As California makes gains on affordable housing, Alhambra needs to follow suit

OPINION
 
The divide between housing prices and what people can afford is troubling, especially in California, where we have some of the highest housing costs in the nation. The problem is especially acute in Alhambra where city policies and actions have been off-the-mark, while a significant portion of our community is struggling financially.  
 
In June of this year, the California Supreme Court ruled in favor of allowing cities to enact affordable housing ordinances to help address this crisis.  Such an ordinance would require developers to set aside a percentage of a project’s units for sale at below market-rate prices.
 
A comparison of our population’s economic status against our affordable housing inventory shows a gap between the two. Too many within our city have lower incomes that make it difficult to stay afloat given the cost of living. Forty-two percent of our households are classified as lower income, which is defined as households with a combined gross income of less than 80 percent of the area median family income (MFI). For a family of four, this is equivalent to a combined gross income of less than $50,400. For a family of two, it is $40,320. 

Average income for each occupation | Source:  U.S. Bureau of Labor Statistics for the Los Angeles region

For those long-time homeowners in Alhambra who haven’t had to deal with today’s rents or mortgages, it may come as a surprise that these figures are considered low-income, since such salaries provided a reasonably comfortable living in their day. The jobs are the same:  teachers, first responders, and technicians, to name a few. And they are no less critical to a functioning city today. But wages have not kept pace with housing costs.
 
California has the highest housing costs in the nation outside of Hawaii. Home prices are more than double and rents 50 percent more than the national average. What this means for most Alhambrans is that housing is the dominant household expense. To just get by, the rule of thumb is that you do not want to spend more than 30 percent of the household income on rent and utilities. For a family of four making $50,400, they would generally not want to pay more than $1,000 on rent.  Good luck finding this within the city for a family of four.
 
In recognition of the problem, the state mandates cities have a plan for addressing the lack of affordable housing. But what, exactly, is affordable housing? It is defined as housing where monthly payments and utilities are no more than 30 percent of a qualified household’s gross monthly income.  And qualified households are those from moderate and below income levels, as defined by the following:
 
Extremely Low Income:  30 percent or less of median family income (MFI) 
Very Low Income:  30 percent to 50 percent of MFI
Low Income:  50 percent to 80 percent of MFI
Moderate Income:  80 percent to 120 percent of MFI
(MFI in Alhambra is $63,000 a year for a family of four)
 
It is also important to note that affordable housing within Alhambra is not public housing, which is housing owned by the government. Instead, affordable housing policy in Alhambra dictates that developers and/or non-profits generate below-market rate units that are often times interspersed with those at market rates.
 
But a review of the city’s lower-income affordable housing stock shows that 90 percent of the units are off-limits to families and restricted to seniors only. When considering the affordable rental units only, which is more likely of use to lower income groups, that number goes up to 99 percent.  Such biased developments are not compatible with our population’s needs. Seniors comprise only 13 percent of our population and only 11 percent of those in need of affordable housing. Families with children have a much greater need and comprise a much higher percentage of the lower income groups. In the Alhambra Unified School District, an astounding 65 percent of our children qualify for free or reduced meal lunches, yet 99 percent of affordable rental housing stock is off-limits to them. 
 

A breakdown of affordable rental and owned units

How did we get here? From 1989 to 2008, Alhambra had discriminatory policies in place that heavily incentivized developers to restrict affordable housing to seniors only. It offered developers the opportunity to build four times the number of such units per acre when compared to non-age-restricted affordable developments. One cannot discount the need of seniors, but they make up only 11 percent of Alhambrans in need of affordable housing, so why did the city largely ignore everyone else? 
 
The need for affordable housing is undeniable. Some say that any housing helps the cause. But without city government interaction, the market will invariably alienate the lower income groups. In the case of Alhambra, developments are targeting overseas money without adequate consideration for those in need in our city. To make matters worse, the city subsidizes these developments with the same type of incentives that should be reserved for developers who provide affordable units; these incentives include allowing more units per acre, reduced parking standards, and a lack of open space to make them financially attractive to developers. For example, the Casita de Zen project on 239 W. Main St. was allowed to build over two and one-half times more units while providing half the total open space and 12 percent less parking than our normal R3 zoning standards, and it was done so without any affordable units in exchange. The apartments being built on the old Mervyn’s site are being developed with over twice the number of units, half the open space, and 18 percent less parking than our standard, yet they will rent at luxury rates touted at $1,900-a-month for a one-bedroom apartment. In Alhambra, developers are being given the breaks, but the city isn’t asking for the affordable units in return.
 
