■ By GEORGE ECONOMIDES Long Beach Business Journal F ounded in 1988, the Olson Company has been dedicated to solving affordable housing needs in urban areas for 30 years. In this interview, Chairman and Founder Steve Olson discusses the housing crisis in California and the way forward. Q: The Olson Company has been building affordable housing in urban areas for 30 years. How has the land- scape for housing in California changed over these years? A: Housing development continues to shift from large master plans located in suburban settings to smaller-scale projects in metropolitan cores. In these areas, distinct neighborhoods and dis- tricts are becoming important local lifestyle centers and the focus of new housing. As these transformations occur, city boundaries are melding to- gether to form larger metropolitan re- gions with some integrated planning functions and shared services. Q: What are the roots of the hous- ing crisis in California? A: Observation Number One: With the elimination of redevelopment agencies by Governor Brown and the state legislature in 2010, urban and metropolitan areas lost an important tool to aggregate land and provide more affordable housing in densely populated areas. In addition, the re- development land that cities held in these agencies was placed in succes- sor agencies to be disposed of. Consequently, the state has added only 678,000 housing units over the past decade as jobs and the population have increased. Meanwhile, housing construction has severely lagged, es- pecially in metropolitan areas. Although the state’s population will soon top 40 million residents, there are insufficient coordinated housing poli- cies at the state and local level to create the number of affordable resi- dential units necessary to help alleviate this crisis. The state is adding 3.26 persons for every new house created, while the historical average has been 1.74 persons per home created. Local zoning requirements continue to be a barrier to entry for many home builders and restrictive regulations such as the California Environmental Quality Act [CEQA] can either delay or sometimes inappropriately kill residential projects. Observation Number Two: Community resistance to developing new housing has increased. Los Angeles Measure JJJ, which creates affordable housing mandates and associated hiring restrictions related to labor groups, is really an attempt to slow residential growth in Los Angeles. Assembly Bill 199 would have man- dated the use of union labor on all residential construction that incor- porated state funds, successor rede- velopment agency funds, or infrastructure matching funds. If it had passed as originally constituted, construction costs could have in- creased 30% to 45%, which would have significantly affected afford- ability and the financial viability of many future projects. Measure S, which was defeated at the last bal- lot, was designed to restrict devel- opment projects in Los Angeles for some time and to prohibit specific changes to the city’s general plan. Over 3,500 new single- and multi- family units would have been imme- diately shelved. Hidden in Measure S were additional restrictions on building height, land use, and future residential, hotel, and retail con- struction. The regulatory barriers to new housing construction continue to be significant. Observation Number Three: One-third of California renters are spending more than half their income on housing costs. At the same time, state housing funds with matching federal dollars declined 67% to $892 million from 2010 to 2015. Developers are asking cities for help, but the local agen- cies cannot accommodate. California is ranked as the “toughest state in the nation” for first-time buyers to purchase a home, by the state’s depart- ment of housing and community development. Because high rents are ab- sorbing much of renters’ incomes, median renter net worth is just $5,400, making it very challenging to save for a down payment for the purchase of a home. Homeownership in California could decline to 48% over the next decade, making it the lowest in the nation as median income households continue facing financing challenges to owning a home. Observation Number Four: There are many challenges to building hous- ing, including exorbitant costs. Land is not readily available to build on in most metropolitan markets. It has to be tied up, re-entitled, and connected to existing infrastructure including utilities/sidewalks/roads. Both CEQA and impact fees can add significantly to the construction/development costs of any project. Add in Title 24 energy regulations and other code changes, and there are built-in annual cost increases. Public processing can be cumber- Steve Olson, Founder And Chairman Of The Olson Company, Discusses The Housing Crisis 6 “Although the state’s population will soon top 40 million residents, there are insufficient coordinated housing policies at the state and local level to create the number of affordable residential units necessary to help alleviate this crisis. ” Steve Olson, Founder and Chairman The Olson Company 2017_18Pages_OlsonCopy_PortAnniversary 12/22/17 11:30 AM Page 6