What every LA voter should know about housing before the '26 election - With Shane Phillips

 With Measure ULA on the chopping block this November and the city's housing crisis showing up everywhere from rent bills to ballot fights, LA voters are about to make some of the most consequential housing decisions in a generation — often without much sense of what's actually at stake. On this episode, I sit down with Shane Phillips, housing initiative manager at the UCLA Lewis Center for Regional Policy Studies, co-host of the UCLA Housing Voice podcast, and author of The Affordable City, to cut through the noise. Shane has spent years translating the research on supply, stability, and subsidy into plain English for policymakers and practitioners, and he walks us through what the evidence actually says about ULA, inclusionary zoning, the CHIP rezoning, and the statewide Howard Jarvis measure — and what every Angeleno should be thinking about before they fill out a ballot in '26. 

Transcript

SPEAKER_02 0:17

All right, welcome to another episode of From A to Built, where we're exploring the big ideas shaping the future of our cities. I'm Bryson Rayome, and I'm here with my co-host Chris James. Today we're diving into one of the most important and probably most misunderstood topics out there, which is housing and our wonderful housing crisis here in Los Angeles. We're getting into not just why it's expensive or why we're so short on housing, but how we got here, what's actually broken, and what it's going to take to fix it. Because whether you're trying to buy, trying to rent, build, or invest, housing impacts all of us across the board. Today we're joined by Shane Phillips. He's the housing initiative project manager at the UCLA Lewis Center for Regional Policy Studies at UCLA. Shane's one of the leading voices in housing policy today, bringing real data, clear thinking, and practical insight into a space that's often anything but clear. He also co-hosts the UCLA Housing Voice Podcast, helping shape the broader conversation around housing every week. So today we're breaking down how we got here, what's holding us back, and what's the real path forward. All right, let's jump in a Shane, thank you so much for joining Chris and I on from A to Belt. It's awesome to have you here. So before we get into this uh amazing topic that we've all been uh banging our heads against the wall in LA on for years and years and years, uh I want to learn a little bit about you, a little bit about what you do with UCLA Lewis Center, what drew you into this space, a little bit of your background before we get into the bigger picture.

SPEAKER_01 1:57

Sure, happy to. So the the UCLA Lewis Center for Regional Policy Studies has been around for 35 years or so. Uh today it is really focused on transportation equity and housing affordability. And I'm on the housing side. I've been there for more than six years now, more than twice as long as I've worked in any other job, actually. And uh so I must like it. And so we work on a lot of research projects with faculty and other staff and students. And my focus is it, I guess I don't really have a focus, I would say. I'm really interested in housing policy and land use policy in a very broad sense. So we've worked on things with affirmatively furthering fair housing and where we're building housing, you know, particularly trying to build in higher opportunity areas, less racially segregated areas, lots of policy and research going on with that, in part, in particular because of the state's focus on that. Um, we're doing a lot these days with zoning reform and actually measuring the feasibility of different zoning reforms, not just what is the capacity you're creating on paper when you say go from an R3 zone to an R4 zone. But at a parcel level, is that actually likely to produce any development? Because, you know, if you allow a six-story building on a parcel that has a four-story building, you're not gonna build anything there. No one's gonna tear that down to build a new project. If it's on a strip mall kind of project and you can build six stories, maybe that happens. So we're really getting into that into that with the city of Los Angeles, with state laws like SB79. Uh, we've worked on lots of kind of fees and trade-offs kind of policy. I'm sure we'll talk about measure ULA. So that's that's what we do at the Lewis Center, the core thing we do. We do events. We have our podcast, UCLA Housing Voice, which we've been doing for five years now, over a hundred episodes. And that's really working on trying to translate research in the academic space primarily to a wider audience of practitioners and advocates and elected officials. Uh, in many ways, my favorite part of the job, just it's a way to keep learning uh in a way at like a depth that you can't really do in other cases. And uh how I came to this, I think like a lot of people, I came to it through personal experience, which is basically just I moved to a city and I really liked it. And having grown up my whole life hating the city because my only experience of it was driving to it, that was really a revelation for me. Uh, moving to Seattle from growing up in the suburbs my whole life uh in my early 20s, mid-20s. And so that's what really kind of got me my start. I was working, I was did my undergrad in biochemistry. I was working in a research lab on microbiology and genetics, interviewing at medical schools. So it was a very big transition when I decided to shift over to urban planning. Uh, and that's actually how I ended up in Los Angeles was to go to uh not UCLA, but USC for my master's program. Oh, nice.

SPEAKER_02 5:04

Amazing.

SPEAKER_01 5:04

Yeah.

SPEAKER_02 5:05

Well, I'm a trader. Yeah. Exactly. The big, big UCLA little go up as we talk about USC. Um, you know, stepping back a little bit, just for this episode in general, you know, we're talking about the Los Angeles housing crisis. And that's just that term that's thrown around all the time the housing crisis. The housing crisis. Now, for a lot of us that are in the space, whether it's real estate, construction, policy, you know, um, working with the city, we have a better understanding of it. But I think we all kind of lose the grasp that the majority of people have no concept of what housing crisis means. You know, we're talking about a housing, okay, I guess we just need housing. Great. That sounds good. I don't know what the big deal is. Right. Um, so backing up a little bit, you know, when you think about the housing crisis and what it is in LA, how do you kind of explain it or sum it up for people that aren't in the space, that aren't working on policy, um, to say, hey, this is what we're dealing with.

SPEAKER_01 5:58

Yeah, and obviously this is not a problem that is unique to Los Angeles. It dates back further in Los Angeles to many other places. Many uh other cities across the country are kind of catching up to us and not just coastal cities like San Francisco and New York, places that have had affordability challenges for quite a while. But I think at the end of the day, it comes down to people not being able to live the lives they want. And that means spending too much for housing. It means not being able to move up into nicer housing or a nicer neighborhood or one that suits your needs as they change, as you have a family, as you have, you know, your kids move out, as you get a dog, whatever. Uh, all those things are just a lot more challenging in a place like Los Angeles than in many other places. And that is partly outside of our control, to be fair. There are, you know, we have a lot of great jobs, we have an incredible, you know, topography and climate and these things that draw people in almost regardless of what we do. But demand is not infinite. And it is in many ways a self-inflicted wound because the the real source of the problem is people want to live here, and we have done a very bad job of making space for them.

SPEAKER_00 7:15

All right, Shane, now the fun begins. Um yeah, as you were talking, I was just thinking about, I mean, uh, I have this like running joke that LA is not a city for single people. Um, because if you just look at like any one bedroom apartment, it's always about like, you know, $35, $4,500. And I'm like, don't think a single person is making that in LA, even if they're doing even if they're doing pretty good. So uh maybe uh maybe our housing policy is trying to say something. I don't know.

SPEAKER_01 7:43

Um move to the suburbs.

SPEAKER_00 7:45

Yeah, that's what people do, and that's really unfortunate. That is true. Um but I do think, you know, we talked about this in the prep session. Uh, this issue does go back uh way further than people really acknowledge. And um, if we look back to say as far as 2008, we can see some of the trends or the effects of the financial crisis of 08 playing out in the housing policy space. So we have a series of charts that we want to show and want to brief the audience on, but we'd love for you to walk us through it. And this first one is from Ezra Klein in the New York Times, but just walk us through what we're seeing here and what the audience can take away from the data.

SPEAKER_01 8:27

Yeah, so this is housing units built per 100,000 residents per year. So it's just a population adjusted housing production across the country. And you know, you can see very plainly here the historical average is just over 600 units per 100,000 people per year. The actual uh and and but you can see the the trend is very much downward. You have these business cycles with big peaks and big troughs, but we've been on this downward trend. And even 2008, which people think of as this big, you know, housing boom and bubble, uh, we had just gotten back to that historical average. Uh to be fair, the average is a little lower now, actually, because of the subsequent couple decades. But you know, we get up to 2024, whenever this ends, and you can see we're still far, far below the historic average. And since this time, I believe this is you know turned downward again. So we've just, you know, over time built less housing. There is, there are some good reasons for this, uh, for some of this decline. The fact that people live longer, the quality of housing has probably improved somewhat, so you don't have to be rebuilding it as frequently. Uh, but there are actually some things that are really pushing against this and making this worse than it appears. I think the chief among them being the fact that people uh that that single family, single person households are growing really dramatically. That's partly a just demographic and and preference thing. It's partly a wealth thing where more people more people can afford to do that. Uh, but it's primarily a uh an aging thing with just an older population either empty nesters or or just an individual who's lost their partner. Uh that's an increasingly frequent phenomenon. I don't actually know the number off the top of my head. I think it's something like a quarter of US households are a single person. I think in Japan it's like 40%. Um, and so that is essentially where we're headed. We are going in that direction. Uh, and so in that sense, not only are we not building enough, because you have to have enough homes for these additional households, even if each home doesn't have as many people, uh, but it also means that the housing that we have built historically is is really poorly suited to our current needs. I uh I think less than a quarter of households are the kind of traditional nuclear family. And uh that's likely to, you know, stay the same or decline. And so this model of 3,000 square foot single family detached houses out in the suburbs uh for the majority of our housing production just does not make a lot of sense anymore.

