planning would have learned that its upzoning proposals exceeded the capacity of local infrastructure and displaced existing affordable housing, transit users, and small businesses. Unlike Beverly Hills’ fixed approach to the Wilshire/LaCienega station, Los Angeles is using the Purple Line Extension subway as an excuse to increase the height, size, and density of privately owned properties zoned for apartments and commercial uses in the neighborhoods surrounding the Wilshire/La
Brea and Wilshire/Fairfax subway stations.
Community planning processes that address transit must also consider data on local land use and supporting infrastructure. This is why City Planning’s Transit Neighborhood Planning approach for the Purple Line Extension is fundamentally flawed. For example, it neglected to consider the constraints of local infrastructure and the adverse impact of taller, larger, denser buildings on surrounding residential
communities. The San Vicente/Pico, Fairfax, Wilshire, and La Brea corridors that comprise the greater Miracle Mile area do not have sufficient infrastructure, public services, or community support to become high density, luxury neighborhoods.
Transit Neighborhood Plans must also be based on California’s mandatory Complete Streets law, City Planning’s Mobility Hubs and Complete Streets Guidelines, and METRO’s First-Last Mile Strategic Plan. Nearby neighborhoods urgently need their sidewalks and intersections repaired and upgraded, their missing shade trees planted and maintained, and their street furniture, bicycle infrastructure, bus shelters, kiss ‘n ride, and park ‘n ride installed.
In local neighborhoods, new developments, even those based on existing zoning, have already displaced rent stabilized apartment units. Once dislodged, these residents cannot afford the rents of new, expensive apartment buildings, a preview of things to come if the City Council adopts the TNP. City Planning’s claims that this upzoning ordinance will produce affordable, transit-oriented apartments are
not credible. New residential developments in the TNP area and the surrounding DEIR study area are already expensive, up to $4,500 per month for a one-bedroom unit. New apartments will be priced similarly or even higher. Because the TNP grants developers upfront increases in building height, size, and density, along with reductions in parking requirements, developers will no longer require SB 1818
and TOC density bonuses to obtain these entitlements.
While it may seem counter-intuitive, UN4LA believes that the best way to create affordable housing in this area is to pursue downzoning. This would force real estate investors to include affordable rental units in their buildings in exchange for additional height, building mass, density, and/or reduced parking. No data exists forecasting a population boom or shortage of developable land in the Wilshire Community
Plan or its Transit Neighborhood Plan sub-area. The TNP area’s existing zoning has permitted many new, high density, by-right commercial and residential buildings over the past two decades. This is the intended outcome of the 389-page upzoning ordinance that the Department of City Planning appended to the 2002 Wilshire Community Plan.
If the Wilshire Community Plan’s current zoning was fully built-out through by-right real estate projects, the plan area’s population would reach 573,000 people. If these projects then incorporated SB 1818 or TOC density bonuses, the buildout population would soar to 770,000 people. In comparison, according to City Planning’s most recent population estimate, the Wilshire Community Plan housed only 293,000
people in 2015. The plan area’s most optimistic population forecast was SCAG’s estimate for 2010, 337,000 people, or nearly 500,000 people less than the plan area’s maximum build-out population.
These data reveal that all construction and population scenarios can be met by existing zoning. In fact, this zoning is already producing the new commercial and residential buildings that the TNP planners claim could only appear through up-zoning. UN4LA believes City Planning's current efforts to push through the Purple Line TNP will fail because:
For these reasons, UN4LA proposes that the current TNP planning process to be integrated into the forthcoming update of the Wilshire Community Plan. Beginning in 2021, it should conclude when the subway opens in 2023.
Conclusion: To avoid lengthy, costly and divisive litigation, City Council Districts 4, 5, and 10 must make it clear to the Department of City Planning that this plan should be deferred until all transit projects in this area can be properly considered through the forthcoming update of the Wilshire Community Plan. The real barriers to growth in this area have nothing to do with zoning. The Wilshire Community currently
suffers from degraded infrastructure, inadequate public services, a lack of truly integrated transit planning, and displacement due to the City's failure to preserve existing RSO apartments and prioritize affordable housing. These problems can only be addressed with the public’s participation in creating a comprehensive new Wilshire Community Plan.
Why Is L.A. Expanding Transit—and Losing Riders? from CityLab, Feb. 1, 2018
The city is losing once-loyal lower-income patrons: They’re driving themselves.
Happy transit systems are all alike; every unhappy transit system may be unhappy in its own way. Case in point: Southern California.
