Los Angeles City Council's Affordable Housing Crisis Task Force Offers Bold Recommendations

In November 1999, a Housing Crisis Task Force was convened by the Los Angeles City Council . The City's housing prices have risen so high that they not only devour the wages of working families, but threaten the City's continued economic growth. Los Angeles is a city of renters, yet renters pay a higher proportion of their incomes for rent [here] than anywhere else in the state.

Task Force Recommendations

1. Establish a housing trust fund with dedicated sources of local revenue.

2. Develop a comprehensive strategy to preserve existing affordable housing.

3. Create more affordable home-ownership opportunities through innovative land use.

4. Make the City user-friendly with phone and Internet information services for housing, building, zoning and planning.

Four Main Findings

• The City's economic recovery has been fueled by businesses dependent upon low wage service workers, yet many of these workers must pay over half their income for rent. To afford a two-bedroom apartment renting at $766 per month, a worker would have to earn $14.90 per hour. A worker earning the minimum wage would have to work more than 100 hours a week to pay the rent.

• Over the next few years, thousands of units in the City's older housing stock will be demolished to make way for new residential, commercial and school construction and as many as 10,000 [subsidized] units could convert to market rate rents. The City must act now to preserve existing affordable housing.

• [S]uitable parcels of land for new housing are so scarce that construction has nearly ceased. Between July 1998 and June 1999, only 1,940 net new housing units were built in the City while population increased by 65,000 people. Only 39 percent of the City's households own their own home compared to 66 percent nationwide, and many middle-income workers must commute long distances to afford single family homes. The City must ease land use restrictions to provide more opportunities for affordable home ownership.

• L.A. is a major center for the new information economy, yet City government is unable to efficiently provide critical information needed by residents and businesses. From the Rent Stabilization Division to the City Planning Department, accurate information should be easily available by phone and Internet to tenants seeking information on rent control, developers seeking zoning information and homeowners.

Funding Recommedations

In L.A., banks are competing to finance affordable housing projects and there are a number of developers capable of developing more projects. The bottleneck is the shortage of government subsidy.

The City is the principal source of housing subsidy. [A]ccording to [SCAG's] Regional Housing Needs Assessment, L.A. needs to produce about 8,000 new housing units each year to keep up with population growth. Nearly half of these should be affordable to low-income households.

Estimating $35,000 of City subsidy to make one unit permanently affordable to low-income families, L.A. needs to invest $132 million per year . Even with such an increased level of investment, the City would only maintain, not reduce, current high levels of overcrowding, substandard housing and high rents relative to incomes. The City [currently spends] $23 million per year on housing subsidy, [much less than most major cities] .

Create A Housing Trust Fund L.A. spends about $23 per person on affordable housing, none of it from the General Fund. In contrast, New York spends $89 per person, Chicago $76 , San Jose $71 and Seattle $66.

Adopt an inclusionary program for residential development. Inclusion-ary zoning ordinances have been successfully used by more than 75 California cities

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Adopt an inclusionary zoning ordinance. Develop an ordinance to require the provision of [affordable] units in certain new housing developments. Conduct a study to determine the minimum project size for application of the inclusionary requirement, the mix of affordability levels, and the percentage of units required in each project. Identify a package of incentives for developers (in addition to the current Affordable Housing Incentives Program) that includes full or partial fee waivers and create a menu of options for fulfilling the inclusionary requirement, such as off-site units, in-lieu fees, and land donations.

Adopt an in-lieu fee as part of the inclusionary zoning ordinance. An in-lieu fee would be an alternative to including affordable units in new residential construction.

Adopt a linkage fee for commercial development. The City's economy is booming and new businesses are creating new jobs, but [those new jobs] create more demand for affordable housing .

[T]en cities around the country have imposed [impact or mitigation fees] on commercial development to help subsidize affordable housing units, including San Francisco, Sacramento, San Diego, Palo Alto, Menlo Park and Cupertino. Adoption of impact fees did not stymie commercial development in these cities and had only a negligible impact on commercial rents.

Courts have found these "linkage" fees legal . Before adopting an impact fee, the local government must demonstrate the link between the commercial development and the need for affordable housing.

In 1990 the Los Angeles City Council completed a nexus study for a [commercial] linkage fee In 1991, the City [notified] developers that they might be subject to a fee. This ordinance remains on the books but the fee itself was never adopted .

Citywide property tax growth [T]he City should dedicate at least 20 percent of the growth in property tax revenues to affordable housing.

Dedicate a portion of the transient occupancy tax. [This] would not require a vote of the electorate because it would not be a tax increase. San Francisco uses part of its hotel room tax to fund affordable housing.

Increase the transient occupancy tax.

Improve the Condominium Conversion Fees Program

Revise the condominium conversion ordinance to allow funds to be spent citywide if no local project surfaces within one year The City requires developers of new condominiums to replace one-for-one any housing demolished . One of the replacement options allows developers to pay an "in-lieu fee" which [is] reserved for subsidizing rental housing within 1.5 miles of the demolished units. Currently, the City has about $1.3 million in in-lieu fees , which hasn't been spent because of narrow geographic restrictions. The City Council should revise [this ordinance] to allow such funds to be used to develop housing citywide if they cannot be used in the immediate area within a year.

Establish a formula for in-lieu fees that is directly tied to the actual cost of developing the replacement housing. The money collected for the in-lieu fees is woefully inadequate It appears that the in-lieu fees generated are between five and ten percent of the actual costs of replacement housing.

