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Discredited Planning Concepts Don’t Die, They Just Resurface at City Hall to Promote Real Estate Speculation.

Planning Watch:  After President Harry Truman fired General Douglas MacArthur, the general gave a farewell speech to Congress that is remembered for its closing line, ”Old soldiers never dies, they just fade away.” 

This maxim, however, does not apply to discredited planning ideas.  They don’t die or fade away.  Instead they resurface with new names and justifications for continued real estate speculation.  The best example is public programs that allow private real estate developers to acquire old commercial property so they can build highly profitable in-fill ventures.  In the post-war era, these abandoned government programs were called Urban Renewal.  They allowed cities to form agencies, such as LA’s former Community Redevelopment Agency, that used eminent domain to acquire commercial real estate parcels, evict the tenants, demolish buildings, and then reassemble the parcels for private developers.  

But the concept of recycling old commercial properties has survived, renamed and reinvented through new zoning scams with a host of cover stories.  Sometimes they are hyped as solutions to the housing crisis.  Other times, as an antidote to sprawl.  And, finally they are spun as a way to build “sustainable” cities to mitigate climate disruption.  But the agenda is still the same, allow private investors to acquire old commercial property so they can evict existing tenants, demolish their homes and businesses, and then replace them with new, high rent commercial and multi-residential structures. 

How the new scams work:  As I wrote last week, a major in-fill tactic is the use of new mass transit lines in old neighborhoods to permit up-scale real estate projects.  While mass transit done right is totally welcome (i.e., it should always include transit-oriented public improvements), mass transit done wrong is essentially an expensive real estate scam. 

Either with or with or without mass transit, urban renewal has been reinvented as up-zoning, the application of Reaganomics to cities as deregulation.  Legislators are now gutting zoning and environmental law to permit larger, taller, denser buildings.  Structures that previously required environmental reviews in combination with one or more discretionary zoning actions, such as a zone change or zone variance, can now quickly obtain unconditional building permits. 

But how do developers and city officials convince their constituents to accept local deregulation, especially when it degrades their quality of life?   Furthermore the trickle down programs of the Reagan and Clinton eras turned out total frauds.  Instead of prosperity, they ushered in a race to the bottom that resulted in economic inequality and deep recessions.  Even President Biden has pushed back against supply-side economics, arguing that they never worked. 

Apparently most municipal and state officials in Biden’s political party never got his memo because they remain fervent advocates of supply-side economics.  This is abundantly clear in Sacramento, where California Democratic State Senator Scott Wiener and his Sacramento cronies are pushing hard to impose statewide up-zoning laws: Senate Bills 9 and 10

The situation is similar in Los Angeles.  Christopher Hawthorne, former Los Angeles Times architecture critic, and now Los Angeles Mayor Eric Garcetti’s Chief Design Officer has added his voice to the up-zoning chorus.  Mr. Hawthorne’s initiative is Low Rise: Housing Ideas for Los Angeles, a design competition for four-plex apartment complexes built on R-1 lots.  Mr. Hawthorne’s up-zoning proposals were quickly echoed in Slate (Los Angeles Has a Plan to Disarm the NIMBY’s) and the Los Angeles Times (An Architectural Competition Imagines Density – Done in an L.A. Way). 

The Hawthorne/SLATE/LA Times cover story is that four-plex apartments can comfortably fit into single-family neighborhoods without visual disruption.  Once built, these supporters claim that new four-plexes will increase the supply of housing, resolve the housing crisis, reverse urban sprawl, and create sustainable cities that will mitigate climate change.  Unfortunately, this design-driven up-zoning scam ignores a critical detail.  Private developers will build these fourplexes.  As a result they will be far more profitable than the single-family homes they replace.  At present, according to Zillow, in L.A. a small, 1000 s.f. house rents for about $3,000/month, while a large house in a popular neighborhood costs about $15,000 per month.  Needless to say, these are not affordable prices, and the main beneficiaries will be developers. 

In addition, let us evaluate several other claims in these articles to hawk this highly lucrative real estate scheme. 

L.A has a run out of room to grow.  The City’s own data is clear.  LA has plenty of room to grow without resorting to urban sprawl. 

