L O Ng B E a Ch C O M M U N Ity H O U Sing R E P O Rt
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Long Beach Community Housing Report An exploration of unique housing design opportunities and their potential for Long Beach 2019 City Fabrick is a nonprofit design studio dedicated to improving communities through public interest design, planning, policy development and civic engagement. CITYFABRICK.ORG Abstract This research addresses and provides recommendations for the mitigation of rising housing costs in Long Beach, CA. It provides context to the issue of housing afford- ability in the state of California, with a focus on Long Beach, and seeks to under- stand and discuss the gravity of the issue and explore ideas in which to increase affordability. The report contemplates methods outside of traditional affordable housing which, much like new market-rate housing, only serves those that fall within a certain income range. In particular, this focuses on ideas that serve what can be referred to as the “missing middle”: middle-income households cost-bur- dened by market rate housing yet unable to qualify for housing subsidies. After identifying housing design and policy concepts employed in other cities, it is possi- ble to have a serious discussion on their feasibility and value to mitigating housing development barriers in Long Beach. Acknowledgments With funding provided by In collaboration with the California Endowment California State University Long Beach A special thank you to the housing advocates, developers, academics, government agencies, and elected officials that were interviewed throughout this process. This report outlines ways of mitigating the issue of housing development barriers in Long Beach Ultimately, this Report explores mecha- borrower’s income for a conventional loan REPORT nisms in which to preserve and advance (US Census Bureau 2006). The term “housing housing affordability in Long Beach, which affordability” is understood as the extent to INTRODUCTION is not to be confused with the term afford- which enough rental housing units of dif- able housing. While the two terms are can ferent costs can provide each renter house- This provides context to the issue of used interchangeably (and often are), af- hold with a unit it can afford (HUD 2017). affordability at the national, state, fordable housing refers to a housing option This report focuses on housing affordabili- and local level. The latter portion of in which the occupant(s) pay no more than ty, but the affordable housing development this Report identifies design and policy 30 percent of their income for gross housing process is an important concept to under- concepts that contribute to the advance- costs (utilities, for example). The 30 percent stand as it serves as a conventional strategy ment of housing affordability, presenting threshold originated as a rule of thumb used to address housing need. case studies of where and why these by the federal government as a result of techniques have been successful. 1990s lending practices. This refers specif- ically to Fannie Mae and Freddie Mac; lend- ers created by Congress to maintain housing market stability by providing readily ac- cessible funds on reasonable terms. One of the stipulations of Federal funding was un- willingness to purchase mortgages unless the principal, interest, tax, and insurance payment did not exceed 28 percent of the 04 Community Housing Plan Guiding their feasibility for implementation, rely- Principles ing heavily on two methods of qualitative This report relies research: written publications and inter- heavily on two The desired outcome of this research is to views. Government documents have been instrumental in understanding the policies methods of develop a guide for fostering housing af- in place that assist in developing housing qualitative research: fordability in Long Beach. These strate- (including traditional affordable housing). gies can be applied in other communities written publications Examples include publications by the City & interviews. throughout the region as well within the of Long Beach including the City’s General proper contexts. The steps to accomplish- Plan, particularly the Land Use and Housing ing this include examining the issue, iden- Elements. tifying factors that contribute to rising housing costs, and developing strategies to The Plan also considers State and Federal increase affordability. Consistent with the programs and policies that support alterna- City of Long Beach’s pledge to pursue and tive housing opportunities, such as techni- promote a range of housing options, this cal guides to low income housing tax credits (LIHTC). Newspaper articles and online blogs research approaches the issue of housing have proven to be a useful source of infor- affordability with the intent of identifying mation by offering robust coverage of the an array of housing opportunities as well current state of housing. Interviews have as their feasibility. While the value of tradi- been instrumental in gathering insight from best fit the mold for each housing opportu- tional affordable housing developments do professionals involved in various areas of nity type. The geospatial aspect of the re- not go unrecognized or unappreciated, this housing development including developers, search utilized data from the United States particular exercise focuses on alternative or advocates, non-profit groups, City Officials, Census Bureau, the Department of Housing and Urban Development (HUD), and the Cal- “outside of the box” strategies. elected representatives, and designers. ifornia State Assessor. In addition to qualitative information ac- Research The structure of this Report begins by Methodology quired through research and interviews, the project team utilized various methods building upon the background research and describes concepts related to housing af- This document, the Missing Middle: Commu- of spatial analysis. Geographic Information Systems (GIS) and Google Earth have assist- fordability, followed by existing mitigation nity Housing Report, identifies alternative techniques. This report then explores dif- housing opportunity types and assesses ed in the identification of areas or sites that Affordable Housing vs. Housing a Affordability A While the two terms are can used providing readily accessible funds on TRADITIONAL BIG ‘A’ SMALL ‘A’ HOUSING interchangeably (and often are), af- reasonable terms. One of the stipula- AFFORDABLE HOUSING AFFORDABILITY fordable housing refers to a housing tions of Federal funding was unwill- Affordable housing An ideology that considers option in which the occupant(s) pay ingness to purchase mortgages un- no more than 30 percent of their in- less the principal, interest, tax, and developments are the accessibility and cost come for gross housing costs (util- insurance payment did not exceed 28 typically government of housing relative to ities, for example). For context, the percent of the borrower’s income for subsidized and required to the population. Housing 30 percent threshold originated as a conventional loan (US Census Bu- be preserved as affordable is considered affordable a rule of thumb used by the Feder- reau 2006). The term housing afford- al government; as a result of 1990s ability is understood as the extent to housing for a period of at when total housing costs lending practices. This refers spe- which enough rental housing units least 15 years. are at or below 30 percent cifically to Fannie Mae and Freddie of different costs can provide each of gross annual income. Mac; lenders created by congress to renter household with a unit it can maintain housing market stability by afford (HUD 2017). 06 Community Housing Plan ferent housing opportunity types, relevant case studies, and guidance for implementa- tion. The report concludes with a discussion of the results that includes a critical review of each case study and their feasibility in Long Beach, and to what extent they may improve housing affordability. Context for Housing Affordability Homeownership in the United States was the lowest in 15 years as recently as 2016. This statistic is directly related to the polar- ization between market rate and subsidized housing, exacerbated by overall shifts in in- come inequality. When combined with costs associated to land value, construction and development fees, there is greater incentive for developers to build housing at the high nism for encouraging private investment into end in an attempt to offset costs increases. the development of rental housing dedicated Millennials leaving the cities for less expen- This missing middle to low-income households. For affordable sive exurbs still demand density, walkability, population, with housing developers, LIHTC is the most im- and access to transit; often in direct conflict portant financial resources, and in 2016 al- income relatively with the preferences of established home- located $92 million to support the purchase, owners that can be reasonably assumed to close to AMI, construction, and rehabilitation of affordable enjoy the benefits of the current housing are still burdened by housing developments (Lester 2003). model. Homeowners have expressed con- housing costs and cerns pertaining to potential financial impli- The California Tax Credit Allocation Commit- are armed with few cations of changes in housing demographics tee (CTCAC) administers low-income housing (most notably increased density and sub- government subsidies tax credit programs intended to encourage sidized housing) in close proximity to their for these middle private investment in affordable