Grannies come home to roost

Housing.  At first glance, not the most exciting topic to delve into.  But, when you start to peel back the onion, the history is rich.

One day down the line I really want to explore how we got to today.  I mean, we are talking about going back to the Federal Ordinance of 1785 and the Standard Zoning Enabling Act in 1926 shaping why your city is so poorly divided up.  And don’t get me started on the National Housing Act of 1934 or the Baltimore Rule of 1910.

But that’s for another day… I want to focus on Los Angeles 2017.  Its where I live and currently see a variety of issues eroding the sense of community and livability of my city.  Homelessness is a huge problem, rents are soaring, land is so valuable it is hard to build affordable housing, the housing stock is way too low, low to middle income workers are getting pushed out of the core, and on and on.

There are so many great analyses of these issues already, I wont waste your time trying to tie it all together.  For quick primers, see here, here, here, here, and here.

Instead, I want to focus on the positive.  Let’s talk Granny flats and AirBnB!

LA knows it has a problem.  It also knows its zoning code is outdated and unsuited for today’s needs (that zoning code has been virtually untouched since 1946!).  But the city is finally doing something about it!  You can follow all the details and timelines at pLAn Re:code, but here are some of the interesting things actually in the works right now that affect housing…

First, Granny Flats, or by their official name, Accessory Dwelling Units (ADUs).  The way most neighborhoods are zoned in LA, its single family homes and that’s it.  Any additional structure, especially one for housing another person, and it is illegal.  The state of California, however, has had much more lenient restrictions since 2010, and LA, knowing its housing shortage, looked the other way on allowing ADUs to be built despite the city not formally implementing these looser regulations themselves.

You can thank short-sighted NIMBYism and a penchant for litigation for the February 2016 ruling that forced the city to stop issuing permits for ADUs.  But, thanks to Governor Brown in September 2016 and the city council and planning department coming around later that year, these units will be grannyfathered-in (sorry, terrible pun) and the process to build one will be much simpler.

What does this really mean?  Prior to 2016, the city was seeing roughly 50 applications a year for ADUs.  Since the new law came in, the city is seeing about 100 a MONTH.

ADUs wont solve the housing crisis, they won’t even come close.  But, its an important first step in the evolving mentality of both the city government and city inhabitants to get out of the old sprawl/tightly-controlled planning mentality that is needed to tackle the issue.  If you can’t accept the idea of an extra unit on your street, then you can’t begin to accept the real density that will be needed in Los Angeles to tackle the housing and environmental problems we face.

Oh did you say environmental issues?  Density and its role in sustainability is yet another topic for another day.

Instead, let’s talk about AirBnB and the rental shortage.  The Home Sharing economy is in full swing.  You need a place to stay, you dont want to pay the exorbitant hotel prices for a subpar stay, you’d rather have your money go directly into the hands of a mom and pop location, and you want to soak up the culture better by staying with a local.  Home sharing.

The problem comes in the fact that commercial units (those units specifically managed to be rented out full-time where the owner does not live onsite) are slowly starting to dominate on these websites.  A 2016 analysis by FiveThirtyEight shows that although commercial units only comprised 15.5% of all Los Angeles listings, they generated nearly 50% of the revenue.  The Los Angeles Alliance for a New Economy, in 2015, estimated roughly 7,000 homes and apartments in Los Angeles that would have been on the rental market were instead going to short-term rentals.

Although there is some legitimate debate on the size of impact sites like AirBnB are having on rental affordability, regardless, it is clear that commercial units are indeed having some effect on an already stressed system.

Now, in the city of Los Angeles, these short-term rentals are illegal per the code.  But the city wants to crack down on these units in the right way, and not negatively impact those folks who are non commercial, true home-sharers.  These home-sharers not only might be getting a revenue source that is badly needed by them from sharing their home, but, its one of the tenets of shaping a cooperative global community – building empathy and understanding from those different than you by getting to live and directly talk with them.

Los Angeles started collecting the data (23,000 listings, 12,000 hosts, 64% were entire homes, average stay 4.5 days, average guests 2.2), held for public input and came up with a policy plan.  The goals are to protect the housing stock, protect residential character of neighborhoods, prevent nuisances/excessive noise and yet allow legitimate home-sharing.  They will do this by allowing home sharing only on primary residences and only for less than 180 days a year (in non-RSO nor affordable housing units), and will enforce it by more proactively policing those units who are advertising without a registration.

Where is that money coming from to enforce?  That new home-sharing registration also includes a fee, there are new fines for not complying, and they will also start collecting a Transient Occupancy Tax (like they do from hotels) on these units.

So, where do these changes in the city code for Granny Flats and AirBnB leave us?  I am not here to imply that we should start seeing a direct impact to our housing crisis now. But, I do think these two changes exemplify some big changes in the mentality of both the people in Los Angeles and the City itself.  I mean, we are seeing some thoughtful reaction and implementation of some minor code changes that should make a large majority of the people living here happy… when does that ever happen???

UPDATE 8/3/17

A study just released appears to show that absentee-owner AirBnB units do increase rents.  With this kind of data, its always difficult to draw a hard line between the two for causation, as there are a ton of other factors that are influencing the rental market, but, it does make sense and helps back up the city’s proposal on AirBnB policy…

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