Los Angeles City Councilman Dennis Zine, who says he doesn’t support government giveaways, is a firm believer in the goodness of capitalism and thinks people should have to earn everything they get.
In a city where charismatic liberals Mayor Antonio Villaraigosa and Council President Eric Garcetti are now firmly in charge, the more conservative Zine would seem like the last person to take a leadership role in the affordable housing cause. But when his son, an LAPD cop, had trouble getting a home mortgage, Zine decided that area home prices have become so expensive that, for working families, it’s just plain unfair.
So, just before the council’s year-end recess, Zine led an unusual but unanimous decision to require builders of San Fernando Valley development hotspot Warner Center to set aside 25 percent of the new housing they build as "affordable" – in this case, affordable for families with a yearly income lower than $55,000.
"What I am doing as an elected official is helping people who obviously want to work but may not be able to make a substantial amount of money," said Zine, himself a reserve LAPD officer. "I want to provide opportunities for firefighters, police, teachers, nurses – those who work in our society."
Though not so revolutionary elsewhere, like here in Pasadena, where ordinances force all developers to abide by similar but often more complex rules, the Warner Center vote is to some a signal of new things to come, a sign that LA is setting the stage for a citywide inclusionary housing ordinance.
During last year’s mayoral campaign, Villaraigosa promised to partner with the private sector and put more city money into creating housing that would be in the reach of working- and middle-class families. But he wouldn’t say whether the cause would require a citywide ordinance, or if he even liked the idea.
Today, Villaraigosa’s people say he still isn’t exactly sure if such a law should be crafted for LA, but now it looks like he’s going to try.
"He does support the idea of inclusionary zoning, but one that benefits the city of Los Angeles," Villaraigosa spokeswoman Diana Rubio told the Weekly.
The devil, of course, is in the details: How much and what kind of a burden should developers bear?
That’s not yet clear, said Rubio.
Meanwhile, "Mayor Villaraigosa has directed his staff to study all the facets of inclusionary zoning," she said.
When it comes to housing costs, it’s fair to say times may never have been so tough.
In LA County, 89 percent of families – nearly 9 out of 10 – can’t afford to purchase the average single family home, announced the California Association of Realtors earlier this month. Finding a roof of one’s own, they noted, hasn’t been this out of reach for Angelinos since 1989.
‘A dire situation’
Along with home prices, rents are skyrocketing too, according to statistics kept by the US Department of Housing and Urban Development (HUD).
Recently, HUD found the median rent for a studio apartment in LA County is $848 per month, $1,025 for a one bedroom and $1,285 for a two bedroom. A year previous to that recent study, the median rent for a studio was $784, for a one bedroom was $945 and for a two bedroom was $1,186.
"It’s certainly a dire situation," said John Pynoos, a housing expert who is a professor of gerontology at USC and a member of the state Commission on Aging. "Prices are out of hand for low- and moderate-income people, people with fixed incomes and renters in particular. We continue to have an influx of people [in LA], putting increasing pressure on the housing stock, which doesn’t grow very fast."
Though no small achievement, the affordable housing generated by the council’s Warner Center vote and a few other decisions like it aren’t going to solve LA’s affordable housing crisis alone, and the birth of citywide affordable housing requirements is a long way off.
In many places, officials have decided that exploding housing prices are too widespread an issue to solve on a case-by-case basis and have enacted citywide inclusionary housing ordinances.
Developers in Pasadena must sell or rent 15 percent of housing units they build at below market rates, or pay heavy fees into a trust fund for the creation of affordable housing projects. Developers in Santa Monica have to set aside up to 20 percent of units for lower income tenants or pay a fee. Inclusionary housing ordinances are also in effect in West Hollywood, Berkeley, San Francisco, Oakland and other California cities.
Though way above the curve compared to Los Angeles, Pasadena’s affordable housing policies have in no way been a perfect, or simple, solution.
"We’ve attempted to do what we can. Have we succeeded? No," said Pasadena City Councilman Victor Gordo, who represents part of the city’s traditionally lower-income Northwest area, where property values have nonetheless also increased rapidly.
"Part of the problem is that the market has been out of control," said Gordo, a labor union attorney. "I don’t know how people starting out can do it; maybe they can’t. As much as we try to contend with the market, the market has gotten the better of us."
