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Hagman Conference : State's Rental Crisis Lacks Constituency

October 13, 1985|WILLIAM FULTON | William Fulton is a Los Angeles-based free-lance writer and a contributing editor of Planning magazine. and

The crisis in California rental housing--if there is a crisis at all--probably doesn't have enough of a constituency to attract much attention in Washington or Sacramento, according to a group of experts who gathered at UCLA.

If anything, panelists at the Third Annual Donald G. Hagman Commemorative Program said, governmental actions are likely to make building and investing in rental housing less attractive in the years ahead.

For one thing, tax breaks for residential property owners could be greatly curtailed if Congress passes a tax-reform proposal. But beyond that, some of the experts said, the mechanisms that are supporting rental housing construction and rehabilitation--such as mortgage revenue bonds for moderate-income units, and grants and tax-increment financing for low-income units--are also under attack because of the money they sap from the federal treasury.

Indeed, the consensus was, the only strong political constituency for rental housing of any sort exists at the local level--where, in some locations, political leaders have rallied around the divisive and emotional issue of rent control. But the panelists, who represented a broad cross-section of views on housing issues, agreed that zeal for rent control in some localities, coupled with apathy at higher levels of government, is not enough to assure a large supply of affordable rental housing.

"There is no money (to subsidize rental housing), and there is no constituency except for the builders," said George Sternlieb, director of the Center for Urban Policy Research at Rutgers University and a frequent critic of government intervention in housing matters.

"There's no will, no political leadership on this issue," agreed Christine Minnehan, an aide to State Sen. David Roberti, (D-Los Angeles) who has supported local rent control ordinances for several years.

The program, sponsored by the UCLA Extension Public Policy Program and the Lincoln Institute on Land Policy, is held annually in the memory of Donald G. Hagman, a UCLA law professor who died in 1982. Hagman was a national recognized expert in the areas of land-use law and state and local government finance.

Ironically, the meeting took place at a time when construction is more robust than it has been in years. Ben Bartolotto, research director for the Construction Industry Research Board, reported that California's multifamily construction in August ran at a seasonally adjusted annual rate of 148,000 units--four times the figure for 1982. Bartolotto said he expects a dropoff by the end of the year to about 121,000 units, still the highest figure in years.

Such numbers persuaded some panelists to declare that there was no rental housing crisis in California after all. "I'm not sure what the rental housing problem is," said Ira S. Lowry, a longtime housing researcher for the Rand Corporation and now an independent housing and development consultant.

Lowry suggested that, on the average, California renters pay about 35% of their income for rent today, only a slight increase from about 32% in 1970. Furthermore, he said, the vast majority of renters are either young people who will go on to buy houses or older people who have sold houses they once owned.

But he got an argument from Fred Kahane, housing project manager for the Southern California Assn. of Governments, who said that 75% of all renters have only low or moderate incomes. Kahane acknowledged that a lot of new rental housing is being constructed, but he said SCAG statistics show it concentrated in resort areas, where it is used mostly for the second-home market.

"We are ignoring our greatest need in the country today," he said.

Most of the panelists were willing to admit that, despite the high construction figures, there are rental housing shortages in a number of local areas around the state. Bradley Inman, vice president of the Bay Area Council, said that advertised rents in the Bay Area have increased by 75% in four years--despite the first construction boom in rental housing in a decade.

"Certain markets within the region are being ignored, while others are tremendously overbuilt," he said. "The affordability problem is similar to the home-price glitch in the late '70s, from which we're still recovering. We're pricing a large part of our population out of the market."

And Fred Case, a professor in the real estate program at UCLA's Graduate School of Management, agreed that low- and moderate-income renters may be getting priced out of the coastal counties. He said a combination of high demand, high land prices, and strict land-use controls is making rental housing construction more expensive. "If we want families with lower incomes to live in coastal counties, we have to give them subsidies," Case said.

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