Main Street during the pandemic

During the coronavirus quarantine, I’m lucky for many reasons, including that I can take walks from my house to the beach or up and down Main Street in my Ocean Park neighborhood. On Friday and Saturday, March 27-28, I used my iPhone to take photos of all the signs announcing business closings or adjusted services. Each photo represents lost jobs and livelihoods; lost community. Yet each photo also shows a bit of resilience. You can view the photos at this Flickr album.

Living in interesting times

Let’s start with good news. Even assuming that the numbers coming out of China, and specifically from Hubei province and its capital, Wuhan, the epicenter of the coronavirus pandemic, reflect incomplete data because of the impossibility of universal testing, it is clear that “locking down” the populace to fight coronavirus and COVID-19 works even if these public health actions have been delayed by initial blindness on the part of authorities.

Hubei has about 60 million people – about 50% more than California. The initial spread of the virus was rapid. As with our federal government in Washington, at first the reaction from Beijing was to minimize the dangers, but as reality kicked in, ultimately, after wasting weeks, measures were implemented in late January to shelter in place.

The impact came rapidly. First the rate of infection and then deaths peaked in Hubei by the middle of February. Meanwhile China implemented quarantine policies over nearly the entire country. Last Thursday the government claimed that there were no new cases in China that originated in China.

There are still fears that the rest of China outside of Hubei will suffer a wave of the virus much like the rest of the world. The number of reported cases in China, about 80,000, is, however, many orders of magnitude fewer than the 25 million cases Gov. Gavin Newsom has predicted could occur in California alone if people do not quarantine and isolate. While the number of reported cases depends on the vagaries of testing, even if there were ten times as many cases in China as have been reported, the numbers are dramatically different from what models show would have been the case without quarantining.

Prompt action in countries and places like South Korea, Taiwan, Hong Kong, Singapore, Vietnam, and Japan have greatly slowed even the initial spread of the virus, but there are even more countries, including the U.S., where authorities minimized the risks, ignored scientific advice, and wasted valuable time. However, the experience in China hopefully shows that it’s never too late to take action.

Italy is another country where the government’s early messages were mixed. The lack of quick action led to rapid spreading of the virus starting in mid-February. The government did not implement a nationwide lockdown until March 9, about two weeks ago. Since then, infections and deaths are still rising. Let’s hope, however, that we will see, in the next week or so, that those measures lead to positive results as they did in Hubei.

Bringing the issue home, during the week of March 9 individual Californians began to self-isolate in large numbers and institutions began shutting down all public gatherings. The first government-mandated lockdowns, in seven Bay Area counties, did not begin, however, until last Tuesday, March 17. On Thursday Gov. Newsom, for the whole state, and L.A. County on its own, issued orders to stay home. With little direction from Washington, localities around the U.S. are only haphazardly realizing that they need to lock down. At this time fewer than 25% of Americans have been ordered to quarantine.

That’s going to have to change. As these measures come online, one hopes that as in Hubei they can tame the beast in three weeks or so. Because, however, these stay at home orders are coming late, typically right as the incidence of infection is exploding, those three weeks (the next three weeks here in California) will be horrible, with, as happened in Italy, an overwhelmed local healthcare system.

During these miserable weeks expect despair and cynicism from some, but expect life-affirming solidarity from most. If we emerge as Hubei has emerged, with a fraction of the illnesses and deaths that were predicted, then you can expect to hear a chorus of naysayers saying, “see, it wasn’t so bad; it was all overblown.” That is, ironically, the sad fate of all great public health victories. Once the battle is won, ignoramuses will say there was no battle to fight. (Typically, they are the same ignoramuses who said before the battle that there was nothing to worry about, that everything was “perfect.”)

If the Hubei model is real, and if it is implemented elsewhere, the containment of COVID-19 won’t be a victory of medicine over disease; rather, it will be another great victory for public health. No miracle cures will stop COVID-19; why anyone, let alone President Trump, believes there will be a cure for COVID-19 when there aren’t cures for the flu, the common cold, or other viral diseases, is beyond me. Doctors and nurses and their colleagues will do their courageous best to prolong the lives of victims long enough for their immune systems to defeat the virus, but what will contain and control the disease are tried and true public health measures of sanitation and quarantine, and ultimately, a vaccine.

The development and expansion of public health has been one of the great achievements of the past 200 years. Public health has been so successful and is so ingrained in our way of thinking, that people take clean water, sanitation, trash collection, vector control, etc., for granted. Nonetheless, the public by and large understands and cooperates with the concept that for their own good and the good of the public they must cooperate with public health orders. (I would include vaccinations in the list of public health achievements that we take for granted, but, unfortunately, we no longer can take vaccinations for granted, since a large segment of our population believe they can live without them.)

(By the way, let me use this opportunity to plug a book written by a Santa Monican. Longtime local Michael McGuire is one of the world’s experts on water. A few years ago, he wrote a wonderful book, The Chlorine Revolution: The History of Water Disinfection and the Fight to Save Lives, that recounts the history of treatment of water with chlorine. Chlorination is widely acknowledged to have save more lives than any other single health practice. The book is a good read for the quarantine.)

There is a proverbial curse (possibly, but not likely, Chinese) that goes, “May you live in interesting times.” All I can say is, if you’re living in interesting times, better for you if you’re doing so as part of a community that believes in public health.

Thanks for reading.

Memo to City Council: It’s a start

After years of creating procedural and other obstacles to the building of much-needed new housing, the City of Santa Monica is poised to do something significant to encourage housing development. Tuesday evening, if the City Council follows the recommendations of staff and a vote by the Planning Commission, the council will vote to streamline the approval process for all 100% affordable housing and most market-rate multi-unit housing developments.