Los Angeles County, the most populous in the country, has been dramatically expanding rail transit connections for its 10 million residents. Yet across L.A. and five other counties that make up the heavily urbanized Southern California region—Orange, Riverside, San Bernardino, Ventura, and Imperial—ridership on public transportation systems has mostly declined since 2007, and quite steadily since 2013. That’s counting passenger increases on some of the new rail lines.
WILSHIRE WATER SYSTEM BREAKS
Infographic produced by LA Times covering 2010 through 2014.
Go to "Search" box. Type in "5905 Wilshire Blvd.", and press "Enter".
According to Times map, majority of pipes in the area appear to be between 75 and 100 years old.
LAPD CRIME STATS FOR WILSHIRE DIVISION, YTD 2016 - YTD 2018
COMPSTAT Wilshire Area Profile 11/10/18 - EXCERPT
YTD 2016: 730
YTD 2018: 937
YTD 2016: 4,519
TYD 2018: 5,394
You may have seen an item on local news broadcasts back in August where a group of activists staged a protest to prevent the removal of 18 mature trees on the 1200 block of Cherokee in Hollywood. The City had determined that the trees needed to be removed as part of its Sidewalk Repair Program (SRP). Lawyers working with UN4LA and the Eastside Nature Alliance asked a judge to grant a temporary restraining order to prevent the removal of the trees. By the time the hearing was held, the City had offered to hold off on cutting the trees down, and so the restraining order was denied.
You may be wondering what all the fuss was about. If you've been living in LA for any length of time, you know that a lot of our sidewalks are in bad shape, and you may be asking why UN4LA would stand in the way of getting them fixed. Even if you care about trees, you may be thinking that broken sidewalks are a safety risk, and that they create barriers for the disabled, and that we need to resolve the problem even if it means losing a few trees.
You'll be glad to know that UN4LA agrees with you on almost all those points. LA's sidewalks are in terrible shape. They do create safety risks. They do constitute a barrIer for the disabled. We do need to fix them.
The problem for us arises when we talk about cutting down trees. But let's do a little review....
LA's sidewalks have been getting worse for years, and in 2010 a class action lawsuit was filed, Willits vs. City of Los Angeles, to force the City to fix them. A settlement was finalized in 2016 which required the City to spend about $1.3 billion over 30 years to address a number of issues related to pedestrian access. There were a number of projects included in the agreement, and one of the priorities was fixing sidewalks that had been damaged by tree roots.
The City knew that repairing sidewalks could mean cutting down a lot of trees, and so in 2017 it started the process of preparing an Environmental Impact Report (EIR). The idea was to look at the impacts of potentially removing thousands of trees, to offer possible alternatives to removal, and when removal was necessary to evaluate the best approach to replacement.
The problem is, the City hasn't even released a Draft EIR, but they've already started cutting down trees.
That's why UN4LA got involved. Sidewalks are a crucial component of our infrastructure. And so are trees. If you think fixing our sidewalks is more important than maintaining our urban forest, think again. We'd like to point out that City officials have repeatedly emphasized the many benefits that trees offer, including lowering the temperature, capturing stormwater, and keeping our air clean. As LA's climate grows hotter and drier, we're really going to need a robust urban forest to keep this city livable.
You see, this is a lot more serious than cutting down a few trees here and a few trees there. Our urban forest is already declining rapidly. A 2017 study from USC showed that from 2000 to 2009 urban green cover declined 14% to 55% in cities across the LA basin, primarily because of the growing size of single family homes. But that's only the beginning. Researchers with the US Forest Service say insect infestations could kill millions of trees throughout Southern California.
So we need every tree we can get, including the ones that are being removed under the SRP. The City has argued that there's no net loss because they plant replacement trees at a ratio of at least 2 to 1, but there's no scientific basis for this formula. Some believe that the City arrived at this number because they see about half of newly planted trees die off, but as our winters get drier and temperatures continue to rise it's going to become more challenging for trees to survive. And since it's usually not feasible to plant 20 trees on a parkway that originally held 10, there's a good chance that replacement trees won't end up in the same neighborhood.
But let's get back to the sidewalks. Don't we need to have safe sidewalks, especially for the elderly and disabled? For a senior citizen a relatively minor fall can cause serious problems. But there are also very real health risks related to the loss of our urban forest. Anybody who spent this past summer in LA knows that we went through a nasty heat wave, with temperatures reaching record highs in some places. According to the Centers for Disease Control , extreme heat in US cities is responsible for more deaths than all other weather events combined. And as air quality in Southern California gets worse, we'll see more more children and seniors suffering from respiratory problems. Maintaining a healthy tree canopy will help keep our air quality from degrading further.
