4.   HOUSING CONSTRAINTS

 

 

The provision of adequate and affordable housing is affected by both market conditions and governmental programs and regulations.  Housing Element law requires a city to examine potential and actual governmental and non-governmental constraints to the development of new housing and the maintenance of existing units for all income levels.  Market, governmental, and environmental constraints that contribute to housing development in El Segundo are discussed below.

 

 

A.   MARKET CONSTRAINTS

 

 

1.     Construction Costs

 

A major cost associated with building a new unit is the cost of building materials.  In the current Southern California real estate market, the single factor which has the most impact on the cost of building a new house is the cost of building materials.  It is estimated that these costs account for approximately 40 to 50 percent of the sales price of a new home.  Typical residential construction costs for a single-family home are approximately $78 per square foot.

 

A reduction in amenities and the quality of building materials (above a minimum acceptability for health, safety, and adequate performance) could result in lower sales prices.  In addition, pre-fabricated factory built housing may provide for lower priced housing by reducing construction and labor costs.  Another factor related to construction costs  is the number of units built at one time.  As that number increases, overall costs generally decrease as builders are able to take advantage of the benefits of economies of scale.  This type of cost reduction is of particular benefit when density bonuses are used for the provision of affordable housing. 

 

 

2.          Land Costs

 

The price of raw land and any necessary improvements is a key component of the total cost of housing.  The diminishing supply of land available for residential construction combined with a fairly steady demand for such development has served to keep the cost of land fairly high, particularly in South Bay coastal communities. Land holding costs incurred during the development process also add to the ultimate price of a new home.  The two factors which most influence land holding costs are the interest rate on acquisition and development loans, and government processing times for plans and permits.

3.     Availability of Financing

 

Interest rates are determined by national policies and economic conditions, and there is little that local governments can do to affect these rates.  Jurisdictions can, however, offer interest rate write-downs to extend home purchasing opportunities to a broader economic segment of the population.  In addition, government insured loan programs may be available to reduce mortgage downpayment requirements.

 

Under the Home Mortgage Disclosure Act (HMDA), lending institutions are required to disclose information on the disposition of loan applications and the income, gender, and race of loan applicants.  As shown in Table 22, in 1997, a total of 343 households applied for conventional mortgage loans to purchase homes in El Segundo.  About 70 percent of the applications were originated (approved by lenders and accepted by applicants) and 11 percent were denied, with the remaining 19 percent of the applications withdrawn, closed for incompleteness, or not accepted by the applicants.

 

The overall denial rates for conventional home purchase loans by income of applicant shown in Table 22 are logical, with low income applicants exhibiting the highest denial rate (30 percent), and moderate and upper income households a much lower denial rate (10 percent).  While the earlier analysis of housing sales prices indicates low income households are effectively priced out of the market in El Segundo, a greater number of moderate income renter households may be able to move into homeownership in the City’s condominiums with limited public assistance.

The small number of applications received from low income households (7 percent), indicates there may also be a need to provide informational and loan counseling services to lower income groups in the City.

 

Table 22

Disposition of Conventional Loans

 

 

 

Overall, home improvement loans have lower approval rates.  In 1997, 28 households in El Segundo applied for home improvement loans and only 36 percent were approved, indicating the continued need for City assistance in providing rehabilitation loans.  Again, the percentage of loans denied is highest in the low income category.  This supports the need for a government-assisted rehabilitation assistance program for low income households.

 

The top mortgage lenders for El Segundo applicants in 1997 are summarized below in Table 23. The remaining lenders not shown processed ten or fewer applications each.

 

Table 23

Primary Mortgage Lenders in El Segundo: 1997

 

        Source:  Home Mortgage Disclosure Act (HMDA) data for 1997. 

            Tabulated with the Centrax software.

 

 

B.   GOVERNMENTAL CONSTRAINTS

 

 

Housing affordability is affected by factors in both the private and public sectors.  Actions by the City can have an impact on the price and availability of housing.  Land use controls, site improvement requirements, building codes, fees, and other local programs intended to improve the overall quality of housing may serve as a constraint to housing development.