If passed, the new rules will require only administrative approval for (i) 100% affordable projects of all sizes (under current rules, 100% affordable projects of more than 50 units outside of the downtown require Planning Commission review), and (ii) market-rate projects for which for all practical purposes the City’s review was already limited by state law (the “Housing Accountability Act”), but for which the City nevertheless required a Planning Commission hearing. Administrative review will not only shorten the duration of review by the City, but also add to the certainty of approval. This will facilitate financing, particularly for affordable projects that rely on tax-credits.

The hope is that by eliminating discretionary review, the City will rekindle interest from developers in what are called, under the City’s general plan, “Tier 2” projects. These are the mid-density, often mixed-use, projects that have been the mainstay of housing development in the city, to the extent there has been housing development, for about 30 years, for both affordable and market-rate developments. The City said it expected Tier 2 projects would be built under the supposedly “pro-housing” planning documents the City developed, after painfully slow processes, over the past 16 years, but few have been built under the new rules.

Perversely, the City’s housing laws make it more difficult to build Tier 2 projects, with more housing, than Tier 1 projects, which generate little housing and few benefits. Tier 1 projects already get administrative review. (As for Tier 3 projects, with even more housing and benefits, these are impossible. They are in the general plan only as window-dressing.) The City loaded Tier 2 projects with additional costs, including the state’s highest requirements for including affordable units, and required discretionary approvals. As a result, the few developers willing to work under the City’s new rules have primarily built smaller, Tier 1, projects that deliver much less housing, including drastically fewer affordable units.

If the council does the right thing Tuesday night, the discretionary review will be gone for most Tier 2 projects, but the restrictive development standards and added-on costs will remain. Nonetheless, the recommendation from staff to remove discretionary review comes in the context that the City expects its annual allocation under the “Regional Housing Needs Assessment” (RHNA) to be greatly increased to about 1,100 units for 2021 to 2029 period. Satisfying RHNA will require the City to demonstrate land availability and zoning capacity to achieve the RHNA numbers. Eliminating discretionary review does nothing for RHNA.

Satisfying RHNA will require a rethinking of the City’s zoning. The City will need to extend to commercial districts throughout the city the kind of zoning first adopted downtown in the 1990s that encouraged the building of housing instead of commercial development. The most important factor was allowing twice the amount of residential development as commercial. Of course, as those who followed the fiasco of the Downtown Community Plan (DCP), know, the DCP ruined the zoning that had over 20 years turned much of downtown into a vibrant neighborhood. One hopes that in the context of responding to RHNA, the City will fix the DCP, too. By concentrating housing development in commercial zones, the City can limit displacement of current tenants.

Tuesday night expect to hear pseudo-housers argue that the City should do nothing to encourage market-rate development, and only provide incentives for 100% affordable projects. In their view, it’s evil to make money from building housing, and only “greedy developers” do so (notwithstanding that everyone in Santa Monica lives in a development that was built by, or land that was subdivided by, a developer). To pseudo-housers, market-rate (or what they like to call “luxury”) development only raises rents for everyone else. As if they want to bring back redlining, they don’t like investment in cities. (I discussed pseudo-housers in more detail back in November.)

I won’t again discuss the silliness of these arguments, but it is worth taking a moment to examine the economics of housing development to try to understand why it is so hard in California to build housing for working-class and even middle-class households.

We talk about a “housing affordability” crisis but when we look at the numbers, we realize that it’s not that rents are too high, but that incomes are too low to pay for the real cost of building housing. It now costs, in southern California, on the order of $500 per square foot to build apartments. (For this analysis I’ll ignore whether this includes the cost of land.) That means that assuming a developer can find land and get zoning approval, an 800-square foot, two-bedroom apartment, our era’s equivalent to a 1950s or ’60s tract house, costs $400,000 to build. To cover amortization of costs, financing, operating costs, and to make some profit, the developer has to recoup at least 10% annually — $40,000 per year, meaning a monthly rent of about $3300, or about $4 per square foot. To afford $40,000 a year in rent, a household needs an income of at least $100,000, far beyond the average household income in L.A. of about $60,000.

These costs show why it is useless to criticize developers for building apartments that only “rich people” can afford. If there weren’t at least some households making $100,000 per year, there wouldn’t be a market for even 800-square foot new apartments, let alone the larger units (including condos) that young families aspire to. To the extent new housing isn’t built for people with above-average incomes, those people will move into the housing of lower-income workers—displacement. Keep on doing that, and what do you know, but 50,000 people in L.A. County don’t have homes at all.  

Fifty years ago, workers made “middle-class” wages working union manufacturing jobs. Fifty years of Republican attacks on unions and the resulting shift of wealth from workers to capital, have created the fiction that it’s housing that has become too expensive, while it’s wages that have fallen too low to justify the development of market-rate housing for workers. Government is called upon to provide or subsidize affordable housing for workers who should be able to afford market-rate housing, and would be able to do so, if they received a reasonable share of the benefits of an expanded economy. And then liberals are criticized for giving away “free stuff.”

Rather than make it more difficult to invest money in housing, the way to solve the housing affordability crisis is to raise incomes starting at the lowest levels of wages.

Thanks for reading.

New realities and housing policy in Santa Monica

Wednesday night there will be a joint meeting of the Planning and Housing Commissions to discuss the future of Santa Monica’s housing policies. (Don’t ask me why there is a joint meeting. The commissions have a total of 13 members, all of whom should have thoughts about those policies. Anyway – expect heat, hope for light.)

Events are moving fast when it comes to housing policy. Decades of chickens, in the form of resistance to building needed housing in coastal California, including in Santa Monica, have come home to roost. A devastating shortage of housing has jacked up rents (meanwhile making homeowners rich) and created unprecedented levels of economically-caused homelessness. Finally the State of California and regional authorities are doing something about it.

I highly recommend reading the staff report for Wednesday night’s meeting. The report does primarily two things: (i) it reviews state and regional actions since 2017 designed to stop local governments from preventing housing from being built and to require them to plan for, allow, and facilitate more housing, and (ii) it presents data from the consultants hired by Santa Monica showing that extending affordable housing inclusion requirements mandated two years ago on development in downtown Santa Monica to the rest of the city would make housing development outside of downtown infeasible (as it has largely become in downtown).

