PlanCheckNC – Los Angeles

Meeting Minutes:Apr. 11, 2015
Chair: Cindy Cleghorn – CindyCleghorn@Mac.com
Next meeting: Sat., May 9 – Robert Silverstein, attorney involved in lawsuit against Hollywood Community Plan and Target. Location Hollywood Presbyterian Church, Hollywood.

Announcements: Congress of NCs is in Sept. A “Planning 101” session will be included.

1. Affordable housing presentation
Guest speaker: Maurice Ramirez, AMCAL Multi-Housing (affordable housing developer)

Main source of funding for 100% affordable housing (all units have rents restricted to low levels that poor households can afford) is federal tax credits.
Tax credits provides money only for rentals. No reliable, substantial sources of government funding exist for ownership housing (condominiums, houses).
Section 8 vouchers are given to tenants to pay for rent. These are 2 very different programs than tax credits.

Households can earn a maximum $35,000 per year to qualify (which is 60% of Area Median Income of $58,000).

Funding is very scarce, and applications are very competitive. As a result, most affordable developers are well-vetted and very professional organizations. Only efficient and effective developers can secure the money needed to build affordable developments.

Funding sources are:
Tax credits (federal) – administered by State of California.
L.A. City’s Housing and Community Investment Dept.
State of California:
Mental Health Services Act: Funding for housing for homeless, mentally ill (can be veterans).
Housing and Community Development Dept.: funding for transit-oriented and infill locations.

City councilmembers must approve funding for projects in their area, so they have strict requirements – excellent architects must be used, so that design does not end up like 1950s “projects,” which were ugly stucco cubes and quickly deteriorated. Councilmembers do not want to be embarrassed by bad affordable developments, so they review design closely.

The costs are just as high as for market-rate apatrments:
Land prices are high because of the booming condo / luxury homes market, and affordable developers do not get discounts just because they are providing cheaper units.
The same good architects must be used.
LEED (green/sustainable design) is required – not required for market-rate apartments.
Financing is complex, so extra costs for lawyers, accountants, compliance, inspections and long holding times/interest costs for acquisition.
Union wages or prevailing wages for construction workers are often required by government funding sources.

Large institutional investors and banks provide equity by buying tax credits and providing loans (Bank of America, Wells Fargo, Union Bank, JP Morgan Chase, SunAmerica, U.S. Bank). They are required to fund some affordable housing, per the federal Community Reinvestment Act. They have regular inspections of the properties to ensure that they are in nice, livable condition, and maintain full occupancy, so their loans are paid back on time.

Property management benefits:
Companies are certified to manager affordable housing by the State of California.
Onsite managers (24 hrs.) are required.
Tenants undergo credit and criminal background checks, and can be evicted.
Tenants must be certified annually. Unit inspections to ensure that no extra people live there (prevents overcrowding).

Current affordable apartments include free social services for residents (case workers, computer classes, social activities, after school programs for youths), with the hopes of empowering them, improving their personal lives, and moving them up to ownership housing.

2. Guest speaker: Matthew Glesne, Planning Dept. – Housing strategy staff

Affordable housing types:
Tax credit funded – 100% affordable with restricted rents, receive government subsidy.
Density Bonus projects (SB1818) – 10% affordable, receive no government subsidy. Trade incentives/bigger buildings for affordable units.
State passed this law because cities failed to implement their own solutions, which contributed to the current deficit in affordable housing.

In 1960s, regular market-rate apartments were affordable to most households. Today’s apartments ($2,500/month) are no longer affordable to the middle and lower classes.

Cost to construct is $350,000 per unit, which is expensive because of land costs. That may sound expensive, but it’s better to build a single apartment building, which has social services on site and is easier to monitor. (Alternative is to provide rental vouchers for vacant houses scattered across the city.)

Benefits of affordable housing:
A good location near a good school and low crime improves childhood development, reduces economic inequality, stimulates better physical and mental health, creates balanced communities with housing for all income levels near jobs of varying pay.
Avoid paying 30%+ of income for housing > more money for healthcare, transportation, education, etc.
Reduce car traffic from sprawl > sustainable future.

