November 10, 2000 - From the November, 2000 issue

Why Isn't Affordable Housing Being Built In L.A.? Related Companies' Bill Witte Opines

In the face of tremendous projected growth, California's affordable housing crisis is not an easy fix. Offering some optimism, however, is Bill Witte, principal of The Related Companies of California, who says that leadership intent on addressing housing is building in the state. He admits, though, that Southern California is behind the curve in tackling the issue, and needs to catch up. He also points to the potential of using housing as a tool for economic development.

Bill Witte

Bill, give our readers an overview of the kinds of projects that The Related Companies are involved in here in California?

We focus on two broad niches.

One is the low- to moderate-income housing market. Those efforts involve preserving old subsidized projects and helping to redevelop older neighborhoods, as well as constructing new projects.

The second is the entirely opposite end of the spectrum-the construction of luxury and/or mixed-income developments in urban downtowns.

At the close of the legislative session, a great deal of attention was finally paid to the dearth of affordable housing in California. In response to that, give our readers a sense of the major benchmark projects that you're engaged in throughout the State.

We're involved in some major projects in the Bay Area including a 39-story, 495-unit mixed-income high-rise in Downtown San Francisco, which is under construction, and a high-end mixed-use project in Downtown San Jose that could include up to 800 units and a 240-unit mixed-income development near the new Giants stadium in San Francisco.

At the other end of the spectrum, we have over 2,000 units of old HUD-subsidized housing in San Jose, San Diego and Long Beach under contract and/or acquired, which we're planning to rehabilitate completely. We're also involved in several large revitalization projects, where we're working with local public agencies to acquire and renovate sites in older neighborhoods that have a large number of absentee owners-in South Sacramento, Inglewood and Anaheim. And we have affordable new construction tax credit projects in San Bernardino County, San Diego and San Jose.

Bill, obviously left out of that equation is Los Angeles; yet the demand for housing here is clear. What are the essential conditions that bring you to locations like San Jose, San Diego, Sacramento and San Francisco that aren't currently present in Los Angeles?

Actually, we're working in Los Angeles along with McCormick Baron & Associates, the L.A. Housing Authority and the Lee Group, to redevelop the 35-acre Aliso Village public housing site in Boyle Heights. That includes 376 rental units, 93 for-sale units, and a supermarket-anchored shopping center. And we're very excited about that.

However, to answer your question, the main factor that draws us to an area is a strong public sector, from elected officials down through the bureaucracy. What are their priorities for housing? Where is the support for housing? And do they acknowledge what the private sector-as opposed to the small nonprofit sector exclusively-can bring to the equation? Well, we're involved in every major city throughout the State, and unfortunately, I don't believe that such an environment exists at the moment in Los Angeles.

Decisions regarding tax credit allocations were made recently, and Los Angeles again came up short. First, give us an overview of how those tax credit decisions are made. And second, how is it that a dense metropolis like Los Angeles-where the need for housing is so great-continues to get the fuzzy end of the lollypop?

At present, there's one factor compounding L.A.'s housing shortage that isn't the City's fault-the allocation system. That process has become very detailed and is certainly oriented to the type of projects prolific in L.A.; yet L.A. County is continually shorted because of over-allocations made to smaller counties in front of it. However, I expect the system to be corrected next year.

Having said that, there's a real premium in this system for municipalities who are ready to proceed, who have their acts together, and who can move quickly. And for whatever reasons, it appears that the City of Los Angeles simply cannot address these components adequately.

HUD had a major conference in Los Angeles at the end of September, looking at housing supply and related issues. What is the appropriate role for HUD to play in the provision of incentives and funding for housing? And what coalitions or collaborations do you have with HUD as a company?


HUD's role is and will continue to be rather limited. The Department's main role should be to help expedite the disposition of its older inventory-both public housing and HUD-insured or subsidized Section 8 properties-to a new generation of developers. And they've been doing a good job in that role.

In terms of encouraging production of an affordable inventory, it's clear that regardless of what administration is in charge those decisions are generally made at the state and local level. And to be honest, I don't see HUD playing a major role in these areas. They do have a bully pulpit, and it's helpful if the Secretary of HUD uses that to be the conscience of the country. But I don't see them having a major role at the local level other than what I mentioned above in terms of dealing with their inventory.

Let's talk about the State then. It's been a year since the new administration took charge. How do you evaluate the success and the role of the State in the provision of housing in California?

While it's all been positive, there's only so much the State itself can do.

Treasurer Phil Angelides has been an outspoken advocate for greater investment in urban areas, for better targeting of the State's affordable housing programs, and for getting some of the big pension funds to become "players." Additionally, the Controller, Kathleen Connell, has a long history in the housing market and has been very supportive. And the Governor's appointment of Julie Bornstein gave the Department of Housing & Community Development an active advocate for the first time in years. Even more importantly, we're seeing the different offices actually speaking to one another about housing, which hasn't happened in the past.

Having said that, what is most fundamental is what happens in the arena of local land-use decision-making. Without land-use decisions that incentivize or at least permit housing and/or affordable housing, you can have all the programs and coordination in the world-and you're still not going to see a lot of impact.

Bill, bringing this to a close, the Legislature again this year failed to take any meaningful steps to deal with the fiscalization of land-use and the current tax structure-even with all the pressure from the Speaker's Commission and others. Do you see anything on the horizon that suggests the State has the policy infrastructure in place to support intelligent housing, growth and land-use policies?

I'm a little more optimistic now than I was even a year ago. Julie Bornstein recently released a report speaking to several new models of how to meet housing demand. And I have a lot of confidence that Speaker Hertzberg and Senator John Burton will not let the issue of housing slip from the agenda.

There's a growing statewide consensus-as there can be only in good times-of people who want to focus on the housing problem. The Bay Area has three strong Mayors who have actively made housing an issue, and I'd like to see that happen in Southern California as well. It's been too quiet here-and the problem is certainly no less severe.

And ultimately, it's up to those of us in the field to keep our representatives' feet to the fire and let them know this is important.

Lastly, Bill, we're going to have a Mayor's election here in Los Angeles next spring. In your opinion, what should be the central themes of this discussion? What topics need to enter the debate?

First, the role of upgrading older housing as a neighborhood revitalization strategy. Second, the role of housing as, dare I say, an economic development tool-as a critical component of both neighborhood revitalization on the one hand, and economic development on the other.

Most other regions seem to have acknowledged-if not addressed-the incredible housing shortfall at virtually every income level. And just like public safety was eight years ago, this should be the fundamental issue in L.A.'s Mayoral debates.


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