As for the new limitations on local government’s control over land use, California has enacted various laws since 2017, described in the staff report, encouraging and expediting housing development. When it comes to dramatic change, however, nothing beats what happened November 7 at the regional level. Responding to dramatic action from the governor to require plans for more housing development, and concerted action by housing activists, our regional planning authority, the Southern California Association of Governments (SCAG), made the overdue acknowledgement that the region needs a large number of new housing units, 1.3 million, and that the majority of those units need to be built, because of existing need, near concentrations of jobs and transit along the coast.

The new SCAG housing numbers, assuming they are approved by the California Department and Housing and Community Development (HCD) and survive the inevitable litigation from coastal cities, will require drastic revision of housing policies in Santa Monica if the City is going to avoid fines and other penalties. The new requirement for Santa Monica will be a net increase of about 9,000 units over eight years. To give you an idea of how dramatic this change is, over the past 24 years, the average number of new units built in Santa Monica was 217. (For more data about housing production in Santa Monica, see this post of mine from last spring.)

Still, lest anyone panic (I’m sure people are), 1,000 units per year would be only about a 2 percent annual increase in the number housing units in Santa Monica, and 9,000 units would be a less than 20 percent increase over about a decade. But the increase is overdue; from 1980 to 2018 the total number of units in Santa Monica increased only about 14 percent (from 46,393 to 52,871).  An increase to 60,000 units is nothing a city with Santa Monica’s resources can’t handle. (I won’t go into it now, because I’ve written so often about the real impacts of population growth in Santa Monica (as opposed to the mythical), but these new residents will not contribute to the traffic that results from commuters coming to Santa Monica and the Westside in the morning and leaving in the afternoon. In fact, to the extent the new residents have jobs on the Westside, they will reduce those trips.)

The rest of the staff report, including exhibits, is all about a financial analysis the City Council asked for regarding what would happen if the City extended the affordable housing requirements of the 2017 Downtown Community Plan (DCP) to the rest of the city. Why the City would consider extending the requirements is a mystery, since those DCP requirements have resulted in little housing, and virtually no affordable housing, being built downtown. (You can read more about the disaster of the DCP here.)

The reason for the analysis is, however, that there are a lot of “pseudo-housers” active in Santa Monica politics, including a large contingent in Santa Monicans for Renters Rights (SMRR). Yes, it’s ironic that an organization dedicated to the interests of apartment renters consistently supports the traditional antipathy of suburban homeowners against apartments. SMRR has always opposed the building of apartments unless they are deed-restricted affordable, which is another way of saying they don’t want apartments to be built, given that it’s difficult to find funding for subsidized, standalone affordable projects. SMRR is the best friend of apartment owners who want to increase rents when rent-controlled units are vacated, because SMRR fights the building of new units that would compete. The pseudo-housers like nothing more, however, than to enact laws that proclaim their “progressiveness” even while demonstrating their opposition to any change in the perfection they evidently find in Santa Monica. That’s why they are pushing an extension of the DCP requirements.

Genuine needs for genuine, not rhetorical, progress, however, are catching up to the pseudo-housers, not only because of high rents and homelessness, but also because of the broad recognition that to reduce carbon emissions it is going to be necessary to live more densely, closer to jobs and transit.

Regardless why the City decided to study extending the DCP requirements, I’m happy to report that the same consultants who too-optimistically found in 2017 that the DCP requirements would not impede housing development downtown have realistically determined that extending those requirements citywide would make nearly all housing development infeasible, especially when compared to the profits that can be made by commercial development. (I wrote about the financial advantages for commercial development in this post from 2017.)

Getting back to Santa Monica’s pseudo-housers, I can predict how they will respond to the new SCAG housing assessment of 9,000 units. About one-half of these units should, according to SCAG, be affordable to low-income households. This is undoubtedly correct (although I don’t believe SCAG has fully taken into account the impact of building new housing on the preservation of affordability in old housing). What I predict, however, is that Santa Monica’s pseudo-housers will seize on this data point and demand that all housing development in Santa Monica be 50 percent low-income affordable. Of course, this would kill private investment in housing, which is what the pseudo-housers want. (To the extent market-rate and moderate-income housing is not built, old, affordable housing stock will continue to be cannibalized and turned into higher-priced housing, but that has never bothered the pseudo-housers.)

So, with all this, where should the City go with housing policy? To me, the City should first return to prior tried-and-true policies that resulted in housing, including affordable housing, being built in Santa Monica over the past 25 years. Then the City should also build on policies, such as the new state law on additional dwelling units (ADUs), to encourage more housing. These policies would include:

• In all commercial zones, give residential housing a double FAR over commercial. This advantage for residential development resulted in around 2,000 units being built in downtown Santa Monica, and the conversion of commercial zoning to residential development means less traffic. It would also solve the “site” problem, since Santa Monica has lots of underbuilt commercially-zoned land.

• In general, increase the zoning envelope to the maximum allowed in the general plan, but at least by one story in all multi-family and commercial zones.

• Return to the moderate-income policy that existed under Measure R until a few years ago, by which a developer could build a 100 percent moderate income project without other requirements. This policy resulted in hundreds of deed-restricted moderate-income units, many of which are now occupied by Section 8 tenants, being built without a dime of public subsidy. A few years ago the pseudo-housers killed this unsubsidized moderate-income development by adding a low-income requirement.

• For the minimum of 15 percent of total units that need to be (and should be) low-income under Measure R, rely on and fund non-profit developers (such as CCSM and homeless service providers like Step Up or the People Concern) and require a small, perhaps 10 percent, inclusionary requirement on large market-rate projects (meanwhile charging a significant in-lieu fee on smaller market-rate projects).

• Look into ADU zoning that would allow ADUs big enough for families to be built in R1 zones.

