Affordable Home: Rancho P.V. Asks What’s the Price?

RANCHO PALOS VERDES —  How do you define affordable housing in a city where the median family income is estimated at $63,588?

That’s what city officials are trying to figure out as they walk the line between what a builder can afford to construct in an affluent area and what will satisfy state fair-housing policies and ward off lawsuits.

In accordance with state law, the housing element in the city’s General Plan calls for homes for a wide range of incomes, but the city has never used its powers over zoning, density and other factors to create housing for low- and moderate-wage earners. City Atty. Steve Dorsey says it had better start doing so soon.

“You have to comply with your own housing element,” he said at a recent City Council-Planning Commission study session. “Suits have been brought to compel cities to allow higher densities for housing for all income groups.”

Newport Beach Case

Dorsey cited a case--filed six years ago but only now in trial--in which Newport Beach is being sued for allegedly excluding all but the rich through land-use policies. Robert Burnham, Newport’s city attorney, said the charges are unfounded, but noted that the case already has cost the city nearly $1 million in legal fees.

Rancho Palos Verdes sees itself as a target for such suits because it has about 1,000 acres of developable land.

“This is a real issue, not a red herring,” Councilman Mel Hughes said in an interview.

Officials say there is a need for lower-priced housing in the city--for the elderly, for children who grow up but still want to live in Rancho Palos Verdes, and for city employees who cannot afford to live in town.

Golden Cove Selected

The city wants to provide such housing in the proposed Golden Cove ocean-view town home development. The builder--at the city’s urging--is proposing to set aside 12 so-called affordable units priced at $150,000. The other 37 would range from $250,000 to $300,000.

Although the affordable units would be smaller and in the least- desirable locations of the development, they would be subsidized to some extent by buyers of the other units, officials acknowledge. Buyers of the lower-priced units would have to meet income qualifications and resale prices would be restricted for a specified period.

Some council members characterize the “affordable” component of the Golden Cove project as largely a defensive move in a city that they say is philosophically opposed to tinkering with the marketplace.

“The idea is, ‘Gee, I busted my fanny to be able to afford to buy a house in a particular area, and if someone wants to move into the area, they ought to do the same,’ ” said Mayor Douglas Hinchliffe.

“I am not a believer personally in subsidized housing.”

At the same time, he said he is not comfortable with the potential legal problems of not trying to provide affordable housing.

Councilman Robert Ryan said that people who earned their own houses “are not interested in scholarshipping someone else who can’t make it.” He called Golden Cove “a bulletproof vest if we get called into court.”

State law requires that all cities have affordable-housing components in their general plans, which are reviewed by the Department of Housing and Community Development. The department, however, has no power to compel cities to follow their own housing guidelines, although spokeswoman Julie Stewart said state housing funds can be withheld from recalcitrant cities.

The six-county Southern California Assn. of Governments (SCAG) has assigned cities--including those on the Palos Verdes Peninsula--a specific number of units to provide in several income categories in order to meet what SCAG calls their fair share of the region’s housing needs. But this, too, is not enforceable.

“There are no claws in this tiger,” said SCAG’s Clint Rosemond.

“The only recourse private groups or individuals have is to go to court,” claiming that the city was not living up to its own plan, Stewart said.

Ryan put it this way: “The state loads the gun. Somebody else pulls the trigger.”

City officials want to gear the Golden Cove town homes to middle-income wage earners in the city. However, the state housing department says that affordable housing should be pegged to county median-family incomes. In Los Angeles County, that is about $30,000, according to the Regional Planning Department.

Councilman Hughes said that using the city’s median would not produce an affordable unit “under anybody’s guidelines.”

“It won’t fool anyone. We would have trouble finding an attorney to defend that.”

The city has been told that a person with a $50,000 income could qualify for the $150,000 Golden Cove units. Developer Howard Adler would not speculate on whether he could lower prices further, but he said it is being studied. However, he said that the development--which has been before the city in various forms for five years--has been delayed so long that it is “getting tougher and tougher” to keep it financially viable.

Other questions to be settled are how long the units can be controlled as affordable and what to do about the “windfall profits” of owners selling units on the open market after controls expire.

Attorneys have told the city that court rulings over property rights have held that the price of units may be controlled only for a limited time--typically 15 years, though it could be longer.

Hughes complained that this does not really solve the problem of affordable housing. “It gives a gift to a few who are lucky enough to get one,” he said. “Affordable controls go off 15 years later and they are not affordable units.”

Councilman John McTaggart called the whole effort to provide affordable housing “a farce.”

Mayor Hinchliffe said the only way Rancho Palos Verdes could have truly affordable housing would be through higher densities, something city residents would not support. Although there are some high-density apartment buildings, most density in the city is less than four units to the acre.

“We are on the horns of a dilemma,” Hinchliffe said.

On Commission Agenda

The city’s Planning Commission will discuss Golden Cove on Tuesday. A City Council public hearing is set for June 17.

Simply by considering such price-controlled units within its borders, Rancho Palos Verdes is ahead of its neighboring cities.

Palos Verdes Estates has not updated its general plan to include an affordable housing component, said City Manager Gordon Siebert. He said the concept of affordable housing is “incongruous” in Palos Verdes Estates where, according to the local realty board, the average home sells for nearly half a million dollars.

Rolling Hills and Rolling Hills Estates have dealt with the issue by stating in their general plans that they will encourage moderate-income housing in neighboring Lomita. Officials say such factors as low densities, little vacant land, difficult hilly terrain, a development pattern of individual homes, and high property values make housing for low- and moderate-income buyers impractical.

Lomita Gets Funds

Both cities give their state housing funds to Lomita, where they have been used for housing for the elderly and handicapped.

SCAG’s Rosemond said the “history of the performance” of the Peninsula cities shows that they are not going to provide housing for low-income people there.

“This does not say they should not be held accountable in the future,” he said. “How they may be held accountable, and under what circumstances, is a matter for discussion and examination in terms of whether or not the housing-element law is working.”

City Median Income Median Home Price Median Condo Price Rancho P.V. $63,588 $328,000 $169,120 R.H. Estates 52,642 328,000 169,120 Rolling Hills 91,084 682,000 None P.V. Estates 65,845 462,000 180,000 L.A. County 30,200 Not available Not available