The state supreme court’s recent ruling is in part a response to such abuses. Going forward, it is important that the city do a better job at addressing the needs of its people by demanding developers set aside affordable units or pay into a pool for such developments. Assemblyman Ed Chau is trying to push an update to inclusionary zoning law in AB-744 that allows developers more waivers when building affordable, special needs, and senior housing. Critics of this bill say that developers may use it to take advantage of those waivers to get around restrictions on parking. In the case of Alhambra, they’re already getting such benefits without having to provide any affordable or special needs housing.
 
Alhambra needs to demand more of their developers, especially those given such subsidies. Affordability and community-oriented design should be a part of every residential development and not the exception. And all parties need to be held accountable. The formation of a housing commission would be a step in the right direction. It would be responsible for ensuring a proper return to the community for developments that receive subsidies, protecting the existing stock of affordable units, and for developing an affordable housing ordinance. We are now a step closer in that direction thanks to the recent state supreme court decision.
 
In the interest of full disclosure, the Source would like to note that Eric Sunada had previously served on the city's planning commission, parks and recreation commission, and was a board member representing Alhambra on the San Gabriel Valley Municipal Water District.  In 2014, he ran unsuccessfully for a seat on the city council.
 

14 thoughts on “As California makes gains on affordable housing, Alhambra needs to follow suit”

  1. The income status is bogus. The real wages of so called low income are not to be believed. Too many people under report income. Yes, the employers are involved with these plots for decades. You will see people who barely making $15k a year ending up with more than 50% down payment. Wonder why? Go undercover in various industries and you might catch some.

  2. Author responds to comments:

    “citywatch”:

     

    Your comments indicate your sensitivity to the effect that increased density can have on the community and frustrations related to the incentives that are being used to encourage it.  But one cannot neglect the devastating effect on the community when nearly half of our residents are spending far too much of their income on housing.  This is a more immediate and direct effect on our people's quality of life which, in turn, hurts our local businesses when we have less disposable income to be consumers.  Your statement “Residents and taxpayers are being herded from single family houses to apartments” points toward a concern for our neighborhoods.  It is true that increased density can have a detrimental effect on neighborhoods, but it is one of the few mechanisms we have left to realize affordable housing.  Which is why it is so important that it be done right and that the community get an equitable return in exchange for it.  In the case of Alhambra, we are getting the worst of both:  no affordable housing being built, yet we give away all the incentives you express frustration over.  I am well aware of the ruse that often occurs in this process with the end result being a development with just a token number of affordable units (one local example:  the photo for this piece shows a development that had its origins with generous density bonuses given out while not getting any affordable units in return and where a former mayor was convicted of bribing a sitting councilman to get it through.).  So it is imperative that we get more funding mechanisms for affordable housing, especially given that state housing bonds are nearly exhausted (Proposition 46 and 1C),  the California Redevelopment Agency is shutdown, and federal grant funding is declining.  Note that Alhambra did not properly nor effectively use any of these mechanisms , so other changes are also necessary going forward.

     

    Richard Ruben and “citywatch”:

     

    The state requires each city to provide a plan for how they can help meet future housing needs.  The focus of the state’s effort is to address the need for housing that is affordable while allowing a certain number of market rate units for financial feasibility for developers.  The state’s arm that allocates the housing needs each city must plan for is the Southern California Association of Governments or SCAG.  SCAG takes into consideration each city’s available land for development, ability to redevelop, needs of the population, and other factors.  These quotas to which cities must plan to is called the Regional Housing Needs Assessment or RHNA.  Alhambra’s RHNA can be found in various documents.  Alhambra's can be found in Table 39 of their Housing Element http://www.cityofalhambra.org/imagesfile/file/201311/housingelement_draft13.pdf.