• Reduce or eliminate parking requirements for housing.

But above all, dear planning and housing commissioners, follow Hippocrates. “First, do no harm.” Resist the pseudo-housers.

Thanks for reading.

Filling the worker rights vacuum

Two Thousand Nineteen seems remarkable for the number of historical events that are being commemorated with round number anniversaries. Fifty years ago, 1969, saw the Moon landing and Woodstock on the good side; the murders of the Manson Family on the bad side. One hundred years ago Congress passed the 19th Amendment giving women the vote. As the New York Times has responded to in a special series, 2019 is also the 400th anniversary of the landing in 1619 of the first African slaves in the English colonies.

One anniversary, also going back to 1969, has not been made much of. That year, 1969, was the year Republicans took over the American economy, and began to dismantle the system that had regulated capitalism since FDR’s New Deal of the 1930s. A system that had led to unprecedented stability, prosperity and economic advancement for all classes of Americans.

The picture hasn’t been pretty ever since, as the wealthy have disproportionately benefited from economic growth, leaving working people in debt and despair.

One bedrock principle and achievement of the New Deal was to establish the right of workers to organize. The resulting unionization of American workers under the National Labor Relations Act (the “Wagner Act”), overseen by the National Labor Relations Board (NLRB), resulted in unprecedented gains in incomes, healthcare and pensions for all employees, whether they worked for unionized companies or worked for companies that emulated union standards to compete for labor.

Once Republicans took control of the White House in 1969, control that Republicans maintained for all but 12 years through 2009, giving them control of the NLRB for nearly two generations, they stripped away the rights and protections of the Wagner Act.

As a result, although the economy has greatly expanded over the past 50 years as technological gains have greatly enhanced worker productivity, the share of the pie that workers get has not grown. For decades, income stagnation has been a problem. Ironically, the politician who has most effectively exploited worker discontent is the Republican who currently occupies the White House — and whose appointments to the NLRB are among the most anti-union in history. (Not to mention all his other plutocrat-friendly policies.)

The evisceration over 50 years of the Wagner Act has left a vacuum, and we know what Nature abhors. That vacuum is going to be filled, given that workers no longer have the ability to negotiate their conditions of employment effectively; given that we fortunately live in a society where it’s no longer okay for workers to be exploited quite as viciously as they were during the Industrial Revolution; and given that government has to pick up the pieces when workers don’t earn high enough wages to pay for the costs of living and raising families.

Even conservatives acknowledge that something must be done for workers and their families. In a disingenuous but nonetheless illuminating opinion piece that appeared in the New York Times August 4, a senior fellow at the conservative Manhattan Institute, Oren Cass, while dismissing “1930s-style unions” as outdated (what chutzpah, considering that to the extent, if any, that unions haven’t been able to serve workers effectively, the cause has been the conservative war against them), acknowledged that there was a crisis, and argued that “new forms of organizing through which workers can support one another, engage with management and contribute to civil society should be a conservative priority.”

Oh, that’s nice. Needless to say, Mr. Cass did not have any ideas of what these new forms of organizing might be, nor how they might simultaneously empower workers and have conservative support. That’s a combination we won’t see.

Which leaves government to fill the vacuum, which explains why governments, including ours here in Santa Monica, and voters all over the country, have been increasing minimum wages.

Next week we will see more vacuum-filling in Santa Monica. At the City Council meeting Tuesday night the council will no doubt adopt an ordinance that will govern many aspects of the workplace in Santa Monica’s hotels. Hotel owners don’t like government telling them how to run their businesses, but how they treat their 2,100 workers here, especially in a city so dependent on their businesses (Santa Monica will receive more than $68 million in revenue this fiscal year from the hotel tax), is too important to be left to them.

The proposed ordinance is based on existing laws in Long Beach, Oakland, and Emeryville in California, and in Seattle and Chicago, and will cover worker safety (particularly for female workers), protections for workers from being laid off if there is a change in ownership, worker training, protections against mandatory overtime, and, most controversial, limits on the workloads of housekeepers.

City staff has done a lot of work researching the operation of the ordinances in the other cities, and generally staff is recommending solutions that emphasize “realizability” — meaning that the regulations should be easily understood and implemented without too much interpretation or involvement by the City.

On the issue of workload, for instance, staff is recommending a relatively easy-to-understand cap, based on square footage, on the maximum workload for a housekeeper working an eight-hour shift. This is not how hotels themselves like to divvy up workloads; they prefer a system that assigns different “credits” to different tasks. Indeed, considering that a square foot of one kind of room might be easier to clean than a square foot of another kind of room, this might make sense for their operations. But basing a maximum workload rule on a credit system would entail close involvement of the city into hotel operations — something I would assume hotels would not want.

Instead, city staff, following the ordinances in other cities, proposes a “bright line” of a cap on square footage (for an eight-hour shift). The proposed ordinance, however, doesn’t require that hotels abandon the credit system to assign work to their employees; only that at the end of the day (literally), a housekeeper can’t be asked to clean more than a maximum number of square feet without hitting overtime.

UNITE Here, the hotel workers union, and staff disagree about the size of the cap. Staff proposes a cap of 4,000 square feet, which is the cap in the Long Beach and Oakland ordinances. The union, arguing that Santa Monica hotel rooms, because of various factors, take longer to clean than hotel rooms in other cities, wants the cut-off here to be 3,500 square feet. I cannot claim to be an expert on hotel maintenance with an informed opinion about whether 4,000 or 3,500 square feet is the right number. I can say, however, that I know from personal experience, and the experiences of housekeepers I’ve hired, that even less than 3,500 square feet of house is a lot to clean in an eight-hour shift.

Thanks for reading.