 

 

1.     Land Use Controls

 

The Land Use Element of the City of El Segundo's General Plan sets forth the City's policies for guiding local development.  These policies, together with existing zoning regulations, establish the amount and distribution of land to be allocated for different uses within the City.  The City of El Segundo General Plan and Zoning Ordinance provide for a range of different intensities of residential land use, including the following:

 

a)     Single-Family Residential (R-1) - up to 8.7 dwelling units per acre.

b)     Two-Family Residential (R-2) - up to 12.4 dwelling units per acre.

c)     Multi-Family Residential (R-3) - up to 18 - 27 dwelling units per acre.

d)          Neighborhood Commercial (C-2) - up to 10 dwelling units per acre (above ground floor commercial use).

e)          Downtown Commercial (C-RS) – up to 10 dwelling units per acre (above ground floor commercial use).

 

In addition to the residential categories described above, the Medium Density Residential (MDR) zone is used as a type of “holding zone” which can be activated within certain areas of the Smoky Hollow Specific Plan and used in place of the base zone regulations.  This zone allows densities from 18 to 27 units per acre to allow sufficient buffering and open space areas

while sustaining residential and supporting commercial uses in the Specific Plan area.

 

An additional residential designation, the Planned Residential Zone (PRD), is to be used specifically for the former Imperial Elementary School Site.  This zone permits up to 29 single-family detached units and 36 multi-family units.  The purpose of this zone is to encourage the long-range development of residential property under an overall development plan for the site.  

Housing supply and cost are greatly affected by the amount of land designated for residential use and the density at which development is permitted.  In El Segundo, 15 percent of the City's land area (533 acres) is designated for residential use.  Multi-Family  neighborhoods are by far the most common residential use in El Segundo, accounting for over one-half of the residential units in the City. This designation includes apartment complexes,  “stacked flat” -style condominiums, and “townhome” -style condominiums.

 

The City’s Land Use Element as amended in 1992 documents a residential “build out” of 7,674 units, or 334 above the City’s existing (1998) housing stock of 7,340 units.  This figure includes vacant residential land and underdeveloped land.  The lack of available vacant land, therefore, is a major constraint to the development of housing within the City.  The majority of the vacant land available is currently in non-residential zoning categories, therefore, the principal options available to expand the housing supply consist of infill/recycling of lower density development or underutilized land to higher densities.

 

 

2.          Residential Development Standards

 

The City's residential development standards, both on and off-site, are not considered overly  restrictive.  The density, setback, and other standards regulating residential development within the City are in concert with those being used by other surrounding communities.  The zoning ordinance limits all residential building heights to 26 feet and two stories.  The City does not offer a height bonus for affordable units, which could potentially inhibit  the development of affordable housing.  Residential development standards for the City of El Segundo are summarized in Table 24.

 

Table 24

Residential Development Standards

 

Source: City of El Segundo Zoning Ordinance, March 17, 1998.

 

Notes:       (1)      Lot coverage may be increased to 47% if the height of the structure is limited to 18 feet.

(2)         Provides for 2 visitor spaces for the first 5 units and 2 visitor spaces for each additional 3 units (e.g. 3-5 units = 2 visitor spaces, 6-8 units = 4, 9-11 units = 6, 12-14 units = 8, etc.).

(3)      Additional parking only required for new units.  Existing units may expand without adding parking.

 

The City’s covered parking requirements for each housing type are: one-family dwelling - fully enclosed garage; two-family dwelling - fully enclosed garage; and multiple-family dwelling - covered structure enclosed on three sides.  Multiple-family dwellings include condominiums.   

 

3.          Provisions for a Variety of Housing Types

 

Housing element law specifies that jurisdictions must identify adequate sites to be made available through appropriate zoning and development standards to encourage the development of a variety of types of housing for all income levels, including multi-family rental housing, factory-built housing, mobile homes, emergency shelters, and transitional housing.  The following paragraphs describe the City’s provisions for these types of housing.

