December 30, 1988 - From the December, 1988 issue

The Housing Problem: A Tale of Two Cities. The Planning Report’s Conversation with Gary Squire, Housing Coordinator for the Mayor’s Office

On December 1, 1988, the Mayor’s Blue Ribbon Committee for Affordable Housing will present its analysis and recommendations. Since April, the Committee has undertaken the first city-wide study to coordinate agencies responsible for housing. The Planning Report recently spoke with Gary Squire, Housing Coordinator for the Mayor’s Office and Executive Director of the Committee.

The L.A. 2000 Committee stated that “a comprehensive city-wide housing policy does not exist.” Who is responsible for housing in the city?

Housing is the responsibility of eleven different agencies. Currently there is no formal relationship between any of these agencies in the way they deal with housing. Each agency generates policy which directly affects the housing system without any assessment of the decision in relation to other actions. What’s missing is an ongoing needs assessment. There’s no barometer which shows how we are doing, or shows the shortfall between supply and demand or what the relative levels of housing deprivation are.

Do we know how much housing we’re producing each year?

We did not until the Mayor’s Blue Ribbon Committee studied it. Now we know we’re producing between 14,000 and 17,000 units each year. However, the net figure comes to 12,000 per year if you subtract demolitions. We’re demolishing between 4,000 and 5,000 units a year. But these production figures are beginning to tail off because of the slow growth movements and the high price of land. Additionally, in the last few years housing production has been affected dramatically by the loss of tax-exempt bond financing because of the Tax Reform Act of 1986. This legislation also affected tax benefits for apartment construction.

But we now have an idea of what we have to do. We have 1.2 million units of existing housing. We calculate that we’re growing at approximately 25,000 households per year. Since our housing stock is increasing at roughly 15,000 per year, we’re looking at a shortfall of 10,000 per year.

 How much money is needed to confront this shortfall?

Our current total housing budget is $90 million per year. To hold the system steady – to keep the problem from getting worse – we have to aggregate about $300 million worth of housing resources. And that could be dollars from local governments, and it could be corporate investment. But it has to be a multi-faceted approach to raise the revenue. The City of L.A. generates no other dollars other than its redevelopment dollars for housing. I think this could change. For instance, you can implement various revenue enhancement programs. We’re considering a system to tie the development of commercial construction to housing production, recognizing that if you build an office building with workers who need housing, they will be putting a demand on a housing system that is already taxed.

When you talk about revenue enhancement, it sounds like quite a bit of the burden will fall upon developers:

That’s one approach. Another is a general obligation bond. Another is raising the cap of the CRA. You can’t simply focus on one path. We’ve got to look at numerous methods to find revenue to deal with the housing problem. A whole new responsibility is now falling on cities to deal with the housing problem. So how are we dealing with it? One way is exactions, another is creating housing trust funds.

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It’s often argued, if you just unfetter the private sector, can’t they build us out of this crisis? And the answer is, no they can’t. We have 150,000 households who are paying more than 50 percent of their income to housing. That’s more than half a million people. If the private sector assistance was going to help these people, it would either develop units at the top of the market and let them trickle down, or generate units that have $400 rents. But a developer today can’t build housing and make a profit for much less than $800 per month. With these new units, you won’t have the trickle down to help the low income renters. There has to be government intervention in the system, just as there has to be intervention in the sewer system and our air quality. Local government now has to be the catalyst that taps outside resources, gets a fair share of state and federal resources, and internally generates resources.

Given all of these housing problems, how did the Mayor’s Blue Ribbon Committee respond?

The charge of the Committee was to determine the extent of the housing crisis and to make recommendations for the first steps towards a comprehensive approach. Let’s look at the first problem I mentioned. There is no rational planning approach to the housing system. I’m the housing coordinator, and there’s no way I can coordinate housing between the planners and the implementers. It’s insufficient that there be one person in the Mayor’s Office coordinating housing policy. We need an annual needs assessment that is reflected in the budget allocation with annual production targets. We need a conscious review of all policy coming out of the city for its impact on the affordable housing system. But we’re struggling with who would actually review policy. The review must not only be comprehensive, but whoever does coordinate the process would have the power to slow any initiatives which have significant adverse impacts on the housing system until those housing impacts are mitigated.

And there were many more recommendations. Our problem analysis demonstrated that we have a bifurcating economy with more high-wage earners and low-wage earners. We have a housing market that isn’t growing. There are workers competing for a relatively shrinking market – where supply is shrinking relative to demand—and the winners and losers are becoming the housing haves and the housing have nots. The gap between wage trends and housing cost trends are growing at a very rapid rate.

The recommendations are that we stabilize the affordability of existing stock; preserving an existing housing unit is as effective as building a new unit. We need to preserve not just the physical integrity of a housing unit but its affordability as well. It makes specific recommendations about 50,000 brick buildings of low-income stock that must be rehabilitated in the next six months. There are also recommendations for the 19,000 HUD units with expiring agreements, because all the federally assisted, privately developed housing ha medium-term affordability restrictions. And we concur with the Mayor’s proposal to raise the cap for downtown because it’s the most significant resource that can be brought to housing production by a factor of five.

Did you consider creating one body, a housing agency, which would consolidate the responsibilities of all the other agencies?

The commission recommends that we coordinate but not consolidate all of the departments. The reality of consolidation is that it would take a very long time. Coordination means overlooking and making recommendations for level expenditures and targeting housing priorities. We looked at the existing housing agencies and the reality of structurally changing the existing housing implementation. But we felt that the existing agencies should be left in place, though some of their objectives should be centrally coordinated.

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