CommentsOn Thursday, October 26, Budget Advocate Barbara Ringuette from Silver Lake Neighborhood Council (NC) with members of her Housing Committee met with the Los Angeles Housing and Community Investment Department (HCIDLA) to inquire about the outlook on revenue for affordable housing for fiscal year 2017-18. The following is an excerpt of the meeting:
“Nationally, Los Angeles is the most rent-burdened place to live in the country,” commented HCIDLA Executive Officer, Laura K. Guglielmo. “There’s a mismatch between what people earn and what they spend for rent in this city; they’re paying more than 50% of their earnings for rent. At some time, it will restrict the workforce. We have to make a choice to improve the problem.”
Housing Development Bureau Assistant General Manager Helmi Hisserich said that she doesn’t want to view development as a “piggy bank.” On the other hand, Ms. Hisserich finds that when development creates an impact causing the need of affordable housing, “it’s only appropriate for it to help support that need.”
“We want to be mindful that every time the city puts a fee on development, it affects the cost of development,” said Hisserich.
Linkage Fee
The linkage fee will contribute about $30 million or less to affordable housing, and the benefit of that will vary upon the amount of development since it’s tied to the market trend, said Hisserich. “It’s a revenue stream that has the potential of growing through time.”
Guglielmo elaborated that large development that has a housing impact will pay a Linkage Fee. Say, in the case of a developer building a skyscraper or stadium and employing many workers at minimum wage who cannot afford to live in Los Angeles. Then that developer is creating a demand for affordable housing, and development now has to create a resource, even though, normally, the people [taxpayers] would be paying for it [through public subsidies].
Guglielmo re-stated that it's a link between development and affordable housing. If a developer is employing workers who are earning at or below the area’s median income, such as a household of four earning $50,000 or less, the developer is contributing to the need for affordable housing.
“With a linkage fee we create affordable housing,” she said.
Assistant general manager Luz Santiago said that HCIDLA is presently working on a study with the Department of City Planning. “The team is looking at the various types of developments, their relative contributions to affordable housing and trying to find a balance. Perhaps they’ll consider the square footage of a development to calculate the fee.” Soon the team will present a proposal to the Mayor regarding the Linkage Fee, she said.
Cap-and-Trade Program
The Affordable Housing Sustainable Communities (AHSC) Program is statewide under the cap-and-trade spending plan which provides revenue generated from the permits sold to industrial polluters in California. Proposals for funding must be used solely for projects that reduce carbon emissions.
HCIDLA, with a group of developers, submitted a funding proposal for the competitive grant, requesting about $75 million to be used for affordable housing linked to transportation. “We were awarded $64 million. We’ll continue to apply for affordable housing grants though the total cap-and-trade fund seems to be declining,” said Guglielmo.
“Affordable housing is linked to transportation. Getting people out of their cars, reducing vehicle-miles traveled is the single biggest way to decrease carbon emissions,” said Guglielmo. “Lower income families tend to eliminate cars when living near public transit, resulting in a higher reduction of carbon emissions.”
Ms. Santiago said that HCIDLA is getting ready to submit a proposal requesting a position for fiscal year 2017-2018 to coordinate the application of the cap-and-trade grant with multiple city departments -- Department of Transportation, Department of City Planning, LA County Metropolitan Transportation Authority (Metro), and Bureau of Street Services.
Preserving Affordable Housing
“The objective of the HCIDLA Recapitalization policy is to preserve affordable housing through the extension of the time period of affordability covenants,” as per CF 16-0085 adopted 2/03/16.
Affordable housing is linked to a covenant “where the occupancy is restricted to households with income equal to or less than a specific income level,” said Hisserich. A covenant may fall into one of two categories. The first category “is a big concern to us,” she said. “There are 13,000 existing affordable units with covenants that will be expiring in the next five years. A lot of these units we inherited from the Community Redevelopment Agency of the City of Los Angeles (CRA) that closed down. HCID has a proactive team of two who are doing outreach to owners to extend the affordability. When the covenants on the units expire they could be rented at market rate.” HCID offers assistance with refinancing or rehabilitation of the physical building. Covenants are legal bindings that are tied to the property for 50 years.
The second category of affordable housing is less of a focus for HCID. Presently the department has 20-Recaps (affordable housing projects with loans for capital improvements) in the queue, explained Hisserich. “These are not at risk of converting into market rate anytime soon. Through a needs assessment, review, and evaluation of certain affordable housing developments, we offer financial assistance with city funds and tax exempt bonds. It varies from project to project.” Then if a property owner needs funding to renovate or repair units, we provide them with the capital to renovate resulting in a capital cost, she said. “Every time we do substantial capital improvements we extend the covenant another 50 years to provide affordable housing. We become financial partners, using public funds and bonds.”
Guglielmo explained that housing under the Rent Stabilized Ordinance (RSO) is rent stabilized housing and not necessarily affordable because an RSO property might not be under the restrictions of a covenant. RSO units could be renting at market rate.
LAUSD Partnership
HCIDLA manages 13 Family Source Centers in the city. It’s a 50/50 dollar-partnership with LAUSD where $1 million comes out of the city’s general fund. Through LAUSD-PSA, teachers work with students whose families are at risk. “We address the family side,” said Guglielmo. She added that HCID is broadening their relationship with LA County to increase the funding for the Family Source Centers with social workers and mental health services, including domestic violence. In summary, she said our Family Resource Centers are “a one stop shop.”
Health Department Vouchers
According to Guglielmo, the County Health Department has recently put millions of dollars into a new voucher program to assist the homeless that are in county hospitals or facilities, stating, “It’s been very valuable.” The vouchers are worth a $1,000 a month in rental subsidy as long as the rental unit is in an area with access to a healthcare facility.
This reduces the cost of “keeping them [the homeless] in a county hospital costing a $1,000 per day,” said Hisserich. “There have been a lot of people who are benefiting from this program. We’re coordinating with the use of these vouchers … Vouchers alone aren’t the solution. They are only part of the solution because a person may have a voucher but have no place to go.”
Budget Advocate Barbara Ringuette commented that she is hopeful substantial additional affordable housing will be built in Los Angeles and that existing resources will be maintained.
Ms. Ringuette added, “My concerns are the enforceability of existing and new housing covenants and mitigating the impacts that increased density, height, and parking can bring to our neighborhoods.”
(Connie Acosta is a member of the Budget Advocates Housing Committee and often reports on the neighborhood council system and other topics.) Edited for CityWatch by Linda Abrams.
Neighborhood Council Budget Advocates Meet LA Housing, Push for Affordable Housing
