California faces a severe housing crisis and needs to build more homes. Many of the Gateway Cities in southeast Los Angeles County are densely populated. These cities have economically disadvantaged populations that are burdened by housing costs and live in overcrowded conditions. New housing production offers the opportunity for much-needed economic development in the Gateway Cities, but California’s current complicated system of municipal finances means new housing would further constrain Gateway Cities’ budgets.

Further, physical space constraints, coupled with increasing Regional Housing Needs Allocation (RHNA) allocations and new state legislation opening commercially zoned land for infill housing, means that Gateway Cities are seeking retail to residential conversion opportunities that also would likely result in decreased sales tax revenue.

In this study, California Forward (CA FWD), in partnership with the Gateway Cities Council of Governments (Gateway COG) and UrbanFootprint, examined the relationship between property tax shares and housing production across California cities, modeled the net fiscal impact of building housing on 19 commercial and industrial sites in the Gateway Cities and modeled the impact of the sixth RHNA process.