Tag Archives: Affordable housing

S is for Snake

Long-time riders will not be surprised that this blog has a dim view of Measure S, the NIMBY land use initiative on the March 7th ballot. Measure S would put a minimum two-year moratorium on any new housing that requires a zone change or general plan amendment – in the case of the latter, even for projects that are 100% affordable. The reasons Measure S is bad have been well explained, so I won’t revisit them here.

However, the level of deception being used by the Yes On S campaign is atrocious. That mendacity deserves to be remembered on its own. And anybody who still finds themselves unsure how to vote on S should ask: why do the proponents of S feel the need to lie so profusely?

Set aside the fact that the vast majority of funding for Measure S – well over $4 million – comes from an AIDS non-profit organization. There is a clear pattern in the Yes on S campaign of lying about the intent of the initiative and lying about support for it.

It started innocuously enough, with the Yes on S campaign crowing about an endorsement from Leonardo DiCaprio. Eventually it was revealed that DiCaprio never endorsed S and the campaign walked back its claim, blaming it on a communications snafu.

However, about a week ago, many residents of Los Angeles found this flyer in their mail. It doesn’t come right out and say the mayor endorses S, but it sure implies that. Garcetti is strongly opposed to S. Oh, and the quote was not actually something Garcetti said. It was something they wrote, in a letter to him. NBD though, right?

sgarcetti

Apparently uncertain of their ability to pass Measure S on NIMBY power alone, the backers have also stooped to trying to capitalize on well-placed concerns about housing in low-income neighborhoods, where many people are rightfully worried about eviction and displacement.

saffordable

This is, to put it mildly, not true. Measure S will not encourage new construction of affordable housing, because Measure S does not contain any mechanism to do so. Measure S will not protect rent-stabilized housing, because Measure S says literally nothing about rent-stabilized housing. In fact, Measure S will probably destroy rent-stabilized housing, because Measure S is perfectly happy to allow rent-stabilized housing to be destroyed by projects that comply with the zoning.

sevictionnotice

Now we are entering rarefied space. Measure S does nothing at all about evictions. You know how many times eviction is mentioned in the text of Measure S? Zero.

shomelessvets

Hard to top the chutzpah of the eviction flyer, but they managed to do it. Measure S doesn’t do anything for rent-stabilized housing or affordable housing, let alone housing the homeless. The sheer audacity of claiming that a moratorium on zoning changes and general plan amendments would somehow lead to helping get 1,200 veterans off the streets… I think I’m gonna be sick.

The campaign materials produced by Measure S do not present the true intent of the initiative at all and in many cases are outright lies… or, dare we say it, alternative facts? If someone is going to such lengths to hide their true intentions, you can be sure they don’t have your best interests at heart. If you truly care about affordable housing, rent-stabilized housing, or helping the homeless, you should be very wary of alliances with self-funding egomaniacs. They’ll betray your trust as soon as they don’t need you anymore.

Parcel Taxes are Better Than Impact Fees

A short note on housing development impact fees. These fees are popular with California cities for a variety of civic improvements, like parks and affordable housing. They owe their popularity to two facts: one, thanks to Prop 13, cities have the ability to levy them more easily than property or sales taxes, and two, the public sees the tax as falling on Big Bad Developers™ and on people who don’t even live in the city yet.

Unfortunately, because they fall on such a small portion of the city’s land and on such a small number of housing units, impact fees are a poor way to fund civic improvements, and have undesirable externalities. On the first count, the fees will never generate very much money relative to the city’s budget and needs. On the second count, because the fees will be set relatively high compared to the value of the housing in an attempt to at least get some improvements out of them, they will drive up the cost of housing. In the case of affordable housing impact fees, the resulting increase in rents makes impact fees somewhat self-defeating as method of achieving the goal.
The unavoidable problem of impact fees is that unless we are developing a large greenfield master plan housing subdivision in a new suburb, they inevitably place a heavy burden on a small portion of the housing and land.

Consider trying to build 10,000 affordable housing units in LA County – a small number relative to the total number of housing units in the county, which is over 3.5 million. Even when development in the county was occurring at a relatively quick pace in the 1980s, at 75,000 new units per year, the cost per unit would be huge. At an affordable unit cost of $300,000, each of the 75,000 new units would be saddled an impact fee of $40,000; at 4% for 30 years, this is higher mortgage costs of about $200/month. There’s simply no way this fee can be assessed without depressing new housing construction.

