Why Los Angeles County Could Lose $3 Billion in Affordable Housing

The city scrambles to reverse its homelessness crisis, but federal aid is drying up. 

(AP Photo/Nick Ut, File)

Despite Los Angeles’ new bond for homeless housing and recently-approved linkage fees, the surrounding county is at risk of losing $3 billion worth of affordable housing over the next half-decade, radio station KPCC reports.

The slow death of fully public development — which has been replaced steadily with public-private partnerships — is partially to blame, the California Housing Partnership Corporation (CHPC) told L.A. officials last week, according to the station. Today, private developers often use public funds for construction, and in exchange agree to rent units at a reduced rate for a set time period. When that period expires, the developer is free to raise the rent; owners of Section-8 funded apartments operate under a similar agreement. As properties age and incur maintenance costs, the risk increases that landlords will, in fact, raise the rent.

In Los Angeles County, 11,000 units fall into the public-private partnership category, CHPC said in its presentation last week.

As Next City has covered, L.A. officials are scrambling to deal with an unprecedented housing and homelessness crisis. L.A. Metro has studied placing supportive services on its properties, for example allowing people who live in their cars to park at Metro-owned stations and shower at bus storage yards. In 2016, voters approved Proposition HHH, a $1.2-billion bond expected to fund the construction of 10,000 new units for homeless and low-income people over the next ten years (24 projects have been approved so far). Last year, L.A. City Council approved a plan to impose so-called linkage fees on higher-end development to fund the construction of below-market-rate units.

And to a certain extent, homeowners are joining in. A series of state legislative tweaks in 2016 and 2017 reduced regulations on accessory dwelling units (ADUs), and in 2017 L.A. residents filed nearly 2,000 applications to convert their basements, garages and backyard cottages into low-cost housing (only 90 applications were filed in 2015 before the regulations were reduced).

But all of those city-led measures don’t erase the fact that federal and state resources are drying up. In anticipation of federal tax reform, low-income housing tax credits have plummeted in value, KPCC reports. In 2017, L.A. County saw a 21 percent decline in tax credit funding for new affordable homes.

And the state’s 2012 shutdown of city Redevelopment Agencies hasn’t helped matters. Those agencies were supposed to set aside 20 percent of their property tax revenues for affordable housing projects. In L.A., that translated to about $50 million annually, the city’s housing department recently told the Los Angeles Times.

Compounding that loss, the city opted to spend state funds that would have gone to the agencies (before they were shut down) on city services such as law enforcement, firefighters and pensions, rather than on affordable housing, the paper reports.

From the L.A. Times story:

Some jurisdictions, including Oakland and Emeryville, dedicated a similar percentage of boomerang funds to housing or helping the poor after redevelopment ended. However, many California cities and counties were reluctant to do the same, facing pressure to spend money to restore services and increase salaries for government employees in the aftermath of the recession.

L.A. County needs to identify affordable housing that’s at risk of evaporating and provide incentives for landlords to keep the units low-cost, CHPC President Matt Schwartz said last week, according to KPCC.

“Over a ten-year period, if there are not further changes … we could be short about 70,000 affordable homes [state-wide],” he said.

Rachel Dovey is an award-winning freelance writer and former USC Annenberg fellow living at the northern tip of California’s Bay Area. She writes about infrastructure, water and climate change and has been published by Bust, Wired, Paste, SF Weekly, the East Bay Express and the North Bay Bohemian

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Tags: affordable housinglos angeles

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