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City Hall Rolls out Red Carpet for Real Estate Speculators

PLANNING WATCH - Real estate speculators have another reason to toast the heroic efforts of elected officials to pave the city’s private parcels with another layer of gold. 

This time it was the state’s final approval of the amended Los Angeles 2021-2029 Housing Element.  Like City Hall, the State justified this latest benefits package for real estate developers with the whopper that the revised Housing Element will usher in an era of racial equality. 

Someone emailed me this assessment of the Housing Element’s amendments and the State’s quick approval.  City Planning puts together a fat package to benefit developers, and then tacks on some language about equity to make it look like they care.” 

A closer look at the amendments, the State’s laudatory letter, and City Planning’s pat-on-the-back announcement reveals farfetched claims that would be quickly discredited if housing conditions in LA were accurately monitored.  While the State’s Housing Department requires annual monitoring reports, these reports do not include the cost of housing, numbers of homelessness people, vacancy rates for low-cost and expensive housing, and four years of population decline

Nevertheless, according to the approval letter:  

The City must monitor and report on the results of these and other programs through annual progress reports, required pursuant to Government Code section 65400 .  .   HCD may revoke housing element compliance if the local government’s actions do not comply with state law.” 

If City Hall were to monitor its lavish equity claims, it would need to document the following, derived from its recent Letter to Stakeholders celebrating the State’s approval of its amended Housing Element: 

  • Los Angeles has until February 2025 to complete its rezoning program, as presented in the Housing Element’s policies 115, 121, 125, which City Hall calls this country’s most ambitious equity-driven up-zoning program. 
  • LA’s rezoning/up-zoning program will promote inclusive communities, prioritize equity and affordability, and minimize displacement. In other words, the Housing Element will reduce racial and ethnic separation, housing prices, and gentrification. 

Now for a reality check.  The Housing Element’s rezoning programs unfold through detailed up-zoning ordinances appended to LA’s updated Community Plans.  Since 2007 Los Angeles has updated 7 of its 35 Community Plans.  Because the City Council directed the Department of City Planning to update the Community Plans on a six year cycle, the Planning Department must quickly update every Community Plan, including their Environmental Impact Reports and complex up-zoning ordinances.  After that the City Council must quickly adopt the Updates and their appended zoning ordinances to comply with the State’s 2025 deadline.  This is a tall order for several reasons: 

First, it is highly unlikely that City Hall could complete this enormous work program in three years.  It would need to re-update the six Community Plans that are rapidly approaching their sixth birthday.  City Planning must also complete 17 Community Plans whose updates began four years ago, to which they must add 17 intricate up-zoning ordinances and EIRs.  To comply with the State’s deadline, City Planning must also initiate and quickly complete the remaining 11 Community Plans, including their EIRs and zoning ordinances.  Assuming that the City Council acts quickly and that no adopted Community Plans, Environmental Impact Reports, or zoning ordinances are again legally challenged and rescinded, these are formidable barriers.                                                                                                                                                    

Second, up-zoning hundreds of thousands of residential and commercial parcels (Program 121) and expanding LA’s Density Bonus/spot-zoning ordinance (Program 125) creates three new problems.  In combination they will scuttle the Housing Element but allow real estate investors to prosper. 

  • Problem #1: When the City Council eventually adopts the 35 up-zoning ordinances appended to each Community Plan update, it will sabotage the strengthened Density Bonus (Spot Zoning) ordinance they must adopt per Housing Element Program 125 -Transit Oriented Communities. Once property owners and developers are granted automatic, up-front zoning increases, they will no longer need Density Bonuses to obtain more height, stories, density, or reduced parking for a particular project.   
  • Problem #2: Up-zoning automatically increases the value of privately owned parcels. Some of these up-zoned lots will be flipped, instantly enriching a small group of property owners and, therefore, increasing income, wealth, and racial inequality.  Other up-zoned lots will host new upscale apartment towers.  Even though the Housing Element’s main implementation program, up-zoning, conflicts with its spot-up-zoning program, in combination they are supposed to reduce, not increase, racial and economic inequality.  In the Housing Element these implementation programs are ironically called Affirmatively Furthering Fair Housing (AFFH). 
  • Problem #3: Other programs that could reduce economic and racial inequality, such as enforcement of fair housing and employment laws, raising wage levels, stopping wage theft, and slowing down gentrification, are missing from LA’s revised Housing Element. Its focus on racist housing policies is self-limited to red-lining, widely practiced in Los Angeles from the 1930s through the Federal Fair Housing Act of 1968, which banned all forms of housing discrimination 55 years ago. 

Why will the amended Housing Element make such leading housing indicators as homelessness and housing prices irrelevant?  Despite the Housing Element’s claims that zoning deregulation -- deceptively packaged as re-zoning -- and public housing privatization will reduce homelessness and housing prices, LA’s 2021-2029 Housing Element is sure to boomerang.  Similar programs have already increased homelessness and housing prices in Los Angeles, and there is no reason to believe that more-of-the-same will produce a different outcome.  The underlying assumption that Los Angeles can build its way out of the housing crisis by encouraging private sector housing construction is undermined by a glaring contradiction.  

Real estate investors pursue the highest rate of return possible, regardless of social consequences.  This leads to the construction of upscale apartment buildings in many Los Angeles neighborhoods.  Depending on private sector housing to meet the enormous unmet demand for low-cost housing is an exercise in futility.  Unlike public housing, only well off tenants can afford to rent small apartments whose rents typically start at $4000 per month.  Furthermore, new over-priced apartments pull up the rents of surrounding lower-priced apartments. 

The result is that housing prices, for both new and older units, increase, and this prices a rising number of people out of housing.  

If the purpose of public policy were to meet the shelter needs of those living in cars and tents or sleeping on sidewalks, these appalling outcomes could be avoided, like they have been in Finland, Austria, Denmark, and Singapore.  But in Los Angeles, like the rest of the United States, the purpose of housing policy is to line the pockets of real estate investors.  While these policies have succeeded, the public has paid a steep price.  Housing prices have risen faster than incomes, forcing millions to pay more than 30 percent of their income for housing.  Others have been completely priced out of housing, which is why homelessness continues to rise in Los Angeles, with no end in sight. 

What you can do to reverse this dire situation. 

As individuals and through organizations, you can let elected officials know that the era of handouts to developers must be replaced by public housing programs, mental health outreach programs, and the preservation of existing low-priced housing. 

You can support organizations like Fix-the-City which legally challenge City Hall ordinances that make the housing crisis worse. 

You can help organizations like the Los Angeles Tenants Union, which take direct actions, such as rent strikes.

 

(Dick Platkin is a former Los Angeles city planner who reports on local planning issues for CityWatchLA.  He serves on the board of United Neighborhoods for Los Angeles (UN4LA) and the Greater Fairfax Residents Association.  Previous Planning Watch columns are available at the CityWatchLA archives.  Please send questions and corrections to [email protected].)