The Wrong Way to Fund Affordable Housing

Gary Toebben

August 22, 2017

This afternoon, the City Council’s Planning and Land Use Management (PLUM) Committee will hold its second hearing on the creation of an Affordable Housing Linkage Fee (AHLF), which would charge a per square foot impact fee on all new residential, commercial and industrial construction in Los Angeles.  The business community strongly supports affordable and workforce housing, but this proposal will make low and middle-class housing more expensive to build and more expensive to rent or own.

Raising fees on the construction of all housing to help only a select few will have a negative impact on nearly all Angelenos.  Ninety percent of our residents who need affordable housing live in market-rate housing.  This policy will make it more expensive for the majority of low and middle-class residents to rent an apartment or buy a house.  

At the last PLUM hearing on this issue in June, councilmembers raised a number of concerns about this linkage fee.  They noted its disproportionate impact on the price of housing in low and middle-class neighborhoods and the total cost of fees already in place in the city, which was estimated at $70,000 per unit.  In response, the Planning Department has prepared a report that outlines some new options like a tiered rate based on neighborhood boundaries or the boundaries in the 35 community plans.

While we appreciate the attempt to address our concerns, this is still the wrong solution, because it will raise the cost of low and middle-class housing by $12,000 to $24,000 per unit.  We do not agree with two major premises in the report: that higher fees of $12,000 to $24,000 per unit will not lead to higher prices for sale or rent; and that because the impact fee being proposed is lower than San Francisco, we should be thankful.  When you begin with a situation in which there is more demand for housing than supply being created, higher costs will always lead to higher prices.  San Francisco is a very good example. 

A study earlier this month by zillow found that a five percent rent hike in L.A. County would push 2,000 more residents into homelessness. We cannot solve our housing crisis by making it more expensive to build, buy or rent a home in L.A.  

And that's The Business Perspective.


Total Votes: 2 Avg Vote: 5


Private comment posted @ 5:44:39 pm

Leave a Comment

Comments submitted to The Business Perspective Blog are subject to review by the Los Angeles Area Chamber of Commerce prior to posting. The Chamber reserves the right to monitor and withhold comments that include personal, offensive, potentially libelous or copyright protected language, materials or links. Only comments relevant to the topic will be posted. Comments posted must have a valid email address. View our full terms & conditions.