One of the greatest problems facing the biggest urban areas is the lack of affordable housing, which is defined by the government as 30% of a persons income, available low income residents. Los Angeles County is perhaps the most apt microcosm for the affordable housing problem which plagues the state of California. A study by the Department of Housing an Urban Development found that a quarter of a million of the household units in Los Angeles are overcrowded, having at least two person for each bed room (Hutchinson, Earl). Earl Hutchinson sees the affordable housing crisis as part of a two-fold problem; Los Angeles builds the fewest new housing units of any major city, which coupled with a large influx of new residents puts a severe strain on lower income person looking for housing.
The California Budget Project found that two-thirds of low income residents spent half of their paycheck on housing and eighty-six percent over the recommended thirty percent. The natural assumption to a problem with a lack of housing seems common to the layman, simply build more housing. Though one would suspect that with Los Angeles’s booming economy that many would be able to afford the costs of housing, housing prices have increased twice as fast as real wages for earners between 1989 and 1999. A simple economics class will you that there is a disequilibrium between supply and demand in Los Angeles’s housing market and theoretically the potential profits should give someone the motivation to building more housing, or housing is too expensive and prices should fall. Like all affordable housing plans Los Angeles faces the NIMBY problem, not in my back yard. The last thing any middle to upper class resident in Los Angeles wants is affordable housing in their neighborhood which could drive down housing prices, and few politicians are willing to put their necks on the line to demand new affordable housing units in any community. Thus, the city of angels faces a problem that will only worsen in the coming years, but the city does have options find places for all of it’s new faces. From a policy perspective there are few choices which Los Angeles may implement, such as inclusionary zoning, a community land trust and of course, nothing.
Certainly taking no action and hoping the problem solves itself, also known as the Congressional method, is something to consider for policy makers. As stated before the political hit a politician will take by supporting affordable housing, especially in middle and upper class neighborhoods, will likely be outweighed by outrage from the communities where new housing might be located. Taking no action and letting the market correct itself could become a plausible solution if the current housing market crisis continues. DataQuick found that housing prices in Southern California fell seventeen percent in March 2008 compared to the previous year. As credit problems and foreclosures reach their highest peaks in years now might be an ample time for home buyers to finally achieve ownership. If the housing market does take a course correction that brings down prices significantly then both sides of the affordable housing win, politicians do not take a political hit, the city does not have to invest hundreds of millions of dollars in affordable housing and low wage earners might be able to live in uncrowded rooms.
The potential benefit of doing nothing is clearly outweighed by the very possibly danger of making the problem much, much worse. The Los Angeles Housing Crisis Task Force found that a major part of Los Angeles’ economic recovery is due in large part to low wage service industry workers. A worker earning California minimum wage of $5.75 would need to work over one hundred hours per week to afford an average apartment at $766 per month. By doing nothing the situation will become more bleak as more and more people move to Los Angeles, a major hub for the new information economy. The Los Angeles Housing Crisis Task Force also found that the city of Los Angeles has basically been build out; a little less than a net gain of 2,000 new housing units are built in Los Angeles per year. A prescription of inaction would be more of a poison than a cure for Los Angeles. Housing prices will most certainly rise again and even middle income resident will be unable to afford a home soon. Lower income earner will be forced to live elsewhere and the low wage labor that Los Angeles depends on will dry up and could hurt the economy far worse than if the city takes action on the housing crisis.
One alternative to taking no action would be enact an inclusionary zoning ordinance, which requires the development of a certain percentage of housing units to be affordable to low and middle income residents. Such a proposal has already been proposed by several city council members and similar to ordinances already exist in over one hundred California communities with great success (Kamenskey and Perez). An inclusionary zoning ordinance seems like a good option for Los Angeles, a 2008 study by the California Coalition for Rural Housing and the Nonprofit Housing Association of Northern California found that the most productive and effective inclusionary housing programs across the state were required by an ordinance, not a voluntary decision on the part of the communities (Nicholas, Brunick p. 2).
The benefits of an inclusionary zoning ordinance goes beyond simply creating affordable housing for low income residents. Any inclusionary zoning must require that affordable housing be built within the larger development and not off-site “ghettos” away from the community center in order to be effective. A proper inclusionary zoning ordinance would integrate communities both economically and racially, giving people in poor neighborhoods access to job with livable wages, better schools, protection from crime and decent health care (PolicyLink). Studies show that low income residents benefit from living next to middle and upper class residents, which give role models to look up to. Thus, a mandatory inclusionary policy would guarantee new affordable housing units while giving new opportunities to Los Angeles’ poor.