SPEAKER_00 11:11

Yeah.

SPEAKER_01 11:12

If it ever did.

SPEAKER_00 11:13

Well, I think uh, you know, when I look at this chart, the first thing that pops to mind is just a basic question, which is did we ever really fully recover from the 2008 financial crisis? Because when I look at this chart, the answer is no. And I'm putting it back to you. What do you think?

SPEAKER_01 11:30

No, no, we didn't. And and that's been actually the trend every single business cycle. We've we've consistently built less every business cycle. So I I mean that's the simple answer. We have not fully recovered. And by the time we started hitting, you know, COVID and and more recent issues with interest rates, you know, we're we're back on a downward trend. Maybe not not a huge decline in the same way. And I think we're already recovering. Uh, but I doubt whenever we kind of peaked a year or two past this, the end of this line, uh, I I think we're probably below that peak still right now.

SPEAKER_00 12:04

I mean, I think it's an important insight for the audience to take away because, you know, a lot of people, you know, they'll hear their elected leaders and you know, they'll point to GDP numbers and the new jobs reports that are coming out, and the economy's on the upswing. And a lot of people will sit back and say, like, you know, why don't I feel it? Yeah. And I feel like data points like this that take the story back to 2008 really explain why people aren't feeling it. So hopeful that people feel a little validated when we are sharing this information. But right.

SPEAKER_01 12:33

Well, and on the rental side, you know, when prices go up, rents go up. It's actually probably more accurate to say the other way around. Higher prices are sort of driven by higher rents or expectations of rent growth. Um, and so if you're renting, that's just, you know, you're struggling if rents are going up quickly. Um, I think people think of home prices going up as mostly a good thing at some level, and sort of for some people it can be. But I think it's really overstated when you consider like what I can do with all this additional housing wealth. Because if I live in a community, I own my home, it's a duplex, and I bought it in 2017, it's probably worth 50 or 60% more than what I bought it for. But every other home in my neighborhood is also worth 50 or 60% more. And if I wanted a nicer home that costs more than what mine did when I bought it, how do I move up? They're already, it was already more expensive. And it's also gone up 50 or 60% more. So it's actually gotten further away from me. And so, you know, I can when I die, I guess leave my home to my kids or family or whatever. Um, but the trade-off is like my kids or family can't actually live anywhere near me while I'm alive. And I don't think people would actually make that trade-off if it were put to them so bluntly.

SPEAKER_00 13:53

Yeah, no, I 100% agree. And uh, you know, to further like emphasize that point, uh, I think this is why a lot of people feel anxious because it's almost as though sometimes you're on a treadmill and you're just kind of like running in place, even no matter how hard you're working, no matter how uh uh many jobs you're ha you're holding down, no matter uh how much income you're bringing in, somehow it feels like you're just kind of keeping your head above water. So I feel like that really explains it. But we have another chart here that you were able to share with us. Can you just like walk us through what we're seeing here?

SPEAKER_01 14:26

Because Yeah. This is I wanted to share this just because I think. And can you actually go to the next one? It might be helpful to see it first. So this one is uh the the home price index for the top 10 metro areas in the country by population from 1995 to 2015. And I I just stopped at 2015 because it's not really about modern day, it's more about this uh great recession period and the housing boom or bubble as it was known. And the the really the key thing I want to point out here is uh, and these are all indexed to I think the year 2000. So obviously the prices are different in Miami versus Atlanta versus Los Angeles, but they're all whatever it was in in 2000 is is set as 100. And you can see uh the pink and red are Dallas and Atlanta or other way around. And prices there through the quote unquote housing bubble did not climb more than 30% above where they're at in 2000, so at their very peak. And I think most people, I certainly thought in uh, you know, as as recently as a few years ago, that the housing bubble was a national phenomenon that everywhere experienced exactly or roughly the same uh run-up in prices, and that just wasn't the case. So green is Chicago, which has always been a kind of strange housing market, so we don't really need to worry about it. Um what you find though, so like uh Miami is the top one in in brown, Los Angeles is in orange, uh Washington, DC in purple. Really, what I want to point out here is a lot of the cities that saw the biggest run-ups were the coastal cities, the places that are expensive now and that are known for not building a lot of housing. But also Phoenix, that light blue one, had a really big run-up in prices despite building a lot. So if you can go back to the other chart now, so same colors, light blue at the very top is Phoenix, uh, pink is Atlanta. Those two cities were building by far the most, this is per capita housing uh construction prior to uh the recession, which is 2008-2009 there. And um, then you compare that to Los Angeles and New York, there was no housing boom in the 2000s for them. They did not increase their housing production meaningfully from an already very, very low level. Um, and I think that's really, really important because that helps explain why the run-up in prices there was so high. Because as there was this demand, uh, partially driven by the way we were the lending standards and everything else and all these crazy lending products, but really driven in some ways, in most ways by the fundamentals, there was just not a lot of housing being built as demand was increasing in the most attractive metro areas in the country. And that actually caused a lot of people to leave because they couldn't afford to stay. And where they went was places like Phoenix and Las Vegas. And so, despite building a lot in Phoenix, and if if you saw Las Vegas, it would be about here, and it also experienced a really big run-up in prices. Those are what uh Kevin Erdman, a researcher at Mercatus Center, who we had on our podcast just recently, calls contagion cities. So Los Angeles and New York are closed access cities. This includes Boston, San Francisco, places like that, that very high demand, very little housing construction. Uh the contagion cities were the places where people sort of immediately flee to when they can't afford those closed access cities anymore. So Phoenix, Las Vegas, uh lots of Florida, because that's like where the Northeast people go from New York and Boston. Uh, but obviously, if you're leaving from California, Phoenix and Las Vegas are the closest places. Uh and you know, Dallas was building a lot and it actually didn't see that run-up because it was sort of far enough away from the closed access cities. It wasn't where people went, but they didn't see that run up. And so I just think this is I I I don't have a particular reason for wanting to share this. I just think it's so interesting and something that like kind of blew my mind when I first learned about it because I just thought this was just something that everywhere experienced. Um, I assumed even uh you know, going further back, that Los Angeles had its own housing boom in the 2000s, just did not happen.

SPEAKER_00 18:57

Yeah.

SPEAKER_01 18:57

We did not respond to that era of rising demand in cities or anywhere with more housing at all.

SPEAKER_00 19:05

Well, it sounds like two things, uh, if I'm hearing you correctly. It sounds like number one, uh kind of like the Phil and Michelle podcast that we filmed, uh, your trainers. Uh bad habits catch up with you. So if you're not performing year over year and meeting the goals that you're supposed to meet, it will catch up with you. And it sounds like for some of these metros, the problem actually caught up with them because they weren't taking care of business when they should have been. Yeah. Yeah. Well, that explains a lot. Um I think uh yeah. Do you want us Yeah? I mean, I think, and that's any more on that one? Well, I think, yeah.

SPEAKER_02 19:43

I mean Oh, the construction employment, yeah.

