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November 2002 Planning Copyright by American Planning Association
Jan Breidenbach knows what it takes to build affordable housing. "You
need dirt, you need financing, and you need political will," says the director
of the Southern California Association of Non-Profit Housing. "No units are available," adds Jane Blumenfeld, director of citywide planning for Los Angeles. But the city is moving forward. Housing advocates have developed a sophisticated political strategy that is transforming the nation's second-largest city into a leader in affordable housing policy. In May, Los Angeles created the nation's largest municipal affordable housing trust fund. Launched with $42 million of the city's money, the fund will grow to $100 million in three years and help finance the construction and rehabilitation of an estimated 4,000 to 5,000 units for low- and moderate-income city residents annually. In addition, the city is reforming land-use policy to remove obstacles to housing production. The city's new comprehensive plan calls for mixed-use development along hundreds of miles of boulevards, and the planning department has drawn up a set of zoning and permitting changes that Blumenfeld hopes will encourage developers to build more affordable units. These achievements haven't occurred in a political vacuum. "On their own, the housing groups couldn't get a housing trust fund through the city council and past the mayor, no matter how bad the situation," says Peter Dreier, co-director of the Urban and Environmental Policy Institute at Occidental College in Los Angeles and former head of the Boston Redevelopment Authority. "We made a calculated decision to get organized labor and the religious community involved and to neutralize or engage the business community." Taking stock From Florida to Silicon Valley, creating broad support for investment, changing land-use policies, and finding the land all are moving affordable housing policy forward. Employers, developers, unions, and religious leaders have joined together in aggressive campaigns. Local efforts are tied to a drop in federal funding since the late 1970s and a concurrent rise in demand. While the problem affects middle-income people in many places, it is particularly acute for households earning less than 30 percent of the local median income. The Millennial Housing Commission, a panel established by Congress to study the nation's housing situation, says it will take 250,000 new units a year for 20 years to house these poorest Americans. The shortage of units — estimated at more than four million in the mid-1990s — is not evenly distributed. The gap between supply and demand is greatest in regions with the highest cost of living. In Massachusetts, the "least affordable state" according to the National Low-Income Housing Coalition, the Boston janitors union (Service Employees Local 254) has made a major issue of the gap between wages and rents. In Florida, workers live in inland counties and work on the coast. And in California's Silicon Valley, despite a precipitous downturn in the local economy, housing remains out of reach for many families. The problem is not limited to the boomtowns and growth centers of the 1990s. "There's a disparity between the cost of housing and what folks earn here, principally in inner city and rural parts of the state," says Jim Cain, executive director of the Iowa Coalition for Housing and the Homeless. "The University of Iowa did a study on housing needs in 2000, and one of the findings was that 68 out of 99 Iowa counties had stagnant or declining markets." With home values so low, Cain adds, "it's difficult to develop affordable housing in those counties because the appraised value won't be as high as the cost of the new or rehabbed home." Local resources Trust funds have become a popular tool for obtaining funding on a continuing basis. "There are at least 175 housing trust funds in different cities, counties, and states," says Mary Brooks, director of the housing trust fund project at the Center for Community Change, a national group that provides technical assistance to organizations in low-income communities. "At any given time 20 to 30 places are thinking about housing trust funds, and that estimate is probably conservative." First created in the late 1970s, trust funds multiplied in the 1990s, thanks in part to changes in the laws of New Jersey, Pennsylvania, and other states that encouraged local financing. They support an array of activities, including rental and down-payment assistance. Most support at least some new construction or rehabilitation activities. While trust funds have been gaining popularity in recent years, the size of the Los Angeles fund and the city's perseverance have drawn considerable attention. "I was surprised we got it through post-September 11," admits Eric Garcetti, a housing advocate and city council member. "We were looking at a quarter of a million dollar deficit — the largest in our history — then we hit 9/11, and I didn't think housing would be a high priority for many council members. The mayor was really wonderful. He kept saying, 'This is the right thing to do'." "Mayor (James) Hahn really comes at this from two points," explains Deputy Mayor Jonathon Kevles. "As city attorney, he had experiences walking through slum housing, seeing the conditions, convicting landlords for violations. Second, he sees it as an economic development issue. It becomes difficult to attract people when 70 percent can't afford to buy a house or find it hard to rent." Ideally, trust funds receive revenues from dedicated sources such as development fees and taxes. That there are no fixed methods for capitalizing trust funds is shown in California's Santa Clara County, where popular desire to address Silicon Valley's housing crisis was matched by resistance to higher taxes. "Our fund is somewhat novel," says Laura Stuchinsky, housing director for the Silicon Valley Manufacturers Group, an alliance of 190 high-tech companies. "This one undertook a two-year campaign to raise $20 million to capitalize it." Two-thirds of the money ended up coming from private donations, the county kicked in $2 million, and the cities gave the remainder. The Santa Clara Housing