by Joe Shea
American Reporter Correspondent
Los Angeles, Calif.
February 7, 2003
COUNCIL BATTLES TIME AND SPACE IN L.A. HOUSING CRISIS
LOS ANGELES, Feb. 6, 2003 -- "This is a great day," said Councilwoman Wendy Greuel Thursday afternoon as she welcomed about 45 of the city's most influential housing policy wonks to a special session of her Housing & Economic Development Committee called to celebrate progress in building the largest municipal housing trust fund in the nation.
A former Dreamworks and Walt Disney executive, Greuel is in her first year on the Los Angeles City Council and coping with its greatest crisis - a shortage of housing so widespread and severe that it threatens to turn one of the nation's most beautiful cities into a squalid Third World slum where more than 40,000 garages have already been illegally converted to housing.
Only half of the city's Registered Nurses, for instance, with their median income of $50,000 a year, have been able to buy a home; for a fast food worker, the American Dream is realized by just 18.8 percent. Mayor James Hahn formed a 3i-member task force chaired by former Councilman Michael Feuer to study the crisis and find ways the fund can cope with it. Hailed by the mayor, who was praised in return, they turned over their findings in a 64-page report to the council's key housing committee on Thursday.
"In short," the advisory group said, "Los Angeles has far too few housing units, those that do exist are often overcrowded and riddled with substandard conditions, rents vastly exceed the earning capacities of a significant percentage of the city's population, and home ownership is out of reach for most middle and low income households."
For once, though, even in this era of budget cutbacks, there is real hope - thanks to the state's voters and its much-maligned initiative process. Voters passed Proposition 46 last year to set aside money for a need that almost certainly would have gone unmet as California wrestles with a $35-billion budget shortfall.
"It's a real great day," responded one enthusiastic speaker during a public comments portion of the hearing. "A couple of years ago this trust fund was just a dream. Now we're looking at the largest low-income housing trust fund in the nation." The $100 million fund is slated to receive $42 million in the 2002-03 budget, and much of that will jump-start the city's projects to compete for newly-available state funds. That job, said one official, "is like moving boulders [uphill] by hand."
The city's money comes from the giant tobacco settlement, a hotel tax, part of a higher sales tax, parking users' tax and the real property documentary transfer tax, among other sources. The Department of Water and Power is also kicking in $10 million. The bulk of the money is slated "to expand and preserve the number of rental units in Los Angeles" for those making less than 60 percent of the area's median income.
"The vast majority of this funding should be devoted to increasing the number of housing units in Los Angeles," the task force recommended.
About 20 percent would go to helping Angelenos become first-time homeowners, and 5 percent to provide emergency assistance to persons in extreme need for immediate housing, such as large families that face immediate eviction because of job loss or sickness. With 65 percent going to expand housing, the remaining 10 percent has been set aside for "flexibility," and defining that word consumed most of a genteel but serious debate that lasted more than 90 minutes Thursday.
The great day came not a day too soon. Los Angeles is bulging at the seams, and the buildable space in most of its 468 square miles is used up even as census data predicts another 6,000,000 people - nearly twice the current population - will come here in the next 25 years.
"Los Angeles needs more than 28,000 new housing units by 2005 just to accommodate" residents that make 80 percent of the median, the task force said.
How to prepare for that unimaginable influx, and how to build "more roofs," as nonprofit Century Housing executive Tim O'Connell put it, is a dilemma that most cities may never solve. If Los Angeles can do it, it will be all the more miraculous.
Attracted by the prospect of warm winters and decent wages, fine colleges and good roads, beautiful beaches, snow-capped mountains and vast, fertile fields, about a million undocumented aliens and hundreds of thousands of Americans have come here to fulfill their version of the American Dream. More often than not, that includes a home of their own, and for most Angelenos, that dream is not coming true.
Just months after a citywide secession battle waged by Hollywood and the San Fernando Valley that aimed to break the city into three or more parts (tiny San Pedro also wanted to go, but was refused a place on the ballot), the four councilmembers who sit on the committee are preparing an all-out assault on some $2.1-billion in funds generated by Proposition 46 that can be spent only to house California's soaring population and aims to turn many of its low-income wage earners into homeowners.
Councilman Eric Garcetti, a sort of "wonk's wonk" when it comes to housing policy - he led seminars on the topic at Harvard University before he ran for office - says that in his own district, Hollywood, about 85 percent of residents are renters; the number is around 65 percent throughout the city, he said.
Meanwhile, says Councilman Ed Reyes, whose mostly working-class Latino district is crowded into some of the most dilapidated housing in the city, "There's no more open space - we have to go up."
And "up" for Reyes means several things, including economically "up," such as by converting the district's many small bungalow courts into owner-occupied units - "What are we up against on that?" he asked plaintively - as well as building low-income housing a lot higher than the prevailing two-story projects around the city.
