The combination of a small, parking-free apartment and a “sweetheart loan” would mean that any full-time employee in LA (LA has a Living Wage ordinance of $15/hour) could afford to own a home near where they work, even in high-cost neighborhoods. An LCI co-op, condo, community land trust, or tenant-in-common is a trade-off many people want: to own a home (at 1⁄4 the price of a single family home nearby) in job-rich and amenity-rich neighborhood with great schools, access to public parks like the beach, or living next to a university campus and taking advantage of the classes and the artistic and cultural opportunities offered. 

By focusing housing in job centers, cities can also push big employers and corporations to offer sweetheart loans to all their employees. There’s a model of this from movie studios: Fox Studios had a program that subsidized mortgages for employees: 1% interest rate on loans for the purchase of a home. We can create incentives for employers like universities, grocery and big box stores, and medical centers to offer their employees low interest loans – while also using their parking lots to build housing (and replacing the parking underneath as needed).  

But what is the effect on the rest of the city?

By building housing in job centers like Santa Monica, Culver City and the Westside of LA, areas that have not built their fair share of affordable housing, cities can create economically diverse communities in high-opportunity neighborhoods. We can simultaneously reduce Displacement in Low Income Communities and Communities of Color. When a middle income household moves into a Low Income Community and outbids longtime residents for limited  housing stock, it artificially inflates rents, and can start a domino effect where longtime residents are pushed out of their homes and into homelessness. Building this way is also aligned with the Equitable Distribution of Affordable Housing – which calls for building near jobs and in neighborhoods that have not built their “fair share” of housing.  

Pushing down rents across the city

In order to create more affordability across the city, the City Council can create a Vacancy Tax or Fee, which applies to landlords who let units sit unoccupied. There are models from the West Coast - Oakland and Vancouver. This is a potentially powerful lever, because one tool landlords use to raise rents is to allow a unit to sit empty for 3-6 months at an inflated rent, waiting for a higher paying tenant. Landlords can see a 15% “bump” if they “hold out.” By penalizing “holding out,” the city can cool off our overheated market. Vacancy Taxes also bring more inventory online at different price points. We can create a virtuous cycle for renters as inventory comes online at different price points, combined with a high Vacancy Tax, forcing landlords to drop the price to fill units quickly (or be penalized) – just as the city (and region) facilitates the building of a surplus of housing through all the various programs – ADUs, SB 9 lot splits, TOC, density bonuses, AB 2011, and LCI. 

Cities can create overlapping virtuous cycles based on data from how residents move through: new units come online… people move in… often vacating a cheaper unit (on average 10% cheaper)… as the city creates downward pressure on landlords to rent quickly, forcing them to lower the price… which creates an opportunity for another household to upgrade quality at the same price – or downsize in a crisis. Since small units without parking naturally fall into the Moderate Income and Workforce range, and not luxury range, vacancies can appear quickly at lower price points, and help create a safety net in the event of a job loss or personal or health. While studies show that when people move, they move up on average one decile (such as to a bigger space, more amenities, more desirable location, etc.) Right now, more people fall into homelessness every day that we house in LA – 200 versus 240. 70% of our unhoused neighborhoods simply needed cheaper rent ($300-$500/month) and they would still be housed. An abundance of affordable vacancies nearby can “catch” people before they fall. Recently completed research shows some powerful and exciting possibilities:  that for every 4 new units that are built, one unit will become vacant at the lowest decile over a 6 year period (the length of the study). If this were true for LA, building our deficit of 500,000 units would create (in theory) 125,000 vacancies at the lowest price point -- while the city pushes down on rents through a Vacancy Tax. 

At the very least, we know we have a deficit of 200,000 homes for Moderate Income households, and 400,000 attainable home ownership opportunities, and these typologies are not subsidized by taxpayers; the market has to build them. To the extent there is a market for car-free/parking-free housing, everyone wins by quickly building 15 minute communities: less traffic, less pollution, less climate emissions, fewer traffic injuries and death, better health outcomes, lower costs for municipal services.

Rents: Right now, LA rents have been bid up to 2X what the unit is worth. If renters have freedom to move and find a better deal elsewhere, this can end the price inflation, and reverse it – studies show that if we actually built our housing deficit of 500,000 units (an ambitious but doable goal, according to experts) the data shows rents would fall at least 21%. This tracks with a recent Case Study during COVID, where LA rents fell 15% as people moved out of the city and state. If these rent savings were realized, it would play a powerful role in creating a more equitable city: data shows that low-income renters can pay 67% of their income in rent. Many households spend 30% of their income on owning a car. The high cost of housing and transportation can be devastating to a household budget. New vacancies also open up inventory for vouchers and Section 8 (right now, LA has a voucher for every homeless family, but they go unused because there are no vacant units). LCI units can fall in the range of Section 8 vouchers.

There are additional benefits that more vacancies create: households can “right-size” – three students living in a single family home (SFH) can move into studios or an apartment on campus, freeing up a SFH for a larger household. A senior can downsize to the beach just as they lose the ability to drive – opening up a SFH in the Valley. Households who have “scored” a rent control unit often feel trapped – they don’t want to give up a great deal, but they might give it up for the opportunity to own their own home – creating a new vacancy and putting a one more permanently affordable unit on the market.  

 The LCI streamlining also helps affordable housing developers build faster, build for lower costs to reach deeper affordability, and build smaller projects on infill lots that were previously undevelopable. There are an estimated 11,500 single parcels in LA that cannot be developed because they cannot be assembled – and the LCI Plan can open those up for development. As streets are transformed for mobility, and it will open parking lots and excess parcels that are municipally owned by the city, county, state, school district, etc., as well as owned by faith-based organizations and nonprofits. This land can be used to create Permanent Supportive Housing, Social Housing, Community Land Trusts, taxpayer subsidized and unsubsidized housing that reaches the deepest affordability.  (And parking can be buried as needed, so no net loss of parking if the demand exists). 

The LCI Plan also significantly reduces the cost of building so small projects can be feasible to build financially, democratizing building as local mom and pop builders can take part; and there is a general understanding that LA developers have a monopoly – only a few have the deep pockets, relationships, and technical know-how to navigate our byzantine system and build enormous projects that involve podiums and sophisticated engineering. By bringing in small actors, the city can see innovations in quality and price.

We need to build

Los Angeles needs to build housing because it is a necessary (but not sufficient) step in addressing the acute crisis of our unhoused neighbors and the tents and the encampments. Cities across the country have radically lower rates of homelessness despite far higher rates of poverty, addiction or mental health challenges – because they do not have the housing shortage we do. The overall lack of housing means that housing vouchers go unused for lack of units; and rents are twice what they would have been if we had built like comparable cities did (and we know homelessness tracks with rent burden.)