Distinguished Speaker Series - Dr. Stuart Gabriel
Published on September 15, 2023
UCLA Professor Explains Affordable Housing Solutions in Distinguished Speaker Series
The City’s Finance Advisory Committee presented an engaging evening of conversation with Dr. Stuart Gabriel in the City Hall Chambers on Thursday, September 14th, the first event in the periodic Culver City Distinguished Speaker Series on Affordable Housing. Gabriel, Distinguished Professor of Finance and Arden Realty Chair at UCLA Anderson School of Management, Director of UCLA Ziman Center for Real Estate, and Co-Director of UCLA Howard and Irene Levine Affordable Housing Development Program, provided insight to the affordable housing challenges, and opportunities, facing Culver City. “Affordability is a concern to us all,” Gabriel said. “It’s pertinent to every single person in Los Angeles.”
Gabriel and Andrew Lachman, Chair of the Culver City Finance Advisory Committee, discussed the complex situation in front of an audience that was in-person and online.
Through studies and statistics, Gabriel noted how “lack of affordable housing is costing us all.” A hollowing out of Los Angeles blue-collar jobs over the decades, Gabriel said, has created more regional economic inequality, with low-end earners in a precarious position. He shared numbers showing that almost 60 percent of Los Angeles renters pay more than 30 percent of their earnings in rent, higher than any major American city. This in turn leads to people making choices between essential needs like food and healthcare.
“At its extreme simplicity, the way to solve affordable housing is to build more housing,” Gabriel said, while also stating that building luxury rental units will not take pressure off the housing issue. “When it comes to solving the problem, we need all hands on deck. We don’t have the dollars to get out the hole with public funding. Our population far outpaces the total units being built. We’re constrained by regulatory processes.”
Citing Regional Housing Needs Assessments data, Los Angeles would need to build 456,643 units from 2021-2029 in order to meet the housing needs. That is five times greater than the previous allotment from 2010-2019, which was 83,865 units. This issue is exacerbated by the sharp rise in rents, which have risen 35% since 2000.
“How do you build cheap housing on expensive land?” Gabriel rhetorically asked. “The answer to that question is: you don’t. From a private sector perspective, you need high rents to offset the high acquisition costs.”
Gabriel shared insights into his latest study, which looked at approval processes and the proverbial red tape surrounding them in the City of Los Angeles. The data-driven report, studying permits issued by City of Los Angeles from 2010-2022, showed it took on average five years from the first permit to occupancy, with a $500,000 price tag per unit. Approval processes took an average of two years, with projects requiring environmental impact reports (EIRs) facing a longer timeline. Gabriel pointed out that municipalities and developers are finding innovative ways to cut down on those lengthy processes, including blanket EIRs that are conducted on a city-wide level, lowering the barrier for private developers.
One of the only public sector solutions at this time to help create more affordable housing, Gabriel said, is the state’s Low Income Housing Tax Credit (LIHTC) program. The LIHTC program reduces the federal tax liability in exchange for the acquisition, rehabilitation, or construction of affordable rental housing units that will remain income and rent restricted over a long period--55 years in California. Gabriel argued that LIHTC and other public programs are not resulting in enough units being built to meet our needs, so helping the private sector create more affordable units was one of the most important things government could do. “We have to try to do everything we have talked about to get the private sector into the act. We can’t do it without the private sector,” Gabriel said.
In addition to speeding permitting times and decreasing uncertainty for developers, Gabriel said Culver City could look to easing restrictions to provide more options for construction, such as easing height restrictions on buildings, “with the stipulation that you put a lot of thought into how you preserve the amenities.”
“Open the toolbox and use whatever can--the variety of tools,” Gabriel said. “You’re leaving money on the table if there wasn’t this height limitation. It doesn’t mean all the amenities you love and cherish are going in the trash can. You can have both if you do it intentionally.”
Lachman reflected on the discussion. “The idea you can maintain the character of a community even if you are making changes to it, you just have to be thoughtful about it,” he said. “We have a lovely suburban community here. You can build taller buildings in smart places and figure out how to blend various kinds of development in order to maintain the character of the community we find so special here in Culver City. By doing that, we can make sure that we can expand our tax base.”
Los Angeles continues to build tall, large residential properties on the edge of Culver City, which allows their residents to take advantage of Culver City’s services. “But we’re not getting the benefit of the property tax base and involvement. We can maintain a commitment to our community, maintain our amenities, but also adapt the fact we have to build more housing, more affordable housing in a way that maintains our commitment doing that,” said Lachman.
Lachman also highlighted Gabriel’s message to invest in Culver City’s school system and parks. “They make up two of the biggest attractants to our city. Both of them have been under a lot of challenge and stress because of infrastructure issues and other items. We need to maintain those and understand we can maintain our academics and maintain our excellence and pursue equity at the same time. Much like we can do with our housing policy. They are not mutually exclusive if we do it smart and thoughtfully and build a consensus.”
The full conversation can be viewed online.
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