Laws Aim to Ensure Low-Cost Housing

Times Staff Writers

Margaret Staley draws $47,000 a year as a postal supervisor, but says the only home she can afford to live in belongs to her parents.

“When you make this kind of money, and you can’t even afford an apartment,” the Anaheim resident said, “there is something wrong.”

A growing group of people in California have become priced out of the real estate -- and even the rental -- market. As housing costs continue to soar, the frustration has spread beyond the working poor, affecting teachers, police officers, firefighters and other professionals.

And pressure is growing on cities and counties to accommodate them.


“I’d like the City Council to help make laws that require every developer to provide affordable housing,” said Staley, who recently urged her city’s leaders to require lower-income units in a planned 2,500-unit housing project.

Indeed, in Anaheim and many other cities, including Los Angeles, council members are drafting or proposing ordinances to assure that some units in new residential projects will be affordable to service workers and public servants.

“We’re already to the point of a crisis situation,” said Anaheim Councilman Richard Chavez, who with Councilwoman Lorri Galloway is pushing for the new housing policy. “In the last five years, we’ve added another park at Disneyland [California Adventure] and a slew of hotels.... Who’s going to wash the windows, baby-sit the children, mow the lawn? Where are we expecting all these people to live?”

The strategy calls for cities to require residential developers to include reduced-priced apartments or houses as a condition of approval for their market-rate housing.


Under benchmarks commonly used by planners and housing authorities, a home is considered affordable if a household that makes 120% or less of an area’s median income doesn’t need to spend more than a third of its earnings on housing. The vast majority of units built under such ordinances are apartments, because they are easier to finance and yield more units per acre of land

Developers complain that “inclusionary housing” policies hurt their profitability and increase housing costs for other buyers and renters.

“Regulations don’t build homes,” said Michael LeBlanc, a senior vice president with the Irvine Co., one of Southern California’s largest developers. “Land and [construction permits and approvals] and financing builds housing.”

Advocates of low-cost housing counter that developers need to consider the pent-up demand of low and middle-income people.


In June, only 16% of California households could afford a median-priced single-family home costing $542,720, compared with 30% five years ago when the median price was $244,230, according to the California Assn. of Realtors.

Renters in the state face similarly dismal news. An average two-bedroom apartment in California cost $1,104 a month in 2004, up from $791 in 2000, a nearly 40% jump, according to the Washington-based National Low Income Housing Coalition. Incomes in California rose only 12% in the period, the coalition says.

About a fifth of California cities have low-cost housing requirements, but their overall success is hard to measure, in part because the efforts don’t immediately yield results.

Some cities, including Irvine and San Francisco, allow developers to donate cash for future low-income projects if they can prove the building requirement is onerous.


Low-cost housing ordinances are not “not a silver bullet,” said Tina Duong, a spokeswoman for the Non-Profit Housing Assn. of Northern California. But they have “great potential to produce affordable housing in the state.”

The government already aids the poorest residents strapped for housing. The federal Section 8 voucher program provides about $15 billion a year in rent subsidies to the homeless, disabled, veterans, the elderly and those making less than 80% of their area’s median income. Developers who build housing for low-income families also qualify for federal and state tax credits. And Proposition 46, a $2.1-billion housing bond measure passed by California voters in 2002, has so far provided nearly $1 billion to build about 55,000 homes statewide for low-income people.

Still, the number of people who can’t afford a home in California continues to rise, and increasingly includes middle-income professionals such as teachers and firemen.

Nick Quinn, a 22-year-old firefighter in Fallbrook, an unincorporated community in north San Diego County, makes $54,000 a year but said he had little chance of owning a house in the community where he works. San Diego County doesn’t have a low-cost housing ordinance.


“I went to look at a tract house on a quarter-acre, and it was $845,000,” said Quinn, who lives with his parents. “It’s ridiculous. It’s not going to happen anytime. I’m going to have to go somewhere cheaper, out of county or to another city.”

Advocates of low-cost housing say that without relief, overcrowding and traffic problems will worsen as people are forced to move farther from their jobs or share cramped quarters.

A growing number of cities are responding to such arguments. A 2003 survey co-sponsored by the Non-Profit Housing Assn. of Northern California found that 107 municipalities statewide had ordinances that press developers to build low-cost housing -- more than double the number a decade before.

Since the survey, 11 more jurisdictions, including Bay Area cities like Hayward and Walnut Creek, have adopted the strategy. Half a dozen more have expanded existing policies, and at least a further dozen more are debating it, the association says.


Some proponents say such ordinances can change people’s lives, boosting their children up the socioeconomic ladder.

Five years ago, Ruben Mayorga and his family couldn’t afford to move out of their cramped Santa Ana apartment. The Puerto Vallarta native and father of two was earning about $35,000 a year as a banquet waiter.

