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LABJ Looks at Market-Rate / Skid-Row Relationship

By Eric Richardson
Published: Tuesday, September 06, 2005, at 05:23PM

Mark Lacter has an interesting piece in this week's LA Business Journal titled "Downtown's Renewal Testing 'Containment' of Homeless Problem." There are things I agree with, and things I don't, but I guess that's what makes a good read. I don't know how the piece is presented in the paper journal, but I would have to believe it's editorial or op-ed.

Trouble is Skid Row has become, in economic parlance, too big to fail. Its residents cannot be put onto buses and shipped to some other neighborhood, because there is no better place to take them. This is, after all, the largest service-dependent ghetto in the nation.

Its estimated population of 8,000 to 11,000 has created an economic infrastructure not only made up of various service organizations, halfway houses and hotels, but ruthless street-level businesses that provide drugs, cigarettes, liquor, prostitution and even protection.

Lots of well-meaning non-profits have tried, with some success, to transition residents into shelters and then train them for jobs. But much of the homeless population is too sick -- mentally as well as physically -- to stand a chance in the working world.

I'll respond a little after the jump.

I fundamentally disagree with the idea that SRO-type housing, the social services and new market-rate development can't co-exist. Homelessness is a problem that Los Angeles has to deal with, and Mark's correct that the problem must be dealt with here. This is where the providers are, and this is where the support structure that does exist is located.

As a resident of Downtown, I understand that. I'm ok with that.

What I am not ok with, and what the new development cannot co-exist with is the underside of Skid Row. Drug deals can not be allowed to continue to occur on our streets. The containment of Skid Row has fostered an environment is which no one cared what it was that was going on in this area. Everyone looked the other way because to do so was easier. Market-rate development in the area has changed that. No longer can the police and the politicians allow the area to operate as it has without a very involved demographic starting to ask questions.

The social service providers are good neighbors. The people who come down here to buy and use their drugs are not.

That's why downtown development has its limits. That's why even real estate people say that downtown is in the midst of significant overbuilding that will lead to empty units, foreclosures and lower prices. It's not unreasonable to expect that in time today's $600,000 unit will be available for $400,000, perhaps a bit less.

Every time someone makes a statement like this I have to disagree. Yes, there will likely be a correction in the price of housing all over the Los Angeles area. Prices have risen ridiculously across the board. Those who are getting into the Downtown market on speculation that they can turn around and unload their unit in a year for a neat $200,000 markup are going to be disappointed. But I do not see Downtown with empty units. The latent demand for housing in the Los Angeles region is enourmous, far greater than the amount of new product being put on the market. If there is a correction the uptake on Downtown product will be even greater.

I'm not a speculator -- heck, I don't even have money to be buying a non-inflated loft -- so I don't really care all that much what the market does. All I know is that the demand for Downtown housing is extraordinary. People are buying into an ideal of urban living that's a lot of fun to be a part of. That's not going anywhere. The units that are being built will have people in them, and those people will work and walk the streets and go to restaurants and bars. Downtown will continue to brighten even as the market takes its course.


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