Great myths of L.A. housing
Today, Dreier and Mailander try to clear up myths about the city’s housing problems. Previously, they proposed big-picture solutions, debated whether rent control helps or hurts, discussed City Hall efforts to rein in property rights, and sketched out the contours of what they think this housing crisis is. Tomorrow, they’ll clear up myths about the Los Angeles housing market.
Myth 1: No future
By Joseph Mailander
The biggest myth about housing in Los Angeles is that it’s impossible to live the dream here. Despite what the City Council and homeless industrial complex have done to the city, it is indeed still possible to live the American dream in Los Angeles.
But the fact that a semblance of a dream is possible for a few doesn’t mean that it’s the likely outcome for most of the people pursuing that kind of dream. We have to adapt policies as a city and even as a region that enable home ownership for a larger segment of people, and we need to replace the missing rungs on the lower tier of the housing ladder with market-based housing solutions, even while making sure that our homeless have shelter not four years from now, not a generation from now, but now.
To do this, our city first needs to plug into...itself.
I am very fond of telling groups that where I live, on the border of Los Feliz and Silver Lake, almost everyone hates President Bush. Mostly, they just despise the president. And that is the extent of their political involvement. This must change.
I dislike Bush too. But when you come home from the protest rally and scratch your head wondering how the forty-unit condo arrived on your little block while you weren’t watching, or why the city keeps throwing a hundred million a year at affordable housing yet you never seem to know a single person who benefits from it, or why it’s considered “inhuman” by the city’s homeless industrial complex to house the homeless in yurts, and more human not to house them at all, you realize how much you’ve been missing. It’s time to tune into these issues, even to the extent that we tune into national issues. It’s time to make politics local again.
The local power players, the developers, large construction companies, and politicians...they all love your apathy. They love the fact that a whopping 93% of you didn’t vote in the last city election. They love the fact that not a single City Council race in the last election had an outcome that was in any kind of question. They love their new $171,000 a year salaries, and their new term extensions, and they love throwing up their hands and claiming they’re powerless whenever you confront them with something about your neighborhood you don’t like.
They especially love telling you that housing and planning issues are very complex, and discouraging your involvement in anything that doesn’t support their agenda: keeping housing prices high, keeping the missing rungs of the housing ladder missing, and keeping their out-of-town developer contributors in the pink. The media often help them along, calling any citizen who rocks the boat a “gadfly.” I say, make every citizen a civic stakeholder; every citizen a homeless advocate; every citizen a planner; every citizen a watchdog.
I’ve been asked where the best city in the county is in terms of housing policy, and I have to respond that that distinction belongs right here, to the City of Los Angeles. I say this not because of any ordinance or outcome or government policyI dislike so many, and indeed, I sincerely think that this current city council is the worst of our lifetimes. But the reason this here fabulous cosmopolitan burg remains the best in the County for housing policy is because of its overriding zeitgeist: the way it attracts the kind of peoplebrilliant and assiduous creatives and immigrants and post-suburban professionalswho can navigate the maze, hurdle the roadblocks, and figure out how to save this city from its greedy oligarchs, self-centered interest groups, and power-hungry politicians. In these I have faith; in these, a brighter future for the City of Los Angeles resides.
Joseph Mailander is a writer and lecturer on architecture and urbanism who often nags the city of Los Angeles about housing issues. He edits the blog MartiniRepublic.com, which features a special category on architecture and urbanist issues, martinirepublic.com/la+u.
How Santa Monica solved its problems
By Peter Dreier
The housing crisis is not confined to L.A. or even to California. It is a national problem.
How serious is America’s housing crisis? Today, about 35 million American households pay more than 30% of their incomes for housing. That’s one-third of all U.S. householdsabout 90 million people. That’s significantly more than the number of Americans who lack health insurance. Almost 16 million householdsone out of sevenpays more than half their income for housing. These are almost evenly divided between owners (7.4 million) and renters (8.4 million). And it is getting worse. Housing is rapidly eating up much more of the family budget.