SPEAKER_01 19:45

I mean, we could I can be very quick on this. Just the the point I wanted to make with this chart is just that, and again, this comes from Kevin Erdman, who has really changed my thinking on like the home ownership and housing boom, uh, and and and the role of lending standards in all of this. So when the Great Recession struck, or or arguably before the Great Recession struck, but as the housing market was crashing, the response in the US was to really sh like restrict mortgage credit to anyone who wasn't just like a super prime perfect borrower. Yeah. And when that happens, suddenly the people who are buying the new homes are not buying anymore because they can't get credit to do so. Yeah. And so there's no work for construction workers. I think we think of this as something that was just inevitable, that the crash in housing prices and housing production was something that just had to happen, had to endure it to make up for the boom. Um, but what this chart shows comparing in the blue, uh, the just construction employment overall for uh the United States to the other two are Canada and Australia, yeah, is they didn't see.

SPEAKER_00 21:01

Blue is the United States, green is Australia, red is Canada.

SPEAKER_01 21:05

Right. And uh yeah, so you're seeing that construction employment pretty much just kept growing in these other countries that did not really crack down on mortgage credit. Um, whereas in the US we did, including making it so a lot of very perfectly qualified borrowers could not borrow anymore. And construction employment fell pretty dramatically. It had and it has actually never recovered. We've just been on this slow recovery since 2008, essentially, or 2010 or 11, um, where there was just no there's no way to spring back when housing production craters like it did by 70, 80 percent, I think. You're not going to recover most of that in a few years if a lot of your construction labor, you know, workforce has gone, has retired, has gone into something else. Um Is not, you know, that they're not bringing new people into the field. And so I think this is just another really interesting illustration of how much of this is self-inflicted. And I focus a lot on local policy and state policy and the role that that has played. And you just cannot undersell how important things like zoning and other local decisions are. But there is really a role for the federal government in particular, too, especially when it comes to housing finance. Um, not just on, you know, the fact that people can't buy homes who probably should be able to, but what that means for production, because if people can't buy homes, there's no reason to build new ones. Yeah.

SPEAKER_02 22:40

And then King, and on your comment about, you know, how the state's coming out with different policies and things that they do to try and solve these problems as they come up. You know, the state has a quota system now for cities are required to build a certain amount of homes. Um, you know, I think that's always kind of an area of confusion for a lot of people. So can you kind of run us through what is that and how is that working? And is it is it being successful right now with getting homes built with this new RENA program that we have?

SPEAKER_01 23:07

Yeah. So California has had this regional housing needs assessment allocation program for uh 40 years or so. Uh every eight years, every single municipality has to develop what's called a housing element, which is essentially a plan for how they're going to grow and meet some target, the RENA target, which is a housing production target that excuse me, that the state kind of hands down that's passed from the state to the regional governments and then distributed amongst the cities within a regional government. And historically, so we're on the sixth cycle of RENA. So I guess that would be years 41 through 48 of having this program. And uh this is actually the first cycle where there's been any kind of meaningful oversight or accountability for cities that did not actually do what they were supposed to, essentially. And so in the past, cities have just kind of done the exercise on paper, they've met the statutory requirements, maybe, probably not even did that, but no one was really doing anything if they didn't. Uh now, if you're not meeting your targets, there are different kinds of consequences, one of which is just that certain kinds of projects have to be approved without any discretion. You just can't reject them if they're compliant with all the rules, which is like actually the way things should work for all development. Yeah. Uh it's not much of a penalty, but compared to how we used to do things, it really is. The other thing that ties into that is we've actually made it a lot harder to meet these targets on the production side because we're requiring a whole lot more on the target side. So the goals that cities are planning for. Just illustratively, the city of Los Angeles for the fifth cycle, which ran from 2013 to 2021, they were supposed to plan for the production of about 80,000 units. Okay. And uh they actually exceeded that. The problem was 80,000 was like far less than what we actually needed. Now they've kind of swung the pendulum the other direction. And for the current cycle, which ends in 2029, we're supposed to be producing 450 something thousand units over the same uh over an eight-year period, just the same. So six times more housing uh per year than we were called to produce the the the prior eight-year period. And uh, as you can imagine, going back to the construction point, like there was no realistic world where we could have taken a area that was building 20,000 units, 25,000 units for let's say the county per year and up that to 50,000, 60,000 a year. It was just like it could not happen except more incrementally. Um and I, you know, hopefully we're we we want to be moving in that direction. Unfortunately, the last year, few years, we've been moving in the opposite direction. Yeah.

SPEAKER_02 26:11

And if they change any of the rules around the penalties and the things like that, like if they're saying, hey, we have to take this seriously, we're gonna ramp the number up even higher. Is there, is it still just kind of like, oh, we'll slap you on the wrist and you know if you don't hit your target?

SPEAKER_01 26:25

A higher number does not necessarily mean much, except that you're likely to be falling behind, you know, not meeting that target, and therefore that that buy right, that ministerial approval process is more likely to apply. The more strict uh accountability measures have been things like the builder's remedy, which is if a city's housing element is not compliant, if they don't submit it on time, if it just does not meet the requirements in law, and there's like a back and forth with the state Department of Housing and Community Development to determine that. Uh if they go past a certain threshold being out of compliance, developers can basically come in and propose just about anything they want. Okay. And that has happened in a few cities like Santa Monica, I think maybe Huntington Beach, but Santa Monica is the one I'm I'm most familiar with, where uh I doubt just about any projects in that city uh are allowed to be over eight stories or so, other than the ones that were built decades ago. And there are multiple proposals for dozens of stories tall, hundreds of units per building projects that they were just waiting for Santa Monica to screw up and go out of compliance. And when they did, they were they were ready. So it's unclear whether all of those will be built. It seems like some of them will, but the builders' remedy, as I understand it, has been around for a very long time, actually. But like a lot of this stuff, it was just not really used. It was not, it was, it wasn't even really appreciated as a real threat.

SPEAKER_00 27:57

Yeah. But just to summarize and like just to recap uh everything that we just discussed, um we have a chart here on the board uh looking at the RENA numbers and the historic averages of what the city of Los Angeles has been producing and then what they're required to produce. And I think the blue is the actual production and the red is the required production. And I think the question to you, Shane, and kind of already hinted at it before, but is it even possible for us to get here without some wartime level mobilization of resources?

SPEAKER_01 28:31

So it is possible to get here without anything crazy. Um, certainly not wartime mobilization level. Many cities produce many, many cities produce much more than that amount per capita, when you adjust that per capita, right now. So places like Nashville, Raleigh, they're building well above that. I mean, because the city of Los Angeles has been at something like two units per thousand residents per year, something along those lines, two to four. And there are cities that are in the 10 to 20 or even higher range. So it's entirely possible. I think we'll get into how different strategies make that more or less likely to be achieved. Yeah. Um, because certain approaches are just gonna, among other things, require more expensive construction types that make it that that limit the number or share of the population that can actually afford the new housing, which means you're gonna build less of it if you if you can only you know build buildings that cost $4,000 a month to rent. There's a much smaller market for that than if you can somehow start building things that cost you know $2,500, $2,000 a month to rent or $500,000, $600,000 to buy instead of a million or more.

SPEAKER_00 29:53

Yeah. Yeah. Well, that's great to hear.

SPEAKER_02 29:55

Yeah. Yeah. That was, I mean, it makes me think I was at an event. It was the it was the CEO of JL, and he was giving a speech talking about all the major markets in the US and housing. And he's going through New York and Miami and Nashville and a lot of these hot markets and the amount of building that was happening. And somebody raised their hand and said, you know, what's what's going on with Los Angeles? And he just started laughing. And he said, Look, you know, this is a this is a long conversation, but he says it just has a gray cloud over it. And he said, the main reason I believe it has a gray cloud over it is because of the uncertainty of outcome when you build in Los Angeles. So you can't go in there and it's not crystal clear on what it's going to take to get from A to Z in a building process there. And people have experienced that. And because of that, they know there's other places that it is very clear. Um, and it's a linear situation, and there's certainty of outcome. So, what do you see as kind of like some of the main blockers in LA in terms of what is preventing us from building like some of these other cities and at that same scale right now?

