A sign advertises a two-bedroom apartment in a building at Fifth Street and California Avenue. (Photo by Daniel Archuleta)
CITYWIDE — A minimum wage worker cannot afford a two-bedroom apartment anywhere in the United States, and Santa Monica is at one of the extremes, a national study examining housing affordability released this month reveals.
The report, dubbed Out of Reach 2013, was issued by the National Low Income Housing Coalition, a nonprofit that focuses on housing policy for poor Americans.
The report shows that a typical worker in the United States would have to earn $18.79 per hour to ensure that they spent 30 percent of their wages on a two-bedroom rental unit with a fair market rent of $977 per month.
Keep in mind, fair market rent is a federal government standard which means that 40 percent of the housing in the area described falls below that amount — it does not necessarily mean market rate.
Meanwhile, the average renter wage in the country is estimated at $14.32 per hour, and minimum wage is only $7.25.
In California, the situation is far more extreme.
The typical California worker would have to make $25.78 per hour to meet the same standard because a two-bedroom at fair market rent is $1,341 per month, but the minimum wage is $8 per hour, according to the report.
That makes it the second-most expensive state in the nation in terms of housing affordability, next to Hawaii.
Although the report does not break it down by county or city, a market rate two-bedroom apartment in Santa Monica rented for $2,150 in 2011, according to a city staff report released in February 2012.
This national trend toward high rents constitutes a problem, said Megan Bolton, research director with the National Low Income Housing Coalition.
“The market isn’t creating the kind of affordable housing that we need,” Bolton said.
That means that low-income individuals are spending more than 30 percent of their income on rent, even as vacancy rates across the country drop from 8 percent directly after the financial crisis to 4.5 percent by the third quarter of 2012, according to the report.
Affordable housing no easy task
Santa Monica has been struggling with affordable housing for many years, a fight that has only become more pronounced since the beginning of 2012 when the legislature, courts and Gov. Jerry Brown collectively killed redevelopment agencies, a huge source of affordable housing funding for the state.
Santa Monica’s Redevelopment Agency provided 75 percent of the money in the Affordable Housing Trust Fund, which was used both to build affordable housing and provide loans to private institutions like Community Corporation of Santa Monica to do so.
That number has been as high as 90 percent in recent years, city officials say.
How to fill that gap has been at the heart of many City Council meetings, most recently resulting in a City Council vote to prioritize development that includes low-income housing and a push to charge commercial development to support affordable housing.
Although affordable housing can be contentious, it’s a priority of City Council members, each of whom were backed by Santa Monicans for Renters’ Rights, a powerful interest group that fought for rent control in the late 1970s.
The ability to keep housing costs reasonable ensures a diverse community, said Councilmember Kevin McKeown.
“To be sustainable, a community like ours must remain egalitarian,” McKeown said. “To reduce commuter traffic, workers must be able to afford to live near their jobs, including those lower-wage jobs that support the Westside lifestyle of the more fortunate.”
Most recently, policy makers have begun eyeing affordability standards attached to deed-restricted housing in the city to bring down the price for apartments already aimed at the less fortunate.
The idea was brought to the City Council on Feb. 26 by Denise McGranahan, a senior attorney with the Legal Aid Foundation of Los Angeles.
Existing affordable housing production standards base rents and incomes off of an adjusted standard higher than most other cities in California, McGranahan said.
Adopting those used by the federal Department of Housing and Urban Development would adjust rent levels down by up to 25 percent, she said.
The City Council voted unanimously to prepare an ordinance that would amend the rent levels along those lines. That is expected to come before the Housing Commission this month, and show up at the City Council as early as April.
For its part, the National Low Income Housing Coalition has a few suggestions itself.
The organization would like to see the federal government create a housing trust fund to build housing for low-income Americans, just as Santa Monica did. The feds could pay for it by reforming a piece of the tax code that benefits homeowners called the mortgage interest deduction, which Bolton argues benefits the wealthy.
By turning the existing deduction into a straight credit and reducing the amount of the mortgage that it applies from $1 million to $500,000, benefits for less-wealthy homeowners will be preserved and the government will save $200 billion over 10 years that can be used to build new housing, Bolton said.