Friday, January 29, 2016

More evidence Californians are overpaying for housing - Part II

How Dallas and Chicago compare to the Southern California rental market

Dallas, Texas-02

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

Our multi-part series on why SoCal's have to face soaring rentals and mortgage payments in order to live continues. Earlier this month, I've showed how Phoenix, Las Vegas and Salt Lake City all offer non-subsidized affordable units for their workforces which pretty much embarrasses Southern California's high price crisis. On the other had, Portland has an expensive housing issue but has its own mini-Inland Empire with reasonably priced rentals about 10-15 miles east of downtown connected by robust transit options. Part I of the analysis is posted on this blog.

Today, we'll take a look at the rental markets in Dallas and Chicago, two major city hubs with polarizing political demographics. We'll see if one with a $50,000 per year salary can afford a 3 bedroom rental near the downtown areas as the sole household provider. Again, the rent budget adds up to about $1,250 per month.

Living in Dallas/Fort Worth

Only five minutes into my research into the Big D, I came across the Residences at Lake Highlands, an upscale complex complete with a clubhouse, playground, pools and private commons. The interior renovations alone show that these luxuriate 3-bedroom units would rent for at least $3,000 monthly if it was built near West LA or the Irvine Business Complex. Add to that, the neighborhood is next to local shopping and walking distance to the Lake Highlands DART station. Train ride into Downtown Dallas is about 25 minutes with departures approximately every 20 minutes.

But the Dallas luxuries don't come with the high rents. Single bedroom units start at this urban country club at...ready? Only $650 per month. The 3 bedroom, 2 bath residence rents at just $1,190 per month. That's about half of what many in the Inland Empire pay for their rent and about a third of Orange County prices.

The minimum wage in the Lone Star State is $7.25; so Lake Highlands may be a little high for the entry-level worker. In fact, many of the studio and single bedroom rentals in Dallas were in the $600 range, pricing out such workers with 51% their gross income going to the rent. Keep in mind though that Texas has one of the most business-friendly and low taxation regulations in the country. That means hard-working employees have plenty of opportunities to work their way up with the competitive job market. And this minor inflation is nothing compared to what Californians are paying for studios. Also, the neighboring Fort Worth area also had better competition with some units in the $450 threshold. Looks like the Big D could use a few more studio lofts and singles but the family-friendly rental market looks great.

Life in Chicago

Our next stop takes us to the Windy City. If you track the local news there, you well know that both south and west Chicago are havens of gang violence and homicides, right up there with South Los Angeles in the 1990's. The criminal group Gangster Disciples controls the south side with the western end controlled by the Almighty Vice Lord Nation gang. Membership in each is in the tens of thousands, mostly African American boys. Yes, it's that bad.

With that said, any unit south or west of Downtown, is out of the discussion. East of the central hub is Lake Michigan, leaving only the northern end and outer suburbs as the only desirable options to call home. With this grave distortion of the housing market, I expected the north side to be overpriced like Southern California simply because of the horror and evil that has taken over the rest of the inner city. That pretty much wipes out a chunk of the supply from the market. I mean, why would a hardworking family want to move into a suburb that is plagued by violent gang crime? If I got a $100,000 per year job offer in the Windy City and if I was raising kids, I would not want them anywhere near the Gangster Disciples or the Lord Nation gangs, period.

So, just how bad is the northern portion of the Windy City in terms of rent? Actually, it's not nearly as bad as I thought. Three minutes into my research of north Chicago rentals, I found several older 3-bedroom apartment listings on Zillow from $1,000-$1,200 per month. The living space is a bit small though at about 1,000 square feet and most rentals only offered a single bathroom. As one got closer to downtown, the newer urban high-rise units began to look like Southern California with market rentals creeping into the $3,000-$4,000 territory. But at least the smaller units within the inner city are there with the $1,000-$1,200 per month marketplace rentals. Thus, the options are at least there. Studios and singles are right on par with Dallas at $500-$600 per month but the mininum wage of $10.05 an hour permits affordability.

Thus, the distortion due to the violence was not as bad as I thought it would be. But the outer suburb rental market was interesting. Chicago does have a robust regional rail system which would allow efficient connections between the metropolitan edges and the urban core. For example, during the week, the Metra Union Pacific Northwest line has trains running every few minutes during rush hours and approxiately every 60 minutes at other times. Many of the rental prices are just few hundred dollars lower than the Inland Empire with single bedrooms starting at around $900 and 3 bedrooms at $1,600. So the distortion caused by the gang crimes has pushed up demands in the outer regions. For the record, studios in the gang-plagued areas of Chicago were starting at around $450; 3-bedroom around $800.