Revise the State Statute of Limitations for condominium construction defect litigation. Currently, condominium owners have up to ten years to file a lawsuit (other states typically have a one-year limitation) . The result is a growing unwillingness to build condominiums and other attached housing. The statute of limitations governing construction defect litigation should be [shortened]

Consolidate the Housing functions of the CRA [into] the L.A. Housing Department . The CRA no longer has tax increment money to spend on housing. In fact, much of its housing funds now come from the Community Development Block Grant. [Therefore,] the housing functions and staff of the CRA should be incorporated into the L.A. Housing Department.

Land Use & Planning Recommendations

Modify the City's zoning code to promote affordable housing [I]ncreased density should be encouraged in areas that are adequately served by public transportation.

Allow a 50 percent density bonus for 100 percent affordable housing developments [as opposed to the current 25 percent]

Decrease minimum lot size in selected areas Reducing the minimum lot size would make it economically feasible to develop properties that have irregular shapes or that would not generate sufficient revenues.

Create intermediate residential zoning designations (R1.5, R2.5, R3.5, etc.).

[I]ntroduce revised intermediate zones, with lower per lot and per dwelling unit minimum areas.

Reduce parking requirements near public transportation. [R]educe parking requirements to one space per unit if the property is within 1,500 feet of a public transportation stop, pedestrian-oriented public facility or supermarket retail project. Existing parking requirements can add as much as $25,000 to the cost of developing a single housing unit and can rais[e] a unit's monthly rent by $100 to $150.

Allow housing development on obsolete industrial land. Identify a set of conditions for safe residential development and then rezone areas that meet these conditions.

"Grandfather in" existing land use entitlements for affordable housing reconstruction. In some cases, rehabilitating an old building is more expensive than rebuilding it . But if the building is demolished, any new construction will be limited by current parking, lot coverage and other regulations . Developers of affordable housing should be allowed to use the old parking and other requirements .

Expedite processing for Housing Development Despite vigorous City efforts to streamline and coordinate procedures , accurate information on zoning, planning, and building requirements is still difficult to obtain, and the process of approval is still slow. Further reforms are necessary to reduce delays by the Planning and Building and Safety Departments.

Create a Building and Safety check list [and likely timeline] for all approvals needed for new housing development.

Guarantee completion of a plan check review within two weeks for affordable housing applicants.

Create a case manager program for affordable housing developments in both the [Planning and Building & Safety Departments].

Improve public access to planning, zoning, and building and safety information Crucial information needed by consumers and the housing and real estate industry is simply unavailable. Developers need an inventory of vacant land and of parcels suitably zoned for various levels of multifamily housing. And communities need to understand current land use and zoning to effectively participate in neighborhood planning.

When the code revision is complete, develop a simple print booklet and on-line guide to the zoning code .

Allow payments of approval and other fees over the phone or Internet. Modernize procedures in the Departments of Planning and Building and Safety to include paying fees by credit card over the phone or the Internet, email responses to [public] inquiries and so on.

Digitize existing and approved land use information and make it available on the City's website. There are approximately 800,000 parcels in the City of L.A. Satellite technology can be used as the baseline parcel information.

Put the City's inventory of 9,200 City-owned sites on line as soon as the Chief Administrative Officer's staff has completed its survey of current land uses on City-owned sites.

Create greater affordable housing incentives Only a few affordable units have been built in response to [the City's 1995 Affordable Housing Incentives Ordinance] and additional incentives are necessary to make incorporation of affordable housing into new development financially attractive to developers.

Include additional incentives in the City's Affordable Housing Incentives Ordinance. Broaden the existing Affordable Housing Incentives Ordinance to allow the waiver of all fees and density bonuses up to 50 percent for projects that provide units affordable to households earning 30 percent or less of median income, and other related incentives.

Increase home ownership opportunities by permitting the development of accessory units L.A. [has] an accessory unit ordinance, but [it] is so restrictive that few legal accessory units have been built. Only attached accessory units may be built and approval is only by conditional use permit.

The proliferation of illegally constructed garage units in most City neighborhoods, including affluent areas, is clear evidence that there is a need for accessory units.

Facilitate the production of accessory units in selected areas. [M]odify lot size requirements and create a permitting process that allows these units to be developed "by right" if they are at or below a maximum size.

Establish a new entity to provide ongoing external leadership to address the City's housing crisis The City's best intentions will be doomed unless key structural leadership vacuums are addressed: leadership on housing issues both inside and outside City Hall.

Create a leadership council on affordable housing and economic vitality.

To build public support for the production of more affordable housing-and to hold City government accountable for its efforts-a new advocacy group outside City government is needed. The Mayor and the City Council should call upon community and business leaders to create a leadership council on affordable housing and economic vitality.

The council would also evaluate the City's response to the crisis and set forth recommendations for improved internal coordination of the City response. The Leadership Council would issue an annual ‘report card' evaluating the City's annual accomplishments in reducing the gap between the number of new housing units produced and the number needed to keep pace with population growth, and in achieving a balance between jobs and housing.

Educate the public about the need to increase the supply of affordable housing [I]t is important to provide models of well designed multifamily housing

Design competition for alternative models of multifamily housing. These projects would be compatible with surrounding structures and would promote higher property values in the neighborhood. Use this competition as the basis for a technical assistance program that includes off-the-shelf designs. Tie competition to city-owned lots. Ask the Leadership Council to sponsor the competition and empanel the judges.

Design studies for new forms of affordable housing. Fund design studies to assist in the visualization of smaller versions of single family living style. Include designs for accessory units. Create a special unit in the City Planning Department to facilitate the applications of individual homeowners.

Integrate affordable housing in major projects such as new schools and transit development

The City should pursue opportunities to add affordable housing as a key component of anticipated new buildings and projects such as schools, transit facilities and commercial and industrial projects, where compatible.