On the other hand, if the fee is assessed on all 3.5 million housing units in LA County, the assessment will be about $850 per unit, or about $4/month for 30 years. This will have practically no impact on the cost of housing. Thus, it may even be possible to increase the affordable goal.

Lastly, consider a tax on assessed value, also known as a property tax. The current assessed value of LA County is roughly $1.264 trillion dollars. The tax to fund the affordable units would be about $1 per $100,000 of assessed value, reducing the burden on each unit even further.

Simply put, if we have worthwhile community goals, we should fund them in a way that’s fair and that works. Parcel and property taxes are not as popular, but they are much better, and we should fight to do things that way when we can.

Zoning Constraints & Housing Types

We all know zoning restricts housing supply in cities. However, the type of housing produced will be different for different kinds of zoning regulations. In this post, we’ll explore the impact of three common kinds of zoning regulations: density controls (number of units), height and setback requirements, and floor area ratio (FAR maximums). As we’ll see, while variety of housing is often a stated goal of planning, zoning regulations and market conditions often work to the contrary. Height and setbacks work in the same way as FAR, with one always being more constraining than the other for a given lot.

Method of Analysis

To simplify things, we’ll look at the impact of these three types of regulations on a 50’x150’ (7,500 square foot) lot, which can be found all over LA and Glendale. For LA, we’ll consider the R1, RD3, RD2, RD1.5, R3, R4, and R5 zones as defined by the city of LA. For Glendale, we’ll consider the R1, R3050, R2250, R1650, R1250, and SFMU zones (which roughly correspond to R1, RD3, RD2, RD1.5, RD1.5, and R4). We will look at the number of units and size of building possible on a 50’x150’ lot in each zone, and see the impact on the type of housing produced.

In general, we will see that the lower density zones are constrained by permitted density, which tends to result in the production of only large, expensive housing units. High density zones are constrained by height & setbacks or FAR, which tends to result in the production of only one bedroom (1BR) and two bedroom (2BR) units, leading to the charge that apartment developers don’t build for families.

Los Angeles

The table below summarizes the maximum permitted density, setbacks, and FAR in common residential zones in LA, assuming height district 1L, except for R5 where we assume height district 2, for reasons explained below.

zoning-la

Again, assuming a 50’x150’ lot, the maximum number of units, maximum floor area, and average floor area per unit are as follows. Assumed efficiency means the percentage of building floor area that’s actually usable for apartments. For single-family structures, it can be assumed to be 1.00. For apartments we assume 0.80 for a low-rise apartment in the R3 zone, and 0.70 for mid-rise apartments in the R4 and R5 zones. Efficiency for apartments is less than 1.00 because of space lost to hallways, elevators, common areas, trash rooms, and so on.

units-la

LA’s FAR is very generous for low density zones, so height & setbacks rather than FAR end up constraining maximum floor area for all zones except R4. If we had used height district 1L for R5, it would also be constrained by FAR instead of height & setbacks, and would only have an average unit size of 425 SF.

As a practical matter, in the R1, RD3, and RD2 zones, actual building size will be constrained by market conditions. There just isn’t that much demand for houses over about 3,500-4,000 SF. These zones are purely constrained by density, meaning that developers will max out the number of units possible and build the largest units they think the market will accept. Purple City once ran the numbers to show you why developers won’t put small houses on big lots.

The RD1.5 and R3 zones are more or less equally constrained by density and building height & setbacks. For R3, density has increased to the point that average unit sizes have been driven down to about 2,000 SF for a small lot subdivision of free-standing houses and about 1,600 SF for apartments, housing unit sizes that are in high demand. This is probably one reason the R3 zone is popular with small lot developers; the combination of permitted density and floor area doesn’t force the units to be smaller than people want, nor does it force much of the lot to remain as open space.

The R4 and R5 zones are constrained by floor area, whether in the form of maximum FAR or height & setback requirements. If the developer maxes out the number of units, they will only be able to get about 800-900 SF average unit size. This is why large apartment buildings in LA are almost all studios, 1BRs, and 2BRs. If you tried to make a decently-sized 3BR unit, say 1,400 SF, it would have to offset by two units of only 500 SF, or a reduction in total units.

