Los Angeles is becoming increasingly unaffordable as rising housing costs burden hardworking families. In 2021, the California Housing Partnership determined that renters in LA County need to earn $38.23 per hour, 2.5 times the City of LA minimum wage, to afford the average rent of $1,988 per month.
- The 2020 LA Housing Report by the California Housing Partnership found those earning minimum wage were short $33,159 to cover basic needs, including food, healthcare, transportation, and childcare, after paying their high housing costs.
- 78% of Extremely Low Income households in Los Angeles County are paying more than half their income on housing costs, compared to just 2% of moderate-income households.
- An analysis by the US Government Accountability Office (US GAO) found that in the second quarter of 2022, only 16% of California households could afford to purchase the median-priced home of $883,370, requiring a minimum annual income of $199,200. This number is down from 24% one year ago, and from 56% in 2012.
The statistics clearly show that the burden of housing affordability falls more heavily on Black and Latino communities:
- Black (64%) and Latino (61%) renters are more likely to be rent burdened than all other groups compared to the Citywide average of 58%. When broken down by gender, Black (66%) and Latinx (65%) women renters are the most rent-burdened renters among all racial/ethnic groups in Los Angeles.
- When broken down by gender, Black (66%) and Latino (65%) women renters are the most rent-burdened renters among all racial/ethnic groups in Los Angeles.
- Similarly, 44% of Black and Latino homeowners are housing-burdened (compared to LA-average of 36%), with women Black (47%) and Latino owners being the most housing burdened among all racial/ethnic groups.
With housing costs outpacing wage growth, and larger percentages of our families spending more than the recommended 30% of their household income on housing, the City needs to augment housing supply and availability to alleviate the chokehold on the City’s Households.
The current planning policies and permitting mechanisms are inadequate to accelerate housing production in a manner that reflects the urgency of our housing and affordability crisis. As more is spent on housing, far less is spent on food, healthcare, and other basic needs, with a growing number of our most rent-burdened households at increased risk of homelessness.
Rick Caruso’s Emergency Declaration on Housing and Homelessness is intended to address the powers that local municipalities have to address the housing crisis: zoning and land use policies, entitlement and permitting processes, and housing access and neighborhood stabilization. By focusing on temporary and short-term policy decisions, the City can immediately provide housing accessibility in transit-rich areas and along major commercial corridors. In doing so, the City can enhance affordability across the housing spectrum.
The Plan to Advance Affordability
Supplementing Rick Caruso’s “Housing LA” plan, the Plan to Advance Affordability evolves existing programs and incorporates innovative thinking to advance housing affordability and access. More importantly, the Plan provides specific and detailed solutions to address areas under the City’s purview, resulting in cost savings to the process for which the City has full control.
ZONING AND LAND USE POLICIES
- Waive discretionary review and impact fees for adaptive reuse projects, incentivizing more efficient and affordable conversions of existing buildings.
- Imbed alternative development standards for inclusionary development in the municipal code, facilitating better design in projects aimed at supporting our low-income neighbors. This can include eliminating restrictions that inhibit the provision of open space in excess of the minimum, encouraging flexible communal areas that can support remote-schooling, childcare, and other activities.
- Eliminate discretionary review for transit-adjacent housing developments that meet underlying zoning, reducing carrying costs, planning fees, and unnecessary consulting costs.
- Develop new housing typologies. The City’s Small Lot Subdivision program has been successful in developing new homeownership opportunities in the City. The City should continue to develop alternative housing typologies designed for smaller infill lots and densities, minimizing construction and housing costs. Offering a path for housing on smaller lot sizes provides an alternative to mega-block developments that necessitate the acquisition of multiple parcels in order to meet existing building requirements.
- Waive impact fees for projects participating in housing incentive programs. An analysis by UC Berkeley’s Terner Center for Housing Innovation found housing impact fees can amount up to 18% of the median price of a home. The median listing home price in LA was nearly $1 million in August 2022 per Realtor.com. That is $180,000 in impact fees added to the cost of one unit of housing.
- i. Establish a fee calculator that can easily, and transparently, inform the cost of building housing. The calculator would reduce fees in tandem with increases in open space and other qualified amenities reducing overall costs.
- ii. Establish a fee deferral program in which developers could delay certain fees until construction completion, reducing reliance on pre-development funding, which can be difficult to secure.
- iii. Overhaul and align the City’s fee structure to support the City’s housing priorities, such as significantly reduced fees along transit and commercial corridors, or waived altogether if participating in housing incentive programs.
- Establish housing incentive programs for projects that commit a minimum percentage to Housing Choice Vouchers, ensuring that every allocated housing voucher is used.
- Establish a City-led housing subsidy to supplement Housing Choice and Emergency Housing vouchers, aimed at alleviating housing costs for our most vulnerable rent-burdened households.
- Develop new housing incentive programs for family-sized housing, augmenting the City’s supply to support working families.
- Leverage the City’s credit rating to secure low-interest loans, partner with HACLA, and establish public-private partnerships to purchase, redevelop, or rehabilitate existing multi-family properties.
- A recent acquisition of a 124-unit complex 636 N. Hill Place by the City of LA cost approximately $370k p/unit – not $837,000 per unit as we are seeing with new construction under HHH.
- Through Project Homekey, HACLA acquired 1,276 units at about $398,000 p/unit this year.
HOUSING ACCESS AND NEIGHBORHOOD STABILIZATION
- Mandate developer participation in the City’s Affordable and Accessible Housing Registry for projects participating in the City’s housing incentive programs, giving registered low-income households first right-of-refusal to the City’s growing inventory of covenanted affordable housing in their neighborhoods.
- Undertake a Citywide marketing and field campaign, partnering with community-based organizations to encourage low-income families to sign up on the Housing Registry, providing the City a better assessment of housing needs, family size, income limitations, etc.
- Provide low-interest loans, and partner with community-based programs to develop duplex, triplex, and fourplex structures on family-owned properties zoned for multi-family development. Many households are house rich, but cash poor, lacking the capital and understanding of how to leverage their properties to continue to support their families and build generational wealth.
- Establish a program similar to the City’s ADU Accelerator Program, partnering with homeowners to develop up to 4 units on their property in exchange for renting 50% of the total units to households facing housing insecurity.
1 U.S. Bureau of Labor Statistics. “Consumer Expenditures for the Los Angeles Area: 2019-2020.” https://www.bls.gov/regions/west/news-release/consumerexpenditures_losangeles.htm#:~:text=Households%20in%20the%20Los%20Angeles,households%20in%20the%20United%20States.
3 California Housing Partnership. “Los Angeles County 2021, Affordable Housing Needs Report” https://1p08d91kd0c03rlxhmhtydpr-wpengine.netdna-ssl.com/wp-content/uploads/2021/05/Los-Angeles_Housing_Report_2021-HNR-1.pdf
4 California Housing Partnership. “Los Angeles County 2020, Affordable Housing Needs Report” https://1p08d91kd0c03rlxhmhtydpr-wpengine.netdna-ssl.com/wp-content/uploads/2020/06/Los_Angeles_Housing_Needs_Report_2020-HNR.pdf
5 California Association of Realtors. “California housing affordability slides to lowest level in nearly 15 years in second-quarter 2022 as home prices set record highs and interest rates surge, C.A.R. reports.” https://www.car.org/marketdata/data/haitraditional/
6 McKinsey & Company. “In Brief: A Tool Kit to Close California’s Housing Gap.” (2018) https://www.mckinsey.com/~/media/mckinsey/industries/public%20and%20social%20sector/our%20insights/closing%20californias%20housing%20gap/closing-californias-housing-gap-in-brief.pdf