Bill Allen: Newhall Ranch provides model for area growth

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As California’s housing affordability crisis continues to grow, we need to intensify the focus on boosting the supply of work force housing in the region, including the San Fernando Valley and surrounding areas.

With Los Angeles as a vibrant and growing center of commerce, and with the size of the population expected to expand substantially over the next 20 years, addressing the supply side of the housing equation is extraordinarily important to achieving our economic development goals.

A recent report by the state of California demonstrates just how extensive the housing challenge is, with more than half of rental households statewide being “cost burdened” because they pay more than 30 percent of their income on rent. The for-sale market is also challenging, with home prices hitting record levels, especially in employment centers in the Bay Area and Los Angeles.

Smart housing policies are crucial to Los Angeles’ economic development efforts for two fundamental reasons. First, our efforts to recruit and retain job-producing businesses rely on the availability of housing that workers can afford. Employers need to know that employees have the opportunity to live close to their place of employment and pay less than the magic affordability number: 30 percent of annual income.

Secondly, housing development is itself a major employer. So expanding housing supply in a meaningful way achieves two complementary goals: business recruitment and retention, and job creation.

In 2017, amid the headlines and policy reports demonstrating the extent of our housing crisis, the Los Angeles County Board of Supervisors put to rest a long-debated development plan by approving the first two villages of Newhall Ranch in the Santa Clarita Valley.

The state of California did its share, too, by approving the environmental analysis for the entire plan, which includes 21,500 new residential units plus millions of square feet of office and retail spaces.

Earlier this year, the Los Angeles County Economic Development Corporation’s Institute for Applied Economics conducted an economic impact analysis of Newhall Ranch, finding that construction of the project will create 130,000 jobs in Los Angeles County alone, generate $21 billion in business revenues and contribute $2.7 billion in federal, state and local taxes.

After buildout, we estimated that Newhall would support 75,000 jobs in the county annually.

While the approval of 21,500 housing units may only make a dent in the regional housing challenges, it is a great start and demonstrates the importance of creating commercial space along with the housing we so desperately need. In Newhall’s case, that means more than 11 million square feet of commercial-serving space to support job creation in the middle of the growing Santa Clarita Valley, which currently is home to more than 90,000 jobs. The fact that Santa Clarita’s economy is the third largest in L.A. County is one of the region’s best-kept secrets.

A significant bonus to the Newhall plan is its ground-breaking commitment to sustainability. The community will be designed to be “net zero” for greenhouse gas emissions. This includes net-zero energy buildings and innovative technologies and community designs to reduce emissions.

In this regard, the net zero plan also promises to be a catalyst for green companies – including solar, energy storage and clean-vehicle companies – to innovate and grow right here in Los Angeles County.
As the housing supply discussion continues into 2018, Newhall Ranch provides an important model for other sub-regions to evaluate. Housing near job centers is crucial.

Density near transit that connects to job centers is vital.

Innovating with sustainable approaches reinforces our region’s leadership in green development. And adding meaningful housing supply forces downward pressure on prices and creates jobs and significant economic activity in the process.

As part of this conversation, we will need to embrace the growth that is projected to come to Los Angeles, and unlock innovative solutions to the housing affordability crisis in the process. Net Zero Newhall was a shining star in 2017. As the New Year approaches, let’s toast Newhall’s owner, FivePoint, for its innovative approach to creating smart communities, and also sharpen our focus in 2018 on other solutions to our region’s and state’s daunting housing challenges. Doing so will be among the most important economic development discussions we can have.

Bill Allen is CEO of the Los Angeles County Economic Development Corporation.

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