Note that if a development is FAR constrained, parcel assembly doesn’t help with unit size at all, only with making it easier to configure parking ramps, elevators, and other common spaces. If a development is height & setback constrained, parcel assembly will help with unit size by eliminating setbacks between lots, until the point FAR constraints take over.

Glendale

The analysis is similar for Glendale, but maximum FAR in Glendale is much less, and setbacks and heights are more restrictive. The table below summarizes the maximum permitted density, setbacks, and FAR in common residential zones in Glendale. Setbacks are averages because Glendale has step back requirements for second and third floors.

zoning-glendale-single

Again, assuming a 50’x150’ lot, the maximum number of units, maximum floor area, and average floor area per unit are as follows. I’m assuming 0.90 efficiency for townhouses.

units-glendale-single

Except for R1250, the multi-family residential zones in Glendale are in the sweet spot for townhouses (1,500 SF to 2,000 SF). The R1250 zone would work for small townhouses or 2BR apartments.

For lots over 90’ wide, Glendale allows additional density and another story of height in the R2250, R1650, and R1250 zones. There’s also a mixed-use zone, SFMU, that requires 100’ wide lots. Therefore, the analysis is modified if you assemble two lots. The SFMU zone has maximum height of 60’/4 stories and density 87 units/acre when abutting another multi-family zone, and 75’/6 stories and 100 units/acre when not, so results are presented for both cases. In practice, it is very rare for an SFMU zone to not abut another multi-family zone. The given story heights for SFMU assume half of the first floor is retail space and while max FAR is not specified it can be inferred from story height multiplied by 0.9, since 10% of the lot must be landscaped.

zoning-glendale-doubleunits-glendale-double

Because density is increased but FAR is not, the average unit size is actually driven down, despite being allowed to make the building one story taller. Of the few multi-lot townhouse projects I’ve followed in Glendale, many of them have not maxed out the density in these situations, electing to build fewer, but larger units. A motivating decision here is probably Glendale’s requirements for 2 subterranean parking spaces per unit, so density may actually be maxed out based on the number of parking spaces you can build in one underground level.

The SFMU zone ends up with larger average unit size than LA’s R4 and R5 zones, and sure enough, you do see some 3BRs in new developments in downtown Glendale. (While not actually in the SFMU zone, most of these buildings are in zones that allow 90-100 units/acre and up to 6 stories by right, so they’re a reasonable proxy.)

Encouraging Housing Diversity

Certainly, cities could increase the diversity of housing production by liberalizing zoning. Increasing allowable density and FAR, and eliminating minimum unit sizes, would allow different developers to try more different kinds of projects. After all, it was more liberal zoning regimes that produced neighborhoods that have a wide variety of housing types, like South Glendale.

Failing that, there are some other policies that might help. The primary concerns seem to be that apartment builders do not build enough family-sized apartments, while townhouse and small-lot builders do not build enough small homes. Some possibilities:

  • Give apartment developers free FAR for every bedroom beyond the second, for a certain percentage of units. Height and setbacks would have to be generous enough to make the extra FAR usable.
  • Add a density bonus for providing 3BR or 4BR apartments; for example, allow 0.20 additional units for every 3BR and 0.30 additional units for every 4BR, up to a maximum. FAR, height, and setbacks would have to be generous enough to make the extra FAR usable.
  • For townhouses and small-lot subdivisions, rezone outlying R1 areas as RD1.5 or R1250. Land in outlying areas is cheaper, reducing the need to max out FAR.
  • Add a density bonus for building small townhouses or small lots; for example, in the RD1.5 zone, allow 1000 SF lot area per unit up to certain percentage of units if they are smaller units.

 

A Short Introduction to Zoning in Los Angeles

Zoning that does not allow enough new housing construction is one of the biggest causes of the housing crisis in Los Angeles. So, it’s important to understand what zoning is, how it works, and how it’s been applied across LA. This post provides a summary of what zoning does, what the main zones in LA are, and where these zones are applied in the city. For more detailed information on zoning and parking requirements in LA, see the city’s summary of zoning and summary of parking requirements.

