Linking Job Growth and Housing: Sustainable Planning for LA

A truly sustainable city needs policies that address pollution, environmental benefits, and inequality. Healthy neighborhoods are free from pollution and include access to walkable and bikable streets, public transit hubs, parks and open space, and healthy food options. In LA, however, the luxury development building boom is rapidly displacing low-income residents to the fringes of the City, away from these resources. This is bad for low-income residents and bad for us all. To promote an equitable, healthier environment for all, we need strong affordable housing policies that make space for low-income residents in Los Angeles long-term.

Los Angeles cannot sustain the high demand for low-income workers with its current shortage of affordable housing. The proliferation of new commercial and residential buildings necessarily creates low-income jobs, but a recent study by the City found that there isn’t nearly enough affordable housing in the City to house these low-income workers.

An affordable housing linkage fee is one way to remediate this problem. This mechanism would place a fee on new development to offset the amount of affordable housing need generated by each new building. The fee would be used to preserve and build more affordable housing units to compensate for new low-income jobs created across the City. The fix is common sense. Providing housing for workers in places where they can walk, bike, or ride transit to work makes our air cleaner and Los Angeles more sustainable.

The City is currently considering a draft linkage fee ordinance, but as written, it does not go far enough. The City’s study found that a fee of $42 to $74 per square foot for residential projects and $118 to $309 for commercial projects would be necessary to mitigate the affordable housing funding gap created by new development and the demand for low-income workers. The proposed ordinance falls far short, proposing a fee of $12 per square foot for residential buildings and $5 per square foot for commercial buildings.

NRDC is joining the Southern California Association of Nonprofit Housing (SCANPH) and a broad range of voices that are calling on the City to do more. The City should raise the fee to at least $15 per square foot for multi-family rental units, $18 per square foot for condos, and $7 per square foot for all commercial development (other than warehouses). These fee increases would raise substantially more money to fund affordable housing, while still remaining well under the level that the City found was feasible for developers to internalize without a significant economic impact. The following graph compares the city’s proposed fee and our proposed fee to rates that the City determined were feasible for developers to maintain across different city markets, showing that both our proposal and the city’s proposal fall below feasible levels.

In recent elections, Angelenos have overwhelmingly and repeatedly confirmed their willingness to chip in to grow our affordable housing stock. The passage of Measure HHH in November, and the defeat of Measure S and passage of Measure H in March, are testaments to this commitment. It is high time that the City ensures that developers join voters and also put some skin in the game as we all work to fix our housing crisis.

Thanks to my colleague Heather Kryczka for contributing to this post.