 

Multi-Family Rental Housing: Multiple-family housing is the predominant dwelling type in the City, comprising about 53 percent of the total housing units.  The number of multi-family units has also been increasing due to recycling of underdeveloped single-family lots. There are still single-family homes located on land that is designated for multi-family use. The City’s zoning ordinance provides for multiple-family units in the following three zones: Planned Residential Development (PRD); Multi-Family Residential (R-3); and Medium Density Residential (MDR).

 

Mobile Homes/Manufactured Housing:  The City provides for mobile or manufactured homes within its residential zone districts if they meet specific standards.  Both mobile homes and manufactured housing units must be certified according to the National Manufactured Housing Construction and Safety Standards Act of 1974, and can not have been altered in violation of applicable Codes.  The units must also be installed on a permanent foundation in compliance with all applicable building regulations and Title 25 of the California Health and Safety Code.

 

Second, Third and Fourth Units:  The City’s zoning ordinance provides for second dwelling units on single-family residential zoned lots when the side lot line forms a common boundary line with lots zoned for higher intensity uses.  The Code also allows a 3-family or 4-family dwelling on two-family residential zoned lots which meet the same criteria.  The side lot line must be adjacent to one of the following higher intensity zones:

 

a)     R-3, Multi - Family Residential;

b)    C-RS, Downtown Commercial;

c)     C-2, Neighborhood Commercial;

d)    C-3, General Commercial;

e)     CO, Corporate Office;

f)     MU-N, Urban Mixed-Use North;

g)         MU-S, Urban Mixed-Use South;

h)         P, Automobile Parking.

i)           M-1, Light Industrial (Two-family residential only)

j)           M-2, Heavy Industrial (Two-family residential only)

 

Second units are also allowed on the front of any single family lot that does not meet the above zoning conditions, if the existing unit does not exceed 700 square feet and was built on the rear portion of the lot prior to December 26, 1947.

 

Transitional Housing and Emergency Shelters:  There are currently no transitional housing facilities or emergency shelters within the City of El Segundo, and the City zoning ordinance does not define or specifically allow for, or prohibit these types of facilities.  A program has been included in this Housing Element to establish an allowance in the zoning ordinance to permit transitional housing facilities in multi-family residential zones and emergency shelters in areas zoned for commercial use under a Conditional Use Permit process.

 

 

4.     Development and Planning Fees

 

The City collects various fees from developers to cover the costs of processing permits and providing necessary services and infrastructure. Fees are collected upon filing of an application for developments that require a discretionary approval.  Fees are also collected at the time of building permit issuance.  No school fees are required for new development west of Sepulveda Boulevard, and there are no “Quimby” (Parkland dedication), art or childcare fees required for any new development projects.  Additionally, refuse collection is free for single-family residences and there is no utility users tax (electric, gas, phone and water) for any residential users.  Impact fees (Fire, Police, Library and Traffic) are required to be paid prior to the issuance of a certificate of occupancy.  All of these factors help to reduce the cost of housing in El Segundo.

 

Table 25 provides a listing of fees the City of El Segundo charges for residential development.  In addition, there may be other fees assessed depending upon the circumstances of the development.  For example, the builder may need to pay an inspection fee for sidewalks, curbs, and gutters if their installation is needed, or the builder may need a Variance, Conditional Use Permit, or Site Plan Review.  The fees listed in Table 25 show those which are typically charged for a standard residential development. 

 

Table 25

Fees Charged For Residential Development

 

Fee Type	Single-Family > 9 units Multi-Family > 6 units	Single-Family < 10 units Multi-Family < 7  units
Adjustments	$520	$375
Appeals	$235 or $501	$170 or $501
Precise Plan Residential	$1,135	$810
Preliminary Review	$80	$55
Subdivision	$935	$675
Conditional Use Permit	$935	$675
Zone Amendment	$1,320	$935
Environmental         EIR Preparation (plus consultant costs)         Environmental Review	$3,650 $37	$3,650 $37
Smoky Hollow Floating Zone	$1,060	n/a
Smoky Hollow Site Plan	$750	n/a

Source:  City of El Segundo Planning Division, April 1999.

