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Down-to-earth housing

City Hall has to change course or downtown will become a gilded ghetto.

July 24, 2007|Douglas Ring and Diane Donoghue | Douglas Ring, a former CRA commissioner, is a rental housing developer. Sister Diane Donoghue, founder of Esperanza Community Housing Corp., was co-chair of the Housing Crisis Task Force.

A battle is shaping up over the future of downtown Los Angeles. Developers are lining up to build new residential skyscrapers for the extremely well-heeled. These luxury apartments and condos, however, will be far out of reach for thousands of people who work downtown -- the hotel and restaurant staff, sales clerks and parking lot attendants, janitors and security guards, government employees and accountants.

About 95% of new residences built downtown since 2000 are expensive -- renting for $1,800 to $2,800 a month, selling for $450,000 to $800,000 -- and there are billions of dollars more on the drawing board. And yet Los Angeles, which still has no plan for how to build affordable housing, is preparing an enormous giveaway to developers called the Greater Downtown Housing Incentive Area. If this ordinance is approved by the City Council in the next week or so, the city will have missed its opportunity to guarantee that downtown's prosperity works for everyone.

The ordinance will alter zoning regulations to allow developers to build bigger buildings. But the rules only require making some of the units affordable if the developer requests a "bonus" -- that is to say, to build even more units than normally allowed. But even that is easily sidestepped, with the up-sizing bonus available for a fee. The result will be virtually no affordable housing in the new developments.

High housing costs are no longer a problem limited to low-wage immigrants or those with limited job skills. The problem is hitting two-income households, college graduates, those already working two jobs. The median home price in Los Angeles County is more than $500,000. A family needs an annual income of $57,000 to afford a typical two-bedroom apartment with a rent of $1,400 a month.

Last November, an important shift took place: Angelenos moved past the shock of the last decade's run-up in rents and home prices and said something needs to be done. A majority of Los Angeles voters -- 63% -- backed a $1-billion housing bond that only failed because it required 67% to pass. Across L.A., voters were saying it was time to address the housing mess -- time to help working-class families rent apartments and middle-income families buy homes.

This isn't a new problem. In 1999, the City Council convened a Housing Crisis Task Force that, the next year, made more than 100 specific recommendations. Some have been acted on in the last seven years, but its top recommendation -- that the city create a $100-million-a-year housing trust fund to finance construction of new affordable homes -- has had a mixed record. Mayor James K. Hahn created it but never fully funded it. Mayor Antonio Villaraigosa fully funded it at $100 million the first two years, but not in the third.

City Hall hasn't figured out how to get private developers to create affordable housing either. As City Controller Laura Chick pointed out in her recent audit of the Housing Department, more than 130 cities in California create "balanced development" by requiring builders to make some of the apartments or condominiums in every development affordable to working people. But not L.A.

In the meantime, Los Angeles has experienced a luxury housing building boom. According to the Downtown Business Improvement District, downtown prices have risen 168% on one-bedroom condominiums and 275% on larger condos since 2000.

On the affordable housing end, we lost almost as much as we built. According to the Southern California Assn. of Non-Profit Housing, about 12,800 new affordable apartments have been built since 2001. During the same period, more than 11,000 rent-controlled apartments in the city were demolished or converted into condominiums. So as the city added about 300,000 residents, it gained only 1,800 affordable apartments. (City Hall responded to this problem by raising relocation benefits paid to displaced tenants -- but did nothing to ensure that tenants would have someplace to move to.)

It is time for city officials -- particularly the mayor, City Council, Planning Department, Community Redevelopment Agency and the Housing Department -- to put the brakes on this development train until they've crafted rules that incorporate affordable housing into the mix.

In fact, the city has just started revising the housing section of the city's general plan. The new planning director, Gail Goldberg, has also pledged to write new community plans that would be embraced by residents and developers alike for downtown, Westlake, Boyle Heights and South Los Angeles.

But before these efforts get fully underway, the City Council may give away the store to a handful of luxury housing developers.

If the city establishes clear guidelines for density, affordability and design, developers will figure out how to make it profitable, just as they have elsewhere. Los Angeles needs smart policies that steer private investment into building more housing for all income levels rather than just aggravating our housing crisis and turning swaths of L.A. into high-rise gilded ghettos.

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