  • First, LA is no longer growing. The city’s population has steadily declined over the past three years, including 52,000 people who left in 2020.  This decline has reduced LA’s population to 3.9 million people, which is 400,000 people fewer than the General Plan Framework’s population 2010 forecast: 4.3 million people.  
  • Second, even if LA eventually resumes population growth, it has no shortage of land already zoned for apartment houses. All commercially zoned parcels allow apartments.  Every new apartment project can also increase its height, mass, and density through density bonuses granted administratively by the Department of Building, without public notices, hearings, or appeals.  This existing zoning allows Los Angeles to double its population without changes to residential neighborhoods, including the demolition of existing homes to prepare building pads for new four-unit apartment buildings. 

Four-plexes will cost $175,000 each.  This figure is off by a factor of 10 or more.  In the Beverly-Fairfax area 95 year-old four-plex apartments rent for $3,600 to $4,000 per month.  In the same neighborhood new four-plex units rent for $6-7,000 per month.  Since new four-plex units in current single-family neighborhoods would be in this price range, the income generated by a former R-1 parcel would jump from $6,000 to at least $24,000 per month.  

Considering the profitability of these four-plexes, there is no reason to believe that a developer would sell them off for $175,000 when they could rent them for $6,000 or more per month.  According to the SmartAsset website the price-to-rent ratio is Los Angeles 38.59.  A house or apartment that rents for over $6,000 per month would, therefore, sell for over $2,000,000, not $175,000.  Likewise, a four-plex condo that cost $175,000 to buy would rent for about $380 per month.  This is 6.3 percent of the actual rental price for a new four-plex apartment.  

New four-plex apartments will counter climate change.  This is doubtful for at least three reasons: 

  • First, the embedded carbon in existing homes will be eliminated when developers bull-doze them to create in-fill construction sites for new energy intensive structures.
  • Second, whether sold or rented, only the well-off could afford to live in these new four-plex apartments. Since this demographic group rarely use transit and mostly owns and drives cars, the carbon from construction, automobile driving, new appliances, and whole house HVAC will still be high. 
  • Third, squeezing four apartments into a typical 6000 s.f. R-1 lot requires the elimination of most setbacks. This, in turn, minimizes the opportunities for planting and maintaining carbon sequestering trees. 

New four-plex apartments will eliminate the racist legacy of red-lining.   This could be the case if new fourplexes sold for $175,000 each or rented for $380 per month.  But the new four-plexes will be expensive and therefore gentrify many neighborhoods.  Because economic inequality strongly correlates with racial inequality, replacing older single family homes with new four-plexes will not increase neighborhood diversity.  The one exception could be four-plexes constructed in minority neighborhoods.  Since they will be substantially more expensive than the houses they replaced, the new tenants will be much whiter than the predominantly minority residents evicted to create in-fill building pads for the wealthier newcomers. 

Infrastructure and public services.  In locations like New York City greater density does result in a lower per capita carbon footprint.  But this is not only a function of apartment living.  It also results from easily accessible mass transit and walkable neighborhoods with close-by stores, offices, restaurants, schools, parks, and libraries.  Unfortunately these components of sustainable density are missing from Mr. Hawthorne’s Low Rise approach.  Furthermore, without a carefully planned program to upgrade the infrastructure and public services serving the new fourplexes, LA’s already stretched infrastructure will be pushed to the breaking point.                                                                                               

Alternatives to up-zoning:  It is time that local Democrats read the Biden administration’s memos that trickle-down programs don’t work.  If local officials are sincere about addressing the housing crisis, they should abandon zoning schemes to build more expensive apartments through deregulation.  Instead, they need to devote their energy to the construction of low-priced housing financed, built, and operated by the public sector.

 

(Dick Platkin is a former Los Angeles city planner who reports on local planning issues for CityWatchLA.  He serves on the board of United Neighborhoods for Los Angeles (UN4LA) and co-chairs the new Greater Fairfax Residents Association.  Previous Planning Watch columns are available at the CityWatchLA archives.  Please send questions and corrections to [email protected].)

-cw