Further to my last post, here’s a pretty bad idea being proposed to help with the homelessness problem in LA.
To lazy to click? Basically, two council-members are proposing a ballot initiative to increase various fees paid by developers to pay for bond which would pay for $1Bn worth of housing for the homeless.
Sounds like a good idea, right?
Wrong.
Here are the problems:
- Because of our insane parking and zoning requirements, the cost of land to build apartment units on is around $50-70k / door.
- Most affordable housing funding requires the use of union labor for construction
Together, the above mean that the cost of building each unit of affordable housing is something like $300-400k. That’s incredibly expensive.
If, instead, we just massively increased the allowable density and eliminated parking requirements in certain transit-adjacent areas in exchange for developers committing to building projects that are, say, 25% affordable, you would get a ton more units, totally privately financed.
If, for example, you allowed people to build the way they did in the 1920s, you would get 24 units onto each 7500 sq ft parcel (via 3 story, center-hallway buildings with no parking). That kind of building would cost something like $3.6MM to build. The land would be something like $600k. So you’re looking at $4.2MM for 24 units… $175k / door all-in (financed by a private developer… not the city!).
If 18 of those units rent for market… say, $1700 and the other 6 are affordable at $600 / month, your rent roll is $410k / year. That’s 10.2x GRM… definitely worth building for a private developer.
You could even go a step further and require that, in exchange for the increased density, the developer voluntarily be bound by something like the LA RSO (eg no no-fault evictions, limited rent increases). For free, the city would therefore get 18 “rent control” units and 6 “affordable units”.
That’s how you use the market to get a shitload of affordable housing.