Then his wife, Rosa, learned that 14 homes were being built in Irvine on land donated by the Irvine Co. as part of the city’s low-cost housing ordinance. The Mayorgas moved into a three-bedroom suburban house after putting a few thousand dollars down and obtaining a no-interest loan. “We won the lotto even though we didn’t buy a ticket,” Mayorga said.

Mayorga credits the family-friendly environment and Irvine’s schools for his daughter’s academic success. She is now a sophomore in college.


Victoria Basolo, an assistant professor of planning, policy and design at UC Irvine and a frequent speaker on housing issues, said the children of low-income families do much better in mixed-income settings, where they are exposed to greater opportunities.

“But that’s a social goal,” she said, “and some people don’t want to think about social goals when they are worried about their immediate property values.”

In fact, opposition to housing laws comes from existing homeowners as well as developers.

In Los Angeles, an inclusionary housing policy pushed by Councilmen Ed Reyes, Eric Garcetti and others was introduced in the spring of 2004, only to be withdrawn several months later. Homeowner activists and developers protested that apartments would overtake neighborhoods of single-family homes.


But Reyes has argued that unless the city’s housing stock is greatly expanded, Los Angeles will shed more workers, and cheaper housing will be relegated to increasingly troubled pockets.

“We are losing the middle class, and the sad thing about it is that the motivating factors to get an education -- having a home and independence -- is fading away,” said Reyes, who plans to reintroduce an ordinance in the fall. “If we don’t do this, we’ll end up with more economic ghettos in the city. We’ll be like Detroit was in the 1970s.”

In Anaheim, where the city has plans for about 15,000 new homes within eight years, including 9,000 near Angel Stadium, council members Galloway and Chavez are proposing that 15% of new residential units be for low- and medium-income buyers.

Under their plan, a third of new homes and apartments would be reserved for people who make less than half of the county’s median income -- $75,700 a year for a family of four. Another third of the units would go to those earning between 50% and 80% of the median income; the final third would be earmarked for those making between 80% and 120% of the median income.


Similar ordinances in other cities typically require that as much as a third of new housing be low-cost.

Critics of such laws say cities ought to focus less on mandates and more on incentives, such as tax subsidies or higher-density allowances so developers can build more units and help remedy the undersupply of housing that contributes to high prices.

“I’m not interested in having government dictate” that developers build low-cost units, said Anaheim Mayor Curt Pringle. “We’ve got to be very careful not to kill the goose that’s building housing for the future.”

Because developers and homeowners benefit greatly from rising real estate prices, there is little incentive to build low-price units, advocates say.


“The market doesn’t do it unless the market is made to it,” said Scott Darrell, executive director of the Kennedy Commission, an Orange County group that advocates low-cost housing.

Darrell and others point out that there is a clear contrast in how developers behave in cities with and without low-cost housing ordinances.

For instance, under Irvine’s ordinance, at least 5% of every housing project must be dedicated to low-income residents. A 1975 lawsuit led the city to adopt its policy, and about 17% of the city’s 18,500 rental units are considered affordable to low-income residents. The city is often lauded by low-cost housing advocates as an example of how such policies can work. Most of those units have been built or developed by the Irvine Co.

In contrast, in Orange, which doesn’t have such a law, the Irvine Co. is proposing to build 128 low-income apartments in conjunction with a pair of housing projects that will total 4,000 homes. The low-income units would represent just over 3% of the total project.


And in Anaheim, which has no such ordinance, the company wants to build the 2,500-home development but plans no low-cost units.

Even where the low-cost housing policy has been a relative success, it’s often not enough, given the state’s super-heated real estate market.

Irvine is still more than 1,000 low-cost units short of what regional planners say it needs.

And without the law, said Darrell, “not even those [existing] units would have been built.”


Times staff writer Steve Hymon contributed to this report.



Finding shelter


More than 100 California cities and counties have adopted “inclusionary housing” policies that urge builders to construct low-cost homes in the course of building regular projects. Shown are the Southern California cities and their programs.

*--* Year Years required to City adopted remain low-cost --- Los Angeles County Agoura Hills 1987 N/A Monrovia 1990 30 to permanent Pasadena 1991 30 to permanent Rancho Palos Verdes 1997 Variable Santa Monica 1985 N/A West Hollywood 1986 Permanent *--*

*--* Orange County --- Brea 1993 30 Huntington Beach 2001 30 to 60 Irvine 1977 N/A Laguna Beach 1985 30 to 55 San Clemente 1980 N/A San Juan Capistrano 1995 10 to 30 *--*

*--* San Diego County --- Carlsbad 1993 N/A Coronado 1982 N/A Del Mar N/A 30 Encinitas 1990 55 Oceanside 1991 55 Poway 1993 N/A San Diego 1994 N/A Solana Beach 1997 30 *--*


*--* San Bernardino County --- Hesperia 1991 30 *--*

*--* Ventura County --- Oxnard 1999 20 *--*

*--* Riverside County (None)

Imperial County (None) *--*


Sources: Non-Profit Housing Assn. of Northern California, July 2003 survey; Times reports