Dear Mr. Krugman: You’re Wrong About Rent Control

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An open letter to economist Paul Krugman.

Dear Mr. Krugman,

I want to start off by saying that I’ve followed your column in the New York Times over the years, and I have tremendous respect for you. Since I have no background in economics, I appreciate your clear, straightforward approach to breaking down the issues. And more important, I appreciate the fact that you speak out against the dishonesty and fraud that are all too common in this country. There have been times when I really needed to hear the voice of reason, and you have been that voice.

But as much as I respect you, I have to say I think you’re dead wrong about rent control. In fact, I think most economists are wrong about rent control. Not that I have anything in my background to give me any credibility. You went to Yale and MIT. I went to LACC. But in spite of my utter lack of any credentials that would give me the right to talk about this issue, I hope you’ll read on at least a little further. Because when it comes to rent control, I think you, like the vast majority of economists, have failed to do your homework.

Just to give you an idea of the sloppy thinking that characterizes most discussions about rent control, let’s talk about Los Angeles. I live in LA, and I can’t tell you how often I’ve heard that rents are high in LA because of rent control. I’ve been repeatedly told it constrains new construction, which means we have low supply, which means we can’t meet the demand for new housing, and that drives prices up.

But there are a number of problems with this argument.

First, most of the people who talk about LA don’t even understand the difference between the City of Los Angeles and the 87 other cities that make up the County of Los Angeles. Some of these are embedded within the City’s boundaries. While the City of LA does have a Rent Stabilization Ordinance, there are only four other cities (Santa Monica, Beverly Hills, West Hollywood and Thousand Oaks) that have any kind of rent control. Median rents in Culver City, Burbank and Pasadena are as high or higher than the City of Los Angeles, despite the fact that these cities have no rent control ordinance on their books. And within the City of LA you’ll find considerable variation in housing costs. Rents in the corridor between Santa Monica and Downtown tend to be the highest. Rents in parts of the Valley (Arleta, Pacoima, Sylmar) and in the Harbor Area (Wilmington, San Pedro) are usually considerably lower. By itself, this seems to suggest that there are other factors besides rent control which may have a larger impact on rental costs.

Second, those who oppose rent control generally point to coastal cities like LA, San Francisco or New York, all of which have outrageously high housing prices. But absolute dollar amounts aren’t the best gauge of affordability. Really we have to look at prices relative to income, in other words we have to look at rent burden. According to a 2016 report by Abodo , the Miami-Fort Lauderdale-West Palm Beach area was at that time the most cost-burdened rental market in the US. A report from HUD the following year came to the same conclusion. While prices in the Miami area are well below those in New York or San Francisco, wages are also much lower, and renters are getting hammered. This is in spite of the fact that Miami has no rent control. Another report from Abodo that breaks down rent burden by generation finds that a number of urban areas in Florida appear high in the rankings, including Daytona Beach, Lakeland-Winter Haven, Cape Coral-Fort Myers, and Orlando. No Florida cities have enacted rent control, because state law prohibits them from doing so. Supply siders tell us that if landlords are allowed to charge whatever the market will bear, this will incentivize new construction which will generate more supply and bring prices down. That hasn’t happened in Florida. Renters there have been struggling for years, and somehow market forces have failed to bring relief. And while the Los Angeles-Long Beach-Anaheim area does appear on Abodo’s 2016 rent burden ranking, it’s interesting to note that it comes in at number five. None of the first four urban areas on the list have rent control.  (I should also point out that Long Beach and Anaheim do not have rent control.)

All the economists opposed to rent control insist that endless reams of research back their stance. Again, I’m not an economist, and I certainly haven’t spent as much time with the research as they have, but what I’ve seen doesn’t impress me. For all the talk of irrefutable data, the studies I’ve looked at seem very limited. They generally focus on a narrow selection of markets, sometimes just one market. They often base their conclusions on data that has a questionable relationship to rent control. They generally look at the housing market in isolation, without any effort to see rental prices as part of the larger picture. And they generally don’t acknowledge that there are a lot of different ways you can structure rent control.

No question, the forms of rent control used in the first half of the 20th century were a failure. I agree that setting absolute caps on housing prices stifles new construction and only encourages black market housing arrangements. But the forms of rent control adopted in some cities over the past 50 years are much different from their predecessors. For instance, in LA the Rent Stabilization Ordinance passed in 1978 only applies to apartments built before that year, so it doesn’t discourage new construction. It allows annual rent increases of 3%. Because the ordinance includes vacancy decontrol, rents are reset when a tenant moves out. It also has a mechanism that allows landlords to charge additional amounts to pay for capital improvements and major repairs. I have to laugh when I hear that rent control inevitably leads to poor maintenance of residential units, creating unsightly and unsafe slums. I often pass through Santa Monica, Beverly Hills and West Hollywood, all of which have a form of rent control, and I haven’t noticed any festering swaths of urban decay.

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Residents protesting gentrification in East LA.

While I can’t claim to have read every research paper on rent control published in the last 50 years, I have read a sampling, and as I said before, I’m not impressed. To go into specifics, I’d like to talk about a couple of papers that have been widely cited, and then another more recent study….

First let’s take a look at Gyourko and Linneman’s study from 1987, which analyses the allocation of benefits under rent control. They focus on New York City, and they use a lot of impressive formulas to compare the distribution of family income with the distribution of benefit-adjusted income under rent control. I don’t pretend to understand the math. I’ll just assume that all the numbers they come up with are absolutely correct. Their conclusion is that, “[I]f the primary social benefits of rent control are distributional impacts, they were not successful in New York.” They go on to say, “Economists have long predicted that racial discrimination could result in markets where nonprice rationing occurred. Blacks and Puerto Ricans in the controlled sector received lower benefits than their white counterparts.”