     

    A common criticism of the SCAG RHNA is that it is unrealistic to expect cities to actually build the number of units being asked of them.  Yet such goals should be part of every city's plan and the state is doing the right thing through SCAG by providing allocations based on analysis.  For established cities such as Alhambra, however, it would require significant infill and re-development to meet it's total allocation of 1,492 units (642 at market rate; 850 at affordable rates).  Here's the kicker:  the city has already exceeded it's goals for market rate housing by building 649 units, but have zero moderate and lower income units being built or even proposed.   The same discrepancies exist for the previous RHNA allocation in years past.  Again, the people of Alhambra are getting shorted on both ends.

     

     

    David Anderson, John Gacis, “Joseph S”:

     

    I think David's statement that “the market is an amazing mechanism” resonates with all of your comments.  It's clear that all three of you are firm believers that government should not interfere with the housing market.  And for at least two of you, having high density is good from a housing needs perspective, but forcing affordable units onto developers is not the way to go.

    The problem is that the market is rigged against the middle-class and lower income groups.  The free-market is obviously not working when we have such high income inequality here and housing policies that have resulted in stark favoritism to developers at the expense of residents and small businesses.  You say let the market take care of itself.  If that's the case, let's level the playing field.  Let's start with the waivers and incentives we give to developers without an equitable return to the community.  Let's look at the mortgage interest deduction that overwhelmingly benefits the homeowner at the top 20% income bracket.  (This housing program alone costs the state $5 billion dollars and exceeds all affordable housing program funding by a factor of ten.)  Let's look at our federal grant funding that we give to developers to help with land, infrastructure, and cleanup costs.  In Alhambra, it's been socialism for the developers but free-market/”you're on your own” for the residents.  We've got it backwards.

    1. I am all for eliminating the mortgage interest deduction to end the distortion of people buying a place to live thinking that some how it is an investment and it will pay for itself through tax deductions and price growth. It is not an investment, but a consumer expenditure with more and more living space consumed to show status in our culture. We have recently seen how the “investment” aspect can disappear very quickly and it has been shown that most of the growth in price in most places has been an illusion as it is primarily due to inflation.

    2. Mr. Sunada,

      Before there can be any meaningful discussion on housing, everyone must agree that the state wants restricted housing not “affordable” housing.
      Restricted housing needs subsidizing by the government.
      If you wish to discuss restricted affordable housing and keep the three words together, most people will then understand that this housing isn’t for them, and they have been fooled into voting for various bonds to increase the restricted affordable housing.
      Every city and county in California hasn’t “met” its assigned number of houses of very low and low income housing. Each regional agency which is made up of cities and counties prepares a report of progress on the number of houses built.
      Restricted affordable housing is prohibited to most middle income people. Even those people with very low and low income must pass the means test to be put on the waiting list.
      Increased density is a selling point of the for profit developers and the non-profit housing developers. They want more money, and the only way to achieve that is to build high density.
      Vote out the California Senators and Assemblymembers who want to herd their constituents from single family homes to apartments.
      Vote out Assemblymembers Chau, Quirk, Gonzalez, and Senator Beall.

    3. Mr. Eric Sunada,

      You’ve got it backwards if you think you can lump my response to all the others you deem are all the same. I never implied I was a “firm believer” government shouldn’t interfere with the housing market or that the market is so “amazing”. Its hard to follow exactly who you were talking to in your response.

      As for your article listing the income earnings for various occupations, that could be for anyone living in Los Angeles County (not just Alhambra). You say 42% of us are classified as lower-income, how about the 58% rest of us? Do we not have a vested interest in our communities as well?

      Speaking of home affordability, how about looking at this list of median home sales for the month of July 2015 instead:

      Nearby City to Alhambra / Median Home Sale Price (July 2015)
      San Gabriel $685,500
      Pasadena $632,500
      South Pasadena $1,120,000
      San Marino $2,133,500
      *Alhambra * $499,000

      Reference: http://www.corelogic.com/downloadable-docs/dq-news/july-2015-ca-home-sal

