Bad Foundation for Business

Approval of Measure S would curb development with costly fallout for housing market, workers, employers.

By Tracy Hernandez and Josh LaFarga

Friday, March 3, 2017

City of L.A. voters will head to the polls on March 7 to determine the fate of Measure S. This initiative is very clear in its intent – place a two-year hold on real estate construction in Los Angeles. If passed, Measure S would change the laws governing the city’s general plan and development projects – this would effectively shut down new construction. It would also result in economic losses for business and the city; make the massive real estate market shortage in Los Angeles much worse; reduce housing for our future workforce; and increase the likelihood of residents setting up in crowded, unsafe dwellings.

Economic losses stemming from Measure S are projected to be as high as $2 billion according to a Beacon Economics report released in December. The measure also would erase $70 million from the city’s budget and will have a significant impact on jobs by putting an estimated 24,000 local residents out of work.

These facts are also concerning in light of results from a Los Angeles County Business Federation (BizFed) poll last year of L.A. businesses showing employers are frustrated that high housing prices limit their ability to attract and maintain a skilled workforce. Measure S will exacerbate current conditions and squeeze both employers and their employees to the point that they will move out of Los Angeles to take advantage of less-expensive out-of-city or out-of-state options.

There are too few houses and multiunit dwellings in Los Angeles to shelter the existing and future skilled workforce. Developers are building an average of 80,000 California homes a year, but that falls well below the 180,000 needed according to figures from the California Department of Housing and Community Development. The state will need more than 1.8 million additional homes by 2025 to keep pace with its growing population.

Educated workforce

Consider also that Los Angeles enjoys an educated workforce and an increasing number of jobs. However, they both might be at risk. A quarter of people ages 25 to 34 living in Los Angeles County in 2014 had a bachelor’s degree. This younger population is more educated than the older, according to a June report from the Los Angeles County Economic Development Corp. The report also shows the county will add 346,000 jobs from 2015 to 2020 for an average growth rate of 1.5 percent a year. Not being able to find an affordable place to live, even as the job market grows, might prompt young, educated, and skilled workers to go elsewhere.

Another potential consequence in the face of a housing shortage is that Angelenos will seek residence in unsafe, unpermitted dwellings. Such circumstances are not unlike those leading up to Oakland’s “Ghost Ship” fire that killed 36. Due to a high cost of living, residents of that warehouse were left with few options for affordable housing and lived in the converted warehouse’s cramped dwelling units. With upwards of 50 percent of its renters unable to pay rent, Los Angeles finds itself in an uncomfortably similar situation. Increasing restrictions on building runs the risk more people will seek dangerous alternative housing.

Rather than set a new standard in impeding much needed affordable development, Los Angeles should look to policies from other cities. For example, Salt Lake City is facing a housing shortage some have described as a systemic crisis. The city has chosen to approach it with a comprehensive plan featuring inclusionary zoning, which encourages affordable housing in new residential developments. The plan also allows for zoning changes for increased density and a wider array of housing types, including accessory dwelling units, duplexes, cottages and bungalows, row houses, and small apartment buildings. What Salt Lake City did not do was shut down real estate construction. Instead, they looked at the current circumstances and planned for the road ahead.

Measure S is not a responsible or safe solution. It will work to only exacerbate a serious problem. Proponents portray the initiative as “developers against everyone else.” This is unfair to developers who are the only ones prepared to address the problem. It is also unfair to local residents who seek stable housing and young people – those who would live in Los Angeles were it not for out-of-reach housing prices.

Those who have adopted a “Not in Anybody’s Back Yard” approach should instead engage with business and city leaders to encourage housing development, not kill it. L.A. voters should reject Measure S on March 7.

Tracy Hernandez is chief executive of the Los Angeles County Business Federation, or BizFed. Josh LaFarga is director of public and government affairs for LiUNA Local 1309 and serves on the city of L.A.’s Board of Neighborhood Commissioners.

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