I’m sure they’re right when they say that calculating the dollar amounts shows an uneven distribution of monetary benefits. Unfortunately, they’re missing the whole point of rent control. It was never intended to ensure the equal distribution of monetary benefits. The purpose of rent control is to provide housing stability and to minimize the considerable economic and social costs of displacement. It does offer equal protection to all those who live in rent-controlled apartments, regardless of their race, which is why it blows my mind that the authors have the nerve to state, “Economists have long predicted that racial discrimination could result in markets where nonprice rationing occurred.” Are they kidding?! They’re saying rent control results in racial discrimination? Like discrimination never happens when we let the free market rule? This statement is so absurd it really calls the authors’ judgment into question. How clueless do you have to be to blame rent control for a social evil that’s woven into the very fabric of this country?

Another issue that comes up, not just in Gyourko and Linneman’s paper but in others, is the idea of a “rent subsidy”. This is the difference between the rent controlled price for a unit and what someone would pay on the free market. As an example, the authors say “…. if the monthly rent for a controlled apartment was $500 and this unit would have rented over $700 in the uncontrolled sector, the monthly rent control subsidy would be $200.” This is interesting, because it assumes that the free market price is the result of some kind of rational process. But is it?

Let’s look at a recent incident at an apartment complex in City Terrace. The building was sold to Manhattan Manor, a real estate investment group, and because it wasn’t covered by rent control, they decided to jack up the rents. One tenant had their rent go from $1,250 to $2,000 overnight, a 60% increase. Since the building wasn’t covered by rent control, and the tenants couldn’t afford the increase, the new owners started eviction proceedings. But the tenants fought back, and the case went to court. Far from siding with Manhattan Manor, the jury found that the unit had significant habitability issues and that the new owners had failed to make basic repairs. In fact, not only did the jury reject the owners’ bid to evict the tenants, they determined that the unit was only worth $1,050 per month in its current condition.

Now, in Gyourko and Linneman’s view, the new landlords were just exercising their right to reset the rent to what they believed they could get on the free market. And from the economists’ perspective, if the building had been rent controlled, the tenants would have been receiving a “subsidy” of $750 a month. But a jury, after looking at basic habitability issues, decided that the unit wasn’t even worth the $1,250 that the tenants had originally been paying. So the idea that the free market somehow sets fair prices through a rational process seems suspect. And this isn’t an isolated incident. Scenes like this are playing out all over LA, and I suspect, throughout the country. Real estate brokers routinely advertise “underperforming” properties, and in the current environment, with speculation running rampant, investors are happy to snap these buildings up. For many of these investors, the condition of the apartment isn’t a primary consideration in determining what to charge. All they care about is getting the highest possible return on their investment. Unfortunately, in many cases, deciding an apartment’s “fair market value” is just a matter of picking the highest number they think they can get away with.

But let’s move on to Glaeser, Luttmer, 2003. I give them credit. Their paper is one of the few I’ve seen that actually compares cities with rent control to cities without. They look at rental data in New York, Chicago and Hartford, and also create a baseline by taking a sample of Metropolitan Statistical Areas (MSAs) across the US. They even break the demographics down by income, household size and education. They’re certainly making an effort to take variables into account. And you could make the argument that the three cities they focus on are similar in a number of ways

Still, there are significant differences that could have an impact on Glaeser and Luttmer’s calculations. To start with, New York is unique. It’s by far the most populous city in the U.S., as well as a financial, educational and cultural center. It’s the point of entry for thousands of immigrants annually and its port is a global shipping hub. The authors use census data from 1990, when New York’s population was 7.322 million, Chicago’s was 2.786 million, and Hartford’s was 137,296. You could still make the case that New York and Chicago are major urban centers and roughly similar when it comes to income and demographics. But the comparison to Hartford, with a population roughly one fiftieth of New York’s, is really questionable.

And while I respect Glaeser and Luttmer for taking the trouble to look at MSAs all over the US to set a baseline, the vast majority of these urban areas have little or nothing in common with New York in terms of population, demographics, employment, income, housing stock, and climate. The idea that we can use the numbers for these areas to set some kind of “normal” to use as a comparison with New York just doesn’t make sense. If your main interest is in working out intricate math problems, the authors’ approach probably sounds great. But if you’re actually looking for answers to complex questions about housing affordability, it just doesn’t make it.

But the biggest problem when it comes to comparisons, even if we’re just talking about New York and Chicago, is density. In New York in 1990 there were 24,165 people per square mile. In Chicago in 1990 there were 11,905 per square mile. In other words, New York is over twice as dense in terms of population as Chicago. Even though the two cities are roughly comparable in terms of housing units per capita, the cost of real estate in New York is way higher, which means the cost of housing is going to be way higher. So while the median income for the two cities is in the same ballpark, you’re going to get less apartment for your buck in New York. Because of this, even if New York didn’t have rent control, you’d expect to see a difference in the kind of housing that New Yorkers could afford compared to the rest of the country.

There are other problems with Glaeser and Luttmer’s paper. On the first page, in talking about mechanisms for rationing goods, they say, “If the allocation mechanisms are not perfectly efficient, then the analysis illustrated by Figure 1, which implicitly assumes that the rationing under rent control ensures that apartments go to the consumers who value them most, is wrong.” The authors seem to be saying that rent control is failure because it’s not “perfectly efficient”. This is an interesting way to define failure when it comes to the housing market. Is the free market “perfectly efficient” when it comes to allocating housing resources? Of course not. When it comes to housing, perfect efficiency is nothing more than an abstract concept. Glaeser and Luttmer base their argument on their own false assumption. They make a claim for rent control that its supporters never have. I’ve never heard anyone claim that rent control is perfectly efficient. Let me repeat, the point of rent control is to provide stable housing and to prevent displacement.

But let’s get to the crux of Glaeser and Luttmer’s argument. For these two academics, the efficient allocation of assets is their Holy Grail. How do they define that in the housing market? “The baseline apartment characteristic used to estimate misallocation is the number of rooms in the apartment.” Huh. Interesting. So they look at the data for New York, Chicago and Hartford, and what do they find? “Our methodology suggests that 21 percent of New York apartment renters live in apartments with more or fewer rooms than they would if they were living in a free-market city.”