He described Pasadena’s success as "incremental" – a lot better than most places, but still not enough.
The city’s 5-year-old inclusionary housing ordinance operates on a simple premise but is enforced in some pretty complex ways, explained Pasadena Housing Administrator Greg Robinson.
Here’s how it breaks down:
A developer building 100 housing units for sale would have to hold 15 units for moderate-income buyers. If those 100 units are for rent, the developer must keep 10 of them affordable for low-income tenants and five for moderate-income renters.
Low-income families are those who make 50 to 80 percent of the county’s median income, essentially no more than 80 percent of $55,100 per year for a family of four. Moderate-income families can make up to 120 percent of that amount.
But what about very low-income housing?
If developers choose to set rent for a unit below half of the county’s median income, they get a credit for two affordable units. So, although the ordinance does not specifically address creating very low-income housing, a developer gets additional credits that include fee waivers and lessening of the city’s environmental impact fee, used mainly for parks and other improvements, which can run as high as $27,000 per unit.
Developers also get credits for building workforce housing, affordable to those who make as much as 180 percent of the median county income – still well below market rate for home ownership, said Robinson.
Then again, if a developer wants to keep all units at market rates, as is the case with billionaire Charles Munger’s downtown luxury condo project, he pays proportionate fees into the city’s Housing Opportunities Fund that go toward affordable housing construction.
When asked earlier this year about his goals for achieving greater equality in the city, Pasadena Mayor Bill Bogaard put housing at No. 1.
Next Monday, Pasadena City Council members are going to consider upping rates for fees paid in lieu of affordable housing construction in order to keep pace with rising land and building costs.
"We’ve made the policy decision, but we’re assuring that the in-lieu fee option … will be used as infrequently as possible,’ said Bogaard.
A new, old idea
In early March, Pasadena will host a housing summit to discuss which of their efforts have worked, and what can be done better.
With an attractive new idea for affordable housing creation, an idea that’s actually been working for decades on the East Coast, Gordo may steal the show.
"We can’t keep pace with the market, and we certainly can’t get ahead of it. So the answer is how we help people become participants in the market," he said.
The idea: co-op housing. In order to reduce mortgage debts associated with home ownership, the city could help groups of prospective homebuyers pool their resources to buy multi-unit property. Each stakeholder would pay a significantly lower mortgage while living in one of the units.
With a little help from the city – a lot less than subsidizing rents or building housing – mortgage payments could be lowered in exchange for agreements that the shares in the property, when sold, will always cost below market rates.
For a co-op shareholder, "They now have equity, and they can use it to move up to another property. At that point they’re into the market, the very market that shuns them today," he said.
A work in progress’
Although several Los Angeles City Council members flirted with the concept of a citywide inclusionary housing ordinance a few years ago, no proposal is currently on the table.
For now, Villaraigosa and Garcetti have thrown their support to a $1 billion bond that, in conjunction with an already solid $100 million trust fund, would fund creation of affordable housing throughout the city.
"Right now, the thing [Garcetti] is focused on most is the housing bond," said spokesman Josh Kamensky, who said the bill could end up on the ballot as early as this fall.
Other council members aren’t sure whether they’ll support the bond, as details have yet to be released.
"The bill is in an infantile stage, and there’s still a lot of work to be done," said Rubio. "Details are being sorted out. It’s still a work in progress."
Ordinance, bond or both, "There’s really no easy answer," said Cal State Northridge economics Professor William Jennings, who explained that many fear inclusionary zoning laws and other forms of rent control that eat into developer profits will actually slow production of housing.
In the meantime, Villaraigosa can take credit for funding the city’s affordable-housing-construction trust fund all the way to $100 million, making it the largest per capita fund of its kind in any American city.
Since 2003, the trust fund has contributed $112 million to finance the construction of some 3,500 affordable housing units, said Yolanda Chavez, the LA Housing Department’s director of policy and planning. For each dollar the city’s housing trust fund dedicates to a project, state and federal grants match five, she said.
Housing created by the fund typically goes to families with incomes lower than $39,000, children leaving the foster care system and people with special needs, and will remain "affordable" for 55 years. And thanks to funds added by Villaraigosa, a lot more help for families at risk of becoming homeless is on the way, said Chavez.
