Beyond Executive Directive 1: How We Can 1Up ED1

Earlier this week, Resident Urbanist editor-in-chief Michael Moore wrote about Los Angeles’s Executive Directive 1 (ED1) and how it’s bringing thousands of affordable dwelling units to market. Today, I’d like to compare it to another similar program and explore what the possible next steps could be.

Los Angeles’s Executive Directive 1 and Austin’s Affordability Unlocked

ED1 is not the first program of its kind, but Los Angeles is by far the largest city to implement such a program. Also, the outcomes of ED1 are outpacing other programs around the country and are doing so far more quickly. For example, the City of Austin implemented its Affordability Unlocked (AU) program in 2019 giving similar incentives for similar affordability requirements. However, from May of 2019 to July of 2023, Austin’s AU program yielded 7,678 affordable units (almost equaling the pace of affordable housing units brought to market under all other affordability programs in Austin combined), while LA’s ED1 yielded applications for 16,150 affordable housing units in just its first 13 months of existence (outnumbering all the approved affordable housing units in LA for the previous three years combined).

The market is clearly responding to LA’s ED1 with more zeal than Austin’s AU – at least in terms of the shear number of units yielded. But which program is having a deeper impact on affordability? ED1 requires 100% of the units in a participating rental project to be affordable to households making no more than 80% of the Area Median Income (AMI). That “100% of the units” could actually drop to only 80% of the units so long as the remaining 20% of the units are affordable to households making no more than 120% AMI.

By comparison, Austin’s AU program allows a smaller percentage of total units to be “affordable”, but those units must be more deeply affordable. For example, in AU’s multi-tiered incentive approach, access to the entry-level tier of incentives requires 50% of all rental units to be affordable to households making no more than 60% Median Family Income (MFI) AND 20% of all rental units to be affordable to households maxing out at 50% MFI. For access into the higher tier of incentives, the requirements become 75% of all rental units affordable at 60% MFI AND 10% of all rental units affordable at 30% MFI. The program also has requirements for the percent share of units with two or more bedrooms (making such units accessible to families).

To say which program is doing more good for the housing and affordability crises requires a subjective judgement call. ED1 is putting more units on the ground (arguably doing more for the overall housing crisis), but AU is reaching deeper levels of affordability, benefiting individuals and families in greater poverty (arguably doing more for the affordability crisis). Again, depending on how you crunch the numbers and what your analytical criteria are, a case can be made for either program. Also, there are many, many more factors at play in each respective economic market, political environment, etc. than we will try to get into here (or could even if we wanted to). Suffice it to say that we acknowledge the existence of these other factors and that no two programs can be compared on a truly apples-to-apples basis. Such is the beauty of the real world.

More pieces to the puzzle

How do we create synergies to go beyond the great work included in these programs? Well, believe it or not, all stakeholders can play a meaningful role.

Legislators and policymakers, keep looking for ways to peel away layers of costly requirements. And do so not just for affordability programs, specifically, but across the board. Making development less expensive overall decreases costs and allows projects to become more affordable without the need of subsidies, special incentives, or deed restrictions. Here are just a few ideas:

• Get rid of minimum parking requirements. Minimum parking requirements eat up space and money in a project faster than any other single requirement and are proven to be vastly over-required compared to market demand. Volumes could be written on this bullet point alone (and have been!). Stop with the minimum parking requirements.

• Do away with masonry and other expensive façade aesthetic requirements. Ship lap and board-and-baton can look just as nice as stone or brick and many times do! In fact, on some architectural types, masonry looks entirely out of place.

• Incentivize infill development through lower street and utility impact fees in urban environments as compared to hinterland, greenfield environments. The denser an area the lower the impact fee. The denser the project, the lower the impact fee.

• Don’t double up on open space requirements and public parkland requirements. Public or private, open space is open space. Access to nature and recreation space is the key.

• Reprioritize public works dollars from road-widening projects to regional stormwater management projects. Then, allow developments to tie into such systems rather than needing to build all of the detention and water quality facilities on their own site. The latter is expensive to piecemeal project-by-project and eats up lots of valuable acreage.

• Stop making development review and inspections departments cover their overhead costs through fees. It is ok to fund these departments through the general fund rather than run the departments as enterprise operations. In fact, it is far more equitable as well as affordability-friendly to do the former. When regulatory environments are highly complex and cumbersome, administering such environments also becomes expensive. If we force each project to fully pay for its own share of these costs, we bar smaller actors their entrance onto the development scene. Mom-and-pop business owners can’t afford to renovate their own buildings. They either close shop or rent space owned by others. Individual homeowners and small entrepreneurs cannot afford the application fees or the consultant fees needed to gain access to the expertise required to navigate the system leaving houses to go un-renovated or illegally (and potentially unsafely) renovated. Only big actors with access to big capital can afford to build or renovate anything. When projects are expensive to build, they are expensive for the end-purchasers.

• Get rid of level-of-service as an evaluation criteria for traffic studies. Instead, look at total mobility and traffic demand management techniques being implemented by a project and its unique surroundings. Level-of-service only ever leads to additional vehicle lanes which only ever induces more single-occupant vehicle trips. The alternatives mentioned above are much less costly in both the short and long term and are far more efficient uses of space, to boot.

The above list is by no means exhaustive, but let’s move on to other stakeholders.

Department administrators and review staff, dare to care. I covered this concept in an earlier article, so I’ll spare the full re-hash here, but the more that the front-line public sector operators care about a project and the human beings involved, the more quickly solutions are found and permits are issued. Time is money. Empathy and caring matter.

Neighbors, the same goes for you. Empathy and caring matter. Someone built your home. It hasn’t just always existed there. Say yes and be an advocate for the new human beings in your neighborhood.

Developers, look for the infill properties and the incremental development opportunities. The land price may be more expensive, but the utility and roadway costs will be less. When we as developers begin to establish trends of infill and incremental development, local jurisdictions will learn to right-price things like impact fees (as discussed above). This will lead to lower development costs and more affordable price-points for end users without the need of subsidies, special incentives, or deed restrictions.

These thoughts are only meant to start the conversation. What other things can you think of? Let’s make this a real discussion in the comments.

Anaiah Matthew is a Partner Writer for Resident Urbanist. He is also the author of The Walkist, which explores the experience of walking through the eyes of a city planner while touching on topics of philosophy, sports, psychology, hobbies, and more. In the words of the venerable Dr. Austin Johnson, author of Executive Counseling, The Walkist “combines the discipline of a scholar, the wisdom of experience, and the unforced poetry of someone fully present in the moment.” Anaiah lives and works in Austin, Texas.You can also find content from The Walkist on Instagram.