Really? That’s the criterion they use? Whether New Yorkers are living in “apartments with more or fewer rooms than they would if they were living in a free-market city.” Honestly, this seems pretty arbitrary. If the outcome was that a lot of New Yorkers were living in apartments with too few rooms, that would fit in with the standard argument that rent control decreases supply. But in their minds, having too many rooms is just as bad as having too few rooms. They say that, according to their calculations, “…the overall percentage of New York renters that are living in apartments that are the wrong size is 25.8%….” And what’s the right size? It’s a ratio they came up with by crunching data for a selection of U.S. cities, most of which are completely different from New York when it comes to employment, income, housing stock, and demographics.

Glaeser and Luttmer seem to believe there’s some kind of ideal that will result from the “perfect allocation” of housing resources, and that the free market will achieve that ideal. But even though all of us want to live in a place where there’s enough room to be comfortable, the key issue for renters is affordability. While Glaeser and Luttmer worry about the right number of rooms, you can see increasing numbers of tenants worried about just making rent in cities like Miami, Portland, and Austin, none of which have rent control. And the free market doesn’t seem to have helped tenants in Clark County, Nevada, where official data says that there were 30,000 evictions in 2016 alone. Interestingly, most housing experts in the area agree that the actual number is much higher, since many tenants who fall behind on rent just leave to avoid having an eviction on their record.

Ultimately, I have to say that Glaeser and Luttmer’s work isn’t very convincing. I give them credit for crunching a lot of numbers, but their conclusions seem pretty arbitrary. Like many economists who tackle rent control, they’re more focussed on the numbers than they are on reality. Rather than looking at the pressures the economy brings to bear on renters, rather than examining the impacts of speculative real estate investment, rather than measuring the social impacts of displacement, they spend their time counting the number of rooms a household has. And because in New York they find that those numbers don’t add up according to an an ideal ratio they’ve decided on, their verdict is that rent control is a failure.

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Downtown LA now offers “boutique apartment lofts”.

The most recent study I looked at was the 2017 paper from Diamond, McQuade and Qian, a trio of academics at Stanford. Their work was just as disappointing as the others. Like Gyourko and Linneman, these folks have decided they can analyze the impacts of rent control by looking at a single city. They feel perfectly comfortable making sweeping statements about the negative effects of rent control without considering what tenants are dealing with in other cities governed by the free market.

The folks from Stanford study decades of data from San Francisco and find that rent-controlled units are more likely to be removed from the market through legal conversions than units not covered by rent control. They argue that because of these conversions the supply of rental units shrinks and therefore rental prices rise. “We conclude that this led to a city-wide rent increase of 7% and caused $5 billion of welfare losses to all renters.” Well, that may sound logical on the face of it, but without comparing their data with rent increases in free market cities, it’s pretty meaningless. To claim any certainty about the actual rate of rent increases due to conversions you’d need to do more than study a single city. You’d have to compare your results to other cities without rent control to see if rents rose even without such conversions. Like, maybe Orlando, where Apartment List reports that rents rose 5.3% from August 2017 to August 2018. Or how about Denver, where a June 2018 report from Zumper says that in a single year the rent for a one-bedroom rose 16%.

This isn’t the only questionable conclusion that the folks from Stanford come to. Check this out….

“Taken together, we see rent controlled [sic?] increased property investment, demolition and reconstruction of new buildings, conversion to owner occupied housing and a decline of the number of renters per building. All of these responses lead to a housing stock which caters to higher income individuals. Rent control has actually fueled the gentrification of San Francisco, the exact opposite of the policy’s intended goal.”

This is fascinating. Because the authors see an increase in high-cost housing, they come to the conclusion that rent control accelerates gentrification. But this is based on the assumption that San Francisco housing prices only increased due to conversions, which is ridiculous. The fact is, real estate investors looking for the highest rate of return will do whatever’s required to squeeze more money out of a building. Sure, in San Francisco they resort to conversions to free themselves from rent control. But in markets without rent control they’d just jack up the rent as high as they pleased, and the end result would would still be the displacement of low-income residents by high-income residents. Free market cities like Portland, Austin and Denver have gentrified rapidly over the past 15 years.

Seriously, the authors are totally clueless on this point. They’re so busy fondling their data that they completely ignore the reality of what’s been happening in San Francisco. As the Bay Area has become a tech hub, wave after wave of high-paid employees have flocked to the city. Seeing this, real estate investors have bought up all the units they can in order to capture some of that cash. Even if San Francisco had never enacted any kind of rent control, prices would still be rising like crazy. Low- and middle-income tenants would still be getting hit with exorbitant rent increases as housing speculators swarmed over the city to cash in on the tech boom. These conversions aren’t the cause of higher prices, they’re just a tool. Given the rise of the tech sector in San Francisco and the flow of global real estate investment into the city, prices would be shooting up with or without rent control, and the end result would still be massive displacement of low-income residents.

Mr. Krugman, you seem pretty cool, so I hate to make sweeping generalizations about economists. But after looking at these three papers, and others on rent control, I have to say their authors all have one thing in common. They’re so focussed on crunching numbers they seem completely out of touch with reality. These academics have certainly spent a lot of time compiling data and working out complex equations, but did they even spend five minutes talking to renters in the cities they were studying? They analyze rental markets in terms of dollar amounts and the number of rooms, but did they spend any time looking at how renters are struggling in the current housing market? Did they even consider looking at displacement in free market cities like Miami, Portland and Austin? Did they ever consider that speculative investment could cause rapid distortions in the housing market that would leave renters out in the cold?

No. They look at isolated datasets and after adding up the numbers they come to the conclusion that rent control is incontestably bad. But their work is narrow and shallow. Of the three studies cited here, only one of them actually compares rent controlled cities to free market cities. And in that case the authors state that rent control should be perfectly efficient, without ever asking if the free market is perfectly efficient when it comes to housing. They claim that rent control distorts the housing market without considering whether other factors could distort the market as well.

