Inclusionary Housing Takes a Hit

Thursday, August 6, 2009
Steve Martin
WeHoNews.com

West Hollywood, California - July was a bad month for West Hollywood.

Sacrificing local government to solve Sacramento’s fiscal crisis, the State has robbed the City of its share of redevelopment revenue, gutted AIDS education programs and withdrew the safety net which so many of our seniors and disabled citizens formerly relied upon.

Then the City’s affordable housing policies sustained the most significant kick in the teeth since the passage of the Costa Hawkins Act, which our Democratic dominated legislature adopted in 1995.

Long term tenants will recall that Costa Hawkins imposed vacancy de-control on “voluntarily” vacated units. Up until then, upon vacancy a rental unit remained subject to the prior rent as determined by the City’s department of Rent Stabilization.

Now, upon vacancy, rents are set at market rates; landlords were freed to impose whatever rent the choose at the commencement of a new tenancy. For many long term tenants a wave of landlord harassment ensued as unscrupulous landlords hoped force the tenants to voluntarily vacate.

While Costa Hawkins hurt, as long as you were a long term tenant, you could still reap substantial benefits of rent control. On the other hand, vacancy decontrol allowed landlords to increase their incomes and gave them incentives to maintain their buildings.

Last month the Court of Appeals affirmed a decision by the Superior Court of Los Angeles in the case of Palmer/Sixth Street Properties L.P. vs. the City of Los Angeles, that ruled that Costa Hawkins invalidated inclusionary housing requirements for new development.

This decision could effectively end West Hollywood’s ability to provide affordable housing to low income and disabled residents. It seems like Costa Hawkins is the gift that keeps on giving--at least for landlords and developers.

For decades West Hollywood and other cities required residential developers to set aside a number of units as affordable housing. In West Hollywood that number was twenty percent.

Most developers avoided actually including these affordable units in their buildings by paying an “in lieu” fee that was used to fund construction of affordable housing projects by the West Hollywood Housing Corporation.

Using those “in lieu” fees to leverage outside funding, the City has been able to build affordable projects in sites throughout the City.

The appellant Court’s ruling on Palmer/Sixth Street Properties L.P. vs. the City of Los Angeles was published late last month. 

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