SCV NEWSMAKER OF THE WEEK:
Holly Schroeder
Chief Executive Officer,
Greater L.A.-Ventura County Building Industry Association

Interview by Leon Worden
Signal Multimedia Editor

Sunday, September 4, 2005
(Television interview conducted August 25, 2005)

Holly Schroeder     "Newsmaker of the Week" is presented by the SCV Press Club and Comcast, and hosted by Signal Multimedia Editor Leon Worden. The program premieres every Wednesday at 9:30 p.m. on SCVTV Channel 20, repeating Sundays at 8:30 a.m.
    This week's newsmaker is Holly Schroeder, chief executive officer of the Greater Los Angeles-Ventura County Chapter of the Building Industry Association. Questions are paraphrased and some answers may be abbreviated for length.

Signal: Chief executive officer of the local Building Industry Association — thats a brand-new job for you.

Schroeder: It is.

Signal: Have you had experience dealing with developers before?

Schroeder: I have had some experience dealing with developers, although I have not actually worked in the Building Industry Association.
    I actually am new to the Southern California area. I just relocated down here from Portland, Ore. And when I was there, I worked most recently at their state Department of Environmental Quality as their administrator of the water quality protection program.
    Clearly, water quality is an issue for that comes up during development, so I dealt with some of the development issues on that end of things, but this is the first time I have worked in the industry.

Signal: Water has certainly been an issue in our valley; did all the developers get together and recruit somebody who could handle the local water issues for them?

Schroeder: I don't think it is quite as simple as that, but I do think that they are hoping — and part of the reason I have been interested in coming down here is that we need to be looking at housing issues ... through a variety of different lenses, and thinking about different aspects of it. Water quality is clearly one of the pressing issues facing the industry, facing our community down here.
    I have had a pretty wide range of experiences working in the private sector, as well as working in the public sector. My hope is that I can use that experience to connect with members of citizen activist groups, members of government, in order to build some bridges and build some coalitions so that we can actually work on solving the housing crisis that is facing the Los Angeles area in terms of housing affordability.

Signal: Statewide, we've heard of the need for 250,000 new housing units every year, but only half that number are being built.

Schroeder: I have heard that figure, and you hear the figure in a variety of different ways. One of the ways I have been interested in looking at it recently is in terms of job growth. Because we have had some very good job growth, and we right now are adding only one home for every six new jobs that we create in this state. The California Department of Finance estimates that a more appropriate balance would be 1-1/2 housing units for every new job that is created. So we are out of balance there, and at a time where we are looking at some strong job growth in the future, it looks like our housing deficit is likely going to continue. And we're concerned about that.

Signal: Is the 1-1/2 to 1 ratio based on the idea that half the homes have one breadwinner and half the homes have two?

Schroeder: I don't know how exactly; it could be; I'm not exactly sure how they calculate it and how they came up with that basis, but I think ... the significant thing is that we're not building. I mean, we're building one (home) for every six new jobs, so there is a significant deficit there.

Signal: Where do those 4-1/2 people live?

Schroeder: That's a good question, and I think that's definitely the issue that we're facing. I think you see people coming up with all kinds of creative solutions. One of the things I'm hearing a lot about as a new resident down here is — people doubling up is an example; people are living with friends or doubling up in different ways; kids are graduating school (and) still living at home. You have people coming up and (being) put in those types of situations where they are not necessarily where they would like to be.

Signal: The SCV housing market has been on a tear; when is it going to come back down?

Schroeder: Don't we all wish we knew? I think we all do wish we knew, and ... frankly, I don't think the economists know...
    Now that I am working here and I'm trying very hard to learn the specifics of the industry in this market, I get all kinds of alerts and newsletters on the Internet; ... I think for every article that I get that says that there's a housing bubble, I get an article that says there is not a housing bubble. So there are definitely very different opinions about whether or not housing is going to continue and what pace it is going to continue...
    The thing that I do know is that we have a shortfall of housing. We don't have the housing stock that we need to deal with, even with the population we have now, let alone the projected population increase that we're looking at over the next 15 years.