SPEAKER_01 31:00

I would say 10 years ago, take your pick, every single aspect of the process from submitting your application to completed construction and getting inspected and your utilities hooked up was had that uncertainty and lots of discretion. Where even if the city said, you can build this tall, you can build this amount of square footage on this size parcel, you can have up to this number of units, here are the design standards. Even then you could propose a project and be rejected for any number of reasons or or seemingly no reason at all. Just completely arbitrary. Yes. And that, as you could imagine, is very chilling. Um, it's among other things, it just means like the the most charitable version I can I can give of it is people will still propose projects in that environment, but there is a higher risk, which means you expect a higher return, which means the cost, the price of what you build has to be higher. So we go back to that. I can't build a $2,500 a month unit or building full of those units. I have to build one that's $3,000 or $3,500 because the risk is just very high. And my chances of losing money are much greater here than they are elsewhere. And it's not like I'm necessarily gonna lose money when I complete construction and and you know start leasing up. It's more, especially let's say 10 years ago or longer, I'm gonna acquire land or have at least some make some deal to later acquire it, and that's even that just costs money. Uh, I'm gonna propose a zone change or something to build on that site, and it's just gonna fall apart. I just can't know. And I'm gonna lose at least millions of dollars. Yeah. Not tens, not hundreds, but but millions. And that's that's a big risk. So more recently, we have made a lot of progress both through local reform and through state reform on making more of that process at least up to the permitting stage, just non-discretionary.

SPEAKER_00 33:08

Uh where describe non-discretionary for it.

SPEAKER_01 33:11

This just means that again, I'll just I'll just say it this way when the city says, here's what we allow, if you propose something that is compliant with those uh requirements, you get to build it. That's essentially it. Or you at least get your entitlements, which is sort of the first step before getting your building permit uh to go forward with the construction. So it's it's not everything, but it is the beginning of the process, and it is meaningful to have shortened the time of that process of that stage, uh, and also very significantly increased the certainty of getting an approval. And and I think it's actually good planning too, because previously we just had a lot of zone change requests where the the zoning would say you could build. Um, it wouldn't say exactly this, but this is just easier to understand. Seven stories tall. And I actually want to build 40 stories. And so I'm gonna propose that, and it's a whole much more complicated process to go through that, but it can be very financially valuable if you succeed. So that's mostly done with. And I think that's actually a good thing, uh, just at a planning level. Um, it doesn't require all the same political connections and experience and um deep pockets that that kind of approach required. Once we get into the permitting process, which is actually reviewing the building plans, and then when you're under construction, the uh the inspection process and the requirements that the Department of Water and Power are going to impose on you and maybe not tell you about until you're nearing the end of construction. I think you guys probably know this a lot better than I do. I really want to do a research project on uh it sounds like the most boring thing in the world, but electric transformer uh sighting, staging, and clearance. This is a thing I I've heard a lot about.

SPEAKER_00 35:06

Bryce and we should turn the tables of the interview.

SPEAKER_02 35:09

We gotta bring Sean Jordan in on this. You guys can have a lot of fun with that one.

SPEAKER_01 35:13

I'm I'm game. But I think the point is that all those things are still a real challenge. There have been state reforms to create sort of shot clocks that say, for example, if the city has not uh does not give you a decision on your building permit application within 30 business days, then you can go to a third-party consultant who is perfectly qualified, is gonna, you know, engineer, sign their name and their reputation on those plans. Um, that's the kind of thing that we're moving more and more toward, usually because the state is forcing us, yeah, not always. Um, but those kinds of things are also really needed. And then we're gonna get into zoning and building code and other stuff, I think, as well. But those are all super important too. And the you know, the political. The one we didn't talk about is measure ULA, which I think that's the other thing where it's not even what you're building. I think the uncertainty of I built this project, I did everything I was asked, and now you know, my business plan in most cases is to sell it once it's leased up, if it's a rental. And now I'm paying an extra 4% or 5.5% tax on that sale, which means somewhere between, you know, a quarter and a half of my profit is gone. And now the profit earned by my investors is less than they could have just made investing in the stock market, for example, while taking much higher risk. And that's the kind of thing that, like, well, the building is built, you can't take it back. But the next developer considering building something in Los Angeles is going to think twice about it.

SPEAKER_02 36:55

Yeah. And then backing up just a little bit on measured ULA, can you break that down for people and um what what that is, how it affected LA, you know, some of the the outcomes that we saw from that. I mean, you just kind of went through it, but yeah, yeah.

SPEAKER_00 37:08

So like if we were a baby, if we were a baby. What is this? Yeah.

SPEAKER_01 37:13

So measure ULA is a real estate transfer tax. Uh, a real estate transfer tax is a tax on the sale of real estate that you usually pay. It's a percentage of the sale price. So it's a it's a piece of land, it's a building, it's anything. Whatever it is, yeah. Um so uh Los Angeles and and uh statewide, we've already had transfer taxes in place, but they've been under 1%. And they've theoretically been for covering the costs of recording the transactions and funding the assessor and all these kinds of things. I think they were more than was necessary for that, but they were pretty, pretty low in the grand scheme of things. Some cities, going back to the 2010s or earlier in California, have increased those transfer taxes, particularly for higher dollar sales. So if the the base tax is for most cities, 0.45% of the sale price. Some cities would do, for example, if it's between a million and two million dollars, we're gonna tax it at 1%. If it's between 2 million and 5 million, we'll tax it at 2% or 2.5%, et cetera. Those have been, you know, there's been various studies, and we'll talk about the ones that that we did at the Lewis Center on the effects of this. But in Los Angeles, Measure ULA was fairly unique in that it was really only limited to very high dollar sales, so five million and above, and the rates were very high as well. So the the it was really only two brackets.

SPEAKER_00 38:44

And what's the nickname again? It's the the quote unquote mansion tax.

SPEAKER_01 38:47

The mansion tax is what it was called. Yeah. Uh and a bit of a misnomer because it was not limited to mansions. Uh the the tax is, as I said, 4% above 5 million or 5 million to 10 million, and it does increase with inflation each year, uh, that that threshold. And then above 10 million, it's 5.5% tax. So pretty significant. You know, a hundred million dollar property sale is going to pay $5.5 million in tax. But that's huge.

SPEAKER_00 39:14

I mean, uh, because you know, people's heard the mansion tax, and I think they were like, okay, yeah, we need more money. You know, income inequality is a real thing. So they vote for it. But I mean, does this thing tax housing as well? Like, I mean, if someone's building 100 units of multifamily in um downtown LA, like, is that also getting taxed?

SPEAKER_01 39:33

Yeah, it taxes essentially all real estate sales, with the exception of uh property that's sold to nonprofit affordable housing developers. That's about it. Uh, there's a few others, but that's that's like, and that's not a big one. You know, there's not a lot of those purchases relative to uh real estate sales overall. So it's really just about everything. And, you know, I I don't harp too much on the mansion tax thing. Every every campaign has its slogan. Yeah. And something like 40% or or almost 50% of the revenues are from single family homes. So it's not, you know, it's not like it's 10% and they're calling it the mansion tax. It is a very significant, the largest share, actually, of of the revenue when if you just group it into commercial, uh, multifamily, and industrial, and then single family residential. So the other three combined equal about the same as as detached houses, which is kind of shocking, like even to me, that there's that many five million dollar plus homes that are selling as well. But I think part of it is that, and we'll probably get into this as well. But the if you are a single-family homeowner who owns one of these five plus million dollar homes, for one, if you're considering selling it, it's probably because you're considering moving, in which case you don't really have an alternative. Whereas if you own a commercial property or multifamily property, you could just hold on to it. You know, that's not always an option, but oftentimes it is. And so um, what we actually have seen, and I don't think we have to go into the real details here, but there's been a very sharp drop-off in the sales of all properties over $5 million in Los Angeles compared to other cities in LA County post-ULA, where we were on this is just showing uh under $5 million property sales inside and outside of LA, uh, outside being just the rest of LA County. And uh here's the start of Measure ULA, and it's just the same trend before and after inside and outside LA. Here is uh outside of LA in light blue, inside of LA and dark red, above $5 million, and you see big spike in sales in Los Angeles just before to kind of get ahead of the tax. Yeah, and then a big dip after, and that dip has just been sustained for about three years now. It just has not really meaningfully shrunk during that time. And that has a lot of consequences. For one, it means the tax is not raising as much as was hoped. Uh, it also means because of Proposition 13 here in California, 1978 ballot initiative that uh capped property taxes and the rate of growth of property taxes um to 2% per year until you sell. This means that when we have fewer sales, we actually have slower property tax growth as well. And so it sort of gives with one hand and takes with the other, where it is raising a lot of revenue. We're up to something like 400 million a year, maybe, give or take. Um but it is slowing sales of real estate overall. And that is uh going to have a compounding effect on property taxes. And that's to say nothing of the effect on development, which we can do.

