• A historical building with cars on the street

      Garfield Ave. and Valley Blvd. (Photo – Ken Lund)

      At its June 10, 2019, meeting, the Alhambra City Council approved a strategic plan that included an Inclusionary Housing Ordinance (IHO), and on September 9, 2019, the City Council directed staff to begin drafting that ordinance.

      By Sean McMorris and Eric Sunada

      While the details are not yet available to the public, an affordable housing ordinance is necessary to address Alhambra’s anemic affordable housing stock, which is the product of decades of poor City planning and development policy as well as mismanagement and misuse of the City’s Redevelopment Agency and HUD Community Development Block Grant (CDBG) funds.

      Any affordable housing ordinance adopted by the Alhambra City Council should be comprehensive and meaningful and should not be subject to discretion or gaming of the system. ColoradoBoulevad.net previously published information describing good affordable housing ordinances, as well as examples of affordable housing ordinances already enacted in regional cities.

      Growing Low-Moderate Income Population in Alhambra

      To understand why Alhambra so desperately needs an affordable housing ordinance, it is important to look at the data and trends in the City as well as the policies that have exacerbated the housing crisis in Alhambra.

      Alhambra always has had its fair share of Low-to-Moderate Income (Low-Mod Income) households, but it is staggering how much that population has grown in Alhambra over the last 12 years. The maps below put Alhambra’s Low-Mod Income population growth into perspective. (A moderate-income household is any resident or family making less than 120% of the Area Median Income; for a family in this HUD Metro Area, Median Family Income for 2019 is $73,100.)

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      (Sources: U.S. Census Bureau; American Community Survey 5-Year Data; City of Alhambra)

      Nearly all of Alhambra currently qualifies as Low-Mod-Income. While State and Federal variables have played a role in Alhambra’s worsening household economic health, City policies and practices have certainly aggravated the problem.  Alhambra’s increasing percentage of Low-Mod Income population is exceptional for the region, as noted by HUD area representative Geoffrey Gilbert during a conversation with Alhambra HCDA Committee member, Eric Sunada.

      The Role of the City’s Policies and Practices in Growing the Low-Mod Income Population

      For decades, Alhambra has adhered to a trickle-down economic policy, as outlined in its Housing Elements and as evidenced in its usage of HUD CDBG and HOME funds and its development practices.

      Many of these funds were used for Section 108 Loans to subsidize businesses primarily providing jobs that do not pay a living wage, and for public works projects, City Hall overhead, and code enforcement salaries that should be paid for through the City’s general fund.  Property tax increases associated with the subsidized retail developments (arguably due to our well-performing school district) were sequestered within and put back into the Redevelopment Agency zone.  When the Redevelopment Agency was abolished, the agency’s public lands were sold off.

      Given that these HUD funds are restricted to the betterment of a City’s Low-Mod Income residents, and given that the amount the City receives annually is based on its Low-Mod Income population, Alhambra’s misuse of such funds to sustain an economy that displaces the very people Alhambra is reliant upon—the working poor—is nothing short of a travesty.

      At the same time the City is redirecting HUD funding from being used to address our housing needs, it is subsidizing luxury housing through zoning variances and density bonuses with no returns on affordability.  The last time a developer needed to take advantage of the State density bonus law for higher density in exchange for a small number of affordable units was in 2010; usually there’s no need for developers to do this in Alhambra because they are given much higher density variances without any need for generating profit-limiting affordable units in return.

      The City also has failed to enforce its affordability covenants. In 2010, the Alhambra Planning Commission allowed 16 affordable condos to be sold-off to a group of investors who could then rent them out at market rates despite an agreement between the developer and the City to keep the condos affordable as a condition of approval of the project.

      Restricted Affordable Housing Stock

      90% of Alhambra’s current affordable housing stock is restricted to seniors, leaving Low-Mod Income working families to fend for themselves. Such discriminatory housing policies do not only compound Alhambra’s housing crisis, they send the message that Alhambra believes seniors are more desirable than the working poor.

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      Source: Alhambra Development Services Department

      Seniors certainly deserve a slice of the affordable housing pie, but they should not get the whole pie, especially when the largest demographic living below the poverty level in Alhambra are 18 to 34 year-olds.  Alhambra’s decades-long policy of reserving its affordable housing stock for seniors has undoubtedly increased Alhambra’s Low-Mod Income population because it limits access to a majority of residents who need affordable housing to survive and overcome poverty.

      A non-discriminatory IHO would help adjust this inequity in Alhambra’s affordable housing stock.

