In Downtown Los Angeles, the homeless rub elbows with finance capital, but the developers want new neighbors.
Estimates of the number of homeless people living in Skid Row, the 50-square block nucleus of Downtown Los Angeles, range between 2,000 and 5,000, depending on the season. They live among tents and tarps, some with ornamentation typical of brick-and-mortar homes. Many cycle in and out of a dense network of shelters in the area. They are vulnerable: It isn’t uncommon to see a woman with feet so gout-swollen that shoes don’t fit, or a schizophrenic man charging through the street like a rhinoceros. A few openly plunge needles into their arms on the sidewalk. In most American cities, you’re not allowed to be this homeless.
Skid Row came before Downtown. In 1876, the tracks of the Southern Pacific railroad first snaked down to the agricultural area that would eventually become the city’s core. The main rail yard and station were built just a few blocks east of the row’s current eastern edge. Poor, male migrants built the tracks and stayed to work during harvest season. A complex of single-room hotels and saloons developed to serve the laborers, but when money ran out in the off-season, many wound up on the street. Christian missions offering shelter beds began competing with the bars and brothels for territory.
Meanwhile, railroad oligarchs like Henry Huntington of Southern Pacific developed the surrounding area. Bank of America and other financial institutions were soon setting up shop on Spring Street, a block away from Skid Row, and world-famous hotels and theaters proliferated the next street over on Broadway. But the paupers never went away, and after the Great Depression, Skid Row’s concentration of services made it a national destination for the destitute.
Over the years, new missions and hotels replaced old ones, and the row’s character changed with the times. After America waged a proxy war against Soviet Communism in Vietnam, young veterans with opiate habits sought refuge on “the Nickel.” A decade later, when CIA-backed Nicaraguan drug runners introduced crack cocaine to poor neighborhoods in South Los Angeles, Skid Row’s population started skewing black, and drug addiction became more pervasive. The crack epidemic, coupled with the county’s habit of dropping off newly released offenders into the area, increased crime. A pattern of routine police sweeps began that reverberates well into the present.
As Skid Row changed, so did the surrounding area. The development of the highway system after World War II reduced the significance of Downtown as a central hub, and the moneyed classes began moving to surrounding neighborhoods. While some new office space was built in Bunker Hill, a few miles west of Spring and Broadway, profitable real estate elsewhere drove most businesses out of the area altogether. By the 1990s, storefronts managed by working class Latinos and sweatshop-like garment operations opened where finance reigned in the first half of the century, and the old banks rotted.
There is an idea in mainstream economics that poverty and homelessness are natural, and even necessary, social conditions. From a developer’s perspective, that means homelessness does not need to be solved—because it cannot be—but rather managed.
Tom Gilmore knows this. “I actually believe that on some level the existence of poor and potentially homeless people or borderline people is not antithetical to a healthy urban environment,” said Gilmore, the face of Downtown’s turnaround, to a researcher in 2004. Gilmore was the driving force behind an adaptive-reuse ordinance passed by the city in 1999 that made it easier for developers to repurpose old buildings for retail and living space. He jump-started the process by using a loan from the federal government to transform decrepit buildings on Spring Street into lofts, hotels and restaurants. In a revealing move, the city also named him commissioner of the Los Angeles Homeless Services Authority.
Gilmore happened to be in Downtown Los Angeles at a perfect time for any enterprising developer. The late ’90s was when gentrification as a redevelopment strategy—and its parent phenomenon, the “urban renaissance”—truly went global. The same year Gilmore rebranded his parcel of Downtown as the “Old Bank District,” an urban taskforce in London announced “a new vision for regeneration” financed by major capital investments in dilapidated areas and facilitated by public-private partnerships.
The rhetoric of “regeneration,” ”resurgence,” “renewal,” and “renaissance” not only justifies major infusions of private capital to makeover already developed lands, but also aligns the interests of developers and banking financiers with footloose global retailers, who all hope to stake ground where potential returns on investments are highest. Development for development’s sake has made property markets a main determinant of urban strategy, and local renaissance is grist for the mill of global capital. A cascade of gentrification clichés ensues: rising real estate, richer citizens displacing poorer ones, and environments conforming to the new citizenry’s deep pockets.
