SCAG and the Art of Numbers

There’s an old saying, “if you like sausages and laws, you better not watch how they are made.”

Yesterday, I had the opportunity to see how something else is made, something more like laws than sausages, but unlike either, it didn’t make me want to look away.  On the contrary, it was worthwhile to see.

I had an opportunity to attend an “Existing Housing Needs Expert Panel” hosted by the Southern California Association of Governments (SCAG).  Thanks to our Deputy Chief Economist Jordan Levine, one of the invited panelists, for getting me entry into the inner sanctum.

Here is a quick snapshot of what the meeting was all about, for those of you who want to get right to the point:          

State Legislation in 2017 and 2018 has made existing housing needs – i.e., the backlog of previous housing underproduction – a key feature of the regional housing needs assessment (RHNA).

Key questions for the panel of experts were (1) how can SCAG best quantify existing housing needs, and (2) to what extent can existing housing needs accumulating over several decades be addressed through the short-term (8-year) RHNA planning period. 

For the totally uninitiated, I should point out for background purposes that regional government entities in California, like SCAG, are required to calculate the housing needs for the localities in their regions.  That’s the Regional Housing Needs Assessment (RHNA).  SCAG is now embarking on its 6^th cycle, which will be in effect from 2021 through 2029, and it is the first in the state to do so under the new legislation.

Also for background purposes, I should add that SCAG is the regional governance entity for six counties, nearly 200 municipalities, and about 19 million people in Southern California.

Localities incorporate the RHNA numbers into their own housing elements.  This is the building block of housing planning in every community.  Given the extreme shortage of housing, we are facing, the process is the subject of much debate and scrutiny.

That’s a lot of technical jabberwocky for a blog, I know.  So let’s take a break, and I’ll riff on the meeting instead.

For those who have never been to SCAG, it’s a swanky location, one that looks more like a corporate office than the headquarters for a regional government agency. A shimmery, 70-story cloudbuster in downtown LA, with security check-in and smart elevators -- which ironically, make you feel very stupid when you walk in, the door closes, and there are no buttons to push.

The techno-gadgetry didn’t end in the lobby.  On the 17^th floor, we convened in a conference room equipped with comfy chairs, state-of-the-art digital displays, and individual desktop monitors.  We were foreign diplomats at a UN negotiating session.  

 But only for a moment, before the mundanity of our purpose set in.  No debating lofty international principles, no peace-keeping missions, and unfortunately, no international cuisine.  But we were tackling some important issues, and I did get a free lunch – a tuna fish sandwich with chips and an oatmeal raisin cookie, which by the way was very tasty, and just the right amount of sugar to keep me going for the full three hours.

I needed to stay alert to focus on the question at hand.  Now that the regional planning entities must also account for existing housing needs along with projected future needs based on population growth, RHNA numbers will presumably be much higher than they have been. How much higher is a question that remains to be answered.  Whether any of that housing will ever get built, is another question still, to which I will return before ending.

At this point, you are probably thinking that I am about to pivot back to the jabberwocky again, and you would be right.  That’s where I’m headed, but don’t worry.  I’ll ease back into it.

If your eyes are starting to glaze over, you are forgiven.  I confess, I felt myself getting a little nappy more than a few times before my inner Kofi Annan snapped me back to the conversation, and the oatmeal cookie had a chance to kick in.

Making matters worse, for some reason, whenever I think of RHNA, I think of the word renal, as in “renal failure”.  I will refrain from plumbing the depths of that analogy, except to say that my father was a medical doctor, so maybe that’s why I make inexplicable free associations to random medical terms.  More to the point, failure is a word I know many will have no trouble associating with the process of RHNA and the housing element, but that’s a topic for another blog.

All wonky kidding aside -- if there is such a thing -- I was glad that I had a chance to sit in on the conversation.  Aside from the free lunch, I had the privilege of sitting in close quarters and making small talk with about 20 or so experts in the field of housing.  These are people who have spent their careers focusing on the minutiae of housing, land use policy, and the big data that surrounds it, people like Dowell Myers from USC and Paavo Monkkonen from UCLA, who are recognized as the foremost experts in their field.  Dr. Monkkonen has been a featured speaker for the CCRE. 

To clarify, with people like this, you don’t make small talk as much as you make “wonky talk”, which is not the same as “honky tonk”, even though they sound kinda the same.  These folks aren’t interested in looking at pictures of your cat, but if you can throw in a quick aside about “squishy numbers” or the 2020 Census, their ears perk up, and you may even score a smile.

I should point out, that it wasn’t a panel discussion as much as it was a brainstorming session, which was good.  The experts made efficient use of the three hours, giving SCAG some valuable input and commentary on its methodology.  They focused on three points:  1) how to account for housing that is destroyed and not replaced on a one-for-one basis, 2) how to calculate the effect of “cost-burden” (i.e. paying more than 33 percent of income on housing costs) and 3) how to accurately measure “overcrowding” as a factor that contributes to the existing need. 

More jabberwocky, I know.  Hard to avoid it, but I do have a point, and if you’ll hang in there a little bit longer, I might get to it.

It was interesting to watch the thought process that goes into the calculations, and the views of those on the outside who are monitoring, studying, and working with the results. 

It was easy to discern differing and deeply held views about the role of local government and the depth of the housing crisis in California.   I think it’s fair to say that while none of them articulated this view, most feel it is a monumental task, at the very least.  I want to say “insurmountable”, but I won’t go that far – even though I guess I just did.  Whether it is insurmountable or just monumental, everyone in the room is committed to chipping away at the problem.

If I could distill the three-hour conversation into one pithy description, it would be this:  Experts used the power of their collective expertise to compel SCAG to refine their methodology to come up with a higher number for future housing needs in the region.  I know, not exactly pithy, but that’s about as distilled as it’s gonna get.

Please keep in mind that SCAG is currently looking at a projected need of just over one million units. I’ll let you be the judge of whether that is a satisfactory number.  (SCAG projects the total population to exceed 20 million in the same time frame.)

On that note, there was little discussion of the politics of housing.  Politics was not the expertise of anyone who was in the room, which included zero elected officials.  Yes, here is my long-winded point:  All the experts understand that while they can fine-tune the methods of calculation to produce the most accurate numbers to quantify the need for more housing in Southern California, ultimately, cities will have to make the bold choices and their residents will have to accept that this is their problem, too.    

Only when we can convince existing homeowners that it is in their best interest to build more housing will that housing have a chance of ever being built. 

Perhaps that is where the REALTORS® comes in.

If you have any thoughts or questions, feel free to email me at richardl@car.org or call me direct at (213) 739-8273.