LV does not stop gentrification—it encourages it

Of all the strained rationales that otherwise progressive Santa Monicans resort to for supporting Measure LV the one most difficult to understand is that LV will stop gentrification.

Measure LV is designed to stop the development that would be allowed under the general plan land use and circulation updates (LUCE) adopted in 2010 and the zoning ordinance passed in 2015. The proponents of LV argue that this amount and kind of development would cause gentrification. This development would mostly be, as most development over the past 20 years in Santa Monica has been, multi-unit housing downtown and in other commercial zones.

Under LUCE and the new zoning, housing development is expected to continue to occur at the rate of about 250 units per year, annually about a one-half of one percent increase over Santa Monica’s approximately 50,000 existing housing units. Under 1990’s Measure R, at least 30% of these units must be deed-restricted affordable to low- and moderate-income tenants. Under LUCE and the new zoning, nearly all of these units will be built on land zoned for commercial development, i.e., not in neighborhoods.

According to LV’s proponents, development of these residences would cause gentrification. Could this be true?

How to define gentrification has been the subject of much academic discussion, and the word is used in various circumstances. What people who fear gentrification in Santa Monica mean, however, when they use the term, and what they fear, is that previously low rents and housing prices in neighborhoods (chiefly the Pico Neighborhood) are increasing so as to be out of the reach of historically low-income residents. They fear that new residents with higher incomes are moving in, increasing pressure on housing costs, and displacing long-time residents.

The causes of this influx are Santa Monica’s increased attractiveness, such as has resulted from the rebirth of downtown over the past 30 years, the city’s good schools and other services, and the higher-paying jobs that came to Santa Monica as offices and post-production studios replaced factories. Residents concerned about gentrification even fear the effect of the Expo light rail (even as they welcome it): a neighborhood, Pico, that was once “across the tracks” now is “along the tracks” and near Expo stations, adding to the value of real estate and making apartments there more desirable.

There’s no question that housing costs have increased in Santa Monica, including in former low-rent districts like Pico. Rents and housing prices have been increasing all over the L.A. area, including in low-income areas, as a result of a housing shortage that has been much discussed, but Santa Monica has housing costs that are among the highest in California and thus in the country. (Santa Monica also has a lot of upscale apartments, which raise the average rent.)

These high rents have attracted developers. Starting about 20 years ago the City began encouraging developers to build apartments in commercial zones, particularly downtown. The purpose was to take development pressure away from neighborhoods. In the late ’80s and early ’90s developers were using the Ellis Act to tear down rent-controlled apartments and replace them with condos. The City made it more difficult to do that, and compensated (because state law said the City couldn’t block the building of housing) by encouraging residential development in commercial zones. The LUCE and the zoning ordinance continue these policies.

Do these developments drive gentrification? Do they increase rents in low-income neighborhoods, driving residents out? The answer is no, for several reasons.

For one, adding to the housing supply does not increase rents on old housing stock, even if high rents in new buildings raise the average rent citywide. This doesn’t mean that increasing the housing supply will necessarily lower rents, since rents are determined by many factors, including regional supply-and-demand and the attractiveness of a particular location, but if high-income people moving to Santa Monica have more choices for apartments, particularly new apartments, it’s less likely that these potential “gentrifiers” will seek to rent old apartments in historically low-income neighborhoods.

Conversely, not building new apartments, the purpose of LV, would increase the pressure on historically low-rent neighborhoods. If our theoretical gentrifiers can’t find housing in high-end neighborhoods, or in a “happening” area like downtown, they are more likely to look for something in Pico.

This is what has happened in Sunset Park over the past 30 years with single-family homes. Bungalows that once housed Douglas factory workers were purchased and upgraded and now go for millions of dollars. I.e., the neighborhood gentrified (to the financial benefit of anyone who held onto the old bungalow).

While there isn’t room in Santa Monica’s R1 zones to build more single-family homes, there remains room in commercial zones to build apartments and condos to take pressure off neighborhoods like Pico. (With the added benefit that replacing potential commercial development with residential reduces the growth in traffic congestion.)

There’s also a danger with LV that as single-family home prices continue to increase in Santa Monica, reflecting demand for home-ownership, and without the building of condominiums to absorb the demand, owners of rent-controlled apartment buildings will use the Ellis Act to tear them down and replace them with large, single-family homes, which can be built “by right” with no planning review. This is already happening in a few instances.

So, no, LV will not stop gentrification. Just the opposite.

Thanks for reading.

 

 

 

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