Affordable Housing Study Session Reveals Uphill Battle To Secure Funds, Protect Existing Units

 

Like any coastal city, living in Long Beach is expensive. There’s no dancing around the recent upward trend of property values and monthly rents, and the causes of that are up for debate. Mired in the middle of a statewide housing crisis, the Long Beach City Council hosted a study session Tuesday night to examine the obstacles and opportunities it has to combat the issue through the construction and protection of affordable and workforce housing.

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Director of Development Services Amy Bodek detailed the many issues facing the city in its attempts to strike a balance between market rate housing and serving the needs of the many people who cannot afford them.

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Screenshot of the study showing how rents in Long Beach have steadily increased over the last four years. 

She outlined how over the past four years rent for the average one-bedroom apartment in Long Beach has risen by 25.9 percent, going from $995 in 2012 to $1,400 as of December 2016. The median rent of a two-bedroom apartment increased by over 40 percent in the same period, rising from $1,350 to $1,700 according to Zillow, an online real-estate entity.

Bodek noted that the number of households considered to be cost burdened—the federal definition being a household spending over 30 percent of its monthly income on rent and other housing costs—has also grown.


 

According to the Department of Housing and Urban Development, data focused on housing affordability shows that over 47 percent of Long Beach renters and homeowners fall into that category, with about a quarter of all households falling into the more sobering category of being severely cost-burdened. Those households spend over 50 percent of their gross income on housing.

But building affordable housing is an expensive proposition she said, and the dwindling of resources has led to Long Beach keeping pace with the rest of the state in not meeting its goals of affordable housing construction.

“It’s safe to say that Long Beach, along with most cities, normally fall short of the targets that are set by the State of California, but we are expected to build affordable housing stock year-in and year-out and we have obviously done some of that work in the City of Long Beach,” Mayor Robert Garcia said.

Bodek said that this failure to meet goals is multifaceted.

The dissolution of the former redevelopment agency has cut a continuous source of funding for the city to invest in affordable housing projects. When the city does secure an entity that wishes to build affordable housing it usually requires local funding, of which Long Beach currently has about $14 million when excluding the nearly $70 million that is tied up in Section 8 vouchers.

“Our resources are limited and part of today’s discussion is to talk about opportunities where we may be able to expand those resources, but also constraints,” Bodek said. “Our big question is with public funding dwindling, how are we going to move forward and invest in affordable housing as a legitimate infrastructure investment?”

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Screenshot of the study showing how much money the city has invested in subsidizing developer costs for affordable housing. 

Instead, the city has had to find creative ways to squeeze in affordable units where it can. It’s taken to giving “density bonuses” to developers, like those about to break ground in the downtown sector, so they allocate a percentage of their projects for affordable housing. The units are blocked out for a predetermined amount of years and in return the developers receive the ability to build higher or provide less parking as would otherwise be required.

The city is also able to provide special financing to property owners if they enter into covenants with the city that allocate a percentage of units for terms of 45 to 55 years.

Other state laws like the California Coastal Commission’s requirement that affordable units that are removed from the coastal zone be replaced in a one-to-one ratio, have helped preserve some affordable units. However, Bodek pointed out that its in-lieu fee option—a fee ranging from $10,000-$30,000 paid instead of replacing the unit—is “antiquated” and staff is looking at adjusting it.

Some larger cities like Chicago, Boston and San Francisco charge larger sums, ranging from $70,000 per unit up to $175,000 in the Chicago downtown sector.

A request from Second District Councilwoman Jeannine Pearce will also have staff pursue the idea of limiting the conversion of apartments into condos when the city is below a certain vacancy rate. Currently the city is below 5 percent vacancy, as is much of the county, and Bodek said that a more healthy range would be somewhere between five and ten percent.

The study session, which lasted for over four hours, served as another opportunity for public input on the housing crisis that has stricken the city along with much of the state. Stakeholders from every part of the housing spectrum have met over a dozen times since February of last year and the mayor hosted three separate community meetings to gauge the public’s perception on the topic late last year.


 

While building more affordable housing is certainly a step in the right direction, many feel that something needs to be done to address the disappearance of units that will surely continue before new projects break ground or are completed.

Jorge Rivera, a housing activist and member of LiBRE (Long Beach Residents Empowered), spoke to that idea, pointing to the dozens of units that are being lost to sales, which are then being re-listed at rates far higher than the ones previous renters were paying.

“I hope you can agree that there’s no way we’re going to build our way out of this crisis,” Rivera said. “One reason is because people and families are losing what’s already affordable to them faster than you can even build it.”

Karen Reside, a resident of an affordable senior housing project in the city, said that the report needs to address the Airbnb issue. She noted a November article in the Washington Post detailing the rise of two young men’s fake news venture, who had listed a Belmont Shore Airbnb as their home base.

“We’re not addressing that at all as part of our housing crisis and I think we should be, especially in the wealthier areas,” Reside said.

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Screenshot of the study showing rent burden in Long Beach in relation to other cities. For those in lower income brackets the percentage considered "cost burdened" is over 70 percent.

Elizabeth Waite, a student at Cal State Long Beach who lumped herself in with the alarming number of homeless college students, said that the American Dream has been abandoned by a lot of her peers. They’re focused on how to afford to live in the city they go to school in.

“For a lot of us, we’ve given up on home ownership because we can’t even enter the renter market because it is so competitive,” Waite said. “And even if we did enter the renter market there’s nothing legally protecting us from being evicted for some erroneous or unjustified reason.”

The recent green-lighting of multiple market rate projects in the downtown sector to spur density initiatives has also led to a surge in average monthly rents with some of those luxury developments commanding around $2,000 for a studio apartment in some cases. Some of those developments, like Studio 421, have affordable housing units included in return for regulatory concessions.


 

However, there is the perception, and anecdotal evidence, that they have created a ripple effect to neighboring communities with some landlords taking that as a go-ahead to raise the rents at their buildings too.

Garcia acknowledged the need to continue to build both kinds of projects as the city’s socioeconomic makeup is not homogeneous. He said the building of all levels of housing provides options to all levels of income earners. He, along with two other members of the council, even threw their support behind the idea of micro-units—under 350 square feet—as a potential part of the solution to the city’s housing crisis.

“Building housing across the board is important,” Garcia said. “When you build more housing for low-income folks you're providing opportunities, obviously, for them to get into the housing market. When you’re building more housing for workforce housing or moderate income housing, you’re allowing folks that might be in substandard housing or in housing that may be more low-income housing to then move into that middle-income housing and create space to incentivize other folks to move into that other housing.”

The tricky part will rest in what avenue the city determines is the best way to achieve this. To locate a permanent source of funding, it may try to implement some sort of property tax bond measure as was identified in the report’s analysis of other cities’ efforts to boost affordable housing funds.

It can also push for more inclusionary housing policies that require a certain percent of units to remain affordable, and charge a larger in-lieu fee if the properties resist it. Linkage fees, tied to general construction projects exceeding a specified square footage, were also identified as potential streams of revenue to bolster the city’s fund for affordable housing.

In a separate item discussed last night, the council also looked at taking “granny flats”—detached units on existing properties— off the black market and incorporating them into the normal, regulated rental market to improve the city’s vacancy rate by virtue of allowing people to have them and letting others know they exist.

The report, which will include elements of last night’s discussion is expected to come back to the city council within the near future for a potential vote on recommended policies. But time to implement them may be running out as the state, which was recently declared to have the highest poverty rate when accounting for cost of living, continues to lag behind in closing its affordable housing gap, currently estimated to be one million units, through 2025.



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