Signal: The housing element of the Santa Clarita General Plan, initially adopted in 1991, specifies a certain number of affordable housing units that need to be built — but they haven't been built. There's been some indication that the state Legislature may force cities and counties to build the low- and moderate-income units that are called for in their housing elements. What's the latest?

Schroeder: ... I think what you are talking about is some proposals that have been floated at both the state level and even at the local level to mandate the developers have a certain number of units in their projects be considered affordable housing — is that (what) you're getting at?

Signal: Yes. Is the state going to make them do it?

Schroeder: At this point, I mean, I can't predict, but I think that there is increasing research coming out right now that shows that those types of mandates aren't necessarily effective.
    There is a study done by San Jose State (University) sometime in the past couple of years, I think, that has been talked about, and the term that is used for a lot of this is "inclusionary zoning" or other types of terms like that. What they find is that as a real solution to overall housing, it doesn't really work; it shifts the cost burden onto other families, and it really only solves the problem for a small number.
    Instead what we recommend, what we really see, is — I mean, we are really talking about a basic market dynamic that's going on here, and we need to start realizing and recognizing — and our decision-making, as the government and policy makers make their decisions — that affordability is going to come with availability.
    It's kind of like what's happening in oil prices or gas prices right now. We're having a (lower) supply of oil, and the price per barrel is going up, and it shows up in our gasoline prices. It's just a basic economic — you know, Market Economy 101. (The) same thing is going on in the housing industry. We don't have enough supply, so you don't have the basic market forces, and that's part of what is sending prices up and making it harder for housing to be affordable.

Signal: Builders would probably be resistant to the state telling them they have to build affordable homes; in your capacity as the voice of the developers, is it your job to lobby on issues like that?

Schroeder: What we do is, we really seek to work with our elected officials and work with community leaders to provide information and education for them about housing issues.
    The housing industry is a very complex industry; there are many different facets to it, and quick or one-size-fits-all solutions aren't really going to get us making long-range plans to accommodate the population growth that Southern California can anticipate. So we work to provide information ... so that we are making informed decisions, and that we're thinking about housing.
    One of the things that we want to be talking with decision makers about is that housing is more than just about houses, in some ways. We're talking about building communities. We need to be thinking about housing and all the decisions that we're making, and thinking about the effect on housing. That's part of what we want to be talking about folks about.

Signal: Are you planning to get involved in local economic development matters?

Schroeder: I think it's not out of the question. I think that we will be; we definitely are interested in trying to build communities, and that's really part of what the Building Industry Association is about.
    In order to do that — you don't just need the houses; you need all of the things that go along with it. That means thinking about the economy, that means the transportation system, it means the open space, parks, schools — all of those things need to be thought about and considered as we're making housing (decisions).

Signal: In other words, how many Wal-Marts we'll need to meet all of these people's shopping needs.

Schroeder: Well, everyone has their own shopping tastes. But one of the things that the people who have lived here longer than me tell me is how much the valley has changed over the past decade, in that they have so many more options about places to eat, places to shop, jobs that are here in the valley; it's really changed. There has been a lot of economic development in the valley, and I think that's an important part of our economy.

Signal: A lot of those old-timers look at you funny when you talk about the housing supply not keeping up with demand, but then they look outside their door and see bulldozers on every hillside. For all of the change we've seen in the last 30 years, there is going to be a lot more. When is enough, enough?

Schroeder: I think that the people (who) say "enough is enough" — I can empathize with the feeling. You know, I think all of us at some point may say: I just don't want to see another car, I don't want to stand in line at the grocery store any longer; whatever it might be. But I think that we are fooling ourselves if we think that. We can't just say: No more people move here. I think that as a community, we have more potential than that. We, as the building industry, want to have a dialogue with people about what future they want to create.
    The population growth that we are looking at in Southern California is significant. People might think that it's just people like me moving in here from other parts of the country, but in fact, a tremendous amount of our population growth is coming from people who live here now (and) are having children.
    And we're living longer, so people are seeing their kids and their grandkids in housing while they're still in housing, and seeing their great-grandkids growing up. Just in order to deal with the natural births-over-deaths population increase, we need to be thinking long-range, and we want to be thinking ahead to provide the housing for those future generations.

