November 18, 2016

A double-whammy of insanity from Los Angeles

By James S. Burling Vice President for Litigation

With all the hoopla of the Presidential election last week, a lot of folks missed the fact that the voters of Los Angeles repealed the law of supply and demand in a City election. As reported here in the Wall Street Journal, henceforth all new residential home projects of ten or more units or even small projects that need zoning changes or certain variances, must set aside 40% of all homes for sale, and 25% of all rental units, for so-called “affordable housing.” In other words new renters and home buyers will have to subsidize low-income housing. How will they do this? By paying more in rent or in taking on bigger mortgages. And that’s supposed to alleviate the shortage of affordable housing?

The second part to this double-whammy is that the developers of those units must pay the same wages as those required for public-works projects, i.e. union wages. The Journal reports that this could mean that a private developer of private units would end up paying around $55.77 for a union-wage carpenter. And that’s supposed to make housing more affordable? While the union group that backed the initiative might be happy, their members may think again as housing costs reach ever higher skyward, forcing middle class Angelenos to become Texans, and leaving those vaunted union jobs in the dust.

In every California city so far where a variation of these “affordable housing” mandates have been tried, the price of housing has gone up. But if something doesn’t work in this state, the best answer is to double down and try it again and again.

 

What to read next