Chicago has got to get better local policing, state law enforcement officers and the National Guard in to isolate and stop the violence there and put the gangs and illegal drug sales out of business once and for all. Unless that happens, the evil violence that has plagued the African American neighborhoods will continue. I believe the continued omission and neglect to solve this deadly crisis in these minority Chicago communities is absolutely racist. Southwest Riverside County for example has one of the strongest law enforcement presences where even petty offenses such as speeding, red light running, driving drunk and even begging at a 15 freeway offramp are closely watched and enforced. Everybody regardless of skin color enjoys the strong protection. Gangster Disciples would flee Southwest knowing their crimes would be caught in an eye blink. Lord Nations would think twice before any committing acts of vandalism anywhere near Old Town Temecula.

Stronger local, state and federal officers should have been in Chicago years ago to protect all of the innocent people there regardless of their skin color from the growing violent crimes. Factoring out race, the homicide and shooting stats confirm stronger law enforcement needs to be called in, period. But for some reason, these African American communities have been neglected of the necessary police resources that Southwest Riverside County and most other jurisdictions enjoy every day, and the major civil rights advocacy groups have been mostly silent about that. I stand by my case that this is racism.

The national news media also needs to do a better job at reporting the Chicago homicides and gang violence in general. And perhaps the horrifying stats may have done this. For January 2016 alone, 51 people have been murdered in the Windy City. Just yesterday, several more shootings occurred in the South and West sides that injured two 17-year old boys and three men. Did you hear anything about that specific shooting?

On the restorative justice front, the hardworking non-profit organizations must be allowed to operate at their best to restore the family units and mentor troubled youth. Such programs need to be allowed to expand.

But this type of distortion of the market has also contributed to overall high rentals in Southern California. Such displacement has driven buyers away from neighborhoods in South LA, San Bernardino, Moreno Valley and parts of Riverside which drives up demands and prices elsewhere. Of course, the primary reasons to clean up the inner cities should be to protect innocent lives and improve public safety. No question about that. But a secondary outcome would also be a stabilized housing market and better affordability near the inner city job hubs. People should be able to live near their jobs without having to worry about being shot.

Be sure to check in next week as we'll cover San Antonio, Philadelphia and New York.

Tuesday, January 19, 2016

How "Public transit should be practical"

Trains & Buses: Getting Southern Californians to where they need to go.

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

Very early this morning I had to attend a state-mandated training seminar in Southwest Riverside County for my job and decided to ride the local bus knowing that I had a bunch of emails, text messages and calls to tend to right before the morning session. That's one little preached benefit of taking public transportation since texting behind the wheel is both dangerous and illegal. Plus, I got a  power nap in.

When I got back to the house for lunch, the Press Enterprise newspaper was waiting on my driveway. I opened it up and found that the lead editorial points that "Public transit should be practical". True. It should be productive and performing efficiently. Its deck stated, "If taxpayers are subsidizing projects, they should focus on where people need to go." Okay. Nothing wrong with that either. The bus took me to where I needed to go, a mandatory work-related meeting. RTA, Omnitrans, Metrolink, and the municipal bus providers do exactly that.

So, I dove in to see what else it had to point, and that's where the ideological spin starts.

As you may know, the PE Editorial Board is not a fan of the California High Speed Rail and the Riverside Reconnects streetcar projects and published this dissenting piece today voicing opposition on both. I understand the newspaper's viewpoint of government overspending. Public transit lines have to be productive. Hey, I don't want my tax or high speed rail bond money wasted on overpriced infrastructure or spent on corridors with little or no demand. That point is valid. Upgrading the Magnolia Avenue transit corridor from local bus direct to a streetcar route may be premature given the current travel patterns. Instead, upgraded Rapid, Express and Metrolink transit routes would certainly fare much better for now. But I also don't want the baby thrown out with the bathwater.

To put a long story short, the private sector needs to be better incentivized to invest in bullet train technology in the USA since it has proven beyond a reasonable doubt to move people. The market is demanding that major inter-city transportation corridors within the state need upgraded infrastructure. The state should make the CA HSR master-plan shovel ready for these sections. Both CA HSR and the XpressWest systems have received some outside private funding, but the state needs to allow for more of that. Believe me, the market demands are there. Also, crowding on RTA Route 1 demonstrates that Riverside's Magnolia Avenue corridor is due for limited stop RapidLink service. If future urban growth and potential crowding on RapidLink call for it, work with RTA on upgrading the route with urban streetcar rail and get it shovel ready. That's how public transit can move people from here to there.

But getting back to the editorial; the opening paragraphs mocked public transit in general and bannered these points:

Know this about mass transit and the media: The particular topic – a new bus line, Metrolink extensions, a trolley proposed for Riverside, the bullet train connecting Northern and Southern California – doesn’t matter.

Most of us just love mass transit. And why not? We don’t ride such things, unless we’re taking a cool little trip to the coast for a day on the beach, or maybe a day of shopping in L.A.