Since 2000, real hourly wages have grown by only 2 percent. Meanwhile, the median home price has increased by 52 percent. While the homeownership rate has increased, many owners are now financially strapped; a growing number face foreclosure. The American Dream is a slippery slope even for many middle class families.
For poor and working class families, housing is increasingly out of reach. In 2000, the national “housing wage"what it costs to afford a typical two-bedroom apartmentwas $12.47/hour. In 2006 (the most recent data) it was $16.31/hour. That’s an income of almost $34,000 a year. (A family with two full-time workers earning federal minimum wage would make just $21,424).
OK, you say, these are national figures, but housing markets are local. This may be a problem in San Francisco, Los Angeles, New York, Boston, and Washington, D.C., but it isn’t a problem in the “heartland,” the rest of America.
The gap between incomes and housing costs is widening in every part of the country. According to the “Out of Reach” report, a full-time worker at minimum wage cannot afford a typical apartment anywhere in the country.
No other major industrial nation has permitted the level of destitution and decay found in America’s cities. We see the consequences every day: deadly levels of crime and violence; Third World levels of infant mortality; a growing army of homeless people sleeping on park benches and in vacant buildings. Americans accept as “normal” levels of poverty, crime and homelessness that would cause national alarm in Canada, Western Europe or Australia.
But the good news is that these other countries demonstrate that the housing crisis is solvable. The U.S. has the resources, technology, and policy ideas to guarantee that every American has a safe, decent, affordable home. What’s missing is the political willin Washington, Sacramento, and greater Los Angeles.
One of the biggest myths about housing is who gets federal subsidies.
Most Americans think that federal housing assistance is a poor people’s program. In fact, fewer than one-fourth of all low-income Americans (those who have Section 8 rental vouchers or who live in government-assisted developments) receive federal housing subsidies. In contrast, almost two-thirds of wealthy Americansmany living in mansionsget housing aid from Washington.
The largest housing subsidies are tax breaks for homeowners. These cost the federal government almost $90 billion$70.1 billion for the mortgage interest deduction and $19.3 billion for the property tax deductionaccording to a report by the Congressional Joint Committee on Taxation. That would be OK if most of it helped middle- and working-class people. But it doesn’t. Those with the highest incomes and the most expensive homes (including second homes) get the largest subsidy.
More than half (53.7 percent) of the $89.5 billion homeowner subsidies went to the 11.8 percent of taxpayers with incomes over $100,000. More than one-fifth (20.6 percent) went to the wealthiest 2.3 percent of taxpayers with incomes over $200,000.
Wealthy households are most likely to own homes and to itemize deductions. Half of all homeowners do not claim deductions at all. Tenants, of course, don’t even qualify. As a result, 62 percent of households with incomes above $200,000 receive a mortgage interest tax break, averaging $7,219. In contrast, only 3.5 percent of households with incomes between $10,000 and $20,000 receive any subsidy, averaging $317. If anything, these tax deductions help push up housing prices artificially, especially at the upper end, because homebuyers include the value of the tax subsidy in their purchase decision. This leads wealthy homeowners to buy bigger houses than they would without the tax breaks.
In recent years, many middle-class families have found it more and more difficult to buy a home. Contrary to the rhetoric of the real estate industry, these deductions aren’t the salvation of the middle class. Only one-third of the 52 million households with incomes between $30,000 and $75,000 receive any homeowner subsidy.
As a result, a wealthy corporate executive is more likely to receive a much bigger homeowner tax break than a garment worker, a construction worker or a school teacher. The current system subsidizes the rich to buy huge homes without helping most working families buy even a small bungalow.
Housing subsidies for the rich are virtually an entitlement, but for the poor it is a lottery. While the tax code provides about $50 billion in homeowner subsidies for families with incomes above $100,000, the entire U.S. Department of Housing and Urban Development (HUD) budget is under $35 billion. This provides housing assistance for less than one-quarter of the nation’s poor. Under President George W. Bush, the number of poor people (now 37 million) has increased, while he’s cut housing subsidies for low-income families. For example, there are more than 20,000 families on the waiting list for Section 8 vouchers in LA alone because HUD doesn’t have enough money to meet the need. So the gap between housing subsidies for the rich and the poor has been widening.
