by Edward Ring
Venice Beach, California, used to be one of California’s great places. A Bohemian gem, nestled against the sand between big Los Angeles and the vast Pacific Ocean. Rents used to be a little lower in Venice compared to other coastal neighborhoods. The locals mingled with surfers, artists, street performers, and tourists. People from suburbs further inland migrated to Venice’s beaches on sunny weekends year-round. Venice was affordable, inviting, inclusive. That was then.
Today, Venice Beach is off limits to families who used to spend their Saturdays on the sand. It’s too dangerous. On the sand, beached seaweed now mingles with syringes, feces, broken glass, and other trash, and the ocean has become the biggest outdoor toilet in the city. More than 1,000 vagrants now consider Venice Beach their permanent home. At the same time as real estate values exploded all along the California coast, the homeless population soared. In Venice, where the median price of a home is $2.1 million, makeshift shelters line the streets and alleys, as the affluent and the indigent fitfully coexist.
What has happened in Venice is representative of what’s happened to California. If progressives take back the White House in 2020, it will be America’s fate.
Laws Raise Costs
California’s cost-of-living is driving out all but the very rich and the very poor, a problem that is entirely the result of policies enacted by California’s progressive elite. They reduce to two factors, both considered beyond debate in the one-party state. First, to supposedly prevent catastrophic climate change, along with other environmental concerns, California’s restrictive laws such as the California Environmental Quality Act, the Global Warming Solutions Act, and Sustainable Communities and Climate Protection Act make it expensive and time consuming to construct new homes. These laws also decrease the availability of entitled land, which further increases costs to developers.
At the same time, California has become a magnet for the welfare cases of America and the expatriates of the world. According to a 2018 report (presenting 2015 data, the most recent available) issued by the U.S. Department of Health and Human Services, of the 4.2 million recipients in America of Temporary Assistance for Needy Families and Supplemental Security Income, an amazing 43 percent of them live in California. That’s more than 1.8 million people. According to the liberal Public Policy Institute of California, as of 2016, California was also home to 2.6 million undocumented immigrants. Could California’s promise of health coverage for undocumented immigrants, or sanctuary state laws, have anything to do with this?
When you enact policies to restrict supply (to save the planet) and increase demand (invite the world to move in), which is exactly what California has done, housing will become unaffordable. Supply oriented solutions are relatively simple. Stop protecting all open space, everywhere, from development. Invest in public-private partnerships to increase the capacity of energy, water, and transportation infrastructure, instead of rationing water, “going solar,” and “getting people out of their cars.” Reform public employee retirement benefits instead of incessantly raising taxes and fees to feed the pension funds. It’s that simple.
Unfortunately, in California, nothing is simple. In 2006, the notoriously liberal Ninth U.S. Circuit Court of Appeals in Jones v. City of Los Angeles ruled that law enforcement and city officials can no longer enforce the ban on sleeping on sidewalks anywhere within the Los Angeles city limits until a sufficient amount of permanent supportive housing could be built.
And what is “permanent supportive housing” for the more than 50,000 homeless people in Los Angeles? In 2016, 76 percent of Los Angeles voters approved the $1.2 billion Measure HHH to “help finance the construction of 10,000 units of affordable permanent-supportive housing over the next 10 years.”
The passage of Measure HHH raises many questions. Most immediately, why hasn’t much of the money been spent? As reported by NPR’s Los Angeles affiliate in June, “so far only three of 29 planned projects have funds to begin construction.” Worse, the costs have skyrocketed. According to the NPR report:
When voters passed the bond measure, they were told new permanent supportive housing would cost about $140,000 a unit. But average per unit costs are now more than triple that. The PATH Ventures project in East Hollywood has an estimated per-unit cost of $440,000. Even with real estate prices soaring, that’s as much as a single-family home in many places in Southern California. Other HHH projects cost more than $500,000 a unit.
Demand Outpaces Supply
Spending a half-million dollars to build one basic rental unit to get a homeless family out of the rain sounds like something a bloated new bureaucracy might achieve, and even in high-priced California there’s no other way to explain this level of waste. What about the private sector?