At its most basic, zoning is the idea that there can be different regulations on the built environment in different places within a jurisdiction.  As the name suggests, it divides places into different zones on a map. Depending on what zone a piece of land is located in, there are different rules for what types of structures and activities are allowed on the property. The major things controlled by zoning are:

  • Use type: controls what type of uses can be built on a lot. The main uses are residential (such as houses & apartments), commercial (such as stores & restaurants), and industrial (such as factories).
  • Density: mainly applied to residential uses. Controls how many houses & apartments can be built on the lot.
  • Floor-area ratio: controls how large a building can be, based on how large the property is. The floor-area ratio (FAR) is the size of the building divided by the size of the lot. For example, a 2,500 square foot house on a 5,000 square foot lot has an FAR of 0.50 (2,500 divided by 5,000).
  • Height: controls how tall a building can be. Height is usually controlled in terms of both the number of floors a building can have and its height in feet.
  • Setbacks: controls how much space must be left between the building and the property line. There are usually front setbacks, side setbacks, and rear setbacks. For example, the zoning might specify a minimum of 15 feet from the street to the front of the building, 5 feet from the property line to the sides of the building, and 20 feet from the property line to the back of the building.
  • Parking: controls how many parking spaces the developer must provide as part of the project. For residential uses, it is based on the number of houses or apartments. For commercial and industrial uses, it is based on the size of the building in square feet.

As you can see, zoning controls many aspects of development. Regulation of the type of uses is the least controversial, which is why people who oppose more housing often rely on absurd arguments about uses to make their point. Obviously no one here is arguing to allow new chemical refineries to be built next to schools and apartments. And obviously there is a large difference between that and allowing the construction of 12 apartments where the zoning currently only allows one house.

Zoning in Los Angeles evolved over the past 100 plus years, incorporating a series of societal goals and trends that may or may not make sense in 2016. LA was a pioneer in zoning for uses, adopting the nation’s first citywide zoning code (separating residential uses from other activities) in 1908. LA later borrowed zoning for ‘bulk’ (height, density, etc) from New York City and single family only zones from Berkeley. In 1930, as the region’s streetcar system was giving way to automobiles, LA began requiring some new building to provide off street parking spaces. LA’s current zoning code was last substantially updated in 1946 (though new zones and rules changes have been added in the subsequent 70 years). The City is currently revising the code through the re:code LA process.

Los Angeles began zoning before it had a formal process for urban planning. In 1974, LA adopted its first general plan, with land use and zoning set by 35 community plans. Under state law, zoning in LA is supposed to implement the general and community plans. The current zoning code has almost 2000 uses, everything from frog keeping to phonograph record blank manufacturing to wine bars.

In the city of Los Angeles, the main types of zones are R, C, and M, which correspond to residential, commercial, and industrial uses (the M is for manufacturing). Each zone is also assigned a height district which controls how large and how tall the building can be. For example, a zoning designation of R3-1 indicates that the lot is in the R3 zone and height district 1.

Residential Zones in LA

There are two main types of residential zones in Los Angeles: single-family zones and multi-family zones.

In single-family zones, you can only build one house on the lot, no matter how big the lot is. If you have a very large lot, you may be able to subdivide it into smaller pieces and build a house on each, so long as each lot meets the minimum lot size required in that zone. This is how the suburban areas of LA were developed, by taking large pieces of property, dividing them, and putting one house on each piece – this is why new housing developments are called subdivisions.

Single-family zoning is by far the most common zone of any kind in Los Angeles. The most common single-family zone is R1, which requires a minimum lot size of 5,000 square feet (SF). Almost all of the single-family neighborhoods in LA that are not in the hills are zoned R1.

The other two common single-family zones in LA are RA (residential agriculture) and RE (residential estate). The RA zone requires 17,500 SF lots and allows limited agriculture – this is often called “horse property”. There are 5 RE zones, RE9, RE11, RE15, RE20, and RE40, with the number corresponding to the minimum lot size in thousands of square feet. For example, RE11 requires 11,000 SF minimum lots. All of the single-family zones in LA require a minimum of 2 covered parking spaces.

The map below shows generalized zoning in Los Angeles – click to embiggen. Anything in yellow is an R1 or an RE zone, and anything in light green is an RA zone.

LAzones-small

As you can see, the map is dominated by single-family zones, especially on the Westside, in the Valley, and in Northeast LA. The fight about development and displacement is being fought entirely outside these zones. There’s practically no rent stabilized housing anywhere in the yellow and light green areas. These neighborhoods have been let off the hook for their role in causing the housing crisis, despite the fact that they occupy most of the city’s land. If we are going to fix LA’s housing shortage, these neighborhoods should do their part.

