Pulling Back the Curtain on LA’s Gentrification Movement

PLATKIN ON PLANNING-On Saturday, December 2, City Watch readers are invited to attend the Resist Gentrification Action Summit. The conference, sponsored by Housing is a Human Right.org,  takes place at Audubon Junior High School, 4120-11th Avenue, Los Angeles, from 8 a.m. to 6 p.m. 

According to Damien Goodman, the conference organizer, the gentrifiers have a three-word mantra for every problem facing Los Angeles, “Build more housing!” For those who listen carefully, their hymn has a second verse. It calls for rolling back zoning and environmental regulations on high-end real estate projects. This not affordable housing is the actual focus of their build-more-housing crusade. 

Little do these gentrifiers know, however, that their perpetual claim, that zoning and environmental laws stifle affordable housing production and overall economic prosperity, has been totally debunked.   For this tour de force, it is hats off to Bay Area planning journalist, Zelda Bronstein, for her new article, When Affordable Housing Meets Free-Market Fantasy,  in Dissent Magazine. [Editor’s note: this article is currently reposted in CityWatch.] 

Gentrification Basics: Before readers peel away to read Ms. Bronstein’s article, let me summarize the basic ins and outs of gentrification.  

While gentrification takes many forms, it is always based on the same underlying dynamic. The world is awash with underperforming capital, and real estate, especially market housing, is a lucrative investment option for sovereign wealth funds, hedge funds, mutual funds, insurance companies, corporations, and retirement systems. While their risks might be high, such as another Great Recession propelled by a catastrophic real estate bubble, the profits are immense. After all, in cities like LA landlords can charge tenants between $1000 - $3000 per month for a one bedroom apartment, forcing over 59 percent of Angelinos to fork over 30 percent or more of their income for housing. 

Lending a helping hand to this flood of investment, congenial cities like Los Angeles provide many conduits for investors to quickly move their idle cash into the high-end housing market. Sometimes cities pony up the real estate schemes and scams I recently wrote about on City Watch. Other times, developers rely on that old City Hall standby, pay-to-play, to get their pet projects quickly approved. Then, when they think no one is looking, some developers cut corners and also bootleg their projects, betting that the chance of getting caught is small, and the prospects that LA’s Department of Building and Safety would shut down an illegal project is almost nil.  

Finally, this perfect storm for gentrification also builds on the rapid growth of economic inequality in the United States, especially Los Angeles. As a result, the well-off dominate a housing market skewed toward their tastes and pocketbook. Meanwhile, a growing percentage of the population is only treading water or losing ground. This is why, according to renthop, most people living in Los Angeles can no longer afford to buy a home or rent an apartment. Nevertheless, the purchasing power of the top 10 to 20 percent is enough to drive a real estate market that excludes much of the city, but is still the most desirable location in the U.S. for foreign investors.   

In practical terms, this perfect storm is also causing local demographic changes.  Even though LA’s population is barely growing, the city’s population mix is shifting toward the well-off. Meanwhile, the middle and working class families pushed out of the gentrifying housing market are resorting to the streets, cars, and overcrowded inner-city apartments. Some, of course, choose to leave LA for the Inland Empire, Nevada, Arizona, and Texas. Those who manage to hang on may resent recent changes in retail stores, such as art galleries in Boyle Heights, but this is a consequence of gentrification, not a cause. 

Gentrification takes many forms in Los Angeles: These include mansionization, transit oriented development, evictions through the Ellis Act and cash-and-key, small lot subdivisions, and “churning,” in which landlords force out low-rent tenants by making buildings unlivable. The net result is that these many forms of gentrification eliminate rent–stabilized and affordable housing much faster than it is being built through such programs as density bonuses and Federal tax credits. In fact, during the past 15 years, over 20,000 affordable units have been eliminated in LA alone through the Ellis Act. If other forms of gentrifications are included, such as mansionization, churning, and cash-and-key, the cumulative loss of affordable housing is much greater. 

What can be done? Gentrification relies on supportive governmental policies and programs, all of which can all be amended, rescinded, or reversed to stem the tide: 

  • At the macro level, countries can slow the influx of foreign investment capital into speculative real estate by eliminating EB-5 investor visas or following the example of Switzerland, which reports all earnings back to the investors’ host countries. 
  • Countries can also rely on taxation, minimum wage laws, and social benefits to reduce economic inequality. 
  • States can promote programs, such as Community Redevelopment Agencies, which use tax increment financing for affordable housing construction. 
  • Cities can strengthen their rent control and rent stabilization laws, as well as eliminate evictions programs, like the Ellis Act, that decimate the stock of affordable and rent-stabilized housing. 
  • Cities can curtain many forms of gentrification, such as mansionization, through local land use ordinances. 
  • All forms of gentrifications depend of discretionary actions that can be slowed or stopped by initiatives, such as LA’s Measure S. 
  • Building departments can proactively enforce zoning, building, and environmental laws to slow down the gentrifications process. 

Why does gentrification continue? Why have local media, such a KCET and KPCC, devoted so much airtime to the gentrification story, but with few changes in public policy? Why have researchers at UC Berkeley and UCLA prepared detailed gentrification studies and maps indicating that transit oriented development primarily consists of expensive housing that does not lift transit use. 

The answer is the political side-effect of the economic dynamic that spawns gentrification. Through campaign contributions and lobbying, major real estate investors also promote an institutional culture at City Hill that uncritically accepts the gentrifiers’ arguments and then acts accordingly. As a result, elected officials and their hired departmental managers are pulling out all the stops to attract speculative real estate money to Los Angeles. 

When they point their finger at fanciful schemes to slow down gentrification, remember that there are still three fingers pointing back at them. 

(Dick Platkin is a former Los Angeles city planner who reports on local planning controversies for City Watch.  Please send any comments or corrections to rhplatkin@gmail.com.) Prepped for CityWatch by Linda Abrams.