BUILDING LIVABLE COMMUNITIES: Enhancing L.A. County’s Economic Competitiveness Paul Habibi UCLA Anderson School of Management Richard S. Ziman Center for Real Estate Los Angeles Business Council 2012 Mayoral Housing, Transportation and Jobs Summit

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Objectives of this Report 1.  Update the 2008 Workforce Housing Scorecard

2.  Identify the Jobs-Housing Balance in L.A. County

3.  Assess the availability of workforce housing (for households earning 50% to 120% of AMI) near jobs & transit facilities

4.  Recommend policy strategies for encouraging additional investment in workforce housing & livable communities

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HOW DID WE GET HERE? TRENDS FROM 2008 - 2012

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2008 Workforce Housing Scorecard

The 2008 Scorecard concluded:

Jobs and housing should ideally be co-located, at healthy ratio of 1.5:1

Varying degrees of mismatch in L.A. County’s 88 cities

Need more workforce housing in jobs-rich communities, and vice versa

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Since then, a lot has changed… Renewed focus on rental housing is a secular trend

Renewed focus on rental housing

Changed views on homeownership

Tightened lending standards

Housing crisis and downward spiral of prices

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•  Median rent is $1,797/mo, median household can afford $1,325/mo

•  Gap is expected to increase given strong rent growth projections

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Median Existing Home Price, L.A. County

120% AMI Affordability Threshold

Owning and Renting Both Remain Unaffordable 55% of owners, 59% of renters considered “cost burdened” by HUD

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Source: U.S. Census Bureau American Community Survey

If You Could Afford to Live Here, You’d Be Home By Now…

Los Angeles CMSA

100.0 105.0 110.0 115.0 120.0 125.0 130.0 135.0 140.0 145.0 150.0

CPI Housing Index for Select Metro Areas (2000-2011)

Los Angeles CMSA

New York CMSA

Seattle CMSA

Dallas CMSA

San Francisco CMSA

San Diego MSA

Chicago CMSA

Real housing costs are increasing, and affordability gap between L.A. and other regions is widening

7 Source: U.S. Census Bureau American Community Survey

THE NEED FOR WORKFORCE HOUSING

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Workforce Housing Remains Undersupplied SCAG  2012  Regional  Housing  Needs  Assessment:  L.A.  County  

        WORKFORCE  HOUSING               Very  Low  Income  

(<50%  AMI)  Low  Income  

(50  to  80%  AMI)  

Moderate  Income  (80  to  120%  AMI)  

Above  Moderate  Income  (>120%  

AMI)  Total  

2014  –  2021   45,720   27,497   30,074   76,779   180,070  Annually   5,715   3,437   3,759   9,597   22,509  2012  Level       13,100  

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Workforce Housing Remains Undersupplied

•  To accommodate workforce, an average of 22,509 new units/year will have to be built •  Including 7,196 new workforce units/year

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SCAG  2012  Regional  Housing  Needs  Assessment:  L.A.  County           WORKFORCE  HOUSING               Very  Low  Income  

(<50%  AMI)  Low  Income  

(50  to  80%  AMI)  

Moderate  Income  (80  to  120%  AMI)  

Above  Moderate  Income  (>120%  

AMI)  Total  

2014  –  2021   45,720   27,497   30,074   76,779   180,070  Annually   5,715   3,437   3,759   9,597   22,509  2012  Level       13,100  

Workforce Housing Remains Undersupplied

• Most affordable housing programs target households earning less than 80% AMI, leaving much of workforce housing as the “donut hole” in the middle of the market

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SCAG  2012  Regional  Housing  Needs  Assessment:  L.A.  County           WORKFORCE  HOUSING               Very  Low  Income  

(<50%  AMI)  Low  Income  

(50  to  80%  AMI)  

Moderate  Income  (80  to  120%  AMI)  

Above  Moderate  Income  (>120%  

AMI)  Total  

2014  –  2021   45,720   27,497   30,074   76,779   180,070  Annually   5,715   3,437   3,759   9,597   22,509  2012  Level       13,100  

Foster Private Development – And Capitalize On It

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Foster Private Development – And Capitalize On It

Density Allow additional density in target areas by-right

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Foster Private Development – And Capitalize On It

Density Allow additional density in target areas by-right

Increase & Streamline Public Funding

Identify and help provide developers with new sources of funds

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Foster Private Development – And Capitalize On It

Density Allow additional density in target areas by-right

Increase & Streamline Public Funding

Identify and help provide developers with new sources of funds

CEQA Updates Categorical exemptions, Master EIRs, and streamlined review/appeal process

