Great News on the Goal to Build More Housing for Angelenos
It was a big week for supporters of more housing for all Californians.
California Governor Gavin Newsom signed into law a number of housing bills that will speed up the development of housing throughout California.
About four years ago the LA Coalition began focusing on the fact that LA's lack of housing was driving the region's workforce out of the region and state.
We formed a partnership with McKinsey, the United Way of Greater LA and the Business Council to generate a report - Affordable housing in Los Angeles: Delivering more—and doing it faster - that would go on to spark ideas that would spur the development of a more diverse and affordable housing stock, with good access to jobs, transit and public resources, for the growing number of Angelenos who continue to stretch financially to secure housing in Los Angeles.
At the time the State-mandated Regional Housing Needs Assessment (RHNA) prepared by the Southern California Association of Governments determined that L.A. County will need to build roughly 800,000 residential units by the end of 2029, and nearly 478,000 of those need to be affordable to households who make 120% or less than the City’s median income.
The most significant advocacy partner that was needed to move forward LA's state legislative agenda was the LA County State Democratic Caucus, which was comprised of 37 members of the state assembly and senate.
The LA Coalition hosted the caucus, chaired by State Senator Sydney Kamlager, to share the findings of the report and to begin a dialogue that would help focus and better leverage this large voting block to move an agenda that helped benefit the LA region.
At the time we focused on the two main concerns that was impeding housing development:
Issue 1: Production
L.A. County needs 340,000 more affordable homes, just to meet the needs of very low- and low-income (VLI/LI) households (<80% of AMI). While recent affordable production has picked up, 6th cycle affordability goals will require 42,500 VLI/LI affordable units per year or about 42% of total build, an increase of >7x the current rate.
Issue 2: Affordability
L.A. County needs 470,000 more affordable homes, just to meet the needs of very low- income households (<80% of AMI); and recent affordable production has been ~6,000 housing units per year, compared to the goal of ~13,000 units. Meeting 6th cycle affordability goals will require 59,000 affordable units per year or about 37% of total build.
Ninety percent of new housing that is being built is for above moderate-income earners, while 80% of renters in L.A. County, are either low or moderate income.
Only 3% of the new housing stock within the past decade has been built for wage-earners (80-120% AMI) who represent a significant portion of L.A.’s essential public and private sector workforces.
LA's leaders, including Senators Kamlager, Maria Elena Durazo, Bob Hertzberg, Ben Allen, and Assembly members Laura Friedman, Richard Bloom, to name a few, did an incredible job turning multiple ideas into bills, and used their talents through negotiations that led to last week's big changes.
The LA Coalition used its extensive network to work closely was a statewide group of housing advocates to weigh in when needed.
The four passed bills below will have an enormously positive impact on the LA region:
AB 2097: The bill, which bars local governments from implementing parking minimums within a half mile of public transit, takes effect next year. When the construction cost of a parking spot can be as high as $55,000 in urban areas like Los Angeles, and cities typically mandate one or two spaces per unit in residential developments, some building projects won’t pencil out unless they are designed and priced as high-end units. This doesn’t apply solely to new development, but to adaptive reuse as well. So if a restaurant, say, wants to move into an old building near transit, a city can’t force it to build more parking or refuse its permit on the basis of parking requirements.
AB 2011 & SB 6: These bills incentivize housing projects in commercial corridors otherwise zoned for large retail and office buildings as a way to help California fill a multimillion-unit shortage in its housing supply. Both bills guarantee union-scale wages and promise an expedited construction process, while keeping development close to city centers to help the state meet its environmental goals and avoid sprawl. An August analysis by UrbanFootprint, a software platform that analyzes city data for urban planners and local governments, found that the new law could produce 1.6 million to 2.4 million new homes, depending on market conditions, including hundreds of thousands of affordable units.
SB 679: This bill will set up the Los Angeles County Affordable Housing Solutions Agency to build new affordable housing, preserve existing affordable housing and offer struggling renters emergency rental assistance and access to legal counsel to help resolve landlord-tenant disputes. The McKinsey report found that LA has long needed to stabilize and consolidate public financing for affordable developments, especially when projects may require up to 15 different sources of funding, each with its own application requirements, restrictions, and timeline for approval. This will bring greater coordination, predictability, and transparency to the financing of affordable projects.
Other bills of note that were also passed:
AB 916 by Assemblymember Rudy Salas (D-Bakersfield) – Zoning: bedroom addition.
AB 2094 by Assemblymember Robert Rivas (D-Salinas) – General plan: annual report; extremely low-income housing.
AB 2234 by Assemblymember Robert Rivas (D-Salinas) – Planning and zoning: housing: post entitlement phase permits.
AB 2295 by Assemblymember Richard Bloom (D-Santa Monica) – Local Educational agencies: housing development projects.
AB 2334 by Assemblymember Buffy Wicks (D-Oakland) – Density Bonus Law: affordability: incentives or concessions in very low vehicle travel areas: parking standards: definitions.
AB 2668 by Assemblymember Tim Grayson (D-Concord) – Planning and zoning.
SB 886 by Senator Scott Wiener (D-San Francisco) – California Environmental Quality Act: exemption: public universities: university housing development projects.
SB 897 by Senator Bob Wieckowski (D-Fremont) – Accessory dwelling units: junior accessory dwelling units.
This is great news and let's keep going and find ways the state can incentivize developers to adopt new construction techniques and technologies at scale to decrease costs and accelerate development of housing.
Back in 2019 the McKinsey report found that:
Prefab construction involves producing standardized components of a structure in an off-site factory, then assembling them on-site. It can reduce the development cost of multifamily housing by 5 to 15 percent, if adopted at scale (with even greater benefits over the longer term). This approach promotes standardization within and across projects, which can speed approvals. The city has funded a number of prefab projects as pilots and set up a peer review process to accelerate approvals. But there is room to do more: establishing new standards and regulations that account for these techniques; mandating accelerated approval of these projects; seamlessly integrating permitting and inspections at both factory and assembly sites; and offering favorable financing terms. The city or the county can also partner with select prefab companies to help them build a pipeline of demand. A thriving prefab construction industry will need a workforce with the right skills, which will require investment in training. In addition to building housing faster, this initiative can bring high-quality jobs to the region.
Efforts around this would greatly encourage more innovative companies, like Impact Housing,that are focused on solving the workforce housing crisis by using a vertically-integrated development model to manufacture new, attainable, and attractive unsubsidized multifamily housing for low and moderate income households.
They have developed a manufacturing site in the region, creating new jobs in CA's incipient modular construction industry. This method brings great benefits, including time savings, cost efficiencies, reduced waste, and improved safety.
This new model is intended to help build housing units for the state's middle-class who are priced out of market-rate units, and don’t qualify for affordable housing programs.
Pushing the state to create these incentives and local officials to create density bonus programs specific to workforce housing; while revising zoning requirements to rethink open space, height limits, setbacks, parking, and design review, would be enormously beneficial to accelerating further progress on housing.
The best part is this can be done without public subsidies and can be aligned with the current strategy that encourages housing development within steps of Metro’s $120 billion public transit build outs.