Driving down Long Beach Boulevard, the contrast between the landscape of Downtown Long Beach and that of the remaining city is starkly obvious. Below 8th Street, single-family homes and strip malls give way to towering office buildings and multi-story apartment complexes, with hovering cranes promising more vertical growth in the near future.
It is that growth and the flurry of development activity in the downtown area that led city staff and a team of hired consultants to identify Midtown and Downtown Long Beach as the most feasible testing ground for any inclusionary housing policy the city might consider. This is one of the main findings published in a memo presented to city leadership in July, describing the preliminary results of an economic feasibility study on inclusionary zoning. Inclusionary zoning is one of several tools the city is considering to increase production of affordable and workforce housing in an effort to help combat a statewide homelessness and housing crisis.
It’s important to note that the economic feasibility study doesn’t represent a recommendation by city staff yet. Instead, such a study is a required part of the process for any ordinance to be considered by city leadership and can help inform future policy proposals. In the case of inclusionary zoning, the purpose of such a study is to identify the threshold at which affordable housing requirements, which are commonly imposed as a percentage of affordable units in new developments, could create a negative economic impact. If the percentage requirement is set too high, it could stifle the development of housing overall, Patrick Ure, manager of Long Beach Development Services’ Housing & Neighborhood Services Bureau, explained.
A detailed report on the feasibility of an inclusionary housing policy is yet to be released. But the memo provides a sneak peek into the areas of the city that may see requirements for affordable units in the future, the potential rent and income restrictions such units could be placed under, and alternative solutions for areas of the city where the analysis produced inconclusive results, due to a persistent lack of overall development.
To prevent locally adopted inclusionary zoning policies from having a negative impact on the overall development of housing, such policies are subject to review by the State Department of Housing and Community Development, under certain circumstances. The California Government Code also requires local jurisdictions to remove all constraints to development, including inclusionary zoning requirements, in areas where development has been stagnant.
In Midtown and Downtown Long Beach, where certain levels of inclusionary zoning have been deemed economically feasible, according to the memo, a number of possible percentage requirements for affordable units were considered. Analysts calculated feasible percentage requirements for affordable units matching just one income category – renters with either very low, low or moderate income – or a mix of different units, to match a combination of income groups.
The difference in affordability between the three income categories used in the analysis is significant. For example, analysts found that a very low-income renter could afford to pay a maximum of $605 per month to rent a studio apartment, while those in the moderate-income category could afford to pay $1,373 for the same size unit. To come up with these numbers, analysts referred to the household income levels used by the Department of Housing and Urban Development (HUD) to define very low, low and moderate-income households in the Los Angeles-Long Beach-Glendale metropolitan area. Analysts operated under the standard assumption that spending 30% of annual household income on rent is the maximum percentage considered affordable.
If the city were to adopt a policy focused on spurring the development of units affordable to very low-income renters, analysts deemed that requiring 11% of newly developed units to fit this category of renter would be economically feasible. If the focus was placed on moderate-income renters, that percentage would increase to 19%, as this income group can afford to pay higher monthly rents than their low- and very low-income peers.
An alternative calculation looked at the option of requiring a mix of affordable units for different income categories. For example, it would be economically feasible for a city ordinance to require 11% of new units to be affordable if those units were split into two income categories, with 80% going to very low-income renters and 20% reserved for their low-income peers, the analysis found.
Generally, local nonprofits focused on developing affordable housing have emphasized the importance of integrated communities, where residents of different income levels live side by side. Brian D’Andrea, senior vice president of housing at Century Housing, a nonprofit lender to developers building affordable housing, stressed the importance of preventing socio-economic segregation. “I’m supportive of the idea of inclusionary housing in general and I like the idea of creating mixed-income, integrated, seamless communities throughout the city,” D’Andrea told the Business Journal.
Further, D’Andrea noted, an inclusionary housing policy could provide additional funds for the city to spend on affordable housing. “The real need in Long Beach is the need for a local, dedicated source of revenue that the city can invest in affordable housing,” he said. In-lieu fees, which developers pay as an alternative to developing affordable units in zones covered by inclusionary housing requirements, could help bolster such funds.
For areas of the city in which full-fledged inclusionary zoning may not be economically feasible, city staff and consultants laid out a number of incentives they say could help spur the development of affordable units. Some of the incentives outlined in the memo are already in place. For example, the density bonus program – which the city is required to offer by the state – allows developers to build a higher number of units per acre than originally permitted at a specific site. The program offers other potential concessions, such as reduced parking requirements. Other policy proposals listed in the memo include city-sponsored homebuyer loans and inclusionary housing policies based on project size.
Claire Okeke, communications manager of Long Beach-based nonprofit Clifford Beers Housing, said her organization was supportive of such incentives, especially in areas that currently lack development overall. “You can’t do less development than what’s happening now, and I do think there’s a place for incentives,” Okeke said. But, she noted, her organization is also partnering with developers of market-rate housing to help move the inclusion and development of affordable housing along. “The current tools that we have in the county and in the state are obviously not enough, because our homelessness crisis is just getting worse and worse,” she noted. “So we are looking at some of those partnerships to integrate market-rate with low-income and very low-income units.”
Additionally, Okeke said her organization would welcome a program that incentivized the use of accessory dwelling units (ADUs), also referred to as “granny flats.” ADUs describe separate living quarters attached to or located on the property of a single-family home. She also noted that the impact of an inclusionary housing policy in reducing homelessness could be increased by including a category for extremely low-income renters. “Adding a fourth category like that, that basically represents homeless and vulnerable populations, could be a tool to promote very low rent as a safety net for people who are on the verge of homelessness,” Okeke explained.
The full report on the economic feasibility of an inclusionary housing policy in Long Beach is yet to be released. A release date was not announced by press time.