Signal: North Los Angeles County — Santa Clarita, Palmdale and Lancaster — are projected to grow from about 550,000 people today to 1.2 million in 20 years. Considering the freeway and the water supply, how is that going to happen? Is it realistic?

Schroeder: I think that it's our responsibility as leaders, and (it is) our elected officials' responsibility, to be asking those exact questions. We want to be engaged in those discussions and participating in that. Because if that is going to occur, I think that it's hard to ask, can you accommodate it? It's more like, how do you not? I mean, we have a responsibility to our citizenry, and we need to, as a community,, provide housing for folks.
    The numbers that you cite, and I think it's (true) — throughout the Southern California area, one of the other statistics is that they anticipate 6 million additional people in the Southern California region. I try to bring that into perspective with folks. I used to live in Chicago for a little while, and that's two cities of Chicago coming into the Southern California area in the next 15-20 years. So we need to figure out ways, we need to come up with solutions, in order to provide housing, and to build the communities that support that housing. We need to bring in the infrastructure that's needed. We need to be continuing to invest in the infrastructure needs for water, for transportation; these are areas we have neglected in the past several years.
    I mean, I have read in history books about the development of the California aqueduct and the development of our freeway system. Those were tremendous infrastructure investments that were made in what the 60s. We're still relying on that infrastructure investment, and it's time for us to really be thinking of those long-range type of solutions in order to accommodate the growth that is coming.

Signal: Well, Caltrans can probably condemn more land to expand the freeway, and the Castaic Lake Water Agency has planned for the near-term growth by acquiring additional state water rights. But what happens when the state water system as we know it is maxed out?

Schroeder: I think it's great that you mentioned the local water agencies, because they're actually going through an analysis of water availability right now as part of their update to the Urban Water Management Plan. (That) is a very important process that's going on, an update to the process that's going on right now that we're engaged in, and we encourage citizens and other folks to get engaged in (this issue).
    I also think that (CLWA is) — and just in my limited exposure to them so far — a very innovative agency, and we need to be looking at innovative ways of using technology. There's a very impressive use of recycled water that has been through a treatment system that has come from all of us — I mean, it comes from our showers, it comes from our laundry and it goes through a treatment system, and it gets treated —

Signal: But you don't want to drink it.

Schroeder: In many cases, you would be surprised at how well it meets drinking water standards. But we use that water in other ways. You can use that water for irrigation and other types of things, and that reserves your more conventional sources of state water or other sources of water for your drinking water uses.
    Those are smart innovations, smart uses of technology. A lot of the housing that's being built today is being built with more improved irrigation systems. (There are) remarkable uses of technology where they can tell how much water is needed (so you can be) energy and water efficient in your landscape use; all these types of things are part of a broader equation. (The BIA is) participating in those discussions with the water agencies, with the state, with the other community groups, to come up with those (solutions).

Signal: Our experience with the Urban Water Management Plan in this valley is that the water experts draft it, and then its statistics and assumptions are attacked in court by activists who want to limit growth. What is the Building Industry Association's role in the process? How do you interact with CLWA as it drafts the Urban Water Management Plan?

Schroeder: Well, we want to be part of the process and part of the discussion. In terms of the numbers, we rely on the experts for that. We are experts in building technologies and other areas, and we need the water experts, and we rely on Castaic Lake Water Agency to really do that analysis, do that research.
    What I think we hope to bring to the table is a focus on the crisis that is facing the Los Angeles area in terms of housing. Because we have not been building houses to keep pace with our population growth, we are sort of in a hole, if you will, with respect to the population growth that has gone on in the past decade. As we're making decisions about the Urban Water Management Plan and making decisions about other areas that effect our daily grind of life, we want to be calling on our elected officials to be thinking about housing, thinking long-term about the future, really stepping up and leading with some vision and a picture of what they want to create in the future. We hope to bring information about the building industry and bring that to the table so that people can try to make holistic and thoughtful decisions as we move forward.

