Housing USA: Los Angeles

6 min read

Skid Row in Hollywood

Los Angeles, CA—Los Angeles is, by some metrics, America’s homeless capital. It has a county-wide nightly unsheltered population of roughly 82,000, including 13,000 who are chronically homeless. There is a broad understanding that building more supportive housing units, such as the kind financed by Low Income Housing Tax Credits (LIHTC), is needed to address this problem. But right now the city itself prevents this through a climate of Nimbyism and regulation, which may strengthen after an upcoming ballot initiative called Measure S.

Such regulatory barriers could indeed increase at a time when the homelessness problem is actually worsening here. The county’s homeless population, after dropping during the mid-2000s, has risen by 15 percent since 2009, and the number of homeless people living outdoors (as opposed to shelters) has doubled. This has occurred alongside—and is related to—increasing housing prices. While homelessness has fallen nationwide, California saw a 1.6 percent increase from 2014 to 2015. Correspondingly, housing prices have grown far faster in California than the greater U.S., including in Los Angeles County, where median prices in five years skyrocketed from $354,000 to $553,000. The subsequent rise in homelessness is affecting groups beyond just drug abusers and the mentally ill, spreading among the working- and middle-class. It is evident at street level, with surprisingly large encampments sitting below overpasses and inside parks throughout the county.

Mass homelessness is not new for Los Angeles. After the state deinstitutionalized its mentally ill in the 1960s, Los Angeles, with its mild weather and dense population, became one of the primary receiving cities. In response, the city established a “containment zone” just east of the central business district to concentrate supportive services and let the homeless sleep along sidewalks. This caused the area, better known as “Skid Row,” to become a multi-block tent city, and it has remained so for decades, marked by crime and open drug use.

This has led the local establishment—reflecting business, government and non-profit interests—to rally recently around two concepts. First, they want to “decentralize” Skid Row, so that different neighborhoods countywide receive their share of the homeless population. This is already happening somewhat as encampments are spreading even to fashionable areas, like Hollywood.

Their second concept is to build, little by little in each neighborhood, permanent supportive homeless housing that features on-site counseling and medical care. This “housing first” model is considered a more cost-effective way to get the chronically homeless out of jails, hospitals and shanties and back on their feet. County voters, too, seem to support this second idea. Last November, they overwhelmingly passed ballot Measure HHH, which authorizes $1.2 billion in bond revenue to fund 13,000 new housing units for the homeless (including 10,000 supportive units). The city has also backed a plan to quickly build some of these units on 12 city-owned parcels.

This could make Los Angeles a great market for LIHTC-financed supportive homeless developments. In many respects it already is a good market, filled with organizations, like Skid Row Housing Trust, that provide innovative twists on supportive housing. But the market may not be as reliable outside of the Skid Row neighborhood, since county voters seem more willing to fund housing than actually allow it near them.

Indeed, Los Angeles’ efforts to house its chronically homeless in this decentralized fashion has spurred Nimbyism from neighborhood groups, who typically have sway over their district-based city councilors. According to a November report by the blog Preserve LA, the city’s plan to build homeless housing on those 12 lots has already faced opposition, forcing developers to scale down their plans.

This was reiterated by Joel John Roberts, CEO of Path Ventures, which is a firm that builds supportive homeless housing throughout Los Angeles. He says that resistance to such housing is strongest in rich neighborhoods; and that even when it does get approved, it typically endures between six to 12 months of neighborhood-level review.

Beyond just the NimbY resistance, though, is the resistance that’s been codified into land-use laws. For decades, zoning and other regulations in Los Angeles have mandated separated uses, limited built densities and minimum parking requirements. According to Roberts and other developers I’ve spoken with in Los Angeles, this prevents many projects from getting built—for homeless people or otherwise. Area developers, after all, are dealing with high costs for land, labor, construction and government approval. There’s no way that projects will pencil out if certain regulations severely limit revenue streams and increase costs. This forces developers either to spend money lobbying for code amendments, to relax the rules for their specific projects or leave their lots undeveloped. Roberts says that, given his target demographic, parking regulations have proven to be particularly onerous and have been the deal-breaker for other developers.

“If we’re going to build a 60-unit apartment building for people who are homeless,” says Roberts, “I don’t need two parking spaces per unit,” given that such people generally don’t own cars.

Yet, in an ode to the contradictory goals of California’s ballot measure process, developers could soon lose their ability to overturn these regulations. Even after passing Measure HHH—the one that allocates money for supportive homeless housing—Los Angeles will vote this March on Measure S, which could prevent such housing from actually getting built. Better known as the “Neighborhood Integrity Initiative,” the measure would place a two-year moratorium on site-specific code amendments that increase the density of buildings beyond what’s already allowed. If it passes, says Roberts, much of the supportive homeless housing that’s now in the planning stages could be shelved, forcing the city to “step back the cause of ending homelessness for two years.”

Of course, the initiative, which is backed largely by neighborhood associations and other homeowner blocs, hasn’t been voted on. But even if it fails, the city’s land use code, and its larger Nimby mentality, remains too strict. For decades, it has prevented Los Angeles’ housing growth from keeping pace with population growth. One victim of this process has been the chronically homeless and mentally ill, who suffer from an inadequate level of supportive housing. But given that this regulatory state prevents other housing types—and is spurring a wider metro area affordability crisis—it has driven other income groups into homelessness.