Where to build housing and where not

I ended my blog last week about Santa Monica’s housing policies with some good news, namely that a lot of housing was either under construction in the city or had approvals to proceed to construction. As of the end of March, 759 units were under construction and another 1,384 had received planning approvals. Most of this housing received approval under laws that are no longer in force, but it was at least good to see that the one good thing about the high rents that result from the region’s housing crisis is that they do attract investment to build apartments that will house people for 50 or 60 years.

But then depressing news came to light when the City released its annual report on housing production. The numbers showed why the state is trying to take control of land use policy. The City reported that in fiscal year 2017-18 only 46 multi-family housing units (apartments or condos) were built in Santa Monica, of which only two were affordable.

This low level of construction continued and exacerbated a trend from fiscal year 2014-15, when housing production fell drastically. While in the 2013 and 2014 fiscal years total multi-family production was 941 units in Santa Monica (of which 503 were affordable!), in the four years since then, only 478 housing units, an average of 119 per year, have been built. This number is fewer than half of the 250 units expected to be built annually under the LUCE, and less even than the average of 217 units built in Santa Monica annually over the past 24 years. (In fact, housing production wasn’t even that good: the report’s construction numbers don’t take into account demolitions. According to the City’s housing reports, from June 2014 to June 2018, the net increase in housing units, after deducting demolitions (and including data for single-family houses), was 422, an average annual increase of only 105.)

Again, the good news is that a fair amount of housing is now in the works, either under construction or approved, in Santa Monica. However, the anemic production of the past four years, and, as I discussed in last week’s blog, the apparent debacle of the Downtown Community Plan, illustrate why Sacramento is not likely to leave housing policy to local governments. Not when Governor Newson wants his legacy to include 3.5 million new homes.

I write this even as the most ambitious proposal to limit local control, Scott Wiener’s SB50, is dead for the year. Sen. Anthony Portantino, of La Cañada/Flintridge, responding to pleas from residents of single-family, suburban areas (such as La Cañada/Flintridge), used his power as Chair of the Appropriations Committee to prevent Wiener’s bill from reaching the Senate floor. The bill drew the ire of single-family zone residents because somewhere along the way a bill that encouraged in-fill urban development had become a bill that would have drastically up-zoned nearly all single-family zones in the state.

This up-zoning of suburbia not only added a poison pill to SB50, but also it was bad urban policy. Why densify sprawl? It doesn’t make sense: if you build more housing off the urban grid, isolated from decent transit, jobs, shopping and entertainment, you magnify the disaster that sprawl is. Wiener needs to bring back a bill that privileges investment in urban housing, and there is plenty of urban land that is zoned for commercial and industrial purposes where this can be done without driving residents crazy. Santa Monica showed how to do this in the ’90s by allowing double the amount of residential development over commercial development in formerly commercial zones in its downtown. A boom in housing resulted.

Downtown Santa Monica development

But cities don’t like to turn commercial and industrial real estate into housing. While no-growth politics coming from affluent homeowners has had a lot to do with California’s failure to build enough housing, a factor that has drawn national attention, another factor has been that cities prefer commercial development that generates taxes over residential development that requires the delivery of services. Cities are loath to convert commercial real estate to housing.

In the interest of promoting economic development cities don’t take into account how many more jobs per square foot of development are now created in office and retail buildings over what existed on old industrial properties, and how many more square feet can now be built in multi-story office buildings than existed in the old one-story factories. Every 1,000 square feet of office development now generates at least three or four jobs, and for those jobs, at least two housing units need to be built. But cities rarely consider that math when rezoning commercial or industrial properties.

Unfortunately, Santa Monica has been a leader in this regard as well, given how it has converted originally industrial areas to offices without sufficient housing for the many more people who work there. In a future version of his bill, Wiener would do well to require more housing to be built whenever cities entitle more commercial development.

As for the suburbs, instead of attacking single-family zoning where we don’t want denser development anyway, what the legislature needs to do is to require local governments to allow (and encourage) the repurposing of malls with added housing and offices (local jobs for suburbanites), and as nodes for transit. Leave the housing subdivisions alone.

Wiener will bring the bill back next year, and I suspect that next time a version of it will get further along in the process. Wiener learned from his mistakes with the first version of his housing bill last year, and I suspect he’ll learn from his mistakes this year. And presumably by then the governor will want to see more progress. This story isn’t over.

Thanks for reading.

Whack-a-mole housing policy

When in the summer of 2017 the Santa Monica City Council, after six years of work, adopted the Downtown Community Plan (DCP), the then architecture critic for the L.A. Times, Christopher Hawthorne, wrote an article about it. Hawthorne, after a conversation with City Manager Rick Cole, expressed guarded optimism that the plan, which Cole and the council had touted as a “housing” plan, would indeed lead to the building of more housing, for all income levels, in downtown Santa Monica.

According to Hawthorne, Cole characterized the DCP as being the result of a “grand bargain” between anti-growth and pro-housing factions in Santa Monica. Because the DCP included streamlined approvals for housing and height and density bonuses for housing development, and eliminated parking minimums, Cole was confident, based on the City’s financial analysis, that developers would build housing despite increased requirements for including affordable housing.

Hawthorne was respectful of Cole’s optimism, but the critic injected a note of skepticism in his article by including a comment from Santa Monica housing activist Jason Islas to the effect that the DCP’s high percentage requirements for affordable housing (maxing out at 30% for the largest projects “on-site,” or 35% “off-site”) would mean that no housing would be built. Islas’ comment on the affordability question was that “30% of zero is zero.”

Now nearly two years on, and according to a “Downtown Community Plan Monitoring Report” the City issued March 22, Islas’ predictions have proven more accurate that City Manager Cole’s. Since adoption of the DCP, six projects have been proposed under the DCP standards, totaling 335 units, but only 19—only 6%!—are affordable. How can that be, you say? Isn’t 20% the minimum under the DCP?

No. Twenty percent is the minimum for projects over 39 feet tall (“Tier 2 projects.”) Five of the six DCP projects are Tier 1. Under the City’s rosy financial analysis, this wasn’t supposed to happen. The City’s financial consultants, and a majority of City Council members, predicted developers would build market rate units in Santa Monica even if they had to provide higher percentages of affordable housing than were required anywhere else in the state.