Big need for housing:
Seniors are L.A.’s poorest population, and L.A. County has the highest percentage of seniors.
In the last 10 years, population in L.A. has increased by 100,000, which is fairly slow growth. But population in suburbs is bigger, and this results in long commutes and more traffic.
Need 240,000 units by 2035 (to accommodate increase of 500,000 persons).

Bad news:
Future jobs in L.A. will be mostly low paying (85% will pay <$35,000).
Housing cost increased in L.A. more than anywhere in USA since 2012.
In 1950, L.A. was only +25% higher than average in USA. Now it’s +200% higher.
In L.A., 48% of income is paid to housing. Was lower at 32% in 1984.
63% of poor households ($35,000-50,000 income annual) are rent-burdened.
L.A. is 1st in overcrowding (50% of all overcrowded units are in L.A. and O.C.).

Housing is needed:
2000-2012: Only 6% increase in units built (higher in SF at 9% and in SD at 10%).
Capacity for current zoning is 4,300,000 persons (Dick Platkin says it’s 6,000,000 persons). This does not include +35% density bonus that is used on many projects.
SCAG Regional Housing Needs Assessment: L.A. needs 5,700 units for <80% AMI households (~$50,000 annual income). L.A. has averaged only 1,100 units, and only 650 last year in 2014. This is mainly because CRA funding was eliminated by State.
L.A. has a deficit of 225,000 affordable units, and has lost 143,000 affordable units in the last 10 years, because of redevelopment and building of luxury units.
2/3 of population growth from 2000 to 2010 was in the San Fernando Valley, which is far from transit.

Funding is scarce:
Federal HOME funds decreased 51%, and CDBG decreased 45%.
$145M was available, now only $63M is available.
City’s Affordable Housing Trust Fund has little funding – only $18M this year 2014.
Big decrease from $108M to $26M from 2008 to 2013.

Strategies:
Fund the Affordable Housing Trust Fund: How? Higher taxes?
Increase the supply of housing near transit and amenities, but preserve low-density areas. In terms of supply vs. demand, this will intrinsically lower housing costs.
Increase incentives for mixed-income housing – similar to current density bonus incentives.
Increase zone changes – increase density in transit/amenity areas.
Preserve existing affordable housing – most cost-efficient strategy. Revise Ellis Act and require 1 for 1 replacement of affordable units.

Things Los Angeles has done to limit density (but not necessarily below the level that is needed or appropriate):
Transitional height requirements for C zones next to R zones.
Prop. U reduced size of Commercial buildings next to R zones.
Site Plan Review.
31 new Historic Districts, 49 new Specific Plans, 20 Community Design Overlays (have no zoning jurisdiction, only aesthetics).
Citywide Design Guidelines for all discretionary approvals (though they are largely ignored in ways that limit inappropriate massing).
New Community Plans (though they often increase density next to R zones and do not protect low-density areas).
Re-code L.A. – create more tailored zones with more stepbacks and setbacks and FAR limits?
Mansionization Ordinance – eliminate bonuses, but needs to make designs that conform to character of existing neighborhood.

Comments:
Master plan needed for infrastructure before increasing densities, especially water (pipe replacements and upgrades).
Historic and quaint/ unique bungalows and courtyard apartments are demolished and replaced by massive stucco cubes, which ruins character of neighborhoods (Hollywood, West L.A.). New housing should replace ugly apartments and commercial buildings first, before demolishing the pretty houses.
Luxury units are built, replacing affordable units.
10,000,000 zoning capacity in 1940 is not based on actual studies. It did not analyze infrastructure nor resource availability (water, roads, etc.).
All Off-Menu Incentives are approved, even without proper documentation of financial need. Many excessive incentives are approved – 2 story height increases, FAR increases from 1.5 to 4.0, based on false pretenses.
R1 zones should be preserved because many transit/ commercial corridors can be built up as an alternative.

City solicits suggestions for locations for new housing:
Matthew Glesne, Housing Planner
City of Los Angeles Department of City Planning
Policy Planning and Historic Resources Division: Citywide Unit
200 North Spring Street, Room 667, Los Angeles, 90012
matthew.glesne@lacity.org | 213.978.2666