SPEAKER_02 42:56

That's that's it goes directly over to if I'm a multifamily developer and I'm coming in and my model is a you know a three or four year kind of flip, you're not gonna do it. Like in LA, it's kind of a hard stop now for most of those developers because why would they, if they know on that back end they're gonna take that hit unless they've stumbled upon, you know, a zero-lengt basis and it's an unbelievable deal. Most of the teams that we've spoken with have been like, no, until this gets sorted out in some fashion, um, we can develop elsewhere. Yeah. Um, there's no reason to.

SPEAKER_01 43:26

And I think the the the sophisticated defense of ULA is well, you can just pay less for land. And that is true. You know, you can pay less for land and recoup the cost that way. Essentially, if I know my property is gonna be worth $100 million when it's finished and I'm gonna pay a $5.5 million tax, I can pay $5.5 million less for land and I'm square. Problem is the owner of that land has choices. Yeah. And not only do they have The choice of selling to other people, uh, including people who might just want to keep whatever's there now, which might be something as small as like a strip mall or a two-story office building. But that they're not affected by the tax because they're not building a hundred million dollar project and paying a tax on that. They're just going to pay a tax on that purchase up front, maybe if it's five million dollars or above. And so you're disadvantaging the person who wants to actually turn that land into a higher and better use and help solve the housing crisis. Um the other option is the landowner can just not sell. Yeah. Which, going back to Prop 13, if they've owned it for a while, they're probably paying little, very little in property taxes as well. And so their motivation to sell is is already pretty limited in California. Because you can just keep waiting and there's a good chance it's going to keep going up in value. Like if I don't need to sell right now, why not just wait for it to get a million dollars more valuable every year?

SPEAKER_00 44:54

Yeah. We talk about this a lot at the office, how uh, you know, we look at buildings all the time. I mean, Bryson in his career, I think he's built uh on the reemergent side, um, three or four office to housing projects. And so, you know, always looking at buildings, always evaluating them, um, always trying to see like what the potential is, what the bones are, et cetera, et cetera. But sometimes if you own a building and you don't have any incentive to convert it or to find a better use for it that could serve the public, it's like just hold on to it.

SPEAKER_01 45:28

I learned this word from my colleague uh Mike Manville, Professor Professor Mike Manville at UCLA, satisficers. Uh very, very nice word. Um, but it's just people who are like good, you know, things are good enough. I don't need to rock the boat. Yeah. You know, I own this property. It I could make more money if I tore it down and redeveloped it, but like I don't need the money. Yeah. That's a big headache. You might go badly. I I'm happy just, you know, living off the $500,000 uh uh a year or month or whatever that my parents left to me with this property, uh, which is probably the majority of the cases with those kinds of properties. But I think that that that's like a particularly real problem in in California because of Prop 13.

SPEAKER_00 46:16

No, I think that like that kind of gets to like the core issue, I think, when it comes to our housing policies, is that the system, for better or worse, the way it has been designed, again, I don't think intentionally, I think most people designed is a strong word. Yeah, exactly. Um let us just say uh how does all come together? Um I don't think most people are trying to make anyone's life harder, especially our policymakers and our planners. I meet great people at the city all the time, very hardworking. And whenever I hear them speak, I'm like, you're really smart, you know what you're doing. Um but when it all does come together, it just seems as though the easier thing to do isn't to build, isn't to make more housing, isn't to increase supply, it's actually to do nothing.

SPEAKER_03 47:01

Yeah.

SPEAKER_00 47:01

So it's incentivizing lethargy in a time when we need action. Yeah. And that to me is kind of like what the flip needs to be here. I don't know how you feel about that.

SPEAKER_01 47:10

Yeah, I agree with that.

SPEAKER_00 47:11

All right.

SPEAKER_02 47:12

It goes right back to our early either piece of certainty of outcome, where like even if you could inspire that, they still need to know can I get from here to there successfully? Yeah. And is there a clear path forward? Which this is a great pivot into let's talk about some of the positive things happening. How can we, you know, come up with some amazing ideas around how to do this successfully? And I was watching a video the other day. It was um, it was Jeff Bezos, he was a keynote speaker at some real estate event in uh Miami. But it was interesting because he had clearly gone through a horrible permanent experience in Miami. And his whole thing was uh, and again, this is very, you know, controversial subject right now around AI and uh AI adoption into a lot of these organizations. But his concept was this is insanity, what's happening in your industry. He says it should it's based on rules, right? So you guys have a clear set of rules of if you do this, you get this. So he's like, the fact that I can't take a set of documents and upload that and get a response in five seconds that I am approved or not approved, and my permit comes right behind that is insane. So he says, this is something where where we're going with AI is it's gonna get into a point where that's where it needs to get to so people have that certainty. And I get it because on our build side, I've sat across from a plan checker multiple times and they bring something up that we're we don't love this, we don't like that. And it's like, okay, I don't, why don't you love that? Well, and it's not really code. Is it not really code? Yeah, and they're kind of like, yeah, okay, but you can tell very clearly, they're not sure. Uh-huh. And say, okay, can you just pull that out and actually show me in the in the code section where it says I can't do that? Yeah. And they can't. And then it becomes this political thing. And most people will never push back because everyone knows in this industry, if you get on the bad side of a plan checker, well, forget about it. Yeah. Now you're three, four, now you're four months out, right? Because you've you've created this situation internally. And that's it.

SPEAKER_01 49:18

And the more complicated the rules are, yeah, the more likely there is something that they're giving you a break on. Yes. And so if you push back on the thing they want, exactly. They're gonna find that thing that they were letting go that they don't really care about. Yeah. They still have the leverage, so it doesn't actually solve your problem.

SPEAKER_02 49:34

And you take that through every single level, right? And there's so many levels that you have to get through and get those approvals. So you look down the road of, you know, and I think everyone's trying to uh solve for the LADBS situation, the LAFD situation, the LADWP situation, but it's a people issue at the end of the day. And I think that's one of those scenarios of is like, is there a way to get to a point where it is kind of this Bezos model, like he's talking about, of is that what the future is? And is that gonna solve our problem? Because again, if you can submit something and get something back in five minutes and you have that certainty that it's like, I've got my permit, I can start building. I mean, you're talking about rocket fuel to start getting back to building where we need to build. Yeah. But if you can't get to a even halfway to that point, it's gonna be difficult.

SPEAKER_01 50:19

Do you feel because obviously I've never developed anything, I don't know how this works from a real practical uh perspective. Do you feel like the requirements and the you know conditions on any given site are if not uh consistent, yeah, uh are predictable enough or are something that you can adapt to with your plan? Because it just seems like every site is different, yes, especially once you start talking about connecting to the right of way and the utilities. And so I can still imagine getting to a point where AI or or something like it could just kind of write the plan and yeah, a separate one is looking at it and approving it. Yeah, but it it it it seems like we're we're still a ways away from that, and there is some need for like a human touch or a human interpretation.

SPEAKER_02 51:15

You're always gonna have that that human touch in there. And and when you get to the field side, yeah, you're even farther away from that because and again, the inspection side, once you actually start construction. And then we can have a whole discussion around inspections of inspectors coming out, and this is wrong. I've had scenarios where it's like, this is wrong, change all this. They come back three weeks later, it's like, that's wrong. Why is it like that? Because you told me to do that. Uh-huh. Oh, my bad. Rip it all out. And you're like, I can't, who's paying for it? I don't know. Not me. Yeah. Like it's wild what happens in the field in LA. So it's, and I and if you work in LA, you know that. And then we go back to, well, you build in that risk then. Because you know you have to build in that risk.

SPEAKER_01 51:55

I mean, I've heard people say that you know, they see that they've got a specific inspector or reviewer, and they're like, We're fucked. Yeah, yeah. Or you're gonna be like, no, I'll wait for the next one. Yeah, like no, you stay, you stay home.

SPEAKER_00 52:07

It sounds like getting a judge, you know, on your ones, like, oh no, not that judge, please, not that guy. Like, we need someone who's a little bit nicer to not just before lunch either. Yeah, exactly.

