Minimum wage, Project Labor Agreements (PLA’s), rules meant to maximize union hiring and limit free workers from getting jobs—unless they pay bribes to unions—are all causes of the lack of housing in L.A.
“A requirement to employ a union workforce on larger Proposition HHH projects to house people experiencing homelessness may have led to fewer units than had initially been anticipated, according to a RAND report released Monday, Aug. 2.
The report looked at why, despite initial projections that the $1.2 billion Proposition HHH, the 7,300 units that are anticipated to be built fell short of the 10,000 figure that had been touted during the campaign to pass the measure.
RAND researchers found that a rule, put into place 18 months after the 2016 ballot measure passed, to require that projects with 65 or more units be subject to an agreement with labor unions may have led to 800 fewer units getting funded.
Homelessness? Unaffordable housing? Look for the union label as the cause.
RAND: LA’s homeless housing bond measure fell short of 10,000 units, because of labor requirement
Researchers believe developers built smaller projects to avoid entering into labor agreements with unions that kicked in on projects with 65 or more units. Increased cost was another factor.
By Elizabeth Chou, Daily News, 8/2/21
A requirement to employ a union workforce on larger Proposition HHH projects to house people experiencing homelessness may have led to fewer units than had initially been anticipated, according to a RAND report released Monday, Aug. 2.
The report looked at why, despite initial projections that the $1.2 billion Proposition HHH, the 7,300 units that are anticipated to be built fell short of the 10,000 figure that had been touted during the campaign to pass the measure.
RAND researchers found that a rule, put into place 18 months after the 2016 ballot measure passed, to require that projects with 65 or more units be subject to an agreement with labor unions may have led to 800 fewer units getting funded. Developers ended up building smaller projects, just below that cut-off, which the study researchers attributed to the builders wanting to avoid signing onto a “project labor agreement” with a local unions.
Projects with such an agreement was 14.5% higher on projects that employed union labor, amounting to roughly $43,000 more than it would have been for projects without one, researchers also said.
The RAND report recommended more transparency, through including such requirements into initiatives and legislation, in order to set more realistic goals for these kinds of programs.
“Moving forward, considering the effects of these sort of labor requirements on the primary goals of public housing policy and making sure they are clearly communicated to the public would improve transparency and help ensure that realistic goals are set for such programs,” said Jason M. Ward, the report’s author.
Project labor agreements with unions tend to have various rules around hiring authority, worker ratios for union and nonunion workers, clauses that guarantee no strikes or lockouts, and guaranteeing no strikes or lockouts, and targeted hiring of local residents and people from disadvantaged communities.
Researchers said it was unclear why developers seemed to have worked to avoid such agreements.
Many developers of permanent supportive housing, aimed at those experiencing homelessness, tend to be “nonprofit, mission-driven developers, so the type of profit motive that might motivate traditional developers of market-rate housing is largely absent in this setting,” the report said.
The researchers conjectured that a major factor may have been that agreements added to uncertainty on projects that typically already face high uncertainty.
“Deeply subsidized affordable housing projects already face considerable uncertainty related to community opposition, assembling the necessary funding, and uncertain timelines for regulatory approvals,” the report said.
Another potential reason for developers avoiding projects that involve project labor agreements is that the costs may have prevented the projects from penciling out as financially viable.
A 2019 audit by the Los Angeles City Controller’s office had also pointed to the lower than anticipated units being built with Proposition HHH funding. That report had pointed to higher-than-anticipated costs of the HHH-funded units.
While the RAND report this week says developers tended to avoid projects that would be subject to a project labor agreement, Controller Ron Galperin had attributed the high cost of the projects partly to such agreements, along with many other factors.
