By The Editorial Board, LA Daily News
In his State of the City speech last week, Los Angeles Mayor Eric Garcetti renewed his call for a new fee on real estate development to provide $100 million a year to pay for additional affordable housing.
The high cost of houses and rental units in the Los Angeles area is a serious problem that hurts more than the people squeezed out of the market for homes. But whether Garcetti’s plan is a serious solution is another question.
Not only the area’s developers are arguing that the effect of such a fee could be the opposite of its good intention. City Controller Ron Galperin raised concern too.
“I’m not convinced that the way that you create more housing is by making it more expensive to build,” Galperin told the Los Angeles Times.
That’s a simple and reasonable objection that must be addressed before a City Council committee and the full council rush into approving the so-called “linkage fee.”
According to a plan first drawn up in 2015 and updated by city planners this winter, fees would be $5 per square foot for commercial developments and $12 per square foot for residential developments. The money generated would go to the city’s Housing Impact Trust Fund, which would use it to fund construction, preservation or rehabilitation of affordable housing units, to the benefit of low-income residents. This would help to offset the loss of affordable-housing funding because of the end of the Community Redevelopment Agency and cuts in federal housing funds.
Lots of projects would be excepted from the fees. Developers could get a break by including affordable units in a project. Fully exempted would be projects covered by Measure JJJ, the law passed by L.A. voters in November that mandates affordable units to be included in housing projects requiring zoning changes.
If this helped, it would be welcome in an area with some of the nation’s lowest housing supplies, lowest home-ownership rates and highest rents. These problems hurt job-seekers and employers and help to clog commutes. And, of course, they’re tied in with the homelessness crisis.
But can you create the needed new housing at all levels of the market by adding to the costs for developers and future buyers and renters?
City Hall must answer that question first.