April 12, 2005

Long Beach Chamber Convinces City Council to Drop the Proposed Housing Trust Fund Ordinance

Agenda item #31 on the city council agenda regarding the proposed housing trust fund and inclusionary housing was withdrawn. It will be submitted at a later date.

Long Beach City Council to Vote on Implementing a Tax that Diminishes Long Beach's Competitive Advantage

3:00pm - 4:30pm

Long Beach City Council Chambers

333 West Ocean Blvd.

Downtown Long Beach

On April 12, from 3:00pm - 4:30pm the Long Beach City Council will be considering the implementation of a new housing policy that will, if adopted, negatively impact development in the City of Long Beach for years to come.

The Long Beach Chamber supports smart growth and development in the City. The proposal currently being considered by the City Council, to create inclusionary zoning and creation of a Housing Trust Fund with fees from new development, will dampen job growth and reverse the great strides the City has taken in developing our City.

A Housing Trust Fund would:

- increase development costs and would decrease development, actually limiting the availability of residential units and increasing the current costs of housing.

- diminish Long Beach's competitive advantage compared with other local jurisdictions.

- would limit job opportunities associated with construction.
 

We need your help. Creation of the Housing Trust Fund could lead to substantial taxes on new residential and commercial development. Please attend this hearing and stop the Council!

March 23, 2005
Long Beach Chamber Establishes its Position on a City Proposed Housing Trust Fund
 
The following position was approved unanimously by the Long Beach Chamber's Government Affairs Council on March 10, 2005:

The Long Beach Chamber OPPOSES the imposition of inclusionary zoning within the City and oppose the creation of a Housing Trust Fund that does not promote the following essential housing goals:

 - Promotes residential ownership.

 - Promotes development of residential and commercial projects.

 - Improves Long Beach's competitiveness with neighboring communities.

 - Promotes quality of life within Long Beach.

 - Creates neighborhoods that increases pool of qualified employees.

 - Improves the quality of neighborhoods, "our most important resource."

 - Removes blight and provides high-quality, and well-maintained infrastructure.

 - Decreases the number of people below the poverty line within Long Beach.

The Long Beach Chamber SUPPORTS a thorough review of Long Beach's housing policy with a goal of increasing private development by reducing bureaucracy, red tape and fees; and increased use of zoning compliance to reduce illegal density.

Background

Housing Shortage. California suffers from a shortage of housing, characterized by high cost, decreasing affordability, low vacancy rates and the increased number of people per unit. Long Beach suffers from a similar shortage. The City's problems are compounded by the high percentage of its population with very low incomes.

Revisions to City Law. As a result, the City of Long Beach is considering major revisions to its housing policy. The plan includes the creation of a Housing Trust Fund and the creation of compulsive inclusionary zoning for newly constructed residential units. It is expected that the City will consider these proposals in late March or early April.

Housing Trust Fund. A Housing Trust Fund is defined as an annually renewable source of subsidy dedicated for the development and preservation of affordable housing. The funds are used in the development of housing, and in direct subsidy to persons wishing to purchase residences. Resale restrictions are placed on residences developed or purchased with HTF funds. Funding sources vary, including fees on new residential or commercial development, redevelopment money, or other taxing methods.

Inclusionary Zoning. Inclusionary zoning, or mixed income housing, is a mandate that a portion of newly constructed residential units be sold at below market rates and that resale be limited up to 55 years. As an alternative, developers may chose to pay a fee, which the City proposes will be paid into the Housing Trust Fund. Current proposed rates are to increase over a three year period, as follows: Year One: $5 per square foot of living area; Year Two: $7.50 per square foot of living area, plus a percent increase based on the increase in median housing sales price in Long Beach from prior year; Year Three: $10 per square foot of living area, plus a percent increase based on the increase in median housing sales price in Long Beach from the prior year.

City staff had proposed a fee on commercial development based upon the theory that commercial development requires increased housing. This currently is not part of the proposal.

Who Benefits? The City has not defined who would benefit from either inclusionary housing or the Housing Trust Fund. Proposals range from directing these subsidies only to extremely low income families to subsidies for first time home buyers (middle class subsidies).

Common Criticisms
 

- Both proposals increase development costs and would decrease development, actually limiting the availability of residential units and
increasing the current costs of housing.

- Both proposals diminish Long Beach's competitive advantage compared with other local jurisdictions.

- Decreases in development would limit job opportunities associated with construction.

- Resale restrictions eliminate the benefits of ownership, particularly the opportunity to build equity in your residence, and the ability to move for new opportunities.

- Government housing for extreme low income populations would increase poverty in the city, increasing demand for social services.

- The proposals do not take into account the quality of life in existing neighborhoods.

Other Long Beach Housing Programs

The City of Long Beach currently has several programs to improve housing within Long Beach:

- First-time Homebuyer Assistance for low- or moderate-income households who live or work within the City.

- Assistance to housing developers in the construction of affordable for-sale ownership housing, usually low-interest loans that convert to silent mortgages for ultimate buyers.

- An acquisition and rehabilitation program, which creates residences for sale to first time homebuyers in Long Beach.

- Owner-occupied rehabilitation programs.

- Mobile home rehabilitation programs.

- Programs which assist housing developers in acquiring and/or rehabilitating affordable rental housing, up to $135,000 per unit with deed restricted occupancy.

- Programs which assist developers in new construction of low income housing, up to $150,000 per unit with deed restrictions; and, other assorted programs such as benefits for police and fire down payment assistance.