The short, solid-looking councilman has little patience with the in-house wonks at City Hall, and wants to see progress in solving the crisis in weeks, not years. "We need folks that can help us move the financial analysis and the financial package along," he told the experts.
In a city that soaks up an ocean of real estate profits every year, there are plenty of those folks around. Los Angeles is fast approaching the San Francisco as one of the most expensive rental and residential housing markets in the country. A vast population of renters living in poverty create a demand for older housing stock, and that's made newer homes precious, O'Connell said.
Cheaply constructed tract houses that sell for $45,000 an hour north of Los Angeles in Lancaster, Calif., may sell for $350,000 and up here - and they're tear-downs on the city's wealthy West Side. Meanwhile, instead of rehabbing, the city is currently tearing down some 100 homes a month, according to City Atty. Rocky Delgadillo, to fight the blight of abandoned buildings in already-rundown neighborhoods. Some are rebuilt by Habitat for Humanity, but most of that housing is lost until an investor takes interest in building out the parcels again.
"We need to get creative," said Sarah Dusseault, assistant deputy mayor for housing. That may be, but none of the projects have taken advantage of an idea offered during the secession campaign by a Hollywood activist: Let the city get aggressive about seizing hundreds of thousands of substandard, dilapidated units, and then partner with a city-funded "Corps of Carpenters" and the units' tenants to rehabilitate the buildings for resale to those same tenants.
But Garcetti and Hahn did pledge last Fall, at a meeting of 1,000 people at Blessed Sacrament Church organized by the Hollywood Interfaith Sponsoring Commitee, a network organization of PICO (The Pacific Institute for Community Organizations), to build 500 new units of affordable housing in Hollywood within three years. Dusseault also spoke of Mayor Hahn's interest in New York City Mayor Michael Bloomberg's success in using housing stock to "make money with money" by leveraging its loans, buildings, homes and real estate.
Praising Reyes for his leadership, Garcetti told the attentive audience that while some 10,800 units now under rent control will convert to market rates by 2006, only 3,000 units are being planned. That, he said, means setting aside more money for preservation, rehabilitation and "adaptive reuse" - turning sow's-ear structures into silk-purse housing.
While O'Connell and the task force set up last summer by Mayor Hahn want to use unencumbered or "flexible" Prop 46 money mostly for new construction, others don't. One is Ruth Schwartz of the nonprofit Shelter Partnership - which provides homeless shelters with basic necessities donated by chain stores and others - who agrees with Reyes and Garcetti that fixing up older housing will accomplish more for less money than building new units.
Worried that new construction will take money away from "police and potholes" and other basic needs, Schwartz says that it "costs a whole lot more to build something new." Garcetti made the same point as he questioned city housing officials, who told him that rehabbing a unit costs about $54,000, while building a new one costs an average of $104,000. A city subsidy can bring both costs down.
The public hearing had nearly ended when an unidentified black woman in a yellow tee shirt with a red fabric rose pinned on it bounced to the microphone and joyously exclaimed, "Thank you! Thank you! Thank you!" She was grateful for the decision to devote 5 percent of the trust fund to emergency needs, and carefully singled out every interest group in the council chamber to thank them for brightening the hopes of thousands who about to become homeless in Los Angeles.
Councilwoman Janice Hahn, whose district includes the Port of Los Angeles and the surrounding communities of San Pedro and Wilmington, warned her colleagues against committing any of the "flexible" funds to either preservation or new construction, since market forces in the region's volatile housing industry can change overnight - earthquakes and riots have accomplished that twice in recent years - and leave the city too slow to take advantage of fast-breaking opportunities.
At yesterday's meeting, where the committee tried to get its ducks in a row as its housing experts prepare project proposals for the first two rounds of funding, the majority agreed to keep 10 percent of the money flexible "but with an understanding that the priority will be preservation." Hahn, the sister of Mayor Jim Hahn, raised her hand and genially agreed to go along.
Later, the committee ordered Los Angeles Housing Dept. officials to synchronize their project "scoring" systems with the state's, and to hire consultants and experts as necessary with an estimated $22 to $25 million budget they've been given to get the city's proposals in shape to qualify for Prop 46 funds. The city is still looking for a Housing Director and another top official is leaving, potentially hampering swift execution of the proposals.
"I think we should be treating the housing crisis as if we did have an earthquake," said Reyes, fondly recalling the button-downed way Los Angeles met the challenge of the 1994 Northridge Earthquake with a clear set of guidelines and a streamlined process for applications.
"We'll score exactly as they're scoring up at the state," promised chief legislative analyst Paul Smith; viable projects will have all their entitlement applications at the ready "to get the optimum score they can get."
Nonetheless, for the city, its consultants and non-profit developers, the coming rounds may be the equivalent of a downhill mogul run. "It's a complicated process," Smith warned, and highly competitive. And like his counterparts in many California cities, he's already out of time.
This is the first in a series of articles on efforts to meet the severe housing shortage that has gripped Los Angeles for the past decfade.