So while we need to fix our sidewalks, we also need to preserve our urban forest. UN4LA wants the City to do both these things. That's why we believe it's necessary for the City to complete the EIR before doing any more tree removals. We need to have a well-thought-out plan in place to minimize the impacts of the SRP. This will cause some delay, but in the long run the results will be worth it.
This isn't an either/or situation. We need to have safe sidewalks and a healthy urban forest. We can have both. Let's take the time to do the job right.
New construction is springing up all over Downtown LA, and developers are creating assets that promise high rates of return on their investment. Why, then, is City Hall giving away huge tax breaks on projects that look to be extremely profitable? Earlier this month, UN4LA sent the following letter to LA's elected officials.
Dear Mayor Garcetti and Members of the City Council,
The Board of United Neighborhoods for Los Angeles (UN4LA) wishes to express its deep concern over the scale of tax breaks that the City is offering to real estate developers. While tax breaks can be a useful tool to encourage investment and produce benefits to the City, they must be used judiciously. CityWatch has published a series of articles on this issue by Jack Humphreville, and the details he reveals have led us to the conclusion that City Hall is abusing this practice.
The City’s Annual Report shows that in 2017 alone Los Angeles entered into six Development Incentive Agreements that waived a total of $850 million in revenue. Recently the City entered into two additional agreements for another $126 million in tax breaks, increasing the grand total of lost revenue to the City to the tune of nearly $1 billion.
We are concerned that, rather than using tax breaks judiciously to spur development and create jobs, the City is giving away badly needed tax dollars to increase the developers’ profit margins on projects that are extremely profitable without incentives.
To give an example, let's look at the proposed Fig + Pico hotel complex that will rise directly across from the Convention Center. While adding hotel rooms to this area is certainly a desirable goal, it is hard to imagine how the City can justify subsidizing this project with $103 million in front-end loaded tax breaks. Even without the tax incentives, an analysis of the information provided to the City by developer Lightstone Group makes it look like the project will be extremely profitable. With no additional tax incentives, Lightstone would realize an annual cash return of around 14%. If the property is sold or recapitalized within the next seven years, the return on equity would be over 100%.
How, then, does the City justify offering the for-profit developer tax incentives totaling $103 million? This puts the developer’s annual cash return in the range of 20%, and, if the property is sold or recapitalized, the return on equity would exceed 200%. As if this weren't enough, the agreement includes the sale of a City-owned parcel on Figueroa for a paltry $9.6 million, which is less than half of the property's current fair market value. It is laughable that, as part of the deal, Lightstone has agreed to pay $1 million to the City for projects to improve the neighborhood. This only highlights the ridiculous imbalance we see in comparing the benefits received by the developer to the benefits received by the people of Los Angeles.
While City Hall’s generosity is troubling in itself, this trend becomes truly disturbing when placed against the backdrop of the City’s Structural Budget Deficit. The Mayor and the City Council have been using accounting sleight-of-hand to patch together a “balanced” budget, but in reality rising pension contributions and other personnel costs are an ever-increasing and unsustainable burden on City coffers. Even with revenue as high as it is, the City is struggling to cover its costs. Why, then, are we giving away enormous sums of tax revenue to subsidize projects that are already profitable?
UN4LA believes that the City should put a stop to this unconscionable practice immediately. It is an irresponsible giveaway that puts the interests of real estate developers over those of Angelenos. Tax incentives should be used judiciously to spur development that might not otherwise happen. They should not be used to increase developer profits at the expense of the people of Los Angeles.
Do we need to send Sacramento a message?
Earlier this year State Senator Scott Wiener created a stir when he introduced SB 827. The bill has drawn a lot of attention because, if approved, it would override local zoning near transit stops, effectively taking planning authority away from cities. But while SB 827 has drawn the most media attention, there are other bills making their way through the State legislature that would dictate how local jurisdictions build housing, and cumulatively they amount to an assault on local planning control.
We can't possibly track all of these bills and fight them individually.
We need to tell the folks in Sacramento to back off.
So how about a ballot measure to keep our State officials from meddling in local planning?
That may sound like an extreme step, but the situation is extreme. The State legislature is making an unprecedented effort to override local planning authority. SB 827 would allow developers to build four to eight story residential structures near transit, with no review by local officials, no public input, and no environmental assessment. And that's only the beginning....