Now, let’s turn our attention to the multi-family zones in LA, shown in orange on the map. These are the zones where you can build apartments. The main multi-family zones are RD, R3, R4, and R5, in order of increasing density. For these zones, density is controlled by requiring a minimum lot area per apartment. There are six levels of RD, which stands for restricted density, RD6, RD5, RD4, RD3, RD2, and RD1.5, with the number corresponding to the minimum lot area per apartment in thousands of square feet. For example, RD2 requires 2,000 SF of lot area per apartment. R3 requires 800 SF per apartment, R4 requires 400 SF, and R5 requires 200 SF.

The RD zones are the most common multi-family zones in LA, followed by R3. That’s mostly what you’re seeing in orange on the map. R4 is found mainly in places like Koreatown, Hollywood, North Hollywood, and Palms. R5 is found almost exclusively downtown and along Condo Canyon on Wilshire. All multi-family zones require parking at a rate of 1 space per studio, 1.5 spaces per 1 bedroom unit, and 2 spaces per 2+ bedroom unit.

To help visualize what these zones look like, RD zones usually look like very small apartment buildings or small lot subdivisions. R3 zones look like dingbats. R4 zones look like podiums. R5 allows for high-rises.

The lack of developable R3 and R4 zones in LA is one of the biggest roadblocks to constructing new apartments for ordinary people. Looking back at the map with that in mind, you can see why the large area of the city devoted to single-family zoning is such a problem.

Most of the residential zones in the city are in height districts 1, 1L, 1VL, and 1XL, where L stands for low, VL for very low, and XL for extra low (see a pattern?). For all zones, this means a maximum FAR of 3. For the single family zones, RD, and R3, these areas allow heights varying from 30’ in height district 1XL to 45’ in height district 1. R4 and R5 vary from 30’ in 1XL to unlimited in 1.

Height districts 2, 3, and 4 allow more height and more FAR, but not more density in terms of the number of apartments. These districts are generally restricted to places like Downtown and Hollywood.

For different places, different factors will limit the amount of development. For example, a 5,000 SF lot in an R4-1 zone theoretically has no limit on how tall the building can be. However, it’s only possible to put 12 apartments on this lot, and with a maximum FAR of 3.0. Therefore, the maximum size of the building would be 15,000 SF, equal to twelve 1,250 SF apartments. It would be impractical to build anything taller than about 5 stories on such a lot. This lot would be constrained by FAR and density, but not height.

On the other hand, a 6,000 SF lot in the RD2-1 zone can have an FAR of 3.0, which would allow up to 18,000 SF of building space. However, only 3 apartments would be allowed on such a lot, and you don’t see many 6,000 SF apartments. If the lot were 50’ wide by 120’ deep, the building footprint available after removing setbacks would be only about 3,000 SF. To get an 18,000 SF building, you’d have to build 6 stories tall, but the maximum height allowed is 45’ – only enough for about 4 stories. This lot is constrained by density and height, but not by FAR.

Commercial Zones in LA

Commercial zones are where businesses like restaurants, shops, and offices are located. They are shown in pink on the above map. As you can see, commercial zoning is located in strips along LA’s major boulevards, and in larger areas of business districts such as Downtown, Hollywood, Century City, and Playa Vista.

There are seven commercial zones in LA (CR, C1, C1.5, C2, C4, C5, and CM), but C2 is by far the most common. In addition to allowing commercial uses, C2 allows R4 uses by default, meaning that on LA’s commercial boulevards, you can build apartments at a density of 400 SF of lot area per apartment.

This was a great way to allow denser residential development along commercial boulevards, which are also often good transit corridors. However, in the 1980s, a ballot initiative known as Prop U cut the allowable FAR in the C2 zone from 3.0 to 1.5. Since many of these properties are already developed with commercial uses and FAR between 0.5 and 1.0, it is not profitable to build apartments in the C2 zone anymore. Thus, these lots are constrained by FAR.

The city has created two new zones, RAS3 and RAS4, that can be applied on commercial boulevards and help solve the problems caused by Prop U. These zones correspond to the same density allowed by R3 and R4, and have maximum FAR 3.0, but allow for mixed-use development by permitting commercial uses on the first floor. However, the RAS3 and RAS4 zones are very rare.