      The prices listed above often commensurate the density levels of those cities. The more expensive housing is in a city, the more exclusive it becomes for lower-density communities. Our city is one of the most dense cities in the San Gabriel Valley. Perhaps we can’t accommodate the most ideal housing affordability standards you desire, but we have more families placed in homes here than many other nearby cities out there. So why don’t you berate the San Marino City Council instead of ours? Of course since you live here perhaps it would be more politically appealing to look only in your backyard. Our housing affordability here in Southern California is a REGIONAL problem often exacerbated by LOCAL anti-growth resistance. Zoning and State regulations (such as CEQA) are other factors. Alhambra meets its RHNA requirements as stipulated in its Housing Element. The city must provide the CAPACITY for developers to build in those income categories. The city is NOT OBLIGATED TO CONSTRUCT THE HOMES ITSELF. RHNA’s are not exclusively government projects. Do you also expect developers to deliberately bankrupt themselves because “its the right thing to do”? You seem to focus on developer’s “greedy” profits but never mention the high-capital risks involved and long-term liabilities. Please stop pigeon-holing the issue as an “Alhambra problem”. This is a supply problem that needs to be addressed collectively among many city jurisdictions if we are to make any sustainable changes.

  3. Does that sound fair to an average worker who pays market rate for rent or buy a condo next to a low income earner who is paying below market-rate prices and property taxes? If you are a low income earner, you are supposed to rent and not be able to afford to buy a home.

  4. I keep saying”throw the bums out” (vote out All the present council people; better yet RECALL them), seems they “are in bed with wealthy developers while ignoring poor/working/middle class residents.

    1. Yeah, that’s ALL you seem to keep saying.

  5. Mr. Sunada,
    Thank you for the article on restricted housing. It’s time that the media and politicians stop with the “affordable” housing phrase. It is restricted and subsidized housing for people of low income.
    Perhaps you can answer the question of who does the subsidizing?
    Nonprofits get their money from donations, grants, and the government. What happens to this subsidized housing when the money runs out? Will the renters be thrown out on the street?
    There seems to be some confusion about inclusionary housing and density bonus law. Two different subjects. Inclusionary housing ordinances require that a developer of a subdivision provide 10-15% of the houses to be for restricted income. Inclusionary housing ordinances also allow the developer to buy out of building the restricted income housing.
    AB 744 by Chau is an amendment to density bonus law not inclusionary housing law.
    Density bonus law is a pox on communities. It was written to give the developer control over residents and has turned into a cash cow for some developers who can reap 35% or more in the number of market rate houses than allowed by zoning for the promise of one or two restricted income houses.
    AB 744 takes away local control to determine the needs of the community. AB 744 actually states that the developer or the market should decide parking requirements.
    Assemblyman Chau has not discussed the fact that part of AB 744 also reduces parking requirements for market rate developments. Nor has he presented to the voters in his district that he wants to take away their rights on any discussion of parking requirements. AB 744 has been rapidly pushed through the legislative process. Another vote on the Senate floor and AB 744 goes to the Governor for signing.
    AB 744 is a horrible bill that doesn’t consider the needs of the community.

  6. “How did we get here?”

    I will tell you how we got here. We had a huge credit bubble that built up over the decades that made housing, college and cars more expensive because they could be easily financed.

    The credit bubble blew up in 2008…and what did the country do? – we printed trillions of dollars and lowered interest rates to almost nothing thereby creating another bubble in housing, health care costs and college costs. The new housing bubble have caused rents to skyrocket as well.

    There are some very good regulations that the government has passed over the years, but things like the housing market should be just that – A MARKET. A market where rents and house prices are determined by supply and demand, not by government decree or cheap money.

  7. Mr. Eric Sunada, we are hardly a step closer based on that Supreme Court decision. Onerous court mandates may force some developers to comply, but who is to say others will leave the market and seek financial sustainability elsewhere. There have been many mandates of this nature imposed on developers before and hardly any of them truly effective. This is not just an acute problem in Alhambra but a regional problem involving many cities across the San Gabriel Valley and Southern California. We are way behind in providing housing across all income groups based on demand; it’s not just a lower-income problem. Focusing the problem only on the developer or city doesn’t address the broader issues and components that exacerbate the high cost of housing.