But I want to be clear. I’m not saying you should come out in favor of rent control. I’m saying that, based on the research I’ve looked at, no economist should come out against it. It’s entirely possible that there are other, better papers I missed, and if that’s the case, you can dismiss me as an ignorant fool. But the studies by Gyourko, Linneman and Glaeser, Luttmer have been widely cited, which seems to indicate that economists give them credence. Honestly, I can’t understand why. While I’m sure these academics worked hard to produce their papers, the results are a meaningless exercise in crunching numbers. These people need to spend less time on their laptops and more time in the real world.

I admit I’m biased. I live in a rent-controlled apartment, and if it wasn’t for LA’s Rent Stabilization Ordinance I would have had to move out a long time ago. But I still say that the economists who argue against rent control haven’t done the research necessary to support their arguments. If you’re still with me at this point, you might be saying, Okay, so what kind of research should we be doing?

I’m glad you asked.

First, a credible study on the impacts of rent control shouldn’t be focussed just on rent control. It should look at housing accessibility in both controlled and free markets. It should cover a range of major US cities. It should include data covering at least a 20 year period, and 30 or 40 years would be even better.

Second, it should look at various measures of accessibility. I think the level of rent burden is the best indicator for tenants, but it would probably also be good to look at homeowners and gather data on their level of mortgage debt. A thorough study would also examine data on evictions and foreclosures, but the first category could be tricky. In LA we have data on evictions under the Ellis Act, but Ellis is only invoked for rent-controlled units. If tenants leave because the rent rises sharply, or because the landlord offered them $3,000 to get out, or because the owner threatened to call ICE on a family of undocumented immigrants, there won’t be any record of their departure. And while most cities would have records of cases where tenants are evicted through a legal process, I bet those cases rarely reflect the real rate of displacement.

And third, how about actually going out into the world and talking to the people who are struggling to keep a roof over their head? How about making this an interdisciplinary study that ties housing accessibility to income, education, location, race and culture? How about looking at housing in the context of the real world, instead of looking at it as a set of numbers on a spreadsheet. The thing that makes me angriest about the papers these economists have produced is that they seem completely cut off from the world around them. When I read that the Bureau of Labor Statistics says the median annual wage for economists was $102,490 in May 2017, can you blame me if the words “ivory tower” come to mind?

I realize a study like the one I’m talking about would cost a lot of money and take years to produce. But it’s time for economists to get out of libraries and conference rooms and spend some time in the world the rest of us live in. The rising cost of keeping a roof over your head is dragging millions of people down across the country. We’re in the middle of a nationwide housing crisis. While the majority of economists feel comfortable slagging LA and New York for having rent control, they don’t seem to want to ask why the free market is failing renters in cities across the nation. If the free market is supposed to naturally produce affordable housing, then why are tenants in cities like Portland and Chicago pushing for legislation to limit rent increases?

Mr. Krugman, if you’ve read this far, I want to thank you for hearing me out. The reason I decided to direct this letter to you is that, of the economists I’m aware of, you seem to realize that economics isn’t just about graphs and algorithms. It’s about people. It’s about whether people can find a job, whether they can put food on the table, and whether they can keep a roof over their head. As you know, in spite of the fact that unemployment is nearing historic lows, there are millions of tenants across the US who are struggling to make rent. Over the last fifteen years, real estate investment has become a global force, with investors targeting cities around the planet looking for the highest possible rate of return. This has caused housing costs to soar in cities as diverse as Los Angeles, Chicago, Toronto, London, and Hong Kong. The argument that we can build our way out of this crisis doesn’t seem credible, since the vast majority of new units built in these cities are far too expensive for the average citizen.

It’s time for economists to stop asking whether or not rent control works. They need to start asking whether the housing market, regulated or not, is working for the millions of Americans who are living a paycheck away from the street. They need to step outside the university campuses and the think tanks and take a good hard look at how difficult it is for average citizens to keep a roof over their head these days. Economists need to look beyond individual cities. They need to start asking bigger questions. They need to make an effort to see human beings as something more than numbers on a spreadsheet.

Until these economists open their eyes wide enough to look at the big picture, their research won’t be worth the paper it’s printed on.

RC 20 VC

Where Is this Bridge Going?

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The old Sixth Street Bridge is gone. It was torn down early in 2016. The demolition was necessary because the concrete in the original structure was decaying. Work has begun on constructing a new Sixth Street Bridge, and right now it looks like it will be finished in 2020. (For the record, the formal project title is the Sixth Street Viaduct Replacement Project.)

Bridges are about making connections. The original structure was built in 1932, and was one of a series of bridges that spans the LA River. This ambitious infrastructure project started in the 20s and continued through the 30s, eventually allowing numerous crossings between Downtown and East LA. Here are a few photos of the old Sixth Street Bridge.

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A shot from the base of the bridge.

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A truck coming down the west side.

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A view of the bridge facing west.

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Downtown in the distance.

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A view of the San Gabriel Mountains from the old bridge.

The renderings of the new bridge are striking. It was designed by architect Michael Maltzan, but the project is a team effort, and the goal is to produce something much more than a bridge. Here’s a quote from Maltzan’s web site.

The design team including Michael Maltzan Architecture (Design Architect), HNTB (Engineer and Executive Architect), Hargreaves Associates (Landscape Architect), and AC Martin (Urban Planning) began with the fundamental understanding that the Viaduct is more than a simple replacement thoroughfare crossing the Los Angeles River. The project instead foresees a multimodal future for the City, one that accommodates cars, incorporates significant new bicycle connections. It also increases connectivity for pedestrians to access the Viaduct, not only at its endpoints, but along the entirety of the span, linking the bridge, the Los Angeles River, and future urban landscapes in a more meaningful relationship.