In reality, the little people ride it. . They actually need to get from Point A to Point B. They must be subsidized.

Who's "most of us?" Who's "the little people?" Who's "They?" That opening statement is absolutely foolish in the context of what it's trying to oppose. Of course, the transit agency ridership stats don't back it up. That statement is pure ideological spin that was simply used as a cheap shot to oppose high speed rail and Riverside Reconnects. But don't tell the tens of thousands of commuters who use Metrolink daily and connecting feeding buses that their rides are a mere "cool little trip to the coast for a day on the beach."

Here's the truth of the matter: In 2014, the Riverside Transit Agency boarded 9.7 million passengers or about 26,500 per day, a record. Most of them are workers or students. Omnitrans has had a steady ridership flow of 14-16 million boardings per year for the last decade adding up to about 41,100 daily. The Metrolink Inland Empire Orange County Line alone reported an average weekday boarding count of 4,775 for FY-2015. The vast majority are workers using the train that take them "where people need to go." Those stats alone show that at least 72,000 trips from all over the Inland Empire each day are via public transit. Not "the little" number if you ask me.

Proposed: RTA RapidLink Gold Line service
Graphic: Riverside Transit Agency
To be fair, 72,000 is a mere fraction of the Inland Empire's total population so the PE is correct that the majority of citizens don't use public transit. But this minority can really negate our highways if the buses and trains didn't run and they each had to drive alone or get a ride. I mean come on: Do you really think our existing Inland Empire freeways can sustain an additional 72,000 daily vehicle trips, most of them during rush hour? That's why we have to subsidize public transit and need high occupancy vehicle infrastructure. Without the HOV transit options, several more freeway lanes would have to be built which ends up costing taxpayers far more than all of the transit agencies' operating budgets combined by substantial margins.

But getting back to transit. After traveling between the major cities up and down the state, how could one not support policies that would enable the marketplace to better invest in CA HSR and compete to address the high demands for better intercity travel options rather than simply trying to derail the technology in the process? After riding aboard Route 1 through Riverside during the rush hour, how can one not support an upgrade of the corridor to limited stop RapidLink service that would better move people along Magnolia Avenue rather than just throwing out the streetcar rail alternative altogether? But the divisive reporting continues and weakens the support that transit advocates need in trying to solve our transportation problems.

Getting from "Point A to Point B" in the most efficient and practical means possible should be something we should universally agree upon. Public transit has long provided that.

Saturday, January 16, 2016

More evidence Californians are overpaying for housing - Part I

A look at living costs and transit mobility in the western United States.

20140724-0012 Irvine

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

As you well know, the high cost of living all over Southern California has become an epidemic. No longer can many hard working providers of their households purpose 30% of their gross income toward the rent or mortgage payment as recommended by financial experts; that's if they want to live anywhere near a major job hub in the Southland with resources to spare in order to pay for other obligations. Many are forced to dedicate much more than that or resort to dwelling far from their work.

This is why many commute long distances to/from work which clogs both our regional and local transportation infrastructure. That is why we have urban sprawl.

To help isolate and identify this serious problem, we need to see what our neighboring metropolitan regions are doing and compare them to the marketplace here at home. So, I have set up a number of live/commute/work scenarios. The goal is to see whether or not one can live within 10-15 miles of their job hub near a reliable public transit route and purpose 30% of income to the rent as the sole household provider.

Let's suppose all of the workers in this example require at least a 3 bedroom rental unit: 1 master for the couple, 2 for the kids. I'll assume that if a family has 3 or more kids, a 4+ bedroom house would be desired, but chances are both parents would be working under that. But this experiment is to see whether a 4-person household (ie. 2 parents, 2 kids) can afford the rent by one full time working adult. Again, about 30% of the gross household income would go to the house payment or rent. Here's a few scenarios to kick-start this multi-part series:
  • Adam has received an electronics engineer job offer at a major resort hotel in the Las Vegas Strip for $57,000 per year.
  • Rachel is a CPA senior accountant for a firm in downtown Salt Lake City. Her salary is $66,000 per year.
  • John is a District Manager for a major retailer in Portland, Oregon. His office is in downtown. He's paid $64,000.
  • Robert is working his way up the sports ladder at Talking Stick Resort Arena in Phoenix. He now makes $40,000.

Later on, I'll take a look at these live/work scenarios:
  • Lisa works in downtown Sacramento; she's paid $45,000.
  • Justin makes $80,000 per year as an IT tech in the Silcon Valley.
  • Chris earns $50,000 per year for San Francisco's tourism sector.
  • Tom earns $64,000 as an accountant in the Irvine Business Complex
  • Mary pockets $55,000 at a university in La Jolla
  • Courtney works in medicine in Murrieta, making $75,000.
  • Marty makes $56,000 working at U.C. Riverside.
  • Kyle earns $44,000 managing a warehouse in Corona.
  • Jill cashes in on $36,000 at San Bernardino.
  • Pete works in broadcasting at Petco Park in San Diego for $80,000.