Developers are proposing to build market-rate housing (but not much) under DCP standards, but not with nearly the affordable housing City Council wanted to come with it.

As I said, five of the six DCP projects are Tier 1, which means they only have a five percent affordable requirement. One project is Tier 2, but as the March 22 report points out, the developer of that project opted to build to 50 feet even though the zoning would have allowed a height of 60 feet (meaning an additional floor of apartments). By adding that floor, the developer would have increased the affordable obligation from 20% to 25%, presumably wiping out any profit for the additional density.

It’s not only that developers are not building the denser and more affordable housing that the DCP was supposed to encourage, but the housing being proposed contravenes other goals of the DCP. The five Tier 1 DCP projects are entirely comprised of small (less than 375 square feet) studio units. (These units are referred to in developer applications and staff reports as “single room occupancy” (SRO) units, but don’t confuse them with what “SRO” usually refers to, namely “congregant” housing, with shared bathrooms, kitchens and other facilities often built for residents who need supportive services. The proposed units are small versions of what are variously referred to in real estate listings as “studios,” “singles” or “bachelor” units, with their own bathrooms and cooking facilities.)

The DCP is bizarre, but I suppose typical for the product of political “grand bargains,” in that the its standards penalize the building of what the City professes to want—a mix of unit types and affordability to create a diverse neighborhood downtown—while making it easier to build what the City says it doesn’t want, namely smaller projects with 95% market rate units and only one type of unit.

These Tier 1 projects, some of which have replaced previously-proposed Tier 2 projects, have caused the typical hysteria that is the City’s response to events that are simultaneously unexpected and predictable. Tomorrow night City Council will consider an ordinance to ban the building of projects with only small studio units after having adopted an emergency ordinance to do this in March. (Which, no surprise, caused the developer of the Tier 1 all-studio projects to sue the City, since the developer understandably felt that he had played by the rules.)

The ordinance won’t solve the problem, however, since it won’t stop the building of studios that are larger than 375 square feet. Meaning that developers could still build Tier 1, all studio projects, but with fewer, somewhat larger units. These would still be profitable: according to statistics I read in a recent Lookout article, 435-square-foot studios currently rent for about $2,500 (or more) in Santa Monica. That’s more than $5 per square foot. (Meaning that whatever residents who live comfortably in big houses or securely in rent-controlled apartments say, there’s a market for small apartments. Not only young tech workers, but think of the many international students at SMC.)

What developer needs to build above 39 feet if there is that kind of money to be made, especially if approvals are not discretionary and the affordable housing requirement is minimal? Figure it this way: if you remove all the unprofitable affordable housing from a Tier 2 project, you’re probably left with the same amount of profitable square footage in a Tier 1 project. As Islas said, 30% of zero is zero.

The ordinance being proposed is a typical example of a whack-a-mole planning. You don’t like all-studio projects? Ban them: whack! But the problem is not that developers have found a work-around to the City’s Byzantine and onerous requirements under the DCP, but the DCP itself, which the City based on wishful thinking and a financial analysis that developers warned the City was flawed.

The fact that the DCP turns out not to be the housing plan the City touted is borne out by a lot of good news about housing in Santa Monica. Anyone who gets around town these days can see that a lot of apartments are under construction.

New apartments under construction on Lincoln Boulevard

According to a March 26 staff report on the City’s Affordable Housing Production Program, in the four years ending 2018 1001 units were constructed, of which 40% (402) are affordable. The 1001 is consistent with the LUCE’s modest goal that 250 units would be built per year, a one-half percentage point annual increase over the city’s approximately 50,000 housing units. Even more encouraging, 759 units were under construction, and 1,384 units had received planning approval. (Keep in mind that these figures are for the entire city, while the DCP only affects downtown.)

These are the kind of numbers that the City could try to use to justify an exemption to the “dreaded” SB50 making its way through the legislature. However, none of this housing is a product of the DCP.

It’s time to revisit the DCP. But who wants to spend six years doing that?

Thanks for reading.

The character of Vicente Terrace

As it turns out, not all politics are local, and what with one thing or another going on in the world, I’m one local news obsessive who has had a difficult time lately obsessing on local news. Thus, no posts here since October, meaning I’ve left uncommented upon elections in Santa Monica and a lawsuit that would upend Santa Monica politics completely. Matters about which previously I would have written much.

But this weekend I’ve put the Mueller report aside to write about a hyper local Santa Monica issue, namely the future of two apartment projects near the beach. I wrote about them in my last column, back in October, and I feel compelled to follow the story.

The owners of the Shutters and Casa del Mar hotels are developing two apartment buildings (with retail on the ground floors) on vacant lots near the hotels. The Planning Commission approved both projects last year, but those approvals have been appealed to the City Council. The council will consider the appeals at its meeting Tuesday evening.

The developer submitted plans for the apartments in September 2015. Even assuming the council denies the appeals and approves the projects, that means it will have taken almost four years to make a decision over two small buildings with a combined 105 apartments, including 16 affordable units. No wonder the legislature in Sacramento is frustrated by how difficult it is to get housing built in California. (Incidentally, based on the development potential of one of the sites, the hotel owners paid $13 million for one of the properties, money that went into the City’s affordable housing fund.)

Of the two projects, the larger one would replace the parking lot between Ocean Avenue and Shutters. The northern edge of the property is Vicente Terrace, a street that runs from Ocean Avenue down to the beach. Residents who live on the north side of the street have appealed the approval of the project, primarily on the grounds that having an apartment building across from their houses would be contrary to “neighborhood character.”