The project also includes a park and an arts center. You can see some images here.

Sixth Street Viaduct/PARC from LA Bureau of Engineering

Here are some shots of the project site from March 2017, when work on the new bridge was just beginning.

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For the time being, this is where Sixth St. ends.

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Lots of machinery on the project site.

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Looking across the river toward East LA.

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A shot of the riverbed when construction was just starting.

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Another angle.

And here are some shots from August 2017.

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A little more progress has been made.

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A closer view.

For the team involved with the design, this project is all about bringing things together, creating connections and offering new ways for people to experience this space. One of the chief goals is to link the Arts District with Boyle Heights and the LA River. That sounds pretty cool in the abstract, but in actual fact there are a lot of reasons to worry about the downside. I’m sure Maltzan and his team see this project as a positive thing, but that’s not surprising. They’re architects and engineers engaged in creating a spectacular new piece of infrastructure. And of course the City’s website  is all about the upside.  But really, the City’s glib promo materials don’t begin to describe what’s happening here. By itself, the new bridge may sound great, but if you look at it in the larger context of the area’s culture and economy, you start to realize that this project could have serious negative impacts.

Any large scale infrastructure project, any attempt to remake the landscape, is going to affect the surrounding communities. These impacts can be good or bad, and often it’s a mix of the two. In this case, the biggest issue is one that never gets mentioned on the City’s web site. It’s the same issue that communities all over LA are dealing with. Displacement. Downtown LA has been going through a massive construction boom, with high-end housing and high-end retail largely transforming that community into an upscale enclave. Now developers are eyeing neighborhoods on the other side of the river.

The residents of Boyle Heights are already feeling the effects of gentrification, as real estate investors looking for cheap land and big profits have been buying up parcels in the area. Evictions are already happening, and many people who live in this largely Latino community are afraid they’ll be next. You may have read about the protests that have taken place in recent years. Here are some shots from an action staged by East LA residents in September 2016.  Protesters met at the intersection of Whittier and Boyle, where the old bridge touched down on the East Side.

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“Boyle Heights Is Not for Sale.”

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Families are worried about losing their homes.

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Many people on this side of the river see gentrification as violence.

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New art galleries are seen as harbingers of displacement.

The protest movement in Boyle Heights has gotten a fair amount of media attention, partly because in some cases the protesters have used aggressive tactics in trying to shut down a new coffee house and some local galleries. They see these businesses as the first outposts of coming gentrification. There are people who have questioned the protesters’ methods, complaining that they’ve gone too far. But let me ask you this. If you were in danger of losing your home and being driven out of your neighborhood, how far do you think you’d be willing to go?

It’s no accident that communities like Boyle Heights have been targeted by real estate investors. Land is cheaper there than in Downtown, and they know that the completion of the bridge and the accompanying amenities will make the area more desirable to upscale residents. We’ve already seen something similar happen in the Arts District. A largely low-income community has been rapidly transformed by a massive influx of developer dollars, and the people who had lived there for years, in fact, the people who actually built the community, have been driven out.  A similar scenario has been unfolding in Hollywood, and with the construction of the Crenshaw/LAX line you can see the same thing happening in communities like Leimert Park.

Investment in a community can be a good thing, but not when it drives out the people who have spent their lives there. And these days it’s not a gradual evolution. City Hall works with developers to target areas for rapid growth, almost all of it geared toward affluent new residents. When the City or County lays plans for new infrastructure, like light rail or parks or, in this case, a bridge, real estate investors move in quickly.  Often these investors are well connected at City Hall and already have possible projects in mind.  In other cases they’re speculators just snapping up parcels that they know will rise in value. They don’t plan to build anything, since they know they can make a profit just by sitting on the property until new infrastructure is in place.  And Mayor Garcetti gleefully promotes the aggressive transformation of these communities, apparently without giving a thought to the real suffering that displacement is causing for thousands of Angelenos. It seems he feels he was elected just to serve the affluent.

These days I hear so much talk about making LA a “world class city”, and I’m really sick of it. Garcetti’s idea of creating a “world class city” is about pouring billions into new infrastructure so that developers can cash in by building upscale enclaves for the affluent. Personally, I don’t care what class LA is in. If we can’t help hardworking people stay in their homes, if we can’t support communities that people have invested their lives in building, then this city is a failure.

You can spend all the money you want on bridges and parks and rivers and rail lines. All that stuff is meaningless if at the same time we’re dismantling our communities, the human infrastructure that really holds this city together.

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I Remember When Artists Used to Live There

AE 800 Traction

800 Traction

Back in November I posted about a protest by Downtown artists facing eviction. I’d been wanting to follow-up, so earlier this month I went to a gathering at 800 Traction to check in with the folks there. Unfortunately, there’s not a lot to report. The artists who’ve been living and working in this building for years, in some cases for decades, still don’t know what the future holds for them. They’ve hired a lawyer, and negotiations with the developer are currently underway. No one had any current news about The Artists’ Loft Museum Los Angeles (ALMLA), which is a short walk away, at 454 Seaton. This is another group of creative people who have called the area home for years. They were served with eviction papers in 2017, and have been wrangling with lawyers since then.

AE ALMLA

454 Seaton

But I wanted to write a post anyway, if only to keep this situation in peoples’ minds. As gentrification continues to spread across LA, the pace of evictions is accelerating. Evictions from apartments covered by the Rent Stabilization Ordinance (RSO) have been increasing for years, with 1,824 units taken off the market in 2017 alone. Over 23,000 RSO units have been lost since 2001. But this only tells part of the story, since there’s no mechanism in place to track the number of tenants who are forced out of non-RSO units. It’s commonplace these days for people living in a building not covered by rent control to find that the landlord has suddenly hit them with an exorbitant increase. If they can’t pay, they have to leave, and no one has been keeping track of how often that’s happened in recent years. If you’re not covered by the RSO, you have no protection. Unfortunately, that’s the case for the artists at 800 Traction.