I'll also cover live/work costs in New York, Chicago, Houston, and Philadelphia, San Antonio, Dallas, and the major hub points all over Los Angeles.

These next few series of blog posts will go over how the country's top metropolitan city cores fared in terms of workforce housing affordability without government subsidies.

This first portion will cover California's closest neighbors of Las Vegas, Salt Lake City, Portland and Phoenix:

Scenario I: Living cost in Las Vegas
Employee Name: Adam
Gross Household Income: $57k
Job location: Las Vegas Strip at Flamingo Rd
Unit Needed: 3+ bedrooms
Rent Budget: About $1,425

You may remember my post about a spacious 2 bedroom apartment near the strip listed for rent for under $1,000 per month. The complex was clean and offered a very short transit ride to/from the Vegas Strip. I will say that after exploring the rental portal site Zillow, Las Vegas has a robust competitive and stable rental market.

Suppose Adam is not materialistic. He just needs a nice, clean place to call home. Just 5 minutes from the Strip on West Flamingo Road, a 4 bedroom, 2 bathroom 1,036 square foot home had an asking rent for...ready?...only $985 per month. That's a four bedroom rental for less than a grand, five minutes away from the Las Vegas Strip, and walking distance to the local shopping center, the Palms, Gold Coast and Rio hotels. How cool is that? Adam can clearly be the sole provider of his household at his $57,000 per year salary. The neighborhood is an older one, but judging by the street view imagery, it's certainly not a ghetto with most of the homes not having barricaded yards.

Okay, what if 1,036 square feet didn't cut it? Less than a mile west, a spacious, 2,150 square foot, 4 bed, 3 bathroom house was on the market for $1,550 or roughly only 32.6% of Adam's salary--still an acceptable threshold. And that leaves one bedroom to spare for a guest, den or office.

While we're in Vegas, a number of studio units had asking rents of under $500 per month. Nevada's minimum wage is $8.25/hour. A full time worker who worked 20 eight hour shifts per month grosses $1,320 monthly. That adds up to about 37.9% of the salary going to the rent, which is a bit on the high side but still acceptable. At $10 per hour which is California's minimum, the gross monthly income would be $1,600 or 31%.

So even the cook at the corner McDonald's can afford to rent a studio near the Las Vegas Strip. 450 miles up the California/Nevada border, Reno's rental market is very similar.

To be clear, the Las Vegas housing market did take a major toll from the 2008 real estate crash and recession. But a December 2015 report from the Greater Las Vegas Association of Realtors shows that the market is actually stable and developers returning to compete. Efficient regulatory policy must ensure that the Vegas units remain affordable through a competitive market but it also must prevent the greed of power and outside parties from gobbling up the property and forming major price bubbles which can cripple the economy once they finally burst. Prices and property values need to rise in line with working salaries and the economy, not way higher. The 2008 bubble must not be allowed to repeat, period.

Scenario II: Living cost in Salt Lake City
Employee Name: Rachel
Gross Household Income: $66k
Job location: Downtown
Unit Needed: 3+ bedrooms
Rent Budget: About $1,650

Utah’s high-elevation capital with its robust supporting cities also has a very competitive and affordable rental market for buyers. Rachel works in Downtown and has no intention of using the I-15 freeway. She's got the choices, even in the city core.

An older renovated 3 bedroom, 2 bath, 2,158 square foot unit was listed for $1,695 monthly. But here's the headline: The spacious unit would be at least $3,500 per month if it were in Southern California given its location. It is only four blocks from the University of Utah, three blocks from a TRAX Red Line station which operates every 15 minutes with only a 5 minute ride to/from the downtown core, and literally across the street from the Salt Lake Regional Medical Center. Plus, because of the areas' competitive market, the landowner is offering 2 weeks free to the tenant. Why is this not happening in Southern California?

Utah's minimum wage is $7.25 for non-tipped employees. Like Vegas, studio rentals were also below $500. Although a little tight with about 43% of gross income going toward rent, rookies in the workforce can still afford to live on their own. Vast public transit options would make owning a car not quite a necessity in this western city.

Like Vegas, Salt Lake City was also affected by the boom-bust cycle of the recession no thanks to the greed of outside special interests buying up the cheap housing combined with money being lent to buyers who could not afford to pay the debt. Efficient regulatory oversight must prevent major future bubbles while ensuring efficient competition between developers. Salt Lake City is currently in good shape. When I passed through in 2013, the region was growing yet prices remain affordable today.

