Commentary : Jobs Control Supply of Housing Within the Economic Reach of Buyers

During recent hearings examining affordable housing, an Irvine city councilwoman shared with the audience the fact that her daughter is living in a lovely apartment in Cleveland that costs only $400 a month.

Why, she asked with more than a hint of frustration, is affordable housing not an issue in Cleveland while it has become one of the most difficult public policy issues at the top of local government agendas in Orange County?

The succinct answer was provided by Claude Gruen, a nationally respected housing economist, who had been invited to Irvine to participate in a remarkably informative effort by the city to explore this issue. Gruen said that in Cleveland, there are more houses than jobs. Thus, the political hand-wringing there is over the depressed state of Cleveland’s economy, which is not providing sufficient employment for those who need and want it.

In Irvine and, for that matter, in most of Orange County, there are more jobs being created than houses.

Gruen’s conclusion: The imbalance between jobs and housing is the primary source of the problem. Any serious public policy effort to encourage affordable housing must begin with a commitment to keep job creation and housing production in balance.

Interestingly, in Orange County, as well as in other dynamic and attractive areas with an appealing quality of life, the momentum to “do something” about affordable housing is running headlong into the resistance of policies that are discouraging new housing production.

Is there any wonder, then, why “affordable housing” is now at the center stage of public policy discussion? The legislative debate no longer is whether “affordable housing” is desirable, necessary or important to maintain the diversity and economic vitality of our communities. On that point I see virtual unanimity.

The tougher question for all of us--including elected officials, taxpayers, business interests and, yes, developers--is what practical, workable steps can be taken to make housing available to more than just the most affluent? And, more fundamentally: How much is needed? Who will create it? How much will it cost? And who pays?

When you encounter the term “affordable housing” at City Hall, in newspaper editorials and in speeches, it is usually jargon for a government-initiated program to encourage construction of “subsidized shelter.”

When you encounter the term in a real estate office, in a family discussion or over coffee with a friend, “affordable housing” takes on a different meaning; namely, adequate shelter to match our desires and pocketbooks.

Together, the Irvine Co. and the city of Irvine have created the most successful program in Orange County to deal with “subsidized shelter.” More than 20% of the new housing units built in Irvine during the past 5 years have met an “affordability” test that provided subsidized shelter to families in need.

Today, however, the city- and county-sponsored low-interest financing that made the subsidized housing feasible has been depleted, and the prospects for new financing is dim. Thus, the city’s goal of continuing to provide housing for all is in jeopardy.

Irvine has been conducting a thorough public examination of how it can accomplish that ambitious goal in an era of declining state and federal subsidies, and at a time when the demand for housing to serve new economic growth is in direct conflict with pressure to build less housing, not more. It’s a tall order.

A parade of housing experts from around the state has offered advice, which generally can be summed up as follows: There are no easy or cheap answers; it will cost money, lots of it, and less money will be available from Washington or Sacramento. So, for housing to become a community priority, it will need to be supported politically and financially by the entire community.

Money can come in many forms: Incentives and bonus densities for developers; fees on new development; a transfer tax on the sale of property; what remains of federal and state subsidies, or, most likely, all the above and other sources.

The bottom line: The amount of affordable housing built in Irvine, and other cities that want results, will have a direct relationship to the breadth and depth of support from the entire community. We must realistically assess what the cost will be. The last thing we need is to set unachievable goals that raise false expectations.

“Affordable housing” progressively has become less and less available only in selective regions where the increase in jobs has outstripped the production of homes. This gap has produced the “affordable” crisis.

To its credit, Irvine is approaching its housing problem in a systematic and sophisticated way, having now engaged a reputable outside consulting firm to estimate the cost and potential sources of support for a workable program.

The goal is a General Plan Housing Element that is more than a statement of good intentions about providing shelter opportunities but a realistic vehicle that will bring about actual, measurable results.

Anyone who sat through the hours of testimony and advice to date is struck by the enormity and complexity of the problem.

Inescapably, the twin public policy goals--providing “subsidized shelter” and effectively influencing the broader problem of “affordability”--will be most effectively addressed when we make a renewed commitment to encouraging more housing of all kinds in Orange County.

Relying on a balance of supply and demand will not entirely solve our housing problems, but it certainly will help. Take, for example, Irvine, which is creating far more jobs than housing. Virtually everyone is arguing that we should be encouraging closer proximity of jobs and housing to improve air quality, shorten commute trips and reduce traffic congestion.

But the impartial Southern California Assn. of Governments estimates that Irvine needs to authorize 18,000 new housing units in the next 5 years to keep balance with anticipated job creation. The city has approved just 2,200 housing units.

Where will these new Irvine job-holders find housing they can afford? What will their presence in a tight housing market do to on already sky-high prices? What happens to the economic growth and vitality of Orange County when living here is beyond the economic reach of most people who work here?

These are the larger, long-term questions that must be addressed as Orange County struggles to provide affordable housing.