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Foster Private Development – And Capitalize On It

Density Allow additional density in target areas by-right

Increase & Streamline Public Funding

Identify and help provide developers with new sources of funds

CEQA Updates Categorical exemptions, Master EIRs, and streamlined review/appeal process

Leverage Catalytic Projects

Cities should reap the benefits of private investments near transit

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Value Chain

Site Acquisition

Entitlements: Planning and Design

Permits and Bidding

Higher

Lower

Required Return

Lower

High Risk Project = High Price Points

Sales and Marketing

Construction (Rough and Finish)

Higher

Risk

Filling the Void of RDAs: Empower Public Agencies to Act as Development Agencies

•  Land Acquisition & Assemblage To shoulder predevelopment risk

•  Public Agencies Thinking Like Developers Expansion on Metro’s existing development platform

•  JVs as Income Streams Joint ventures can create cash flow for future projects

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LIVABLE COMMUNITIES Developing Transit Corridors to Connect Jobs and Housing

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Transit Alleviates Jobs-Housing Dislocation Measures R & J Provide Much-Needed Connectivity

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Using Transit to Connect Jobs and Housing

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CO

CO

LegendOwner  Occupied  Housing  Price

Below  $160,000

$160,000  -­$  240,000

$240,000  -­  $400,000

$400,000  -­  $560,000

Above  $560,000

No  Data  Available

Jobs-­Housing >1.5  Ratio

Expo  Line  Phase  1

Expo  Line  Phase  2

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SANTA

MONICA

CO

Using Transit to Connect Jobs and Housing

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CO

CO

LegendOwner  Occupied  Housing  Price

Below  $160,000

$160,000  -­$  240,000

$240,000  -­  $400,000

$400,000  -­  $560,000

Above  $560,000

No  Data  Available

Jobs-­Housing >1.5  Ratio

Expo  Line  Phase  1

Expo  Line  Phase  2

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Using Transit to Connect Jobs and Housing

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CO

CO

LegendOwner  Occupied  Housing  Price

Below  $160,000

$160,000  -­$  240,000

$240,000  -­  $400,000

$400,000  -­  $560,000

Above  $560,000

No  Data  Available

Jobs-­Housing >1.5  Ratio

Expo  Line  Phase  1

Expo  Line  Phase  2

Keys to Livable Corridors: Develop mixed-income housing near transit facilities

Using Transit to Connect Jobs and Housing

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CO

CO

LegendOwner  Occupied  Housing  Price

Below  $160,000

$160,000  -­$  240,000

$240,000  -­  $400,000

$400,000  -­  $560,000

Above  $560,000

No  Data  Available

Jobs-­Housing >1.5  Ratio

Expo  Line  Phase  1

Expo  Line  Phase  2

Keys to Livable Corridors: Don’t forget about employment generating land uses

Use transit assets to connect jobs-rich neighborhoods to areas where workforce housing can be developed more easily

Targeted Investment Target new investment in close proximity to transit lines

Land Use Planning Use transit station plans & community plans to allow denser mixed-use development near transit

TOD to Transit Corridor Shift focus from single-project TODs to livable community development

First / Last Mile Connections expand the developable footprint around transit nodes

Invest in the Development of Livable Corridors Along Transit

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Importance of Development Near Transit

0%

2%

4%

6%

8%

10%

12%

under 1/4 mile 1/4-1/2 mile 1/2-1 mile 1-2 miles 2-3 miles 3-5 miles 5-10 miles beyond 10 miles

Distance to nearest transit node

Share of Residents and Workers Using Rail, Subway, or Streetcar

Residents

Workers

Source: Public Policy Institute of California

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Example: Utilize new transit assets + first mile / last mile systems to increase developable footprint and create workforce housing connected to jobs through livable corridors.

Developing Livable Corridors Along Transit

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Example: Utilize new transit assets + first mile / last mile systems to increase developable footprint and create workforce housing connected to jobs through livable corridors.

Developing Livable Corridors Along Transit

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Example: Utilize new transit assets + first mile / last mile systems to increase developable footprint and create workforce housing connected to jobs through livable corridors.

Developing Livable Corridors Along Transit

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Example: Utilize new transit assets + first mile / last mile systems to increase developable footprint and create workforce housing connected to jobs through livable corridors.

Developing Livable Corridors Along Transit

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Report Recommendations

1.  Invest in the Development of Livable Corridors Along Transit

2.  Foster Private Development – and Capitalize On It

3.  Emphasize Development of Mixed-Income Housing Near Transit

4.  Plan for Employment Generating Land Uses

5.  Empower Public Agencies to Act as Development Agencies

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