In November 2002, California passed Proposition 46, the largest affordable housing bond measure in U.S. history. In total, the measure will finance $2.1 billion in affordable housing, with its largest segment, $910 million, earmarked for the creation of 22,000 permanent affordable rental units. The first round of funding was released in early 2003 and will result in approximately 8,000 units of affordable rental housing.
In Montgomery County, Md., where rents are extremely high and vacancy rates are minimal, a growing number of multifamily property owners are choosing to opt out of federal subsidy programs and begin charging market-rate rents. The Maryland Housing Initiative Fund has made preservation of affordable units a priority and provides assistance to nonprofits willing to purchase and manage affordable properties. To date, about 850 units have been preserved.
In Los Angeles, where there is a 250,000-unit housing deficit and 50 percent of all renters spend more than 30 percent of their incomes on rent, Century Housing and the National Housing Development Corp., two nonprofits, have teamed with Mayor James Hahn and the city of Los Angeles to develop a new $200 million program called “LA Win!,” Los Angeles Workforce (Housing) Initiative Network. LA Win! will create affordable rental housing and homeownership opportunities for working families, defined as those earning between $34,000 and $67,000 (60 percent to 120 percent of the Los Angeles AMI) and paying no more than 30 percent of their income for housing.
The housing needs of Los Angeles’ working families are becoming more critical. Vital municipal workers, such as teachers and police officers, and blue collar service sector and retail workers are unable to afford to live near where they work. Minimum wage earners are particularly at risk as rents rise faster than inflation and much more rapidly than their incomes. In frustration, families begin to leave high-cost housing markets and employers have difficulty attracting new workers. As the recent report, “In Short Supply,” by the Los Angeles Housing Crisis Task Force concluded, “The city’s housing prices have risen so high that they not only devour the wages of working families, but also threaten the city’s continued economic growth.”
This same reality is being felt in cities across the country, and programs such as LA Win! are only part of the solution. Municipalities and the private sector also must get involved in bringing solutions to bear on the housing crisis. For their part, cities must help bring down the cost of building workforce and affordable housing. Softening requirements on zoning, parking, and impact fees and fast tracking approval times are just some of the solutions. It also is critical that cities adjust their thinking on density issues. Some cities, such as Dallas and Portland, Ore., are beginning to allow higher densities, effective mixed-use infill projects with residential components, and transit-oriented housing development, but more cities need to follow suit.
It can be difficult to convince municipalities to allow mixed-use development and give up the sales tax receipts they receive from strictly retail use properties. But, in areas of huge population growth, such as Southern California, some cities are beginning to rethink the issue. Projections show that in the next 20 years, Orange County – the state’s second largest county and an area with a reputation for being a largely suburban environment favoring large homes on oversized lots – will grow by 600,000 residents, but there will be virtually no more vacant land on which to build. Looking ahead, several Orange County cities have begun converting old, dysfunctional strip retail centers–which are numerous in the county–into mixed-use communities with apartments, condos, and townhouses. The new housing units are built on the former parking lots and over rehabilitated retail space.