Like LA’s trust fund, Pasadena’s affordable housing money goes toward both housing construction and the purchase of rent-setting rights to existing properties.
It will work
With information about a bond scarce and the fate of inclusionary zoning a mystery, putting market restrictions on individual projects, as with Warner Center, "is the wave of the future," said LA City Councilman Alex Padilla.
Padilla is celebrating a Warner Center-style victory of his own, having recently negotiated a 10 percent set aside of new affordable housing units developed near Sylmar’s Cascades Golf Club.
"The city has kicked around the idea of a housing policy. I have said so publicly that I would support one. I point to the Cascades as an example. It will work," said Padilla.
The Sylmar Cascades project, which will create 70 affordable units, will serve families with incomes much lower than the ones served by Warner Center, which is said to create "workforce" housing.
"Some say you can’t make [developers] do that, but there’s no requirement on the city to approve the development either," said Padilla.
It’s that kind of sentiment Gordo would like to hear from other cities.
"If we do it as a region, we stand a much better chance of succeeding than if we try to do it on our own. Mayor Villaraigosa is in a terrific position to provide leadership not just for LA, but certainly to help convene other municipal leaders … to look at this for what it is: a regional issue," he said.
The effort for a regional housing policy might find support as close as Eagle Rock, with newly elected LA Councilman Jose Huizar.
"The mayor’s housing bond, I generally support it at this time. It’s one way of fully funding the housing trust fund," he said.
When it comes to choosing between a bond and an ordinance, "they’re not mutually exclusive. We could do both. What I like about [an ordinance] is it guarantees a supply of affordable housing and does not concentrate it in one particular area of the city."
Like Padilla, Zine is unsympathetic to developers crying poor.
"I don’t know of any developer that’s not a multimillionaire. They make more money in their sleep than the average person working for a living," he said.
But very unlike Padilla, Zine said he doesn’t support an inclusionary zoning ordinance, arguing instead that "government doesn’t need to provide everybody a house, but we need to provide an opportunity."
Though generally supportive of the idea of an ordinance, Huizar is also focusing on workforce housing.
"We have to redefine what ‘affordable’ means, as we have public employees who can no longer afford housing: police, firefighters, teachers," he said.
Even for those who want it, drafting an inclusionary housing ordinance that fits would be no easy task, said Padilla.
"We’re not a one-size-fits-all city. If there’s ever going to be a permanent policy in LA, it’s going to have to allow for some flex or it will only work in some areas," he said. "As much as we tinker with inclusionary zoning and other Band-Aids, the biggest factor in price is law of supply and demand."
The bigger picture
As area powerbrokers gnash their teeth over new policy decisions, perhaps the biggest hurdle to a more affordable Greater Los Angeles is coaxing enough state and federal dollars to make a difference.
"We’re in a state of crisis right now," said Marvin Schachter, an affordable housing advocate in both Pasadena and Los Angeles who serves on the board of the nonprofit Menorah Housing Foundation, part of the Jewish Federation of Greater Los Angeles.
"At a time when prices have exploded, the federal government has retreated totally from the field," said Schachter, who estimated the federal funds will create only 5,000 units of affordable housing nationwide as opposed to six times as many under President Clinton.
"We could use 5,000 units in the city of Los Angeles. There are 30,000 on the waiting list for Section 8 [government-subsidized] housing alone.
"As far as federal programs go, there is clearly less money," agreed Robinson, with Pasadena suffering reductions in grant money and Section 8 funding under President Bush.
"In the aftermath of 9/11, funds from government sources were siphoned off, whereas private funds put into the real estate market caused prices to soar," he said.
Meanwhile, affordable housing funds set aside in the days of former Gov. Gray Davis under provisions of voter-approved Proposition 46 have almost all been spent.
And Gov. Arnold Schwarzenegger, at least according to his State of the State Address, doesn’t plan to refill affordable housing coffers while attempting to beef up California infrastructure.
"It’s very short-sighted," said Pynoos, who believes solving LA’s affordable housing crisis is really the only way to improve mass transit, freeway congestion and other problems now targeted by the governor.
"Residential housing is part of the infrastructure. [Schwarzenegger] can try to improve all the mass transit he wants, but if you don’t have housing, the roads are still going to be clogged. The best thing to do is to have more affordable housing near where people work. If year want livable communities, you have to have housing," he said.