LA Supervisor Barger Opines on Affordable Housing: Less Regulation, More Market Investment (Not Rent Control) to Spur Supply

Kathryn Barger: I want to start today’s discussion with some statistics that I think shed light on where we are in LA County.

Since 2010, LA County’s population has increased a little more than 3 percent, but the number of housing units in the same period rose just 2.2 percent.

The median sale price of an existing single-family home in LA County rose 9 percent in just one year, reaching more than $530,000 in November 2017.

Using the traditional industry standard of affordability, only 28 percent of LA County households can afford the median-priced home. Even starter homes are out of reach: Only 45 percent of our households can afford a commonly classed “entry-level” home in this county.

59 percent of LA county residents pay more than a third of their monthly income on rent and utilities. For a typical middle-class family of four, finding a home to suit their needs and their pocketbook can be virtually impossible without making very painful sacrifices.

In many high-growth, desirable areas, new housing is tilted toward the highest of the market. Why is this? It’s simple: because the costs of creating new housing—whether it’s an apartment building or a single-family home—are so high that builders can’t make decent middle-class workforce housing work at any price.

The regulatory permitting, growth management, and land-use restrictions on residential real estate are a very big driver of these costs. I represent one of the largest new developments that has come up as a net-zero project: Net-Zero Newhall. It took more than 10 years to get the approvals they needed to begin building. They sat on that land for 10 years, going through the entire process and getting challenged in and out of court. And in the end, people who want to purchase the homes will have to pay the costs of that delay. For a lower-priced home, this can be the biggest driver of costs—not only the regulatory, but also CEQA or even the EIRs that are required for these projects.

Academic and economic studies from across the spectrum are in wide consensus that many high-cost markets, including the LA market and many other California communities, are uniquely defined by high-cost land-use, zoning, permitting, and other restrictions. There is little question that these restrictions harm working families and are hindering our economy. They also make it more difficult for employers to attract and retain the kind of talent that they need to be competitive in the global market.

I also contend that it’s simply unfair. Liberalizing our laws to give more freedom to build the kind of homes we need, where working families need them, is an issue of economic growth and of economic fairness. How can we welcome people and families from around the world on one hand, but on the other, restrict their ability to rent or own a home? The path to prosperity must include homes they can afford and the opportunity to forge their own version of the American Dream.

While the Board of Supervisors has done an admirable job in investing millions of dollars into our Affordable Housing Trust Fund, unfortunately, it really is only a Band-Aid that fails to address the underlying disease.

At the county level, we established a Tenant Protections Working Group. The point of this body is to develop policy recommendations for the board that will address housing affordability and development in the county.

I appointed two board members to the group, including Dr. Richard Green, an economist and director of the Lusk School of Real Estate at USC. He is a leading expert in the negative impacts of rent control and comes with a wealth of knowledge on the best practices taken by other municipalities to address housing shortages.

My second appointee was Patrick Spillane, who manages many properties and developments across Los Angeles County, and is very familiar with the limitations faced by businesses in trying to provide sustainable and affordable housing opportunities.

This working group will meet every few weeks and will provide a report with recommendations to the board within six months. This will be a platform for the county to address harmful misconceptions on how to save our housing crisis and develop pragmatic and lasting solutions.

My biggest fear is that some of my colleagues believe that rent control will solve this problem. And from everything I’ve read and discussed with people, it won’t. I do not believe Section 8 is going to solve this problem. We need to spur growth.

I represent LA County’s largest district, with approximately 2900 square miles. I believe that we have, in the Fifth District, the greatest opportunity to do building—including infrastructure and transportation to get people to and from work. I hope the successes we achieve can be a blueprint for the rest of the state and the nation.