How Does Affordable Housing Get Built?

Tunnel

LA is the most unaffordable city in the US.

As a result, nearly all Angelenos agree: we desperately need more affordable housing.

But how does affordable housing get built, and how can we push for more of it? 

Housing is considered affordable if someone spends less than 30% of their income on it.

Black and Latinx Angelenos are disproportionately burdened by rents that are far higher than this.

There’s generally two kinds of affordable housing:

“Naturally occurring,” or market-rate housing that happens to be affordable, and “covenanted affordable” units that are legally required to be affordable to low- and middle-income families.

We’re focusing on the second kind.

There are two main ways CA creates covenanted affordable housing:

• Tax breaks and other incentives to 100% affordable developers

• Density bonuses -- allowing buildings to be taller, with more apartments -- for projects that include affordable units in their buildings.

Local tax breaks and loans for 100% affordable projects are essential, but the pot of available money isn’t meeting the enormity of our need.

Projects are forced to compete for limited slots each year, then cobble together state, federal, and private financing to get built.

Best estimates are that it will cost more than $130 billion to publicly finance the ~450k affordable units LA County needs. 

For perspective, Measure HHH, which is financing housing for people experiencing homelessness, raised $1.2 billion -- and that was a big deal.

To reach this level of investment, we also must leverage funds from the private sector.

The main way we’ve done this in LA is through a program called Transit Oriented Communities (TOC), which was approved by a 2016 ballot initiative called Measure JJJ. 

TOC, which offers height and density in exchange for affordable units in buildings near public transit, has significantly increased affordable housing production in LA.

Overall, it has generated 35,060 units, 11,556 of which are covenanted affordable.

                                                                                               

TOC has many shortcomings, however.

It’s important to recognize and improve upon them because each of our Community Plans is developing a local version of this program.

Hollywood’s version is included within its Community Plan Implementation Overlay (CPIO).

One issue with TOC is some projects destroy existing rent-stabilized (RSO) housing. 

These RSO units must be replaced, but the replacement units count towards the new building’s affordability requirements.

This double counting is wrong, and the Hollywood CPIO shouldn’t allow it.

Second, in high-resource neighborhoods like Hollywood, developers can likely afford to set aside an even higher percentage of affordable units.

As such, the Hollywood CPIO should enact even more ambitious affordability requirements than the citywide TOC program.

Going forward, the more ways we can make building more affordable -- through allowing smaller units, less parking, and co-living arrangements -- the more we can (and should) require even higher percentages of affordable units in new market-rate projects.

The Hollywood Community Plan goes back before the City Planning Commission this Thursday.

To follow along, and support stronger tenant anti-displacement protections and affordable housing requirements, the agenda and call-in info is here