So many people have highlighted the irony of an Arts District that’s forcing artists out, it seems redundant to bring it up again. The folks at City Hall certainly don’t care. They’ve been actively assisting real estate investors in a massive overhaul of the area. The change in the neighborhood’s vibe is both striking and depressing. Even going back just 10 years, I can remember aging warehouse spaces filled with struggling artists who didn’t have much money, but who had still managed to create a lively community. Most of those people are gone now. And where there used to be cheap dive bars and funky little stores, now the streets are being taken over by clothing shops and chain restaurants. More and more these days the neighborhood seems like a giant outdoor shopping mall.

AE Umami

The people at City Hall keep talking about how they want to create vibrant communities, and insist that the onslaught of high-priced apartments and upscale retail is helping to achieve that goal Downtown. In reality, what they’re doing is creating enclaves for the affluent that automatically exclude anyone making less than $70,000 a year.

If these artists are eventually forced out of their homes, it’ll be one more win for the developers. And a huge loss for LA.

AE Live Work

 

Westlake Residents Speak Out Against “Design District”

CDW Audience

Attendees at a community forum on the North Westlake Design District.

It’s clear that the people at City Hall think they know better than we do how our communities should grow. The latest example of their arrogance is the proposed North Westlake Design District (NWDD). It’s another attempt to put money in developers’ pockets by pushing for gentrification and displacement in low-income communities. Check out the language from the notice announcing a hearing held by the Department of City Planning (DCP) back in 2014.

“The proposed Design District is being considered to guide new development that will complement the existing character of the neighborhood, create a pedestrian friendly environment, and provide neighborhood-serving amenities. The proposed zoning ordinance is initiated by the City of Los Angeles.”

Pay attention to that last sentence, because it’s the key to what’s happening here. This “design district” is not something that the community asked for. It’s something City Hall wants. Are any of the area’s residents in favor? Local activists organized a community forum in January. I was there for about an hour, and I only heard one speaker who thought this was a good idea. Everybody else who spoke while I was there was against it. Why? Well, there were a lot of reasons, but it boils down to the fact that a lot of them are worried they’re going to get kicked out of their own community.

Why are they afraid that’s going to happen?

Because that’s what’s been happening in communities all over LA for well over a decade. As real estate investment interests have moved into places like Echo Park, Highland Park, Boyle Heights and Hollywood, low-income residents have been forced out by rising rental prices. Even units protected by the Rent Stabilization Ordinance (RSO) aren’t safe. In 2017 landlords took 1,824 RSO units off the market using the Ellis Act. Over 23,000 RSO units have been lost since 2001. So the residents of the Westlake area, including Historic Filipinotown, have good reason to be worried.

Real estate investors are already buying up property in the area. The City Planning Commission recently approved The Lake, a huge mixed-use project that includes a hotel and a 41 story residential tower, at Wilshire and Bonnie Brae. Other projects in the works are a 54-unit building at 1246 Court and a 243-unit mixed-use complex at 1800 Beverly. As investors move in, you can bet a lot of locals will be forced out.

The impacts are already being felt in the community. One of the speakers talked about how the office building he works in was recently purchased by a new owner, and the non-profit the speaker works for has already received an eviction notice. Another speaker complained that a project containing over 200 condos at Temple and Hoover will take away what little open space the neighborhood has.

CDW Glesne

City planning staff responds to community concerns.

There were a lot of unhappy people at the forum. Speaker after speaker came forward to talk about their concerns, and some weren’t shy about expressing their anger. Three representatives from the DCP attended, and they did their best to defend the design district. Personally I didn’t think their arguments were persuasive, but at least they showed up. The organizers of the forum invited Councilmember Mitch O’Farrell to come and hear what the community had to say, but he was a no-show. Didn’t even send a rep from his office. I guess that shows just how much he cares about the folks who live in the area.

We’ve seen this all before. The City pushes a plan that will create a “pedestrian friendly environment” and bring “neighborhood-serving amenities”. They talk about “walkable”, “vibrant” urban spaces, where people can shop, dine, drink and party. The only problem is, once the City’s done with its makeover of these areas, the people who get to enjoy them are the affluent newcomers who’ve taken the place over. Families who used to call the neighborhood home have to leave. They can’t afford to live there any more.

In response to the NWDD, a group called The Coalition to Defend Westlake has been formed. To view their Facebook page, click on the link below.

Coalition to Defend Westlake

CDW Line

People wait in line to have their say about the NWDD.

To Have and Have Not

Bilt Where Will

I was so bummed. I desperately wanted to go to UCLA’s 32nd Annual Land Use Law & Planning Conference. Unfortunately, the $535 registration fee was a little too pricey for me. But just the thrill of being close to all the movers and shakers who were attending the conference drew me to Downtown. Even though I couldn’t afford to go in I just stood on the sidewalk across from the Biltmore, gazing up at the windows where I knew the attendees were debating lots of heavy issues.

Bilt Angle

The conference brochure definitely made it sound cool. They had a bunch of high-powered attorneys and consultants on hand to talk about CEQA reform, the housing crisis, infrastructure and other important stuff. And beyond all those big, heavy issues, they even found time for a session entitled Community, Health, and Planning for Environmental Justice. I mean, okay, they kind of jammed that into a half hour slot along with about half a dozen other topics, but I’m sure they covered everything they needed to.

Unfortunately, my reverie was interrupted by a bunch of noisy protesters who were standing nearby, holding signs and chanting slogans. What were they complaining about? Well, they were angry because one of the speakers was Sacramento superstar Scott Wiener, the Senator from San Francisco. The protesters had a problem with a bill the Senator just introduced, SB 827, which takes zoning authority away from cities. Wiener says if we override local zoning to allow developers to build housing up to eight stories along transit corridors, we can solve both our housing problems and fight climate change. Doesn’t that sound great? According to Wiener, his bill will let developers build tons of new units so housing prices will definitely go down. And because the new units are close to transit, everybody will dump their car and jump on the train.