SPEAKER_02 52:16

Yeah, we've been working with uh uh the county and talking about the fire rebuilds and things like that. And uh, a big part of it was you need to come up with the third-party site inspections if you really want to build back its scale and build back quickly. Uh-huh. And it's interesting, people that aren't in the field that haven't dealt with it, it's like, oh, well, we've got our inspection system. It's like, have you ever called for an inspection? And the people that are making the rules, they haven't. They haven't been out in the field and you haven't made that phone call. It's taking you three days to get the inspection scheduled. Yeah. Then you're sitting there for four hours waiting for somebody to come check your drywall nailing. And then when they come out, uh maybe they show up on time, maybe they like it, maybe they don't. No one really knows. And then maybe they don't show up at all. Um, so I'm like, you need to bring in third party because if it's third party private and I'm somebody that's getting paid per inspection, I'm giving you a one-hour window. I'm there for two minutes and I'm checking to make sure things are good, I'm signing and I'm moving on. Yeah, that's gonna create speed and efficiency in the field. But how we currently do it is just a broken old system where you're not gonna get that speed and efficiency like that.

SPEAKER_01 53:19

It will also give you more flexibility in terms of like if there's just a lot happening this month or this year or the next five years, it's a lot harder to hire a bunch of city staff to take that role because you're like you're just in a position as a as a city agency, a department head, where you actually can't just like ramp up and ramp down. You can't just lay off people when the work slows down. So having that ability to, and then I know they have this in the planning department, but they've been very like tight fisted about how much goes outside of the department, as I understand it. Yeah, absolutely. I don't know if this happens in the permitting department as well. Uh as I said, with the state law, maybe this is gonna happen a little bit more. But I think there's there's a lot of room for improvement there.

SPEAKER_00 54:03

Yeah. Well, I mean, you know, you mention like the difficulties of inspections and you know being out in the field, but you know, Bryson, you obviously come from the world of existing buildings. And I imagine like those are like the hardest to get inspected. And it's like because I mean these buildings were built what, like 50, 70, 100 years ago. And so an inspector comes out, it's like, well, that doesn't look right. Well, yeah, because it was built a hundred years ago.

SPEAKER_02 54:25

Yeah, and the disconnect between the plan check and the field is specifically to the DAP for reuse in historical, is the gap is much larger. So you may be installing part of your plans, and when the field inspector shows up, he goes, I get it, it's on your plans, you did it right, but they didn't understand what was going on out here, so rip it all out.

SPEAKER_00 54:43

It goes back to one of the first slides that we were showing about the uh construction employment numbers, because I think one of the things that's not I don't know if it's really unpredictable as much as it is about having qualified professionals or experienced people handling the process. There just really aren't that many people who have fully designed, built, and occupied a building in Los Angeles. Like when you really get down to it, there just aren't. You might be an architect who has designed a lot of buildings, but have you seen the whole process through? Have you like gone through the trash, utility inspections, all of that? Um, you're a certain type of builder, you might work on retail, not multifamily, you know, different product type, different inspection requirements. So to have that kind of 360 degree perspective and to know those kind of, I wouldn't say like knowledge gaps, but just like tension points that it can appear in all of these different scenarios. Yeah, there are just not that many people to really tell that story. And I think that's something that we're kind of like really missing, honestly, is just like more of this storytelling of like what is going on out there.

SPEAKER_01 55:50

Yeah. Well, I and I think, you know, this is something I've long wished we had, for example, a sort of uh national or state or at least somewhat shared zoning code so that you as a developer, you don't have to learn a new system in every single jurisdiction you operate in. But the uh it would be nice to have that for the building code and for inspections and these kinds of things as well, where you don't have to have every city having its own permitting staff and inspectors where they could actually just, you know, you can inspect anything in Los Angeles County because it's all the same rules. Um maybe there's still different design standards and things like that, but the basics of like how things work, so you can have people move across these borders. Yeah. Seems like it would be much more efficient.

SPEAKER_00 56:37

I think that's a good place to transition because yeah, there are some cities. Way too logical. Can't do that. There are some cities, though, right? Um, some municipalities, some states, uh, even some countries that do this really, really well. And I think that, you know, just to give people hope that, you know, there is a better way to build. There is a more kind of thoughtful and intentional way of going about this process. Can you give us some best practices, some examples that you've seen uh statewide, um in different states around the country, overseas that you think could be practically implemented in LA?

SPEAKER_01 57:16

Some of this would be at the state level, and I think the state will continue to pass housing laws for a variety of reasons. One reason that state reform is important is because the fact is that Los Angeles is one of the better actors for all its flaws. You know, it is and many of its uh elected officials and and staff are really trying to build more and make it easier to build because they take seriously the problems of the housing crisis. That is not true of you know most of the remaining 500 and something cities in in California, and they're just not going to voluntarily contribute to solving the housing crisis. And so the state really has to make them. And the nice thing about when that happens is if everyone is required to contribute something, no one actually has to do all that much. Los Angeles does not build enough, but we also build something like 70% of the housing in our county, despite having only 40% of the population and and also like being even more built out than the rest of the county. So it's harder in some ways to build here than in some other parts of the county. So that is important and that will continue to happen. So something like what Japan has with their national zoning code, it's essentially like 13 districts that cities can pick where they go on the map, but they can't have different districts. And they're just basic things in terms of, you know, even the lowest density district is not single family only. It's something between like one and four units. It's it's a very different system. You can have up to like a 500 square foot commercial space in the ground floor, basically anywhere in the country. And then like the next zone up is higher, a little higher density and a larger commercial space. Uh, and then it gets into you know larger multifamily commercial, et cetera. But again, I think it would be really important and valuable to just have standardized rules still allow a little bit of customization locally, but just not have it be something entirely different from place to place. And, you know, it's important to say in the case of Japan that it builds something like five times the housing, or I should say Tokyo builds five times the housing per capita that California does. Um I think once you account for demolition, it's more like three times because they build actually a lot of single family homes, but they're on very small lots, like 500, 800, 1,000 square foot lots. Wow. Uh, and they'll rebuild them every 30 or 50 years. And so that's a lot of what's going on, um, but not the majority of it. So that's something I'm really interested in, and actually um extending that to the building code, where it's not just the zoning that says the height and the floor area and the setbacks and the lot coverage, the things that the zoning development standards tend to do, but also the actual structural requirements in what in the US is known as the International Residential Code and the International Uh Building Code, which is for anything three units and above. So there is this model code that is national here for the IRC and the IBC, but in practice, every city is allowed to adapt it however they want, and many, many places do. And so the rules just differ even there. Some places are actually changing. So Dallas is my kind of standout for this one, changing it so that more projects can be built under the International Residential Code, which is simpler and less expensive. Right now we have this arbitrar very arbitrary uh dividing line where one unit, two units, or townhouses can be built under the IRC, three units and up is the IBC. And the cost per square foot is dramatically higher. Yeah. Going from a two-unit to a three-unit building because of that. And there's no real good reason that the requirements for a three-unit should be dramatically different than a two-unit. It's just where we decided to draw the line. Um, so Dallas just kind of increased that to eight without many other changes. Memphis is another city that had to first go to the state in Tennessee and then change it locally to six units as their threshold. Um, they'll still have usually some kind of you might still require uh sprinklers where you wouldn't for most IRC projects otherwise. Um, that's something that really has the potential, especially in this missing middle range of housing, the stuff from two, three units up to you know, a three or four-story 10 or 12 unit apartment or condo building. Having that standardized and having it just like more rational and right-sized for the for the building size would make a really big difference and is a real priority for a lot of reformers right now uh across the country. And um, you know, on the zoning side, so California has actually led the country on ADU reform at the state level, and Los Angeles builds by far the most ADUs in in the state uh of any city. And that's almost true, even adjusted for population. But we build something like eight or 10,000 of the 30,000 that we're building per year. And this goes back to a couple of 2016 laws that from 2016 and earlier, we were building fewer than 2,000 per year statewide. Uh so that's dramatically increased production at that end, the very lowest kind of incremental production end. And we just passed SB79, which is the transit-oriented development law, which around rail stations and and a very limited number of uh bus stations allows anywhere from six to nine stories, uh, with essentially pretty high density, very favorable development standards. It's just everything in between that we're missing. Uh, and there's some places that have done a good job of this, really diverse places. So Spokane, Washington, in eastern Washington, a city of 200,000, they basically said you can build up to three stories, something like 50% of the lot covered by the building, uh, you know, and whatever setbacks, no density restriction, no floor area restriction, just whatever you can fit in that box with lot coverage, setbacks, and height, and however many units you can fit into that through, you know, following the building code and other things that that puts some limit on that, you can go ahead. And they actually passed that, I think, unanimously back in 2023 or 2024. Uh, Sacramento, California, just did something recently where they pretty much allowed that scale of development throughout most of the city as of last year. I think it's still being implemented. Cambridge, Massachusetts, which is where Harvard's located, right next to Boston, allows now basically four stories, uh, I think lotline to lotline because they're a very like row house-oriented community, um, and up to six stories if you include affordable units citywide. Uh so these are things that were unimaginable five years ago that any city would voluntarily do this. There's also some state reforms that are pushing cities that might not have otherwise done it. So, for example, in Washington State, a law called HB 1110 passed in I think 2023 or 2024. And uh that requires at least four units per parcel, six if it's affordable. But the city of Seattle, in its updated comprehensive plan, just at the end of last year, approved something like eight to twelve units on pretty much every parcel in its neighborhood residential zones, which are kind of the lower density zones. This sounds like Japan. Yeah. Yeah. More than you realize because actually they uh allow commercial in, I don't know if it's all all the buildings or if it's maybe just like on the corners on, but in any case, like bringing back neighborhood retail and shops and restaurants so that people, you know, with the thinking, among other things, that you don't have to drive as much or travel as much if more is within within walking distance or a short bike ride or even a short car ride, better to do a one mile ride than a five or ten mile ride. So there's a lot of positive things happening at the city and state level. Um, many more things that we could talk about, but those are just some of the things I think are most exciting. And I think the that missing middle scale is particularly important. First, just legalizing it through zoning, because single family homes are very expensive because you're paying for a lot of land per household. Larger buildings, podium style, you know, seven-story or taller, are expensive to build because the construction costs are quite high because they're just more complex. And so that missing middle three to four story, even two story range is really optimal in some ways because you have shared land costs and you have low construction costs. And so putting those two things together makes it possible to build housing. That's a lot more affordable, just kind of naturally without needing subsidies or anything like that. And that just opens up the market for who can actually see themselves moving into or buying those units as well. Yeah, absolutely.