Trust Fund may prove particularly beneficial to smaller cities, such as Cupertino, a suburb with 52,000 residents, which contributed $250,000 in hopes of leveraging more than the city can raise on its own. Although the city of Los Angeles decided to finance its fund, there is no dedicated revenue source. Housing advocates agreed to take linkage fees and inclusionary zoning off the table in order to satisfy business and developer interests. To work out financial and other details, the city created a task force headed by Mike Feuer, a former member of the city council. The focus, Feuer says, is funding sources, administration, and the sticky issue of targeting beneficiaries. "There are good public policy reasons to identify the poorest residents of Los Angeles as the target, and we know that $100 million, even with leveraging, won't be enough to meet the needs of L.A.'s poorest," Feuer says. "But there are also good public policy reasons to target better off residents — the firefighters and schoolteachers — who are not among the poorest but who can't afford to buy a house without a subsidy." Housing advocates believe the bulk of the money should go for the very poor, but they have agreed that some funds should be used for moderate-income workers, especially public employees. Sunshine state While Los Angeles is just beginning, Florida has used trust funds for a decade. "Our comprehensive planning process includes a housing mandate that says cities and counties must house all current and expected residents," says Jamie Ross, housing director for 1000 Friends of Florida and president of the Florida Housing Coalition. "Local governments don't like unfunded mandates, and this was unfunded until 1992, until we enacted the Sadowski Affordable Housing Act." The Sadowski Act increased the documentary stamp fee on real estate transactions by 10 cents per $100 and dedicated 70 percent of that to cities and counties. SHIP — the State Housing Initiative Policy Program — delivers the local aid. For fiscal year 2002–2003, the Sadowski Act will generate close to $250 million, $175 million for local governments. The act also created the Catalyst Program, which receives $350,000 a year to provide technical assistance and training to local governments and housing nonprofits. The city of Tallahassee makes use of SHIP funds, CDBG and HOME grants, and its own trust fund to support affordable housing initiatives. While the city does some multifamily rental housing programs, it focuses on ownership assistance for low- and moderate-income households, offering down payment assistance loans to about 75 home buyers a year, says Martha Bentley, a housing specialist in the city's neighborhood services office. "We set up our housing trust fund in 1992, we saw a need in the community, and we set aside the original amount of $2.2 million," says city commissioner Debbie Lightsey. "We set it up so most of the money would be revolving funds with some grants. The balance is down to $1.2 million, but it took 10 years to get there, and we think we can keep the fund going." Development fees on projects without affordable housing are expected to help refinance the trust. The trust fund's flexibility is a valuable tool in working with nonprofit developers. "Trust funds don't have the same strings as federal and state money," says Lightsey. "Habitat for Humanity is very active here, but its money comes irregularly, and it needed money up front. We extended a $100,000 line of credit at one percent interest that it can draw from. Habitat pays back the loan when their money comes in. This smooth flow of money allowed them to double their construction." This is not unique to Tallahassee. Chris Block, executive director of Charities Housing, the development arm of Catholic Charities in California's Silicon Valley, says this is also an important attribute of the Santa Clara County Housing Trust Fund. "In our real estate market, it's hard to compete," he says. "You have to be able to access land as quickly as possible. Getting gap financing allows us to move quickly and makes other financing possible." Financing is only one part of Tallahassee's effort. The city continues to address an interwoven set of land-use, zoning, and revitalization issues, including crime, business development, and education. "We want to infuse affordable housing throughout the community," says commissioner Lightsey. "We are struggling with the idea of urban sprawl," adds Martha Bentley, "so we have concentrated our CHDO (Community Housing Development Organizations) development in infill housing. Our aim is to take neighborhoods that need revitalization and build them up with home ownership." Tallahassee also is working on incentives for developers, city planning director Wendy Gray says. "We authorized the development review committee to grant deviations upon request for most development standards as long as they are not environmental standards — for example, setbacks. We've included a density bonus of up to 25 percent, we've allowed any kind of building, for example, duplex, triplex for inclusive units — the unit might appear to be single family from the front — where code would normally prohibit that. For developments below a certain size we'll offer a full waiver for development fees." Los Angeles has been addressing similar issues since creating a comprehensive plan two years ago that allows mixed-use development with 108 housing units per acre on major commercial corridors. Planners have proposed a series of reforms to make development on the corridors more feasible by reducing the need for height and setback variances, for example. This would be good for neighborhoods where there is "way too much commercial zoning and not enough housing," Jane Blumenfeld says. The planning department has also proposed a by-right density bonus of 35 percent for projects that meet affordability and transit requirements, and elimination of density formulas that discourage large-family units in multifamily housing. Design matters, but it's not everything Even with housing-friendly policies in place, Los Angeles faces intense land-use squabbles as developers and planners identify affordable housing sites. "We've had to engage the community, to change the stereotype of affordable housing," says