 

1         A 50 % Appeal fee for a citizen’s principal residence applies under certain conditions.

5.     Building Codes and Enforcement

 

In addition to land use controls, local building codes also affect the cost of housing.  El Segundo has adopted the Uniform Building Code (UBC) which establishes minimum construction standards.  These minimum standards can not be revised to be less stringent without sacrificing basic safety considerations and amenities.  No major reductions in construction costs are anticipated through revisions to local building codes.  Working within the framework of the existing codes, however, the City will continue to implement planning and development techniques that lower costs and facilitate new construction where possible.  Enforcement of all City codes is handled by the appropriate departments and is typically coordinated by the Community, Economic and Development Services Department. The Planning Division enforces the Zoning Ordinance.

 

 

6.     Local Processing and Permit Procedures

 

The processing time needed to obtain development permits and required approvals is often cited as a prime contributor to the high cost of housing.  Additional time may be necessary for environmental review, depending on the location and nature of a project.  In response to State law, California cities have been working to improve the efficiency of permit and review processes by providing 'one-stop processing,' thereby eliminating duplication of effort.  The passage of Assembly Bill 884, which took effect on January 1, 1978, has also helped to reduce governmental delays by:  1) limiting processing time in most cases to a one year, and 2) eliminating some of the "red tape" by requiring agencies to specify the information needed to complete an acceptable application.  The City of El Segundo has fully implemented the provisions of AB 884, as well as more recent legislation requiring the establishment of one-stop permit coordination. 

 

Based on periodic surveys conducted by the City, local processing times are quite comparable to those experienced in neighboring communities.  Currently it takes approximately 2 to 6 weeks to review and process plans.  Many minor permits are issued in a much shorter time frame including “over-the-counter” approval and permit issuance.  Additionally, the City allows the issuance of separate grading and foundation permits prior to the issuance of the building permits. Plans are allowed to be submitted to plan check prior to the Planning Commission and City Council approval of the project.  Zone changes and Planned Residential Developments (PRD) are typically taking 3 to 4 months to review and process for a public hearing, although this may vary depending upon the type of environmental review required.  The Planning Commission remains the only entity in the review process, unless the Planning Commission decision is appealed.  In this case, approval by the City Council is required.  In addition, City Council approval is required for a zone change and General Plan Amendment.

 

 

C.   ENVIRONMENTAL CONSTRAINTS

 

 

As a City with a large industrial base, numerous environmental related factors are present which pose constraints to residential development within El Segundo.  Historically, less than 25 percent of the land within the City has been used for residential development.  The remaining land has been used primarily for a mixture of light and heavy industrial purposes, including oil refineries, aircraft and space vehicle manufacturing, chemical production, corporate research and supporting office, commercial, and hotels.  The development invested in these properties is substantial, making conversion to residential uses economically infeasible.  When sufficient amounts of these properties have become available for recycling, the City has permitted residential uses in a mixed-use environment west of Sepulveda Boulevard, provided that infrastructure issues could be successfully addressed, and residential uses could be buffered from non-residential uses. 

 

In comparison to other areas in Los Angeles County, the City of El Segundo is heavily affected by traffic, air quality, odor and safety issues related to flight operations at Los Angeles International Airport.  Those residential areas located near the northern boundaries of the City are particularly subject to these impacts.  The Circulation, Air Quality, and Noise Elements of the City’s General Plan all contain policies that seek to minimize the negative effects upon these residential areas, and help ensure the protection of area residents.

 

Many of the industries operating in El Segundo use hazardous materials in their operations and have sites which are contaminated by toxins.  Since heavy industry is the largest single land use in the City, hazardous materials use and management is a serious consideration. Heavy manufacturing comprises about 30 percent of the City’s area, which is made up almost entirely of the Chevron Refinery.  The uses associated with the Refinery, Hyperion Treatment plant, and two power plants preclude the development of additional housing in close proximity to these facilities.  Although industries in El Segundo generate a diverse mix of hazardous waste, all heavy industrial uses must conform to the policies of the City’s Hazardous Materials Element.  The location of major waste generators and industrial land uses are shown in Figure 7. 

 

 

Figure 7- Waste Generators