Less discussed is how this has transformed urban planning. From Los Angeles and New York to Munich and Istanbul, competing city planners must act like entrepreneurs to attract highly mobile investment capital. They offer tax awards and eschew slower democratic processes for the sake of efficiency. The city becomes a brand advertised by planners and consumed by developers, high-end retail, the “creative class,” and tourists. Former New York City mayor Michael Bloomberg captured this sentiment best in 2003 when he called the city “a luxury product.”
A year before Bloomberg made his remarks, the eminent business lobby of Los Angeles, the Central City Association (CCA), was fretting over how it would lead a renaissance in Downtown with the nation’s largest encampment of homeless people at its center. “We believe it is necessary for society to ‘take back our streets’ from those who cannot help themselves or refuse help,” the organization said in a 2002 report. It goes on: “Downtown Los Angeles is on the cusp of an urban renaissance…[but] this renaissance is threatened every day by street encampments, drug deals, overdoses, and panhandlers.”
Throughout the 2000s, the adaptive reuse ordinance transformed buildings all across Downtown, complementing the completion of L.A. Live, a $2.5 billion bonanza of restaurants, bars, ballrooms, theaters, and high-end living space. Leaders were left playing catch-up with the boom. Once the real estate fever subsided, some wondered, how could they brand Downtown to the world to keep investment coming in? And what would that mean for Skid Row?
Former Los Angeles council member Jan Perry addressed the first question during a 2010 CCA event entitled “The Titans of Downtown.” Donning her entrepreneurial hat, Perry, a Democrat, gave a glowing introduction to the four business oligarchs who were about to take stage:
“We need another catalyst [like the adaptive reuse ordinance],” Perry said. “[Downtown’s development] happened because of gentlemen that you will hear from… I’m extremely proud to have been able to move the mechanisms of government and partner with the Central City Association.”
Tom Gilmore moderated the discussion between powerful developers Nelson Rising and Jim Thomas, then-CEO of Anschutz Entertainment Group Tim Leiweke, and billionaire philanthropist Eli Broad. Together the four titans hashed out “the plan” everybody else would follow.
By 2020, they agreed, tourism and entertainment should be the main drivers of Downtown’s economy. A new billion-dollar football stadium would be flanked by a new convention center and museums, and the surrounding space would be filled with hotels, office space and modern retail-restaurant complexes. All of it would be connected by a new transit system. Downtown would be “prestigious,” like Manhattan, and high-class people would want to live there. And they needed each other to make that vision happen, they said: A convention center needs hotel rooms to host visitors, hotels need stadiums to attract tourists, and so on.
Local politicians have since acted out this vision. One telling sign is the city’s current frenzy to open up more hotel space. Daily rates for hotel rooms Downtown have risen 80 percent, and occupancy has hit an all time high—even as the football stadium deal seems likely to fall through. This is happening alongside a housing boom in Downtown, where there are now over five times as many residential buildings completed or under construction as there were in 1999. Many of the high-end variety: Last year the price of luxury properties rose 14 percent in Los Angeles, the greatest change in the entire Western hemisphere, and much of that change was concentrated Downtown.
Rising returns on property have attracted interest from international developers, particularly in Asia. Earlier this year, Greenland Group of Shanghai invested $1 billion to build “Metropolis Los Angeles” near L.A. Live, which will include a 38-story residential tower and a four-star luxury hotel. Then there’s the $1 billion Wilshire Hotel—slated to be the tallest building west of the Mississippi, built by Korean Air, which won a reduced tax rate for the building. China’s Oceanwide Real Estate Group and Overseas Union Enterprise Ltd are also investing over $500 million in hotel, residential, and retail complexes.
But despite all the investment, Skid Row remains. Complicating matters is that the county estimates homelessness rose from 50,214 in 2011 to 57,737 last year, and many believe this has swelled Skid Row’s population. Homelessness increased so steeply, the county believes, because of the recession and an $80 million slash in federal resources for homeless prevention and housing late 2012. Sequester-related cuts to Section 8 voucher programs for low-income housing likely had an effect as well.
As a white-hot real estate market rises in tandem with the homeless population, L.A.’s urban planners are employing “business-powered solutions” to handle homelessness in Skid Row and across the county. This is how the neoliberal city cleans up after itself.
In September, United Way’s Home for Good announced that it would finance something called the “coordinated entry system,” “an ambitious, business sector-powered plan to eradicate veteran and chronic homelessness” in Los Angeles County, with $213 million from public funders including the US Department of Veterans Affairs and the Los Angeles Housing Authority, as well as private funders like Goldman Sachs, JP Morgan Chase, the Hilton Foundation, and the Weingart foundations. The coordinated entry system, first announced two years ago, is meant to match individuals with services through registration in a massive database. Proponents present the program with frequent appeals to “efficiency” and “cost effectiveness.”
