Q: What do you think of the growing de- mand for room rentals in California? Is this a temporary condition, or will it become a more permanent part of the housing solutions? A: We always discuss the balance between “multi-family” and “for-sale” housing. These historical ratios define most of the housing universe with the exception of the fastest growing sector in California, which is room rentals (by day, week, month or year). Inad- equate planning for affordable housing has opened the door for a permanent change in California housing: room rentals. The truth is that people looking for housing at more affordable prices have become room renters. In recent studies, private or shared room rentals now represent up to one-third of the total rental demand in the major California metropolitan markets. These numbers are now comparable to places like New York City. Airbnb plays a factor in this market. Home- owners are profiting by charging up to $1,400 per month for a room/bathroom with prices still going higher. In many cases, these rentals are clear violations of city codes, but they are so prevalent that code enforcement cannot follow up on all the violations. This trend has actually allowed many workers to live in expensive urban areas in places close to their work. The same phenomenon is also occurring in trendy suburban areas next to transit stops where someone can live renting a room in an upscale neighborhood and take the train to work. Neighborhoods like Pacific Palisades, Venice Beach, Hollywood Hills, and Santa Monica all have significant and growing room rental populations. This type of rental will also keep more seniors in their homes by renting out an unused bedroom to help subsidize their income. The chart above right shows the importance of this market today. Q: What changes do you recom- mend to improve affordable hous- ing in California? A: The state and local govern- ments must first clearly weigh the cost of not having affordable housing. If the state and local governments cannot assure that metropolitan areas will have adequate housing for their service workforce, outmigration will con- tinue increasing. Fulfillment centers, such as those for Amazon, are now growing in metropolitan cores to support same-day deliveries. Major health- care companies have been increasing their presence in the urban markets and will continue to grow in both delivery systems and research presence. Hospitality, especially in California, is an important part of the economy. Infrastructure jobs have tended to be metropolitan based. As the country begins to focus on rebuilding its infrastructure, many of these projects will be located in the major metropolitan areas. The ultimate cost of not having affordable housing is stagnant growth. It could even lead to both economic and population decline in the state, which would be unprecedented. A number of things are necessary to create more affordable housing in our cities: (1) the state needs to create new hybrid redevelopment agencies that can be melded with Enhanced Infrastructure Financing Districts that have access both to property tax increments or state bond measures to subsidize building affordable and revitalization projects in urban markets (SB-3 bonds could fund these activities); (2) the regional planning authorities (Regional Association of Govern- ments) need more power to coordinate location of affordable housing, in- frastructure development for transit, and linkage of existing infrastructure assets to help create a more efficient economy; (3) increase the share of property taxes that actually go back to local agencies that must coordinate housing and other types of development; (4) publicize an annually updated housing development plan for the state highlighting the number of housing units needed in each region including “targeted price ranges;” (5) refine the International Building Code in California which approves use of modular and panel built homes in certain circumstances; (6) approve certain form-based building codes that can speed up local processing times; (7) encourage greater design densities especially within walking distance of transit stops that have at least 10% inclusionary zoning for affordable housing; and (8) modify some of the CEQA Act provisions that will make it easier and less costly for housing development. ■ 8 “The ultimate cost of not having affordable housing is stagnant growth. It could even lead to both economic and population decline in the state, which would be unprecedented.” Steve Olson, Founder and Chairman The Olson Company 2017_18Pages_OlsonCopy_PortAnniversary 12/22/17 11:46 AM Page 8