Manufacturing Zones in LA

Manufacturing zones are where industry is located. They are shown in grey on the above map, and are mainly located in the industrial district near downtown and along freight rail lines. As heavy industry has become less important to LA, these zones have become occupied by light industrial uses and commercial uses. The common M zones, M1 and M2, allow for C2 uses, meaning that offices and shops can be constructed there. However, residential uses are prohibited in M zones. For example, the Warner Center is in an M zone.

Occasionally, some people have expressed concern that allowing commercial development in M zones is going to erode the city’s industrial job base. This gets the analysis backwards; the existence of M zones does not create industrial jobs. Many M zone uses, such as warehouses, have low job density compared to commercial uses. In addition, it is worth remembering that because most of the city is zoned residential, commercial and industrial uses are competing for a very small portion of the city’s land. Allowing commercial development in more areas would decrease the development pressure on M zones.

More to Come

This post has hopefully provided an understandable overview of the main zoning regulations in LA. In a future post, we’ll look at the process that developers must go through if they want to get permission to do something differently. Since the housing crisis is a regional problem, future posts will also look at the zoning in other cities in the region.

Luxury Housing Isn’t the Problem

Indignation at luxury housing construction is one of the few things that unite NIMBYs and renters advocates concerned about gentrification and displacement. Since luxury construction is the only thing that pencils out in many places under existing zoning, this alliance is much more beneficial to NIMBYs, who get to thwart all new construction, than to renters advocates, whose meager gains from avoiding rent increases due to amenity effects are at least partially wiped out by rent increases due to the regional housing supply shortage. Politically, breaking the alliance between NIMBYs and renters advocates is prerequisite to taking any meaningful action on the housing crisis, as these are the two of the largest advocacy groups active in land use policy.

The trick that NIMBY con artists pull is to convince people that luxury construction is crowding out low-income & middle class construction – that every luxury unit built represents a missed opportunity to build a low-income or middle class unit. Of course, NIMBYs would oppose the construction of low-income & middle class housing or subsidized affordable units even more than they oppose luxury construction; that’s why it’s a trick.

For this story to be accurate, you’d have to believe that the economy is churning out housing as fast as possible. This is extremely unlikely. To see why, let’s look at a few graphs from the always excellent Calculated Risk and from FRED, the excellent data service of the St Louis Federal Reserve Bank.

First, here is the level of housing starts in the US.

01-StartsJune2016

Nine years after the bottom fell out of subprime lending, both total housing starts and single-family housing starts remain at levels that, since 1968, were previously only seen during recessions. When you adjust for population growth, the level of housing construction is even worse. The graph below shows the number of new housing starts per year for each person of population growth. For decades, we constructed 0.6 to 0.8 housing units for every additional person. That number dropped to almost 0.2 during the crash and has barely recovered to 0.4. (Note that this ignores demolitions, so it systematically overstates the amount of construction per person, but it’s fine for purposes of comparison.)

02-startsperperson

Now, it could be possible that developers have decided to spend the same amount of money, but build a smaller number of bigger, more luxurious units instead of a larger number of smaller, more affordable units. If this were the case, we’d expect to see housing investment remain at the same level as in the past, despite declining numbers of units.

This isn’t the case either. The graph below shows total real private investment in multi-family and single-family structures. Residential construction spending remains about a third below what it was before the housing boom of the 2000s started, and half of what it was at the peak.

03-totalinvestment

We can adjust this for the number of units by dividing total investment by the number of units constructed. The next graph shows total real private investment in residential structures divided by the number of units started. In real terms, investment per housing unit remains around $210,000-$230,000, similar to what it was in the 2000s.

04-investmentperstructure

So, developers are not substituting luxury construction for low-income and middle class construction. It’s just that the total volume of housing investment and construction remains low.

Labor shortages and material costs have been suggested as reasons that housing construction is not higher. However, construction employment is still well below what it was during the last boom.

05-constrjobs

In addition, employment per housing unit constructed is still above historical averages. Through the 1980s and 1990s, each housing unit built every year supported between 0.4 and 0.5 jobs. This level rose dramatically during the recession, as builders tried to keep their employees despite reduced volume, and has only declined to just over 0.6 jobs per unit. It seems that builders may not be using the labor they have to its full productivity.

06-constrjobsperunit

Prices for materials like framing lumber are up, but still below what they were during the last housing boom.

