L.A.’s Ambitious 486,000-Unit Housing Production Target by 2029 Likely Unattainable Without Major Policy Changes, Business Leaders Say

Apr 13, 2022

L.A. Business Council launches effort to identify actionable solutions to overcome longstanding systemic challenges to deliver new workforce and affordable housing at scale

LOS ANGELES–(BUSINESS WIRE)–As the worsening housing affordability crisis poses daunting challenges for communities citywide, the Los Angeles Business Council has launched a multi-faceted effort to build an evidence-based blueprint designed to drive down the costs and speed up the production of residential housing to meet the City’s massive housing needs.

In November, the L.A. City Council adopted an update to its Housing Element – the state-mandated analysis of a community’s housing needs – that targets the creation of 486,379 new residential units by 2029. Some 40% of those units are targeted for lower-income households.

On average, the City will need to produce approximately 61,000 units – of which 23,000 must be affordable to lower-income households (under 80% Area Median Income, or AMI) – each year for the next seven years. To meet the ambitious new Housing Element target by 2029, the City will need to more than quintuple the amount of housing permitted annually since 2014, including affordable housing under 80% AMI.

The LABC is calling for sweeping reforms to help meet those goals, which business leaders say are likely unattainable without significant changes to City policy. “The City Council deserves great credit for setting an ambitious goal to bridge the housing shortage and related affordability gap that is widening by the day, but without significant reform and a blueprint, that goal will not be met,” said LABC President Mary Leslie.

The LABC Institute this week announced plans to work with the UCLA Ziman Center for Real Estate to better pinpoint the obstacles and opportunities to producing an adequate affordable housing supply. They hope to present findings in time for the 2022 Los Angeles mayoral election in November to provide the City’s next leader with a formula to drive down affordable housing costs.

“Since the onset of COVID, the nation’s housing supply has experienced a severe upheaval with a dramatic change in supply and demand across virtually every geographic market in the country. Los Angeles is in serious need of solutions that will effectively deliver large quantities of new affordable and market rate housing in a short timeframe,” said Brad Cox, Chairman of the LABC Institute, the research arm of the LABC. “Our LABC leadership and members are committed to working with local governments to implement effective strategies to reduce the cost of new housing. This private public effort requires innovative solutions that dramatically increases the production of new housing for all income levels. We need to provide housing that all residents of Los Angeles can afford.”

The LABC’s efforts aim to create a surge in affordable housing development over the next two to three years to set the blistering pace that is required. The organization will encourage local governments to do everything possible to facilitate that growth, including executive directives, ordinances, or ballot measures that will expire automatically after three years.

The LABC has identified the following areas as opportunities to drive down housing costs:

  • Streamline approvals: The City should update its approval process to require only one Council approval per loan and project. Implement a speedy hearing deadline for all qualifying projects and aspects of clearance. If the deadline is not met, it is deemed approved or, in the case of life and safety, referred to a referee for immediate review and approval.
  • Create predictability for clearances to start and finish the work: Provide housing developers visibility on when work may begin by creating a set number of days post-approval. If the set number is not reached, approvals should be immediately referred to an ombudsperson with authority to immediately approve and/or expedite.
  • Remove costly affordable housing “extras”: The City should waive requirements for add-ons that drive up costs, including private balconies and additional street-widening or Caltrans work. In addition, rents should be strictly determined by the U.S. Department of Housing and Urban Development, with no additional rent level determinations. Other suggestions include waiving Quimby and LAUSD fees for 100 percent affordable housing, as well as all city fees for developments that include 50 percent of more Permanent Supportive Housing.
  • Incentivize for workforce housing development: LABC is urging the City to create non-financial incentives for workforce housing for households that make up to $120,000 per year or 150% AMI. Additionally, it should support an 80 percent market rate and 20 percent affordable without financial subsidy.

“We strongly support increasing the production of housing and look forward to working on critical reforms in L.A. to expedite the development of housing affordable to low- and moderate-income households,” said Jimar Wilson, vice president and Southern California market leader for Enterprise Community Partners, a nonprofit dedicated to increasing housing supply, advancing racial equity, and building resilience and upward mobility.

On Wednesday, hundreds of key government, business and academic leaders convened in-person and virtually at the LABCs 20th Annual Mayoral Housing, Transportation and Jobs Summit to address how to bridge the housing affordability gap and meet the vital new development goals. This served as a kick-off to the months-long process to build the housing blueprint for the City to achieve the ambitious Housing Element goal by 2029.

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