I wonder if anybody at the conference asked Wiener about a recent report from UCLA that shows transit ridership is way down in Southern California, even though local officials have been approving pretty much any crazy project developers propose as long as it’s near transit. If so, I really would’ve liked to hear his response. I’m sure Wiener had a ready answer for the cynics who point out that in New York housing is still outrageously expensive even though the city has been building tens of thousands of new units every year. And so what if cities like Vancouver and Toronto have thousands of units sitting empty while middle-income and low-income families struggle to pay the rent? Foreign investors need homes, too, although, okay, maybe they don’t always really need them.

Bilt Speaker

At lunch all the power players adjourned to the Gold Room, where they heard the keynote address from Richard Rothstein, author of The Color of Law: A Forgotten History of How Our Government Segregated America. Rothstein apparently talked about how federal, state, and local governments have implemented and upheld racist policies to create and maintain segregated communities since this country’s inception. Of course, he’s absolutely right. I wonder if he spoke about the fact that many of these policies were formed as a result of intense lobbying by development and real estate interests that wanted to protect their investments? Kind of like the development and real estate interests that are pouring money into Sacramento right now. It would’ve been nice to hear what he had to say about research from the Urban Displacement Project, which shows that current government policies promoting transit-oriented development have resulted in gentrification, pushing low-income people of color away from transit hubs in LA and the Bay Area.

Bilt Hand

Even though I was standing across the street, I could feel the soothing vibrations emanating from the collective wealth and wisdom gathered inside the Biltmore. So what if most of these people make six figures, live in single-family homes, and drive nice cars? So what if most of them rarely ride transit and never had to worry about getting evicted? They’ve got college degrees and lots of money and they go to a lot of conferences. They’re well qualified to tell the rest of us what to do about housing and transit.

But the protesters kept disrupting all the good vibes I was getting from the Biltmore. I guess some of them are facing eviction, or they’ve already been evicted, and they’re ticked off because they’re losing their homes. Yeah, okay, that’s a bummer. But they need to trust the folks inside the Bltmore. All we need to do is listen to people like Scott Wiener and let developers build tons of new housing around transit. Just because the median income for people living around rail lines in LA is mostly between $30,000 and $40,000 a year, and they could never afford the new units, which usually start around $2,000 a month, is no reason to keep the developers at bay. I’m sure at some point we’ll have such a housing glut that these new units will lose 50% of their value, and then the families that were kicked out could return to their neighborhoods.

So, okay, it could take decades. And yeah, it might never actually happen. But that’s no reason to rethink policies that are displacing the poor and destroying communities.

Is it?

Bilt No Nos

 

Downtown Artists Fight Eviction

AE 01 Coming Soon

Artists are being forced out of the Arts District. This isn’t news. It’s been happening for years. The news is that now the artists are fighting back.

On Saturday, November 4, two groups of artists facing eviction organized a parade to bring attention to the rampant displacement that threatens their community. Earlier this year the residents at 800 Traction were told by the new owners of the building that they’d have to leave. Also this year, the people behind the Artists’ Loft Museum Los Angeles (ALMLA) were hit with a steep rent increase that seems intended to force them out. So the two groups have gotten together to let the world know that they’re not going quietly.  On Saturday, November 4 they staged a parade through Downtown.

AE 10 Skel Pharm

The parade started in Little Tokyo.

AE 12 Angel 1

Took a right on Alameda.

AE 14 Crowd Alameda 3

Then the protesters headed down Alameda toward Fourth.

The parade started in Little Tokyo, cut down Alameda to Fourth, then wended its way along Seaton, Fifth and Hewitt, finally winding up at 800 Traction. It was an interesting walk. Protesters waved signs and displayed artwork. Two giant skeleton figures towered over the crowd. A few cars honked to show their support.

AE 16 Crowd Alameda 4

A momentary pause on Alameda.

AE 18 Crowd Seaton 2

Marching along Seaton.

AE 20 Merrick

And then up Merrick.

We passed in front of the building that holds ALMLA, which is actually a brand new enterprise. Michael Parker and Alyse Emdur have lived in this space, along with other artists, for 16 years. Parker says that in just the last 6 years their rent has risen by 200%. The latest increase is beyond what they can pay, and Parker believes it was designed to force them out. So the artists at 454 Seaton decided to create ALMLA, which they hope will draw attention to their situation, and to the larger wave of displacement that’s sweeping across Los Angeles. Just before the museum’s opening, the landlord went to court to shut the event down. Fortunately he failed.

I used to hang out in this area back in the 80s and 90s. It’s depressing to see some of the changes that have taken place. While most of the buildings remain, with the onslaught of gentrification many of them now house chic boutiques and pricey restaurants. Anonymous LLCs have bought up a lot of the real estate, and investors seem bent on turning this part of Downtown into something very close to a suburban mall.

AE 40 Shop

Shop in the Arts District.

AE 42 Restaurant

Eat in the Arts District.

AE 44 Creative Campus

Gentrify the Arts District.

Like I said, we ended up back at 800 Traction. A number of the artists who live in this building have been here for decades. Some were among the first wave of artists to move to the area back when it was more or less a decaying industrial ghost town. And most of the current residents at 800 Traction are part of the Japanese-American community, which is crucial to this story. This community has hung on in spite of successive waves of forced displacement going back to WWII. In the early part of the 20th century, Little Tokyo stretched far beyond its current boundaries. There were numerous Japanese-owned businesses and Japanese cultural institutions in the area between Alameda and the LA River. The first assault was the internment of Japanese-Americans after Peal Harbor. Since then City Hall has carved out one piece after another. And now these artists, after years of working within the community, are threatened with eviction.

AE 50 Golf 2

A performance featuring two of the Downtown elite enjoying a round of golf.

AE 52 Golf 4

They seemed to agree that gentrification wasn’t happening fast enough.