Once a person is in the system, they are given a “vulnerability score” based on a few different variables, including mental and physical handicaps and time spent on the street. Based on each individual profile, the entry system recommends a menu of “targeted services.” It was piloted last year in Skid Row, and a few dozen were eventually housed as a result.
While the coordinated entry system is the county’s most visible attempt in recent years to alleviate homelessness, the 1,400 units of units of permanent supportive it plans to build fall far short of the tens of thousands needed. Home for Good seems to hold no illusions that the entry system will actually end chronic homelessness. “The prioritization equation is designed to help Skid Row prioritize our chronically homeless population as there are limited housing resources in a community with a high demand for permanent supportive housing,” reads a user manual for the system. Such candor, as well as the rise in homelessness and fall in federal resources, makes it difficult to believe claims by Home for Good director’s Christine Marge that the program is “on track” to end chronic homelessness by 2016. Furthermore, past studies have estimated the cost of ending homelessness to be much higher.
In 2006, the city’s Economic Roundtable detailed a 10-year strategy to end homelessness in Los Angeles County that estimated the total costs of actually housing all street dwellers, factoring in the costs of supportive housing, subsidized housing, affordable housing, and an array of ongoing services. Using its most optimistic forecast, which assumed the number of homeless would decline and their rate of employment and enrollment in public assistance programs would rise, the county estimated a total cost of $1.45 billion in the first year and at least $900 million every year after that, reaching $1.9 billion in 2016.
That was before the Great Recession and subsequent austerity. With far less than a billion dollars for housing, the city’s plan is to manage Skid Row’s homelessness in a way that doesn’t impede the flow of capital gushing into Downtown. And they want to do it on the cheap. While the entry system sounds well intentioned, it obscures a recent history of outright oppression that now manifests in subtler ways.
The police sweeps of the last decade, when the LAPD would arrest hundreds of street dwellers for “quality of life crimes” like drug possession, public urination (where toilets were scarce), and even sitting on the sidewalk are gone. Lawsuits from advocates quelled the raids, but the city finds other ways to send its message: Strict bans on grass-sitting in newly revitalized Grand Park, pedestrian bridges built between lofts and over encampments, forced migration from block to block by police and private security citing garbage concerns. It seems to be working. A study from August cited in the Los Angeles Times found that a significant number of Skid Row residents were moving to nearby Boyle Heights and Lincoln Heights, outside of Downtown.
Perhaps no city leader embodies the competing interests of human care and capital investment more than council member José Huizar, whose district includes Skid Row. While he ostensibly represents some of the poorest people in the city, Huizar collected almost as much in campaign donations as all the other 10 council members combined in the last election. He brokered the billion-dollar Wilshire deal with Korean Air months before announcing a $3.7 million plan to provide greater access to bathrooms and showers in Skid Row (a move the LA Weekly called a sick joke). Like Home for Good, Huizar speaks a big, hollow game about accessible housing.
The plan to confront homelessness does not originate from politicians like Huizar hustling for capital, but from capital itself, channeled through developers. And in the developer’s paradigm, in which everything is a potential source of profit, the homeless may actually be useful as bohemian props to attract urban pioneers seeking urban grunge.
Bernard Harcourt suggested as much in his 2004 paper “Policing L.A.’s Skid Row.” The academic spoke with a number of developers, including Tom Gilmore, and discovered a shared vision for “a harmonious mix” of hipsters, business techies, and street people. Harcourt concluded that there was a “symbiotic relationship between urban downtown chic and the destitute,” personified in property magnate/homeless commissioner Gilmore.
But that was 10 years ago—before the financial crisis prompted the world’s central banks to slash interest rates and flood commercial banks with cash (known as quantitative easing). This “reduc[ed] the cost of finance and encourag[ed] affluent buyers into the prime property markets,” according to Knight Frank’s 2014 Wealth Report. By 2013 global investors spent $1.2 trillion a year on high-end properties, an 80 percent increase from three years prior.
Whether or not Skid Row’s street people will be wielded around for the sake of urban brand, or simply expelled as real estate values keep rising, remains an open question. We can, however, be assured of one thing: The vast majority will not be housed anytime soon.