07-LumberJuly2016

Simply put, luxury construction is not behind the housing crisis. It is the low overall volume of construction. Indeed, even if developers switched to building the same number of middle class units, we shouldn’t expect any impact on the regional price level, because the housing shortage would persist. Rich people don’t disappear because you stopped an upscale tower. Luxury construction doesn’t induce rich people into existence.

What has happened is that job growth has been concentrated in large cities in this economic cycle, more so than in previous expansions. These are places like LA, where geography has made it impractical for new single-family construction on the edges of the region, like the IE, to relieve housing demand generated by job growth in the core, like the Westside.

So if we want to understand the housing crisis, we have to look at why the volume of construction in places like LA is so low – lower than at times in the past like the 1960s and 1980s, despite much stronger price support.

The biggest reason at the local level is zoning. Through downzonings that have restricted how many units can be built on a lot and costly regulatory requirements like parking minimums and impact fees, we have made it impossible to build things like dingbats and courtyard apartments, the types of new housing that were immediately affordable to the middle class and even many low-income residents. Filtering is real, but we should make it possible again to build new construction that’s affordable to low-income and middle class people.

Other policy changes besides zoning reform could work to serve this goal. For example, it’s easy to get a highly-leveraged federally guaranteed loan to buy a single-family house, but not to build a small apartment building or mixed-use project. This is true despite the fact that apartments in centrally located parts of the region are much safer investments than single-family houses on the fringe. If policy had not been oriented this way in the 2000s, perhaps the housing boom would have produced a large number of conveniently located apartments instead of empty subdivisions in the desert. As another example, the much-maligned investment of foreign money in US real estate could be guided towards building apartments rather than pied-a-terre purchases.

NIMBYs, of course, don’t want to see any of this. It’s easy to get mad about rich people buying big houses and luxury condos, and NIMBYs exploit that to their advantage in trying to stop all new construction. To solve the housing crisis, though, we need to realize that luxury construction is a distraction from what we need to do – figure out why housing construction is at such historically low levels, and changing policy to fix it.

Three Stories

On Sunday, I traveled back from the east coast, and met three people who experience LA in very different ways.

The first person barely made it onto our 6am flight, having received an epic send-off party from friends the night before. They were fresh out of school, and had just landed their first job at a marketing firm in El Segundo. Sunday they moved across the country; Monday was their first day of work. They got an apartment in El Segundo, and were excited to live near the beach and start their job, but were worried that not owning a car would make it harder to make friends. I offered a welcome and encouragement, but flying out of Boston, I couldn’t deny that not having a car in El Segundo would impact one’s social life.

The second person picked me up on the upper level of the LAX central terminal area – a driver for a popular ridesharing app. They had moved to LA in 1990 with a sibling to try to pursue a career in music. It’s a tough industry and the early 90s were a very tough economic time for LA, and they hadn’t found the success they’d hoped for. They now live in the far west of the Valley, having gotten a deal on rent from an in-law. The sibling had already departed for the Midwest; they were considering doing the same, where their money would go a lot further.

The third person is a friend of a friend, who stopped by to chat after lunch. They had moved to the Inland Empire a couple years ago to help take care of family. However, they live in a very family-oriented area (like you do in the IE) but do not have children, and miss the social and cultural opportunities of LA. The long drive from the IE makes it difficult to take advantage of the city, and the IE does not offer the same opportunities for one’s personal life as LA.

These are three people out of 18 million in LA/OC/IE, at different points in life, going in different directions. The land use planning system that we’ve constructed doesn’t work for them. There are millions of other stories out there with the same thread connecting them. There are probably plenty of people who’d want to live in El Segundo without a car and have lots of friends close by. There are many people that want to pursue artistic work that doesn’t pay well but enriches LA’s culture, who are needlessly punished by high housing costs. There are lots of people in the IE who don’t have families and would like to have a greater variety of social and cultural opportunities nearby.

Rigidly-defined land use planning forever locks neighborhoods, cities, and regions into the patterns chosen by a very small portion of people – usually very vocal opponents of any development other than single family homes. More importantly, it locks people into those patterns – it shapes and restricts their lives, their dreams & opportunities.

It’s long since time to dispel with the myth that everyone wants the same type of suburban family-oriented development, and that the desires of the people who do want that type of development should absolutely trump the hopes of everyone else. It’s also time to recognize that the social, economic, and cultural outcomes are what matter, not the built form of the city. SoCal is a big place; we have plenty of room to allow all kinds of development and for everyone to pursue their dreams.

