California Is Desperate for Affordable Housing But Can’t Stop Getting in Its Own Way

In Los Angeles, 49 units are taking 17 years to build, facing nearly every hurdle that state laws allow

By Will Parker and Christine Mai-Duc of The WSJ. Excerpts:

"A Los Angeles nonprofit was given government land in January 2007 to build a few dozen units of affordable housing. They’re finally hoping to open the building next year. 

Lorena Plaza, a 49-unit development rising in the predominantly Latino neighborhood of Boyle Heights in eastern Los Angeles, is taking longer to complete, a city official said, than practically any other residential building this size in the history of Los Angeles. 

The 17 years of false starts and delays are an extreme instance of how difficult it has long been to build affordable housing in California—for both the homeless as well as lower and middle-income workers—and in other states with complex regulations and high costs. 

The development has faced nearly every hurdle that California laws allow opponents to place in the way of affordable housing. Approvals by politicians and commissions took years, often held up by a single determined opponent on the city council. It took the developers more time to win over skeptical neighbors who were particularly opposed to nearby housing for the mentally ill and homeless. Financing hurdles and other costs piled up along the way. Construction finally began about a year ago.

In California, affordable housing developers typically abide by a host of requirements when they take public subsidies, such as tougher energy-efficiency standards and higher wages for construction workers. They often need to build amenities such as offices for social workers and transit-boosting features such as bike storage. 

Even home builders who are sympathetic to these priorities say those same objectives undermine the state’s ability to produce enough affordable housing. That means California will continue to suffer stubbornly high rates of homelessness that plague the Golden State and are evident on the tent-filled streets of cities like L.A."

"Los Angeles is aiming to construct more than 450,000 new homes by 2029, a feat that would require five times as much construction as occurred in the previous decade"

"cities keep looking for ways to block new housing, market-rate or affordable. 

The Bay Area suburb of Woodside, for example, last year tried to declare that its entire city was a mountain lion refuge to prevent apartment development. The town, which later reversed the decision, didn’t return a request for comment."

"In New York City, a developer’s plan to build low-income apartments at the site of a community garden in lower Manhattan has been held up for a decade by city review processes and lawsuits filed by opponents. In Dallas, a mixed-income apartment complex planned for an empty field in the northern part of the city was delayed for more than three years by deed restrictions that allowed neighboring property owners to dictate land use.

An apartment building takes an average of four years to build in L.A., according to a UCLA and CSU-Northridge analysis of building permits from 2010 to 2022. Two-and-a-half of those four years come after the approvals process. 

About 36% of projects that received permits in California between 2010 and 2022 had not yet been completed, according to UCLA."

"In San Jose, Calif., the average cost to build just one unit of low-income housing shot up by 24% in 2022 alone, hitting a new high of $938,700, or roughly what it costs to buy a three-bedroom bungalow there"

"In Los Angeles, Lorena Plaza . . . Its 49 units will . . . cost $34.2 million to build." (about $700,000 each)

"The city councilman representing the neighborhood, Jose Huizar, had broad powers to delay projects on his turf. To get a city subsidy, the developers would need a signed letter from Huizar, who sat on the MTA board and remained opposed to the project for years."

"Huizar’s staff wanted more commercial space"

"Once that was satisfied, they requested the approval of the Boyle Heights Neighborhood Council, a community advisory group."

"In 2015, the development got a boost after the neighborhood council voted 15-1 to let ACOF proceed. It took about another year to receive city approval on all the necessary zoning and environmental reviews. 

State law provided an opportunity to stall Lorena Plaza further. The Rosados appealed the project’s city-approved environmental review, claiming it was too dense for an already-overcrowded area, according to the filing.

A landmark state law called the California Environmental Quality Act, passed in 1970 . . . allows any opponent to use appeals to slow down development if they claim environmental reviews are flawed. In Los Angeles, appeals are heard by the city council’s Planning and Land Use Management Committee. That body was chaired by Huizar."

"The committee didn’t schedule a hearing on the appeal for more than a year. When the project did get a hearing, Huizar sided with the Rosados, saying an abandoned oil well on the site posed a potential hazard."

"While housing production has ticked up in recent years [in California], it still sits well below half the pace needed to hit that figure."

"In early 2018, Huizar called up the Los Angeles Times to say he had changed his mind after the developer made concessions and would push for the project’s approval. 

The owners of El Mercado [a bustling, three-story indoor market next door] then turned to the courts, filing a lawsuit alleging ACOF didn’t properly address potential soil contamination. The case dragged on until ACOF and the business owners settled in 2020."

"By 2021, when the Lorena Plaza developers secured all the necessary funding, the project’s costs had shot up by $9 million, or about one-third, in the five years after it first received approvals to build"

"Developers no longer need a letter of support from their city council member to receive affordable housing funding. Environmental appeals have to be heard within 75 days. Zoning approvals for affordable projects, which took more than a year at Lorena Plaza, are now happening as quickly as a few months-time"