Scenario III: Living cost in Portland
Employee Name: John
Gross Household Income: $64k
Job location: Downtown Portland
Unit Needed: 3+ bedrooms
Rent Budget: About $1,600

Portland's rental market is not nearly as competitive as Vegas or Salt Lake. It's environmentally-rich ecosystems and endless groves of evergreen forests dictate the development patterns and growth boundaries, especially near the rivers. Because of that, there are many areas of this hub with very expensive prices and rentals, but one can still find some affordable family-friendly units on the east side of the City of Roses as one approaches Gresham. Think of it as a mini Inland Empire connected by mass transit routes. This developed segment is mostly flat and allows for additional in-fill, environmentally friendly housing growth.

Zillow had a beautiful 3 bed, 2.5 bathroom house listed for an asking rent of under $1,400 per month about 12 miles east of downtown in this valley. The spacious home is only a few blocks away from TriMet Route 21 which operates every 30 minutes during the week. The route feeds into the MAX Red Line and the local ride between the MAX station and the local bus stop is about 10-12 minutes. The Red Line light rail ride into Downtown Portland is under 30 minutes. The commute distance for this unit spans 12 miles. Doing the math, 42 minutes for a peak-hour, public transportation trip plus a short transfer within an area with a fairly expensive rental market is very acceptable. Adam can therefore afford to live somewhere near his job with a stay-at-home wife and has the option to use transit. By the way, the MAX Red Line also directly connects to Portland International Airport.

Studios were around $700-800, again much higher than Nevada and Utah. Portland's minimum wage is $10.10 per hour while the rest of Oregon is $9.25. Across the Columbian River, Washington State is $9.47. About 45-50% of the gross income of an entry-level worker would pay the marketplace rent which creeps into unaffordable territory. I think that's a reason why there's a huge drive to push the wages higher in that region. Nevertheless, Portland has a first-rate mass transit system and the buses from Gresham feed into it. With that, it is not car-centric like the Inland Empire. Many of those entering into the workforce as minimum wage employees certainly will not have to own a car to get to/from work and that could help offset the high concentration of income going toward the house.

But the Portland/Vancouver region could use some additional marketplace housing units of all sizes to lower rentals and prevent another bubble in a reverse way; that is, bad red-tape politics obstructing development which inflates prices. I understand that Portland is pro-transit oriented development with its growth boundaries and taming the natural evergreen woodlands that surround the city could have environmental consequences, especially the wildlife corridors and natural waterways. The governments should look into designating such areas as protected habitats.

That means developers should have the incentive to bring urban manufactured housing technology into town so that such ready-made parts can be used to build full size residential towers quickly in existing developed areas. To be clear, the area's rental market is not in terrible shape like Southern California but the governments needs to allow for better competition there with developers.

Scenario III: Living cost in Phoenix
Employee Name: John
Gross Household Income: $40k
Job location: Talking Stick Resort Arena, Downtown
Unit Needed: 3+ bedrooms
Rent Budget: About $1,000

Finally, over to Phoenix, the nation's 6th most populated city. It's topped by New York, LA, Chicago, Houston, and Philadelphia. So the market there will have a loud voice in the debate. Like Vegas, the Phoenix Valley was hit hard by the greed of the 2008 housing bubble. Today, prices are very affordable for the workforce and its values must remain in line with working salaries. Infrastructure is growing once again with affordable prices.

I gave John a $40k salary knowing that his options would be more limited with a $1,000 rental budget for a 3 bedroom unit. I wanted to see what options are out there for people with similar salaries. Would it still be possible for John to live somewhere desirable with a short commute to/from the stadium as the sole provider of a 4-person household? The answer is yes.

Take a look at this listing where a 1,280 square foot 3 bedroom apartment unit in an older renovated complex is renting for $1,049 per month with a private commons area and community pool. Transit options are good with Valley Metro Route 29 feeding into the Valley Metro Rail system in addition to Route 19 connecting directly into the western portion of Downtown.

Go up a few miles more and an 1,100 square foot apartment unit with 3 bedroom and 2 baths is listed for only $950 per month. Further north into the Deer Valley area, there's a wide selection of recently built 3+ bedroom houses and apartments ranging from $975-$1,400 per month. Studios all over the valley start at around $400-$500 allowing those making the $8.05 minimum wage a chance to live on their own. I can say for certainty that the workforce in the Phoenix Valley can afford to live close to their jobs. Yes, Phoenix has its share of traffic congestion, but it does not even come close to what the 91, I-15 and I-405 corridors experience everyday in Southern California.

