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Affordable Housing Rule Deemed Feasible for L.A.

Requiring developers to include low-income units is good policy, a report concludes.

March 29, 2003|Jocelyn Y. Stewart | Times Staff Writer

Some California communities meet their housing needs by requiring developers -- including those of upscale homes and apartments -- to offer a certain percentage of units to low- and moderate-income residents. In exchange, local government offers builders incentives to offset the cost.

Now a study says Los Angeles could employ the same strategy.

Released last week by the mayor's office, the long-awaited study concludes that such a requirement is financially feasible in much of the city when applied to the construction models seen most frequently.

Known as "inclusionary housing" or "inclusionary zoning ordinances," such laws have been touted by housing advocates as a useful tool in housing production -- and blasted by some builders and owners who say they stifle it.

The report sets "the stage on which we can have a dialogue between different interest groups that I believe have a common interest in expanding our housing stock, " said Los Angeles City Councilman Ed Reyes, who heads the Planning and Land Use Committee.

Mayor James K. Hahn said the study provides useful information, but many questions remain.

"I am concerned about crippling the only leg on which our economy is standing in Los Angeles -- housing," he said in a letter to Reyes. "Inclusionary Zoning can be a simple cost-effective means of getting affordable housing built in the city, however it is ineffective without incentives to make it work in the economic realities of the housing market."

The study, conducted by David Paul Rosen & Associates, said the city's affordable-housing shortage is at a crisis level. Inclusionary housing is "one of the most important strategies the city can pursue to meet its affordable housing needs," it concluded.

More than 110 communities in California use inclusionary housing ordinances to increase the production of housing for very low-, low- and moderate-income households.

Based on an analysis of 28 cities or counties, the study concludes that "with one potential exception, passage of an inclusionary housing ordinance is not associated with a negative effect on housing production."

In some communities -- San Diego, Carlsbad and Sacramento -- housing production increased, sometimes dramatically, after passage of inclusionary housing ordinances.

For new rental housing, the report said, it's feasible to require that 10% of the total units be set aside for households at a certain income level -- for example, a family of four making about $25,000 a year.

With housing built for purchase, the report said, it's feasible to require that 20% of the total units be set aside for another income level, such as households of four making about $50,000 a year.

Incentives offered to developers are key to making such programs work. In exchange for the low-income units, the developer might receive land use and planning concessions, fee deferments or waivers, or a speedier processing of project-related permits.

Developers also are allowed to comply with the requirements in various ways.

For example, rather than offer the lower-rate units on-site, the developer might meet the requirement by building units in areas of the city where land costs are lower.

A Los Angeles ordinance has not yet been written or proposed, but housing advocates that include Housing LA, the coalition that pushed for the creation of a $100-million housing trust fund, support the idea.

In April 2000, the mayor and City Council instructed the Housing Department to determine what was needed to enact an inclusionary housing program as part of the trust fund. A year later, the department contracted with Rosen to analyze the issue.

Officials with the Assn. of Community Organizations for Reform Now said an inclusionary ordinance is needed because residents, including many of the group's members, live in areas where rents have increased because of the development of high-end housing.

"We need policy that requires development to be beneficial to all residents, not just one sector," said Alvivon Hurd, a member of the reform group.

Such ordinances are not popular with some builders and property owners.

"In general, the building industry does not support strict inclusionary zoning policies," said Ray Pearl, executive director of the Los Angeles/Ventura Building Industry Assn. "Inclusionary zoning at its basic level is an exaction on the home-building industry and the private sector."

Pearl said the responsibility for providing affordable housing "should not be placed on the backs of the private sector alone."

But Pearl commended Reyes and other officials for taking steps to include various groups in discussions, so the city does not create "a cumbersome ordinance that makes it more difficult to build housing."

Hahn expressed concern about incentives. The city already provides some incentives to encourage the building of affordable units, but few builders utilize them, he said.

"We have to find out why," he wrote. "Some hurdles are obvious, such as the need for height variances or parking waivers, and some may be neighborhood-specific and difficult to identify."

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