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Vicente Terrace

Before I explain why I disagree with the neighbors’ appeal, it’s only fair to mention that they are not taking the stance of so many opponents of change in Santa Monica, meaning that they are not opposing the whole project. They seem to recognize that buildings across the street housing new neighbors would be an improvement over the parking lot that they face now. What these neighbors say they want is for the developers to make the building look like it’s a row of townhouses rather than an apartment building.

They also acknowledge that the Planning Commission approved a plan that the developer modified to respond to their concerns. The buildings on Vicente Terrace will now be stepped back considerably from the curb (from 15 to 22 feet, even though the zoning ordinance only requires a five-foot setback) and the floors above 36 feet (the height limit the neighbors say they would accept) are stepped back at least another 20 feet, meaning these upper floors will likely not be perceptible from the street below.

There is now only small difference in terms of size and massing between the approved plans and what the neighbors say they want, except that the neighbors want the façades to mimic townhouses rather than apartments. (Related to this, they also contend that apartments across the street will lower their property values.)

I say, “small difference,” but let’s not forget Freud’s concept of the “narcissism of small differences”: small disagreements can fuel passionate arguments. In this case, the neighbors in their houses fervently desire to face façades that are or at least appear to be single-family homes, not apartments.  Instead of the narcissism of small differences, what we seem to have here is plain narcissism. They want the other side of the street to mirror themselves.

As I said, these neighbors don’t seem to be hard-line NIMBYs, and judging by an opinion piece one of them wrote in the Daily Press, some at least assume a liberal political mantle (“Wall Street vs. Main Street”). (I often wonder if Santa Monicans who decry the profit motives of real estate developers don’t go to movies because they’re made by movie producers and studios obsessed with the box office.)

The neighbors, however, seem unaware of how arguments based on “neighborhood character” have historically been used to exclude apartments from neighborhoods because of fears of allowing into neighborhoods the lower economic classes.

Nor do they seem to be aware that in places where the population is generally left-wing, left-wingers have been adept at finding new rhetoric to justify the same old suburban sanctification and glorification of single-family homes vs. the vilification of apartments. (This is of course creates cognitive dissonance here in Santa Monica, where left-wing arguments against building market rate apartments are also based on phony (when coming from generally affluent people) quasi-Marxist arguments based on the expected high incomes of  future tenants who surely will be class-enemies if they can afford to rent new apartments in Santa Monica.)

In the context of the housing crisis created by NIMBYism and the environmental crisis created by sprawl, left-wing arguments against infill development, however, are now being challenged as anti-city and pro-sprawl. As Benjamin Ross puts it in his 2014 book, Dead End: Suburban Sprawl and the Rebirth of American Urbanism, a history of how restrictive land use policies aimed against apartments and the people who would live in them destroyed cities and gave us sprawl, “the rise of the antisprawl movement has put resistance to change in conflict with left-of-center social and environmental goals…. [Although] [o]pponents of urban infill are fewer in number . . . they have not abandoned the fight. The rhetoric of the environmentalist Left remains on their lips, but the substance of their agenda has begun to converge with the familiar exclusion of old-line suburbs.” (Emphasis added.) Ross calls this “left nimbyism.”

I live in Ocean Park, a once single-family neighborhood that thankfully became a mixed neighborhood of houses and apartments before the City adopted mono-culture zoning. I don’t know anyone who doesn’t like the “character” of Ocean Park. On a per square foot basis, Ocean Park has some of the highest priced real estate in California. The Vicente Terrace neighbors’ argument that apartments will lower their property values is laughable.

I want to distinguish these phony leftist arguments from the genuine left-wing concerns of UNITE HERE Local 11, the union that represents hotel workers in Santa Monica, which has appealed the approvals of both buildings. The grounds for the union’s appeal are that the union doesn’t believe that the approvals include enough protections against the renting of the apartments as short-term rentals (either as Airbnb-type lodgings or as corporate housing).

UNITE HERE is right to be concerned about short-term rentals of unoccupied apartments, as they have become a scourge of the housing market. It appears to me, however, based on the staff report, that the City has included sufficient enforcement mechanisms in the conditions of approval and in existing law. (And the City has had some success recently with enforcement.) However, if it’s possible to approve the projects with more effective enforcement mechanisms, there wouldn’t be anything wrong with that.

Thanks for reading.

Tales of two more projects

Earlier this year I wrote a post about two development projects that were staggering through the approvals process in Santa Monica. One was an apartment building on Lincoln Boulevard, replacing worn-out automobile repair shops, and the other was a hotel project, the one Frank Gehry has designed for the prominent corner of Ocean Avenue and Santa Monica Boulevard.

Two similar projects are now plodding towards their respective destinies. One consists of two apartment buildings that are being developed together and which are considered as one project for environmental review. The other is the redevelopment of the Miramar Hotel, for which new plans were publicly released earlier this year.

The two apartment buildings will be built near the beach on land adjacent to the Shutters and Casa del Mar hotels. They will replace two vacant lots—the parking lot behind Shutters with frontages on Ocean Avenue, Pico, and Vicente Terrace, and the space just south of Casa del Mar on Ocean Front Walk.

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Vacant lot on Ocean Front Walk, just south of Casa del Mar Hotel.

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Vacant lot on Ocean Avenue, behind Shutters, between Pico and Vicente Terrace.

The format and programming of the apartments, designed by local architects Koning Eizenberg, conform to that of apartments that both for-profit and affordable housing developers in Santa Monica have been building for about 20 years in commercial zones. Meaning that three or four stories of apartments sit above underground parking and (in most but not all cases) ground floor retail. This model has served Santa Monica well since new zoning that encouraged housing in commercial zones was first adopted in the 1990s for downtown.

Ocean Vicente Terrace Corner

Architect’s rending of proposed apartments between Shutters and Ocean Avenue.

Given that these new apartments on vacant lots won’t displace anyone, given that they are in a busy part of town that has been intensively developed (with many buildings much larger than these) for about a century, and given that they aren’t taller than the hotels next to them (and step back to respect the shorter buildings they will face on Vicente Terrace), one would think that getting approval for these buildings would be easy. Further, the developers have tried to make the process easy on themselves, by asking for no variances from the applicable zoning other than some minor technical adjustments to take into the account the significant slope on the Ocean Avenue lot.