More evidence Californian's are overpaying for housing

So there you have it. For the most part, our neighboring western metropolitan areas across the state borders are not doing bad in terms of ensuring housing is affordable for the workforce and their families without government subsidies. I have to admit that I was surprised in a positive way when I looked over Phoenix's rental market considering that it's the 6th largest city in the country with a growing robust economy, marketplace jobs, business-friendly taxation and stable yet affordable housing market. Also, I did not expect to see affordable workforce units renting for under $1,000 per month anywhere near the Las Vegas Strip with its gigantic land values, let alone a four bedroom house walking distance to the Rio Hotel in Las Vegas. I was surprised to see that too.

With that said, the housing bubble of 2008 really damaged the economies of these areas and I do hear some belly-aching within the environmental circles of how Phoenix, Las Vegas and Salt Lake City were examples of urban sprawl with all of the new tracts and connecting freeways. Besides the unfortunate housing crashes and resulting chaos in prices, I believe the growth patterns there worked and with their markets now finally stable, additional infill development should be explored by the industry as the economy grows to keep the prices in line with growing working salaries. The previous growth spurt last decade was certainly spread out but these cities certainly do not need to be classed with the type of urban sprawl we saw in the Inland Empire during the last two decades with one-way commutes lasting in excess of almost two hours no thanks to expensive housing in Orange County, LA and San Diego.

But because Southern California was also hit hard by the recession, especially in the Inland Empire where registered unemployment crept up to 20% at one point, we too should now be in a position where housing supplies are inline with demands, stabilized and affordable for the workforce. But because the state and local governments won't allow developers to address the supply-and-demand issue with the trivial-red tape politics, lack of legal protection from potential frivolous CEQA lawsuits, and outdated land use zoning, that didn't happen and the rising rental bubble will continue to inflate and spiral out of control and creep into the Inland Empire...until either the governments finally get their acts together, or infuriated businesses and residents pack up and leave the region in search for friendlier options. Then everything will change.

Next week, we'll have a look at the rental markets in Dallas, Chicago, San Antonio and Philadelphia. Phily's going to be interesting. I thought that it would be an expensive spot too considering its population density and #5 spot on the most populated list. The studios near downtown are in smaller, older structures, but prices start at $400-500 per month. 3+ bedroom start around $800-$1,000. Chicago's market will also be interesting; it is distorted due to chronic gang violence and homicides south of the downtown area. How has that affected the market demands in the other supporting suburbs and cities? Stay tuned.

Friday, January 8, 2016

Aiding and Abetting Traffic Gridlock and Expensive Housing

The general lack of will to permit marketplace infill development in high demands areas have led to worsened long-distance traffic congestion on California freeways and soaring housing costs.

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

I hope everybody has kept up on my recent posts over the serious growing traffic issues plaguing the Inland Empire as well as the rest of Southern California. As reported all over the media, the south half of the Golden State continues to rank among the worst in congestion and the resulting lost productivity.

Another major problem is a general lack of housing infrastructure near jobs. Earlier this week, I was in west Anaheim and did a field study of the La Palma Avenue transportation corridor during the afternoon rush hour. It is densely populated. Pedestrians and cyclists can be seen on each block. Nearly every bus stop along the route had people waiting. Orange County Transportation Authority Line 38 serves this street and is one of the busiest routes in the system with weekday headways of 15 minutes between the Kellogg and Knotts Berry Farm short turn segment.

However, suppose one factored out the population density and judged the street solely by its development infrastructure. It would look like a suburban corridor with the single-level retail shopping centers, tract houses, and some apartment complexes. But with the presence of the giant job hub in Placentia, downtown Anaheim, the regional hospital, the Buena Park Mall and Knotts Berry Farm combined with a busy transit line, this section of La Palma Avenue is urban, period. Because of this situation, I believe multiple tenants and families are squeezing into the expensive and crowded housing units. Besides some apartment and condo complexes, where's the additional infill housing infrastructure to better support the local workforce? What is stopping the land owners in the retail areas from redeveloping the properties into urban villages with housing units above ground-level retail and expanding the number of residential units which would actually add value to the land?

Workforce housing shortages like this are seen all over Southern California and this trend has crept into the Inland Empire. Yesterday, the lead editorial of the Press Enterprise mentioned this troubling topic and how the lack of development will hurt the IE working class. The fact is both purchase prices and rents have escalated to points where workers and their families cannot afford to live anywhere near the jobs along La Palma Avenue. Meanwhile, working salaries have generally not kept up with the living cost hikes. Demands for government-assisted subsidies for the high rents are soaring with extensive waiting lists and selection lotteries. Working people should not have to depend on the government to live; they should be self reliant.

From an impartial point of view, I believe this situation is an example of economic injustice.