A new privately funded development company, Flyaway Homes, has debuted in Los Angeles with the mission of rapidly providing housing for the homeless. Using retrofitted shipping containers, the companies modular approach to apartment building construction is purported to streamline the approval process and cut costs. But the two projects they’ve got underway are not cheap.
Their 82nd Street Development will cost $4.5 million to house 32 “clients” in a 16 two-bedroom, 480 square foot apartments. That’s $281,250 per two-bedroom apartment. The firm’s 820 W. Colden Ave. property will cost $3.6 million to house 32 clients in eight four-bedroom apartments. That’s $450,000 per apartment.
Is this the best anyone in L.A. can do? Because if it is, it’s not going to work.
Let’s accept the far fetched notion that $5 billion could be found quickly to construct housing for the 50,000 homeless people in Los Angeles, and this could be finished within a few years. Does anyone think the growth in subsidized housing would keep pace with the growth in the population of homeless? Why, when California is a sanctuary state, a magnet for welfare cases, and has the most forgiving winter weather in America?
One may take issue with the whole concept of taxpayer subsidized housing, but that is almost beside the point. There are more urgent strategic questions that aren’t being honestly confronted in California. For example:
Why is the national average construction cost per new apartment unit somewhere between $65,000 and $85,000, yet it costs five to 10 times that much in Los Angeles?
Is it wise to have subsidized housing that is of better quality than the apartments that many hard working Californians occupy and pay for without benefit of subsidies?
Why has there been no serious attempt to get useful statistics on the homeless population, in order to apply different approaches depending on who they are? For example, how many of them are mentally ill, or criminals, or substance abusers, or sexual predators, or undocumented immigrants, or willfully homeless with other housing options, or hard working sane people who have encountered hard times (yes, “intersectionality” would exist among these categories)?
Why not immediately allocate open land to create campsites where the homeless can move their tents and belongings, to get them off the streets?
Why not then study the refugee camps set up around the world, an activity where U.S. NGOs have in-depth expertise, and replicate these in areas of L.A. County where there is cheaper, available land? These semi-permanent structures are far less expensive than solutions currently offered.
Does inviting millions from impoverished, politically unstable nations help those nations, when for every person who makes his way to California, thousands remain? And if not, why not directly help the people who are staying in those nations, which would be far more cost-effective?
Wouldn’t it make more sense to moderate the inflow of unskilled workers across the border into California, in order to eliminate the oversupply of cheap labor which depresses wages? Wouldn’t that be better than mandating a higher minimum wage?
Doesn’t offering welfare and subsidized housing to people capable of work make it unlikely they will ever seek work? While striking a balance is a compassionate necessity, has that balance perhaps been violated, since California is home to 43 percent of America’s welfare recipients?
When will California loosen restrictions on land development and building code mandates, in order to bring the cost of new housing construction back down towards national averages?
When will the elected officials in a major California city stand up to the litigants who use the Ninth Circuit to impose rulings such as Jones v. City of Los Angeles, and take a case to the U.S. Supreme Court? While many homeless people have genuine stories of hardship and bad luck, must we be forced to cede to all of them our most desirable public spaces?
No Good Resolution in Sight
What has happened in Los Angeles is a perfect storm of progressive pressure groups and rent-seeking bureaucrats and profiteers, working together to amass money, power, and prestige. If they were efficiently solving the problem, that would be just fine. But they aren’t, and until they accept tough answers to tough questions, they never will.
As Venice Beach continues to reel from the impact of the homeless invasion, Los Angeles city officials are fast-tracking the permit process to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Shelter capacity? About 100 people.
In a less utopian, less corrupt society, that single property could be sold, and the proceeds could be used to set up and monitor a tent city housing thousands, if not tens of thousands of people. But not in California. Under the warm sun, against the indifferent ocean, the idiocracy endures.
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Edward Ring is a political and financial analyst, working primarily with start-up and early-stage organizations. In 2013, he co-founded the California Policy Center, a free-market think tank based in Southern California. He is a prolific writer on the topics of political reform and sustainable economic development. Ring, a fifth-generation Californian, has an undergraduate degree in political science from UC Davis, and an MBA in finance from the University of Southern California.