However, the developers are building a “Tier 2” project, which means they have to through a development review rather than an administrative approval. This entails, among other things, an expensive and time consuming environmental review which at the end of the day, for infill projects like these apartments, doesn’t tell you anything you didn’t know already. It’s perverse to make it harder to build Tier 2 at this scale, because the public gets more from a Tier 2 project than it does from a Tier 1. Face it, we only make approval harder and more expensive and less predictable for Tier 2 because it’s expected (but not necessarily true) that a developer will make more money from a bigger building. It’s more envy than anything else.

As for public benefits, a Tier 2 project must provide affordable units at a 50% higher rate than Tier 1, and of course, a bigger project produces more affordable units than a smaller project even without the bonus. If you want to house people, you have to build housing. (Also worth noting if you like affordable housing: the City owned the property next to Casa del Mar and sold it to the developers for more than $13 million, money that the City has put into its affordable housing fund. That amount of money was only paid because the property could be developed.)

As it happens, applications for these two apartment buildings were filed in September 2015, three years ago, and they are only now (Wednesday night, in fact) coming before the Planning Commission.

No surprise, but the apartments face neighborhood opposition. A new neighborhood group, South Avenue Residents (SOAR), which represents at least some neighbors on Vicente Terrace, filed a comment letter to the draft EIR with 67 comments. I have read many EIR comment letters, but I recommend this one in particular as a definitive catalog of first-world complaints. My favorite comment in the letter is number 42: “There are multiple dogs and cats living with their owners on Vicente Terrace. How will the developers compensate owners for special care of their animals during construction?”

This attitude of the beach dwellers is nothing new. Twenty years ago when I was on the Planning Commission there was an issue about hours of operation for Pacific Park. A woman, who later became prominent in Santa Monica’s no-growth community, testified that she had recently moved to an apartment near the Pier and she was shocked at how much noise and activity there was on Ocean Front Walk. She said that when she was moving here to the beach, she thought it was going to be like Mendocino.

Disclosure: longtime readers of mine know that when I wrote for the Santa Monica Lookout News nearby neighbors on Seaview Terrace provided plenty of grist for my mill. I’ll confess that I was in part drawn to writing about these new apartments for the opportunity to check in on what was going on in the neighborhood. It was like old times to see that once-serial project opponent Stephanie Barbanell had submitted two comment letters to the EIR. Ms. Barbanell once told neighbors that she considered her opposition to development projects (in particular, any licenses to sell alcoholic beverages) a form of conceptual art, but in recent years she’s been quiet. Good for her that she’s expressing herself again!

Ultimately, building apartments and some ground floor retail on these sites makes sense because the zoning prohibits nearly everything else. The area is under the control of Measure S, passed in 1990 to stop hotel and large restaurant development. What better to be built on these vacant lots than housing? (There may be up to three small restaurants as well.) Would the neighbors prefer an office building? (I’m sure there are tech billionaires who would love to be able to take a break and surf whenever the waves are good.) Anti-development residents in Santa Monica like to go on about how much quieter Santa Monica used to be, as a “sleepy beach town,” but what if someone wanted to bring back Pacific Ocean Park? Or even just put an amusement arcade on these lots? I’m sure the neighbors would love that.

* * *

The revised plans to remake the Miramar Hotel and add condominiums that were released last April were the third major iteration of the plans. The plans are the product of nearly 10 years of controversy. The Miramar and the proposed office and housing project at the Paper Mate factory were the major catalysts for the revival of the development wars in Santa Monica after the approval of the LUCE in 2010.

The revival of the development wars climaxed with the defeat of the Paper Mate plans in 2016. Since then, however, after the defeat of Measure LV in November 2016 and the approval of the Downtown Community Plan (DCP) in the summer of 2017, there has been less heated rhetoric and fewer political battles about development. In the meantime, the Miramar brought in a new team of developers and new architects, the internationally famous firm of Cesar and Rafael Pelli.

The new team appears, with their new plans, to be committed to not igniting another conflagration. They have been more communicative with nearby residents and other locals than the earlier development team. Most important, the new plans fit inside the envelope for the site that the DCP provides. Previous plans required substantial changes to the existing land use parameters.

While the plan includes 60 condominiums, which are controversial in Santa Monica because residents who live in houses worth millions of dollars don’t like to think of their sleepy beach town as a place where rich people live, it also provides for 30 units of affordable housing. Again, as with the beach apartments, while it’s true that rich people, including dreaded Russian oligarchs and Arab sheiks looking for new pieds-à-terre, will now have new housing options near the beach, so will more poor and working-class people.

If the plan were going through the approval process now, during the lull in the development wars and not too long after City Council adopted the DCP, I suspect that it would fare well. Unfortunately for the plan, however, it’s now in environmental review jail—an EIR is being written (and yes, for a project this big an EIR is appropriate), and that typically takes more than a year. Then the plan will run a gauntlet of approvals: Landmarks Commission, Architectural Review Board, Planning Commission, City Council and Coastal Commission. It will be at least a couple more years before the plan might win final approval.

Time is the enemy of all plans because time is the enemy of certainty. The Miramar’s developers crafted their first plan (one I didn’t think was very good) in consultation with the City’s planning staff. At a City Council hearing, the plan was shot down because it blocked too many views. The council advised the developers to come back with a tall skinny building, to preserve more views. Which the developers did (with another not-very-good plan), but by then the council had forgotten what it had said about a tall tower, and that plan went nowhere.

It was after that debacle that the Miramar brought in its new team. They waited out the DCP process to see what it would allow them to build. Now they have given us the new plan, which is, by the way, quite good.

But in two years, who knows that the City will be telling them they can build.

Thanks for reading.