Another bill, SB 828, amends State law to require cities to build more housing. Currently every city is required to take part in the Regional Housing Needs Allocation (RHNA), which sets goals for new residential construction. This bill, again by Scott Wiener, would mandate that cities accomodate 200% of the low-income units needed. There is certainly a demand for affordable housing, but this goal is absurdly unrealistic, especially since public housing subsidies have been cut by more than half over the past decade. At the same time, SB 828 says that high housing prices "shall be alleviated by rapidly increasing housing supply, particularly housing supply for moderate and above-moderate income households." Wiener seems to think that just mandating more residential construction will make it happen. He apparently doesn't realize that developers build housing, not cities. Local governments can't force developers to build anything.
Then there's SB 831, which overrides local restrictions on building Accessory Dwelling Units (ADUs, or granny flats). This bill would: 1) Prohibit any requirement that the ADU applicant reside on the property; 2) Prohibit considering the additional square footage when calculating allowable floor area ratios; 3) Exempt the project from fees for new construction. But it gets worse. SB 831 says that if a city doesn't act on an ADU application within 120 days, then it's automatically approved. If a city doesn't approve the application, it can be taken to court, and if the judge finds the city is violating the law, the minimum fine is $10,000.
Sacramento is making an unprecedented effort to override California cities' control over planning and zoning.
Is it time to start thinking about a ballot initiative that would get our legislators to back off?
Let us know by visiting today's post on our Facebook page:
IS IT TIME FOR A BALLOT MEASURE TO KEEP SACRAMENTO FROM MESSING WITH LOCAL PLANNING?
The following post was published as a rebuttal to a piece by Steven Sharp that appeared in the LA Times last month (Downtown has a high apartment vacancy rate? The rest of L.A. should be so lucky, LA Times, 2/13/2018). In it, Sharp responds to critics who expressed alarm over high vacancy rates reported in Downtown LA last year, and cites figures from CoStar to show that the number of empty units has declined.
Our response is based on skepticism about the way Downtown developers are dealing with high vacancy rates. In 2017, both the LA Weekly and Curbed reported that Level Furnished Living (LFL), a building approved by the City for residential use, was now advertising units that were available for stays as short as a single day. Essentially this means that a building that was approved as a residential tower is now functioning as a hotel, and that 303 units meant for people to live in are now available for overnight visitors. If the Downtown property market is as hot as Sharp claims, it seemed odd to us that the building's owners would be converting housing into hotel rooms. It also seemed like the conversion would be an easy way to remove vacant units from the market.
But after our post was published, a reader alerted us to the fact that LFL had been functioning as corporate housing, or an extended stay hotel, pretty much since it opened. (Developer plans fully furnished apartments in downtown L.A., LA Times, 2/25/2015) Have the owners illegally engineered a change of use? Or has LFL always been a hotel?
The July 30, 2013 determination letter from the Department of City Planning (DCP) says that the approved project consists of 303 residential condominiums and 7 commercial condominiums. A search on ZIMAS, LA's on-line zoning information system, shows no subsequent approvals that alter the building's use. The City has argued that the extended stay use was permitted, because visitors would be residing at LFL for longer than 30 days. But it's clear that since last year, folks are invited to stay at LFL for a lot less than 30 days, and LA's zoning code clearly prohibits this. A spokesman for LFL's owner claims that they've been working with the City to create a transit occupancy permit for the building, but the City has not offered any comment.
Since our response to Sharp's piece is based on the estimation of Downtown vacancy rates, this does make the situation more ambiguous. Were LFL's empty units included in vacancy numbers prior to 2017? Were they ever included at all, since it seems that the building has functioned as a kind of hotel ever since it opened? What is clear, though, is that the DCP approved 303 units as residential condos, and that these units are now being offering as hotel rooms.
LFL aside, our point is that across LA housing is being converted to hotel rooms. And it's clear that City Hall is complicit in the process. Not only has the City failed to enforce existing laws, but it has willingly allowed at least one other property (The Metropolitan in Hollywood) to change from an apartment building into a hotel.
How is it possible to come up with accurate vacancy rates when property owners are taking units that were intended for housing and posting them on-line for tourists? And how is it possible that City Hall has still failed to pass an ordinance that would legally clarify the difference between the two uses? An even more disturbing question is, how is it possible that at a time when renters are being evicted so that landlords can convert units to short-term rentals, the City has done almost nothing to enforce laws that are already on the books?