I support federal (and state) subsidies for working class and middle class families so they can buy a home, but not for rich people to purchase mansions.
Local officials, meanwhile, have to cope with the housing crisis in their own backyards, without much help from Washington or Sacramento. Cities can’t solve the problem on their own. They lack the resources and the legal authority. Even so, some cities are better than others at stepping up to the plate and pushing the limits of what’s possible.
One such city is Santa Monica. The city has a strong policy agenda for both protecting existing affordable housing (and tenants who live there) and expanding the overall supply of affordable housing. How?
Santa Monica provides affordable housing incentives above and beyond the required state density bonus. It includes parking reduction, height bonuses, and a density bonus for developers who serve poor and moderate income households. Affordable housing developments get fast-track treatment through the streamlined bureaucracy. The city encourages mixed-use (housing and commercial) projects and channels new housing into the underdeveloped commercial corridors. The city has an inclusionary zoning law that requires market-rate developers to include affordable housing within projects rather than pay an in-lieu fee.
Santa Monica requires commercial developers to pay a “linkage"housing mitigationfee, which is used to fund affordable housing. In fact, even though Santa Monica only has about 2% of L.A.'s population it spends about 10% of what L.A. allocates for affordable housing. It funds nonprofits to provide a range of housing optionssenior housing, supportive housing, transitional housing, shelters, and housing for the working poor. Its nonprofit arm, the Community Corporation of Santa Monica, is successful because the city provides enough capital funds to support a pipeline of projects. In that way, it serves as a housing production engine. It has produced 1,400 units already. Another 200 units are scheduled for this year. (That would be the equivalent of 9,000 affordable units in L.A.).
Santa Monica, where the Rent Control Board is elected, had a strong rent control law until the mid-1990s, when the state legislature tied cities’ hands. Even so, Santa Monica strongly enforces its vacancy decontrol law. To restrain landlords from unlawfully evicting tenants so they can raise rents to market levels, Santa Monica pro-actively educates renters about their rights, through mailings, workshops, and support for tenant outreach and counseling. It has a strong law against harassment of tenants and prosecutes landlords who violate tenants rights. The city does not allow any conversions from apartments to condo.
Despite myths to the contrary, most tenants living in rent-regulated apartments are poor, working class, or seniors. Moreover, these regulations have not led landlords to defer maintenance, for two reasons. Santa Monica has strong code enforcement. And Santa Monica’s Rent Control Board will lower rents if landlords don’t maintain their buildings.
Clearly L.A. has more serious poverty problems than its neighbor. Even so, what lessons can LAand other citieslearn from Santa Monica? Cities can do a great deal to address the housing crisis, even if they can’t solve it. Learning from Santa Monica and other “best practices” around the country, LA should:
Take a comprehensive approach. No one policy, on its own, will do the trick.
Make a significant public investment in building affordable homesprimarily rental but also condos and townhouses.
Require private sector developers to build affordable homes as part of all market-rate projects.
Revise local zoning laws to permit more density, particularly alongtransit corridors
Enact a law to limit the demolition or conversion of rent-controlled apartments until the vacancy rate reaches an acceptable level. Relocation fees aren’t enough when there are few places to move to.
Adopt a granny-flat ordinance, which makes it easy for homeowners to build asecond unit in their backyard
Adopt a policy to make it easier to rezone industrial land for affordable homes
Create a really fast-track approval process for developments that have 30% or more of their units designated as affordable
This isn’t meant to let Washington or Sacramento off the hook. None of this will happen without a broad grassroots movement for housing justice.
Peter Dreier is E.P. Clapp Distinguished Professor of Politics and director of the Urban & Enviromental Policy program at Occidental College. He is coauthor of three books: Place Matters: Metropolitics for the 21st Century; The Next Los Angeles: The Struggle For A Livable City; and Regions That Work: How Cities and Suburbs Can Grow Together; and co-editor of Up Against the Sprawl.