Guest Contributor
Wayne Lusvardi

Wayne Lusvardi worked for 20 years for the Metro Water District of So. Cal. and lives in Pasadena. The views expressed are his own. . Wayne receives e-mail at waynelbox-blogger@yahoo.com

A Pea Shell Game
Inclusionary housing laws...
[Wayne Lusvardi] 7/6/05

“Shell game. A form of the game thimblerig in which spectators bet on the final location of an object hidden under one of three walnut shells or cups that have been shuffled.” Encarta Dictionary

Politics has been defined as the art of promising something for nothing and of concealing who really bears the burden of taxation. This was demonstrated recently when Bill Bogaard, the mayor of the City of Pasadena, California was quoted as praising affordable housing advocates for pushing for an amendment to the city’s Inclusionary Housing Ordinance that would apply to small housing projects of 5 to 9 units as well as many of the newer and pending large-scale apartment and condominium projects in the city (“Following Our Lead – Pasadena aims to strengthen affordable housing rules,” Pasadena Weekly, June 23, 2005).

No politician wants to acknowledge that inclusionary housing programs are pea shell games which claim to transfer property from “greedy” developers to less materially advantaged households, but in reality developers just pass such excise taxes on to landowners in the form of price discounts when they buy land.

The history of inclusionary housing programs in California goes back into the 1980’s when the state legislature prohibited exclusionary zoning and mandated that communities have to bear their “fair share” of affordable housing. Federal Appeals Court cases have upheld the Constitutionality of such ordinances. The ability of such ordinances to withstand a legal challenge is a word game intended to circumvent the takings clause of the U.S. Constitution.

Pasadena’s inclusionary housing ordinance requires that 15% of new housing units be constructed for lower income households; or that developers pay an in-lieu fee to the city’s affordable housing fund which, in turn, can be used to purchase or create more affordable housing. Pasadena has reportedly collected $9,519,139 in in-lieu housing fees from developers and 341 units have been dedicated for low-to-moderate income housing units. There are 2,278 new housing units being built in the city.

Housing advocates have recently pressured elected city officials to produce more affordable housing units given that the fees collected from developers will only produce 19 units given the median price of a condo in the city is $500,000. Pasadena City Councilman Paul Little is quoted as saying that collecting in-lieu fees has “given developers an incentive not to build affordable housing.” In response, the City of Pasadena is reported to be looking favorably at expanding its inclusionary housing ordinance to smaller developments in order to produce more affordable housing units.

Marvin Schachter, reportedly an affordable housing activist in Pasadena, praised the proposed changes and wants the amendments even stronger to keep up with the booming housing market. No mention is made in the local newspapers that Schachter is a non-profit housing developer who may benefit from such programs.

However, the reported housing data does not support the claims of the affordable housing advocates. The dedicated affordable housing units already built in Pasadena (341 units) reflects 95% of the 360 total potential affordable units and amounts to 15.8% of the total units. Thus, there would be no need to expand the inclusionary housing program to smaller units as the housing advocates contend.

That the data doesn’t support their claims won’t make much difference to such groups as ACORN (Association of Community Organizations for Reform Now). ACORN typically masses 200 or more activists at city council meetings with TV news cameras rolling to put pressure on elected officials to capitulate to their demands. Many of these activists aren’t even from Pasadena, so the affected small landowners are out-numbered by non-voters who get all the media attention but don’t have to pay a lick of taxes. But local politicians would rather run the risk of alienating a small minority of their own voting constituency rather than the risk of negative media coverage. This swarming technique is a highly effective tool of symbolic politics. It is taxation with representation, but by mass media mob politics. And the local newspaper media usually ignores the affected small landowners in such local political issues and plays up the housing advocates as champions for the poor.

Like many cities in California, Pasadena has changed its General Land Use Plan to “dump” all lower income housing into the commercial core of the city so as to “exclude” affordable housing from upscale single family neighborhoods. Thus, the city has been dubbed with the nickname “Pasa-donuts” for the hole of commercial development and low income housing at its geographical core surrounded by a ring of single family housing districts.

Pasadena has unjustly levied its inclusionary housing fees mainly on landowners of downtown commercial and multi-family residential zoned sites instead of spreading the tax evenly across all taxpayers. Even a study commissioned by the city and conducted by Keyser-Marston economic consultants reported that a 15% set aside of affordable units in new apartment and condo projects would result in about a 30% or more decrease in the value of the land on which such projects are built. For example, on one small one-third acre lot on which 20 apartment units could be built, the city's inclusionary housing ordinance coupled with the city's new $20,000 per unit parks fee could equate to a $1 million hit to its land value.

There is no housing affordability crisis in Pasadena if lack of affordability is defined as some people being denied new luxury apartments or condo units in its upscale “urban village.” As a society we don’t say that people are being excluded from buying expensive automobiles or other luxury goods, so why do we say this with high-end market housing? It is also strange that a city such as Pasadena would claim to have an affordable housing crisis when the 2000 U.S. Census data indicates about one-third of its residents are perhaps low income illegal migrants who somehow have found affordable housing in the city. CRO

This opinion piece first appeared at Chronwatch

copyright 2004 Wayne Lusvardi

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