How Will The Real Estate Market, Demographics, & Affordable Housing Demands Reshape Planning?
Gail Goldberg: It won’t surprise you to learn that Los Angeles is one of the least affordable cities and counties in the country. That is based, not only on the fact that our rents are high, but also on the fact that our area median income is low.
The area median income in Los Angeles County is a little more than $62,000. In order for housing to be affordable to a low-income person, it has to be affordable to someone who makes 80 percent of that $62,000. Very-low-income people make 50 percent of that $62,000. And an extremely-low-income person earns just 30 percent of that $62,000. We have a lot of low-income folks in this city, and little opportunity for them to get into this market unless they get into subsidized housing.
We have a crisis in this city around affordability, both because of the difference between the area median income and the area median rent, and because of the supply and demand problem. The median rent in LA County increased by almost 30 percent between 2000 and 2014, while the median income declined by 8 percent. And there is currently a shortfall of more than half a million affordable homes for Los Angeles County’s very low-income and extremely-low-income households.
Our population is growing faster than our housing production. We’ve produced fewer than 200 permitted units for every thousand new people. Between 2010 and 2015, we produced about one unit for every six residents. And our average household size is about 2.8. We’re falling further and further behind.
I’m going to talk to you about the city and county are doing or not doing to help in this situation, and what we can expect from the feds.In the city of Los Angeles, the mayor is not the policymaker; that’s the job of the city council. What the mayor can do is issue directives, which are mostly followed by the people he controls—i.e., the general managers.
In his first year in office, Mayor Garcetti put out Executive Directive 13: support for affordable housing development. He put out a goal of producing 100,000 new units of housing by 2021 and preserving at least 15,000 affordable units by 2021, which was about twice the rate that we were producing.
Now, you can ask yourself: What does this mean? The mayor can tell the general managers that he has a goal, but so what?
Actually, this mayor was a little bit more strategic in this directive. (I think he was heavily influenced by Rick Cole, who was a deputy city manager, and advanced the theory that you can’t change something that you can’t measure.) This mayor said, “I’m not only going to have a goal, but I’m also going to publish the results every quarter.” And as a former general manager, believe me, you don’t want to be the general manager who causes the mayor to not meet his quarterly goals. So, the mayor has successfully used the tool of the executive directive to actually direct his general managers—mostly from Planning and Building & Safety—to prioritize the processing of affordable housing.
The mayor also delegated one of his staff people to be the housing liaison in the Mayor’s Office. That’s the person he appoints to go out and make certain the general managers are cooperating and that they are working hard to help him meet his goals.
In his first three years of keeping this scorecard, the mayor generated 41 percent of the total goal, and had slightly more than 6,200 affordable units. 1,500 of those were not new units; they were preserved from losing their affordability. (Affordable units that are subsidized have covenants, or restrictions, for a period of years. When those expire, there is an effort by the city to get new covenants, or to pay new subsidies, in order to keep those restrictions going. Despite all of our efforts to build new, if we are losing significant numbers of affordable units every year, all the building in the world is not going to help us keep up.)
The mayor also talks a lot about streamlining the process (one of my favorite things in life). And in fact, there is an effort to do that. They have placed planners and Building & Safety folks together, to try to keep folks coming in with housing from having to run all over the place.
Overall, I think the mayor has done a reasonable job of doing what he can to create an environment where housing projects are treated with some respect and there’s some attempt to get them through in a timely way.
The city’s Affordable Housing Trust Fund was established in 2000 with about $5 million; the next year it got $10 million. I can assure you that’s not enough. There was also commitment a couple of years ago to increase that fund, over a period time, to $100 million, and there is an effort to continue to put money into that fund. But at the local level, that’s still very little, and it is not a great way of creating the subsidies that we need to build housing.