SPEAKER_02 1:06:12

Well, thinking down the road, we're coming into our um, you know, new mayoral election cycle here, which is super exciting. And, you know, I've I've always believed it's a big part of it, is it's always a people issue at every level in terms of how do we get this solved. So if you're thinking it, you know, looking down the road and you know, you're talking to three or four of the candidates, is there anything that you would love to see them do? Because we all know this is gonna be a big part of what they're talking about, what they're promising, the changes they're gonna make, and now everything is gonna get transformed and uh all the housing is gonna come flooding into the market, you know, as soon as they're elected. Is there anything that you're wishing they're gonna focus on or or uh you know key in on?

SPEAKER_01 1:06:56

If you're not talking about that middle scale of housing and allowing that in many places so that it's not just concentrated in a few and the land prices shoot up, and so a lot of the you know potential savings from that more affordable housing type are just eaten up by the land costs that goes to some landowner who just has happened to have it for the past 40 years. I think that has to be really at the top of the list. And it's a very, very hard thing to do. It's I I don't want to downplay it. It is a politically difficult thing to accomplish. Um, but I think the right person in that position can make the case and bring on the right people at the departmental level as well to make it happen. As I said, uh in Spokane, Washington, it was unanimous. I think it was unanimous or close to it in Sacramento and Cambridge as well, to do these reforms that seem, frankly, uh like inconceivable here in Los Angeles. And I'm sure they seemed inconceivable in those places too, just years before they happened. Yeah. So I I think we need someone who's really making the case for that and really understands why it's important and why we are not going to meet our housing needs or solve the housing crisis just by building ADUs and duplexes and podium five over one, you know, uh 300 unit buildings and and 50 story towers. That is just not going to get us there. We need those, but we need the middle as well.

SPEAKER_00 1:08:25

I think uh I mean there's so much to go off of there. Um I mean, one of my big questions is I mean, we have actually had this conversation a few years ago around like, you know, what gives you hope. And I think that everything seems impossible, you know, before it happens. Then you do it and it's like, oh, it was possible. You know, couldn't run five miles. Oh, I trained, I'd run five miles. Um I still can't do that. I'm sure I could learn. Yeah. It's all everything's possible. Um but I think uh, you know, my big question for you, Shane, is yeah, if you were advising the mayor of LA like today, and there was like there was one thing, or there was like if you could clear the decks and just be like, listen, like these three things should happen. You mentioned the missing middle. What would they be? What would be like your top three recommendations?

SPEAKER_01 1:09:17

We need that zoning reform because the first step is just legalizing these different housing typologies. Then we have to actually make it more affordable to build them because I'm speaking highly of these three and four-story missing middle uh typologies, uh you know, something as small as like a sixplex, even, but they are right now pretty expensive to build because we have these codes that are that really favor and make it quite inexpensive to build single family and duplex and townhouses, at least relatively speaking, and quite expensive to build that anything higher, basically. And when you're building 100 units at a time, 300 units at a time, you can kind of absorb the the complexity and the cost of that. Uh, when you're building five or eight or 12 units at a time, you can't. Uh, and that's partly code that's also permitting and these other things that just I think we really have to learn the lesson from ADUs, which is the reason ADUs worked is because we made it extremely simple to build them. And I think we recognize we had to do it that way for ADUs because the people building them are not developers, they are homeowners who are finding a contractor and someone to partner with potentially. But otherwise, they're like almost always going to be first time and maybe never again. Yeah. And so, like, it has to be something that's a first-timer can do. And I'm not sure that building a 12plex in Los Angeles needs to be that simple, but it needs to be close to that simple because you can't have people, frankly, like yourselves, who are the only ones building housing in the city. You need to be able to bring in the smaller scale folks who just feel it's impossible right now. Yeah. And I think there's a really strong argument to make for that from a you know racial justice and economic justice perspective, where people always talk about not liking the large-scale national, international developers, the big investors, et cetera. And then we set up policies that make it so no one else can build in a city. Like absolutely impossible. And so I think we need to bring that back. Um, you know, other than that, I'm curious to hear what you guys think or what you what you're doing. I mean, it's funny here.

SPEAKER_00 1:11:37

No, it's funny as you're uh mentioning it, because we're having conversations with a lot of groups, a lot of nonprofits actually about how to standardize their process when it comes to building, um particularly in Altina, which really needs that. Yeah. Um, and we're actually working with a group of clients who are for the first time kind of getting into development. And it's amazing how simple things that you know I think we take for granted, like standardized specifications, yeah um, standardized drawing details, um, having those things just locked and loaded so that you can go through every project in your pipeline and just like kind of set it and forget it, can make a big difference. Yeah. And I mean, it sounds like the missing middle could maybe use a builder's perspective.

SPEAKER_02 1:12:16

Yeah, yeah. And the and the up front again, get continuing to go back to that idea of certainty of outcome for anybody that wants to build housing in LA. It's you need to start there and you need to show them that there is a clean path from start to finish. Yeah. And what does that look like? And I I'm a big believer that I think technology is gonna play a big role in that moving forward to help us solve some of these bigger issues. And so I'm hoping whoever it is leans into that concept and looks at what other cities are doing and saying, hey, how can we streamline this process? How can we provide certainty of outcome? Um, you know, what are those core changes without getting too much into the weeds? You know, what are the biggest blockers and how do we remove them? Yeah.