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In Steven Sharp's recent Los Angeles Times op-ed, "Downtown has a high apartment vacancy rate? The rest of L.A. should be so lucky." the author responds to critics of real estate trends in the Downtown LA. While many critics, like us, have questioned the need for so many luxury high-rise apartment buildings in the central city, Sharp claims that widely cited statistics on their high vacancy rates are misleading. In his view the new, expensive units are necessary to meet demand, and this trend should be emulated in the rest of Los Angeles.
We sharply disagree with his conclusions for the following reasons.
The real estate research firm CoStar caused a stir last year when it reported a 12.4% residential vacancy rate in Downtown LA. Sharp notes that CoStar's data showed a drop to 10.3% in January 2018. He then says the vacancy rate has declined further to 8.1%, and 4.7% for buildings that have been open for one year or more. Looking at these numbers out of context creates the impression that developers have been right all along. Their bet on high-priced housing paying off, and it was only a matter of time until the real estate market absorbed their expensive units.
But do these numbers tell the whole story? Hardly.
In September 2017, KPCC reported that more than 2,000 of the over 21,000 market rate apartments in the Downtown were vacant. And in November 2017, the LA Weekly reported that the owner of Level Furnished Living (LFL), a high-rise apartment building at 9th and Olive, converted its building to an extended stay hotel.
Where LFL led, by converting 303 apartment units into hotel rooms to protect its bottom line and reduce the residential vacancy rate, others will soon follow. In fact, The Metropolitan in Hollywood also pulled the same stunt, all with City Hall help. The owners of The Metropolitan asked the Department of City Planning to grant a Transit Occupancy Residential Structure (TORS) overlay. They got their wish, and are now in the process of converting over 50 apartments into hotel rooms.
Meanwhile, many apartment building owners are not waiting for City Hall’s blessing to make the same changes. Since the City Council has failed to pass an ordinance regulating short-term rentals and since the Department of Building and Safety does not enforce existing laws barring this practice, there are numerous reports of local landlords converting also their residential units into short-term rentals.
But, even if we accept Sharp’s numbers as accurate, it’s important to test his supply-side argument through Downtown LA’s real estate market. He says, “Downtown's growth has created competition among landlords for residents. Prices have leveled accordingly, and many property owners have resorted to incentives, such as free parking or discounted rent in order to lure tenants.” It is true some downtown rents have plateaued, but we need to look at the words “discounted rent” carefully. What landlords are actually doing is offering one or two months of free rent when prospective tenants sign a lease for expensive apartments. While tenants are getting a short-term discount of between 8 to 16 percent for one year, the rent is remaining the same because the owners cannot afford to make significant long-term rent reductions.
Their projects are financed by global investors enticed to Los Angeles by a high rate of return on their money. For them, these aren’t just residential buildings; they’re financial assets. In order to retain their value, their rents must remain high to assure a handsome profit. Supply-siders repeatedly argue that if City Hall aggressively green lights new residential construction, housing costs will fall. But will these become affordable for the average Angeleno family? In 2017 the Zumper real estate site reported the median monthly rent for a one-bedroom apartment in Downtown Los Angeles was $2,500. The median household income in Los Angeles is around $55,000 a year. The standard formula dictates a household should spend one-third of its income on rent, which comes out to $1,500 a month. There’s no way the rent for these new units will permanently fall by 40% or more to this level. As a result, middle-income and low-income households are priced out of the Downtown, assuming they could even squeeze a family into a one-bedroom apartment.
Sharp insists that “supply and demand” is a fundamental law of nature, like gravity. But his strict supply-side view is hardly a natural law, and it cannot explain 21st century urban real estate markets. These markets are now global. Companies most of us have never heard of pour billions into lucrative real estate projects that are nothing more than a prospectus for distant investors. Real Estate Investment Trusts (REITs) buy and sell assets, like high rise apartment buildings in downtown Los Angeles, based purely on profit projections. Such immediate consequences as pollution, displacement, overcrowding, and gentrification are irrelevant to them.
Furthermore, the emergence of short-term rentals means that many property owners, like LFL, have realized that a “hotel” is far more profitable than an apartment building. A number of the city's hottest neighborhoods are seeing badly needed supply taken off residential market so landlords can please investors by renting empty units to tourists.
Sharp finishes his article with, “Downtown isn't a case study in what's wrong with development in Los Angeles. It's the best model we have for what's right.” This is a truly startling statement; one that makes clear how completely disconnected his view is from reality. While City Hall has had important successes in revitalizing DTLA, the same area continues to be plagued by exorbitant housing prices, rampant homelessness, crumbling infrastructure, and rising crime rates. Transit ridership continues to fall, as traffic congestion grows worse. And in spite of all the talk about creating livable communities, local government still has not even found a permanent home for the Downtown’s only elementary school.