      The Housing Market is Broken and Needs Intervention

      Simply building more housing will not increase affordable housing stock without government intervention. Alhambra, however, cannot rely on the State to do its job. The State may never do what the Alhambra City Council ought to do, and whatever requirements the State imposes on municipalities may not be adequate for Alhambra’s affordable housing problems.  For example, the focus of debate at the State level is on building more market rate housing, the belief being that more supply will lower prices to affordable rates.  That belief disregards the fact that investors in the housing market seek to maximize profits. There is never a lack of housing, only a lack of affordable housing, a claim supported by new research that shows L.A. has more vacant housing than it does homeless people—a staggering finding given the swift spike in homelessness in Los Angeles over the last several years.

      Market forces motivate developers not to satiate the housing market in order to keep prices high. Indeed, new research suggests that since 2006 housing markets have been overtaken by an oligopoly of builders who control enough of the market to manipulate it to their advantage, which a Johns Hopkins University study found has cost the country approximately 150,000 additional homes a year. In a summary of the study, the Washington Post reported, “With fewer competitors, builders are under less pressure to beat out rival projects, and can time their efforts so that they produce fewer homes while charging higher prices.”

      Most new large housing developments are built by multinational corporations and conglomerates, and most existing developments are managed on behalf of large investor groups.  All of these entities are not beholden to local market pressures and not sympathetic to household financial stress.  Shelter flipping, condo conversions, and Airbnb rentals are norms that were not serious market factors 15 years ago. Consequently, housing markets are more volatile and subject to intervening variables that mitigate pressures to lower rents.  “Our housing market is broken,” writes Mellon-ACLS Fellow, Amee Chew. “[F]or-profit housing cannot meet most renters’ needs, and that’s by design: when profit determines pricing, the housing needs of low-income folks never matter as much as the demand of a few rich individuals at the luxury end.”

      Thus, simply deregulating, incentivizing, and streamlining the market-rate building process is not, by itself, going to significantly decrease the demand for affordable housing. Indeed, the opposite can happen. Streamlined, exclusive market-rate building combined with bad local development policies can increase displacement and the demand for affordable housing.

      Alhambra is proof of this.

      Building Market-Rate Housing; Losing Affordable Housing

      Alhambra has been steadily building luxury and market-rate housing over the last decade while severely under-building affordable housing. Unsurprisingly, the City’s need for affordable housing has increased as the City’s Low-Mod Income population has ballooned.

      Below is Alhambra claimed progress on meeting the City’s housing needs based on the Southern California Association of Governments (SCAG) current 8-year-cycle Regional Housing Needs Assessment.

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      Source: City of Alhambra, Development Services Department

      Not represented in the above table are the more than 1,000 market-rate units the Ratkovich Company is proposing to build over the next 10 years at the corner of Fremont and Mission. Rather than utilize the State density bonus law to incentivize the Ratkovich Company to create some affordable housing within the project, a prior Alhambra City Council gifted the developer a general plan amendment that allows it to create over 1,000 by-right housing units without seeking any density bonuses. A member of that City Council (Mark Paulson) is now the developer’s paid entitlement consultant.

      Nonetheless, the above table is erroneous. Recent reporting by ColoradoBoulevard.net revealed that it overstates the City’s affordable (Low-Mod) housing progress by nearly 70%. In addition, the table is deceptive in that all of the “Units Produced” are not newly constructed, nor are they rental units, even though 60% of Alhambra households rent. Instead, they are products of Alhambra’s First-Time Homeowner and Rehabilitation Programs, which are loans financed with HUD/CDBG funds that are typically forgiven after 15 years. The deed-restrictions that accompany these loans are removed once a loan is re-paid, allowing the homeowner to sell the property at market-rate and cash in on the equity. These loan programs help one home owning family, unlike affordable housing covenants that ensure units remain affordable to multiple households over a period of decades regardless of deed transfer.

      It has also come to light that Alhambra is re-counting old affordable housing stock from its previous eight-year RHNA cycle (4th Cycle: 2006-2013) as “new” affordable housing stock created during the City’s current eight-year RHNA cycle (5th Cycle: 10/31/2013-10/31/2021). For instance, based on the 5th RHNA Cycle housing inventory that the City provided ColoradoBoulevard.net, which is Alhambra’s current RHNA cycle (see below table), seven rental units from Pepper Street are listed as “New Construction.” According to public records, these units were built in 1991 and their affordable housing covenants expired in 2011. In the same table, four other units listed as “New Construction” were all built prior to Alhambra’s previous RHNA cycle (pre 2006).