SPEAKER_01 1:12:57

I had one more thing that I think might be something you're less likely to hear. Um I really feel like we still have a long way to go on zoning reform, on code reform, fee reform, all these things, but we are making progress on them. And I think the thing that we are just starting to really pay attention to is design and the built environment. And I think it's gonna be really important that we are able to show people not only that the buildings we're building are beautiful and things that people actually welcome at some level. People are always gonna be resistant to new things and bigger things, but I think you can make a difference, if not enough of a difference by itself with good design. But I think even more than just like looking nice, having housing bring along amenities like parks, um, and not by just putting it on the developer to provide that, because I think that just is more likely gonna result in housing not being built, but really taking that public charge back and saying, you know, for example, we want these neighborhoods to be our priority areas for growth. Alongside of that, that's gonna come with inconvenience of construction and change. But because of that, alongside it, we're going to really invest in some neighborhood parks, for example. So that new housing doesn't just mean, you know, a regional benefit in terms of affordability and more people can live in the neighborhood. And maybe there's support for, you know, it supports more restaurants and retail in the neighborhood. But that's like not a very strong argument for someone who's living there and is also going to be experiencing more congestion and maybe more parking issues and things like that. I think you want to really be able to make a stronger case for real tangible benefits. And I think things like open space and other kinds of public investments would be really, really valuable. So I'm hoping that becomes more of a focus and that our, you know, our next mayor, whoever it is, is able to kind of make that case while keeping in mind that like this is something that the public has to be responsible for. It can't just be something that we say, in addition to everything else we ask of developers, we also want you to build these things. And then we end up with kind of what we're seeing with Measure ULA or what can happen with inclusionary zoning policies, where you ask for a lot because you want a lot and you need a lot, and what you actually get is nothing at all. Uh, you know, the line about inclusionary zoning, 50% of of nothing is is still zero. Yeah. Um, and so I I think that that's where I want to see more focus, not just on the production, but like how do we make that feel good to people who already live in a community are seeing that housing come come into their neighborhoods. Yeah, it's like your pocket park scenario that we're mentioning.

SPEAKER_02 1:15:57

Yeah, not just not just building housing, but building community, right? That's that should be the goal. It shouldn't just be blanket housing. It should be the housing should come with community in some fashion. And yeah, we're talking about these, you know, pocket uh communities and these cottage housing, you know, developments that we love, um, because they're single family homes around a courtyard and you're kind of building in community to these areas. It's like mini neighborhoods. Yeah, many neighborhoods, absolutely.

SPEAKER_00 1:16:22

So I guess uh last question. Um you know, if you're an average or if you're an average voter out there, um Yeah, what's one question that every voter should ask the mayoral candidates uh before the next election?

SPEAKER_01 1:16:39

Question. Uh I'm I'm torn on this. So I kind of want I don't know exactly how to phrase this question.

SPEAKER_00 1:16:48

Be careful, there are no do-overs. There are no do-overs.

SPEAKER_01 1:16:52

No, you you can leave in the uncertainty. So I think it's it's useful, uh, and it's it's accurate. But my frustration with a lot of politicians and and not just politicians is in housing, as in many things, the focus is often on like who's the bad guy, uh, who is the the evildoer, the enemy that we have to vanquish, and all of our problems are you know to be blamed on them. And if we could just defeat them in some way, then our problems would be solved. And I think that's just in housing in particular, maybe, but really in in many, many things, it is just sometimes important as a starting point, um, sometimes important as a as a kind of galvanizing argument for people, but it is not nearly enough. And so I really want the focus to be on like what do you want to affirmatively do? Um, and like, can you phrase that in a way that's not just like who are the bad guys? And I want to, you know, punish the bad guys because I mean I have this frustration with um, you know, like tenant advocates, for example. And I in my book, which I never even mentioned, my book, The Affordable City. There you go. Nice. It's five years old. Yeah. Uh I make a pretty strong argument, I think, for for rent stabilization of the kind that we have in California. And that's, you know, made a lot of people unhappy. Uh, but I believe in it. But my frustration oftentimes with with people in that space is it sometimes feels like they are more anti-developer or development than they are pro-tenant. Yeah. And it is often treated as though those two things are essentially one and the same or go hand in hand. Yeah. And I think that is just not true. I don't, and I don't think you have to be like super uh interested in or worried about the fates of developers and and and how they're treated. But if your answer to our woes is the developers are bad guys and we just need to punish them, that is not actually a solution. And it's essentially what we've been doing for 50 years. Like, look where we are. We build very, very little housing. Uh, the developers who are able to build in a place like this actually do probably better than the ones who build in somewhere like Phoenix because they have to get higher returns in order to justify building here. Yeah, be more efficient. We need to focus on what is the actual solution here, not just who we want to blame for it. Yeah. Super hopeful.

SPEAKER_02 1:19:29

Yeah. I love that too. And did the, you know, makes me think of what I would ask. And now we can go full circle, Chris, because I want to hear yours too.

SPEAKER_00 1:19:36

Okay.

SPEAKER_02 1:19:37

Um but it's the, you know, we uh we always talk about, especially on this podcast, let's try not to break people down, to complain, because it's so easy to harp on all the negative things. Everyone does that. We can talk about it all day long about what the problems are. And if we really want to, we just go on Twitter. Yeah, yeah. Exactly. But I love what you're saying of asking them, like, what do you plan to, you know, affirmatively do or accomplish? And I would follow that up with, you know, and who are the top five people or groups that you plan to collaborate with to make that happen? Because I think that would be very telling on their thought process of, you know, yes, this is what I want to do. And these are the top five people or groups that I'm planning to collaborate with to make that a reality at the end of the day.

SPEAKER_01 1:20:22

Something I was thinking about not long ago, and I was trying to think about how you would put this into a survey or something for all the mayoral candidates, but I would be interested in their answers to a range of like, okay, say you have a uh a family with two young children. What are you gonna do for them on housing? Say you have a single person who just graduated high school and is living with their parents. What's your solution for them? Say you have a, you know, couple in their 60s or 70s who lives in a single family home and wants to downsize. What is your solution for them? A single mother who is, you know, living in overcrowded conditions with their sister and and their kids, what's your solution for them? I feel like actually having an answer for all those different groups would be really, really valuable because I think a lot of the time housing policy, especially in more progressive places, for good reason, but also I think to its detriment, is so focused on low income, disadvantaged. And I think prioritizing those populations is essential and actually like should be done. But sometimes prioritization transforms into this is actually the only thing we're gonna care about. Yeah. And I think that's just among other things, it's just really bad politics too if you don't have an answer for the vast majority of people who make too much for rent assistance or other kinds of public assistance, but also make much too little to feel comfortable or to buy a home in the city.

SPEAKER_00 1:22:01

Yeah. Yeah. Um bring us home, Chris. One uh yeah, one question to ask the candidates. That's uh um it's always much harder to answer than that. Why'd I ask this? Oh no. Um, yeah, I don't want to ask I'd want to ask them a lot of things. Um I think my top question was would be um LA is a city. How do you plan to make it a city-state? So I'd like to hear their response there.

SPEAKER_01 1:22:36

I think you need to elaborate on that. Yeah.

SPEAKER_00 1:22:38

Well, I think um, you know, you take LA, um, one of the biggest, widest sprawling metros in the country, in the world. Um, I don't know how many different neighborhood councils and sub-neighborhoods, 49, 57. Um, and I actually remember I had a college professor in architecture school, he made this point to me just about when we were studying urbanism for the first time. And uh, we read a series of books. Uh, and uh at the end of it, he made the point that, you know, if you drew your five favorite spots in LA and I drew my favorite spots, my five favorite spots in LA, uh, they would be totally different. I mean, we live completely unique lives, each and every one of us, all four million Angelinos. And it is the most culturally diverse, dynamic uh region, I think, in the world. And if you really want to help it flourish, you have to stop thinking of it as just a city and actually this huge, larger ecosystem of people and places and ideas. And how do you plan to facilitate that growth and that rise?

SPEAKER_01 1:23:46

I like an open-ended question.

SPEAKER_02 1:23:47

Yeah, yeah, yeah. Well, they're all coming on the podcast, right? We'll be able to ask them soon enough. Shane, thanks so much for coming on. That was awesome, very informative. So thanks for having me. Yeah, absolutely. Appreciate it. Good stuff.

SPEAKER_00 1:24:00

All righty.

SPEAKER_02 1:24:08

All right, thanks for listening, everyone. Um, before we go, a quick thank you to our sponsors, the Cooperative LA, a premier owner's representation and construction management firm helping clients save real time and money across complex projects. And Ray Ellen Richardson, a best in class commercial general contractor here in LA, known for delivering high quality work the right way. You can check out both their websites in the description, along with more info in the links in the show notes below. And finally, if you're enjoying the podcast, if you like me, if you like Chris, please do us a huge favor. Hit subscribe, follow, hit that button in there somewhere. I promise it's probably somewhere on the screen that you're looking at. We would appreciate it, and it helps a lot more than you think. Thanks.