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Los Angles Voters Approve More Affordable Housing Proposition, but . . .01-06-17 | Legislation

Los Angeles Voters Approve More Affordable Housing Proposition, but . . .

Affordable Housing and Labor Standards

The combination of higher construction wages, directives for hiring construction workers and the many mandates set forth by the Los Angeles Affordable Housing and Labor Standards Related to City Planning Initiative Ordinance would seem a disincentive for housing developers.

According to the "Affordable Housing and Labor Standards Related to City Planning Initiative Ordinance" (a 31-page Los Angeles City Council document https://tinyurl.com/gl9h4ss), L.A. is the nation's "homeless capital" (estimated 26,000 homeless), has the nation's highest percentage of renters (according to a UCLA study), and is meeting only 26% of housing needs for lower-income households. The Southern Calif. Assn. of Governments estimates a shortage of 82,000 affordable housing units in L.A., and funding to build only 500 such units a year.

This initiative went on the Nov. 8th ballot in Los Angeles as Proposition JJJ. Los Angeles voters approved it. Proposition JJJ is a broad reaching new affordable housing measure that requires developers of new housing (10 or more units) to build a certain percentage of "low to moderate-income" housing: up to 40 percent for condo projects and 20 percent for rental units. It also incentivizes new housing development along transit lines and stations.

Reading the official initiative is heavy going, but quite specific:
Subsection (ii) of "For-sale Projects" states:
"If the general plan amendment, zone change or height district change results in a residential density increase greater than 35% or allows a residential use where not previously allowed, then the project shall provide no less than 11% of the total units at rents affordable to very low income households, or 20% of the total units at rents affordable to lower income households, or 40% of the total units at rents affordable to moderate income households . . ."

Subsection (iii) under "Rental Projects shall provide the following" states:
"If the general plan amendment, zone change or height district change allows a residential use where not previously allowed, then the project shall provide no less than 5% of the total units at rents affordable to extremely low income households, and either 11% of the total units at rents affordable to very low income households or 20% of the total units at rents affordable to lower income households . . ."

The initiative also mandates a rather dizzying array of construction workforce requirements: 30% of those hired to build new housing would have to live in Los Angeles; 60% of the construction workers would have to be graduates of or registered in a joint labor management apprenticeship training program; 10% of the construction hours must be performed by "transitional workers" living within a 5-mile radius of the project. "Transitional workers" means residents of an "economically disadvantage area" (median annual household income less than $40,0000) or those from an "extremely disadvantage" area (median annual household income less than $32,000). The "transitional workers" would also have to face at least 2 of these "barriers to employment:" be homeless; be a custodial single parent; be receiving public assistance; be lacking a GED or high school diploma; have a criminal record; be chronically unemployed; be emancipated from the foster care system; be a veteran; or be an apprentice with less than 15% of apprenticeship hours away from journey level.

The Los Angeles Times opposed the measure, saying it would increase construction costs, and exacerbate the housing crisis.

The Wall Street Journal asserts the initiative will stifle construction, and double the hourly wage for some construction trades, as the housing developers would have to pay construction wages equal to those required for public-works projects. The WSJ does note, however, that developers who build affordable housing using government subsidies already must pay higher wages.