Los Angeles Business Council

Mission Imperative: LA’s Workforce Housing Crisis
By Mary Leslie
Los Angeles Business Journal
December 10, 2007

Los Angeles’ business leadership is at a turning point. The downward financial spiral hitting the housing market, the demographic realities of the region, and the lack of an appropriate housing supply, have created a housing crisis that is threatening our economic viability. Our quality of life will worsen unless we act decisively. Now.

Smart Growth, which values long-range regional sustainability considerations and integrates and expands housing, employment and transportation options, is the only responsible way forward.

We must accept our obligation to meet the City’s workforce housing needs. Incentivizing housing at all income levels, particularly where the private developer is reluctant to build, is critical. Housing is infrastructure. People making between $29,000 and $90,000 a year represent the backbone of our economy and are vital to maintaining our quality of life.

Meeting Our Entitlement Requirements Through The Regional Housing Needs Assessment

We applaud the City for accepting its Regional Housing Needs Assessment (RHNA), which projects our housing requirements increasing by 113,000 households by 2014. The RHNA is mandated by State housing law as part of the process of updating the General Plan. The RHNA quantifies the need for housing within each jurisdiction during specified planning periods. The current planning period is January 1, 2006 to June 30, 2014

Meeting our projected need will require due diligence to ensure the right partnerships are formed and that we plan properly. Is the plan feasible?
Are all stakeholders – landowners, builders, tenants, and community groups – at the table? Are we looking to build in the right places?
Are we, as we must, building at all income levels? Last year, for example, according to the Housing Department, the City built over 14,000 new housing units. Twelve thousand of these units were priced for people making $90,000 or more per year. Unfortunately, in the same period only 1,300 of the 8000 units needed for people making between $29,000 and $90,000 per year were built.

If We’re Not Building, Who’s Leaving? Achieving Production Goals

To meet our region’s demands we must build at all income levels, including a minimum of 13,000 units, per year, in the city. This will require the City to create viable partnerships with for-profit and nonprofit developers. To encourage enough affordable housing, sites must be prioritized, fees must be appropriate, permitting must be expedited and gap financing must be provided. This is what has led the Los Angeles Business Council (LABC) to model the Orange County Business Council’s 2007 Scorecard and launch the LA Workforce Housing Scorecard initiative. The Scorecard will assist in planning by correlating regional job growth to housing demand; allowing us to reshape how we move forward to attract and retain the solid workforce we need to maintain a vibrant and healthy economy.

What the City Could – And Should -- Do Now

Implement SB 1818 immediately. It’s been three years since the state mandate passed. The law gives developers who build affordable housing – where appropriate – a density bonus and other incentives to offset their costs.
Leverage every state and federal dollar possible.
- Earmark a specific percentage of general fund money for the Housing Trust Fund.
- Make operational the $200 million New Generation Fund (NGF) as promised by January 2008. Enterprise Community Partners and the City’s partnership will provide predevelopment and acquisition funds to help finance approximately 20,000 rental and homeownership units.
- Expand City programs that offer gap financing to low and moderate-income homebuyers to maximize the new market opportunities in the 2008-2009 budget.
- Adopt the Private Sector Green Building Program by June 2008, which will modify the current building codes, establish incentives to encourage sustainable development and institute a process to educate and administer the new program.
- Modify the HUD regulations to adjust the allocation formula from a per capita basis to one proportional to true need. Thus, high cost low-income areas like Los Angeles could receive an allocation proportional to need instead of being unfairly penalized. The same could be done at the state level with the Tax Credit Program.
- Demand that Congress and the President support the National Affordable Housing Trust Fund Act of 2007 that commits to producing, rehabilitating and preserving 1.5 million housing units in the next 10 years.

There is no more important infrastructure issue impacting economic development and the overall health of Los Angeles than housing. We can no longer accept City or County officials giving up simply because we haven’t been successful in the past. We must create innovative partnerships between the City, the County, for-profit and nonprofit developers and adopt an integrated policy of Smart Growth.

Failure is not an option.

Mary Leslie is the President of the Los Angeles Business Council

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