Some people argue for voluntary inclusionary zoning that some part of Los Angeles have already enacted. It is reasonable to assume that if one throws even money into subsidies that a voluntary program could work, but housing subsidies are becoming more and more scarcer as community needs grow. However, Brunick found that even successful voluntary programs, such Irvine’s housing program, act more like a mandatory program (p.3). It is quite obvious that voluntary inclusionary zoning is no solution for Los Angeles nor California as a whole.
While inclusionary zoning sounds like a probable and easily implemented solution it too might increase housing prices. Los Angeles already builds fewer new housing units than any major city and requiring a portion of new units become “affordable housing” could have the double negate impact of making it tougher for developers to get permits in communities, causing developers to raise the price on rentals and thereby increasing the housing costs in the city. In addition, someone will have to take the political hit from middle and upper class citizens who are angered by such proposals that would have lower income housing in their neighborhoods. What lawmakers could be left with is a “solution” that no side of the debate is happy with. Inclusionary zoning might not produce as many affordable units as originally hoped and developers would raise the price of their market rate units, making homes and rentals unaffordable to more moderate income families.
Los Angeles might also consider a city sponsored community land trust. In one version of a community land trust a small start-up fund is to purchase distressed or vacant land. The trust sells land to developers who build affordable housing on the land and then the trust uses the profits to buy more land and resell. There are many versions for how a community land trust can work, the Northern California Community Land Trust allows itself to own the land, but rent or preferably sell the actual house (Northern California Land Trust).
The potential benefits of a city owned and operated land trust would be immense and a significant upgrade over an inclusionary zoning ordinance. Instead of continually pumping hundreds of millions of dollars into a trust fund using tax payer money, a community land trust would be fiscally nuetral part of the budget. The current housing downturn also provides an ample opportunity to take advantage of the record number of foreclosures and people become desperate to sell. Thus, Los Angeles has a rare opportunity to solve the housing dilemma in addition to many social ills while those in power do not have to make a “damned if you do, damned if don’t” choice of mandating affordable housing in communities.
A community land trust appears an easy solution but lends itself to several problems that prevent it’s implementation. A land trust could be used to buy all types of property; industrial, affordable and market rate housing, commercial real estate, ect. To many it would seem an improper use of funds from a government agency to build both affordable and market rate housing. A second question on the minds of many is who would run this type of agency. Ideally, a group of professionals would bargain for the best deals instead of politicians. However, it will probably be the professionals who have the closest contacts to real estate in the city and undoubtedly some questionable deals might arise. A third reason a land trust might not work in Los Angeles is the unwillingness of banks to lend to a mixed income housing project. Developers also might feel it hard to attract middle and upper class tenants into a building with low income earners. With the current credit crunch lenders will likely use what little liquidity they have to give mortgages to more safer investments. The city would need to move against this by possibly guaranteeing a portion of the mortgages, or maybe issue bonds for non-profit developers.
The question to policymakers is which of these solutions will solve or at least alleviate the housing crisis in the most efficient, effective and equitable way. Taking no action is a reckless and dangerous “solution” to the problem, but such critical decisions in a city as large as Los Angeles do not happen overnight. The affordable housing crisis has festered because of a lack of effort on the city to take action sooner, inaction in this case is tantamount to ignoring the situation. The choice for a solution is narrowed down to inclusionary zoning or a community land trust. Both present a very valid vase that will not break the city’s wallet by using funds directly to pay developers. If forced to choose though, a community land trust between the public and private sector would accomplish more for affordable housing than just inclusionary zoning. Los Angeles needs to immediately start buying distressed and vacant properties and land that people need to sell quickly. The city needs present a plan to the voters that will generate affordable as quickly as possible and one that will require a minimum amount of tax payers to create. The faster a group of affordable housing developers can gain experience working with a community land trust the faster the system can work. A community land trust will also encourage development, instead of instating yet another barrier to housing construction. In the end, a community land trust is a politically feasible, equitable process to guarantee that some action is taken against housing prices in Los Angeles. With an influx of new waves of immigrants and people looking for work Los Angeles needs a solution that will sustain itself and a community land trust is simply the best option.
Hutchinson, Earl. http://findarticles.com/p/articles/mi_m5072/is_19_23/ai_74654031