Yesterday, the LA City Council declared a “state of emergency” regarding homelessness and pledged to spend $100MM to help ameliorate the problem.
As you might imagine, I have plenty to say about how the city handles homelessness in general and about this plan in particular.
But today I want to focus on one particular aspect of the problem that is totally, 100% within the city’s control: The delays imposed by the city on construction projects.
At any one time, Adaptive generally has approximately 150 units in various stages of renovation. I think it’s fair to say that construction on each one is generally delayed by approximately three months by the city (~2 months in plan check and then another month waiting for various inspections).
That means the city is imposing 150 units x 3 months = 450 apartment months of delay. That’s 450 / 12 = 37.5 apartment years. In other words, it’s the equivalent of taking 37.5 apartments out of the rental market for a year. And Adaptive projects represent an infinitesimal fraction of the total construction, both rehab and ground up, in the city at any one time.
Keeping so many units out of the spot market is 100% certain to increase rents, which everyone agrees leads to homelessness.
If the city is serious about reducing rents and, therefore, homelessness, it needs to radically reduce the delays it imposes on residential construction of all types and thereby ease the supply crunch.