    Also you can’t address the housing affordability problem without addressing the anti-density issue, which your article doesn’t even talk about. So many Alhambra residents already complain about “higher-density” in our city yet can you imagine: if developers did set-aside more affordable housing what density-levels would be required to make this financially sustainable? Probably much more density than the density we get from market-rate housing. This isn’t just about lowering the profits of greedy developers, but banks requiring demonstration of sufficient cash flow for developers to service their debts. If the pro-formas and financial feasibility reports can’t substantiate the project, then any Supreme Court ruling mandate becomes meaningless and even counter-productive. To make the problem even worse, anti-growth/anti-density advocates will continue to flood the Alhambra City Hall chambers if there is a perceived threat of more density in our city – even if it is well-intentioned with hundreds of low-income housing. They will also complain of more traffic, which is why I strongly support the parking variance at the Casita Zen project, affordable housing or not. With the Casita Zen project right next to a bus line that allows connectivity to a vast and extensive Metro light/heavy-rail and bus system, the city MADE THE RIGHT DECISION to reduce parking requirements. Its cars, not people, that create traffic on our city roads.

    You say without city government interaction, the market will invariably alienate the lower income groups. Totally disagree! The city government is already interacting with the market through their enforced zoning requirements such as max. density, floor-area ratios, setback rules and height restrictions. What is alienating the lower income groups is a constrained market from a heavily regulated environment.

    I support the idea that developers should provide more housing across all income groups. However, we must accept the fact that our population will continue to increase and therefore we must embrace growth, not fight it. Forcing developers to build less expensive homes is a counter-productive approach if the current regulatory and political environment makes it so expensive and difficult to build otherwise. Incentivizing builders is a much more practical approach based on our current government model. We are a regulated free-market and must meet the diverse needs of our community.

    1. Amen!!! I recently went to a planning input meeting for the new plan extending to beyond a normal life span. Many if not most of the people there were complaining about density – the building of condos and apartments. They are still in the time warp period of the 50’s. We must build up and forget the idea that a single family house is a viable proposition in this urban area except for the very wealthy. It then becomes a question of how we do it. It needs to consider transportation and – I need only mention the brouhaha going on in LA city about building more density around the metro.

      But what about affordable housing? If there is nothing affordable in the community you are working in, you move to another location. There is affordable hosing in the LA area – it does’t have to be in Alhambra. The market is an amazing mechanism – if there is no housing and the wages are too low to afford the housing in Alhambra (including that the commute is too long to provide the people necessary), the wages will rise to provide a solution without mandating a wage that will push many employers to depart. Government manipulation of density to provide affordable housing is a fool’s game – it will only result in the best and the brightest manipulating the process for their advantage.

  8. Mr. Sunada, You state in your article that the state set goals for cities to build affordable units that are part of our housing plan. How many units have been built vs what the state has mandated? With all of the condos on Main St and throughout the city that are being built I find it hard to believe that there are no units that are “affordable housing.” Please clarify. I don’t understand if what you say is factual, why the city would be against providing affordable housing. What is their reasoning behind this?

    1. Mr. Ruben,
      If you are not familiar with the Southern California Association of Governments or SCAG, you must quickly learn what is being directed as proxy for the state by this agency and the other regional agencies in California.
      Here is the SCAG website:
      http://rtpscs.scag.ca.gov/Pages/Regional-Housing-Needs-Assessment.aspx
      The so-called housing needs or RHNA are guesstimates of the population in twenty years. The regional agency receives a guesstimate number of very low, low, moderate, above moderate of housing that may be needed. The agency than divides those numbers among the member cities. The allotment is often unfair and makes no sense.
      Most California cities haven’t build the allotted numbers of low income housing because of many reasons – no place to build unless other low income housing is destroyed, no funds, etc. Basically, the federal and state decided to get out of the public housing business and put the burden on individual communities.
      Remember that the state and regional agencies only care about restricted income housing that will be build; not what will be preserved. Additionally, state legislators changed the housing element law to require that cities actually rezone to higher densities parcels for restricted housing.
      However, the increased density on the properties doesn’t have to be restricted housing.
      Learn about the RHNA and the density bonus law. Residents and taxpayers are being herded from single family houses to apartments.
      Assemblyman Chau is one of the herders. State Senator Dr. Ed Hernandez may also be a herder after the senate vote on Monday for AB 744.

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