Many local jurisdictions and the state government have not acted to control these price escalations. To be fair, Anaheim, Irvine and a few other areas are trying to draw infill development. Suburban-style industrial parks in the Platinum Triangle and Irvine Business Complex area are being redeveloped with urban, European style housing. Irvine is finishing its housing master plan in the Spectrum area. Houses are sprouting along Ortega Highway just east of San Juan Capistrano. This brings up an interesting point: These cities can take leadership positions on this issue which could draw the non-participating jurisdictions to follow and pressure the state to reform trivial regulatory rules. Will they?

Meanwhile other corridors in Anaheim including La Palma are long overdue for such better infrastructure. Because of the slow development pace and resulting high prices, many workers have moved into the Inland Empire and commute long distances to and from work. With the increased vehicle miles traveled, that has led to disastrous traffic conditions on Southern California highways. It turns out that the lack of will from the government to expand workforce housing near the job hubs has actually aided and abetted California's traffic gridlock problem.

Meanwhile, the cities in the Inland Empire cannot sit this one out. They too need to allow developers to address demands for better local marketplace jobs in the city hubs and ensure continued housing development keeps prices in line with working salaries. The twin county seat cities of Riverside and San Bernardnio should be the metropolitan hubs for the region with plentiful workforce residential units available to keep our rents and unit purchase prices affordable, competitive and innovative.

Next week, I'll show you how other regions throughout the country have allowed its workforce to live very close to their jobs without any subsidies from the government through robust housing choices. Our neighboring metropolitan areas across the state border are good examples to follow and are living proof that infill development could work in reducing traffic congestion and demands for long distance commuting here at home.

We need to finally solve this serious example of economic and social injustice here in Southern California.

Monday, January 4, 2016

New Year 2016 Transit Briefing

By: Nicholas Ventrone, Community Engagement Director

Happy New Year! As we transition out of the holidays and back into our normal routines, there's going to be quite a bit of important transit stories unfolding for 2016.

More California Gas Price Injustices

This story has just about infuriated many folks all over the Golden State and hopefully the broken politics surrounding California's isolated fuel market becomes better known so that the legislature will finally be held to account by voters in solving this problem.

Local media outlets all over the nation have been reporting that gas prices have been falling with the country's average dropping to $1.99 per gallon. Meanwhile, crude oil remain plentiful with prices at $34 per barrel. California is using the less-expensive winter-blend fuel and will remain that way until the March/April changeover to summer. You would think we would be enjoying the price breaks too.

However, California fuel prices have gone the other way, with Inland Empire prices soaring about 30 cents per gallon over Christmas and another 15 cents through the New Year. As of this post, we're paying just over $3.00 per gallon, a buck over the national average. I project that it will tick up even further as a few gas stations in the area are posting prices at about $3.20-$3.40 and reports continue to flow in that Southern California refineries are not producing nor importing, leading to a so-called "shortage" even though we have a wealth of crude oil. Meanwhile, go across the Arizona border to the Phoenix metro area where the lowest price stations are around $1.75.

I understand that Califorians pay more than the national average due to higher state taxes...Fair enough. But the price difference gap has already surpassed the $1 mark and quickly approaching $1.50 during the winter-blend season. The price gap should be around 65 cents this time of the year.

So here's the deal: Dereliction, ignorance and lack of will within the state government are all directly responsible for this economic injustice. Because of trivial regulatory red-tape in the business climate, the current oil industry within California lacks outside competition which has allowed it to get away with a supply shortage and higher prices without losing out on the sale. That has allowed them to maintain their high profit margins. In the free marketplace, if one company did not have what the customer was looking for due to a production shortage, it loses the transaction to a competitor, period.

Not too long ago, I held a checking account with a big-name bank. When it announced it was about to implement a $10 per month fee, I went to a local credit union that offered a better valued package, mobile deposits and widespread ATM access, saving me $120 per year on the unnecessary fee. Smaller community banks and credit unions are able to compete with the big corporate banks because efficient regulatory oversight allows them the freedom to do so.

But the big oil oligopoly has no direct outside competitors, at least not yet because state law prevents smaller investors from coming in to compete with the existing refineries. Yes, cleaner, zero-emission, CNG and all-electric cars are in hot demand, growing and could very well wipe out the gasoline industry in the future, but they are not yet the norm and remain far too expensive for many. While growing and becoming more usable, our public transportation system still has ways to go before it can be a viable option to get around for many trips. That means the oil industry has been allowed to get away with this shortage because trivial regulatory rules prevents outside entrepreneurs from producing what we need to get around, leading to an artificial supply shortage and high prices.

And this gross economic injustice increases all of our living costs whether or not one drives a car or not.

I'll keep a close watch on this one.

New track infrastructure for the Metrolink Perris Valley Line
Photo: SCRRA
Almost There: Metrolink Perris Valley Line

The long-awaited extension of the 91 Line into South Perris is here and will be open to the public very soon. Early 2016 is the expected launch date for operations.