If Downtown is the best model City Hall has to offer, we are in deep trouble.
Over the past year or so our legislators in Sacramento have let it be known that they aren't happy with the pace of development in California's cities. As housing prices continue to rise, traffic continues to worsen, and the reality of climate change becomes ever more apparent, the Senate and Assembly have decided that local jurisdictions aren't doing their job and that the State needs to intervene. In 2017 the Legislature worked feverishly to pass bills that would restrict local authority over land use. Now they're starting off 2018 with SB 827, a radical effort to override local planning, claiming it will ease the housing crisis and get more people riding public transit. In reality it will do niether.
SB 827 is the brainchild of State Senator Scott Wiener (D-San Francisco). It would exempt residential projects that include a percentage of low-income housing from local zoning restrictions if the project is within 1/2 mile of a major transit stop or 1/4 mile of a high-quality transit corridor. This means that local requirements regarding height, density, floor area ratio, and design review would no longer apply. The idea is to promote high-density residential construction along transit corridors. Wiener, and many others, argue that this would not only ease the housing crisis by producing new units but would also encourage transit ridership, thereby reducing greenhouse gas (GHG) emissions.
SB 827 is meant to further Transit-Oriented Development (TOD), a policy that state agencies and local jurisdictions have been pushing for years. In theory, TOD seems like a great idea, and the fundamental principle is sound. If you focus residential development along transit corridors it makes access to trains and busses easier, thereby taking cars off the road and cutting GHG emissions. What's not to like?
But there's a big difference between theoretical outcomes and cold, hard reality. The Los Angeles Department of City Planning (DCP) embraced TOD long ago, and invokes it frequently when arguing for high-rise projects anywhere near a transit corridor. So how has that worked out? Not so good. In spite of the fact that thousands of new units have been built along LA's transit corridors over the past decade, transit ridership is lower than it was 30 years ago, and it has declined for the past 3 years running. This is especially disturbing when you realize that LA County (the area served by the MTA) has added over one million residents during that same period. It's not just that transit ridership hasn't increased, it hasn't even kept pace with population growth.
Don't take our word for it. Check out the recent report released by UCLA's Institute of Transportation Studies, Transit Ridership Trends in the SCAG Region. (SCAG stands for Southern California Association of Governments.) While the report covers all of Southern California, the data show that LA is leading the region in lost transit ridership. So as City Hall approves one skyscraper after another, making the claim that TOD will save us all, the number of people actually taking busses and trains has plummeted.
The report provides much valuable insight into what's actually happening on the transit landscape. While local and regional officials have enthusiastically promoted large scale development, claiming that these projects are transit friendly and will reduce traffic, in reality per capita vehicle ownership in the SCAG region has risen dramatically since 2000. During the 1990s the region added 1.8 million people and 456,000 household vehicles, or 0.25 vehicles for every new resident. But from 2000 to 2015 the region added 2.3 million people and 2.1 million household vehicles, or 0.95 vehicles per new resident.
But that's just Southern California. Maybe things are going better up north? Not really. With the fervent support of Bay Area officials, developers have been having a field day in San Francisco and beyond, building thousands of new units and claiming the increased density will boost transit ridership. But here's a quote from Vital Signs, a web site maintained by regional agencies which provides info on Bay Area transit....
"While featuring one of the nation’s most extensive public transit systems, the Bay Area has not experienced significant growth in transit ridership over the past few decades – with residents primarily shifting between bus and rail modes. This has resulted in crowded conditions on BART and Caltrain, while suburban buses have lower utilization than in years past."
The site highlights the fact that per capita transit ridership in the Bay Area has declined by 11% since 1991. And while many have touted the fact that an increasing number of San Francisco households are car free, that doesn't mean people aren't using cars. A recent report from the San Francisco County Transportation Authority showed that people are making 170,000 trips via Uber and Lyft on weekdays. This amounts to 570,000 vehicle miles driven by Uber and Lyft cars on a typical weekday. Bottom line, in spite of all the TOD boosterism by San Francisco officials, lots of people are still using cars to get around.
So while state and local officials have been telling us for years that that high-density development will get people out of cars and onto transit, that hasn't happened. But what about housing? Even if SB 827 might not deliver on transit ridership, wouldn't it still ease the housing crisis by generating lots of new units?