Robin Hughes, executive director of the Los Angeles Community Design Center, a nonprofit development, planning, and architecture firm. Hughes notes resistance from homeowners concerned about property values and residents of low-income neighborhoods upset by the "dumping" of housing projects in their midst. "We have to educate neighbors on who we are, on long-term project impact on the neighborhood, on our belief in good design, and on solid property management," Hughes says. Mike Pyatok, an Oakland architect who specializes in affordable housing, believes designers can move affordable housing forward by having communities envision their future. He encourages a hands-on approach in which potential tenants and other residents are invited to participate in the design and planning. The resulting buy-in, he says, can help move a project through the public planning process. In Silicon Valley, good design is almost mandatory if a project is to move forward. "People have an image of affordable housing that has nothing to do with reality," says city council member Sandy James. She shows off good projects, finds the resources to help developers improve their design, and takes a proactive approach to development and planning. "We like to sit down early with developers, to talk about our vision, before plans are drawn," James says. "This way, we tend to get good projects with early buy in on what the community wants." James took the initiative in getting the Santa Clara County Housing Trust Fund to join with Prometheus Development, a for-profit developer of multifamily market-rate housing, to offer a $10,000 award for affordable design. "We wanted to showcase that good design in affordable housing doesn't have to cost more," says Jackie Safier, a Prometheus partner. "The winner was a project in downtown Palo Alto, one of the most expensive places to live in the country." Alma Place, a single-room occupancy project completed in 1998, won the initial prize. Built by the Palo Alto Housing Corporation, its 106 units are affordable to people earning no more than a third of the area median income. It is situated on a half-acre site within walking distance of jobs, stores, services, and transportation. The developer and designers Rob Wellington Quigley and Ron Wigginton won praise for using of smart-growth principles, light-enhancing bay windows, efficient landscaping, and high ceilings. "It was a very simple, but elegant and well-thought out design," Safier says. San Jose's progress San Jose, with close to one million people, is the largest city in Silicon Valley. It has undergone tremendous change in recent years. The epicenter of the most recent economic boom, San Jose has worked to recreate its downtown, improve transportation, and address housing shortages at virtually all income levels. When Ron Gonzales became mayor in 1999, "he challenged the city to double housing production," says David Vossbrink, his communications director. "We held monthly meetings with high level commitment, with the city council, with developers, and we are on track to create an average of 1,200 affordable homes per year." Since 1998, San Jose has achieved substantial success by earmarking more than $239 million in gap financing that has produced more than new 5,400 affordable homes throughout the city. That money helped leverage $877 million from other sources. In September, the city council dedicated an additional $544 million from the city and its redevelopment agency to housing over the next five years. Officials hope this will leverage an additional $1.6 billion from other governmental and private entities. Building on success Adopting good policies and finding funding sources are steps in a long, continuing process. Deciding where affordable housing is located, often on a regional basis, is one of the next challenges. "Suburbs haven't viewed affordable housing as a benefit," says Tim Shanahan, housing task force coordinator for United Way's Human Services Planning Alliance in Polk County, Iowa. "That's where the new jobs are being created and where there is great need for affordable housing. Right now there are no requirements that developers include affordable units in their projects." Tallahassee is working on adding inclusionary zoning to its toolbox. "In our 1996–97 evaluations, we discovered the issue was not just the amount of housing, but where the housing was located," says planning director Wendy Gray. "Demographic analysis showed the county was becoming more segregated." In Los Angeles, advocates and developers say, you must pay attention to streamlining procedures and helping developers find the right combination of local, state, federal, and private financing. "I would hope that now that we have the housing trust fund, the housing department can establish a systematic plan for allocating money," says Robin Hughes of the Los Angeles Design Center. "Now that they know they have $42 million to $100 million available, perhaps they can create schedules and add more predictability to the funding cycle." Despite these concerns and hoping for more federal money, many housing advocates and developers feel upbeat. "I'm more encouraged about affordable housing than I have ever been," says Silicon Valley's Chris Block. Pointing to an aggressive campaign to approve a California housing bond at the polls in November, and the "energetic effort" behind the national trust fund campaign, Block adds that "if they all come together, we're going to make a real run at solving this problem." James Goodno writes about politics, policy, and urban affairs for several national magazines.
Reports. Millennial Housing Commission, Final Report, May 30, 2002, www.mhc.gov/MHCReport.pdf. National Low-Income Housing Coalition, "Out of Reach 2002." www.nlihc.org. Organizations. Housing LA, 3345 Wilshire Boulevard, Suite 1005, Los Angeles, CA 90010; 213-480-1249; www.lapoverty.org/Campaigns/Housing/About.htm. Center for Community Change, Housing Trust Fund Project, 1113 Cougar Park, Frazier Park, CA 93225; 661-245-0318; brooksm@commchange.org; www.communitychange.org/htf.html. National Housing Trust Fund Campaign, 1012 14th Street NW, Suite 610, Washington, DC 20005; 202-662-1530; kim@nlihc.org; www.nhtf.org.
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