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area grew by 58 compared to Californias 31 growth in the coastal metropolitan markets the housing stock in the greater Los Angeles metro area for example grew only 19 during this period. As a result home prices in the coastal metro markets are now 3.7 times more expensive than the averages for the rest of the country. Land prices have continued to recover from the lows of 2010. Alternative land use has put a floor under land prices in many metropolitan areas. The only way to provide affordable housing in these close-in markets is to increase densities and for local agencies to recognize the magnitude of the crisis. In the greater Los Angeles region for example there is a shortfall of 200000 units. Although density bonuses granted to developers meeting certain agency conditions coupled with some easing of parking requirements could help a legislative fix to the inclusionary housing initiative Palmer decision would create targeted and tailored zoning ordinances that would increase density and streamline processing for affordable housing. Community resistance can be strong against allowing increased densities and frequently local zoning laws and building codes are not conducive to creating more cost efficient housing. On average voters in coastal communities have approved five measures per year limiting housing growth. The Millennials have started to account for a significant part of the workforce and have been left behind in becoming first-time homebuyers. They will be 38 of the adult population in 2020 and most will still reside in rental housing. The problem is significant and if not addressed over the next five years will be a crisis of large proportions. Federal and state subsidies are needed along with strong regional planning to provide shelter for arguably our largest generation that could be left sitting on the sidelines. Q Didnt redevelopment agencies play an important role in creating affordable housing in the past What funding mechanisms are emerging today that could help reconstitute the redevelopment process A There needs to be new funding sources for affordable housing and redevelopment. The creation of Enhanced Infrastructure Financing Districts EIFDs along with Public Financing Authorities PFAs would help fund transit-oriented housing mixed use and other infrastructure projects that have affordable housing associated with them. These are legally constituted government entities which would be governed by a public financing authority capable of issuing bonds. Coupling this with proposed tax increment contributions are important however the maximum period by which tax allocations can occur is 45 years from date of bond issuance. Projects which can be funded include the purchase construction and improvement of tangible property with a useful life of 15 years or greater. The EFID law allows these new districts to overlap the boundaries of former redevelopment districts. State Assembly Bill 35 would in conjunction expand the States Low Income Housing Tax Credit by 500 million which in turn will leverage another 2.8 billion in federal money. This potentially will create an additional 29000 new jobs in the state plus more affordable housing. And finally social impact bonds and health funds might become an additional source of affordable housing funds. Q What are some of the socioeconomic impacts of not providing affordable housing in the important metropolitan markets A Some of the hidden costs to the lack of affordable housing in the states metropolitan areas are as follows Health issues with children currently living in substandard housing conditions Moves which can affect childrens education and social development Not being able to provide affordable housing next to jobs and transportation which support regional growth and competitiveness Leaving a void of future generation homebuyers who normally create a steady demand for homes in a market 200 jobs lost by not constructing one new community of 70 affordable homes Lack of permanent housing increases the usecost of both state and local social services Not meeting the shelter needs of senior move downs who also want to reside in the metropolitan core An unwillingness to recognize that the savings ratio for the bottom 90 percentile of households is zero while it is over 20 for the top decile where most of the income growth has been occurring and Not creating a strong base of affordable homebuyers who eventually will become move-up buyers granting an orderly exit to those move-up homeowners who might want to sell their homes. Many families are challenged to save for a down payment and need the entry level assistance which is frequently provided with affordable housing projects. Q Why dont cities actively work to resolve their affordable housing problems Is it a fiscal issue or more resistance from the local political constituents A The dichotomy in creating a balanced urban environment is that cities recognize the importance of new commercial developments but many times are unwilling to plan for affordable housing to support the labor pool necessary to run these businesses. New retail establishments including restaurants stores auto malls and new hotels all yield high net fiscal benefits to 7 Millennials Are Growing Up Please Continue To Page 8 California Home Prices Have Grown Much Faster Than U.S. Prices Ination-Adjusted Median Home Prices in 2015 Dollars Source California Legislative Analysts Oce California United States 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 1940 1950 1960 1970 1980 1990 2000 2010 2015 0 Percentage Of Millennials Over 18 Millennials As A Percentage Of Adult Population 2008 2010 2012 2016 2020 BAC Research 2015 90 80 70 60 50 40 30 20 10 The Millennials will be 38 of the adult population in 2020 and most will still reside in rental housing. The problem is significant and if not addressed over the next five years will become a crisis of large proportions Steve Olson Founder and Chairman The Olson Company 2015_OlsonCompanyInTownLiving_PortAnniversary 8815 117 PM Page 7