We do need to build housing, but creating new units isn't going to ease the crisis unless they're accessible to middle-income and low-income Californians. While SB 827 makes the inclusion of affordable units one of the criteria for removing restrictions, the percentage of affordable units isn't likely to make a significant difference. Generally speaking density bonus incentives are offered on projects that include between 10% and 20% affordable housing. This means that the rest of the units are "market rate" (i.e. really expensive) and most likely to attract the demographic that owns and drives cars.
To make things even worse, research is showing that new development along transit corridors has been causing gentrification and displacement. The Urban Displacement Project, a joint effort by UCLA and UC Berkeley, recently released a gentrification map of LA. This research shows that high-density development near transit lines has pushed housing costs up and pushed low-income residents out of Chinatown, Highland Park, East LA and Hollywood. And anyone following the LA real estate scene knows that as soon as the MTA's Crenshaw/LAX Line was approved investors started diving into communities like Leimert Park and Inglewood. The result? More gentrification and displacement.
Putting all this together, it's hard to see how SB 827 will deliver any benefits either in terms of housing or transit ridership. And it's important to be specific about the reason why. It's not that TOD is a bad idea in itself. The problem is that in spite of all the talk, state and local policy has not been geared towards producing new housing that will increase transit ridership. In reality, what local governments have been doing is using the TOD argument to promote unchecked development. In LA City Hall has been shredding local zoning and offering developers generous entitlements while arguing that this will ease the housing crisis and promote transit ridership. The DCP has been telling us that they're planning for a new TOD era where people won't need cars. But what they've actually produced is a tangle of new planning initiatives, none of which mean anything because the City Council will sweep aside any zoning regulations in place for developers that have enough clout at City Hall. And the bottom line is that housing costs continue to rise while transit ridership continues to fall.
SB 827 will only exacerbate the situation. In cities across California we're seeing high housing costs, homelessness, worsening congestion, and declining transit ridership. The only way to solve these problems is through real planning. Creating plans that will actually serve the needs of our urban communities is difficult, complex work. It means starting with hard facts rather than wishful thinking. It means doing neighborhood outreach instead of backroom deals. And it means engaging with communities in long, difficult discussions where all stakeholders have a chance to be heard.
The folks in Sacramento want us to believe we can forget about doing the hard work that planning demands and solve our problems with a quick and easy shortcut. Don't believe it. SB 827 will not solve the housing crisis or get more people on transit. It will only continue to fuel the speculative development binge that's crippling California's cities.
If you have a problem with Sacramento overriding local planning control, better contact your representatives in the State Senate and Assembly quickly. If last year's legislative session is any indication, developers and their lobbyists will be pushing hard for the passage of this bill. And it couldn't hurt to also call your local city officials to tell them you oppose SB 827. There's only one way for California to solve its problems, and that's through real planning. There are no shortcuts.
Last month on NBC’s News Conference, State Senator Kevin de León made some inaccurate and insulting remarks regarding Neighborhood Councils (NCs) and the development process in Los Angeles. He equated NCs with NIMBYism, and claimed that they have the power to shut down projects they don’t like.
United Neighborhoods for Los Angeles (UN4LA) finds it surprising that Senator de León, who represents a large portion of Los Angeles, does not seem to understand how the City’s Neighborhood Council system works. The NCs have no power to stop anything. They are purely advisory bodies, and even if an NC votes unanimously to oppose a project, that does not stop the project from moving forward.
UN4LA feels Senator de León has been grossly unjust to LA’s Neighborhood Councils, and that he owes them an apology. We have written an open letter to him, telling him he needs to apologize to the NCs. We also ask that he educate himself about NCs and how they function, since his misunderstanding of the role they play seems to have been a factor in his support for SB 35, a bill that eliminates public input on some development projects. Here is our letter….
Dear Senator de León,
We are writing to you to express our deep disappointment regarding comments you made recently on News Conference hosted by Conan Nolan. In talking about the California Legislature’s recent attempts to deal with the housing crisis, Nolan made the claim that Neighborhood Councils (NCs) are somehow obstructing the construction of affordable housing. Allow us to quote your response….
"You're making reference to NIMBYism, of course, Neighborhood Councils, whether it's in Los Angeles or elsewhere, they're gonna stop any type of project if they don't like that project.”
This statement is not only insulting, it reveals a disturbing lack of understanding of LA’s NC system and the development process in general.