Signal: You want to make sure the Castaic Lake Water Agency is doing everything it can to get more water so that your builder-members can build more homes.

Schroeder: It's not just about building homes. It is really about building the community. It's about building the communities that will support our population in the future. In building that community, it includes the water and sewer infrastructure, it includes the parks and the schools.
    As the building industry, we really pride ourselves in the fact that we — One, we're providing housing, which is a noble thing, to provide housing. It's very near and dear and personal to people. And we're also a big part of the funding for a lot of infrastructure that is needed for the population that is already here, even.
    I think your readers would be surprised to learn how much of the infrastructure (that is) built is paid for by new home buyers. Costs associated with roads, costs associated with parks, schools, all of that — there's not other funding sources, and it ends up being paid to a significant degree through the building industry.

Signal: The cost is passed on the new home buyer —

Schroeder: Ultimately it gets passed to the home buyer, and that's why housing is costly.

Signal: Speaking of building communities, we're going to have a whole new one west of Interstate 5 — Newhall Ranch, 70,000 people over 25 or 30 years, starting when?

Schroeder: That's a good question. Newhall Ranch is a great example of some of the challenges we face in the building industry. Did you know that the planning for Newhall Ranch started back in (about) 1990? That maybe gives folks an idea of just how much planning and how much legwork needs to go into (developing) a project; that is 15 years to come to fruition. That's probably longer than it takes to bring a drug to market. It still hasn't broken ground ... it's probably still several years away before we do break ground.

Signal: In terms of roads, schools, that sort of thing, how do you perceive the Santa Clarita Valley's ability to absorb it?

Schroeder: I think the part of the planning for that, and part of what's going on as we're doing that, is a lot of planning for the roads, and again, as I mentioned, a lot of the costs put forth through that is (paid) through the building of new homes and the purchase of new homes. That's where a lot of the funding comes for that —

Signal: So ultimately it will pay for itself?

Schroeder: I think that we have to continue to pay attention to our infrastructure needs; we need to follow through on the projects we have got in the pipeline that we need to get funded; because they are going to be a big part of the solution to accommodating that.
    The cross-valley connector is a great example. I heard a speech from Congressman (Buck) McKeon, who was talking about when he moved to the valley; the real-estate agent told him that we're pretty soon going to have a highway that was going to connect the 5 to the 14. And that was in the 60s. We're going to have it in a couple years, they said, and that's what people are still saying right now.
    We need to see that through. We need to provide that transportation corridor for people who are living here, so they can get off of trying to navigate through the neighborhood streets in order to find a shortcut from one side to the other.

Signal: The city of Santa Clarita and numerous local organizations are concerned about the Cemex mine that's supposed to extract 78 million tons of sand and gravel in Soledad Canyon over the next 20 years. Do you see a role for the BIA? If your builder-members need the raw materials, are you in favor of having the mine there? Or do you see an opportunity to step in and help negotiate some other solution?

Schroeder: That's a great question, and if I had been here for more than two months, I would have had a better answer for you. I don't know a lot about the Cemex situation at this point in time, but it is, I know, a very volatile issue in the community; something that a lot of people have passionate and significant differences of opinion about. It's one I need to learn more about and figure out how we can engage. If there is a way we can be of service and bring (that to) resolution, then we would certainly want to do that.

    See this interview in its entirety today at 8:30 a.m., and watch for another "Newsmaker of the Week" on Wednesday at 9:30 p.m. on SCVTV Channel 20, available to Comcast and Time Warner Cable subscribers throughout the Santa Clarita Valley.


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