Hanging out with the other party guests, I felt like the room was filled with a kind of giddy energy, but there was also an undercurrent of tension. I spoke with Nancy Uyemura and Jaimee Itagaki, and they gave me the latest news about 800 Traction. The building’s new owners, DLJ Real Estate Capital Partners, had hired a property management firm, Pearson, that seemed intent on sabotaging the gathering. Pearson had called the cops before the party, apparently believing they could shut it down, but it went on as planned. They also sent security guards to keep an eye on the tenants and guests. Harrassment in situations like this is commonplace, and Pearson is doing their best to make things uncomfortable. Uyemura said that the tenants at 800 Traction were told in May that they had to leave, and they were supposed to be out by August. Recently they received an unlawful detainer notice. Their hearing date is in December.

AE 60 Party 1

Protesters gathered at 800 Traction after the parade.

AE 62 Security

I hope the security guards enjoyed the party.

AE 64 Sketch

Artists sketched their take on what’s happening Downtown.

The attempt to evict the artists at 800 Traction is bad enough, but there’s another layer to this story that makes it even more disturbing. DLJ has decided to go through the process of designating the building a Historic-Cultural Landmark, which will enable them to get significant tax breaks for renovating the structure. They hired GPA Consulting to do the research for the nomination. GPA’s report talks at length about the building’s architect and Beaux Arts revival style and the food processing industry. They even mention Al’s Bar and LACE. But somehow they completely avoid any mention of the Japanese-American community that thrived in the neighborhood for decades. They also neglect to mention that the current residents have deep ties to the current Japanese-American community, and that some of them were among the first artists to move to the neighborhood back in the 80s.

In other words, GPA’s report completely whitewashes the community’s history. At the Cultural Heritage Commission (CHC) hearing where the nomination was considered, some attendees pointed this out, among them Dorothy Wong, herself a preservation consultant. Wong was baffled by the fact that the report didn’t refer to Little Tokyo once, and made no mention at all of the Japanese-American artists who had lived and worked at 800 Traction for decades. To their credit, the CHC agreed that the report was incomplete and chose to defer their decision until further work was done.

This may seem like a small victory, but it goes to the heart of what’s happening in Downtown. Ruthless investors are kicking artists and others out of the area so they can turn it into a sanitized, upscale urban destination. The Mayor and the City Council are doing everything they can to help make that happen. The people who have lived and worked in the area for much of their lives, the people who built communities and kept them going through tough times, are being told to leave. And while City Hall makes a great show of preserving historic structures, they’re destroying the communities that gave those structures life.

It’s hard to say whether the artists at 800 Traction and ALMLA will win this battle. They’re a determined group, and they seem committed to fighting til the bitter end. But LA has become increasingly hostile to artists, and the Mayor’s vision for Downtown is all about handing the area over to developers.

What have real estate investors put into this community? Money. What do they want out of it? More money.

What have the artists put into this community? Their lives. And what do they want? To continue working with and for the community, as they’ve been doing for years.

Find out more by following these links.

800 Traction

ALMLA

AE 90 Skel Sun

A Big Win for Tenants

Members of Union de Vecinos and the LA Tenants Union at a gathering on Thursday.

Members of Union de Vecinos and the LA Tenants Union at a gathering on Thursday.

It’s not uncommon these days to hear about a group of investors buying an apartment building and forcing the tenants out. Sadly, this kind of thing happens all too frequently in LA, and we’ve seen thousands of apartment dwellers lose their homes in recent years. Many renters don’t know their rights and leave without putting up a fight. Those that try to stay can get ground down by long and costly court battles.

But every once in a while the tenants win out.

Apartments at 4330 City Terrace.

Apartments at 4330 City Terrace.

Earlier this year the apartments at 4330 City Terrace were bought by Manhattan Manor, LLC. (Love the name. It’s so classy.) The new owners immediately imposed a steep rent increase on the tenants, certainly knowing that most couldn’t pay and would have to leave. Carolina Rodriguez’ rent went from $1,250 to $2,000, far beyond what she could afford. She could have thrown in the towel and left, hoping to find another place she could afford. But she decided to fight, and last month, she won.

With the help of the Los Angeles Center for Community Law and Action (LACCLA), Carolina went to court, and the jury sided with her. In fact, not only did the jury decide that $2,000 a month was unfair, they said that the apartment she occupied needed major repairs and was only worth $1,050 in its current state. Must’ve been a shock to Manhattan Manor.

Celebration on City Terrace after the victory in court.

Celebration on City Terrace after the victory in court.

On Thursday a crowd of people gathered at 4330 City Terrace to celebrate this victory. In addition to residents from the building, members of Union de Vecinos (UV) and the Los Angeles Tenants Union (LATU) showed up to hear speakers talk about Carolina’s struggle, and to remind everyone that the struggle is still going on. Noah Grynberg, the lawyer from LACCLA who argued the case, gave an energetic speech about the importance of protecting people’s rights. Elizabeth Blaney, of UV, emphasized that there was still a long way to go in the battle against gentrification and displacement.

Noah Grynberg, of LACCLA, speaks to the crowd.

Noah Grynberg, of LACCLA, speaks to the crowd.

And Carolina took the mike to talk about how she came to the point where she felt she could stand up to the landlords. She mentioned another tenant who lived in the building, Jesus Baltazar, who had been a major influence. Though he was very ill, Jesus had insisted passionately that the tenants had to make a stand, that they shouldn’t be pushed around. His determination inspired her, and she decided to go to court. Sadly, he has passed away. His daughter, Georgina, is still fighting eviction.

Carolina Rodriguez tells how she decided to fight eviction.

Carolina Rodriguez tells how she decided to fight eviction.

The struggle goes on. Property owners will continue to kick people out of their homes in their pursuit of higher profits. But this story shows that tenants can fight back, and they can win.

If you’d like more info about the organizations mentioned above, the links are below. They all deserve your support.

Union de Vecinos

Los Angeles Tenants Union

Los Angeles Center for Community Law and Action

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