‘Round Glendale: One Block on Elk

In our first tour of Glendale, we took a long walk down W Wilson Ave, from the city center on Brand Blvd to the industrial edge at San Fernando.

Today, we’re going to go seven blocks south and look at a short block on W Elk Ave, between the end of the ramps from the 5 and Pacific Ave. This stretch is barely 700’ long, but has a remarkable diversity of buildings.

From the freeway off-ramp, the view is at first dominated by Brio, a large apartment complex that was finished in 2012-2013. The left side is large apartment house with three wings; the right side of the street is a set of 14 townhouse-style units built as part of the same project. The 186-unit apartment building has a Colorado St address but takes up the whole block, with the wings opening up towards Elk.

Like most large new construction apartment buildings with boatloads of on-site amenities in LA, rents aren’t exactly cheap. Studios start around $1,800/month and a 2BR will run you over $3,000/month. The side facing Colorado has first floor retail.

The apartment portion of the project is zoned SFMU, which is Glendale’s basic mixed-use zone, allowing up to 100 du/acre and 75’/6 stories height. (These are slightly reduced when abutting other multi-family zones and significantly reduced when abutting single-family zones.) This is more or less equivalent to the RAS4-1L zone in Los Angeles. On some streets (San Fernando, Colorado, & Broadway), commercial uses are required on the street frontage. The townhouse portion of the project is zoned IMU-R, which is Glendale’s most generous mixed-use zone, allowing everything up to heavy manufacturing. (Multi-family requires an administrative use permit and mixed-use requires a conditional use permit.)

Moving beyond Brio on the right, there are three single family homes.

Well, there were three single family homes. Now there’s one and a hole in the ground.

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The demo permit for this job was just issued at the end of March. Soon, a 6-unit townhouse will be rising on the site. This is going to leave on SFR in between Brio & the townhouses, for some infill developer in the future to tackle. The south side of Elk from Brio to Pacific is zoned R-2250, one of Glendale’s basic multi-family zones. As the name suggests, this allows one unit per 2250 SF of lot area, or 19 du/acre, similar to the RD2 zone in LA.

The next building up looks like an SFR at first, but is at least a duplex and maybe a triplex, and it might even have a backyard cottage too. Walk around this part of Glendale, and you’ll notice the density is often hidden; it’s nearly impossible to tell how many units a property has from the street. This is classic missing middle affordable housing, which we ought to be building in spades all over the region, especially towards the edges of the city where there’s housing demand but apartments might not pencil out.

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Then we have a newer development with two houses on one lottwo houses on one lot, but who knows, maybe one is a duplex.

After that, we have two classic 1980s buildings. The building on the right was finished in 1988 and is built on two lots, just like the new 6-unit townhouse project being built. However, it has 15 units. So unfortunately, the permitted density here has been reduced by more than half since the 1980s, making it impossible to construct smaller, more affordable units. If you can only put 3 units on a lot, you need to make them pretty big to make it worthwhile. The building on the left was finished in 1989 and has 5 units.

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Three small structures take us to the corner of Pacific. The one on the right is a duplex; the middle is single-family. The last is two units on one lot and actually has a Pacific Ave address.

The north side of Elk is still zoned SFMU all the way to Pacific, so eventually we may see another mixed-use development pop up here. For now, most of the north side between Brio and Pacific is occupied by a generic light industrial building, mysteriously and awesomely named “Promoting Growth AWAP”. A little digging reveals this to be an auto parts wholesaler.

The last building, a set of twin apartment buildings at the corner of Pacific, was built so long ago they actually got away with a surface parking lot. It has a Pacific Ave address, and provides 16 apartments.

This little block on Elk displays a lot of the different types of housing you’ll find in Glendale. It’s providing a variety of housing for a variety of people, but it’s also a warning about what we’re at risk of losing the LA region. New buildings like Brio are great; new townhouses are great. But we’re not building the small duplexes, the small apartment buildings, or the medium size apartment buildings that fit in many small, but affordable, apartment units.

If we want to maintain the dynamism that makes LA such a great city, we’ve got to be building those missing middle housing types. Land costs are such that it might not make sense to build them in this particular neighborhood today, but there are places where it would – if we only allowed it.