For your information, the Neighborhood Council system was created by the Los Angeles City Charter. There are currently 97 NCs throughout LA, made up of elected stakeholders who give their time to work on issues affecting their communities and the City at large. They are engaged in a wide variety of activities, including disaster preparedness; public art projects; sponsoring events for youth and children; health and safety education; expanding access to parks; and a range of other endeavors. They do all this without compensation, many of them spending hundreds of hours per year, with the goal of making Los Angeles a better place to live.
Yes, Neighborhoods Councils also review and comment on projects that require some form of discretionary approval by the City. But your claim that “they're gonna stop any type of project if they don't like that project,” shows how sadly uninformed you are about the NC system. In reality, they have no power to stop anything at all. They are advisory bodies, and their input cannot make or break a project. The Department of City Planning has often voted to approve projects that were opposed by NCs. Your comment quoted above completely misrepresents the reality of the situation, and gives a wildly inaccurate picture of Neighborhood Councils and how they function.
It is also disturbing that you apparently believe NCs are synonymous with NIMBYism. The word “NIMBY” is a derogatory term thrown around frequently these days by developers and politicians to disparage anyone who objects to a project for any reason. It has become commonplace to blame so-called NIMBYs for the housing crisis, with many claiming that the housing shortage has been caused entirely by self-centered, shortsighted people whose only concern is protecting their property values.
But the members of the UN4LA board know many people who serve on NCs, and some of us have also served. Our experience is that the vast majority of NC members are dedicated, unselfish people who have volunteered to spend hundreds of hours serving their communities. Yes, they sometimes oppose projects, and you might be surprised to learn that in many cases they have legitimate concerns, including the loss of rent-stabilized housing, inadequate infrastructure, overstressed public services, safety issues, reduction of open space, and the destruction of our urban forest.
While you dismiss these people as NIMBYs, if you were to take the time look closer, instead of the stereotypical suburban homeowner looking to preserve property values, you would find people who are deeply concerned about the negative impacts that reckless development is having in terms of displacement, damage to the environment, and overburdened public services. You would also find people who actually work in the field of real estate and development. Do you include them among the ranks of obstructionist NIMBYs who are opposed to new housing? It is depressing for those of us who have served on NCs to have our efforts disparaged by someone who should know better than to make such sweeping generalizations.
We do thank you for your honest account of your interactions with hypocritical politicians who say one thing to the public and then pursue another course behind closed doors. Of course, we're well aware that some of them are dishonest, but it’s refreshing to hear someone from the State Legislature openly acknowledge that there are people on the City Council who we simply cannot trust. They tell us they want to preserve affordable housing, and then approve generous entitlements for developers who demolish RSO units. They tell us they’re planning transit-oriented development, and then approve luxury skyscrapers designed for a demographic that's more likely to drive expensive cars. They tell us they want to create healthy communities, and then dump liquor permits on neighborhoods that are already awash in alcohol, and where violent crime is rising.
In public our elected officials tell us they're working to make the City a better place. But we see the results of the policies they're actually pursuing behind closed doors: housing prices keep climbing, evictions are rampant, homelessness is skyrocketing, crime is spiking, and congestion is worse than ever. The only thing going down is transit ridership, which is lower than it was 30 years ago, in spite of the fact that the County (the area served by the MTA) has added over a million residents during that period.
We feel you owe LA's Neighborhood Councils an apology. Your inaccurate and insensitive remarks have offended many of the people who give their time and energy to make Los Angeles a better place. The citizens who serve on our NCs don't expect to be rewarded, but they deserve to be respected. By lumping them all together and dismissing them as selfish NIMBYs out to sabotage development, you have done them an injustice. You have wronged them.
And beyond an apology, we hope that before the legislature reconvenes you will think more deeply about your efforts to "reform" the development process. Many community members were angered by the passage of SB 35, which will prevent them from having a voice in the debate over some projects. The spectacle of you and Senator Scott Wiener celebrating this “accomplishment” was baffling to those of us who have seen the damage done by reckless development. But it now becomes clear that in your view we are simply selfish NIMBYs, and that you believe shutting us out of the process is a necessary part of your “reform” agenda.
Before the next legislative session begins, we hope you will take the time to educate yourself about LA’s Neighborhood Councils, the people who serve on them and the many ways they help the community. We hope that as you work to shape your legislative agenda, that instead of crafting bills that reduce public participation, you will think about the importance of maintaining and possibly encouraging greater public participation in the development process.
In your appearance on News Conference you said, "We have to work together if we're going to deal with this housing crisis." UN4LA strongly agrees with this sentiment, and we believe the vast majority of Neighborhood Council members would also agree. We would love to work together with you. If you’ll allow us to.
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.
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