The 24 mile extension will bring Metrolink from the Riverside Downtown station to South Perris with stops at Hunter Park, Moreno Valley March Field, Perris Station Transit Center and South Perris. The Riverside Transit Agency has plans to implement feeder service and other upgrades to its bus system. For instance, one will be able to train to Hunter Park and transfer to a feeder shuttle to UC Riverside, and connecting buses will ferry passengers from the March Field station to various employment hubs throughout Moreno Valley.

Metrolink's website has the latest info. Specific train schedules to be released soon.

Cost of Living in a Home in California

Just like the incompetence of dealing with soaring fuel prices, housing prices and rentals remain generally out of control all over Southern California no thanks in part to unnecessary bureaucracy at the state level which has led to an inventory shortage and soaring prices. Unfortunately, such trouble has already begun to seep into the Inland Empire.

Press Enterprise Columnist Sal Rodriguez wrote an op-ed during the New Year's Day holiday, reporting that the Golden State remains the "No. 1 judicial hellhole in the United States by the American Tort Reform Foundation." Yesterday, PE/OC Register writers Joel Kotkin and Wendell Cox posted this op-ed citing that lack of enough building have contributed to soaring rents.

Zillow rental listings near the Irvine Business Complex job hub
I believe the complexity of California law has obstructed investors and the development industry from competing and expanding housing infrastructure in existing high demand areas. That has led to high prices and many hardworking people not being able to afford the rent or mortgage payments in neighborhoods anywhere near their jobs.

In addition, several local jurisdictions share the same responsibility on this issue too with outdated land-use general plans that don't address what the marketplace is currently demanding. That has led the industry to go out and build on cheaper land far from existing infrastructure. To be fair, some existing cities and localities are allowing for development but the region as whole needs a stronger will to deal with this problem. Also, I understand that units within or very near the job hub points will often be a bit more pricey.

Zillow rental listings near the Las Vegas Strip
But cross over into other Western states and you'll notice a stark contrast. Efficient regulatory oversight has allowed for good competition between builders which has led to affordable and non-subsidized rents and purchase prices even near the central city cores.

At the time of this post, Zillow had a spacious 1,300 square foot 2 bedroom, 2 bathroom unit in a clean, gated private complex in Las Vegas listed for an asking rent of only $950 per month, not subsidized by the government. The neighborhood has two pools, walking distance to the local shopping center and even the Orleans Hotel & Casino, and a short 12 minute bus ride to the Strip. The feeding bus line to the Strip's Deuce/Downtown Express Rapid lines runs every 20 minutes with hourly night owl service. Here's an aerial shot of the neighborhood:

I have a lot to talk about on this topic. Addressing California's housing shortage will be a prime solution in solving our long-distance traffic congestion problems.

In addition, the Inland Empire should continue to draw businesses to invest in our main city centers, especially the twin county seat hubs. There have been pushes to transform both Riverside and San Bernardino into business-friendly, metropolitan cores for the region. But the state government needs to help us too by allowing developers and investors to better compete and grow the infrastructure to meet demands so that our living costs are in line with the rest of the nation, not way higher. We're long past due for such regulatory reform.

Funding OC Direct Access Ramp Infrastructure

While doing some research on how to better connect the 91 Express Lanes with the Village at Orange transit hub, I came across this 2011 Q&A piece that documents that the City of Orange has been trying for the last two decades to develop an interchange at the SR-55 freeway at Meats Avenue. It would be a general-purpose junction which would redistribute high traffic demands from the Katella and Lincoln Avenue ramps.

I didn't see much marketing or other media reportage of the proposal but according the article, part of the 20+ year hold-up to develop the diamond-shape junction has been lack of funding. The project would also require several residential property acquisitions but would expand capacity, reroute traffic from two congested interchanges, and address an extensive backtracking issue for RTA CommterLink 216 and carpools.

If you read my posts of advocating for better transit infrastructure for the Inland Empire HOT Express Lane master plan, I have called for a HOT/HOV direct access ramp at Meats Avenue which would be paid for by infill developers through a public-private partnership. The development industry would be given a fair and competitive tax and fee break package if the SR-55 ramp, upgraded bus transit bus bays and waiting areas at the Village at Orange hub, and a public park & ride garage were included with the private development. Property acquisitions would be minimal and total costs would be far less than a full junction. Express buses, 3-person carpools, and toll-paying non-HOV's using the Village at Orange transit station would no longer have to backtrack via Katella Avenue in order to use the 91 Express Lanes.

A general purpose interchange in lieu of a HOT/HOV direct connector could very well address this issue too even though weaving will be required between the ramp and the HOT lanes. Anyway, I've got some other fresh and out-of-the-box ideas of how to solve this local traffic and regional transit connectivity problem without having to wait for decades for the cash. Stay tuned for that.