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      Source: Alhambra Development Services Department

      Even though the two RHNA progress tables the City provided the public differ by count and stock, which is troubling in and of itself, our reporting shows that at most the City has only produced 34 affordable housing units in its current RHNA cycle—far less than the 107 and 115 units claimed in the two above tables—and all represent loans, not new units, which, according to Housing and Community Development (HCD) should not be counted as “new” affordable housing units. When this is factored into the equation, as it should be, Alhambra has only potentially produced 5 new affordable housing units in its current RHNA Cycle (see chart provided by HCD below). Of those 5 units, there is no guarantee that any will actually get built since HCD is counting permits issued, not the completion of projects.

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      (Source: Housing and Community Development)

      Worse still, Alhambra has allowed hundreds of affordable housing covenants to expire since 2013, possibly diminishing the City’s affordable housing stock to levels far below the level on which the State based Alhambra’s 2013-2021 needs assessment.  The net effect could be a loss in affordable housing, not a gain!

      Alhambra’s  dishonesty about and indifference to its diminishing affordable housing stock, combined with a hyper-focus on market-rate and luxury housing, has greatly increased Alhambra’s Low-Mod Income population and amplified the City’s affordable housing crisis.

      Those who benefit from such policies refer to the collateral damage loosely as the cost of modernization and/or economic progress; to those who lose their roofs, it is both de jure and de facto displacement. More to the point, it is unjust.

      Alhambra must implement a meaningful IHO to compensate for its skewed housing stock.  That housing stock currently obliges the needs of the affluent Alhambran and affluent non-Alhmabran, not the vastly greater number of Alhambrans who are Low-Mod Income.

      Ethics vs. Economics

      Alhambra’s and California’s housing crises are as much crises of conscience as they are crises of the economy. Until policy-makers start viewing housing in that light, little is likely to change.

      The housing debate in Alhambra and in the State has been poisoned by the zero-sum propositions that: 1) anything less than the exorbitant rents of the current housing market will bankrupt landlords and developers, and 2) any gains by the Low-Mod Income population must come at the expense of the affluent.

      In reality, the debate is about unreasonable profit vs. a reasonable profit. The developers who provide affordable set-aside are compensated with density bonuses and other incentives. Most rent controls, including California’s AB 1482 which goes into effect January 1, 2020, allow rents to rise yearly based on a certain percentage plus inflation. Furthermore, State law guarantees landlords a fair return on investment.

      Alhambra’s trickle-down theory of economic growth is a slow drip death to Alhambra’s Low-Mod Income population. If it provides any trickle-down at all it is by way of precarious low-wage jobs that create more insecurity, displacement, and household stress then they do wealth.

      The immediate damage of a profits-over-people approach to housing is declining student enrollment and increased poverty and displacement. The long-term collateral damage is depressed human capital, stunted economic growth, greater inequality, and a general tearing of the social fabric. Research has also shown that the housing crisis is directly linked to issues of physical and mental health, racial and economic segregation, traffic congestion and air quality, academic performance of our youth, and many others.

      DecorativeFrom a subsistence standpoint, other than food and water, housing is the most basic necessity for survival, but housing is not merely a social justice issue. Housing is also a necessity for economic advancement and social well-being.   The most vulnerable need relief now, not ten years from now.  A substantive affordable housing ordinance will help make this possible.

      Conclusion: It’s Lives, Not Capital Gains, Stupid

      City policies and the private market are failing most Alhambrans. Although population growth and State and Federal policies have contributed to California’s housing crisis, decades of poor policy and planning at the local level have exacerbated the crisis in Alhambra. The use of a majority of the City’s CDBG funds to subsidize low-wage business development rather than affordable housing, a profits over people development policy, non-renewal of most of the City’s affordable housing covenants, the City’s dishonesty about its affordable housing numbers, a discriminatory affordable housing policy that places a premium on seniors, and a focus on market-rate and luxury housing have all combined to facilitate Alhambra’s acute Low-Mod Income population growth and extreme lack of affordable housing.

      If Alhambra’s leaders had employed more ethical thought and less “voodoo economic” theory in their policy process over the decades, Alhambra would not be in its current dire affordable housing crisis.

      To correct for the poor policies of the past, Alhambra needs extraordinary measures to address its growing Low-Mod Income population, quell displacement and social anxiety, and unlock the potential of its residents. Alhambra must implement a comprehensive affordable housing ordinance that ensures all housing developments moving forward, with very limited exceptions, provide some affordable housing.

      Eric Sunada is the founder of the San Gabriel Valley Oversight Group, an environmental and social justice non-profit.


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