My presentation at the Neighborhood Convention: In my weekly Planning Watch columns, I often debunk shady claims that housing policies have repercussions – inspired by Reaganomics – can solve LA’s housing crisis.
Nonetheless, the Department of Planning, City Council and the Los Angeles Times regularly argue that Los Angeles can remedy its myriad housing problems – sky-high rents, overcrowding, driving and homelessness. – by deregulating the city’s zoning laws and privatizing low-cost housing. These top-down giveaways to investors are meant to encourage them to build more homes in the private sector. This induced housing boom at market prices would then reduce rents through “supply and demand” and filtering. But in Los Angeles, these claims are without facts. In fact, I’ve often asked readers to identify sites where building market-priced apartments has created cheap apartments for the homeless, sky-high rents, and overcrowding. So far no one has sent me an address that has verified.
Meanwhile, back in La-La Land, the LA Times gives its opinion, “…Local zoning in too many cities severely restricts sites for denser housing, including apartments and townhouses. This is how the LA archival document recycles the ludicrous claim that homelessness is primarily the result of a housing shortage, not funding for public housing programs and a lack of money among those whose price is overpriced.
This is the same message that the LA Department of Planning presented in its interim webinars on the housing element and the community plan. While the term overzoning does not appear in these awareness materials, the concept is prevalent through the obscure term “rezoning” and its equivalents. For example, the housing element project Program 121 calls for rezoning, additional zoning capacity, and changes to the zoning code to avoid the word up-zoning.
“Program 121: The rezoning program is expected to be implemented through a number of work efforts, including updates to up to 16 community plans (four West LA plans and six SE / SW Valley plans, two Downtown plans, Boyle Heights, Hollywood, Harbor-Gateway and Wilmington), two specific plans (CASP and Slauson TNP), as well as at least one city-wide ordinance that will create additional zoning capacity through expansion of affordable housing incentive programs (see Program 48) or other zoning code changes.
Five problems: There are at least five major problems with the LA Times’ zoning (deregulation) and density bonus (privatization) solutions to the housing crisis. Together, they make the housing crisis worse, not better.
- First, single-family zoning no longer exists in Los Angeles.. Homeowners can legally build a separate lot at the market rate of 1200 square feet Accessory housing unit for the elderly (ADU) in their garden. They are self-contained second homes, and their only code constraint is the location of power lines. Homeowners can also incorporate a separate 500 square foot junior accessory housing unit into their main house and roll a small house on wheels into their backyard. Together, this means that four separate housing units are legally permitted on lots that were previously limited to one house.
- Second, Los Angeles has no shortage of zoning which automatically authorizes the apartments. In Los Angeles each commercial area and three manufacturing zones allow apartments R-3 and R-4. As a result, the construction of LA existing zoning would increase LA’s population from 3.9 to 7.2 million people. If ADUs and routine density bonus additions are then factored in, LA’s right-zoning construction population would reach 9 million people, more than double the current population. In addition, the LA Transit-oriented guidelines allow residential developers to voluntarily double the size and density of a building (FAR) and also reduce on-site parking. These density bonuses are granted through administrative (ministerial) approval by the LA Department of Planning. No owner or resident nearby ever receives a notice. As for public hearings, decision-making meetings and appeals against these projects, they no longer exist. In addition, developers can also request more height for a project, knowing that these discretionary zoning overrides will be systematically approved.
- Third, unlike homes, there is no shortage of rental housing in Los Angeles. For Rent signs are on display in apartment buildings in Los Angeles, as well as in nearby cities. Even if there is at least 25,000 vacant apartments in LA, they will never house the homeless because the homeless cannot pay their rent. Even though LA’s official minimum wage is $ 15 / hour, a tenant must earn $ 37 / hour to afford a typical two-bedroom apartment in LA. To buy a basic house, an Angelino needs a annual salary of $ 127,000 ($ 61 / hour), according to Curbed LA.
- Fourth, supply and demand do not apply to the LA housing market. Not only is the city’s housing market segmented into distinct markets for houses and apartments, but also for expensive, mid-range and low-income housing. In Los Angeles, there is no evidence that building expensive homes or apartments somehow creates cheap apartments. Indeed, “supply and demand” only works when investors realize an acceptable rate of profit. Private investors will not invest money in unprofitable businesses, such as building and operating low-cost apartments. This is why the end of HUD non-market social housing programs has worsened the housing crisis, despite a boom in market-priced and luxury housing construction in Los Angeles and other cities. In addition, in Los Angeles, developers have demolished at least 27,000 rental stabilized housing – by dislodging their residents – to create building blocks for their new apartments at market prices.
- Fifth, overzoning rarely produces affordable housing. Overzoning increases property values, a boon to developers and homeowners, which also increases the cost of infill housing. Based on current trends, market-priced homes are selling fast, while apartments have consistently high vacancy rates. While landlords often offer potential tenants such teasers as a free monthly rate, they don’t cut rents so that homeless people can afford to live in vacant homes. Consequently, the number of new homes on the market steadily increasing, just like the number of homeless people and homeless camps, reported on this card.
There is no mystery as to the gap between vacant homes and those in need of a place to live. The Explanation of the vacancy report rings totally true.
“We are not building enough affordable housing. While luxury construction is booming, affordable housing construction is not. Amid mass evictions and displacement, a persistent lack of very affordable housing construction has resulted in a shortage of more than 500,000 affordable units in Los Angeles County. The gap between homes that are most needed and homes under construction continues to widen, intensifying an unprecedented affordable housing crisis. “
Why then do developers build expensive housing when there is a massive unmet demand for low cost affordable housing in Los Angeles? The answer is that real estate investors know they are getting the highest rate of return on market-priced apartments built in neighborhoods close to places of employment, recreation and commerce.. This is why real estate investors and their lobbyists are proposing over-zoning in these privileged neighborhoods, which allows them to overthrow their most valuable properties or build luxury housing.
The culprit is their business model. Like all investors, they want to maximize their profits, which means avoiding low-cost, losing housing projects. This also explains why they lobby for superior zoning and associated zoning giveaways through discretionary approvals, housing component and community plan updates.